Mr. David Clelland (Tyne Bridge): I am pleased to follow the hon. Member for Mole Valley (Sir Paul Beresford). He is a fellow member of the Select Committee on the Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions, but I shall not take the same entirely distorted route in criticising the report, although I have criticisms of my own that I shall point out.
I accept that the local government settlement is, overall - I deliberately insert that word - a better settlement than we ever got under any Tory Government. I congratulate the Government on trying to produce a better system of local government finance and finally ending the anomalous SSA system. As the Select Committee pointed out, however, there is still some further work to do. As we said, the equality of the outcome suffered from a lack of proper preparation. We also said:
"It is unacceptable that . . . not all the relevant information was published on the day of the announcement"and that
"local authorities have only just over a month to respond."That month included the Christmas period. As I shall mention later in my speech, at least one local authority is still awaiting information, even though the final settlement has now been announced.
The Committee also pointed out:
"The Government's proposals for resource equalisation have not resolved the difference in 'gearing' between authorities."That is a huge anomaly for local authorities in the north, despite what we are hearing from Conservative Members who are crying out about difficulties in the south. It is the poorer areas in the north that have to pay higher council tax in order to subsidise some areas in the south. Indeed, we are now having to do that to try to depress council tax rises in Westminster because of the anomalies in the 1991 census figures.
The report made another point that is very important for my local authority:
"The consequence of 'passporting' increases in education and social services Formula Spending Share is either to increase council tax or to reduce expenditure on other services."That is certainly the case in Gateshead, where the Government's view of the figure to passport to schools, £6.877 million, is greater than the council's increase in total grant from 2002-03 - £6.734 million. That leaves no additional funding for all other council services, with the burden falling on council tax payers.
There are further difficulties that are more local, but certainly affect the North-East. For example, the new formula fails to take account of the need to maintain back lanes. We have many miles of such lanes in the north, but they are ignored in the formula. They have to be surfaced and lit, which is especially important with regard to crime problems, and local authorities have to provide funding. Furthermore, such lanes generally divide long streets of Tyneside flats, but the children in flats indicator that is retained in the children's personal and social services formula does not include Tyneside flats. It usually refers to multi-storey flats. Councils such as Gateshead have a policy of not housing children in multi-storey flats for very good social reasons, but as a result, they are not included in the formula and suffer.
The north of England, which generally comes lowest in most social and economic indices, is still one of the regions that does worst out of the settlement. We heard from some of my hon. Friends representing Durham seats about its concerns about the settlement, but I should like to concentrate the rest of my remarks on my home town and constituency. Gateshead is a beacon council that is excellent by all the standards that the Government and the Audit Commission have set down, so we were surprised and concerned to find that we received a settlement of only 4.6 per cent. In comparison, Wiltshire received a settlement of 13 per cent. Far from transferring money from the south to the north, it seems that this process has operated the other way around.
The Minister very kindly agreed to meet my right hon. Friend the Member for Gateshead, East and Washington, West (Joyce Quin), my hon. Friend the Member for Blaydon (Mr. McWilliam) and me, and members and officers of the council. That meeting took place on 13 January, and we were told that population loss was the reason for the problem with Gateshead's settlement. I was interested to hear the Minister tell the Opposition that we should compare like with like, as it was pointed out at that meeting that the populations of the neighbouring authorities - Newcastle and Sunderland - had reduced by 4 and 3 per cent. respectively, yet they had received 6 and 6.2 per cent. respectively and that Gateshead's population had reduced by only 2.9 per cent., yet it had received only a 4.9 per cent. increase. So it seems obvious to us that population loss was not the reason for the lower increase in grant.
We were then referred to the resident expert on local government finance - a civil servant who would tell us what was the reason. The answer was, "It must be because of other factors." Well, as hon. Members can imagine, that really was not the answer that we were looking for, so we pressed the expert and asked, "What other factors?" We were told, "It might be education." Again, that is not a satisfactory answer.
Finally, the local authority chief officers were invited to go back to Gateshead to look up the Department's website, where they would find all the figures and be able to work out for themselves why we only got 4.6 per cent. That may be satisfactory in some people's minds, but it is not in ours: we felt that we should have been given a proper answer at the time. Following that meeting, my hon. Friends, the leader of the council and I sent letters to Ministers, but I regret to say that, to date, no reply has been received and no explanation has been given about the 4.6 per cent. increase.
I can understand Ministers' argument that, with a complicated formula that covers the whole country, there will be winners and losers and that some people will get more than others. That is understandable, but we are entitled to an explanation as to how the increase has come about. If we had an explanation that we could understand, we might be able to accept it, however distasteful it might be, but, unfortunately, we have had no explanation.
We now find that Gateshead's final settlement has been reduced by a further £346,000, so the increase now works out at 4.3 per cent - even lower than before. It is certainly the lowest figure in Tyne and Wear. The next lowest in that area is 6 per cent., and it is certainly a lot lower than the 7.3 per cent. average for metropolitan districts. That is not acceptable.
My right hon. Friend the Member for Gateshead, East and Washington, West intervened on the Minister's speech to ask whether he had an explanation for the settlement. I am afraid that, again, we did not get a satisfactory answer. There is still no detailed explanation for that settlement. I accept the Minister's offer of a further meeting - I am sure that it will be taken up - but that is no comfort to us here and now, when we are asked to go through the Lobby to support a settlement that we find totally insupportable. So unless a miracle happens and the Minister is able to give us a satisfactory reply in his winding-up speech, I have to say that the hon. Members who represent Gateshead will be unable to support the measure in the Lobby this evening.
7.17 p.m.
| Promoted by Ken Childs on behalf of David Clelland, both of 19 Ravensworth Road, Dunston, Gateshead. NE11 9AB |