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24 Oct 2002 : Column 455—continued

Mr. Reed: Does my hon. Friend accept that people in Leicestershire, which already has the worst-funded education authority, will look at the four options and see that they take us backwards? We would see further cuts under each of them. It is difficult to explain need as a concept, when people see that they would be worse off in cash terms not only now, but under the formulae that are being proposed.

Mr. Watts: I understand my hon. Friend's problem. I would not support some of the options that have been put forward by the Government; there are some real difficulties there. There is a need for more transparency in the system. The Government should set up an independent review body to consider all the different factors relating to the need for local councils to spend extra resources.

Mr. Burnett: There is a paper, to which I have already referred—Professor McLean's study—that makes it quite clear that the south-west is very seriously disadvantaged.

Mr. Watts: With respect, there are a number of reports knocking around, all arguing in favour of the different systems that the Members who commissioned those reports want to promote. I would not accept that that is the right one, but I would accept the need for a review to consider which factors determine the need for local authorities to spend more than the average amount. It should also consider the linkage between those factors. We have not yet talked today about the weighting that is given to each of the deprivation factors. For example, in relation to the ethnicity factor, #448 million—I think—is distributed to 12 per cent. of deprived children. That may be right, but in some cases it is not allocated according to need, and there seems to be no logical reason for that money being transferred to those children rather than to other local authorities with equal levels of deprivation, whose children are underperforming in schools, but which have no chance of getting the level of resources that other areas receive. It is important to have a transparent system and that funding can be linked to the need to spend.

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Let us consider some of the other deprivation factors. There are three areas in Great Britain that have objective 1 status—Cornwall, Merseyside and South Yorkshire—yet, ironically, each of those local authorities is disadvantaged by the system. There is something fundamentally wrong with a system in which Europe can allocate to areas massive resources that are not matched by the allocations for services by the Government. That is one of the reasons why we need a review.

I am not arguing that there should be no change this time. If we accept that there should be no change to the present system, that would mean that my local authority and many others—

Madam Deputy Speaker: Order. I call Mr. Gregory Barker.

3.27 pm

Gregory Barker (Bexhill and Battle): At the outset of the debate, the Government insisted that the touchstone for their proposals for the reform of local government finance was, as they stated in their White Paper, to create a mechanism that would be

Few could dissent from such a sensible and reasonable ambition. Unfortunately, however, the practical effect on my county of East Sussex could not be further from their stated goal. Instead of simplicity, the proposed new formula offers complexity; instead of stability, it offers uncertainty; instead of creating a system that is robust, it will create a regime that is open to challenge and acrimony; and instead of fairness, it will create division and inequality.

The reality of the proposals is that the new formula would rob East Sussex of #4.1 million on a best-case scenario, and on a worst-case scenario the county council would lose #43 million. In a letter to all East Sussex Members of Parliament, the county chief executive described the proposals as Xdamaging and drastic". It is, therefore, rather a shame that neither the hon. Member for Lewes (Norman Baker) nor the hon. Member for Hastings and Rye (Mr. Foster) is here this afternoon to fight the county's corner.

The negative effects of this reform will be particularly bizarre, given the Government's focus on creating a fairer system, and particularly perverse when we bear in mind that East Sussex is the poorest of the 34 English shire counties. Gross domestic product per head is, at just #7,847 a year, comparable to that of Tyne and Wear and Middlesbrough, which—unsurprisingly, and perhaps rightly—are net beneficiaries under these reform proposals. In April 2000, average full-time weekly earnings in East Sussex were #377.40—more than 10 per cent. lower than the average for Great Britain and 15 per cent. lower than the south-east regional average. Yet despite these low incomes, the property market in East Sussex remains in the orbit of outer London's. So although the average wage in East Sussex may compare unfavourably with that for London, its house prices are three times higher than those in the north-east.

East Sussex also has much higher levels of deprivation than any other shire county. With 25.7 per cent. of its population being over the age of retirement, it has the

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second highest proportion of elderly people of any English county. Elderly people are predominantly dependent on fixed incomes, and it is they who feel the council tax increase most keenly. For many of my elderly constituents, the council tax is the largest single item in their household budget.

I have already mentioned that East Sussex stands to lose up to #43 million. That is the worst-case scenario, but let us consider the mid-point. Even a loss of #26 million would be equivalent to a 23 per cent. tax rise, or the loss of 900 teachers across the county. As a proportion of our current funding, ours stands to be the worst affected county council in the country. Indeed, even taking into account all 148 principal local authorities in England—county councils, metropolitan councils and unitary councils—we are still the second worst affected.

The loss of #26 million may sound paltry in comparison with a Government budget of #418 billion for this year, but it would eat up more than 80 per cent. of the entire road maintenance budget for a county that already suffers from the worst transport links in the south-east. Such a loss is equivalent to the cost of nearly 1,000 teachers, out of a total county teacher headcount of 3,700. Put another way, that loss is more than the budget of all the primary schools, secondary schools and special needs schools in my constituency. It would wipe out entirely the county's budget for both residential and nursing home care for the elderly. Of the 2,395 places currently provided for the elderly, all would have to go, and further savings would still have to be made. A figure of #26 million is more than three times the total budget for our entire library service, which is already facing significant pressure.

Given that it is the worst affected county council in the country, it is no surprise that East Sussex is not seeking to endorse any of the Government's proposals. However, there are three areas, accounting for 90 per cent. of its funding, that are of particular concern: education, area cost adjustment and resource equalisation. I do not have time to discuss them in detail, but I ask the Minister to look at the county's submissions to him. I cannot believe that a better and more equitable solution cannot be found to the problem with which the Minister is wrestling.

It is not just the county council and the essential public services that it provides that stand to lose out through these reforms. The effect of these changes on Sussex police could be catastrophic, involving the potential loss of up to #70 million, or 9 per cent. of its total funding, in a single year. Ministers have said that the changes may be achieved by effectively freezing grant at its current level, but the consequence of that to Sussex police would be substantial. It would mean a steady reduction in levels of service, or a massive increase in council tax.

Mr. Michael Jabez Foster (Hastings and Rye): Will the hon. Gentleman give way?

Gregory Barker: No, I am afraid that I do not have the time. The hon. Gentleman has only just come into the Chamber. [Interruption.] He has only just entered the Chamber and has not been here for the debate.

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Both the Prime Minister and the Home Secretary like to talk tough on crime. How can they possibly square their tabloid rhetoric—

Mr. Foster: Will the hon. Gentleman give way?

Gregory Barker: No, I am afraid I will not.

Mr. Foster: On a point of order, Mr. Deputy Speaker. Is it proper for an hon. Member to name another hon. Member and then refuse to allow him to intervene? The hon. Gentleman selectively named Members and criticised them for their non-attendance, failing to note that there are Conservative Members who are not present, but who have not been similarly criticised.

Mr. Deputy Speaker (Sir Michael Lord): The conduct of Members in their speeches is entirely a matter for them. It is not a matter for the Chair.

Gregory Barker: What puzzles me is that the Government are not totally blind to the problems in East Sussex. We have a special taskforce—on which I sit, along with the hon. Member for Hastings and Rye—because our county contains some of the most deprived wards. The Government have recognised that fact, and I am grateful for that, but it makes no sense then to cut away the legs of the county council, which is the essential provider of transport and education.

I implore the Minister, who I am sure is setting out to be fair, to look again at the practical effect that the proposal will have on East Sussex. It cannot be right and it cannot be fair—please, please look again at the treatment of East Sussex.

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