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Public Services (Gloucestershire)

Volume 462: debated on Tuesday 3 July 2007

It is pleasure to serve under your chairmanship, Mr. Hood. Before I start, I would like to welcome the new Minister in what I believe is her first parliamentary outing. I am sure that she will do very well and, hopefully—from her point of view—follow in the path of her predecessor’s meteoric rise.

The subject of my debate is the funding of public services in Gloucestershire and the comprehensive spending review. My objective is straightforward. A number of the public services in Gloucestershire, ranging through local government, health, policing, education and transport, are funded either directly or indirectly by central Government. Gloucestershire tends to appear at the bottom of funding league tables in most cases. In some cases, one would expect it to be towards the bottom, owing to the nature of the area relative to others, but in some cases one would not. I wanted the opportunity, therefore, to put my constituents’ concerns on the record prior to the Government’s conclusion of the comprehensive spending review in the autumn, in the hope that they will be addressed, at least in part, and that the disparities between Gloucestershire and other authorities will not get worse, even if we do not expect rapid improvement.

It is not always clear to people locally exactly what the Government spend in particular areas. If the Sustainable Communities Bill, which is currently in another place, gets through Parliament, central Government will be required to make clear how much they spend on local services in each area and, as my right hon. Friend the Leader of the Opposition said, it would

“significantly alter the balance of power in favour of local councils and local communities”

because the amount of money spent by central Government in each area would be much clearer. People would be able to see exactly how much of their tax was coming back to their local area.

Given that that Bill has not passed into law yet, it is difficult to assemble all the data. However, I shall put some figures on the record and hope that the Minister can respond. I shall deal, first, with health, which I know is a matter close to her heart; in her constituency of Burnley, she has been involved in a number of local campaigns, as I have, to save local hospitals, and busloads of her constituents have come down to Westminster to protest about cuts in local services, which indeed has happened in my constituency. As a constituency Member, as well as a member of the Government, she will know how much such matters concern local people.

Gloucestershire receives about 90 per cent. of the national average for health care funding, which, were we to receive it, would amount to an extra £66 million. Over the last few years, we have been facing cuts in services at community-hospital level—I am pleased to say that we saved the hospitals at Dilk and Lydney in my constituency—and currently are trying to fight off cuts to mental health services. In part that is down to deficits and a lack of funding that does not represent properly the health needs in my constituency and Gloucestershire more widely.

In this debate and the comprehensive spending review, I hope that the Government will address the health allocation formula, which divides health spending around the country. One of the reasons that Gloucestershire does rather poorly is that the current formula focuses more on deprivation than on rurality or the age profile of areas. However, I noticed a piece of good news in the constituency health profiles just published: given that, in the Forest of Dean, female life expectancy, as well as that for males, has risen, women now live longer there than in England as a whole. Although those two pieces of news are very welcome, they mean that the population is ageing, and older people use more health care than younger people. The overall prevalence of disease in my constituency and Gloucestershire will rise with that higher age profile, which will push up the cost of health care. The current formula does not represent that adequately, which will give us a problem in the future.

On policing, again, the bulk of funding for our local force, the Gloucestershire constabulary, comes from central Government. This year, the Government grant will give our police force the equivalent of £97 per head of population, whereas across the country, that figure is £122. That difference would equate to an extra £14 million for our county’s police. Even if we exclude the large metropolitan forces from that equation, we are still being underfunded to the tune of about £7 million, which means in Gloucestershire that the police authority has had to put up the council tax precept rather higher than the rate of inflation.

Most members of the public in my constituency will remember that, a few years ago, in 2003-04, there was a 51 per cent. rise in the police precept in order to create a large number of detective posts and firearms officers for the level 2 policing that the Government talked about in their review of the attempted mergers of police authorities. That was tackled locally in Gloucestershire. However, that huge increase was driven largely by the lack of funding from the centre. Dr. Timothy Brain, our chief constable, who is also the finance spokesman for the Association of Chief Police Officers, has been warning, both nationally and locally, that there will be a squeeze on the number of police officers in the coming years as costs rise ahead of Government grants. That will be a particular problem in Gloucestershire because of our relative lack of funding compared with other parts of the country.

The Conservative county council that gained control in 2005 promised broadly in its manifesto an extra police officer in each electoral division, which is being paid for by the council tax part of the overall council tax, rather than by the police precept. There are now a significant number of officers. In fact, all the increases in the number of police officers since 1997 have been funded, not by central Government, but either by the county council or the local precepts. We have more police officers, but the credit needs to go to the police authorities and local taxpayers, rather than central Government.

I shall move on to education. It is extremely well known, in Gloucestershire and elsewhere, that our county is in the F40 group of education authorities, which are the worst funded in the country—Gloucestershire is the 11th worst funded. Our children get about £315 less per head than the national average, which equates to £25 million over the year, or about £750,000 for a large secondary school. Clearly, governing bodies and head teachers in those schools would see the tremendous difference that they could make, if that funding were applied more evenly.

On transport, there is a small specific issue, of which I gave the Minister prior notice, concerning the changes to taxi licensing in the Road Safety Act 2006, which will lead to higher costs for the county council in providing public transport. In Gloucestershire, there is a great deal of use of private hire vehicles on long-term contracts to transport children to school, particularly those with special educational needs. Drivers working on those long-term contracts used to be exempt from the licensing regime, but that is no longer the case. That will drop a cost straight on to the council that will not be covered by central Government funding. Again, that is just another example of how financial pressures hit constituents in my area and the county as a whole.

It would also be helpful if the Minister could address the amount that local government is expected to get. For example, this year, Gloucestershire received an increase in its grant of only 2.7 per cent. when inflation was running at 4.2 per cent. The county council’s allocation from central Government is £163 per head, compared with the national average of £170—a difference of £4 million. If the county council got the national average grant, no rise in council tax would have been needed this year, which would have been very welcome, particularly for pensioners and hard-pressed families who find the council tax a real burden.

The Government’s changes to supported borrowing have hit the county council’s funding as well. As the Minister will know, supported borrowing is a method whereby councils can borrow money to build and refurbish schools and to repair and develop roads, for example. The Government used to give the council a grant to cover the interest and repayment charges, and the charges therefore did not hit council tax payers. That grant has now been cut on future borrowing, meaning that councils will have to spend less capital, or they can continue borrowing the money but will have to meet the full cost of the interest payments, which will push up council tax, hitting local council tax payers. That is of particular concern to those in the community who have the most difficulty in paying the council tax.

Despite all those financial pressures, the county council in Gloucestershire should be praised for its efforts in keeping the council tax down. That was the top priority in its 2005 manifesto and it kept the increase down to 3.4 per cent., which was excellent news for those on low incomes and pensioners, but it required a huge focus on efficiency savings, which are obviously easier to achieve in the initial stages and cannot be carried on for ever.

It is worth noting that in the current year the Government have cut the funding for flood protection in the midlands. For the purposes of flood protection, my constituency is in the midlands, although it is in the south-west for all other purposes. Given the events of the past few weeks and the fact that my area and areas like it are very vulnerable to flooding, I hope that when the Treasury is examining flood protection in the future, it will ensure that those short-term cuts—frankly, they are short-sighted cuts—do not take place again.

I touched on rurality—rural areas and the cost of delivering public services in those areas. Few of the funding formulas that are used to dish money out across the country take adequate account of that. Delivering services in a rural area is more expensive due to the costs of transport, a dispersed population and the time, and number of people, needed to deliver the services. That is not reflected adequately in those formulas, particularly for health. It is worth noting that the formulas used by certain devolved nations in the United Kingdom for distributing that money take more account of rurality and the difficulties of delivering services in rural areas than the formulas do in England. Perhaps the UK Government could, on devolved matters such as health and education, more adequately recognise that.

Something that, to be fair, the Conservatives did to some extent when we were in government, but which the present Government have become past masters at, is loading extra responsibilities and costs on to local government and not adequately meeting those through central funding. The admittedly small example of taxi funding was an example nevertheless of a change in legislation leading to a direct cost on local government with no change in local government grant.

I hope that in the comprehensive spending review the Minister will note the points that I have laid out and that action will be taken on some of the formulas that allocate funding across the whole range of public services. One does not realistically expect them all to be changed hugely overnight, but it would be helpful if the Government said what work they were doing on them, explained the extent to which the rurality of an area—the difficulty of delivering public services in rural areas—will be taken into account, and assured us that all the factors that drive cost, such as the age profile of the population, will be better taken into account in the future. If the Minister does that, the people of Gloucestershire and the Forest of Dean will have much more confidence when the Government finally announce their public spending proposals for the next three years when they publish the comprehensive spending review in the autumn.

It is an honour to make my Commons ministerial debut under your chairmanship, Mr. Hood.

I congratulate the hon. Member for Forest of Dean (Mr. Harper) on securing the debate and representing so eloquently the views of many of his constituents and, indeed, the wider interests of the local authority. He raised some interesting issues, not all of which, I am delighted to say, are my ministerial responsibility, but the manner in which he raised them has shone a spotlight on the need for the Government to think in a cross-cutting, cross-departmental way when considering such issues. I am grateful to him for that and for the constructive way in which he approached the debate, which has allowed my officials time to provide some answers that I hope his constituents will find useful. I should like to make a couple of observations as a general response to the points that he raised. I shall then deal with the specific points, and if I have any time remaining, I shall perhaps make some observations about how this debate fits into the comprehensive spending review.

The hon. Gentleman was right to say that many of the issues are perhaps best discussed in the debate taking place on the Sustainable Communities Bill, which is going through Parliament. One of its provisions would place a duty on the Secretary of State to provide a local spending report, which would consider the net effect on a certain geographical area of the various spending decisions that are taking place. That may not lead to a change in those decisions, but it will shine a spotlight on whether there are any anomalies that local communities may want to lobby about or may consider unfair. The hon. Gentleman raised a valid point, and it is interesting to consider the effect of a number of different decisions on a particular geographical area.

A number of points that the hon. Gentleman rightly raised will be considered as part of the routine negotiations that take place between every local authority and the Department for Communities and Local Government in relation to the always intense and strongly argued representations that are made as each annual funding process is gone through. Like every other MP, in acting as a constituency MP I have made strong representations. It almost seems to me that we get into more trouble if we do not. MPs who do not make representations may be subject to a cut, as opposed to those who do make representations being subject to something favourable. The hon. Gentleman is right to raise these issues, but they will be considered as part of that routine process.

As part of the CSR, my Department and other Departments in Whitehall are engaged in more blue-sky, root-and-branch consideration of the demands that currently apply to local authorities due to pressures that have arisen from elsewhere, and the implications for local government finance of the way in which Government policy has evolved elsewhere. I am thinking, for example, of the new obligations that we are taking on in respect of waste. The Government are considering that and I urge the hon. Gentleman’s council and others to make their views known strongly as part of that process, because our intention is certainly to listen.

It may be helpful if I outline the basis for determining the level of local government grants. Perhaps the difference between us is that the hon. Gentleman emphasised, rightly, the level of funding in terms of input—I disagree with some of his numbers—but the process that the Government go through involves considering the effect of that spending. The amount allocated to Gloucestershire is not determined arbitrarily; the amounts are determined through a clear and rational process based on the needs of each local authority. I shall not bore the House by explaining the funding formula in all its detail, not least because, thankfully, it is not my responsibility. If there were a great clamour, I could try, but I am not sure that there is. However, it is important to realise that it takes account of a large number of characteristics of each authority, including demand for key service areas, such as adult social services and children’s services. That is calculated on the basis of the area’s population: the number of people employed and unemployed, the number of children and so on.

After establishing demand, the formula considers the capacity of a local authority to generate revenue from council tax, before determining a total allocation for each authority. The allocation is then subject to damping, which I am sure Gloucestershire is feeling a little sensitive about, as it is a process that is right for the country as a whole, but there are winners and losers each year, because it guarantees all local authorities a minimum increase in grant—known as the floor—by scaling back the allocation of authorities above the floor. The advantage of that system is that all authorities, including Gloucestershire, know that if factors external to them or beyond their control mean that in one year the formula means that the allocation is below the floor, they can rest assured that that will not suddenly result in an enormous drop in funding. I hope that the hon. Gentleman will recognise that this is a well-established system, which is necessary to ensure stability in local government finance settlements and avoid large fluctuations that make it even harder for local authorities to plan effectively.

The hon. Gentleman also mentioned supported borrowing, which I am told is the local government finance term for a central Government promise to make available a revenue stream to finance borrowing from capital. Like the damping system, supported borrowing is clearly established, and there are regular discussions on it between central Government and local authorities, which gives those with concerns the chance to have their say. We understand that the interaction between damping and supported borrowing can lead to difficulties in some cases, but such difficulties tend to be short term, and the system is fair when considered over a longer period. As I said, we would support both procedures as part of an overall policy. If we moved away from supported borrowing—some local authorities are asking for direct cash payments—responsibility for debt finance would effectively pass to central Government. That cannot be done in a completely cost-neutral way, and central Government would have to remove revenue from the local government finance system. There is, therefore, no win-win option out there for local authorities.

Another specific issue raised by the hon. Gentleman was taxi licensing. At present, private hire vehicles—vehicles with fewer than nine passenger seats that are made available for hire with a driver—are exempt from the need to be licensed if they are involved in long-term contracts. As a result, unlicensed operators can be involved in contracts without having gone through criminal record and other checks, which is of particular concern given that they may be involved in transporting vulnerable people and children, as the hon. Gentleman mentioned. For public safety reasons, therefore, the Road Safety Act 2006 will repeal that exemption, and we intend that to apply from January 2008. That will level the playing field between licensed and unlicensed operators and save those engaging private hire vehicles from having to make checks themselves.

We recognise, of course, that that will mean extra costs, and that is exactly the type of issue that local authorities should routinely raise with the Department for Communities and Local Government in their annual budget negotiations. Our estimate is that the national cost will be about £1 million, although the hon. Gentleman implied that the cost for Gloucestershire county council would be quite substantial. Perhaps we can bottom that out outside this place, but the effect on Gloucestershire does not seem to be enormous, although he may correct us if we are wrong on that. Like all legislative changes with such an impact, however, the present policy has been carefully considered through the various processes and by means of the regulatory impact assessment. The public safety concerns outweigh the national cost, which will be spread over a number of operators, and I am sure that hon. Members will agree that we need to take measures to ensure the safety of vulnerable and young people.

The Minister is outlining very clearly the need for the change introduced by the Act, and I did not suggest that it was not necessary. My point was that local authorities transport children in different ways—in rural areas, the reliance on taxi provision is much higher than in other areas—and that the differential financial impact of the change should therefore be recognised so that the cost does not fall disproportionately on Gloucestershire. I was not suggesting that we should not take the necessary measures; I was thinking of the measure’s financial effect, rather than its rightness.

I am grateful for that clarification, and I urge the hon. Gentleman and his local authority to make that point clearly to the appropriate Department.

To return to the overall level of Gloucestershire’s funding, the grant allocation that each local authority receives is the outcome of a clear process, which is based on an area’s needs and population and on the need to ensure funding stability for local authorities. Gloucestershire receives £164 per head in grant, which our analysis says is exactly the average for shire counties with fire responsibilities. We should also remember that, despite damping, Gloucestershire still received a 3.8 per cent. increase in last year’s grant settlement. The hon. Gentleman mentioned a figure of 2.3 per cent., but that was the allocation for 2006-07; the allocation for 2007-08 is 3.8 per cent. Gloucestershire’s allocation is therefore going up, and the county has received above-average rises for three of the past four years. Given that four-year evidence base, I would perhaps gently question the concept that Gloucestershire is being completely unfairly treated.

The hon. Gentleman also said that Gloucestershire receives a below-average grant generally, compared with the national situation. He is right to argue his case, but he is perhaps not comparing like with like, given the average for similar areas—other shire counties with fire responsibilities. Gloucestershire is apparently just a little £3 per head above the average. We must make sure that we are in the same ball park when discussing these figures.

When talking about funding, we should also remember that Gloucestershire, like the rest of the country, has benefited from substantial investment over the past 10 years. When we launched our first CSR ten years ago, Britain needed modernising—as we all know, it suffered from a historic backlog of under-investment—and standards in public services were well short of what people rightly expected. In the past 10 years, we have successfully addressed that historic backlog, and I am delighted to say that Gloucestershire, like the rest of the country, has seen improvements.

On education, there are 610 more teachers in the county than in 1998, average funding per pupil is up by more than £1,000 in real terms and more than £250 million of capital investment has been allocated to Gloucestershire local education authority since 1998-99. We have talked about the difference between inputs and outputs, and that investment has led to improved results, which is the most important thing. Some 83 per cent. of 11-year-olds now achieve the required standard in English, while 80 per cent. achieve the required standard in maths, compared with 68 per cent and 60 per cent. respectively 10 years ago. That is a direct result of the improvement in public investment.

The hon. Gentleman started by mentioning health, and I congratulate him on saving his own hospital—ours has been saved, although perhaps not as much as one would have initially liked. I was delighted that he said that female life expectancy, in particular, is much increased. That rather makes the point that allocation is made according to need and outcome, although that is in no way to say that Gloucestershire is not deserving. In fact, I am told that Gloucestershire Royal hospital is, as he will know, in the early stages of a £32 million redevelopment, with a new accident and emergency department—Burnley will be jealous—diagnostic and treatment centres, a children’s centre, a coronary care unit and an extended X-ray department. The services that are available will therefore be improved, and I hope that the life expectancy of males and females will rise even faster.

We have also seen investment in transport. The final section of the Gloucester south-west bypass was opened to traffic in May and a new bus and train interchange and parkway scheme is under consideration for Elmbridge Court. I hope that the hon. Gentleman will join hon. Members on both sides of the House in celebrating that.

The hon. Gentleman also mentioned crime. There are now 203 more police officers in Gloucestershire than in 1997, but the important thing is the output: domestic burglary has fallen by more than 28 per cent., robberies have fallen by almost 13 per cent. and theft of and from vehicles has fallen by more than 47 per cent. It is always boring when a politician comes out with statistics, but they make the point that public services are improving as a result of our sustained investment.

The hon. Gentleman mentioned that the increased police numbers are funded from the precept rather than central Government funding, but I understand—thankfully, this is not my direct area of responsibility—that the issue is subject to negotiation between central Government and local police authorities. It is not as if people have gone off on their own and done something; as far as I understand, what has happened has been done by agreement. If that is wrong, however, we will let him know later.

I am extremely grateful to the hon. Gentleman for raising the issue of the level of funding in Gloucestershire, and he is right to do so. We will reflect on the issues that he has raised, but I hope that he will agree that Gloucestershire, like the rest of Britain, has benefited from the increases that have taken place in public spending. Indeed, the grant continues to increase, and I hope that his constituents will be glad of that.

I have one minute remaining and I want to come back to Treasury core areas. Notwithstanding previous improvements, we are not the slightest bit complacent about the need to invest in public services. The end of the current comprehensive spending review process is in sight, and there will be no slowdown in the rate of public service improvements over the CSR period. I hope that that will be of some reassurance not only to the hon. Gentleman’s constituents, but to people in other constituencies.

Let me finish by congratulating the hon. Gentleman on raising issues of such importance and by reaffirming my delight at being able to respond to them under your chairmanship, Mr. Hood.