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Lord Hardy of Wath: My Lords--

Baroness Farrington of Ribbleton: My Lords, I hope that my noble friend will understand that the procedure is that I reply to the two Front Bench speakers and that there is then an opportunity for questions from other noble Lords. Certainly, the noble Baroness, Lady Hamwee, would find it not at all difficult to convince me, while I am at the Dispatch Box, that there is a better way to proceed. I am sure that, during the course of the review of local government finance, questions of presentation and the manner in which decisions are announced will form part of the discussion.

I begin with the points made by the noble Lord, Lord Bowness. I find it strange that he feels able to express dismay at an average increase which was definitely built into the published expenditure plans of the previous government as part of their commitment that a greater share of the cost of local services ought to be borne by the council tax payer rather than through central taxation which is then re-distributed through grant. He expressed concern about council tax payers having to pay even more because of extra spending. I remind the noble Lord that the Government are backing pound for pound the £835 million increase in education expenditure with extra grants.

The noble Lord asked how we would ensure that the additional money intended for education was spent on education. That is one of those catch-22 questions. If we were to say that it was being rigidly controlled from the centre, that would provide grist to the mill of the noble Baroness, Lady Hamwee, who sees even passporting as a dangerous extension of central control. Budget decisions are for local authorities, and that is as it should be. Both I and my right honourable friend the Secretary of State will want to draw the attention of local

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authorities to education and to the priority that it will be given by parents. I declare a former interest as one-time chair of an education authority in Lancashire. In my experience the first people to be aware of the additional money for education will be the many parents and parent governors who are not prepared quietly to sit back.

The noble Baroness, Lady Hamwee, referred to the increased money for education. I believe that she failed to note that the total year on year increase in the education budget is £1.06 billion, and that the £835 million was additional expenditure within that amount and therefore should be adequate to meet the needs she identified. The noble Lord, Lord Bowness, claimed that the nursery money was merely a question of recycling. What we are doing is returning money--so that it can be spent directly, without incurring unnecessary bureaucratic hoops and costs--to the people who ought to provide the service for all four year-olds whose parents wish them to have that education. Therefore it is not recycling money.

The noble Baroness, Lady Hamwee, asked whether the distribution of money would be in a manner that was fair to individual local authorities. I am sure that individual local authorities will check that aspect during the consultation period. The noble Baroness expressed concern, if I understood her correctly, about the degree to which there would be central control over bids for additional money to spend on the education service. We do not intend to allow local authorities, as they did under old local government finance systems, to claim money within their expenditure totals and central government grant for the provision of pre-school nursery education, and not use the money for that.

The noble Lord, Lord Bowness, asked about distribution. I refer him to the detail of the Statement. I believe that it clearly answers his question.

The noble Baroness, Lady Hamwee, referred to the issue of grants, capping and ratification of the charter. The Government will ratify the charter for local government when it is appropriate to do so. In their new partnership deal with local government the Government recognise that there need to be radical changes as the result of a thorough investigation of local government finance. It is because we intend to do that that the capping regime stays in place at present. But we shall give priority to ensuring that there is a proper, thorough review. We seek to achieve agreement between ourselves and local government in order to improve matters.

As regards the education budget, there is a 5.7 per cent. increase year on year. The noble Baroness, Lady Hamwee, sought to reintroduce a proposal which I understand was put to the electorate in the general election by her party: that the public should pay higher rates and that the money should be spent on education. This RSG settlement provides nearly £2 billion in total including the additional money for school buildings over and above the expenditure totals which we inherited. In that sense we have met an objective but have done so with the backing of the electorate who voted not to have such an increase in income tax.

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We do not deny that this is a difficult budget. That is inevitable. The Government wish to see firm and solid management of the economy at this stage so that at the end of five years we are able to consider the funding of local government services and the new relationship in the context of a sound economy.

From my experience, Barnsley, being the other side of the Pennines, would be happy to have the visitors and commuters who are present in some of the authorities in the south. My experience of people in Yorkshire is that they would happily say, "Yes, and we do not expect unfair additional treatment if we are doing so well."

6.5 p.m.

Lord Hardy of Wath: My Lords, does my noble friend accept that it is cause for considerable pleasure to hear that the Government seek to develop a new, fresh and much needed relationship with local government and that the blatant unfairnesses are being tackled? In that regard, and as a Yorkshireman from the best side of the Pennines, I wish to ask my noble friend whether Barnsley and the other Webber-Craig authorities--the smaller metropolitan areas of the north of England--have cause for a little relief after more than a decade of the unfairness and hardship they have experienced? That hardship and unfairness did not extend to the City of Westminster. Is there some satisfaction for those and other authorities which have experienced that unfairness? Has the difference between the City of Westminster authority and the remaining authorities substantially narrowed?

Baroness Farrington of Ribbleton: My Lords, I agree with my noble friend. It is a good position to be in. As an initial step in reviewing the way in which local authority SSAs and funding are calculated, we are looking at some of the more blatant examples of the system used by the previous government which was unfair to some authorities and excessively unfair to others.

Baroness Gardner of Parkes: My Lords, I believe it appropriate to ask my question in view of the previous Statement with which I cannot agree. Is the noble Baroness aware of the lengthy debate in this House when the national non-domestic rate was introduced? It now seems to be called the business rate. On that occasion it was pointed out that the City of London, the City of Westminster, Camden, and Kensington and Chelsea, each made a huge contribution because the total business rate which they had collected in the past had gone in its entirety directly to the Treasury. That was the reason for a degree of compensation to those inner London boroughs. The City of London was excluded and treated differently. The other boroughs received differential treatment to compensate them to some minor degree for the great amount that they had lost. I do not know whether the noble Baroness is aware of that debate. I participated in it at the time.

Is the noble Baroness aware that since 1991-92 the SSA per head in the City of Westminster has increased by less than the average for inner London boroughs? Is she also aware that within the City of Westminster there are significant areas of deprivation, and a much higher

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proportion of elderly aged over 85 and elderly living alone than in Hackney, Islington, Lambeth or Southwark? Can the noble Baroness confirm that some element of the SSA will continue to cover tourism? The noble Baroness mentioned areas fortunate enough to have tourists. Does she agree that there are costs in terms of additional street cleaning and provision of amenities associated with tourism? Tourists are not entirely a source of joy either to the local residents or to the council tax payers.

I have one further question which applies to any borough--in London or outside. Will the Government consider the need to recognise that special expenditure for refugees falls unfairly on certain areas and should be treated as a national expense? Can some help be given, either retrospectively or in advance, to those boroughs and areas involved in the high costs which apply to refugees?

Baroness Farrington of Ribbleton: My Lords, on asylum seekers, the Government recognise the difficulties of local authorities. In the short term the asylum seekers will be eligible for non-contributory social security benefits, where they have applied on arrival at the port of entry for asylum, and for assistance under the homelessness legislation. In the longer term, the Government are conducting a wide ranging review of asylum policy considering all aspects of the asylum process including the provision of accommodation and support. The aim is to identify need.

Behind the point raised by the noble Baroness is the question of whether SSA should apply in full to the cost of asylum seekers. It is not possible to reflect specifically asylum seekers in the framework of broad indicators used for SSAs, but numbers of asylum seekers are included in SSAs to the extent that they are reflected in the population estimate used in their calculation. In deriving the estimates for 1998-99 SSAs, the Registrar General changed the method of calculation to reflect more accurately the numbers of asylum seekers in the London area.

As to the range of questions put by the noble Baroness, I do not recollect the particular debate to which she refers with regard to national non-domestic rate, but I can reassure her that the levels of real deprivation among the population in authorities such as the City of Westminster will continue to be given fair treatment. What has changed as a result of the more blatant flaws in the previous system is the assumption not that there should not be account taken of those coming into such authorities in terms of commuters and tourists--those needs are taken into account--but to ensure that no assumption is made that if, for example (I use a figure for illustration) 20 per cent. of the City of Westminster's permanent population were deprived,

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that would be no reason for assuming that 20 per cent. of the commuting or tourist population were deprived. That is the adjustment that has been made.

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