Thirteenth Standing Committee
on Delegated Legislation
Thursday 11 July 2002
[Sir Nicholas Winterton in the Chair]
Local Government Finance (Special Grant Reports Nos. 92 & 99)
The Chairman: On this very pleasant July summer afternoon I welcome all members to the Committee. Is it the wish of the Committee that the orders be debated together? [Hon. Members: Yes.] I gather that it is, and I am grateful.
Mr. Stephen Pound (Ealing, North): I am not sure whether this is a point of order, Sir Nicholas, but will you rule on whether members may remove their jackets, in view of the warmth of the July afternoon to which you have alluded?
The Chairman: If members feel, as one already has—
Simon Hughes (Southwark, North and Bermondsey): Two.
The Chairman: Two members. If members feel more comfortable removing their jackets, I am happy for them to do so. I am grateful to the hon. Member for Ealing, North (Mr. Pound) for doing me the courtesy of asking my permission so to do.
Mr. John Taylor (Solihull): On a point of order, Sir Nicholas, I should like your permission to keep on not only my jacket, but my waistcoat.
The Chairman: We will clearly have a most enjoyable afternoon. The hon. Gentleman is known for his independence and style, and he has shown it.
The Minister for Citizenship and Immigration (Beverley Hughes): I beg to move,
That the Committee has considered the Local Government Finance (England) Special Grant Report (No. 92)(HC 877) on Special Grants for Asylum Seekers Support (Adults and Families of Asylum Seekers) for 1999–2000.
The Chairman: With this it will be convenient to consider the Local Government Finance (England) Special Grant Report (No. 99)(HC 878) on Special Grants for Unaccompanied Asylum-Seeking Children for 2002–03.
Beverley Hughes: It is a pleasure to be in Committee with you this afternoon, Sir Nicholas. It looks as though we will have a lively and enjoyable debate. Special grant report No. 55, which was processed in March 2000, gave permission to pay £185 million to local authorities for their claims for support of asylum-seeking adults and families. To date, £186 million has been paid and final audited claims amount to £192 million. The conditions of the special grant prescribe that if the £185 million ceiling is exceeded, each authority's claim should be reduced. Local authorities were promised by the then Secretary of State that claims would be met in full.
The purpose of today's debate is to approve the payment of an additional £6 million. I am sure that
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Parliament would not want to maintain its original voted intention if it were aware that that amount had to be absorbed by local government.
Mrs. Cheryl Gillan (Chesham and Amersham): I may have misheard, but I thought that the Minister just said that the figure for the final number of claims submitted is £192 million, and the ceiling is £185 million. Does that not mean that there is a gap of £7 million and not, as she said, £6 million?
Beverley Hughes: The hon. Lady did not mishear. However, perhaps she did not hear me say that £186 million had already been paid, which is somewhat more than the £185 million figure. The difference therefore between £192 million and £186 million is £6 million, which is the amount that we are debating today.
Mrs. Gillan: Is the Minister telling the Committee that, as the ceiling was £185 million, an unauthorised £1 million has already been paid over to authorities? Where did the authorisation for that extra £1 million come from?
Beverley Hughes: Some £1 million more than the £185 million has been paid. I cannot give the hon. Lady a detailed answer to her question, but will endeavour to do so during the debate. I suspect that as regards paying the full amount that local authorities have specified, the extra £1 million was probably the result of paying—[Interruption.] I am trying to explain the mathematical consequence of the way in which the bills were paid that could have resulted in aggregate overpayments to meet local authorities' claims. Clearly, payments could not go far beyond £185 million without us having to return to Committee, as we have done today.
Mr. Eric Forth (Bromley and Chislehurst): For clarification, can the Minister tell the Committee exactly which period we are referring to? Different periods are referred to in the tour de force that is in front of us, so it would help the Committee's deliberations to put things in context by knowing whether we are authorising expenditure that has been incurred in the past, is being incurred now or will be incurred in future.
Beverley Hughes: We are dealing with the period from 1 April 1999 to 5 December 1999. If the right hon. Gentleman waits a little longer, I shall explain why we are dealing with that period and the reason for the overpayments.
Simon Hughes: At the time of the report that allocated £185 million, the then Secretary of State said that the Government had made available up to £185 million—an increase of £10 million—to ensure that claims for the period could be met in full. They clearly could not be met in full, which is why we are back here. Why was the revised Government estimate, after they received notice that local authorities were short of money, again inadequate? Why have we had to come back for a second time to authorise another upwardly revised figure when the Government were clearly given figures by local authorities and were told that there was not enough money?
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Beverley Hughes: The Government were not told at the time that further money would be required by local authorities. We have been told that since. In the process of auditing accounts and considering matters in detail, we have found that that extra money is required. If the hon. Gentleman waits a little longer, and allows me to progress with my speech, I should be able satisfactorily to address the question that he raised.
Outstanding amounts have clearly been promised to local authorities, which is why the second special grant report for that period is required. Amounts payable to individual authorities are subject to maximum weekly costs of £140 for adults and £240 for families, as prescribed by the special grant report No. 55, less any amounts already paid. Authorities are not required to complete a claim form, as amounts payable will be calculated as the difference between audited claims and amounts already paid to them.
Initial claims amounted to £182 million and as a result, the special grant report was set at that time at a higher figure of £185 million. The audit certificate from Haringey amounted to £9.8 million when it was finally completed, against its initial claim of £4.4 million, which had been used to reach the amount contained in the original special grant report.
Mrs. Gillan: Will the Minister give way?
Beverley Hughes: I should like to finish this point, so that Members are completely clear.
In March 2001, we paid £4 million to Haringey; it argued that if scaling were applied to the £185 million, that is what it would be entitled to. It was that payment that brought total payments to £186 million. The Comptroller and Auditor General drew attention to the fact that payments had breached the £185 million limit in his report on the Home Office accounts.
The delay in reaching this point and processing the total required for this additional special grant report was due to a request from Northamptonshire for more time while it investigated a potential fraud. That situation was not finalised until April this year, when a revised audit certificate was issued for that authority. Clearly, the Home Office depends on audited claims and as they are inevitably received late, special grant limits may have to be revised, as has been the case in this instance, for the reasons that I have outlined.
Mrs. Gillan: I am rather alarmed if I have understood correctly what the Minister said about Haringey and the fact that she relies on audited reports. How on earth could any local authority make a mistake of the proportion of a figure of £4.4 million compared to £9.8 million? That is not just double the first amount, but double it plus £1 million; that is for one single local authority. Can the Minister give us further details on whether that happened through incompetent auditing, incompetent accounting or even fraud? It seems an alarming discrepancy.
Beverley Hughes: I cannot comment on why Haringey's initial claim of £4.4 million turned out to be so out of kilter with its ultimate actual expenditure. Members may know of some of the difficulties
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concerning finances and the control of finances that that local authority faced during that period, which have been in the public domain. I am not sure whether that was the reason. The hon. Lady will be aware, I am sure that, in finalising claims and settling final amounts paid to local authorities under special grant reports—the paying out of public money—the Home Office, like any Government Department, cannot finally resolve payments until it has gone through the process of satisfying itself on the basis of audited claims.
The question of the discrepancy is a matter for Haringey. We are satisfied that the £9.8 million that came through the audited process is the right figure because it has been through that process. Due to the difference between the initial claim or estimate and the final figure, there is clearly a need—if we are to keep our commitments to local authorities—for us to pay the additional money. As I said, the other case involved Northamptonshire, which was investigating a fraud. That process finished, and the audited claims were finalised, only two months ago.
Mr. Forth: This gets more alarming the more we hear of it. Can the Minister tell us what will happen if the Committee decides not to grant the money? Frankly, the more I hear about it, the more I want the Committee to do that, although I am not a voting member. To say at this stage that it is a matter for Haringey and not us is rather bizarre, as we are the ones being asked to pay the money. Surely we have the option of whether or not to pay it, depending on whether we are satisfied by what the Minister says. Can she help us by saying what might happen should we decide at this stage not to pay the money, perhaps subject to receiving further information?