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24 Oct 2002 : Column 443—continued

Sir Patrick Cormack: Will the hon. Gentleman underline the fact that, throughout my 32 years in the House, Staffordshire has always had a prudent county

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council, whether under a Conservative or Labour administration? Our cry is from hon. Members on both sides of House and from all parties.

Paul Farrelly: That is a valuable point.

We want a formula that better addresses need and deprivation so that counties such as Staffordshire and regions such as my own do not lose out time and time again. I will not repeat the points so ably made by my hon. Friend the Member for Stafford, but having overwhelmingly elected a Labour Government in 1997 and 2001, my constituents and the people of Staffordshire want them to be bold in redressing the balance. To coin a recent phrase, we are at our best when we are bold. Like many areas represented in the House, we want fairer funding. I realise that the Minister is in an invidious position; he cannot satisfy everyone, but we call on him to be bold. Our constituents have spent a long time waiting for a change, and a change that changes nothing will not be good enough.

2.42 pm

Mr. Andrew Lansley (South Cambridgeshire): Days before the 1997 general election, the Prime Minister, then leader of the Opposition, said:

The first debate that I secured was in July 1997, in the previous Parliament, and it was on the area cost adjustment. Responding to that debate, the Minister for Local Government and the Regions told me:

Five years and three months later reform of the area cost adjustment is long overdue. What the Government propose in their options could have been done five years ago because it is substantially based on the Elliott review methodology produced before the 1997 election.

If implemented, the five area cost adjustment options would increase Cambridgeshire's standard spending assessment total by anything from 2.5 to 6 per cent. During the past five financial years, Cambridgeshire may have lost #100 million from the Government's failure to act, and fairness delayed is fairness denied. Cambridgeshire has the lowest SSA—#647 per head—of any county, and schools suffer most, with a gap of about #270 per pupil between the school funding in my constituency and funding over the border in Hertfordshire. Although the Cambridgeshire police area has an average amount of crime, we have 250 fewer police than average. It is time for fairness.

Step one is to implement reform of the area cost adjustment. Only options 4 and 5 would provide an area cost adjustment factor for each county. I would go further and provide that for each authority. The labour market pressures in South Cambridgeshire and the constituency of the hon. Member for Cambridge (Mrs. Campbell) are substantially different from those in the fenlands in the north of the county. I would use option 5, which more accurately reflects underlying labour market pressures in the longer term, to which local authority services have to respond, particularly if district level authorities are involved. The same area cost

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adjustment approach should be used for education. House prices are too volatile, too closely related to interest rate movements and too much of a current preoccupation rather than a long-term indicator.

Step two must be to reform the education grant. Many people have said that the capitation level—the basic entitlement per pupil—should be higher. That is true not only because it would deliver fairness in funding, but because the education funding strategy group is trying to build an activity-based level of funding so that we accurately fund the cost of providing the national curriculum to pupils. I am disappointed that the Government did not work with that group to produce an option on that basis. Likewise, as the formula does not provide for so many unmet needs, how can they be included in relation to additional educational needs? Additional educational needs factors apply in every authority to some extent, so it must be right to have a high threshold of 50 local education authorities. In addition, sparsity is inadequately reflected and should be included for secondary schools and the under-fives.

Step three must be to reject the proposed resource equalisation options proposed in the consultation. Those would reintroduce past spending into the formula, which the Government said they would not do. Worst of all, they would be based on validating high spending and penalising thrift. I do not suggest that we can do without resource equalisation and I accept that we may have to rely on the current system for the time being while we look for something better. However, perhaps the Minister should consider not using council tax and standard spending under the current system, but look instead to the median level of council tax as a proper intermediate measure on which to base our resource equalisation.

Step four is to take proper account of population growth. Those areas with a declining population are already compensated because of the lag between population data and grant calculation. Those areas with a large growth in population, such as Cambridgeshire, need a factor in the grant which is based on excess population growth. I was surprised that the consultation suggests #65 for a shire district. Although a shire unitary authority would receive #675, shire counties and districts would get only #560 when added together. The Greater London Assembly and an outer London borough would get #1,000 when added together.

Step five is to take proper account of sparsity. For example, a 1 per cent. weighting in the police service calculation is woefully inadequate.

The Government's proposals could be turned into a fairer system. It would mean kicking out the resource equalisation proposals and the idea that the business rate should be treated as a Government grant. The system would benefit from major changes in the education options, which other hon. Members and I have proposed, and, in the longer term, from using more direct and relevant data that relate to pupils' additional needs. I hope that on that basis we will see a much improved result later in the year. It is time for fairness and I look forward to that happening in the next financial year.

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2.48 pm

Mr. Tony Banks (West Ham): I have sat through many such debates on local government finance and have participated in them for the 20 years or so since I became a Member of Parliament. They always reveal the problems that arise from an overcentralised Government system. It was the same under the Conservatives. I remember Margaret Thatcher extending to us the promise that she would take Whitehall off the back of the town halls. Of course she did precisely the opposite. Hearing various blasts from the past, such as the former leader of Wandsworth council, the hon. Member for Mole Valley (Sir P. Beresford), complaining about the proposals, I am reminded of the way in which the Tories used formulas to give an advantage to their sweetheart authorities, such as Westminster and Wandsworth.

Things have got better under this Government. One still gets the feeling, however, that local authority finance is like the infamous Schleswig-Holstein question. Most do not understand the question, no one knows the answer, but everyone is affected by the outcome.

This is a whingers' debate. I have not heard anyone do anything other than whinge, and rightly so. That is the problem with local authority finance: we all come to the Chamber to complain about our own local authority being skint. No one is likely to come and say, XWe have done very well." Those hon. Members who are not present are probably not interested, or prefer to read the collected works of Kim Il Sung, which are slightly more interesting, or their local authorities have done extraordinarily well out of the settlement, though I doubt it.

We know that very few people turn up to say thank you. There is little gratitude in politics, as we will all find out eventually. All our political careers are doomed to end in failure, as someone said. Mine just ended a bit sooner than others. However, I want to prove to the Minister that I am not wholly a whinging ingrate. Newham, my borough, has received much Government support, but mostly in the form of special programme measures, schemes and Government initiatives, all of which are time-limited. What we want in Newham, as all local authorities want, as a number of hon. Members have said, is a predictable core of Government funding, and much greater powers to raise our own revenue streams. We want to be able to use those revenue streams to spend on our locally determined priorities.

Government provide 75 per cent. of all local authority finance, but there cannot be effective local democracy with the Treasury controlling the purse strings to this extent. The Government have announced and implemented a genuine programme of devolution, but without greater financial independence, devolution will ultimately fail. It will not produce the local successes that people expect from it. That might be one of the reasons for the low turnout in the recent local elections, particularly those for local mayors.

It is an open secret that I hope to become Labour's candidate for London mayor. I am grateful for the support of a number of my colleagues. Why should I not be? I was the first to propose a directly elected mayor for London in 1990. The idea did not meet with universal acclaim or, as I recall, any acclaim whatever, at the time,

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but it is now a fact and it was brave of the Government to introduce the office. However, they are holding back from making that office truly effective.

We in London must have our own revenue streams, free from the dead hand of Treasury control. I have made a number of suggestions recently, which I shall put to the young and handsome Minister. [Interruption.] He is young and handsome. It is quite scary, really. One suggestion is that city hall should be able to raise a bond issue for transport infrastructure investment in London, unless Treasury Ministers will give us all the money that we need for vital schemes such as crossrail 1 and 2, Thameslink and the river crossings. We know that they will not, yet they are preventing us from raising our own money.

I have suggested that London should be able to receive all the income from the airport tax, which would then be hypothecated for transport infrastructure projects. That could be done, if Gordon is prepared to let us do it. I notice that the Government propose to change the legislation relating to gambling. Why not have municipal casinos in London? That is an excellent idea. It is done in other parts of the world and raises large amounts of money, which could be used to improve services for London.

My hon. Friend the Member for Denton and Reddish (Andrew Bennett) mentioned a tourist tax. We could have a hotel bed tax in London. What about a London lottery? I throw these ideas before the House so that they may be considered and discussed. A London lottery would be an excellent way of raising money. We do not want to rely on sticking the precept up more and more, as that simply impacts on the local authorities and borough councils, and we want to find independent ways of raising our own money in London. My hon. Friend also suggested that business rates should come back to local authorities. Absolutely correct. That would be of great benefit to London.

I know that when we call for more resources for London, there are many who say that London is already getting too much. That is not a fact. London is not just Mayfair, Westminster, Kensington and Chelsea, where Opposition Members go for their enjoyment; it is also places such as Plaistow, Tottenham and Peckham. We have some of the most deprived local authority areas in the entire country.

I conclude with an extract from a speech made by the Chancellor on 11 October, in which he said:

I hope that when the Minister replies, he will dress that out a little more. It sounds very interesting and promising. We need some delivery.

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2.55 pm

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