Commons Chamber

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House Of Commons

Wednesday 31 January 1996

The House met at half-past Nine o'clock

Prayers

[MADAM SPEAKER in the Chair]

Medical Misconduct

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Burns.]

9.34 am

It is now 10 years since a constituency case alerted me to the need for changes in the way in which doctors are dealt with in cases of suspension for alleged medical misconduct. Since then, I have raised the issue three or four times in the House. Action has been taken, although, as I shall seek to demonstrate, regrettably it has not solved the problem.

A lady came to my constituency surgery. She was gentle, apologetic, nervous and tearful. She was clearly stressed and told me that her husband was a consultant anaesthetist at the Queen Elizabeth hospital. He had been suspended and accused of medical negligence. She was upset because he was being paid his full salary, but was sitting at home and doing absolutely nothing; he was not allowed to do anything. She said that he was clearly upset because he had no wish to take money that he was not earning. On the other hand, bills had to be paid. It was not possible not to take the money, but it upset both of them greatly. That situation had been going on for 18 months.

I wrote to the health authority about the case and received a guarded response. I wrote again, and another year went by. Eventually, at the end of all that, he was found to be innocent of all charges. Meanwhile, his wife had died.

That doctor was most unjustly and wrongly treated, and his case is not unique. Other doctors are and have been in a similar position. I am worried about the injustice that they have suffered. I am also worried about the money that has been wasted paying them—money that could certainly have been better used by the national health service. Of course it is right that if people are suspended and there is nothing proven against them they should be paid. However, that does not solve the problem. I am worried about the waste of the state's huge investment in training those doctors in the first place, let alone the extra training for consultants. The doctors about whom I am talking today are or have been consultants.

It is perfectly true that the number of such cases is not huge, but I am sure that the House will agree that even one case is too many. Of the 101 cases of which I am aware, only 16 were found to be justified. That means that 85 doctors have been unjustly put through that hell, and it certainly is a hell. The resulting stress is severe, and it has four major sources. One source is the length of time that the cases take. I have cases on record that have lasted anything from two days to 11 years. The mean length of time to resolve them is two and a half years. In three cases, the doctors involved died while suspended, before their cases could be resolved.

In another case, the dispute dragged on for so long that the doctor reached retirement age before it was fully resolved. Although the disciplinary inquiry fully exonerated him at that time, and he was still below retirement age, the employing authority refused to give him his job back.

One doctor had to go to court a year after his suspension commenced to discover why he had been suspended. I was surprised to find that it is not uncommon for another set of allegations to be made if the first looks likely to fail. One doctor had to prepare defences for no fewer than four different successive allegations made over a long period before the authority decided to withdraw all the charges against him. One can only imagine what he went through during that time. I remind the House that justice delayed is justice denied. Something must be done to shorten the long periods during which the accused man or woman is under an extremely serious cloud.

The second reason for stress is the effect that such happenings have on a doctor's career. I have pointed out that it takes two and a half years on average to clear up such accusations, which is a huge chunk out of any medical career. I doubt whether any doctor could get back on the career ladder at the place where he or she would have been if the allegations had not been made.

My hon. Friend is referring to extremely honourable people, most of whom were exonerated. However 16 doctors were not exonerated, and what if one of them were to work as a locum, as one did in the north-west? Nobody knew that the doctor had been suspended, he secured successive jobs and he proved to be an absolute menace.

I hold no brief for anyone who practises medicine after he or she has been found guilty of professional misconduct.

It was before.

The same applies to any doctor who practises when he or she is suspended. I hold no brief for any of those 16 doctors: I am not pleading the case of doctors who should not be practising. Like my hon. Friend, I deeply regret the actions of the doctor to whom she referred. That was clearly wrong—particularly if that doctor was receiving full pay, which is the standard practice, during his suspension.

According to my findings, only a tiny minority of doctors are found guilty. Therefore, it is not unreasonable to draw the attention of the House to the injustice suffered by the majority. I understand perfectly that some individuals are very difficult to work with—that happens everywhere. There is no committee, office or school which does not have a member or an employee who could be described as an awkward cuss who does not get on with his or her colleagues. We have all had experiences of that nature, but it is not right to pillory the person who does not fit. Doctors should not be pilloried on the grounds of medical incompetence when no such incompetence exists and they should not have to face trumped-up charges.

The third reason for stress is the cost of defence. The present disciplinary procedures are based on three national health service circulars. They define the categories for disciplinary action as: professional incompetence, professional misconduct and personal misconduct. The classification vitally affects the composition of the disciplinary tribunal panel—for example, whether there is a doctor on the panel and whether the existing professional defence organisations will assist the accused.

Although in their promotional literature such bodies promise to assist in all cases of employment dispute, it does not work out that way. One doctor was forced to pay £10,000 to defend himself successfully against allegations of professional wrongdoing. In that case, the defence body wrote that it was "not minded to help". Another doctor spent about £40,000 refuting allegations, while a third spent more than £50,000 attempting to refute trumped-up allegations. That money is not recoverable and, as far as I am aware, it is paid after tax. There is no right of independent appeal in cases of personal misconduct.

The fourth cause of great stress to doctors is the appalling stigma associated with suspension. In the constituency case that I mentioned at the beginning of my speech, the wife died—perhaps as a result of the shame, the upset and the worry of that situation. One suspended doctor made a very telling comment. He said:

"The hammer blow of suspension is utterly demoralising. One's confidence and trust in one's professional ability and eventually one's own self-esteem is severely undermined".

It is also true that the more conscientious and self-critical a doctor is, the greater his demoralisation. Doctors' professional and social standing is undermined. Such people are usually pillars of their society; they are well known and respected. They are probably members of local clubs and they enjoy a certain position in society. When the rumour of their suspension circulates, their position in society alters immediately and the stigma is terrible. They are ostracised, even though they are almost certain to be found innocent. People say that there is no smoke without fire and that there must be something in the allegations, but, if we use a little imagination, we can appreciate how hard it must be for such doctors and their entire families.

There is no better example of that than the constituency case to which I referred. Wrongly suspended doctors frequently suffer permanent ill health, and three doctors have committed suicide. Even when completely exonerated and compensated financially, very few doctors are able to come to terms with their treatment. Even after many years, they cannot let go. A core of deep resentment is established and it contributes to a serious depressive state. 'The cases have been checked and documented; I assure the House that I have studied the matter very carefully.

I do not know whether hon. Members are aware that all suspended doctors are locked out of their hospitals and that they could also be denied NHS treatment at those hospitals. One suspended doctor who suffered a cardiac arrest and was admitted as a patient to the intensive care unit of his hospital—perhaps his heart attack was caused by his circumstances—was transferred to another hospital because he was told that he was an embarrassment. I think that that is appalling.

Suspended doctors have also been denied the right to visit family members or friends who are patients in hospital. When the wife of a suspended doctor who had been locked out of his hospital for one year—the lock-out was instigated six months after his suspension began—was admitted to hospital as a patient, she was forced to appeal to the community health council for permission for her husband to visit her in hospital. Many community health councils are excellent bodies, but they do not work at the speed of light. By the time that council had finally decided to grant permission for the doctor to visit his wife in hospital, she was dead. Another doctor was locked out and forbidden to visit his wife as she lay dying of cancer in a hospital ward. Yet another was locked out and barred from collecting essential photographic evidence which he required for his own defence. The health authority apparently knew precisely why he wanted that evidence and they denied him the right to get it.

Another doctor had his suspension and lock-out maintained for nearly nine months after a disciplinary hearing had acquitted him of all charges. The verdict had been concealed from the doctor so he did not even know that he had been acquitted, but the lock-out was maintained for nearly nine months. I have no idea why that occurred, but I have strong ideas about the morality of such a situation.

Is there no duty on the people holding those hearings to inform the doctor of the result? That seems quite extraordinary.

My hon. Friend makes a very good point. I have found so many injustices, and that is apparently another. I can only tell her and the House that that case actually happened. Whatever rules that exist do not work, and that is why I was so anxious to raise this subject today.

We are all told that suspension is supposed to be a neutral act, but I feel sure that those who have listened to me this morning would agree that those factors are not neutral. People have been treated appallingly. The notion that suspension is neutral is clearly not sustainable.

I believe that the information that I have sought and been given on this matter is entirely reliable. If it is, I find some of the reasons given for suspension extremely trivial. With all the consequences of a suspension that I have described, one would have thought that doctors could not be suspended without very good reason.

A serious offence, which could possibly justify dismissal, is not defined. Some of the reasons that I have discovered are trivial. There seems to be a wide variation in suspension reasons between different administrators. What some administrators judge to be a serious offence seems bizarre. One consultant was suspended for writing a repeat personal prescription for his ward sister. Another was suspended because he went through the clinical case notes of one of his own patients and took out papers that he, as the doctor, considered were redundant. A third was said to have over-claimed on his petrol expense. A motoring organisation later gave evidence that he had under-claimed to the tune of some thousands of pounds. The health authority finally had to pay him back.

One consultant histopathologist was threatened with a charge of professional incompetence because he sought a second opinion on a few slides. That is quite extraordinary. Surely it should not be an indictment to ask for a second opinion in any branch of medicine. That must be common because none of us can be so certain of our judgment on every case. Doctors should not be barred or accused if they ask for the opinion of a colleague who also knows the facts of the case.

My hon. Friend the Minister for Health may believe that the two guideline circulars, which were issued by the Department of Health to remedy some of those wrongs, are efficacious. With great regret, I have to tell him that they are not. HGL(94)49 was intended to shorten the period of suspension and suggested that doctors should be fully informed as to why they were being suspended. HC(90)9 was also intended to shorten the disciplinary period. Not one hospital authority or trust anywhere in the past six years has observed the rules regarding disciplinary action as laid down in those circulars. That is quite appalling.

I am sure that the hon. Lady knows that a consultant from one of my local hospitals, Shotley Bridge hospital, has been suspended for four years. I have raised the issue in the House and the trust has now agreed to do something about the case. Suspension for such a long time is not in the interests of the doctor, the hospital or the patients. It is certainly not in the interests of the taxpayer, because the case has dragged on for more than four years and the doctor has been suspended on full pay. Therefore, he has not been making his contribution to the service and the taxpayer has been the loser. Such matters should be settled in a more effective, efficient way for the sake of the doctor, the patients and the taxpayer.

That is precisely the case that I am making and I agree very much with her. I have no doubt that many hon. Members have had such cases that have worried us. I am anxious to put on record that there have been efforts to put matters right, including the circulars that I mentioned. However, they have not succeeded in solving the problem and that is what worries me. In every case where dismissal was a possibility, the health authority has ignored the guideline documents.

It is probable that the guidelines are unenforceable. I turn for evidence of that to the minutes from the Public Accounts Select Committee of 15 March 1995, less than a year ago. The public accounts experts struggled for two and a half hours to try to unravel why a woman doctor was suspended for 11 years at a cost of £600,000 to the taxpayer and the health service. The Select Committee worked hard on the question and anyone reading the report will recognise the scale of the job it had to try to find out whose fault it was. My goodness, anyone reading the report will see that the Select Committee's job was like playing blind man's bluff at the same time as playing pass the parcel. The more I read the report, the more I thought it was a cross between Agatha Christie's "Murder on the Orient Express" and J. B. Priestley's "An Inspector Calls. It was no one's fault and nobody could be nailed for it, except the poor doctor who was suspended for 11 years. Extraordinarily, however hard the Select Committee struggled, it could not find out whose fault it was, why it all happened or how it could possibly have taken so long. The main witness who gave evidence to the Select Committee said that the rules to which I have referred were unenforceable.

Furthermore, in all cases alleging personal misconduct, the ACAS code of progressive warnings under the Industrial Relations Act 1971 has also been ignored.

In 1988 there was a joint working party report on the matter, but it was not very conclusive. Nothing has come out of that report which has alleviated the problem, although it did cite some interesting cases including some in which doctors had sued for damages—an eventuality that I have not yet mentioned.

The fastest disposal of a contested case looked at by the working party took one year. The total cost was about £250,000. That included legal fees, costs and the salary paid to the doctor. Five years ago a doctor was awarded £100,000 in damages and that has to be added to the other costs involved. Two cases are estimated to have cost £4 million between them and another has already cost £1 million and is still proceeding. There are many other examples, but I hope that I have given the House sufficient to make my case. One estimate suggests that there are about nine or 10 new cases every year and the average cost is £400,000. So we could be losing as much as £4 million per annum for the health service.

I am asking my hon. Friend the Minister to look seriously at the case I have made and I feel confident that he will do so carefully. On cost grounds alone, the situation cannot be allowed to continue.

I have already mentioned that there is no right of independent appeal in the cases I have outlined and there are other aspects that worry me. The chairman of the tribunal panel is chosen by the prosecuting health authority from a list provided by the Lord Chancellor. In the past, health authorities have rejected certain nominations as being "unsuitable"—they have said no more than that. In all alleged misconduct cases, the tribunal panel is chosen by the prosecuting health authority. I hope that my hon. Friend the Minister is listening carefully because it is a serious issue of justice that the judging panel should be set up fairly.

The fact that the panel is chosen by the prosecuting health authority could suggest bias. There is a growing tendency to classify all charges as personal misconduct because that makes it easier for the health authority to control the panel. In those circumstances, the authority is the instigator, the prosecutor, the judge and the appeal court. It is Gilbertian in its scope. In one recent case a panel member was the very person who authorised the suspension of the doctor in the first place, and he was on the hospital board that subsequently decided to prosecute. The same board decided to bar from taking part in the judgment any member of the tribunal panel who was not a board member. Yet it is a well-established principle in European and English law that no body can be the judge in allegations that it, has made. There must be an independent assessment.

Under European law a doctor has a civil right to practise if he is so qualified and approved. That right can be removed only by a body appointed by law—the General Medical Council or the courts—and only after a fair and open trial. That has been agreed by the British Government. There was a recent case in which a French doctor's right to practise was challenged, but the doctor was found to be in the right.

The consultants I have mentioned have been denied their right to practise because suspension means that they cannot act at all. Therefore, in the eyes of European and English law, they have been told, unfairly and wrongly, that they cannot practise, although there has been no judgment by the GMC or a court. Surely that is wrong. To comply with European law all cases of suspension should rightly be referred to either the GMC or, where there are accusations of personal misconduct, to the courts or to an industrial tribunal. That has not been happening. On and on go the months and years in which a doctor is not allowed to practise in the circumstances I have outlined.

If I were the Minister, I might feel a frisson of apprehension about the possibility of being taken to the Court of Human Rights in the not-too-distant future by a doctor who has been prevented from practising without proper and accepted judgments being made.

It will be apparent to hon. Members that I feel strongly about all this. However, I want to make it absolutely clear—it would be unfair if I did not do so—that I do not regard this as the fault of the Government. All the reports that I have read suggest again and again that it is the fault of the extraordinary way in which some health authorities operate. They are responsible. I have already cited the case in which 11 years went by. That was not the Government's fault. Having said that, the buck always stops with the Secretary of State. It is an unfortunate truth and we must recognise it. He is forced to take responsibility for everything that goes wrong and these things are very wrong. I urge my hon. Friend the Minister to urge our mutual right hon. Friend the Secretary of State to set things right.

10.6 am

My hon. Friend the Member for Birmingham, Edgbaston (Dame J. Knight) has performed a signal service by bringing this matter to the attention of the House and ventilating it publicly. I congratulate her on her success in obtaining the debate and on the manner in which she has presented her case. The House will be aware that I am a lay member of the General Medical Council and, in accordance with our rules, I should declare an interest in that I receive from the GMC a modest fee in recognition of my work as a lay screener.

My hon. Friend has illustrated effectively the dilemma facing any hospital trust when a complaint is made about a doctor, particularly when it reflects on his professional ability. Clearly, if a complaint is made, the trust—the doctor's employer—will be open to criticism if it suspends him immediately, particularly if what follows is a saga such as that outlined by my hon. Friend. Equally, it could be open to criticism if it did not suspend a doctor about whom complaints had been made. My hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman) mentioned a case, with which I am familiar, which demonstrates that point.

If a doctor were found to have performed a certain surgical procedure or taken some medical steps with serious consequences and it were found that complaints had been made about him previously and nobody had done anything about it, the trust could find itself open to criticism. There is a difficult balance to be struck.

The doctor to whom I referred was under suspension, but was practising as a locum.

That is a further dimension. Although things have improved a bit, a doctor can be suspended from one hospital and then offer his services elsewhere. If that new hospital does not make some inquiries about the doctor, what follows may be similar to what my hon. Friend the Member for Lancaster described.

A doctor may be suspended quite unexpectedly from his point of view, as he may believe himself to be completely innocent. The complaint may be without any foundation, so the suspension would be extremely distressing for him and his family. It is literally a waste of money because he is being paid for doing nothing. In addition, the hospital and the local community are deprived of his skills while he is suspended.

The main issue is how long it takes to resolve the matter when a complaint has been made and a doctor suspended. My experience is that it is by no means uncommon for it to take 18 months or even two years. Why? We can draw some comparisons with the time that it takes the police to make inquiries in civil and criminal cases. It often takes many months before the matter can be brought before the court. Why does it take that long?

A hospital may receive a complaint from a patient or a patient's relative that may be of such a serious nature that it feels it has to suspend the doctor. The hospital will want to pursue the matter. It will ask for further details about the complaint and then put the full complaint to the doctor, who will have the opportunity to respond. The complainant is given the opportunity to comment on what the doctor has said. An inquiry panel must then be assembled at a time and place convenient to all concerned. I accept that going through those procedures could take some time, but surely not a year, 18 months or two years.

When the panel has heard the evidence, it may conclude that the doctor is innocent and he will be cleared of the charge. However, if it decides that the complaint is justified in some respect, it may decide to punish the doctor. He may then wish to appeal against that decision—a process that can take a very long time indeed.

The problem is that that is not the end of the matter; there is a further dimension. The panel will make a judgment on the extent to which the doctor has failed to comply with the terms of his contract. A similar process applies to general practitioners. The decision will affect the doctor's professional standing. If the original complaint involved negligence—if there is any question about his medical skills—there may have been some justification for suspension. However, if it was an administrative matter, such as some of those referred to by my hon. Friend the Member for Edgbaston, I would find it extraordinary if the doctor were suspended.

If the hospital trust finds the doctor at fault and raises doubts about his professional competence, there is a virtual double jeopardy because the papers will be sent to the General Medical Council, which must then decide whether that doctor should be allowed to continue to practice or whether there should be an inquiry, possibly leading to suspension or even to his name being erased from the register.

Not only is that doctor suspended, not only is he is being paid for a job that he is not allowed to do—which must be extremely frustrating and demoralising for him—but he knows that at the end of the local process he may have to appear before his national body—and that could lead to serious consequences.

For most employees, employers deal with problems through admonishment or even by giving someone the sack. At least those employees can then try to get other jobs. For a doctor, however, that is not the case, as he may have to appear before the GMC and he may be suspended or even have his name erased from the register. He will have lost his livelihood. We must be aware of the serious consequences that can follow a charge of negligence.

In my capacity as a lay screener, and because I sit on the GMC preliminary proceedings committee, I deal with a number of such cases. It is quite unfair on a doctor to bring him to account for incidents that happened three or four years ago. Part of the reason for the delay is that it takes a long time to go through the process described by my hon. Friend and then through the appeal procedure, which is far too protracted. I hope that my hon. Friend the Minister will take that on board and take action to expedite the whole process.

I fully accept that the interests of the patient are paramount; we must ensure that only competent doctors serve patients. However, we must not forget the interests of the doctor, who must have a fair crack of the whip. I hope that my hon. Friend the Minister will feel able to do something about the problem.

10.16 am

I welcome the initiative of the hon. Member for Birmingham, Edgbaston (Dame J. Knight), who was kind enough to brief me yesterday on the range of her concerns. The overall matter is very important, as are the legal issues that it raises. The hon. Lady pointed out the apparent contradiction with European law in that in theory a doctor is in practice, but cannot practise because he has been deprived of the ability to do so. That raises proper legal issues.

I want to suggest to the Government a way to deal with the problem. I shall first make a point that widens the issue—there are parallels elsewhere. I do not do so in any arrogant way; I want to help in the process of finding a way forward.

The case has been made. The hon. Lady cited the most horrendous examples. No one in the health service, the health authorities or any other walk of life undervalues the significance consequences for an individual who is suspended but then later found fit to carry on. It is difficult to unwrite that bit of employment history. That applies not only in the health service, but in other parallel public services.

One point that the Minister might consider is the apparent non-compliance with the guidelines. The hon. Lady said—I have no reason to doubt her—that no trust has complied with the rules. The Department needs to deal with that speedily.

Similar issues in the public domain have arisen in two or three other professions. First, there have been well-reported cases of police officers being suspended because of allegations made over long periods. Secondly, teachers are often suspended for lengthy periods after allegations, often serious and worrying, by pupils. It may be a long time before the individual can return to teaching. The rumour, speculation or allegation may be made public, and the teacher's career may be severely damaged as a result.

I declare an interest in relation to the teaching profession. I have discussed the matter with the Association of Teachers and Lecturers—a teaching union for which I act as a consultant and which, as with the hon. Member for Chislehurst (Mr. Sims) and the GMC, pays me a small amount for my advice. It does so also for some Conservative Members.

Order. The House is debating hospital doctors.

The parallel that I have drawn with teachers is relevant to the hon. Lady's case, and I will suggest a way forward that applies to them all.

Perhaps the Minister could consult on the use of employment law. The matter may ultimately be for the Department of Education and Employment. If the problem ranges more widely than trusts and the health service, there should be another way of dealing with it. It would be nonsense to have one system in the health service and a different one for other public services, such as local authorities and the police.

The hon. Member for Chislehurst spoke of reviews. If the Crown Prosecution Service or another authority takes too long to process a case, it is called before the magistrate to report progress. When a suspension occurs a court or, more appropriately, an industrial tribunal should have the power or be required periodically to consider the evidence from all the parties. If an individual were suspended today, for example, it would be his automatic right to have the state of the investigation regularly considered by an external person, beginning in one month's time. The suspended professional should be able to say, "I am being kept out of my job. Nothing is happening quickly. What is going on?", and an objective third party could say, "You're right. This is unacceptably slow." That third party could lay down a timetable and rules to govern the investigators.

Fundamental to the hon. Lady's case is a guarantee that the persons considering disciplinary action are entirely independent. In registered nursing homes, a disciplinary suspension and the adjudication on the individual's ability to continue in employment can be dealt with by the same people, which is entirely inappropriate. Of course the adjudicators can take evidence from the individuals who enforced the suspension, but the adjudicators must be independent and be seen to be independent. An external element may also be needed.

The House has just dealt with the final stages of a Bill to improve the procedure for health service complaints. It is unlikely that any of the hon. Lady's proposals can be incorporated in that measure. However, that Bill has just gone to the other place. It may be appropriate for any possible amendment that can quickly be made to be incorporated in that Bill. At most, that can accomplish only some things—the issue is much wider. I hope that the Minister will deal with action that can be immediately implemented by his Department, but it may be for the Department of Education and Employment to examine the issues as they apply to all professions across the range of public service.

10.24 am

I am pleased to participate in the debate and to echo the congratulations extended by other hon. Members to the hon. Member for Birmingham, Edgbaston (Dame J. Knight) on bringing the issue before the House. She graphically illustrated the problems that arise during suspension—including delay, the impact on the individual's career and the stress caused to the doctor and his or her family.

Major problems continue to arise, despite two measures having passed through the House over the past year—the Health Service Commissioners (Amendment) Bill and the Medical (Professional Performance) Act 1995—which strengthen health service complaints procedures. The inordinate time taken in some cases of suspension cannot be justified. If trusts look carefully at their procedures, they may reach the same conclusion.

To be fair to the Government, they have improved the procedures for processing complaints. The new three-tier system will operate from 1 April, and the monitoring powers of the General Medical Council has been strengthened. However, consideration of the matter must go beyond the structures and institutions in pinpointing why major problems continue.

Every trust has the ability to modify or change its procedures—the Minister will correct me if I am wrong. The hon. Member for Edgbaston said that national standards are needed. Fairness should apply not just in Birmingham or Glasgow but across the length and breadth of the country, and we are not seeing that. I repeat that the time taken to process some cases cannot be justified. What is going wrong?

One answer is that not enough priority is given to individual cases. The British Medical Association, among others, has pointed out that the issue is clearly one for the individual. On the other hand, there are implications for the hospital involved. The BMA points out that the suspended consultant may lose clinical skills, especially if the suspension lasts two, three or four years. A backlog of cases can be created when a specialist is lost to a hospital, and there is additional pressure on colleagues. That can be another problem in a health service that is already subject to strains and tensions.

The BMA also points to the lack of continuity of patient care. There can be nothing worse for a patient than to lose the services of his or her usual consultant. Of course, serious offences may be involved. No one is arguing that there is no case for the safeguard of suspension—but often it should be exercised as the course of last resort. Trusts may be opting for suspension rather than another course, which may not be best.

I agree with the hon. Member for Edgbaston that cases should be resolved more quickly. Obviously the issues are complex. [Interruption.] I do not know whether the Minister is mumbling in agreement or just mumbling to one of his hon. Friends behind him.

I was commenting to one of my hon. Friends.

That is gratifying at this time of the morning, rather than being insulted—as I am usually.

Never.

There is a mood of magnanimity this morning, at least in this debate.

Why do appeals and suspensions take so long? Trusts are not short of administrators, clerical employees and bureaucrats—people who want to do such work. Why should there not be a national standard and a time constraint? Some individuals will need to be suspended immediately and the cases will take a long time to resolve. The Minister could therefore aid the House in further discussions by painting a picture of what is happening nationally. We need more information.

In his winding-up speech, perhaps the Minister will be able to provide information on the number of complaints against hospital consultants and doctors being processed, the average length of the cases, and where they are occurring. I suspect that in some areas, that information would not be heartening. Clearly, in Birmingham and other areas, cases are arising routinely. The other issue that concerns me is the cost of the processes when we need to be spending as much as we can on the real business of hospitals.

Adjudication procedures concerning allegations of medical misconduct of hospital doctors is an excellent issue to discuss in the House. Although we clearly do not lack structures and institutions to cope with the problem, we must look to the trusts at the front end to improve matters. I am sure that the Minister will respond positively and I hope that he will seek information from each trust about what it is doing so that he can make a judgment on whether many of the delays are necessary. I am sure that an informed debate based on information from trusts will help to speed up the process, ease the misery of many doctors and consultants and ensure that the health service, through the trusts, is providing front-line patient care rather than dispensing of its energies or dissipating them through long suspensions.

10.31 am

I am grateful to have an opportunity, courtesy of my hon. Friend the Member for Birmingham, Edgbaston (Dame J. Knight), to address what the speeches of other hon. Members have shown is an extremely important subject. I am not sure whether I shall be able to go along entirely with the attempt of the hon. Member for Fife, Central (Mr. McLeish) to write part of my speech for me. I agree with him, however, and with my hon. Friend, that the matter is important not only for the medical profession but for patients—as my hon. Friend the Member for Chislehurst (Mr. Sims) said.

It is right that the House should debate a matter about which there is clear concern. Although I cannot go the whole way with my hon. Friend the Member for Edgbaston in some respects, some of the cases that she described seem to raise extremely serious issues, so I should be grateful if she would take them up in more detail—although that would not be appropriate in a debate on the Floor of the House. If what she is saying is borne out by evidence, I would be extremely concerned as it would be clear that the employing trust was not adhering to the very detailed guidelines on important matters.

The guidelines are constantly being reviewed and updated, as my hon. Friend said. She said that much progress has been made in recent years. The detail of the guidelines is such that I hope to be able to convince the House that the Government take the matter very seriously as a national responsibility, although that responsibility must be developed locally between employer and employee.

I am grateful to my hon. Friend for the receptive way in which he is replying to my remarks. There would be no problem whatever in furnishing him with more detailed information. As he rightly said, and as I judged, it would not be correct to go into great detail, giving names, places and so forth in this debate. Would he therefore agree to see a small deputation of people who have been studying the matter? They are all doctors and they could cite chapter and verse. It might help my hon. Friend to see them as a groupx2014;not a very large group—because they are knowledgeable and have spent a long time tabulating and examining cases.

I am grateful to my hon. Friend. If she would let me have details of what she is proposing, I shall—as always with any request that she makes—look on it very sympathetically.

It might benefit the House if I clear a little of the fog around the issue. It is important to understand the issue in its various components. There is the issue of suspension; the separate, but related, issue of disciplinary proceedings, which runs to a strict timetable; and paragraph 190 appeals should a medical practitioner employed by a hospital decide to exercise that right. When describing various cases, hon. Members have shown that, where separate procedures have been taken one after the other, there has been some muddying of the waters in understanding what rules apply to each procedure.

I do not wish to be defensive, but I am sure that the House will understand that where there is a need in the procedures to be fair to the interests of the public and the individual medical practitioner, there can be delays for a number of reasons. I do not want to refer to any particular case, but the Medical Defence Union—if it is representing a medical practitioner—or the British Medical Association may want to take a considered view of the matter, and take some time to investigate it fully, in order to present the case on behalf of their member. That is quite right, and in some cases it is an understandable reason for delay.

Illness of the medical practitioner is another reason why there might be delays, which on superficial examination might appear inordinately long, in the processes that we have set down. It is important to study each case to see whether it raises issues of unfairness. When it does, it is a matter about which nobody should be complacent.

My hon. Friend the Member for Edgbaston made much of suspension. It is important to see the matter in context. Evidence to the Public Accounts Committee revealed that only six cases of suspension had endured for more than six months. The six-month period is important because the system requires suspensions of more than six months to be reported to regional health authorities. That will continue after 1 April under the NHS executive because Ministers consider it vital to be informed of delays that go beyond the time limit set out in the guidance. It also encourages trusts to ensure that they comply with the guidelines which, as my hon. Friend said, are set out in HSG(94)49.

It is important to understand the aim of the guidance, which is to avoid unnecessary suspensions. We do not want to be suspending doctors for any reason. Employers are encouraged to consider suspension as something that might be necessary, but that should be avoided if at all possible. They are also told to ensure that, if practitioners are suspended, it should be for the minimum period necessary. I am sure that my hon. Friend was not suggesting that employers should not be entitled to use suspension—

No, I was not.

My hon. Friend confirms from a sedentary position that that is so.

The House must consider suspension from both sides of the mirror—if I may put it that way. If we had a debate that was prompted by a patient's interest, where something had gone wrong and a clinician had not been suspended and where I was not able to assure the House that it was a balanced process and suspension was available to hospital trusts—the employers—the House would rightly take a pretty dim view.

We must consider whether suspension is carried out reasonably and in accordance with the guidance. Suspension should be seen as a neutral act. This goes to the heart of the point made by my hon. Friend the Member for Edgbaston. Suspension is not intended to do other than protect the interests of patients, staff or, indeed, the practitioner. It is meant to assist the investigative process. Of course, it is understood that it is a measure that could have extremely serious consequences in both human and financial terms—my hon. Friend gave us a clear example of that—especially where the suspension proves to be lengthy. That is why timetables are set.

Suspension may be considered when a member of staff needs to be removed immediately from the employer's premises to protect the interests of patients, staff or the practitioner. That, I suggest, is the extreme end of the spectrum. One can foresee circumstances in which it would be necessary. It should be confirmed immediately in writing—this deals with fairness—so that the person who is suspended is made fully aware of what is going on. The letter should state clearly the effective date and time of the suspension, and the content of the allegations and confirm that a full investigation will follow.

As it is a neutral act, it would be extremely unfair not to suspend on full pay, because to do anything else would be to prejudge the issue. I remind the House that suspension takes place at a point when no judgment has been made about what is alleged.

A review of the suspension should normally be undertaken at least every two weeks, and the outcome reported to the chairman or non-executive director who is responsible for the matter. The practitioner concerned should be informed of the outcome of each review. If the investigation has not been completed within three months of the date of suspension, a report should be made to the trust board or health authority outlining the reason for the delay and indicating how long the suspension is expected to continue. It should also include a plan for the completion of the investigation.

The guidance is clear on fairness and on setting a timetable. Should delay appear to be built into the process, the guidance clearly sets out a timetable whereby an employing trust must justify any delay. The importance of that is that suspension cannot continue to be disregarded for an inordinate period.

rose—

Will my hon. Friend give way?

I shall give way to the hon. Gentleman first, and then I shall give way to my hon. Friend.

What can a suspended employee do if he or she believes that there is delay, that the guidance is not being complied with or that the reports are not proceeding? What can they do to speed up the process and ensure that the guidance is complied with?

It depends entirely on the circumstances. The process is designed for both parties, and under it the person who is suspended can be involved and encourage progress. There is nothing that says—I presume that this is the point that the hon. Gentleman makes—that further deadlines must be complied with, because during the suspension process investigations are undertaken. The suspension is reviewed regularly by a designated person to whom the person under suspension can complain or draw attention to the fact that matters are not proceeding properly. At that stage, any failure in the process can be brought to the attention of those who are responsible for speeding it along in the most appropriate way.

Although my hon. Friend the Member for Edgbaston rightly said that speed is important, in other circumstances it might not be of the essence. The person under suspension might wish to make their own preparations for what may follow. It is a two-sided argument, and that is as important an aspect of it as the other.

What my hon. Friend said a moment ago seemed to suggest that the guidelines should have been able, and were able, to stop such cases occurring. I cited the suspension of Dr. Bridget O'Connell, whose case was dealt with by the Public Accounts Committee only last March and who had to wait 11 years, despite the fact that the guidelines were in existence. Surely in that case the guidelines were proven to be ineffective.

The House examined the matter some time ago and was well informed on it. I think that my hon. Friend would concede that, following inquiries, the guidelines were improved. I am dealing with suspension; the case to which she referred continued after going through a number of complicated processes. I do not think that the case to which she refers falls into the category of suspension. She raises a wider point, which I shall come to. I intend to deal with the whole process and how it should take place.

The recommendations of the working party, in 1990, gave rise to further guidance. It made a number of recommendations about the disciplinary procedure, all of which were taken on board. They dealt not only with the setting up of inquiries but with the timetable for the completion of the disciplinary process. It might be helpful if I set out the timetable to the House.

After the chairman has decided that there is a prima facie case to answer and has informed the practitioner, the practitioner has four weeks in which to comment on the case. After receipt of the practitioner's comments, the employing body can decide, within two weeks, to follow that procedure. Thereafter, the chairman of the inquiry panel is appointed and the panel meets within 13 weeks. The hearing is concluded within one week. A report is produced and the factual part is sent to the practitioner within four weeks. The practitioner makes comment within those four weeks, and the report then goes to the health authority within four weeks. It is a strict timetable and it must be complied with in such inquiries.

My hon. Friend questioned whether inquiries might be biased. It is important that an investigating panel is seen to be independent of the employer; that is in the interests both of the employer and of the practitioner. Although it is set up by the trust responsible for the appointment of the practitioner, it is important to understand that the panel is distant from it. The guidance stipulates:

"No member of the panel should be associated with the hospital(s) in which he works".

Not only should no panel member be an employee of such a hospital, no panel member should even be associated with one.

The guidance continues:

"In all cases the panel should be small, normally of three persons, including a legally qualified Chairman, not being either an officer of the Department of Health or a member or officer of the"

employing trust. The chairman

"will be nominated in each case which arises by the Secretary of State from a panel appointed by the Lord Chancellor."

That is an important safeguard for the investigating panel. I am not sure what better safeguards one could build in.

That passage continues:

"In cases involving professional conduct, the members other than the Chairman should contain an equal proportion of professional and lay persons, unless the charges relate only to relationships between a doctor…and his professional colleagues, when it would clearly be appropriate to have a panel wholly or predominantly of professional members, apart from the Chairman."

The independence of the investigating panel is ensured and supported by those guidelines, which have been set out carefully to deal with such matters.

One of the other points raised by my hon. Friend the Member for Edgbaston relates to compliance. The hon. Member for Fife, Central raised that matter too, and asked the sensible question: whether, as all that guidance exists, we are certain that it is being complied with. My hon. Friend suggested that no trust is complying with it—an assertion for which, if she does not mind my saying so, I should like to see a little more authority. I would be concerned if it were true, but I do not think that it is. It is important that the guidance has force, and is not disregarded.

Guidance for national health service trusts, which are separate and independent bodies, has developed since the health service reforms. Hospital trusts have a history of heeding it, and it is heeded in this instance, but guidance is no more than that, and I do not pretend that it is.

I would not go down the road favoured by the hon. Member for Fife, Central, and suggest that we should enforce the guidance rigidly on a national basis. I agree that the guidance forms an important framework that underpins the rights of individuals, Inn it would be unfortunate if the ability to deal with matters at a proper level—between employing trusts and their employees—were lost, and we were to go beyond setting out guidance with which we expect trusts to comply, but upon which we understand that they may wish to build.

No one would disagree with the logic of the Minister's contribution. The central point is the fact that we have structures, institutions, guidance and processes. That is not the issue. I do not say that we necessarily want a heavy hand directing from the centre, but what we have heard has made it clear that there are excesses in the system. Perhaps the cases that have been mentioned are profoundly complex and take masses of time to resolve. None the less, it would be instructive for the Government and for us if we could find out what is happening throughout the country, so that any further consideration by the Minister could be informed by what was happening in the trusts. This is not a case of the trusts ignoring the guidelines, but it is clear that the application of them may differ from one trust to another. That may be healthy in some respects, but we need consistency and fairness, and that consistency would be better informed if we knew what was happening throughout the country.

The system gives me that information, should there be undue delay. I have explained to the House that, if there is undue delay in resolving a suspension and turning it into either a full inquiry or a dismissal of the complaint, the information is gathered after six months. When evidence was given to the Public Accounts Committee, six such cases were outstanding. Considering that more than 17,000 consultants are employed by the NHS, that is a small number.

When such a delay has been brought to our attention, of course inquiries are made about whether it is reasonable; we fully expect people to comply with the guidelines. The guidance is not simply thrown out into the blue yonder, with Ministers washing their hands of it and saying, "We have written the guidance, and that is all we intend to do." It is important to us that there is general compliance. However, I reiterate the fact that we expect employers to build on the guidance in a manner appropriate to their local circumstances.

It is important that all procedures are clear and flexible and ensure that patients' interests are protected, that fair treatment is provided for practitioners, that cases are dealt with as speedily as possible, and that professional advice is taken in appropriate circumstances in individual cases. Those are the principles on which the guidance is based.

My hon. Friend the Member for Edgbaston raised several specific points, with which I shall now deal. First, she said that suspension was sometimes used for trivial reasons. The guidance clearly implies that suspension is a serious matter and should not take place for a trivial reason. However, what is a trivial reason in the eyes of one party may be an important reason in the eyes of another. I can certainly give my hon. Friend the assurance that I would not expect trivial reasons to lead to suspension. I would expect employers to consider all such issues carefully, as the guidance requires them to, before taking the important step of suspension.

My hon. Friend also talked about the process not affecting the right to practise. It does not. The hon. Member for Southwark and Bermondsey (Mr. Hughes) rightly said that there are other ways in which the right to practise can be handled—through the General Medical Council.

Perhaps it would be helpful to my hon. Friend if I were to clarify the position. Suspension is a neutral act, so if a practitioner under suspension decided to resolve the matter himself or herself by simply moving out of the context of that employment and getting another job, that would be entirely possible. Nothing would have been proven against the practitioner, and it would be wrong to prejudge the issue by saying that the right to practise should be diminished by the act of suspension.

Should not the fact that the practitioner is under suspension be disclosed to the hospital to which he applies?

Suspension is a neutral act. My hon. Friend is suggesting that suspension should be seen as something other than a neutral act.

The House has put legislation on the statute book which allows immediate referral to the GMC if the suspension involves a serious matter of basic professional competence, and that is the correct route in such cases. That is a decision for the individuals involved. We must not forget—I am sure that my hon. Friend the Member for Edgbaston does not forget—that a reference to the GMC can be made by someone other than the employing body; it could be made by a fellow practitioner. There is a range of ways in which to handle that aspect of the ability to carry out medical practice, apart from the act of suspension.

This has been an important debate. I thank my hon. Friend for giving me the opportunity to address some of her concerns directly and to explain the position on suspensions and investigations. I hope that I have also given the House an assurance that the Government take the matter extremely seriously. I hope that my hon. Friend will bring the individual cases that she has raised to my attention. I shall be happy to consider them, and I have said that I shall consider her request for a meeting with those who have raised them with her.

When we talk about the suspension of a member of any profession, we are dealing with a difficult and sensitive area. The hon. Member for Southwark and Bermondsey alluded to some parallels. It is vital to the public interest and to patients that we get it right. We have made excellent progress in recent years. Where we have been able to learn lessons, we have always been happy to translate them into the guidance that we expect to be reflected across the service. We have an open mind on these matters. Where improvements can be made-we can discuss that with the profession in particular-we are more than happy to make progress and build on the current guidelines.

Meat Hygiene Service

10.59 am

When the Fresh Meat (Hygiene and Inspection) Regulations (1995) were laid before the House in March 1995, I tabled early-day motion 845, in which I posed certain serious questions about the rationale, proposed operation and likely effectiveness of the Meat Hygiene Service. The early-day motion attracted considerable support from a remarkable spectrum of interests across the House, an indication not only of the strength of the case but of the far-reaching implications of the new arrangements for abattoirs and jobs across the country.

Following a prayer against the proposed regulations, they were presented for the scrutiny of the Fifth Standing Committee on Statutory Instruments on 4 April 1995. A devastating case against the regulations and the introduction of the MHS was developed in that Committee with the support of the hon. Members for Clwyd, South-West (Mr. Jones), for Manchester, Central (Mr. Litherland), for Carmarthen (Mr. Williams), for North Cornwall (Mr. Tyler), for Aberdeen, North (Mr. Hughes) and for Ceredigion and Pembroke, North (Mr. Dafis)—an interesting cross-section of Members.

The rationale offered for the establishment of the MHS had three legs—greater cost-effectiveness, greater efficiency and greater consistency in relation to the existing system managed by local authorities. In Committee, it was clearly demonstrated that the MHS would not satisfy any of these criteria.

In terms of cost-effectiveness, the MHS has an establishment that costs about £54 million to run. All these costs must be taken out of the industry in charges. I have heard varying figures for the cost to the industry in charges to local authorities under the old system, ranging from £26 million to £45 million. Whichever figure we take, there is a sudden and serious increase in overheads to be financed by the industry.

I shall not burden the House with excessive repetition of the case made in Committee, as the non-validity of the claims of greater efficiency and greater consistency will be exposed in my remarks today. Suffice it to say that, I made no apology then for stating that there was a crisis in the fresh meat industry in two respects.

First, small and medium-sized operators, such as Sammy Morphet of C.S. Morphet and Co. in my constituency, were predicting that they would be driven out of business by the increased charges. Indeed, in my early-day motion, I asked whether the new system was actually intended as an instrument for enforced rationalisation in the industry. This was a serious question, as to whether we were witnessing rationalisation by statute, rather than by inducement and compensation.

An important aspect of the crisis in the industry was the breach between the hierarchy of the Federation of Fresh Meat Wholesalers—the consultative body for the industry favoured by the Ministry of Agriculture, Fisheries and Food—and people such as Sammy Morphet of Cronton in Knowsley, Thomas Slinger of Greater Harwood near Blackburn, E.D. Jones and Son of St. Asaph, Cig Mon Cymru—I hope that the hon. Member for Ynys Mon (Mr. Jones) will forgive my pronunciation—from Llangefni in Anglesey and Keighley Abattoir Ltd. Mr. Whitely, from the last company mentioned, said in a letter that was passed to me in April,

"For God's sake make them understand what is going on".

Many others have been involved, including Toby Baker of Nailsea. I mention him in particular because he is the secretary of the Quality Meat and Livestock Alliance, to which many disillusioned small and medium-sized operators have turned to represent their interests.

Secondly, many endangered operators are determined not to pay the increased charges with which they are faced under the new system. It is a classic case of "can't pay, won't pay". I have kept in touch with the situation since the introduction of the Fresh Meat (Hygiene and Inspection) Regulations 1995 and the inception of the MHS, and I take no pleasure today in saying, "I told you so". All the predictions have come to pass, and a report in the Daily Mail this week stated that 120 companies are refusing to pay their fees to the MHS, which is facing a shortfall of £14 million in its annual budget.

MHS has served writs on three companies, including that of Sammy Morphet in my constituency. Sammy Morphet is happy to lead with his chin and test the principles at issue in court, the High Court and the European Court of Justice, if necessary. He describes the new system as a shambles, and cites the example of the residue inspection charges. In the past, MAFF checked any meat suspected of containing harmful chemical residues and, as I understand it, made no charge. Under EU directive 86/469, a new system was set up, co-ordinated by the Government's veterinary medicines directorate and run since April 1995 by the MHS.

The charge imposed by the MHS for this service on C.S. Morphet is £12,000 per annum for the analysis of eight pigs' kidneys a month.

I am sorry to interrupt the hon. Gentleman, but he should be aware that, prior to the MHS carrying out the testing duty, Mr. Morphet was invoiced by Knowsley borough council. It was not a free service—he received bills for the inspections.

There was a dispute at that time between Mr. Morphet and Knowsley council, and the council understood that Mr. Morphet was making a test case at that time. When I was referring to a free service, I meant the service that was in operation before EU directive 86/469. I am grateful to the Minister for pointing that matter out, but I was aware of it.

I was referring to the charge of £12,000 per annum for the analysis of eight pigs' kidneys per month. While £12,000 in itself is a burden on Mr. Morphet's business, he could not believe what happened next. During the summer of 1995, MHS officials arrived at his abattoir with a fridge-freezer, which they plugged into his electricity supply—without asking permission, by the way. Eight kidneys per month were placed in the fridge-freezer by MHS inspectors but, from June to December, no one came from the MHS to collect them. However, on 14 December 1995, Mr. Morphet received a bill for £5,000—for the inspection of the kidneys that were still in the refrigerator.

In case one thinks that that was an isolated case of cavalier charging in the meat industry, I shall give the example of Cig Mon Cymru, from the constituency of the hon. Member for Ynys Mon. In March 1995, the firm received its last bill from the local authority for inspection services at its abattoir in Llangefni. The charge was £9,945.18 for 60,061 sheep slaughtered in a four-week period, which works out at 16.56p per sheep. On 27 June, the firm received its first invoice from MHS for a two-week period from 3 to 14 April 1995, when 25,699 sheep were slaughtered. The bill was for £6,405, or 24.92p per sheep—an increase of 50 per cent.

There are by-products of these increases. For example, the increases are not uniform across the industry, so livestock traders will pick and choose their abattoirs. That can mean that a longer distance is travelled by live animals for slaughter. Jobs are being lost in abattoirs, which may have to close for that reason or because of heavy charges alone. The current position also encourages live exports to Europe, where abattoir rates are cheaper. No wonder Sammy Morphet faces an extra £30,000 a year in charges for his average throughput of between 2,000 and 3,000 pigs per week.

Another example of cavalier charging relates to the recognition of experienced slaughterers. The industry might understand a charge of £65 for the validation of newcomers to the trade, large though the increase is in comparison with the original nominal fee of £1-the charge may have been reduced recently; I do not know the exact figure—but experienced hands in slaughterhouses not only consider the charge exorbitant, but find it demeaning to be validated by official veterinary surgeons who, although they may have professional veterinary skills, do not possess the manual skills with the knife that are the essence of the slaughterer's trade.

That brings me to the nub of the dispute between the dissident element in the trade and the MHS. The justification for the new system is the implementation of European directives governing meat hygiene. No one argues with the principle, but it must be asked how the new charges here can be higher than charges elsewhere in Europe. In fact, the question, "How are the charges so high?" is easy to answer; more interesting is the question, "Why are they so high?"

Let us deal with the "how" question first. Ante and post-mortem inspections are carried out in abattoirs in accordance with European Union directive 91/497. Under the MHS, they are conducted by official veterinary surgeons, who cost more than mere meat inspectors. Yet it is maintained that the identification of unsound meat is a special skill that can be acquired by technicians who do not need the full range of skills possessed by the veterinary surgeon—stockmen or slaughterers, for instance. Indeed, it could be argued that a typical OVS does not possess the knife skills that are necessary for the post-mortem examination of a carcase under directive 91/497. Official veterinary surgeons are expensive—and that is why MHS costs are so high.

Members of the trade would maintain that OVSs are not needed in static postings in all abattoirs. Indeed, it could be said that it is their visible input in static postings that has lowered their credibility among experienced practitioners in the trade. OVSs would make better use of their specialist skills, and recover their credibility, in the role of monitors of meat inspectors in more than one abattoir. The resultant service would be cheaper, too, and directive 91/497 would be met. I understand that the system works satisfactorily elsewhere.

Let me make two further points. First, it may be asked what the ante-mortem inspection achieves that cannot be achieved by the post mortem. Secondly, I am advised that the whole system of inspections is—here I use a word that I have used before—a shambles. Abattoirs are reporting variations of as much as 400 per cent. in the inspection hours allocated to similar slaughtering operations. In some abattoirs, inspectors will examine "green offal"—stomachs and intestines—and in others they will not. Some inspectors insist on being present throughout the time when killing takes place; others do not. The Government have cited inconsistencies between local authorities as a justification for the new system. So what is different?

Previously, if a proprietor had a complaint or query, he or she had only to call in at the local council office; now he or she must try to communicate with a remote organisation in York. No wonder it is known as the Kremlin: it cannot communicate answers to simple questions such as how many hours are being charged for when invoices are presented.

MHS field staff are no less bewildered. They find themselves being arbitrarily allocated to slaughterhouses miles from their former work places, and doubtless their travel costs are passed on to the slaughterhouses. They find that overtime is subject to random variations, and that—especially in the case of part-time inspectors—work is erratic and uncertain. They find that the overwhelming burden of paperwork takes colossally more time than under the old local authority system, and they must endure a constant flow of confusing edicts and counter-orders from York. That is what I mean by a shambles.

On 4 April last year, a Standing Committee implemented the regulations. The hon. Gentleman was a member of the Committee; I attended, although I was not a member. When I asked my hon. Friend the Minister to assure us that the system that was about to be introduced was the simplest and most cost-effective system that could be introduced consistent with the European directive, she told me that there would be

"close contact with the MHS to ensure that the organisation's costs are held down year on year."—[Official Report, Fifth Standing Committee on Statutory Instruments, &c., 4 April 1995; c. 8.]

The hon. Gentleman has done Parliament and the country a great service in bringing to our attention horrific evidence of the costs of the new system, and I wish him well in his efforts.

I thank the hon. Gentleman for his support. Sadly, all the horrifying predictions are coming true.

I said that the organisation was a shambles. That brings me to the other question that I posed: why does such a system exist? That, as I said, is the interesting question. The answer lies in the nature of the MHS, which is not a simple quango but a self-financing regulatory authority, or SEFRA. It has an establishment of about 1,000 staff, and its total running costs are some £53 million or £54 million—all to be financed from charges levied from the trade. It is not subject to Treasury strictures and controls like other quangos—like, for example, my local NHS hospital trust, with which I had some dealings earlier this week. It is currently having to cope with a directive to cut management costs by 5 per cent. and allocate the savings to front-line services.

A SEFRA, however, has every incentive to perpetuate its bureaucracy by imposing ever more, and ever more unreasonable, regulations on what it calls—in a distortion of the term—its customers. It means the trade. The customers of the MHS are, in fact, the public, whose health it purportedly exists to protect. It is as if the police financed their traffic services with the fines levied on speeding and over-the-limit motorists, and called them their customers.

There is, however, a more sinister aspect, which also derives from the nature of a SEFRA. I mentioned earlier that a large block of the trade—some 120 firms—had lost faith in the Federation of Fresh Meat Wholesalers. That is because they feel that the big operators who are the hierarchy of the FFMW are supporting the MHS, with all its faults, precisely because its operation, as I have described it, will drive the small operators like Sammy Morphet out of existence. I shall not use the term "unholy alliance", but there is a convenient coincidence between the interests of the big operators and those of the people who run the MHS.

What is in it for the big operators is that they will eventually dominate the trade when the small operators are driven out of business; what is in it for those who run the MHS is a lucrative, risk-free business with rich remuneration. That is why last year, in early-day motion 845, I questioned the interests involved in that risk-free business.

What is the prognosis for the long term? When the big operators have the field to themselves, they will call the shots. They will be in a position to dictate to the MHS. For example, by threatening to relocate elsewhere in Europe—many are multinationals—they will be able to expose the MHS shortfalls in fee income and so ensure that their wishes dominate the continuing activities of what is called the "Service". The technical term for that is regulatory capture.

I am talking about cartels. They will be able to force the imposition of new regulations, which will drive smaller rivals out of the trade and prevent newcomers from coming into it and it will all be done in the name of such virtuous cloaks as meat hygiene.

I have the evidence for that in a letter from the general secretary of the FFMW to the principal finance officer of the Ministry of Agriculture, Fisheries and Food, dated 8 November 1995, which refers to unpaid bills that existed at the time and includes the words:

"it would be helpful to this end for the Minister to stick firmly to his stated intention not to issue licences to plants which have not achieved the structural standards required by the end of the derogation period on 31st December 1995, (except in exceptional circumstances beyond their control)."

This is the interesting point:

"This would have the effect of at least preventing a number of plants who have no intention of fully complying with the legislation or paying MHS bills from continuing to exacerbate an already serious situation".

That is a sinister comment in a letter from an officer of the FFMW to an officer of MAFF.

What will be the consequences for the true customers of the MHS—the meat-buying public? There will be a reduction in consumer choice, as the fewer large outlets will concentrate on standardised fare to the exclusion of the variety of livestock breeds available through smaller, specialist outlets. I imagine that such outlets exist in constituencies like that of the hon. Member for Ynys Môn—in rural areas.

The cartel will be able to control prices to a much greater extent because small, independent livestock buyers will be removed from the market. There is a close analogy with the domination of the retail trade by the giant supermarket chains. But, in the case of the meat industry, there is an added and serious dimension. Food safety—the ultimate rationale of the MHS—will deteriorate. With fewer, larger units processing greater numbers, there will be increased danger of cross-contamination in slaughterhouses, increasing the spread of such bacteria as the salmonellas, campylobacter and E. coli 0157. Incidentally, it is worth noting that the only E. coli outbreak ever associated with meat came from a fully approved EU slaughterhouse of the type that I predict will dominate the trade. Tracing sources of infection will become inestimably more difficult and the break-up of the present food hygiene system, with the introduction of the MHS, will make it more difficult to trace food poisoning. In short, we are not merely looking at a monster in the creation of the MHS, but at a nightmare for public health.

The local authority system, for all its faults, was not broken, although it may have needed some fine tuning in keeping with progressive demands. Sadly, however, one cannot expect local authorities, pressed as they are to meet their statutory responsibilities in many fields, suddenly to step in and bail out the Government by resuming a responsibility so summarily removed from them.

Yet a system is needed to enforce the regulations, which necessarily and rightly flow from EU directives on meat hygiene. The interesting thing about the abomination of a system that the Government have introduced under the Fresh Meat (Hygiene and Inspection) Regulations 1995, is that it makes the option of opting out of the EU regulations more attractive than it otherwise would have been to many people. There are those who say that we should opt out for ideological reasons. Others are saying that we should do so because the system is such a mess.

Given that the EU is reviewing the meat inspection system to bring it into line with more modern systems of risk assessment, there is scope for returning the responsibility for inspecting their own produce to the meat traders, leaving the regulatory officials the simple task of monitoring systems in the same way as they are monitored for the rest of the food industry.

I conclude with this appeal to the Minister: pursue that self-regulatory line in Europe, pressing for the development of systems that will make the MHS redundant as soon as possible. She would thereby be doing a great service to the economic health of the fresh meat industry, the jobs of people employed in it and, more importantly, to the health needs and wealth of choice of the meat-buying public.

11.25 am

I congratulate the hon. Member for Knowsley, South (Mr. O'Hara) on obtaining this debate. Having listened carefully to everything that he has said in the past 25 minutes, I must tell my hon. Friend the Minister that I find it difficult, if not impossible, to disagree with anything. The hon. Gentleman has spoken the truth and put forward the case on behalf of the meat industry and I endorse not only what he said, but his request that that monstrous edifice and organisation in York be abolished at the earliest possible date, given all the unnecessary on-costs that it carries.

Macclesfield has long-standing historical connections with the farming and livestock industries. There is a splendid market at Chelford, which is owned and run by Frank R. Marshall—a company that has been in business for more than 100 years. Another market is on the borders of my constituency, lying in that of my hon. Friend the Member for Congleton (Mrs. Winterton), who is away on an Agriculture Select Committee visit—otherwise she would be here supporting the views expressed by the hon. Member for Knowsley, South. That cattle market is owned and run by Whittaker and Biggs.

I have regular contact with small, private butchers, who are members of the Macclesfield and District Butchers Association—an organisation that still exists despite the tremendous competition from the superstores, such as the Tescos, Safeways and Sainsburys of this world. Funnily enough, I am going to its annual dinner and dance in only a few weeks' time. I applaud the role that the small, family butcher and the small and medium abattoir play in the life of the farming community and in that of many rural towns and villages.

Macclesfield is also home to a most excellent slaughterhouse, operated by TTS Meats on the Hurdsfield industrial estate. It is on behalf of that slaughterhouse, those who own it and supply it, those who are employed there and those who ultimately benefit from the high-quality products that it provides for customers that I have been conducting an on-going and determined correspondence with my hon. Friend the Minister and the Department for a considerable period of time. I am deeply concerned about the significant and adverse impact that dramatic over-regulation and excessive—I really mean that—administrative charges have imposed on that slaughterhouse and other small and medium slaughterhouses.

My passion for deregulation is well known to the House. It is a passion that I had been led to believe was shared by my colleagues in the Government. I despair of the way in which the Meat Hygiene Service was set up by MAFF and of how it has operated.

Abattoirs are singled out for extra regulatory controls, unique in the food industry: the presence of full-time public sector/agency officials to inspect the supervised hygiene procedures for meat and to apply what I would call a "health mark". They are also required to pay an inspection levy that enables the MHS to recover the costs of the health controls. The hon. Member for Knowsley, South mentioned that £54 million has to come out of the industry each year.

All other food businesses are essentially self-regulating. Operators take responsibility for compliance with regulations under the food safety legislation without having to pay direct enforcement costs. There is no evidence that that way of operating is anything other than successful. For slaughterhouse operators, the cost of funding public sector/agency meat inspectors has increased considerably and resulted in controversy, anger and resentment throughout the industry. I do not think that I can be contradicted when I say that the industry is totally opposed to what has happened.

Millions of pounds are involved annually in meeting this hidden but unavoidable tax, which leaves the British slaughterhouse industry at a competitive disadvantage in Europe—a point eloquently made by the hon. Member for Knowsley, South. That threatens to drive it out of business altogether. Many hon. Members could name slaughterhouses that have gone out of business, to the disadvantage of the agricultural industry and of the communities in which they were located.

I refute absolutely the argument that the current punitive regime of inspection and fees is necessary on public health grounds as my hon. Friend the Minister will, no doubt, argue in her response. Ministers from her Department frequently come before the House and assure us, I believe rightly, that British meat is safe. She has said that time and again in recent weeks and I agree whole-heartedly with her. It is safe. However, that is not because of the bureaucratic empire that has been built and financed by sucking the blood of smaller businesses, but because most operators are responsible in their approach to hygiene and public health. They know that that is their duty and that they will suffer sanctions if they are not responsible. They know that the customer, Mr. and Mrs. Citizen, has never been more aware of, or demanding about, food safety issues and they respect that.

Meat hygiene legislation is founded on two fundamental myths. The first is that the slaughtering stage of the meat production chain presents special health risks that can be eliminated only by the full-time presence of public officials. The second is that abattoir operators, uniquely in the food industries, are either incapable or irresponsible in their approach to the introduction and implementation of adequate control measures. Neither of those misrepresentations can stand close scrutiny, but, until this debate, they have never been challenged on the Floor of this House.

In a food scare climate, which frequent outbreaks of mad media disease have exaggerated and misinformed ever since the first salmonella salvo from my misguided hon. Friend the Member for South Derbyshire (Mrs. Currie), public officials with jobs and empires to protect have shown even less inclination to question their purpose in life. Fresh meat is a low-risk food and current hygiene legislation has been demonstrated to have nothing to do with health control.

The greatest risk in the food chain, to those who know anything about it, is not slaughterhouses but the way in which cooking, preparation, storage, display and serving of food are undertaken. The wealth of scientific evidence to support that view was ignored by the House in 1992 when the meat hygiene regulations were introduced. It was against the background of sensational and irresponsible reporting by the media, faulty technology and a questionable law that the creation of a centralised meat hygiene service was pursued—wrongly, in my view. It is not surprising that dissent, confusion, anger and frustration have followed.

The regulations are not only unnecessary but, I say in support of the case of the hon. Member for Knowsley, South, anachronistic. They belong to another age and have no part in a modern society. Fresh meat is not a hazardous food. The sensible measures that are required to produce safe, good-quality meat are well within the capability of competent butchers. Abattoir operators can achieve the necessary standards in the context of the Food Safety Act 1990 without being singled out for trampling under the iron heel of Meat Hygiene Service charges.

Today, that iron heel demands that if an abattoir has enough turnover to keep an inspector occupied for only one hour a week, the operators nevertheless have to continue to pay for 40 hours' inspection charges. Such blatantly unfair practices, ridiculous overcharging, unacceptable levels of inspection and total lack of consultation have led to turmoil in the industry. Responsible business men and women are refusing to meet the unreasonable bills that they are being sent. I hope that my hon. Friend the Minister will not ask whether I support such action. I perhaps would not give a direct answer but I fully sympathise with them and believe that they have a very good case for taking that action.

Abattoirs faced, as the Minister knows, an immediate 25 per cent. increase in inspection charges when that monstrous body, the MHS, wrested responsibility from local authorities, to which I pay a tribute for the role that they previously played in the industry. On a turnover of £3 million a year, a typical slaughterhouse faces inspection charges of a staggering £50,000 annually. Businesses cannot survive in such a climate.

Furthermore there is patchy commitment on the part of the service to the implementation of the rules. That was referred to in a number of cases mentioned by the hon. Member for Knowsley, South. Responsible traders, who feel morally obliged to comply with regulations that require massive investment, are understandably bitter when they see the Meat Hygiene Service in other areas fail to take action against those who flout the regulations. While we have these regulations and this monstrous body, let the regulations be evenly implemented throughout the country. I do not like to look to Europe too much or too often but let us consider the charges that apply on mainland Europe.

It is high time that there was a root and branch reform of the Meat Hygiene Service and, what is more, of the principles upon which it is based. I hope that my hon. Friend the Minister, in replying to the debate, will agree to such a review in addition to the request made by the hon. Member for Knowsley, South. I hope, too, that other hon. Members, perhaps those who serve on the Agriculture Select Committee, will consider this important matter and take steps to save our abattoirs before they are dismembered on the butcher's block of excessive bureaucracy.

11.38 am

I congratulate, as will the whole House, the hon. Member for Knowsley, South (Mr. O'Hara) not only on bringing the matter before us but on the unstinting way in which he has examined the problems inherent in the Meat Hygiene Service. I hope that the Minister will note that any issue that brings together the hon. Member for Macclesfield (Mr. Winterton), the hon. Member for Knowsley, South (Mr. O'Hara) and myself must be of wide significance in rural areas. I want to deal briefly with three specific issues and underline the points already made by other hon. Members.

My first point concerns the rationale for setting up the Meat Hygiene Service. At the time, there was some misunderstanding and misapprehension—it was thought that the MHS in its present form was set up at the direct instigation of the European Union and the European Commission. Nothing could be further from the truth. On 5 April 1995, in the Fifth Standing Committee on Statutory Instruments, the Minister was good enough to say that that was the case. The MHS is a British organization—it is the product of the thinking of the Ministry of Agriculture, Fisheries and Food. It is not some wicked Brussels bureaucratic plot.

As the hon. Member for Macclesfield has said, it is significant that other parts of the European Union have adopted different techniques, mechanisms and institutions to fulfil their obligations under the treaty of Rome and the directives. We need to know today—we pressed the Minister on this in Committee and did not get a wholly satisfactory answer, although I admit that that was because the institutions were comparatively new—what the comparable arrangements are in the other 14 states, as they now are, and if they are as expensive, as bureaucratic and as burdensome as the hon. Members have said. What is the competitive position in the so-called single market?

The hon. Member for Knowsley, South referred to the way in which the MHS has been set up and its responsibilities to its customers, to Parliament and to the nation. I repeat the statement made by the Minister in answer to a number of our questions in the Committee. She said:

"I reiterate that the MHS is answerable to the Minister, who is ultimately answerable to Parliament. That is the line of communication. There is therefore no question of its being a stand-aside quango which is unaccountable and can go its own way".

Through the Minister, the MHS is answerable to the House—that is why the debate is vital and timely. It is an opportunity for the Minister to answer for the MHS. Note again: there is no question of the MHS being answerable in any sense to the bureaucrats of Brussels.

It is extremely important that we acknowledge the debt that we all owe to Christopher Booker, who has also considered this issue carefully and has identified the extent to which the responsibility lies fair and square with Whitehall. This problem was home grown, within a few hundred yards of this building. It is nothing to do with Brussels.

Secondly, I know that the Minister and the hon. Member for Taunton (Mr. Nicholson) will share my concern at the way in which, over recent years, the regulations—not just since the MHS has accelerated the process—have impinged on the smaller abattoirs in south-west Britain. The same may be true in Wales and in other parts of the United Kingdom, with which I am not so familiar.

In Committee last year, we were able to demonstrate, using the Meat and Livestock Commission's figures, that the reduction in the number of abattoirs had been accelerating as the regulations came into place in 1992. That acceleration had increased. I hope that the Minister will be able to give us the latest figures for the number of abattoirs. It is not the throughput but the number that is important. That is what is geographically significant.

In the past three years, 51 abattoirs have closed. From 1971 to 1992, when the regulations on fresh meat came into force, 62 abattoirs per year closed. That is a significant difference.

I am grateful to the Minister. Clearly, the fact that closures have occurred and are continuing since we raised this issue with her in Committee last year must be a matter of real concern.

In three years, 51 abattoirs have closed, compared with 62 closures per year from 1971 to 1992. That is a significant reduction.

That is precisely the point that I was trying to make. In Committee last year, the Minister gave us assurances that that trend would not continue. It is disturbing to find that it is, and at the time when—I think that the Minister, with her south-west experience, would be with me on this—greater and greater concentration of abattoir facilities inevitably leads to longer journeys. We all know, and she knows better than anyone, from the problems with the new regulations on the welfare of animals in transit—apart from the export problems with which we are all familiar—that we must staunch the wound, and stop any more smaller abattoirs closing. The centralisation of facilities is damaging in that wider sense.

Thirdly, on the charges, the Minister said:

"The new fresh meat regulations include a number of minor changes designed to reduce compliance costs."—[Official Report, Fifth Standing Committee on Statutory Instruments, &c., 4 April 1995; c. 7–23.]

If that is true, either they have not worked or other increases in the cost regime have outbalanced that. As the hon. Members for Macclesfield and for Knowsley, South said, in some cases, the overall cost increases are dramatic. I suspect that, at the core of this, is again the fact that Britain has insisted on using expensive, skilled but utterly inappropriate methods for the purpose of inspection. The official veterinary service is not the right organisation to be employed on such an exercise. I hope that the Minister will tell us what is happening in the other 14 states. Are comparable professionals, at comparable cost, being used?

I was not there but I understand that the Minister of Agriculture, Fisheries and Food spoke at the Conservative party's Blackpool conference and that the emphasis of his speech was that he was declaring war on expensive red tape in his Department. Some might say, "16 years too late", but never mindx2014;that is good. I want to know whether this particular example of expensive Ministry of Agriculture, Fisheries and Food gold plating of what was given to us by agreement with the European Union has resulted in excessively burdensome costs on all parts of the industry, as the hon. Member for Macclesfield has said. Surely, if there is a war on red tape, this is a good place to open the first front.

11.46 am

I welcome the debate. The hon. Member for Knowsley, South (Mr. O'Hara) was wrong on costs. He ignored the need for standards and much of the debate has ignored the fact that British people require standards, to which my hon. Friend for Macclesfield (Mr. Winterton) referred, because of the way in which they have been frightened about meat eating. Clearly, the way in which the Meat Hygiene Service is working in practice in his constituency is different from the way that it is working in mine, and I am sorry to hear that. Some of his predictions were imaginative, speculative and—I hope and believe—wrong.

The figures that I have are that the total cost of providing the inspection service in 1995–96 is expected to be just over £35 million, compared with the previous local authority arrangements, which cost £45 million. That is a greater saving than was promised to us in the first place. Of course, I should like that cost to come down, but it is an improvement on what we had before.

Given that my experience of the MHS is different from that of my hon. Friend, I asked the National Farmers Union in my constituency what its experience is. It tells me that the work relationship between the MHS and NFU members and abattoir owners is generally good. It is impressed by the openness with which the MHS operates. There have been relatively few complaints from owners of abattoirs. I will discuss an abattoir in my constituency later, so I am familiar with that side of things.

In most of the debate so far, hon. Members have ignored the fact that the previous arrangements involving local authority inspections were severely unsatisfactory. They not only cost the business community overall a lot, but provided uneven and different standards in different parts of the country. Different arrangements prevailed.

Like other hon. Members, I regret today's climate. Like the Irishman, I should like to start my way to Dublin from somewhere else. Nevertheless, we must recognise that the old system of regulating and inspecting meat provision was unsatisfactory, unfair and did not produce results with which the consumer would ultimately be satisfied.

Will my hon. Friend expand on his last statement, that the old system was unsatisfactory? It is easy to make such comments, but in that instance, he needs to provide some proof or evidence that the old system resulted in an unsatisfactory product.

I recognise my hon. Friend's expertise and I have no doubt that his direct experience is different from ours in the south-west, but it is the considered view of the National Farmers Union in my part of the country that the standards that were applied were different and that different abattoirs had to conform to widely differing standards—a practice to which, understandably, they objected strongly.

The Sturminster Newton abattoir in my constituency, with which my hon. Friend the Minister has been closely involved, provides an excellent service to the farming community and to the meat and butchering trade, and it has been affected by the regulations. They are a considerable hurdle for business to overcome. I must record my gratitude, and the Burden family's gratitude, to the Minister for the way in which she has handled the case. In the special circumstances, she felt it right to give a further derogation from those regulations to enable that business to renew itself.

Like me, the Burden family do not like regulations, but they recognise that today they must provide a first-class service. They want to achieve the best standards possible and, in so doing, do not want to pay more than necessary. They are undertaking a major fund-raising exercise to build a new abattoir. They want to take their business into the next century, and they want to export meat. They want to achieve the oval stamp.

There is a great market for the Burden family's beef, and for other meat, in the third world. That market will not be available unless the meat achieves the highest standard and the family need time to ensure that their factory meets those standards. They are grateful to have been given that time. The family recognise, albeit reluctantly, that if they want to compete, to provide a good service to the farming community and to export their product, they must achieve the highest standards.

Why are standards necessary? It is all very well for the hon. Member for North Cornwall (Mr. Tyler) to say, "Let us go to Europe and discover what other standards apply." Although that is a useful exercise, we start with the British consumer, who demands very high standards.

I agree with my hon. Friend the Member for Macclesfield that, regrettably, the British consumer has been panicked by a combination of mad professors and other people with other interests into being frightened of eating meat. Therefore, at least for the foreseeable future, we must ensure that standards, and no doubt even bureaucracy, exceed what we would like them to be ultimately. I concur with the hon. Member for Knowsley, South, who wanted self-regulation, but that is light years away. I wish that it were nearer, but it is not.

I conclude by quoting to the House an example from Dorset, which may be of interest to the hon. Member for North Cornwall, of the way in which panic and irresponsible behaviour operates on the British consumer in a way that it probably does not operate in any other country in Europe. Ten days before the end of the winter term, Dorset county council, under Liberal Democrat control, imposed a temporary ban on beef products in schools, not because new evidence had emerged—it had not—but because of scare tactics. The media were at work. One or two mad professors had made pronouncements. It was alleged that there had been

"lots of requests from parents"

for the ban. Further inquiries revealed that a total of six letters had been received.

The ban had a devastating effect on the farming community. There was, I should add, no ban in old people's homes or anywhere else, only in schools. As the Dorset Evening Echo said, that was a "knee-jerk reaction" by the Liberal Democrats, and it was very much to be regretted. The Spongiform Encephalopathy Advisory Committee continued to state throughout that time that there was no evidence of linkage.

About two weeks ago, the ban was halted and the decision was changed. I welcome that. That step was taken as a result, not of new medical or health evidence, but of pressure and of a recognition that damage had been done to the farming community. Irresponsibly, a highly damaging panic was stirred up, and that is not an isolated example of the fears that can be aroused by people who appear to believe that it is in their interests to do so. There are more mad cows in county hall in Dorset than in all the cattle herds of North Dorset. I deplore that.

I hope that my hon. Friend the Minister will tell us how she can reduce costs and bureaucracy—an aim with which I am entirely in sympathy—while maintaining across-industry standards. I was disturbed to hear suggestions earlier that standards were uneven, even under the new provisions. British meat is a first-class product. Our producers want to sell on the world markets. High standards of safety are required for public protection. I know that my hon. Friend the Minister understands that, even if others do not.

11.56 am

I hope that the hon. Member for North Dorset (Mr. Baker) will forgive me for not following him into his little difficulty with the Liberal Democrats. I shall turn my attention to the core subject of the debate, which was expressed well by the hon. Member for Knowsley, South (Mr. O'Hara), who has done us all a great justice by initiating the debate. It is important that the House recognises that there is considerable and widespread concern at the way in which the Meat Hygiene Service operates, the costs of that service, which are now evident, and the impact that they have not only on the abattoir industry but on the farming community generally.

I know that the Minister is aware that it is necessary that several outlets should be available to farmers. As other hon. Members have said, a vast number of small abattoirs have closed. The Minister may be able to tell us that the rate of closure is slowing, but some are still closing, to the detriment of the agriculture industry.

The Minister knows that, in sparsely populated rural areas far from a marketplace, some abattoirs have great difficulty attracting the right level of throughput from their local community throughout the year. At some times of the year—in my area, from January to April, before the lambs come on the market—they have to bring in animals from other parts of the United Kingdom, which is an increased cost. It is necessary for employment to be maintained in the abattoirs throughout the year. Abattoirs are an important source of local employment. Their difficulties have been compounded by the substantial increase in costs that has confronted them as a result of the introduction of the Meat Hygiene Service.

When I spoke to managers at the abattoir mentioned by the hon. Member for Knowsley, South—Cig Môn Cymru Ltd.—they predicted that their costs would increase by between 50 and 55 per cent. when the service commenced. In January 1995, they gave me an estimate of what they thought the cost of meat inspection and veterinary visits would be. Some people thought that they were being pessimistic and that the level of charges would be substantially lower. When the Government introduced the concept of the Meat Hygiene Service, it was on the basis that it would be cost-effective and reduce the overall burden on the industry.

In March 1995, the abattoir company came to me and said, "Our predictions were right. Our costs will go up 50 per cent. because we have been told by the Meat Hygiene Service what our costs are likely to be". I have been in regular contact with the Welsh Office, which is responsible for agriculture in Wales, about the level of charges. I have been told that there will be consultation between MHS officers and each abattoir to determine the level of cost for each abattoir and whether it can be justified.

Despite the predictions that were made in January 1995, despite the representations that I made in March 1995 and despite the Department's statement that there would be consultation, the January 1995 predictions were absolutely correct. There has been no variation in those charges, and the costs are exactly as predicted.

I subsequently made representations to the Welsh Office, and I was told that it was difficult to make a true comparison between proposed MHS charges and previous local authority charges. The Minister added in a letter to me:

"Owners may have changed their plants' size or operating hours; the throughput or the types of animals slaughtered may have altered."

I have heard some excuses for price increases in my time, but that takes the biscuit. There had been no change in the type of animals going through the abattoir, no change in the level of throughput and no change in its plant size, but the cost still increased by 50 per cent.

By the end of 1995, even though the industry had been told that there would be consultation and an appeal procedure, and that the service would be cost-effective, charges were substantially higher than they were under the old local authority regime. I agree with the hon. Member for North Dorset (Mr. Baker) that we must have a hygiene service for meat that is of the highest possible standards. People need to be confident that the meat that they eat is safe—but the current system is destroying the industry.

The Government must find a formula that enables abattoirs to be absolutely confident that the meat is safe, yet reduces the burden and cost of bureaucracy that the type of service which the Government have introduced has placed on them. That is absolutely clear. I should like the Minister to acknowledge that the abattoirs which predicted that costs would increase have been proved right and that Ministers did not listen to them. The Government must respond to that. People at the abattoirs have asked me, "Why should we have to pay this kind of charge to the Meat Hygiene Service when there is no competition? We have a service that can charge virtually what it likes. How can we challenge that? The Minister will not listen to us, and the Government will not listen to us. Why don't they introduce a service that has an element of competition in it?"

If someone else can produce a service that is more cost-effective and competitive, it should be considered. I know that the Minister is aware of those issues, and I hope that she will take them on board.

12.3 pm

I congratulate my hon. Friend the Member for Knowsley, South (Mr. O'Hara) on so diligently and eloquently pursuing this further disgraceful episode in the misgovernment of our country. The Government's excuse for taking away the responsibility for meat inspection from local authorities was the desire to avoid the varying standards and costs that applied in different local authorities. The truth is that it was part of their vendetta against local government in general, no doubt brought about by the humiliation heaped upon the Tory party at every local election. As Lord Howe has apologised for getting rid of the Greater London council, so I hope the present Secretary of State for the Environment, the right hon. Member for Suffolk, Coastal (Mr. Gummer), will soon repent for the damage that he has caused the meat inspection service.

My hon. Friend the Member for Carmarthen (Mr. Williams), who has great experience in these matters, put the issue clearly when he said that any problem in obtaining uniformity in pricing and standards could have been solved simply by issuing guidelines. The solution is simple. I must tell the hon. Member for North Dorset (Mr. Baker) that there was no reason to create, without accurate and adequate consultation, a new organisation with so many drawbacks and which has aroused fears that, after short-term cushioning, charges will increase substantially, which would speed up the decline in the number of British slaughterhouses, harm jobs and lengthen travel distances for animals.

One of the main concerns expressed about the Meat Hygiene Service was its lack of accountability, and that is still the case. A great advantage of today's debate is that it gives the Minister the opportunity to cast aside some of the secrecy with which the MHS has been shrouded. Perhaps she will tell us when the agency intends to report publicly on its activities. We should appreciate information on cost-effectiveness, throughput, animal health, and enforcement against abattoir operators and meat traders. Will she tell us when we can expect more information so that we can better judge whether the MHS is providing a more efficient service?

Meat products are notoriously open to contamination and the dumping of bad meat. It is essential that effective monitoring arrangements are provided.

The hon. Lady will be aware that the total cost of providing the service through local government was about £45 million a year, which is slightly more than the MHS proposes to spend this year. Is she aware that many local authorities subsidise their inspection service? Does she believe that it is right for council tax payers and consumers to continue to subsidise the British meat industry?

The system we now have in place is a costly shambles over which we have no control. Prices can be increased without any consultation or recourse to anyone.

Will the hon. Lady give way?

No; the Minister will have time to reply, and I should like to make some progress.

Will the hon. Lady give way?

No, I will not. There is not much time, and other hon. Members have been waiting to speak.

I should like to examine some of the specific matters which have given local authority associations concern. One of the main bones of contention between local authorities and the Government when local authorities controlled meat hygiene was veterinary supervision of meat plants. The local authorities' view was that environmental health officers were cheaper and more effective than vets.

Local authorities wanted to reduce veterinary supervision, but the Government refused to allow it. However, the Government are now allowing the MHS to reduce supervision—the very thing that was refused to local authorities. Why, oh why, is that? Because the MHS has found it difficult to recruit staff, not least in hiring the appropriate veterinary surgeons to manage staff at slaughterhouses and abattoirs? Is it because the Government now understand the problem that high veterinary fees—the basic legality of which are now being studied by the European Court—caused local authorities?

Costs would be even higher if the Government had not made the savings that local authorities wanted, but were not allowed, to make. Will the Minister tell us what the annual cost of the MHS would have been if the savings had not been made, and what the cost is now?

While local authorities and MHS local officials are working together—the MHS is using local authority offices in such places as Smithfield market—local authorities are concerned that the MHS has added to the confusion over food safety enforcement and created gaps. Will the Minister tell us what arrangements the MHS has made to inform local authorities about food health issues in their areas?

Those important issues must be addressed if the public are to receive proper protection. For example, the Association of District Councils has drawn my attention to the issue of illegal slaughter by unlicensed slaughtermen on premises that are also unlicensed. As a consequence, meat is sold that may have been prepared in insanitary conditions. It has advised that:

"Currently the MHS and the State Veterinary Service have the exclusive power to deal with this situation; however, the MHS seems unwilling to take action on incidents which occur outside licensed premises, and the SVS does not have the staff available to respond quickly enough to tackle the problem. The earnest desire of the Association is therefore that L.A's are given comparative powers to the MHS and SVS in order that they are able to adequately protect the public health and safety."

Will the Minister comment directly on that point, which has a bearing on the important subject of bovine spongiform encephalopathy? On 4 April last year, my hon. Friend the Member for Knowsley, South drew attention to the fact that it was local authorities which had pressed a reluctant Government to:

"enforce better procedures for beef carcass splitting in the industry."

Will the Minister confirm what guidance is now issued to MHS staff about BSE matters in general and, in particular, about the enforcement of the new regulations relating to bovine spinal offal?

The Association of Metropolitan Authorities is concerned about the low profile of the MHS and the responsibility of its vets during the BSE scare last year. The AMA tells me that, from a local authority point of view, it is "very suspicious". The AMA has long held and expressed the view that vets are not the right people to be put in charge of meat hygiene. It has said:

"vets are best left looking at the health of animals, and they have insufficient knowledge in detecting unhealthy food. With BSE for example, they won't know once the bovine in killed whether or not the animal carcass is healthy. Similarly their expertise will not be in forming a judgement on whether or not the spinal cord has been properly removed and left healthy meat".

The AMA's view is clear:

"When meat hygiene was left with local government, wider enforcement activity was possible. If inspection staff thought `mucky' meat was being produced from unhealthy animals, they would then call on the wider resources of the local authority to help complete their investigations. This is no longer the case."

They are very serious concerns and the Minister must address them.

There is great concern in the country about BSE, animal health and animal welfare. From the local authorities' point of view, there is little evidence that the MHS is tackling those problems with the vigour that the Government would have expected from local authorities. We seek an assurance from the Government today that they will repair the damage that they have done to our country's food protection service.

12.12 pm

I shall begin by picking up some of the points that hon. Members raised during the debate. Throughout his contribution, the hon. Member for Knowsley, South (Mr. O'Hara) worked on the assumption that the Meat Hygiene Service has cost £54 million—which was the figure that he mentioned in the Statutory Instruments Standing Committee. I am astonished that hon. Members on both sides of the House have assumed that that figure is absolutely correct. Any one of them could have tabled a written question in the past few weeks and received an answer from my office as to the exact cost of the service 10 months down the road. The hon. Gentleman's figure is quite inaccurate, as I told him in the Standing Committee. Today, I shall provide the correct figures, which prove that the basis of the hon. Gentleman's argument is flawed and that the allegations made by hon. Members on both sides of the House are totally without foundation.

I shall deal now with the points raised by hon. Members. We consult not just the Federation of Fresh Meat Wholesalers, but the Quality Meat and Livestock Alliance, British meat manufacturers and a whole range of people who represent both large and small companies. The hon. Member for Knowsley, South pointed to regulation inconsistencies between different abattoirs. The system that we operate in this country is based on the hazard analysis critical control point system. So as not to over-regulate them, plants are assessed individually and the amount of inspection required is based on things such as throughput and the need for further inspection.

That system has been welcomed not just by the meat inspection industry, but by whole areas of British industry as a minimalist approach to regulation. In other words, inspection is concentrated on those points in the process and on those premises where it is deemed necessary. We seek to reduce regulation by working in partnership with the abattoir owner. That is why some plants have more inspections than similar plants.

The hon. Gentleman then suggested that we should adopt the European proposal, but the Europeans are considering the system that the United Kingdom has pioneered in that area. Under our system, inspections are different from plant to plant, but regulation is minimal. We do not over-regulate where regulation is not needed. The system also helps plants to recognise the role that they must play to reduce the number of inspections of their premises.

The hon. Member for Knowsley, South also said that the MHS is not subject to Treasury controls. That is not the case: it is subject to both Treasury and National Audit Office controls. I point out to him and to the hon. Member for Newcastle-under-Lyme (Mrs. Golding) that the fact that we are having this debate, in which I can answer for the Meat Hygiene Service, proves that that service is directly accountable to my right hon. and learned Friend the Minister of Agriculture, Fisheries and Food and myself. Consequently, I am here today to account to the House of Commons. There could not be a more transparent line of communication between the service's operations and its accountability to this place. I think that the hon. Gentleman described it as a self-financing regulatory authority, but that is not the case. There is a clear line of direct contact, which I welcome.

Many hon. Members mentioned competition in Europe. My hon. Friend the Member for North Dorset (Mr. Baker) made a very telling point, using the example of the small abattoir at Sturminster Newton in his constituency. I have met my hon. Friend and the owner of that abattoir, and I issue an open invitation to hon. Members to meet me, with abattoir owners from their constituencies, and talk about problems in abattoirs and about the details of individual cases.

That abattoir owner came to my office and said, "We want the European health mark. We want to be able to export, because it is a £1 billion industry and we are very good at it." The demands of the marketplace, both at home and abroad, create huge opportunities for those abattoirs that aspire to those standards, that control and the health mark. The industry is asking for that. That is where the industry is heading in the next century, and I am astonished that hon. Members want to see a reduction in the controls that allow British companies to compete.

The hon. Member for North Cornwall (Mr. Tyler) referred to other member countries. Many, such as Ireland, Denmark and Holland, have centralised inspection systems. There is no evidence to suggest that the United Kingdom is disadvantaged commercially as a result.

I shall deal now with the main substance of the debate, as I should like to put the facts to the House. I am very grateful to the hon. Member for Knowsley, South. When the Statutory Instruments Standing Committee debated the regulations which transferred responsibility to the Meat Hygiene Service last April, the hon. Gentleman painted an alarming—indeed, an apocalyptic—picture of the effect that the MHS would have on the meat industry. I am sorry that he chose to pursue that theme in his remarks today because, 10 months down the road, I can provide more information.

I can confirm that accountability was made very clear from the time that the MHS was established. It will produce an annual report after the first year—it is now 10 months old—which will be placed in the Library. There is no question of any secrecy, and it is rather disappointing that the hon. Member for Newcastle-under-Lyme did not know that.

The hon. Member for Knowsley, South predicted that the industry would have to bear overhead costs averaging £20,000 per abattoir and that his constituent, Mr. Morphet, would be charged an extra £30,000. He said that the MHS would have a built-in incentive to maximise its own requirements, that it would drive small and medium operators out of the industry, that consumer choice would be restricted and that prices for livestock farmers would be reduced. The hon. Gentleman even predicted that fewer than 95 slaughterhouses would remain in business by the end of 1995. He will have heard the figure I gave twice, and I hope that the hon. Member for North Cornwall also understood the figure. I told the Committee in April that those accusations were unfounded. This morning, I shall give the House the facts.

The story of the Meat Hygiene Service is worth telling. When we set it up, Ministers gave it a target of achieving an efficiency gain of 10 per cent. in relation to estimated costs—our figure of £45 million, not that of £54 million given by the hon. Member for Knowsley, South—in 1994–95. We expected the MHS's operational costs, with the 10 per cent. efficiency gain, to amount to £40 million in 1995–96.

We also took the view that it should be possible for the MHS to achieve further efficiency gains in future years, and we concluded that it would be right to make available some financial assistance in the first year to ease the transition to the new arrangements. We therefore made available up to £3 million, for 1995–96 only, and we made it plain, in the House and in another place, that the Meat Hygiene Service would be expected to find the efficiency gains necessary to compensate for withdrawal of that transitional relief after 31 March 1996. In other words, the MHS was required to ensure that chargeable costs in 1996–97 would be less than £37 million—the amount that we expected to be charged for the industry in 1995–96, taking into account the efficiency savings and the transitional relief.

The MHS is now forecasting, just two months before the end of its first year, that its operation costs for 1995–96 will turn out to be £35.2 million pounds. I wish that hon. Members had thought to ring my office or put down a parliamentary question, because the contributions to the debate, including that by my hon. Friend the Member for Macclesfield (Mr. Winterton), have been based on the wrong assumption that the figure was almost double the actual figure. The erroneous figure was produced by the hon. Member for Knowsley, South last year and was perpetuated by him this morning.

The Minister is making much play of the actual costs of the MHS. My figures show that, in 1990, local authority costs for a similar service when there were 700 abattoirs and more than 100 poultry plants were £32 million, yet in 1995 the figure for the MHS, when there are only 400 abattoirs—not 700—and a static number of poultry plants, is about £37 million. Will the Minister comment on the statistic quoted by my constituent about his abattoir—

Order. The hon. Gentleman knows that these are short debates, and one question is sufficient.

I hope that my later points will help my hon. Friend.

The MHS is now forecasting that its operational costs for 1995–96 will be £32.5 million. That is an efficiency gain of more than 20 per cent. in the first year, despite the fact that we had charged it to make an efficiency gain of 10 per cent.

Because the European legislation prohibits subsidisation below the level of the so-called Community standard charge, and the MHS charges to many plants are coming out below that standard charge, only £2.5 million of the £3 million allocated to transitional relief will be used. So the total amount paid by the industry in 1995–96 will be some £32.7 million pounds. I appreciate the point that my hon. Friend the Member for Macclesfield made about fewer plants, but we are several years down the road and the MHS is charged with additional responsibilities. For example, it now has a very important role in animal welfare in the abattoirs.

In the debate in Committee, the Minister said:

"As far as charges are concerned, we expect them to be no higher next year than they have been in the current financial year."—[Official Report, Fifth Standing Committee on Statutory Instruments, &c., 4 April 1995; c. 24.]

Is she now saying the figures are 20 per cent. lower than expected?

No, I am saying that, because of the 20 per cent. efficiency gains made by the Meat Hygiene Service, there have been considerable reductions, but they may not apply to every single plant because of the point I have just made about minimum charges. When we set up the Meat Hygiene Service, we knew that there were variations in charges. The hon. Member for Ynys Môn (Mr. Jones) gave a constituency example that is a case in point. In some areas, but not all, local authorities subsidised the charges that they levied from taxpayers' money.

That excellent result from the MHS means that some plants have had reduced costs this year compared to what they paid under local authorities. A large red meat plant that paid some £610,000 in 1994–95 will pay around £556,000 in 1995–96—a saving of £54,000. A medium pig slaughterhouse that paid £56,000 in 1994–95 will pay £39,000 in 1995–96—a saving of £16,000. A small abattoir that paid nearly £3,400 in 1994–95 will have a bill of less than £2,900 this year—a saving of just under £500.

As for Mr. Morphet, the constituent of the hon. Member for Knowsley, South, I understand that he has refused to provide the MHS with copies of his local authority invoices. It is therefore difficult to make an accurate assessment of how he has been affected by the MHS, but we believe that in his case the Meat Hygiene Service's charges are likely to be some 20 per cent. lower than he was charged by his local authority in 1994–95. If the hon. Gentleman or his constituent would like to supply me with those invoices so we can make the comparison, we would be very pleased to see them. To date, they have not been forthcoming.

There are also equally impressive savings in the poultry sector. One large plant will save around £75,000 on its 1994–95 bill of nearly £400,000 and another will save nearly £59,000 on a 1994–95 bill of more than £236,000.

We have always acknowledged the fact that, in individual cases, charges could go up under the MHS, because there was a wide disparity in charges under the local authority system. By and large, those who find themselves paying more under the MHS are those who paid well below average before. The industry in total is paying substantially less, and that is a very important point. Also, the charging policy is consistent across the country and the staffing levels on which the charges are based are being adjusted as necessary, following a thorough audit in each plant. That is the point that I made to the hon. Member for North Cornwall just now.

I hope that the House will recognise the commendable achievement of the MHS. I pay tribute to the chief executive and all his staff—especially the meat inspectors in the plants—for the energy and the commitment that they have shown in tackling their challenges. However, hon. Members will not be surprised to learn that my right hon. and learned Friend the Minister of Agriculture, Fisheries and Food and I have no intention of allowing the MHS to rest on its laurels. It has done extremely well in its first year of operation, and we shall make sure that next year's targets require the chief executive and his team to keep up that good work.

In practice, the MHS is already delivering in its first year an efficiency gain that we had expected would take more than two years to achieve. It would not be reasonable to expect another 20 per cent. from it next year, but we shall certainly keep pressure up.

Hon. Members have made comparisons between what is done now and what was done by local authorities. As the Minister responsible for dealing with BSE, I have had several meetings in the past year with my right hon. and learned Friend the Minister and members of the meat trade. We have discussed some of the problems that we have encountered in slaughterhouses, including staining and disposal of specified bovine offals and the retention of small pieces of spinal cord in the vertebral column. Those problems did not come to light under local authority inspection.

The general public and the meat industry must be reassured that we now have efficient, uniform inspection carried out throughout the country. When we find a problem, we are able to deal with it by bringing forward measures such as those which we have placed before the House in the past few months. I hope that all hon. Members recognise how important it is, especially in BSE controls, that we have that professional, uniform service so that when a problem arises we identify and deal with it quickly.

The hon. Member for Knowsley, South has had much to say in his local press in the past few days, as well as in his contribution to this debate, about non-payment. If the message from new Labour is "Do not pay your bills", we take note of that. That is a rather familiar theme and I thought that it was an old Labour message. Perhaps it has been forgotten. About 90 per cent. of the MHS customer base of 1,800 businesses—that is slaughterhouses, cutting plants and cold stores—are paying their bills. Those who are not paying are giving themselves a nice little advantage over their competitors while the legal arguments are being pursued.

In the Woodspring case, the judge made it clear in his November statement that there was no reason why payment should not be made while the matter was before the European Court of Justice. In other words, some people are working the system to their commercial advantage while others in the meat industry are working to improve our export trade and build up their businesses. Those people will not carry those who have debts and nor will the British taxpayer. I will pursue those debts through the courts rigorously. I hope that the hon. Member for Knowsley, South will consider exactly what he is supporting when he suggests that people who—

Order. We must move on.

Pollution (Bexley)

12.30 pm

I am pleased to be able to raise the important issue of pollution in Bexley borough in this short debate. Pollution is an issue of increasing importance within our society and, in my borough of Bexley, it is causing growing concern. The borough is an extremely pleasant place in which to live and work, and it is certainly a privilege to represent it in Parliament. However, there are important factors at work which are causing increased levels of pollution locally and putting strains on the local environment.

I must stress that pollution is not an issue that divides people on the grounds of political affiliation. I am delighted to see the hon. Member for Woolwich (Mr. Austin-Walker) in his place. Pollution is not restricted to one part of my borough or to that borough in isolation. However, Bexley's problems are greater than in neighbouring London boroughs or in Kent.

Bexley council's environmental agenda document entitled, "A framework for consultation and action" will be debated at a conference on the local environment in Bexley on 10 February. The aim of all in my constituency and across the rest of the borough is—as the document says—

"to ensure that Bexley is a clean, healthy, pleasant and accessible Borough for people to live and work in and to visit."

There are many interesting sights in the borough to which people can come, and we welcome visitors from other parts of the country and abroad.

As one of the borough's representatives in Parliament and a resident of Crayford, I wholeheartedly endorse the sentiment contained in that document. I am determined to push hard to ensure that local pollution is reduced. Although education must be a factor, we must look to local and central Government, as well as local industry, to play leading roles. Today I am looking particularly to my friend and colleague the Minister, the hon. Member for West Hertfordshire (Mr. Jones), to take on board my concerns and to ensure that his Department plays its full part in the fight against increasing levels of pollution in my borough. We need more help in the future.

Air quality in Bexley borough has been monitored for the past 10 years. Originally, the late and certainly unlamented Greater London council and the London scientific services maintained a constant monitoring station at Crossness sewage works in the north of Bexley. That unit measured sulphur dioxide, carbon monoxide, nitrogen oxide and ozone—in other words the major industrial and road transport air pollutants. It produced annual reports.

Bexley London borough has a monitoring station located in my constituency at Slade Green, which measures all the pollutants assessed by the old GLC station, as well as the levels of respirable dust in the air—known as PM10. Bexley's station commenced operation in 1992, and since 1994 has been affiliated to the Department of the Environment's national automatic air monitoring network. Reports are produced daily, quarterly and annually.

In addition, pollution is monitored in Bexley at a station established in Belvedere in August 1995 by Barking Power plc, to measure air pollutants that may be emitted from the combined cycle gas turbine power station in the London borough of Barking and Dagenham. I am advised that that monitoring station, established in accordance with a planning condition, will be transferred to Bexley council in 1999.

We have considerable monitoring of local air quality, and the results suggest that, although Bexley experiences air quality similar to that of other urban areas, there is an additional problem of air pollution from specific industrial sources in the east Thames valley. Our area appears to have higher levels of pollution.

The results of monitoring show that the local levels of sulphur dioxide pollution exceed reasonable standards. The Department of the Environment's panel on air quality standards has recommended a protective standard of 50 ppb measured over one hour. However, the local measurement has recorded a maximum considerably higher than that for many hours over the past year. Therefore, the level exceeds the Department's recommendation.

The reasons for that lie with the power stations and large industrial processes to the east of Bexley, over which the local council has no control. Bexley can monitor, complain and highlight, but it does not seem to have any power to take action.

It is alleged that particles in the air are responsible for the increasing number of bronchial and asthmatic illnesses in northern Bexley, particularly in Erith, Belvedere and Thamesmead. Local measurements suggest that the guideline of 50 μg/m³ of air, measured as a running 24-hour average, is frequently exceeded. A peak 24-hour running average would be 90 μg/m³ in Bexley. That is probably associated with local road transport and local power stations. In addition, local road transport, particularly the large and heavy lorries, is responsible for high levels of nitrogen dioxide, which may also exceed the guideline for air quality control set by my hon. Friend's Department.

We do not have accurate figures on this and, although I appreciate that there are statistics and statistics, there is a growing feeling within the council, among local residents, and certainly among the borough's Members of Parliament, that there is a problem. The statistics presented to me by Bexley council's environmental health department give me some cause for concern.

I hope that my hon. Friend will appreciate from the figures and from my concerns that, although I do not wish to be a scaremonger, I am concerned that the levels of pollution appear to be increasing, and seem to be much higher than they should be under the Department's guidelines. I hope that the Minister will take on board the issues and concerns that I have raised.

The Thamesmead area, to which the hon. Gentleman referred, is partly in his constituency and partly in mine. I wonder whether he has seen the evidence produced by the former director of public health for Bexley, which showed that levels of respiratory illness in the Thamesmead area are far higher than the census economic deprivation statistics suggest. Will the hon. Member also confirm that the former director showed that the level of asthma and respiratory illness among children in the area was the third highest in the south-east Thames area, the highest being in the part of the locality that I represent?

The hon. Gentleman is right, and I share his concern. I have seen that report, and I hope that there will be some action to reduce the problems of respiratory illness in that area, particularly among young people.

The provisions of the Environment Act 1995 which relate to air quality management will come into force in 1997. My borough of Bexley has already made it known to the Department of the Environment that it would like to take part in the pilot project to test the implementation of the new statutory controls contained in the Act.

The pilot scheme is due to commence soon—perhaps as early as April. I hope that Bexley will be one of the councils allowed to participate in it. I urge the Minister to give a favourable response to Bexley's application, because of the concerns in the borough about the level of air pollution.

To add to the pollution problems caused by local industry, the power stations and the east winds that seem to blow pollution into the borough, the local environment is also threatened by an application by PowerGen and Cory to build a huge waste energy incinerator at Belvedere in northern Bexley. The proposal, which is strictly the responsibility of the Department for Trade and Industry, has been refused once, but if it is allowed to be built, that could result in further pollution problems for my area.

The application has been refused by Bexley council, and it is opposed by all local people, organisations, political parties, community groups, the hon. Member for Woolwich (Mr. Austin-Walker), myself and others. I hope that there will be a public inquiry to allow local views to be aired more fully.

The hon. Gentleman referred to the threat from the Cory-PowerGen proposal. Does he agree with the statement of the Baptist minister for Belvedere, Mr. Goode, in his letter to the DTI? He said:

"to knowingly build this plant in an area already experiencing such acute problems with pollution and its resultant illnesses, would be scandalous and irresponsible. An act of environmental vandalism towards the residents of Belvedere and beyond."

I certainly endorse that view, although I do not like the emotive language. I would not use such language.

The issue of refuse disposal is important. Unfortunately, because of shortage of time, I was not called to participate in our recent debate two weeks ago. However, I did sit through the whole debate. I was encouraged by the Minister's speech, and by the general tone of the debate. Of course there is a need for more recycling—a message that came loud and clear from both sides of the House. However, I believe that we need local solutions to local problems.

Bexley council and the residents are keen to have local solutions to Bexley's refuse problems. What they do not want is to become a home for huge amounts of waste from neighbouring boroughs—and possibly, in time, other parts of Europe. With the PowerGen-Cory proposal, some 1.2 million tonnes of refuse will be required to operate the vast incinerator, yet only 7.5 per cent. of that would emanate from Bexley borough.

Although some of the refuse would travel on the Thames, the rest would travel across the borough and add to the pollution on our already overcrowded roads. I strongly objected to the proposed incinerator on many grounds, but in particular on the environmental issues and the threat of increased transport pollution. I look forward to a public inquiry into the matter.

We had hoped that the excellent proposals for the development of the Thames gateway would mean a rejuvenation and regeneration of the Thames riverside, with new clean industries. For far too long, the potential of the area has been under-utilised and damaged by the dirty and polluting industries of the past. Thamesmead, Belvedere, Erith, Slade Green and Crayford look forward to new investment, jobs and homes as part of the initiative. A waste-to-energy incinerator was not what we had in mind to improve the area. I hope that it will not prejudice the development of the clean industries and new homes and jobs that we want in the area.

I pay tribute to the organisation BADAIR, set up to lead the campaign against the PowerGen-Cory incinerator proposal, and in particular its former chairman Alec Tapper and vice-chairman Commander John Mankety—local people, determined to improve the local environment.

Having dealt with incineration and the problems associated with emissions from that, I want briefly to deal with pollution from lorries and cars. The problem of increasing traffic and the environmental consequences of exhaust fumes is widespread across London; it is not just an issue in my borough. However, the position is exacerbated locally because of the inadequacy of local roads and the increasing number of vehicles travelling through residential roads in Crayford, Bexleyheath and Bostall in particular. Huge lorries thunder along roads that were never meant to take them.

For example, Crayford has become a continuing traffic nightmare, with the stop-start progress of cars and lorries emitting exhaust fumes causing more pollution. There has often been near-gridlock in the town centre, with exhaust fumes causing a cloud over the town.

Meanwhile, on the major motorway crossing our borough—the A2—traffic has increased dramatically over the past few years, causing increased pollution and creating more difficulties for those whose homes are close to the road. My right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) has raised the problems experienced by his constituents with our hon. Friend the Minister for Transport in London.

The road now ranks among the busiest in the United Kingdom. At times, it is so congested that cars and other vehicles travel at low speeds, stop-start and create more pollution. The road is fairly busy for some 20 hours a day, and has changed out of all recognition from when it was opened.

Traffic from the A2 causes great environmental problems across the whole of the borough. While I realise that that is not the subject of today's debate, and needs to be pursued with the Transport Minister, it nevertheless highlights the problems of Bexley caused not just by industry but by traffic passing through the borough to other destinations and by the heavy lorries that come to Bexley's industrial areas. The increasing frequency and size of lorries and the growth in the number of car journeys in the area contribute to the poor air quality, which is being monitored by Bexley council.

I urge my hon. Friend the Minister and his Department to do all they can to improve air quality and reduce levels of pollution across London, but especially in Bexley. In the short term, I believe that Bexley has a strong case for joining the pilot scheme and for monitoring the new statutory controls under the 1995 Act. I also believe that the Department's overall responsibility for the Thames gateway initiative will allow it to help to invigorate and rejuvenate the area as part of a riverside community, with environmentally friendly industry, in which it is a pleasure to live and work.

Our area has great potential, but it needs help from the Government and the local authority, as well as local industry, to kick-start the development. We need clean industry and cleaner air for the residents, the visitors and everyone who works in the borough of Bexley.

12.47 pm

I welcome the opportunity to respond to the debate, as it enables me to pay tribute to my hon. Friend the Member for Erith and Crayford (Mr. Evennett), who has waged an energetic and single-minded campaign to improve the environment of his constituency. He is a respected campaigner on this and many other issues, and Bexley is fortunate in having him as a champion.

As my hon. Friend said, Bexley contains one of the air pollution monitoring stations belonging to the Department of the Environment's automatic urban monitoring network. It shows that Bexley experiences levels of pollution that are, on the whole, not unusual for any urban site in the United Kingdom. For example, levels of nitrogen oxides can approach, although they rarely breach, the Department's poor air quality threshold. It was breached for only a single hour in each of the last two years. Levels do not approach the European Community's limit value, which I remind the House is 200 μg/m³ and the 98th percentile of hourly means over a calendar year.

We recognise that levels of sulphur dioxide have occasionally caused poor air quality, as defined by the Department's air quality banding. The poor air quality threshold for sulphur dioxide roughly coincides with the World Health Organisation's guideline value. This level was exceeded in Bexley on four days in 1994, and on 13 days in 1995.

That is the picture of air quality in Bexley. The question of sulphur dioxide apart, it largely reflects the air quality to be found in other urban sites. The Government recognise that there is nationwide concern over growing evidence on the health effects of some pollutants and the desire to improve living conditions—particularly in our cities. The Government are determined to take effective action where the need to bring down levels of air pollution has been identified. I will outline the broad framework of pollution control.

The United Kingdom already has in place one of the most sophisticated industrial air pollution control systems in Europe. It was introduced in the Environment Protection Act 1990, and consists of two elements—integrated pollution control and local authority air pollution control.

Integrated pollution control applies to large industrial installations and is currently administered in England and Wales by Her Majesty's inspectorate of pollution. Its authorisations set limits on emissions to all environmental media from such installations. Local authority air pollution control, which is administered by the relevant local authority, covers emissions to air from small and medium enterprises.

In both systems, authorisations are based on best available techniques not entailing excessive cost—BATNEEC—for the industrial process in question, and are reviewed every four years, so that changes in the available technology can be taken into account. Across the UK, some 2,000 processes are authorised under integrated pollution control, and there are about 13,000 local authority air pollution control processes nationwide. The figures for the London borough of Bexley are five IPC processes in operation and 31 LAAPC processes. I will refer later to industrial emissions in Bexley and the east Thames corridor.

Emissions of sulphur dioxide and smoke from domestic households are controlled through the smoke control areas system, which was introduced in the Clean Air Act 1956. Bexley has completed its smoke control programme, so 100 per cent. of households in the borough fall within smoke control areas.

As to pollution from transport and road traffic in particular, emissions from the transport sector are mainly controlled through European Community legislation—specifically, through emission standards on new vehicles sold in the Community and standards on the quality of automotive fuels. Standards that make compulsory the fitting of catalytic convertors to petrol cars took effect from 1993. Stricter standards for vehicles have been agreed for 1996–97. The effect of the standards already in place will be to bring about a continued dramatic reduction in emissions of traffic-related pollution well into the next century.

We recognise that the steady rise in the size of the vehicle fleet will militate against that downward trend. It is estimated that, on current policies, emissions will begin to rise again around the year 2010. If we are to achieve and maintain our air quality targets and objectives in the face of transport fleet growth, further progress is needed in reducing average emissions per vehicle.

The European Commission is expected to bring forward this year new proposals for vehicle emission and fuel quality standards for the year 2000 and beyond. We shall be looking to agree a positive, cost-effective package of measures that will bring down emissions further and bring us closer to meeting our air quality objectives.

As cleaner vehicles come to predominate in the fleet, we are also tightening up the MOT standards, to ensure that we pick up on catalysts that have stopped working efficiently, and that vehicle owners keep their vehicles properly tuned. In addition, we are tackling the volatile organic substances given off when tankers load and unload at fuelling stations.

Reducing pollution cannot be left entirely to technological fixes. Air quality can also be improved through changes in patterns of behaviour. We are encouraging public and private fleet operators to act in an environmentally responsible way, and we are providing the public with information about greener motoring habits.

To deliver a sustainable improvement in air quality in areas where quality currently exceeds the levels that are considered desirable, a national framework of air quality objectives and assessment, and management practices within which the right balance of policies can be set, are needed. The Environment Act 1995 committed the Government to producing a national air quality strategy.

That strategy, which we will issue this year, will set out the framework. It will be based on sound scientific advice about the health and other effects of air pollutants—recommendations from the independent expert panel on air quality standards and information from other sources, such as the World Health Organisation, which will provide the technical expertise to provide that scientific basis; clear national standards and objectives for air quality, to be achieved by a given timetable; a national strategy backed up by flexible and cost-effective action at a local level, through the system of local air quality management areas; a commitment to keep Government policies under review, to ensure that progress is maintained; and clear and accessible information for the general public and advice on how they can help. We need to keep the strategy flexible, so that we can continue to find cost-effective solutions and to ensure that as further air quality targets are agreed in Europe, the mechanism can encompass them.

The work of laying the ground for the air quality strategy has already started. It is fairly clear that a single solution for the whole country is unlikely to be cost-effective. To ensure that action is not unduly burdensome or bureaucratic, problems must be solved where they occur—whether across the whole of Europe or in one congested high street. To ensure that solutions can be put in place, a new legal structure for local authority action is needed.

The Environment Act 1995 requires local authorities to review their air quality against the standards and targets in the strategy. Where targets and standards are not going to be met, an air quality management area will be designated and a more thorough assessment will be made, to work out where the problems are, how bad they are and what is causing them. The local authorities involved will be required to prepare and undertake a plan of action to remedy the situation.

The Government are currently drawing up guidance, in consultation with local authorities, on how they can meet their duties under the Act. Furthermore, we are initiating the first phase of local authority assessment and reviews this year. It will include a Londonwide initiative.

Our aim is primarily to ensure that air quality can brought to acceptable levels and sustained. Local authorities will be free to use all the powers at their disposal in the discharge of their duties under the Environment Act 1995. Those powers encompass the setting of conditions in local authority air pollution control authorisations—which in future must have regard to the forthcoming air quality strategy.

Over the long term, local authorities can bring their planning powers to bear on air quality. Guidance has already been issued to them on ways of lessening the need for private transport through judicious planning.

I have outlined the Government's national approach to controlling pollution, all of which has great relevance to my hon. Friend's constituency, and I will make a few comments specific to the area that he represents.

As to sulphur dioxide, there are no major processes regulated by HMIP within Bexley that release significant amounts of the pollutant. There are a number of major sources within the wider area, within a 25 km radius. Most prominent among them are the power stations at Littlebrook and Tilbury, oil refineries at Coryton and Shellhaven, and a cement producer at Northfleet. All those processes are to the east and to the north of Bexley, which is upstream of the prevailing winds. It is possible—under certain, infrequent weather conditions—that these processes contribute to the raised levels of sulphur dioxide in the Bexley area.

Nationally, we are committed to a significant reduction in emissions of sulphur dioxide over the coming years. By 2010, emissions should have been cut by 80 per cent. on 1980 levels. That continued reduction is administered under the national sulphur plan and will be delivered largely by increasingly strict conditions in integrated pollution control authorisations, which should mean that the risk of raised levels of ambient sulphur dioxide should also reduce significantly.

In 1992, Her Majesty's inspectorate of pollution commissioned a major study of the environmental impact of all the major industrial releases of nitrogen oxides in the east Thames corridor. A number of processes were subject to application for authorisation and their potential effect was considered. The ensuing report reached the conclusions that existing industrial processes make a relatively small contribution to annual nitrogen oxide concentrations, accounting for not more than 17 per cent. of current levels; each new plant would make only minor additions to the existing levels of nitrogen oxides; and all the releases of the proposed new plants would not threaten the statutory EC directive limit value.

HMIP has used and will continue to use the BATNEEC principle to ensure that state-of-the-art technologies are used to minimise the release of nitrogen oxides and other pollutants, including sulphur dioxide, from the major industrial processes in the area. Of the 10 processes proposed at the time of the study, three are in operation and performing to the required emission standards.

Of the remaining seven, the most significant plants for Bexley are the sewage sludge incinerators at Crossness and Beckton, and the waste to energy plant at Belvedere. The sludge incinerators, which will be operated by Thames Water, were authorised in 1994, and are currently under construction. They have been designed to meet the tight emission standards imposed by HMIP for plants in the east Thames corridor.

Cory Environmental Ltd. was granted an IPC authorisisation in 1993 for a waste and energy plant at Belvedere, designed to treat 1.2 million tonnes of London's waste and to produce 108 MW of electricity. I understand that the prospective operators of the plant have not been successful so far in obtaining planning permission, and it is not appropriate for me to comment at this stage on the application, in the event of any further procedure under the planning regime.

I hope that what I have said will reassure my hon. Friend that the Government have very much in mind his concern about environmental quality, and that we are committed to the measures necessary to enhance and improve it over the years ahead.

Sustainable Development

1 pm

I am grateful to the Under-Secretary of State for Wales, the hon. Member for Cardiff, North (Mr. Jones), for agreeing to participate in this all-too-brief debate on an issue of enormous global significance which is of particular relevance to Wales.

It is important to recognise at the outset how far-reaching a transformation is implied by the achievement of sustainability. The principles of sustainability, which are being elaborated at all levels of human society, have been accepted by the Government through their endorsement of the Rio documents and their participation in the process of the United Nations Commission for Sustainable Development, which came about following the 1992 earth summit. I shall recall some of those principles.

First, there is a need for a radically different method of measuring economic success other than gross national product growth—what are called new economic indicators, bearing in mind environmental and social considerations. The second principle is to give resource productivity priority over labour productivity as a measure of progress, which implies major changes in taxation, and taxing pollution and wasteful resources instead of jobs.

Thirdly, there is a preference for the use of renewable resources over non-renewable resources. Fourthly, it is suggested that environmental considerations should be integrated into all decisions on development. Fifthly, the implementation of the proximity principle is recommended, encouraging more localised patterns of production, distribution and consumption. That is some transition.

The European Union recognises the validity of those principles in its fifth environmental action programme "Towards Sustainability" and in the very important White Paper "Growth, Competitiveness and Employment". In the second document, the EU argues that environmental sustainability and the solving of the unemployment problem must and can go together.

The Government have established bodies to advise them and to promote sustainable development. The round table has representatives from business and voluntary sectors. Indeed, last week the second report of the advisory panel on sustainable development, chaired by Sir Crispin Tickell, was published. It reviewed last year's recommendations and considered the next priorities. It is lucid and succinct yet forceful, and it merits very serious attention.

When those organisations were set up early in 1994, a special body on sustainable development was established by the Secretary of State for Scotland, but in Wales, under the former Secretary of State, there was nothing of the kind. To members of Plaid Cymru, who attach importance to Wales as a country in its own right, and do not think of it only as some kind of appendage to England, that was offensive.

Countries will succeed and contribute to the collective welfare of the global community in the extent that they tackle the sustainability issue seriously. It is as crucial as that. The indications are, however, that the Government of Wales—in effect the Welsh Office—is failing in its responsibility to put our country, for which it is responsible, on the road towards sustainability: the only basis for true and lasting prosperity in the 21st century.

That is not to say that nothing has been done or that nothing is happening in Wales. Indeed, I am happy to make that point. The Welsh Office organised two seminars—in November 1993 and May 1995—that were attended by representatives of various quangos, local government, the social partners as they are called, non-governmental organisations, and so on. Copies of the minutes of those seminars, which happen to have found their way to my desk, suggest that the seminars were useful enough, but the suggestion that

"a working group which could meet at regular intervals to discuss sustainable development"

seems to have come to nothing. I hope that the Secretary of State will at least support a permanent working group. I shall, however, describe a more radical proposal later.

The absence of any kind of permanent body, or any Welsh Office think tank on sustainable development, raises questions about the local Agenda 21 process in Wales. Local authorities, which are involved in reorganisation, are enjoined to consider sustainable development in producing their local plans. What kind of guidance are they being given by the Welsh Office? Without adequate guidance, how can an all-Wales Agenda 21 evolve? Perhaps the Under-Secretary could enlighten us on the matter.

The business in the environment initiative is being delivered in Wales by the Arena network to assist Welsh businesses in achieving greater environmental efficiency. Will the Minister tell us how the Arena network programme's progress is being monitored and how many businesses have participated in it? I imagine that many businesses in Wales, especially small and medium-sized enterprises, will not even know of its existence. That needs to change.

The Welsh energy project has been acknowledged inside and outside Wales as an important and useful initiative. It produced a five-point action plan for a pilot series of innovative sustainable economic development areas, business development initiatives, the creation of a network of local information centres—I know that that is happening—the encouragement of investment in energy efficiency and the growing worldwide environmental protection market, and the provision of help to local planning authorities. What monitoring is taking place to assess the extent to which the action plan is being successfully implemented?

Renewable energy, in view of the serious pollution and the climatic effects of burning fossil fuels, and of course the fact that those fuels are being depleted, is hugely important, as I tried to show when I spoke in the debate on the Queen's Speech. We in Wales have major resources which could provide significant and sustainable economic development and employment opportunities.

I quote the words of Mr. Mike Brooker, chairman of the environmental study group of the committee organised by the Prince of Wales, which held a very successful seminar entitled "Towards a Sustainable Energy Strategy for Wales", which I attended and by which I was very impressed. In his summary of the findings of that seminar, Mr. Brooker says:

"Delegates at the conference—representing industry, environmentalists, politicians and academics—concluded that, although there was a huge amount of complex and detailed information available, there appears to be no coherent strategy to embrace environmental, social and economic issues. Developing such a strategy is an essential pre-requisite to the future management of energy issues.

There was general agreement about the need for change by all the stakeholders,"—

forgive the word stakeholders—

"Government, Power Companies, Planners, Environmentalists Business, Industry and the public at large. The difficulty is creating a focus to establish strategy and precipitate local action. How can we create an Action Plan in Wales?.. Which organisation should oversee the strategy and create delivery at a local level?"

The Welsh Office should have something to say on that last question. Is the Welsh Office not the responsible organisation? What is it doing to ensure the creation of such a strategy? Is it not time—this is a practical proposal—to revitalise the Welsh energy project established in 1991 before the Rio summit, and update it in the light of the sustainable development agenda, which has moved ahead significantly since the project was established?

I am aware of the Aries project, which is supported by the Welsh Development Agency and the Development Board for Rural Wales and which receives European funding, on the economic development opportunities of renewable energy. The study was organised by an interesting little company in my constituency, called Dulais Engineering, which exports, among other things, photovoltaic equipment, refrigerators and medical equipment to Eritrea, and does other important work in relation to third-world economies.

I am aware of the Alt-Energy Wales project, which is funded from the European Union Altener programme. I hope that the Welsh Office will support the idea of creating an Aries Wales forum, which would provide a focus for stakeholders—there is that word again—and would provide information and assistance with preparing business plans and so on. Such a forum would help to energise the renewable energy scene in Wales.

All these matters should be considered in the context of an overall strategy covering planning issues, the encouragement of manufacturing and sourcing in Wales, training, research and development and so on. It should have targets for the contribution of renewables to total electricity supply and for reducing demand through improved efficiency. I understand that a reduction of as much as 20 per cent. is perfectly feasible.

One of the advantages of such a strategy, the drawing up of which would entail wide consultation, would be that the public at large would be able to understand the broad context in which individual developments occur. The singularly ill-informed public debate on wind energy, which is influenced more by misinformation than by enlightenment, shows that currently that is not so.

Crucially, an energy strategy should tackle offshore oil and gas resources. Currently, Welsh Office input into this enormously important and controversial policy is minimal. Perhaps the Minister will tell us what the Welsh Office is doing about it.

Sustainable development is not just about energy, although that is perhaps the central issue. I recommend to the Minister the very useful overview on the subject provided in Plaid Cymru's consultation document, "A Sustainable Development Strategy for Wales". He already has a copy, and I have been looking forward for some time to his response.

Other areas are considered in the document, and I ask a series of questions. First, what is being done to encourage the location and growth of environmental goods and services industries in Wales? By 2000, there could be a global market of $600 billion in that sector. Does it figure in the inward investment strategy of the Welsh Development Agency or of the Development Board for Rural Wales, or in Source Wales?

Secondly, on transport, what long-term thinking is in progress in view of the Government's intention to continue to increase fuel duty, the royal commission's recommendation to accelerate that increase and the possibility of a carbon tax? What would that imply for regional economic development in Wales? How are rural areas to cope or be compensated? To what extent should electronic communications supplant physical mobility? How should that affect investment priorities? How can we develop an integrated transport policy for Wales? How will train services be protected—enhanced, even—under privatisation? How is that affected by the fact that rail is not the responsibility of the Welsh Office? Should not that be changed?

Thirdly, on farming, when will we have an integrated all-Wales agri-environmental scheme?

Fourthly, and most important, how can we create employment through sustainable development? I refer the Minister to Plaid Cymru's excellent document, "100,000 Answers", in which 30,000 of the jobs described would be created as a result of environmentally linked activity.

These issues cannot be tackled without a thoroughgoing strategic approach. Pace the right hon. Member for Wokingham (Mr. Redwood), the Tory right's so-called economic instruments on their own would be not only inadequate but socially inequitable and damaging. The 17.5 per cent. VAT on domestic fuel showed that with startling clarity. We need a range of instruments and interventions, and we need them soon, because unless we tackle the issues, Wales will lag far behind instead of being, as it could and should be in this matter, in the lead.

I have seen reference in the Welsh Office documentation to the idea of a centre for sustainability in Wales. Perhaps the Minister can tell us what is happening to that proposal, which we would strongly support. Wales should aim to become a centre for sustainability. Placing Wales at the forefront of sustainable development should be the great millennium project for Wales—that and the achievement by 2000 of real democratic self-government. The Welsh Office, even though its masters do not share our enthusiasm for the latter project, has a responsibility now to lay the foundations for the first.

What kind of body should be responsible for driving the sustainable development process in Wales? It should, of course, be a powerful Welsh Parliament, but what about the interim? Should it be the Countryside Council for Wales? Sustainable development is about much more than the countryside. It is just as much about what goes on in the factories of Glamorgan, Gwent and Deeside. The new Environment Agency has a remit for sustainable development. We do not have our own agency in Wales, as Scotland does, although there is a Welsh regional structure. In any case, the agency's responsibility is primarily pollution control and waste disposal, and sustainable development goes way beyond that. Sustainable development is about integrating all aspects of life in keeping with its central principles, and the organisational structure in Wales should reflect that.

The Secretary of State for Wales should now set up a powerful working group for sustainable development, comprising representatives from the Welsh Office, local government, the new Environment Agency, the WDA, the DBRW, CCW, NGOs such as Friends of the Earth, and, indeed, the Prince of Wales's environmental trust for Wales—soon to be christened "Bro"—the Confederation of British Industry and the Trades Union Congress, with higher education and research to provide the scientific and academic underpinning.

In the absence of a properly constituted democratic forum for Wales, only a powerful partnership such as that can provide the focus and resources for such a vital project. To set that process in motion would be to provide true leadership, and would mean that when a democratically elected Government or Parliament meets in Cardiff, with sustainable development as the first item on its agenda, it would already be up and running in Wales.

1.16 pm

I am grateful to the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) for raising the important topic of sustainable development and for the considerate and positive way in which he has approached the debate.

I am sure that we agree that this is an issue that should concern us all. Yet very often its importance can be lost through simply not understanding or realising what it means. In the words of the Brundtland definition, sustainable development is

"development which meets the needs of the present without compromising the needs of future generations to meet their own needs".

That, perhaps, still provides the most succinct definition. It challenges us to recognise the needs of economic development with those of environmental protection. Both are important and both should be in harmony. Both need to be emphasised, but not at the expense of each other.

Sustainable development is not just a matter for Government: it affects, or should affect, everyone's life style. None the less, the Government have played a significant part in taking forward the challenge of the agenda that was set at the earth summit in Rio de Janeiro.

Two years ago, the Government published their national strategy for sustainable development, which not only set out the principles of sustainable development but looked ahead 20 years to identify problems and opportunities. The underlying principles include sound science, the precautionary principle, the polluter pays principle and the need to take account of the natural environment, especially non-renewable resources.

Central and local government, business, industry, the scientific and voluntary sector and, not least, individual citizens all have a role in carrying forward the strategy. To foster that, the Government established three independent bodies to promote sustainable development. The Government panel on sustainable development gives authoritative and independent advice to Government on a number of broad strategic issues. The United Kingdom round table on sustainable development draws in a wide cross-section of advice from the main sectors and groups who have a role in developing and carrying forward sustainable development, and the Going for Green initiative seeks to carry the message to individuals and local communities.

I note that the hon. Gentleman expressed a preference here—and in almost every other area—for setting up a separate Welsh forum or a Welsh version of Going for Green. I remind him that there are Welsh representatives on the round table and Going for Green, and the Welsh launch of Going for Green will take place in the spring.

As the hon. Gentleman said, both the Government panel and the UK round table on sustainable development have recently issued reports. Both reports are under consideration by the Government, and responses will be issued shortly. He will appreciate that I would not wish to anticipate the detail of the responses at this stage.

One of the major developments during 1996 will be the setting up in England and Wales of the Environment Agency, which will take up its responsibilities in April. It will build on the work of its predecessor bodies, Her Majesty's inspectorate of pollution, the National Rivers Authority and local waste regulation authorities. It will seek to protect and enhance the environment in line with the Government's commitment to sustainable development.

Greater integration will mean that the agency will be better placed than its predecessor bodies to consider the environment as a whole, to ensure a consistent approach to regulation and to provide a more streamlined service to industry and to the public. The Government will issue specific guidance to the agency about the objectives, and the contribution that it should make towards achieving sustainable development. Drafts of that guidance have been issued for consultation.

The Government are anxious that their strategy for sustainable development is continually updated and developed. Annual reports are published, reviewing achievements against previous commitments, and setting quantified targets and priorities for future years. The next annual report is due in March.

The hon. Gentleman rightly concentrated on the relevance of sustainable development in Wales, and on the actions that he considers should be taken to promote that concept in the Principality. I welcome his contribution in areas such as energy, transport and agriculture. If time permits, I shall return to those issues briefly during my reply.

As I have already said, the achievement of sustainable development depends on a large number of players, of which the Government are only one. That is as true in Wales as it is elsewhere. None the less, in the Welsh Office we recognise and welcome the role that we can play in Wales. We are of course paralleling and augmenting many of the United Kingdom initiatives that I have already described.

Each year since 1991 the Welsh Office has published "Environment in Wales" reports. They provide an overview of the state of our environment, record progress made towards meeting previous commitments, and look forward to the likely impact of new initiatives. As the hon. Gentleman said, the Welsh Office has also hosted two seminars on sustainable development. Their purpose was to draw together key Welsh organisations, and so to encourage an exchange of ideas. I hope that a further seminar will be organised soon.

The pivotal role that local government can play in achieving sustainability was accepted at the Rio earth summit. It was agreed that every local authority should produce its own local Agenda 21 to provide a framework for sustainability in its area. Many local authorities in Wales have already made progress on that front, and we have made it clear that we hope that the new unitary authorities will give priority to completing their local Agenda 21 documents.

Raising public awareness of the relevant issues is vital if we are to achieve the goal of sustainability. I therefore very much look forward to the official launch of the Going for Green campaign in Wales.

I am confident that Wales will fully share in the benefits of the new Environment Agency. A committee will be established to advise the Secretary of State on the activities of the agency in Wales, and I am sure that its new integrated approach to the environment will enable it to become a key player in bringing about sustainable development in Wales.

Last September my right hon. Friend announced his intention of publishing a White Paper for rural Wales, and immediately set in hand a wide-ranging consultation exercise to encourage and promote debate across the whole range of the Welsh Office's policies as they affect life in rural Wales. The response to the consultation was very good, and we are grateful to all those who took the opportunity to participate, including the hon. Member for Ceredigion and Pembroke, North. The House will understand that it would, of course, be inappropriate to refer now to the probable contents of the White Paper, which we expect to be published shortly. In the meantime, the hon. Gentleman may be confident that sustainable development will be at its heart.

I shall now say a little about particular environmental issues in Wales. Our rivers and coastline are an intrinsic part of the Welsh environment, which we must protect for this generation and future generations. Recent years have brought a considerable investment in improvements to our aquatic environment, and we are now seeing the results. Last year 89 per cent. of the identified bathing waters on the Welsh coastline met European mandatory standards. That compares, for example, with a pass rate of only 48 per cent. in 1986.

The National Rivers Authority deserves much credit for the achievements that we have seen in river water quality. The authority has worked closely with the water companies and with other sectors of industry, including agriculture, to tackle the various sources of pollution. As a result of that combined effort, the most recent figures published by the NRA show that 98 per cent. of Welsh rivers are now classed as of good or fair quality, including 89 per cent. classed as of good quality. That record of achievement is set to continue. Welsh Water alone intends to invest £650 million in its environmental programme over the next five years.

Increasing pressures for housing and development require even greater care in optimising the use of scarce land resources. Within Wales the Welsh Development Agency's land reclamation programme is the largest landscape improvement programme in Europe. Since its formation the agency has reclaimed more than 15,000 acres, and its aim is to reclaim all significant dereliction in Wales by the end of the century.

Some of Wales' most attractive new business sites are on reclaimed land—for example, Swansea enterprise park and Delyn enterprise zone. In addition, 80 reclaimed sites have been developed for housing, such as the former national garden festival site at Ebbw Vale. In those and in other cases, land reclamation, besides being positive in itself, also avoids the need to develop green-field sites.

On the provision of housing, is it not incumbent upon the Government to make it more feasible, and more commercially and financially attractive, for properties in town centres to be carefully and tastefully refurbished, so that our built heritage can be looked after in that way, rather than making it difficult, as it is now, for that to take place, which creates more pressure on green-field sites?

I think that the hon. Gentleman and I have similar outlooks in that respect. We both want to see the best use made of existing housing. We have put in a considerable investment—about £1 billion—since 1990, and in the coming year we shall invest another £180 million in renewing Welsh housing stock, but we should make the best use of existing stock. We are very aware of the pressures on other green-field sites, as I have described in connection with business uses.

The hon. Gentleman raised other specific points, and I well appreciate his concern for Project Aries, which represents a positive initiative to produce practical solutions to assist the development of renewable energy in Wales. The Principality has a range of renewable energy sources, such as hydro, wind, landfill gas and biomass, which could be harnessed to assist the economy and the environment, through lower emissions. I welcome the project's aim of involving key organisations and individuals interested in renewables, and to identify ways of reconciling differences between them.

The project is now coming towards its conclusion, but I am pleased to see that work in that area will be taken forward in the new ALT-INVEST project, which is intended to stimulate private investment for the most promising renewable energy source schemes. I imagine that the hon. Gentleman will wish to study that.

I am sure that we are all equally concerned that road building should be part of a sustainable transport policy. Decisions to proceed with new road schemes are taken only after careful assessment of all realistic alternative solutions to the problems identified. Every effort is made to avoid areas of natural beauty or scientific interest, and if that is not possible we try to minimise the effects.

Environmental impact assessments are undertaken for schemes costing over £1 million, and for all schemes affecting national parks, and areas such as sites of special scientific interest.

The Secretary of State's trunk road priorities and plans were published in "Roads in Wales: 1994 Review", which identifies three major strategic routes—M4, A465 and A55—on which resources will be focused. The document stresses that the A40 in Mid Wales and the A5 on the mainland are not to be developed as major routes for long-distance heavy traffic.

In the public transport sector, Wales has seen many improvements to its local rail services. South and west Wales have new links to the north-west, the midlands, the south coast and to London's Waterloo station, to connect with Eurostar services to the continent. There have also been improvements in local services in mid and north Wales. The Government's rail privatisation programme should see even more. Indeed, in being awarded the InterCity franchise into south Wales, Great Western announced its intention to provide extra services on that network.

Recently I announced the go-ahead for a range of transport measures, including new rail links to expand and improve rail services between Cardiff bay and the south Wales valleys, new bus priority schemes, and substantial cycle ways along both the north and the south Wales coasts.

All aspects of energy policy are clearly relevant to sustainable development. On the one hand, energy is an essential input to economic activity, while on the other, the production of energy can have major environmental effects through local pollution caused by emissions and through climate change caused by global warming. I have referred to actions related to carbon dioxide emissions from energy production, and we are also encouraging energy efficiency. The Government are actively promoting that policy in both the supply and demand sides of the energy industries. For example, new legislation will come into force this year requiring local authorities to identify means of improving the energy efficiency of residential accommodation.

In Wales, the NHS is working towards a 15 per cent. reduction in energy usage, and the Welsh Office has reduced its energy costs by 18 per cent since 1991. The Government are seeking to encourage new and renewable energy sources which have the prospect of being economically attractive and environmentally acceptable. Sustainable development, however, is an issue that goes wider than the environment. It is a matter of harmonising development and environmental protection. Development is needed, but it brings its pressures, and we are addressing such issues in Wales within—

Order.

Charity Shops (Business Rate)

1.30 pm

I draw the attention of the House to the entry in the Register of Members' Interests which shows that I am an unpaid adviser to the British Shops and Stores Association.

I want this short debate to explore the status of charity shops, particularly as far as their business rate status is concerned. I had some difficulty in finding a title for the debate that would apply solely to one Minister, because the position of shops generally, and charity shops in particular, on business rates is part of a wider picture—the fate of town centres, and the pressure which traders feel they are under. It is not simply a matter of business rates—although, to be fair, that is regarded by most traders as the most significant matter—but also the effect on their business prospects of out-of-town shopping centres, parking restrictions and the like.

In many town centres, traditional trading communities are finding it increasingly hard to trade in a way which is traditional and conventional, while enabling them to be able to offer service to the public. There is no doubt from the representations that I have received that some traders—I would have to say, most traders—believe that the status of charity shops has a part to play as well.

Perhaps it should not be necessary—but, in this day and age, I am afraid it is—to emphasise exactly what one is not doing, as well as what one is doing. Let me make it abundantly clear, however, that I am not launching an attack on charities or charity shops. I am not saying that their role in society is anything but good. I want to emphasise that I am not attacking charities, which have a unique place in British life. There are a whole range of fiscal measures in terms of income tax, corporation tax and VAT that make it abundantly clear that charities have—and, I dare say, will always have—a unique position in our national life.

That is recognised not only by the Government, but by people up and down the land. One only has to see the amount of work that is given freely and voluntarily by members of the public to charities to know that, in a uniquely British way, charities play a part in our national life that is wholly for the good. Therefore, in no sense are my remarks to be taken, or deliberately misconstrued, as an attack on charity shops.

What concerns the traders who have made representations to me is more fundamental than that—they are concerned that measures designed specifically to help charities, particularly in relation to business rates, are being used to help organisations that are, in all but name, fellow traders.

The position in law is straightforward enough. Section 64(10) of the Local Government Finance Act 1988 requires a charity shop to fulfil two conditions to be exempt from business rates. It must be wholly or mainly used for the sale of goods donated to a charity, and the proceeds of the sale of the goods, any deduction of expenses, must be applied for the purpose of a charity.

Despite having made an immodest living interpreting the law in the past, I do not know what that means. One understands what "wholly" donated means, but what does "mainly" donated mean? Does it mean that 51 per cent. of the produce in a shop is sufficient, or 80 per cent? I suspect that that ambiguity lies at the heart of the current problems.

If a charity—let us call it Charity Ltd.—has a number of shops in a national context, it is possible that the charity as a whole may purchase only a tiny number of goods directly for sale. But if the goods are found in one particular shop, it may well mean that the trader next door finds that he is trading in commodities against someone who is in a totally different position.

This is not an isolated problem. It has not been raised with me on only one occasion—it is a matter of great concern locally. The matter has been discussed in the past by Teignbridge district council and Newton Abbott town council, while it has been raised with me by the chambers of commerce from Teignmouth and Newton Abbott. I dare say that that can be replicated up and down the country.

If one goes to Newton Abbott, within a few minutes of walking around the town centre one sees shops representing some of the great charities in the land—the Red Cross, the National Society for the Prevention of Cruelty to Children, Rowcroft hospice, Cancer and Leukaemia in Childhood, Imperial Cancer Research, the British Heart Foundation, the Royal Society for the Prevention of Cruelty to Animals and Barnardo's.

In Teignmouth in my constituency, one sees charities such as Yugoslavian Refugees, Oxfam, the People's Dispensary for Sick Animals, Rowcroft hospice, the YMCA, the Children's Society, Holiday Services for the Disabled and the RNLI. The idea that we are talking about one or two shops is a mistake.

The difficulty is that one must rely to an extent on anecdote, and I must rely on the information that traders have given me. I am told that, if one goes into some charity shops, one does not see the traditional bric-a-brac or second-hand goods. One is looking, to all intents and purposes, at premises selling new goods. One shopfitter recently told me that the best contract he had had all year was from a charity shop. He said that he wished "other local traders", as he put it, were able to give him such good work, but they were unable to do so.

One might think that some charity shops are buying in the majority of goods to be sold on in a way that directly competes with businesses next door that simply do not have the advantage of having at least 80 per cent. relief on rates, with the potential to applying for a further 20 per cent. relief from the local authority.

What can be done? I suspect that part of the problem depends on the meaning of "wholly or mainly". In a letter in September 1994, my hon. Friend the Minister of State said:

"The meaning of 'wholly or mainly' is determined by the local authority."

That is like defining the functions of an archdeacon by saying that an archdeacon performs archdiaconal functions—it is true, but I am not sure how greatly it helps.

It would be asking too much of a local authority to carry out an audit on each and every shop that applies for an exemption from business rates. One runs into a problem right away—an authority may discover that a local shop selling a high proportion of bought-in goods is able to say that it is a part of a greater organisation, and the authority's considerations may not apply. It seems to me that it would be very difficult for a local authority to have to make such judgments.

The effect of this ambiguity should not be underestimated. If premises are in all but name local traders, we must consider what the effect can be if they do not have to pay the uniform business rate. They will be in a position to pay higher rents, but those directly competing against them do not have the benefit of not paying UBR. Therefore, circumstances would be conceivable in which local traders were simply priced out of the market.

The question that must be considered is, in a sense, even wider than that which the Minister will answer today. We live in a time when, for reasons to which I have referred, town centres are under unique pressure. Traders in those centres are also under pressure, and society must ask itself whether its intention is that we prefer one class of trader over another by giving one unique privileges.

It must be said that there is nothing wrong with trying to earn a living by selling goods in a town centre. There is nothing wrong with being a charity, either, but if one trader-uniquely-is in a better position than another, questions must be asked.

Lest anyone imagine that I have got it wrong, and that charities never see themselves in that light, I can do no better than quote that excellent publication the Mid-Devon Advertiser, which recently carried an article about charity shops. The main point of the article is not relevant to this debate, but it contains observations that are.

It explains that a certain charity shop was not reaching its targets, and quotes a voluntary worker—understandably, the staff are not paid—as saying:

"We took £94,000 since we opened in September '94…I'm sure other shops would like to do that."

"Hear, hear", many might say. The article then quotes a man described as a chief executive of the charity's shops division as saying:

"The shop hasn't performed as well as it should have done …A target is set monthly".

The man said that the shop was

"effectively a retail business, and had to set targets to reach each week."

That says it all.

I do not think that my hon. Friend has got it wrong. Two weekends ago, I walked the entire length of the main retail street in Redruth, in my constituency. The main issue that every retailer raised with me was having to trade shoulder to shoulder with charitable shops that had budgets that most Redruth traders could only dream of, and competing with central purchasing managers. Like my hon. Friend, I am not knocking charities.

My hon. Friend's intervention shows that the problem is not unique. It also reminds me to say that my hon. Friend the Member for South Hams (Mr. Steen), who wanted to attend the debate, was unable to do so because of a regional planning conference. He tells me that the position is similar in Totnes and Kingsbridge in his constituency.

What is to be done? Again, I emphasise that I am not attacking charities. It is important for me to make that point, because some people will try to misrepresent what I am saying. Nevertheless, if traders cannot compete with others who are traders in all but name, I feel that the Government should comment. The position is considered a local issue in at least three areas in the west country.

I should be interested to hear from my hon. Friend the Minister whether it would be possible to amend the law if such amendment proves necessary, even allowing for the constant pressure on legislative time; I should also like to know whether there is a judicial definition of "mainly" that is easy to understand. I suspect that the possibilities for litigation are legion.

It would also be useful to know more about the relationship between a local shop and the charity of which it is part, and to hear of any guidance that my hon. Friend can give. I suspect that charities themselves would welcome guidance. It must sometimes be hard for them to know precisely how the legislation applies to them. Some may be saying, "Perhaps we should take advantage of the position; other charities have. Where do we stand?"

I am not talking about traditional charities carrying on in the traditional charitable way, but I think that the current position must be addressed. If a man from Mars came here, he would see no difference between two traders, apart from the fact that one incurred expenses that were not incurred by the other.

1.44 pm

I am always glad of the opportunity to listen to Conservative Members from the south-west, but I feel that they tend to gang up. When they have a cause, they pull together and fight for their constituents in a way that is seen in no other country. Dealing with their concerns can be a bit like facing the All Blacks.

As my hon. Friend the Member for Teignbridge (Mr. Nicholls) said, we recognise the good work done by charities, and realise that charity shops are an important source of funds for many of them. My hon. Friend, however, is worried about the possible effect on local businesses. He acknowledged the special role of charities. They are given relief from many of the taxes that commercial businesses pay, including rates, and in many cases that is right and proper; but I think it worth touching on some recent history.

Rate relief for charities predates the non-domestic rating system. Rate relief of 50 per cent. was mandatory for property wholly or mainly used for charitable purposes under the provisions of the General Rate Act 1967. Rate relief for charity shops is not a recent innovation; it has existed for some time. Specific legislation was introduced to provide rate relief for charity shops in the Rating (Charity Shops) Act 1976. Those provisions were carried through to the new system in the Local Government Finance Act 1988.

Initially, the Government proposed that the provisions from the earlier legislation be repeated in their entirety. They specified, as now, that to qualify for relief a charity shop had to be wholly or mainly used for the sale of goods donated—it is worth emphasising that—to the charity. If a shop met the criteria, 50 per cent. rate relief had to be given by local authorities: that was mandatory. The amount could be increased to as much as 100 per cent. if the authority saw fit. If it felt that the charity was particularly deserving of local support, it could top up the relief, but the extra cost would be borne by local ratepayers.

At the time of the passage of the 1988 Act, it was feared that the new rating system might impose an unacceptably high rates burden on charity shops, and interfere with their ability to raise funds. In response to enormous pressure, the House increased the mandatory element of the relief from 50 per cent. to 80 per cent. The cost of the mandatory part is borne by the non-domestic rating pool. If a billing authority decides to give discretionary relief, it can, as under the previous legislation, top up the relief to 100 per cent., but 75 per cent. will be borne by council tax payers; the remaining 25 per cent. will be borne by the pool.

My hon. Friend is concerned about competition with local traders. He spoke of the difficulties experienced by various shops and towns, and mentioned a number of causes. Let me keep to the point, however.

To qualify for relief, charity shops must sell donated goods. That generally seems to mean old clothes, old toys and second-hand ornaments, but—anticipating the fierce case put by my hon. Friend—I decided to visit some charity shops in my area, as did some officials in the Department. They had the impression that the shops that they visited would have accepted unwanted Christmas presents: indeed, there seemed to be a fair display of those on the premises. I was reminded of a Conservative association bring-and-buy stall, and beat a hasty retreat. I saw nothing that quite fitted the pattern suggested by my hon. Friend. I suspect that, in fact, the shops I visited contained genuinely donated goods.

My hon. Friend asked how many other representations I had received. I cannot give the precise figure, but I think that the number of letters I have had must amount to about 5 per cent. of the number we receive about rates in general. Ultimately, I do not feel that my hon. Friend's concern is justified to the extent that a change in the existing law is needed. Charity shops that wholly or mainly sell goods bought from wholesalers are not entitled to relief. If the charities choose to raise revenue through such means, they too must pay rates on the shops, just like their neighbours.

I am sure that shops that sell donated goods rely on the good will and generosity of members of the public, as my hon. Friend pointed out, both in the donation of goods and as a means of donating to the charity. I am also sure that people who donate their old clothes, books and unwanted Christmas presents to a worthy cause want the money raised from the sale to go to those causes.

As I think my hon. Friend will accept, the issue pivots on the action of the local authority, not on a blunderbuss, across-the-board treatment by central Government through legislation or direction. There is a horses-for-courses arrangement, in which the local authority has the ability and the expertise, and can visit each premises and judge for itself.

The phrase is not simply "mainly", but "wholly or mainly". References to premises used "wholly or mainly" for certain purposes are found throughout rating law, and the definition of "wholly or mainly" will depend largely on the circumstances of the case involved. There is a body of case law on the meaning of

"wholly or mainly for charitable purposes",

which may shed light on the issue. If my hon. Friend wishes, I will write to him with some examples.

indicated assent.

I see that he would be interested.

In the case of charity shops, in the first instance it is for each local authority to decide whether a shop meets the legal requirements to qualify for relief. The authority might want to consider a wide range of factors when deciding whether a charity shop is wholly or mainly selling donated goods. Local authorities are in the best position to see the local situation and to judge it. Indeed, most local authorities have been exercising judgment on charity shops sensibly for at least two decades.

There is a discretionary element, and again, it is right and proper that local authorities should use that when deciding which charities are deserving of local support. I understand that Teignbridge district council has decided that a blanket policy is to be avoided, which is right. It is approaching the element of local discretion in entirely the right way. Each case should be decided on its merits and on local circumstances, and each billing authority should decide whether the charity is worthy of additional relief. The authorities have a financial incentive to choose wisely. After all, they have to pick up three quarters of that extra funding if they decide to give the relief.

Proper consideration and implementation of the legislation, as it stands, and leaving the matter in the hands of the local authorities are the right way to proceed, but I will write to my hon. Friend with some additional bits and pieces to explain cases that we considered. I hope that, in areas of concern, he will apply pressure to the local authority to do what it is there to do.

It being eight minutes to Two o'clock, the Motion for the Adjournment of the House lapsed.

Sitting suspended, pursuant to Standing Order No. 10 (Wednesday sittings), till half-past Two o'clock.

Private Business

Edinburgh Assay Office Bill

Read the Third time, and passed.

Oral Answers To Questions

Scotland

Income Tax

To ask the Secretary of State for Scotland what discussions he has had with the Treasury concerning the practicalities of a different rate of income tax for Scotland. [10785]

Labour, Liberal and Scottish National party support for a tartan tax will be immensely damaging to Scotland and create huge problems for employers on both sides of the border.

Bearing in mind the huge costs and problems for employers in Scotland, and although I, as an English Member, would welcome the transfer of jobs from Grangemouth to Gravesham, how on earth does my right hon. Friend think that Labour and the other parties can justify to the Scottish people that impact on jobs in Scotland?

My hon. Friend is absolutely right. The tartan tax will be a tax on Scotland's jobs and would certainly disadvantage Grangemouth. He also has considerable cause for worry about his constituents in Gravesham, because Labour is proposing a tax on jobs—the social chapter—that would apply to the whole of the United Kingdom.

Can. the Secretary of State name any Parliament in the world that does not have revenue-raising powers or any country in the world, apart from Scotland, that has its own laws and legal system but no Parliament of its own to pass those laws?

The hon. Gentleman should move back two Benches and join the Scottish Nationalists if he wants to ask questions like that. In case he has not noticed, the United Kingdom is the greatest country in the world, with the greatest history. All parts of the United Kingdom have benefited from that.

Is my right hon. Friend aware that, during the passage of the Scotland Bill in the 1970s under a Labour Government, it was generally accepted that the advice from Treasury Ministers to the Government was that it was impossible to introduce a differential income tax in the United Kingdom? What is the view of the Treasury Ministers in our Government?

I have to agree with my right hon. Friend. He is right. It was considered impractical for the same reasons as Labour Members have opposed a local income tax. They argued that a local income tax would be difficult to collect because of great administrative problems. People are taxed not according to where they live but according to where their employer is. There is no doubt that a tartan tax would create enormous problems and anomalies. For example, Scottish Labour Members would not pay the tartan tax even though they were Scottish Members because they are paid in Westminster in England and would therefore be exempt from it.

The Secretary of State has obviously taken a careful interest in the effect of taxation on employment. Would he be kind enough to tell us his assessment of the consequences for employment in Scotland of the tax increase—which is now equivalent to a net 6p in the pound—that his Government have imposed since 1992?

The hon. and learned Gentleman has a real cheek. To be fair to his party, it is at least honest—unlike some Opposition Members who vote for our tax reductions and then complain about the public expenditure consequences. The hon. and learned Gentleman and his party want income tax to go up. Although their partners in the Scottish Constitutional Convention say that there is no tartan tax, he and his hon. Friends are going around promising to spend it even before it has been brought into being.

Will my right hon. Friend speculate on the tartan tax's impact on businesses on either side of the border? Would it encourage more of my constituents in Northumberland to shop in Scotland, or even more Scots to travel from the border regions to Newcastle shopping centres?

Far be it from me to give any credibility to the idea of people not shopping in Scotland, but my hon. Friend is right. The tartan tax would add to the costs of employment and of businesses. It would put prices up in shops in Scotland. As my hon. Friend points out, his constituents would benefit from that. Even more seriously, together with the crackpot policies for a Parliament whose funding would still be determined here, it would lead eventually to the fragmentation and break-up of the United Kingdom, which would mean huge price increases in Scotland, high inflation levels and spiralling unemployment.

rose—

Cluck, cluck.

Dear, oh dear. That comment, Madam Speaker, was from the parliamentary private secretary to the Secretary of State.

Now that the Secretary of State has had his wrists slapped for breaking the guidelines, will he apologise to the Scottish Office information directorate for using it as a scapegoat for putting party propaganda in press releases, and to the Scottish taxpayer for peddling propaganda at their expense? When will he realise that the truth about the popularity of our plans for a Scottish Parliament will always beat the lies about non-existent taxes?

When will the hon. Gentleman rise to the occasion that being shadow Secretary of State for Scotland requires? On the use of the phrase "tartan tax", before I used it—and I did so in the first press release that I issued from the Scottish Office—I asked for advice from the permanent secretary and I was assured that it would be in order. The permanent secretary's advice changed after the hon. Gentleman complained that the phrase was in widespread use and now a matter of political controversy. I have always accepted that advice. Why is the hon. Gentleman so afraid of the tartan tax? Is it because he knows that the people of Scotland do not want to pay it? If it is non-existent, let him rise in the House and tell the people of Scotland that he will drop his crackpot proposals to have a tax-raising power for his Scottish Parliament, which would impose that tax on the working people of Scotland.

Scottish Government

To ask the Secretary of State for Scotland if he will make a statement on the future relationship of the Government of the United Kingdom with the Scottish people. [10786]

We are Unionists and stand four square behind the Union, which has benefited Scotland, England, Northern Ireland and Wales.

Does my right hon. Friend accept that those of us from England who express an interest in Scotland do so not to pursue narrow party advantage, as the Labour party does, but out of concern for the United Kingdom as a whole? Will he reaffirm that devolution would be a profound act of unsettlement? Would it not throw into turmoil the number of Westminster Members of Parliament that there should be from Scotland, the way in which Scotland is taxed and funded, and the election system itself? In seeking any cross-party understanding on this matter, has my right hon. Friend had any confirmation from the hon. Member for Hamilton (Mr. Robertson) that he is prepared to deal with the anomalies to which he has admitted, and with his differences with the Liberal Democrats?

I do not like the word "anomaly", which is how the hon. Member for Hamilton has described the vital issue of how many Members of Parliament represent Scotland in the House. Nor do I agree with the Leader of the Opposition, who described the funding of the Scottish Parliament as an accountancy detail. On those matters rests Scotland's prosperity, the quality of public services and our ability to have an effective voice for Scotland here at Westminster, where, even under the Scottish Constitutional Convention's proposals, the big decision—on Scotland's budget—would be taken. Liberal Democrat Members are at least honest enough to admit that there would have to be a reduction in the number of Members of Parliament, and the loss of the office of Secretary of State for Scotland. That is too high a price to pay on top of the Labour party's tartan tax.

One of the primary mechanisms by which the people of Scotland convey their representations to the United Kingdom Government is local government. I understand that, within an hour, there will be a report of the inquiry into local government in North Lanarkshire council. Why was that not available before Question Time today? Is it because it exonerates councillors in North Lanarkshire and, if so, will the Secretary of State tell us how much the inquiry cost and who will pay, and guarantee that in future such inquiries will not be used as a party political weapon by one party against another?

A written question has been tabled and the report will be published. No doubt the hon. Gentleman will be able to study it, together with the report that has been published by his own party. The inquiry was established after we received representations from those with responsibility for ensuring fair play in local government, and it is pretty disgraceful of the hon. Gentleman to ask a question in those terms.

How would my right hon. Friend describe a proposal that would allow Scottish Members of Parliament to vote, for example, on whether there should be selection in our schools in England, but would not allow English Members of Parliament to vote on education policy in Scotland? Would that not be hypocritical perhaps?

I am a Unionist. I believe in this Parliament and I believe in everyone's right to vote on matters that concern the United Kingdom. Opposition Members have argued that English Members should not vote on issues affecting Scotland. It is interesting to note that tonight, when we celebrate the bicentenary of the birth of Robert Burns—

The death.

All right, it is the bicentenary of his death. The hon. Gentleman may be celebrating his death, but let us compromise on death and birth so that we have his life's work.

It is significant that tonight, as we have a big function in Whitehall to celebrate the life and works of Robert Burns, Scottish Opposition Members will insist on no pairing arrangements applying to voting on, of all things, the English rate support grant.

The relationship between the Government and the Scottish people will be immeasurably soured by the spending restrictions that the Secretary of State is imposing on Scottish local councils. Has he read The Scotsman today, in which the Tory leader of the new Borders council has expressed his disgust at the spending restrictions that are being imposed on that council, necessitating cuts in the education budget?

When the Secretary of State sounds off about law and order in Scotland, which is an important issue in the relationship between Government and the people, will he explain why the expenditure of Strathclyde police joint board is £304 million yet the Government will give it only £302.5 million? With that spending gap, how will the police be able to tackle the problems of law and order in that part of Scotland?

I have given substantial increased provision for the police. The hon. Gentleman's position would be slightly more credible if he and members of his party were not travelling around Scotland saying that expenditure was not enough without saying how much extra they would spend.

Instead of speaking about cuts, perhaps the hon. Gentleman would acknowledge that there is an increase in local government expenditure in Scotland over and above the amount that we get under the Barnet formula consequences of more than £25 million. Instead of telling fibs about the Government and what the Government have done, members of the Labour party would do better to draw attention to the increase that has been made. If the hon. Gentleman feels that the expenditure is not enough, he should say how much more a Labour Government would provide. If he is not able to do so, he should stay quiet.

Unemployment

To ask the Secretary of State for Scotland what is the latest unemployment figure; and what the equivalent figure was in December 1992.[10787]

Unemployment in Scotland has fallen by 55,000 since December 1992, to 195,900 in December 1995.

Will my hon. Friend confirm that unemployment in Scotland, at 7.9 per cent., is much lower than in France, Germany, Italy and Spain, all of which follow the economic policies recommended by the Labour party? Does he agree that the only threat to a continued reduction in unemployment in Scotland comes from the proposals for a national minimum wage, the adoption of the social chapter, and from that confounded tartan tax?

My hon. Friend is absolutely right. I am sure that he will understand me when I say that it is with real regret that while he, as a Scot in exile, can take great pride in all of Scotland's achievements and its advances, the Opposition Members who have the privilege to represent Scottish constituencies use every opportunity to run down Scotland, as the next few minutes will no doubt prove.

What steps is the Minister taking to bring more employment to the districts of Possilpark, Springburn and Dennistoun?

I am sure that the hon. Gentleman realises that unemployment has decreased by 6 per cent. in the past year in the areas that he has mentioned in his constituency. Obviously, we will continue the policies that he knows are working.

How much would a separate Parliament in Scotland have to levy on employees in income tax if it were to make up the £3.1 billion extra that the Government spend in Scotland over and above what they spend in England per head of the population? If that levy were imposed, how would it relate to those employees' income tax and to the unemployment rate in Scotland?

As my hon. Friend knows, the proposed tartan tax of 3p, in the pound would raise £450 million. I leave it to my hon. Friend and to Opposition Members to work out exactly what the shortfall would be. I hope that they will put that in each and every one of their election addresses at the next general election.

The Under-Secretary of State will be aware of the announcement this week of the closure of Buchan Meat, which is in the constituency of the hon. Member for Banff and Buchan (Mr. Salmond). It is a very important plant for meat producers in the north-east of Scotland, employing almost 300 people. Can he explain what his Department is doing to make contact with Grampian Enterprise to ensure that we save those jobs and maintain the added value that that high-quality meat facility provides in the north-east of Scotland?

The hon. Member for Banff and Buchan and people at the factory have been in touch with my right hon. Friend the Secretary of State today and yesterday. Of course I agree with the hon. Member for Gordon (Mr. Bruce) that the loss of jobs is always a matter for regret, particularly when it is such a large number in a relatively small community. My right hon. Friend the Secretary of State and the Under-Secretary of State for Scotland, my hon. Friend the Member for Kincardine and Deeside (Mr. Kynoch), are keeping in close touch with Scottish Enterprise and Grampian Enterprise to see what can be done.

Exports

To ask the Secretary of State for Scotland if he will make a statement on the current level of Scottish exports. [10788]

Scotland's manufactured exports have reached an all-time record of £14.3 billion.

Can my hon. Friend confirm that, besides whisky and computers, almost all sectors of Scottish industry showed export growth in 1994 and that, in particular, the motor car and spare parts industries showed an increase of almost 60 per cent. on the rate in the previous year? What would be the effect of a tartan tax on that excellent growth record?

My hon. Friend is absolutely right to highlight the exporting successes during the past year. In fact, exports in the food and drink industries, excluding whisky, increased by more than 11 per cent.; paper and printing exports increased by 23.7 per cent.; and chemicals exports increased by 14 per cent. Growth has been right across the board.

My hon. Friend is absolutely right to refer to a tartan tax because export success depends on the competitiveness of the Scottish industrial base. Not only would a tartan tax hit exports, but I read in the press this morning that the deputy general secretary of the Scottish Trades Union Council proposes that we now go for a four-day week, but maintain wage rates. That would result in a 25 per cent. increase in costs and a dramatic reduction in competitiveness, which would be disastrous for exports and disastrous for business.

What information can the Minister provide to the House on the progress of negotiations with Japan about the vexed question of taxation and Scotch whisky exports?

I think that the hon. Gentleman will be aware that that subject is examined constantly. The World Trade Organisation is considering the matter at present, and both Scottish Office and other Ministers raise the issue with the Japanese Government whenever they visit Japan.

Is my hon. Friend aware that the rise in Scottish exports has played a major part in reducing unemployment in my constituency by 24 per cent. in the past three years? What assurances can he give me that that welcome progress will continue?

My hon. Friend's local enterprise company makes a sterling effort in that regard. That fact was repeated to me this morning when I attended the celebrations for the bicentenary of Robert Burns's death. [Interruption.] That shows that I learn quickly. Scottish Enterprise, together with the local enterprise companies, is participating in the new export strategy, the international challenge, which I launched in September. We are making a great effort to ensure that small and medium-sized companies receive the best possible exporting assistance. That will ensure continuing success and continuing record exports from Scotland.

Does the Minister agree that exporters in the west of Scotland, the highlands and islands, Northern Ireland and the Irish Republic would benefit from increased funding and further expenditure on the A75 and the west coast main line? Will the Scottish Office endeavour to ensure that such upgrading continues?

I am delighted to see the hon. Gentleman for the second time today—he was present this morning at the ceremony at the statue of Robert Burns on the embankment. I hear what the hon. Gentleman says, and I shall ensure that my hon. Friend the Minister responsible for transport issues in the Scottish Office hears the same thing.

Film Industry

To ask the Secretary of State for Scotland when he last met representatives of the Scottish film industry to discuss the industry's future prospects. [10789]

My noble Friend the Under-Secretary of State, the Minister with responsibility for the arts in Scotland, met leading figures in the film industry from overseas, the United Kingdom and Scotland on 10 January.

As part of his continuing film initiative, will the Minister institute discussions within his Department and with other interested parties about establishing a Scottish film school, which would do a great deal to nurture and develop talent in Scotland? If he agrees to do that, will he take into consideration other international models, such as the Danish film school—which, in its 20 years' existence, has made an enormous contribution to the film industry in that country?

We are now looking at all the options for which the Secretary of State has asked and which Scottish Enterprise is undertaking. The hon. Lady will also be aware that a number of studies are taking place, and we hope to be in a position to make a comprehensive statement in the early spring. The hon. Lady will appreciate that tourism figures have soared in Scotland as a result of the enormously successful films set in Scotland: "Braveheart", "Rob Roy" and "Shallow Grave".

In view of the fact that the Scottish film industry is becoming more and more successful, does my hon. Friend believe that increasing tourism in Scotland could be damaged by the tartan tax? Will he also confirm that the new film "Loch Ness" is to be premiered shortly in Inverness?

Yes, that film will be premiered in Inverness shortly and I believe that it will be extremely successful.

As to the first part of my hon. Friend's question on the tartan tax, he is absolutely correct to suggest that those who provide facilities for overseas tourists would have the greatest reservations about the tartan tax if they had to pay far more than tourist operators and tourist service providers elsewhere in Britain.

If the Government are so anxious to do something about the Scottish film industry, why have they failed to convince the Chancellor to amend the Capital Allowances Act 1990 to encourage private investment in the film industry by redefining expenditure on film as revenue expenditure? If the Government simply duck issues such as that, it will become patently obvious that their interest in the film industry is yet another propaganda exercise and another opportunity for the Secretary of State to pose for nice photographs with Mel Gibson to use in the right hon. Gentleman's election address.

We are looking at all the options, including the position on tax. As I stated last night, the Government will consider whether there are any lessons to be learnt from the Irish experience which can be applied to the Scottish situation in the light of the consultants' report. The hon. Lady will be pleased that the production of a CD-ROM, about Scotland as a screen location, has been funded by the Scottish Office, and many hundreds of thousands of pounds are being provided by the Scottish Office for films in Scotland.

Forestry Policy

To ask the Secretary of State for Scotland if he will make a statement about forestry policy. [10790]

The main aims of our forestry policy are the sustainable management of our existing woods and forests and the steady expansion of tree cover to increase the many, diverse benefits that forests provide.

Has the framework document for the new forest enterprise agency been agreed, and is there a problem with defining the specific rate of return that the agency will be expected to achieve?

The framework document is actively under consideration by Ministers at the moment, and my noble Friend the Minister with responsibility for agriculture, forestry and the environment, who is responsible for that matter, will bring forward a statement in the near future.

Is the Minister aware that vast areas of forest in my constituency in south Ayrshire would have to be destroyed if the electricity interconnector with Northern Ireland went ahead? In view of the alarm caused by the laying of the gas pipeline and the threat to the forest, as well as to the people on the south-west coast from the explosives in Beaufort's dyke, does he agree that there should be a third public inquiry into the undersea section of that interconnector before it is allowed to go ahead?

I commend the hon. Gentleman for getting a question about Beaufort's dyke into a question about forestry. The hon. Member for Glasgow, Cathcart (Mr. Maxton) was shaking his head in complete disbelief and I think that he summed up the feeling of the House.

Leaving aside for a moment the fact that electricity lines need poles, can the Minister give the House any indication of what tonnages of softwood the Government would like to see produced in this country in 35 years hence, which is the length of time it takes a Sitka spruce tree to grow to available size? What quantities and tonnages of hardwoods will we need 100 years hence?

Softwood is a particular concern of my noble Friend the Minister with responsibility for forestry, and I will ensure that the hon. Gentleman receives a full reply from him as soon as possible.

Highlands And Islands

To ask the Secretary of State for Scotland if he will make a statement on the economic prospects for the highlands and islands in 1996–97. [10793]

They remain excellent.

Will the Minister confirm that funding for Highlands and Islands Enterprise will be cut by £3 million in the next financial year; that funding for the three main further education colleges will be cut by £500,00 next year; that funding on housing in the highlands will be slashed next year; and, of course, that funding for local authorities has also been reduced, by some £2 million in the case of the Western Isles? When the Minister comes to Inverness next Monday, will he take the opportunity to explain to the people of the highlands and islands that all those cuts into the economic muscle of the highlands are necessary to finance pre-election tax cuts?

The hon. Gentleman refers to Highlands and Islands Enterprise. That organisation has a budget for 1996–97 of some £75 million. In the round of public expenditure settlement that we have had, that is a very fair settlement. Clearly, Highlands and Islands Enterprise has the opportunity to lever in private sector funds from industry, which it now does. It is more than capable of maintaining levels of output and improving on them.

The hon. Gentleman is perhaps unaware that we have increased funding to local government throughout Scotland by some 2.9 per cent. this year. With the reorganisation of local government, local authorities have a significant opportunity to deliver more cost-effective services. However, the hon. Gentleman and the Labour party seem intent on giving more money to local government. The hon. Member for Dundee, East (Mr. McAllion) was on BBC Television's "Scottish Lobby" with me at the weekend and he said that, if the Labour party had been in office this year, it would have given an extra £200 million to local government in Scotland. Would he take that money from the health budget, the education budget or another budget?

Will my hon. Friend confirm that, in the current financial year, some 3,200 jobs will be created in the highlands and islands, very much along the lines of previous years? Is not it about time that we talked up the economic prospects of the highlands and islands rather than denigrated them as the Labour party does?

My hon. Friend is right. I know that he is a regular visitor to the highlands as a tourist. Tourism accounts for 20 per cent. of employment in the highlands and islands and is a significant contributor to the economy. I believe that there are remarkable success stories to tell in that area. For example, Selfcare in Inverness represents a major inward investment in the area and should be welcomed. We rarely hear good news from the Labour party.

The Minister will be aware that the economic prospects for Campbeltown and Kintyre in my constituency will be greatly enhanced once there is a ferry link between Campbeltown and Ballycastle. He will be aware that the Secretary of State has taken a particular interest in the matter. Is he able to give any indication about when a ferry operator will be chosen? I am sure that he agrees that it will be a marvellous thing for the entire area—Kintyre and Northern Ireland—and that it would be a nice thing to happen in the new peace climate.

My right hon. Friend the Secretary of State and I have great sympathy for the hon. Lady's case. My right hon. Friend must take proper advice before reaching a conclusion. At this stage, no proposals have been put to Ministers, but we will bear the hon. Lady's comments in mind when we consider them.

Campbell's Soups

To ask the Secretary of State for Scotland what representations he has received about the boycott of Campbell's tinned soups in Scotland. [10794]

None.

The Minister will know that the campaign to boycott Campbell's soups and Fray Bentos products in Scotland has been extremely successful. He will also know of the appalling action taken by Campbell Soups to close down the extremely profitable Homepride factory in my constituency. Will he join me in asking those who are boycotting Campbell's soups in Scotland to buy Baxter's soups instead, which are made in the constituency of the hon. Member for Moray (Mrs. Ewing)? Should not the slogan in Scotland be, "Boycott Campbell's and buy Baxter's"?

I know that the hon. Gentleman is waging a significant campaign on this issue and I read with great interest the remarks he made in the Adjournment debate on 6 November. I have a great deal of sympathy with much of what he said, but there is little that I can add to what my hon. Friend the then Minister for Competition and Consumer Affairs, the hon. Member for Brecon and Radnor (Mr. Evans), said at that time.

Madam Speaker, you will recognise the importance attached to all our fish and food processing organisations in the north-east of Scotland and their significance to the local economy. Given that, and the remarks made by the hon. Member for Workington (Mr. Campbell-Savours), will the Minister explain what aspect of the Scottish Office budget will be allocated to promoting those high-quality goods, especially as they employ many people who give of their best to ensure high standards so that Scotland's name is recognised in the international community?

The hon. Lady is right about the importance of the food industry to Scotland. If she looks at what we are doing with Scottish Enterprise and Scottish Trade International, she will realise that significant efforts are put in to export assistance for the food industry. My right hon. Friend the Secretary of State launched a cookery promotion at the boat show in London recently—I was not aware that he was an expert.

We take every opportunity to promote Scottish products. We also have Scotland The Brand and I know that companies in the. hon. Lady's constituency—they have already been mentioned—have been involved. I believe that the local enterprise company in her constituency, Moray Badenoch and Strathspey Enterprise, is also involved. I participated in a promotion in Regent street just before Christmas. I believe that the Scottish Office is making every effort to ensure that the best of Scotland is promoted and exported in the interests of everyone.

Scottish Council (Development And Industry)

To ask the Secretary of State for Scotland when he next intends to meet representatives of the Scottish Council (Development and Industry) to discuss the trends in the Scottish economy; and if he will make a statement. [10795]

I met representatives from the Scottish Council (Development and Industry) shortly after I was appointed and following my invitation to organisations throughout Scotland to meet me to discuss their concerns.

Is the right hon. Gentleman aware that the 250 job losses at Buchan Meat in Turriff doubled local unemployment at a stroke? In a community the size of Turriff, it is the equivalent of thousands of job losses in an urban conurbation. Does he recognise that he should respond to that problem as a matter of national priority and not simply leave it to local agencies? Is he aware that the workers action committee in Buchan Meat is keen to advertise the fact that there are many excellent, expanding and profitable product lines in the factory, not least Boeuf D'Ecosse, a new packaged product that was to be trial launched on the French market in a £1 million venture this week? There are many products in that factory which would prove extremely attractive to alternative investment.

Does the right hon. Gentleman agree that the message is that alternative investment in the people and products of the area will be warmly welcomed, but that those interested only in asset-stripping—removing machinery, products or jobs from the factory—will be as fiercely resisted in Turriff as they are in Workington?

I am sure that all hon. Members are well aware of the difficulties created in Turriff by the liquidation of Buchan Meat. I am happy to give the hon. Gentleman an assurance that Scottish Enterprise will be involved. Indeed, it and the local enterprise company tried to prevent the liquidation, albeit—unfortunately—unsuccessfully. I understand the hon. Gentleman's concern about the impact the loss of jobs could have on Turriff and the surrounding areas—not least the farmers and others who are shareholders in the company.

I shall be happy to meet the hon. Gentleman to discuss what can be done. I shall ask Scottish Enterprise to pull out every stop—I know that it will—to try to ensure the continuation of local employment. The hon. Gentleman will be aware that there are great difficulties, but I am sure that, on this matter, we can be of one mind and share a single-minded determination to do what we can to prevent further job losses in his constituency.

When my right hon. Friend next meets the Scottish Council (Development and Industry), will he ask it to carry out a full and objective economic analysis of the effect of a tartan tax on the Scottish economy? In particular, will he point out that the reason why Scottish Labour Members are so fanatical about a tartan tax is that they would not have to pay it? They would be at Westminster, on full pay, with nothing to do except speak on English matters—with no liability to pay the tartan tax.

I do not know whether this is correct, but I am told that even the people who work in Labour's research department in Scotland would not have to pay the tartan tax because they are paid from Walworth road. My hon. Friend has pointed out an anomaly—[Interruption.] I say to Labour Members who laugh and jeer about the tartan tax that it is not a joke. In the unlikely event of Labour ever getting into power to set up its tax-raising Scottish Parliament and introducing the tartan tax, the result would be £6 a week extra in tax for the average family. It would mean losing the family holiday and I do not think that most people in Scotland are prepared to give up their holidays to give politicians an opportunity to be put out to grass in Edinburgh.

Is the right hon. Gentleman aware that IBM is transferring the manufacture of its computer keyboards from LEMAC in Haddington to the far east, thereby destroying the jobs of 252 of my constituents? Why are the Government allowing that multinational giant to have free access to the European market without accepting responsibility for the low-paid employees of its contractors in Scotland? When the right hon. Gentleman next meets the council, will he discuss what the Government intend to do to create more jobs for my constituents in east Lothian?

The first thing that we are doing is resisting idiotic proposals such as a tartan tax, the social chapter or a minimum wage—all of which would add to employment costs. If the hon. Gentleman has begun to realise that jobs are mobile and that we must fight like tigers to get them, we may be making some progress with the unfortunate circumstances that exist in his constituency. When I met IBM recently to discuss inward investment, it became clear to me that we are in a fiercely competitive market and that we need a low tax, low regulation economy. The hon. Gentleman, with his support for a tax-raising Parliament, is the enemy of jobs in Scotland.

Violent Crimes

10.

To ask the Secretary of State for Scotland what proportion of reported crimes of violence have been committed by re-offenders in the last 12 months; and if he will make a statement. [10796]

Information is not available in the form requested, as not all reported crimes of violence result in a conviction. In 1994, 17 per cent. of persons convicted of a crime of violence—which category includes serious assault, sexual assault, robbery and possession of offensive weapons—had been convicted of a similar offence in the previous five years.

What steps will my hon. Friend take in respect of crimes of violence committed by youngsters? There still seems to be a problem with the carrying of knives. Will my hon. Friend consider introducing legislation to prevent the sale of knives to young persons under the age of 18? Will he also consider introducing legislation to prevent the consumption of alcohol in public places by youngsters under 18?

It is illegal to sell alcohol to under-18s, and a large number of councils have adopted byelaws approved by the Secretary of State to prevent the consumption of alcohol in public places. We will consider, in co-operation with the Home Office, any proposals that my hon. Friend has—but we must be certain that proposals are enforceable by the police. We believe that the Health Education Board for Scotland should spearhead health enhancement among the young.

As to the carrying of knives, there have been a number of successful campaigns, such as Operation Combat. The number of attempted murders involving the use of knives fell by half as a result, which every police force should bear in mind.

Does not the Minister's answer reveal the total failure of the Government's criminal justice policies? With friends such as the hon. Member for Ayr (Mr. Gallie), who needs enemies? The present policy clearly does not work. At Glasgow district court a few months ago, 7,000 criminal cases were dropped because of lack of resources. Apart from that being a kick in the teeth for the victims of crime, is not it the case that the several thousand villains who are out and about in Scotland regard the Government as their friends?

The dropping of that large number of cases was the responsibility of Glasgow district council, which refused to make available the necessary facilities. The hon. Gentleman should direct the strength of his criticism to that council. I am proud to be associated with my hon. Friend the Member for Ayr (Mr. Gallie), who introduced a necessary provision to allow prosecutors a right of appeal against sentences that are too lenient. That right has been used successfully, and such offenders have been subjected to heavier sentences as a result of the measure for which my hon. Friend fought. He was right to fight for it, and that measure is greatly to his credit.

Does my hon. Friend recall previous law and order Bills and the Opposition opposing measures that the Government wanted to introduce? Does my hon. Friend remember the speeches made about stop and search, which has produced remarkable results? Does not that measure show that Conservatives are tough on crime, whereas Labour supports not the victims of crime but the persons who practise it?

My hon. Friend is right to remind the House that, originally, Labour Members opposed the right of police officers to search persons whom they suspected of carrying weapons. Despite that opposition, the law was changed. As a result, the number of persons who commit crimes involving knives is considerably lower than it would have been.

New Towns

11.

To ask the Secretary of State for Scotland what plans he has to encourage employment opportunities in Scotland's new towns; and if he will make a statement. [10797]

Scottish Enterprise and the local enterprise companies recognise their responsibility to maintain economic development in new towns.

Would I be absolutely right to say that new towns and their staff had an excellent track record of creating jobs and attracting inward investment to Scotland's new towns and that the new towns have led inward investment in Scotland since the second world war? That being the case, would it not be appropriate for the Minister to ensure that the employment of those staff is cared for in the transition from the development corporations to the new unitary authorities? Will he ensure that everything possible is done to guarantee their future employment?

There seems to be a game of trying to get us to say, "You are absolutely right." I am interested to hear the hon. Gentleman's comments. He raises some valid points. Over the past five years, in Cumbernauld, for example, which is obviously of great interest to him, Locate in Scotland has recorded 36 planned inward investment projects, involving planned investment of more than £87 million associated with the expected creation or safeguarding of more than 2,000 jobs. I am anxious to ensure that we continue the process of inward investment into the new towns. They are of course no longer new towns, which is why the new town development corporations are being wound up. Locate in Scotland has been in regular contact with the new town development corporations and I am very confident that the positive efforts that have been brought about remarkably successfully by many people through partnership will continue in future.

Does my hon. Friend agree that Scotland's recent record on job creation, compared with that of other parts of the United Kingdom, has been excellent, but that all those encouraging gains would be set at nought if we had a tartan tax, the extra imposts on employers that the social chapter would bring, and a minimum wage? Is he aware of the budget announced yesterday in Germany? The German Government are now well aware of the job-destroying consequences of all their foolish decisions over the years, which have loaded employers with huge costs and will only reduce the wealth-creating potential of the country.

My hon. Friend draws attention to Germany, where unemployment is rising, whereas it is falling consistently in this country. Not only are the taxes to which my hon. Friend has referred important to the future competitiveness of Scottish industry in particular; the costs of labour in Scotland are important too.

If new Labour is all about trying to go forward, having stakeholding and involving the unions more closely on factory premises, I should like to know whether it disassociates itself from what Mr. Bill Speirs, the deputy general secretary of the Scottish Trades Union Congress, said yesterday. He demanded that the working week be reduced to four days and expected no reduction in earnings. That would mean an effective increase in wages of some 25 per cent., which would be catastrophic not only for Scottish businesses but for British business. All the successes and records being set daily by industry in Scotland would be for nought.

As the Minister responsible for industry, does the hon. Gentleman agree that employment opportunities are directly linked to the quality of education and training in Scotland? Is he aware that, yesterday, Borders regional council had to withdraw free transport for people aged between 16 and 18 attending day-release classes at further education colleges as one of 30 cuts in education in the region? How can the Secretary of State tell the shadow Secretary of State that there have been no cuts in education? Will Ministers stop fantasising about tartan taxes and deal with the situation on the ground?

The right hon. Gentleman should be aware that, in fact, there has been a 2.5 per cent. increase in education spending this year. It is up to local councils to decide how to spend their funds. Local councils have asked for more responsibility for, and more choice in what they can do with, the funds that they are given, and they are being given both. We are consulting on areas in which they can take on greater responsibility. They must stand up and be responsible for what they do. They have the opportunity to decide how to spend their money. I hope that they will give priority to the areas to which the right hon. Gentleman referred.

The Minister will recall that, last year, I asked a question about the effects of £11 million for urban development being lost from Irvine new town because of the closure of Irvine development corporation. He said that the money would be distributed to local enterprise companies. Why, then, must the LEC in Ayrshire put up with a cut of £2.5 million? In those circumstances, how can industry be promoted in the new town beyond the life of the development corporation?

The difference between the hon. Gentleman and his party and the Government is that we recognise that LECs, as with Scottish Enterprise, have levered in a ratio of 3:1 of private funding to public funds. They clearly believe that they can exist with less funding and maintain, through efficiency improvement, the same output—and, indeed, improve on it. If the hon. Gentleman spoke to his LEC he would understand how successful LECs have been. Rather than running down the Ayrshire economy, he should tell the positive stories about Irvine, inward investment into Irvine, and the successes of Ayrshire.

Nhs Staffing Costs

12.

To ask the Secretary of State for Scotland if he will make a statement on NHS staffing costs. [10798]

Resources available to the NHS for staffing and other costs continue to be higher than ever before. Since 1980, the number of nursing staff has increased by 15.5 per cent., the number of hospital doctors by 21.5 per cent. and the number of general practitioners by 18.7 per cent.

Does the Minister agree that the Government's market approach has led to rock bottom morale among NHS staff and a two-tier service for patients? Will he condemn the approaches made to consultants at Glasgow Royal Infirmary NHS trust to give preferential treatment to patients of GP fundholders? Will the Government, for once, stop telling fibs and admit that the NHS is certainly not safe in their hands? [Interruption.]

Order. The hon. Member for Lancaster (Dame E. Kellett-Bowman) seems to be a little perplexed. The Secretary of State used the word fib earlier in a similar context and I allowed it.

The hon. Lady can be assured that the health service is absolutely safe in the Government's hands. Expenditure has increased substantially. I can give her the reassurance that she seeks in relation to Glasgow. We are absolutely committed to treating all patients equally. All that matters is the recommendation of the clinician as to whether the patient requires urgent treatment. If he or she so recommends, the patient must receive it. The Scottish Office guidelines are clear. The same waiting time guarantee must apply to every patient. I understand that the trust accepted that it issued its questionnaire in error.

Being guaranteed a maximum waiting time is not the same as being told that someone will not be put behind in a queue if a GP fundholder seeks priority. Has the Minister been in touch with Glasgow Royal Infirmary NHS trust today to tell it that it is out of line? If not, why not?

If the hon. Lady had listened to what I said, she would have heard that I was making it absolutely clear that we do not accept in any circumstances a two-tier health service. Every patient must receive the same priority according to the determination of the clinician concerned. That is stated in our guidelines and that position must be followed. The NHS trust admitted that its questionnaire was issued in error.

If the Minister thinks that the Scottish Office guidelines are clear, he is the only one who does. Has he read the letter, issued on official notepaper bearing the crest of Glasgow Royal Infirmary NHS trust, in which the medical advisory committee states that it has agreed to take the opinion of all consultants on whether factors other than clinical need should significantly affect the handling of patient care? Does he understand the point that is made in the letter—that the pressure from his imposed internal market and from GP fundholders and other purchasers who are demanding significantly better treatment for their patients has led the trust to consider abandoning the principle of treatment in accordance with medical need? Will he send a clear instruction to every NHS trust in Scotland that patients can be treated in accordance with medical need, and only in accordance with medical need? If he will not do that, both he and the Secretary of State for Scotland should do what one of the Secretary of State's constituents—Mrs. Bowie—called on him to do today in the press and resign, because neither of them, nor any of the other chancers on the Government Front Bench, can be trusted with our NHS.

Oh!

Guidelines have been issued—[Interruption.] The position is absolutely clear—[Interruption.]

Order. Obviously I have missed something. Will the Under-Secretary of State tell me what he is shouting about?

Is "chancers" parliamentary?

Chancers?

The hon. Member for Dundee, East (Mr. McAllion) used the word "chancers".

rose—

Order. I did not hear what the hon. Member for Dundee, East said. If the hon. Gentleman said something that might have been unparliamentary, I expect him to develop the point that he made so that I understand completely what he said.

Madam Speaker, I used a word from Glasgow patois—"chancer". It means that we do not really trust the person who is described as a chancer. I think that it is parliamentary.

I live and learn every day, especially from the Scots. Thank you very much.

I can tell the hon. Gentleman that there is no element of chance about the fact that more than £30 million has been allocated to the NHS trust in the hon. Gentleman's constituency for an extension to Ninewells hospital. NHS trusts in Scotland represent a remarkable success story in helping to bring down waiting times. As for the Secretary of State's constituent, although because of confidentiality I cannot comment in detail, I understand that she wanted to be treated more quickly than would have been possible on the NHS. There is no reason to suppose that she would have had to wait longer than the guaranteed maximum period for patients. Only clinicians can judge individual need. NHS resources must be made available for those in greatest need.

Glasgow International Airport

13.

To ask the Secretary of State for Scotland what analysis he has made of the impact on the economy of the west of Scotland of the development of Glasgow international airport. [10799]

I believe that the airport makes an important contribution to the west of Scotland economy, and that is why, as my hon. Friend knows, we support the Glasgow airport initiative, which seeks to maximise the economic benefits of the airport's expansion.

I am grateful to my hon. Friend for that positive and helpful reply. Does he agree that two key infrastructure developments are crucial to the airport's future—first, the M74 northern extension and, secondly, an eastbound on-ramp for the M8? Can he give an unequivocal commitment to the House today that both those developments will go ahead as soon as possible?

I compliment my hon. Friend on his involvement in the setting up of the Glasgow airport initiative in 1992. In answer to his two questions about the roads, I assure him that we shall consider those matters positively and will try to take them forward at the earliest possible time.

Will the Minister join me in congratulating Glasgow airport on bringing 5,000 jobs to my constituency, but will he also recognise that that is no substitute for the loss of 85 per cent. of the manufacturing jobs in my constituency—about 20,000 jobs—over the same period? Will he now consider investing in manufacturing industry, with the aim of helping the airport to further its business?

I am glad that the hon. Lady recognises the contribution that the airport initiative has made. I have seen a similar initiative in the United States—the Washington airport task force, which has contributed towards a good joint venture arrangement between software houses in the United Kingdom, including Scotland, and in Virginia. I believe that the Glasgow airport initiative has been ably set up to develop similar arrangements.

As for manufacturing, the hon. Lady may be aware of the jobs that have been created by Locate in Scotland in the past year. About 12,300 jobs have been created, involving 97 projects and £1.1 billion in capital investment. The transformation of the Scottish economy from some of the traditional industries of the past towards the industries of the future—we now produce about 11 per cent. of Europe's semiconductors, 35 per cent. of its personal computers, 50 per cent. of its automated banking machines and 60 per cent. of its workstations—is all positive information about successes for the Government and for our policies.

Ec Council Of Ministers

14.

To ask the Secretary of State for Scotland if he has recently attended a meeting of the EC Council of Ministers. [10801]

My right hon. Friend attended a meeting of the Council of Fisheries Ministers on 26 October 1995, and I attended on 21 and 22 December 1995.

When my hon. Friend returns from the next European Council of Ministers meeting, will he go on a special tour of Scotland to remind all of those who are selling the idea that Scotland will be able to cast itself adrift from the UK and that all the tax money that is spent and the trade that is conducted in Scotland by the rest of the UK could be replicated and replaced by Europe are talking utter nonsense? Would not such a course lead to bankruptcy and higher taxation?

I can assure my hon. Friend that my right hon. Friend and all my Scottish Office colleagues regularly travel to all parts of Scotland. Indeed, my right hon. Friend has just returned from two days in Shetland at the Up Helly-a celebrations. My hon. Friend is right to suggest that Scotland punches well above its weight in the councils of Europe and the world as a full and equal partner in this United Kingdom. That is in stark contrast to the immediate belittling of Scotland that is on offer from the SNP or the gradual marginalisation that is offered by Labour and the Liberal Democrats.

When the Minister and the Secretary of State attend meetings of the Council of Ministers, do they discuss with their Spanish, German and French colleagues the development of regional government within these areas and the importance of devolution to their economies?

I can assure the hon. Gentleman that we discuss those matters—our Spanish counterparts are most concerned about having one of the worst unemployment rates in the EU.

Points Of Order

3.30 pm

On a point of order, Madam Speaker. You will have noticed that question No. 175 appears on the Order Paper today in the name of the hon. Member for Dover (Mr. Shaw). The question appears to have been placed on the Order Paper to elicit the result of the inquiry to which the question refers. This is a matter of immense importance that should have been dealt with either by a statement to the House or by an oral answer from the Secretary of State for Scotland. All Scottish Members are here and, while we have plenty to do, we could hear the answer to that question orally. Is there a procedure whereby that question can be answered now so that we can debate the matter now?

There is no procedure whereby the hon. Member can secure an oral answer to that question. I have not heard that any Minister is seeking to answer it orally or to make a statement on the matter.

On a point of order, Madam Speaker. I rise to draw your attention to the fact that the European Commissioner for Transport has today approved the expenditure of —440 million of public funds in aid to the state airline of Spain, Iberia. This will have a damaging impact on UK airlines. Is there any way in which the House can debate this matter, because British taxpayers' money will be used to damage British interests?

The hon. Gentleman may like to raise the matter with the Leader of the House during Business Questions if he is seeking a debate on this or other matters.

On a point of order, Madam Speaker. It has been widely reported today that senior judges—including a former Master of the Rolls—have criticised the Home Secretary for playing politics with the administration of justice. Given the gravity of these accusations, has the Home Secretary indicated to you whether he intends to come and give an explanation to the House?

No. As I said earlier, I have not heard from any Minister that we will be having a statement today on any of those issue.

Subsequent to the point of order of my hon. Friend the Member for Cumbernauld and Kilsyth (Mr. Hogg),Madam Speaker—

Order. The hon. Gentleman and the House know that once a point of order has been dealt with, it must rest there. I have given my answer to that point of order.

It is a different point of order.

The hon. Gentleman said that it related to the point of order raised by the hon. Member for Cumbernauld and Kilsyth. He cannot have it both ways.

On a point of order, Madam Speaker.

The hon. Member for Cunninghame, North (Mr. Wilson) might like think about a different point of order while I deal with the hon. Member for Linlithgow.

While it is quite right, Madam Speaker, to say that there is no procedure available in such cases, used there not to be a convention that—at least as a courtesy to the House—Ministers who knew that controversial statements were due to be made placed them in the Library at two o'clock at the latest?

That is a decision for Ministers to make, not one for the Speaker.

rose—

Is it a different point of order?

Yes, Madam Speaker. I used the word "subsequent" in a purely chronological sense.

The question on the Order Paper refers to a specific local authority. I was under the impression that, according to a convention of the House, any such specific reference should be made by an hon. Member representing the area concerned. The fact that the question was tabled by the hon. Member for Dover—

Order. That is not a point of order for me. I think that the House knows the answer to that one.

Bill Presented

Protection Of Privacy

Sir Patrick Cormack presented a Bill to make it an offence to sell or to buy tapes or transcripts of private conversations otherwise than with the consent of both parties; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 14 February and to be printed. [Bill 50.]

Regulation Of Funding Of Political Parties

3.35 pm

I beg to move,

That leave be given to bring in a Bill to regulate the funding of political parties.

The Bill would require the disclosure of the source of donations, prohibit donations from overseas sources and require the publication of accounts.

Once again, the funding of political parties is on the agenda, put there by no less a person than the Prime Minister. Only last Thursday, at Prime Minister's Question Time, he raised the question of Labour party funding when he said:

"We know who pays 50 per cent. of the money that the Labour party gets."—[Official Report, 25 January 1996; Vol. 270, c. 476.]

He was quite right: we do all know.

The Prime Minister seems very keen to publicise the source of funding of the Labour party—and why not? It is no secret. Party accounts make it quite clear, and the law makes strict provision with regard to the operation of trade union political funds. Unfortunately, no such transparency applies to the funding of the Tory party. Shrouded in mystery and obscurity, a host of secretive companies and organisations were created after the war to funnel secret loot into the Tory party, and our Prime Minister seems to want to keep it that way. What a perfect example of saying one thing and doing another.

The Bill is a simple measure. It has three main aims—to prohibit donations from foreign nationals not normally resident in this country and from overseas companies and Governments; to ensure the recording and publication of donations above a certain limit—I am not tied to a particular figure, but the limit would probably be about £1,000; and to require political parties to publish full income and expenditure accounts in the same way as companies and trade unions.

The issue is so unremarkable that in 1949 the House passed a motion requiring parties to publish accounts. Unfortunately, it has not yet been properly activated by the Tory party. We know that the matter is of considerable concern not just to Opposition Members but to many members and supporters of the Tory party. It may also be of interest to those who do their business with the Royal Bank of Scotland, which seems to have allowed the Tory party a huge overdraft—at one stage hitting nearly £16 million. My Scottish colleagues may wonder whether small businesses that bank with the Royal Bank of Scotland receive such helpful treatment if they encounter cash-flow crises in their day-to-day affairs.

Publication might also help the Prime Minister, who was very confused about the sources of Tory funding a couple of years ago. He now ducks questions about the use of Downing street for Tory party functions. I have here an invitation to the winter ball in aid of Conservative party marginal seats, which states:

"You will shortly be receiving (or may already have received) an invitation to the launch reception at 10 Downing Street."

The Prime Minister has even less idea of what is going on around the country. When I raised the point with him at Question Time on 19 October 1993, he said that he must let me into a secret:

"There are a great many secret sources and they are all cheese and wine parties up and down the country."—[Official Report, 19 October 1993; Vol. 230, c. 144.]

One wonders how much wine and cheese the Tories stuffed into that fugitive from justice, Asil Nadir, who, as they have now admitted, donated more than £400,000. One wonders whether they will pay that money back to the unfortunate people who lost heavily in the crash of Polly Peck. One also wonders why they could not confirm the donation immediately, and why they were careless enough to dump the records of donations so that they were unable to provide the receiver with facts and figures. And one must wonder whether they will repay the money donated by ex-Nissan boss Octav Botnar, who is currently hiding in Switzerland to evade the attentions of the Inland Revenue. What about Mr. Virani—another heavy donator to Tory funds who ended up inside? Who are the real villains' friends here—Botnar, Virani and Nadir?

There might also be concern as to how much foreign business men, particularly Greek shipowners, have donated. We could then match the figure with the amount lost to the Treasury each year through the tax loophole that benefits them—foreign domicile tax status. It is an interesting provision and such an unusual arrangement that we are one of only four countries in western Europe to have it. The others are Switzerland, Luxembourg and the Channel Islands, which are all well-known tax havens.

It would also be instructive to find out how much money has come from Hong Kong. It appears that the Tories have still not shaken off that habit. Even this year, it is reported that the Foreign Secretary attended fund-raising meetings during his recent visit, even though one presumes that his trip to Hong Kong was funded by the British taxpayer. One wonders whether, following the deterioration of relations between China and Britain, Hong Kong business men were as generous with their donations as they have been, but that will not stop that lot trying to get money from them.

What is remarkable is that legislation forbidding foreign donations has been in place in the United States, Germany, Canada and other countries for some years and is accepted as normal. The British public have a right to know whether one of the main political parties is in hock to foreign business men, companies or, indeed, countries.

The publication of donations was introduced a number of years ago in the United States, which was followed by other countries, including Australia. It does not seem to provide any particular difficulties for them. Is not it surprising that the Conservatives are so keen to invoke the right to silence in this case? Of course, they might be following the precept that they chant regularly from the Dispatch Box that, "Those who have nothing to hide have nothing to fear." Perhaps they are concerned that people might detect—how can I put it delicately—a strong statistical correlation between donations to the Tory party and the provision of knighthoods, peerages, and now, places on quangos, let alone ministerial access for companies.

That highlights the problem that the Tories face. They are kept together only by their monopoly of patronage through honours, quangos and political favours. They are a narrow oligarchy clinging to central state power, propped up by a few high-spending companies and individuals and by foreign interests. More and more, their previous supporters in industry and construction are deserting them, as they realise the harm that is being done to their businesses by Government policy.

Even Lord McAlpine, the previous treasurer of the Tory party, said only this week that the construction industry must

"explain to the government how its handling of the British economy has, over the past five years, systematically destroyed Britain's construction industry, and that this has to stop."

Even that industry is deserting in the face of the Government's actions. Frankly, the Conservative party is knackered.

It was most instructive to watch the programme on Tory wives the other month. Look at what happened when they held constituency functions. Nearly all the participants were pensioners. That graphically illustrated what has been reported in the press, particularly The Daily Telegraph—that the Tory party is an elderly and aging party with an average age of 60. New blood is not coming into the party. Lots of those who stay do so only to belong to Conservative clubs, which reputedly have the best snooker tables. The Young Conservatives, which was once the largest youth movement in Europe outside the Komsomol, is down to 5,000 members and half of them are barmy. That is why the Tory party has had to cancel its youth conference. Meanwhile, the young Labour movement is at 25,000 and roaring ahead.

At councillor and Member of the European Parliament levels, Tory representatives are becoming an endangered species. That is why the Tories have to seek out and cover up the supply of dodgy money. The Bill is aimed at cleaning up the financing of British politics and ensuring that British parties are not up for sale. It would be considered normal in our fellow democracies and will be considered common sense by the voters of this country and I commend it to the House.

3.43 pm

I oppose this Bill on the regulation of the funding of political parties. It contains more than a whiff of hypocrisy. The stench of hypocrisy surrounding it is much like that of the sewers before we privatised the water companies.

One objective of the Bill is to move Britain towards the state funding of political parties. That would be extremely damaging but Labour would like to do it. It is not about regulating those who financially support political parties but about keeping secret the millions of pounds of trade union support to Labour that would fall outside its terms. It is a classic case of Labour saying one thing and doing another.

Labour talks about disclosure of party funding and openness. The hon. Member for Warley, West (Mr. Spellar) said that there is no secrecy about Labour party funds. That statement is not true. There is a lot of secrecy when one starts to look at Labour party accounts. The Labour party makes many statements about disclosure and openness, but it says one thing and does another. The hon. Gentleman's entry in the Register of Members' Interests shows that he receives trade union funding from two sources but there is no disclosure of or openness about the amount of money that he gets from them. He is guilty of saying one thing and doing another.

The Conservative party's openness is revealed by the extent of the information that the hon. Member for Warley, West has been able to find. As he knows, we in the Conservative party go to a lot of wine and cheese parties and chicken dinners. Sometimes the cheese is not up to scratch; sometimes the chicken is not as nice as we would like it to be. But we know that we are raising an honest penny for the Conservative party's coffers. We do not pick up the phone, as does the Labour party, to call a friendly trade unionist to get thousands of pounds. We do the hard work of going around the chicken and cheese circuit to get money for the Conservative party.

I invite hon. Members to look at the Labour party's national executive committee reports. In the 1986 report they will find an advertisement by Robert Maxwell—funding the Labour party. If they look again, they will find an advertisement for a Soviet book shop—funding the Labour party. There was no reference in the speech of the hon. Member for Warley, West to the member of the other House who sits on the Labour Front Bench and who took £250,000 of pensioners' money three weeks before Robert Maxwell jumped overboard. That is how the Labour party and its Members fund themselves.

There is worse than that. The latest accounts of the Labour party reveal that 57 per cent. of its funds come from the trade unions. However, that is 57 per cent. of what we are told about. There are many entries in the Labour party's accounts that cannot be reconciled. For example, I have here some leaked minutes of the National Trade Union and Labour Party Committee. Donations called affiliation fees from trade unions add up to £3.6 million. The Labour party's accounts give the figure as £6.6 million. There is a lot of difference between £ 6.6 million and £3.6 million. Where is the £3 million?

On a point of order, Madam Speaker.

Where are the extra affiliation fees that the Labour party does not disclose in its accounts?

Order. I have a point of order.

The hon. Gentleman is clearly arguing in favour of greater disclosure of party funding details, which is exactly what the Bill is about. He is making a speech in favour of the Bill which masquerades as one against it.

I do not interpret the speech of the hon. Member for Dover (Mr. Shaw) in that way. He is keeping himself in order. He has another minute or two in which to finish.

I am grateful for your support, Madam Speaker.

If we consider the trade union figures, we find no openness and disclosure. The minutes of the meeting say that Unison's donation to the Labour party is £700,000, but, when one goes to Unison's accounts£buried away on a page that is difficult to find, somewhere in the middle of a 50-page document£one finds that the figure is £1,989,000, equivalent to one sixth of Labour party expenditure.

That is not the whole story. The Labour party receives more money from Unison than is disclosed in that figure. Another £94,000 is disclosed as being for parliamentary activities. Once upon a time, we were told that the Labour party would disclose how that figure is made up, and that we would find out which Front-Bench Labour Members are receiving the money, but no such disclosures have yet been made. In that regard, Labour Front-Bench Members are guilty of saying one thing and doing another.

The Labour party does not disclose five other funds in its central accounts. The Industrial Research Trust, once mentioned in disclosures of the Leader of the Opposition and the deputy leader in the Register of Members' Interests, has now been excluded from public view and taken out—another example of saying one thing and doing another. No details are available for public scrutiny on the Labour leader's office fund—another example of saying one thing and doing another.

There are no disclosures of what the Lionel Cooke Memorial Fund is, of the details, of donors and of the size of donations. There are no disclosures of the details of the National Trade Union and Labour Party Committee funds, of the donors and of the size of donations. That is an example of the Labour party saying one thing about openness and disclosure, but doing another. [HON. MEMBERS: "Hypocrisy"] My hon. Friends may say the word "hypocrisy": I could not possibly comment.

The Labour party is in trouble. If we consider its membership and the NEC report, we find that the Labour party boasts an 85 per cent. retention rate. If we turn that statistic around, however, it means that 15 per cent. of the Labour party membership are either dying each year or are failing to renew their membership. The Labour party retains its members only for about six years on average and then they get fed up with the Labour party. The NEC report says:

"The party's growth in membership"

has brought

"little financial benefit centrally".

There is still a high dependency on the trade unions in Labour party financing.

The Bill should be opposed because it is full of hypocrisy by the Labour party. In his speech, the hon. Member for Warley, West, in common with his Front-Bench colleagues, has been saying one thing and doing another.

Question put, pursuant to Standing Order No. 19 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):—

The House divided: Ayes 163, Noes 62.

Division No. 41]	[3.52 pm
AYES
Adams, Mrs Irene	Burden, Richard
Allen, Graham	Byers, Stephen
Armstrong, Hilary	Callaghan, Jim
Ashdown, Rt Hon Paddy	Campbell, Mrs Anne (C'bridge)
Ashton, Joe	Campbell, Menzies (Fife NE)
Banks, Tony (Newham NW)	Campbell-Savours, D N
Beith, Rt Hon A J	Canavan, Dennis
Benn, Rt Hon Tony	Cann, Jamie
Bennett, Andrew F	Chidgey, David
Benton, Joe	Chisholm, Malcolm
Betts, Clive	Clapham, Michael
Bradley, Keith	Clarke, Eric (Midlothian)
Bray, Dr Jeremy	Clelland, David
Brown, N (N'c'tle upon Tyne E)	Clwyd, Mrs Ann
Bruce, Malcolm (Gordon)	Connarty, Michael

Corston, Jean	Madden, Max
Cousins, Jim	Mahon, Alice
Cox, Tom	Marek, Dr John
Cummings, John	Marshall, David (Shettleston)
Cunliffe, Lawrence	Marshall, Jim (Leicester, S)
Cunningham, Jim (Covy SE)	Martin, Michael J (Springburn)
Dalyell, Tam	Martlew, Eric
Davidson, Ian	Maxton, John
Davies, Bryan (Oldham C'tral)	Meale, Alan
Davies, Chris (L'Boro & S'worth)	Michie, Bill (Sheffield Heeley)
Davies, Ron (Caerphilly)	Miller, Andrew
Denham, John	Morgan, Rhodri
Dixon, Don	Morley, Elliot
Dobson, Frank	Morris, Rt Hon Alfred (Wy'nshawe)
Donohoe, Brian H	Mudie, George
Dowd, Jim	Mullin, Chris
Eastham, Ken	Murphy, Paul
Etherington, Bill	O'Brien, William (Normanton)
Evans, John (St Helens N)	O'Hara, Edward
Ewing, Mrs Margaret	Olner, Bill
Flynn, Paul	Orme, Rt Hon Stanley
Foster, Rt Hon Derek	Parry, Robert
Foster, Don (Bath)	Pendry, Tom
Foulkes, George	Pickthall, Colin
Fyfe, Maria	Pike, Peter L
Galbraith, Sam	Pope, Greg
Gapes, Mike	Powell, Ray (Ogmore)
Garrett, John	Prentice, Bridget (Lew'm E)
Godman, Dr Norman A	Purchase, Ken
Godsiff, Roger	Radice, Giles
Golding, Mrs Llin	Randall, Stuart
Griffiths, Nigel (Edinburgh S)	Rendel, David
Grocott, Bruce	Roche, Mrs Barbara
Gunnell, John	Rooker, Jeff
Hain, Peter	Ross, Ernie (Dundee W)
Hall, Mike	Ruddock, Joan
Hanson, David	Salmond, Alex
Hardy, Peter	Sheerman, Barry
Hinchliffe, David	Sheldon, Rt Hon Robert
Hogg, Norman (Cumbernauld)	Skinner, Dennis
Home Robertson, John	Spearing, Nigel
Hood, Jimmy	Spellar, John
Hoon, Geoffrey	Squire, Rachel (Dunfermline W)
Hoyle, Doug	Steel, Rt Hon Sir David
Hughes, Roy (Newport E)	Steinberg, Gerry
Hughes, Simon (Southwark)	Stevenson, George
Hutton, John	Stott, Roger
Ingram, Adam	Sutcliffe, Gerry
Jackson, Glenda (H'stead)	Taylor, Mrs Ann (Dewsbury)
Jackson, Helen (Shef'ld, H)	Taylor, Matthew (Truro)
Janner, Greville	Tipping, Paddy
Jones, Barry (Alyn and D'side)	Touhig, Don
Jones, Jon Owen (Cardiff C)	Turner, Dennis
Jones, Martyn (Clwyd, SW)	Tyler, Paul
Kaufman, Rt Hon Gerald	Walker, Rt Hon Sir Harold
Khabra, Piara S	Walley, Joan
Kilfoyle, Peter	Wareing, Robert N
Litherland, Robert	Watson, Mike
Lloyd, Tony (Stretford)	Wigley, Dafydd
Llwyd, Elfyn	Williams, Rt Hon Alan (Sw'n W)
Lynne, Ms Liz	Williams, Alan W (Carmarthen)
McAllion, John	Wilson, Brian
McAvoy, Thomas	Winnick, David
Macdonald, Calum	Wray, Jimmy
McFall, John	Wright, Dr Tony
McKelvey, William
Mackinlay, Andrew	Tellers for the Ayes:
MacShane, Denis	Mr. Harry Barnes and
	Ms Angela Eagle.
NOES
Alexander, Richard	Beggs, Roy
Alison, Rt Hon Michael (Selby)	Booth, Hartley
Ashby, David	Brown, M (Brigg & Cl'thorpes)
Atkins, Rt Hon Robert	Carrington, Matthew
Atkinson, David (Bour'mouth E)	Cash, William
Banks, Matthew (Southport)	Channon, Rt Hon Paul

Chapman, Sir Sydney	Patnick, Sir Irvine
Dover, Den	Pattie, Rt Hon Sir Geoffrey
Duncan-Smith, Iain	Pawsey, James
Dunn, Bob	Porter, David (Waveney)
Forsythe, Clifford (S Antrim)	Riddick, Graham
Fry, Sir Peter	Ross, William (E Londonderry)
Gallie, Phil	Shaw, David (Dover)
Greenway, Harry (Ealing N)	Shepherd, Sir Colin (Hereford)
Greenway, John (Ryedale)	Skeet, Sir Trevor
Hamilton, Neil (Tatton)	Smith, Sir Dudley (Warwick)
Hargreaves, Andrew	Smyth, The Reverend Martin
Harris, David	Sweeney, Walter
Hughes, Robert G (Harrow W)	Taylor, Rt Hon John D (Strgfd)
Hunt, Rt Hon David (Wirral W)	Thomason, Roy
Hunter, Andrew	Thompson, Sir Donald (C'er V)
Jessel, Toby	Townend, John (Bridlington)
Kellett-Bowman, Dame Elaine	Townsend, Cyril D (Bexl'yh'th)
Knight, Dame Jill (Bir'm E'st'n)	Tracey, Richard
Lamont, Rt Hon Norman	Tredinnick, David
Lawrence, Sir Ivan	Twinn, Dr Ian
Leigh, Edward	Walker, Bill (N Tayside)
McCrea, The Reverend William	Winterton, Nicholas (Macc'fld)
Marshall, John (Hendon S)
Martin, David (Portsmouth S)	Tellers for the Noes:
Mitchell, Sir David (NW Hants)	Mr. Paul Marland and
Montgomery, Sir Fergus	Mr. Jaques Arnold.
Neubert, Sir Michael
Onslow, Rt Hon Sir Cranley

Question accordingly agreed to.

Bill ordered to be brought in by Mr. John Spellar, Mrs. Barbara Roche, Mr. Mike O'Brien, Mr. David Winnick, Ms Angela Eagle, Mr. D.N. Campbell-Savours, Mr. Andrew Mackinlay, Mr. Gordon McMaster, Mr. Chris Mullin and Mr. Denis MacShane.

Regulation Of Funding Of Political Parties

Mr. John Spellar accordingly presented a Bill to regulate the funding of political parties: And the same was read the First time; and ordered to be read a Second time upon Friday 19 April and to be printed. [Bill 51.]

On a point of order, Madam Speaker. In view of the substantial majority in favour of my hon. Friend the Member for Warley, West (Mr. Spellar) being given permission to bring in the Bill and bearing in mind the importance of the subject—which we have been debating on and off for the past 12 to 18 months—can the Nolan Committee be notified of the House's decision? It is an important point and I see no reason why the views of the House, as expressed just now, should not be relayed formally to the Nolan Committee by the Clerks.

The Nolan Committee has its own terms of reference to which it works, as I am sure the hon. Member for Walsall, North (Mr. Winnick) is aware.

Further to that point of order, Madam Speaker. May I point out to the House that the Division figures are unbalanced by the fact that parliamentary private secretaries cannot vote?

Order. I am not in the habit of allowing one point of order to run on and become a debate. I can accept another point of order only if it is on a different matter. It is a waste of the House's time, if they are not points of order.

rose—

Does the hon. Member for The Wrekin have a point of order on another matter?

My point of order is about the credibility of the Division figures.

We do not need to know about the credibility of the figures: they are there for all to see. A majority of one constitutes a win in our democracy, and that is the end of the matter.

Orders Of The Day

Local Government Finance

4.5 pm

I beg to move,

That the Local Government Finance Report (England) 1996–97 (House of Commons Paper No. 164), which was laid before this House on 29th January, be approved.

I understand that with this, it will be convenient to discuss the following motions:

That the National Parks Supplementary Grant Report (England) 1996–97 (House of Commons Paper No. 167), which was laid before this House on 29th January, be approved.

That the Limitation of Council Tax and Precepts (Relevant Notional Amounts) Report (England) 1996–97 (House of Commons Paper No. 166), which was laid before this House on 29th January, be approved.

That the Special Grant Report (No. 16) (House of Commons Paper No. 165), which was laid before this House on 29th January, be approved.

On 30 November, I issued my settlement proposals for consultation. They included the total provision for local authority spending, the level of central support for that expenditure, and my proposals for calculating standard spending assessments—the SSAs. I also announced provisional capping criteria. My right hon. and learned Friend the Home Secretary also announced his proposals for police specific grant on 30 November.

Since then, my colleagues and I have received written representations from 250 local authorities, and have met delegations from 84. We have carefully considered all the points that were raised with us during consultation. Our final decisions in respect of grants and notional amounts are embodied in the reports before the House today. I will also remind the House today of my provisional capping criteria.

The Secretary of State has made great play of the enormous consultation process that he has undertaken, and I do not criticise him for that. However, I must raise two points in relation to the city of Birmingham. The first concerns the extra population from Frankley Beeches and fact that the deprivation index for the county of Worcester and Hereford rather than that for Frankley Beeches was used, which has cost Birmingham £1.6 million.

My second point concerns the way in which capital financing is examined in the standard spending assessment. A notional amount rather the actual capital debt of an authority is taken, which has apparently cost Birmingham city council £30 million. Those points were raised with the Secretary of State during the consultation process. Why did he not take them on board?

There have been three delegations from Birmingham, and I had the pleasure of meeting the leader of Birmingham city council and talking through the matters. The point about the estate that was transferred from Hereford and Worcester to Birmingham was raised with me. However, in later discussions, it was discovered that the figures were not as the hon. Member for cited, and in fact Birmingham felt that our suggestion was the better answer.

I do not think that it would be sensible for the hon. Gentleman to press the matter, as the figures were based on something that did not proceed. The transfer arrangements are agreed between the Government and the local authority association, so the hon. Gentleman would find it difficult to pursue the matter.

I told Birmingham that, if it wanted to continue, and if it could persuade the local authorities to propose a change, I would not be averse to altering the system. The system is agreed between local authorities because it is about the transference of amounts between local authorities and not about the total amount, as the hon. Gentleman would agree. I made that offer to Birmingham, but in retrospect the council decided that it would not be better.

rose—

The hon. Member for Birmingham, Perry Barr (Mr. Rooker) has asked me two serious questions with which I wish to deal. I should be grateful if my hon. Friends could wait a minute.

We have been discussing notional amounts for some time. I am sure that the hon. Member for Perry Barr understands that, if one local authority—I cast no aspersions—spends a great deal and has built up a huge debt in the past, and another has been extremely careful and prudent, it would be unfair if the system meant that the first authority, however much it continued to spend, was bound to do better than the prudent authority, irrespective of need. That is why we fix notional amounts. That is the only fair way to cope with that genuine difficulty. We cannot have a situation in which the provident always find themselves at a disadvantage to the improvident.

The hon. Member for Perry Barr said that a local authority had lost some money. That was a curious use of the word "lost", because the authority never had that money. Birmingham council—I shall be direct—has a long record of spending much more money than it is able to finance. It is asking all the other local authorities to pay for that, but that is not fair, and there must be an intervening system.

The area of Frankley, to which the hon. Member for Birmingham, Perry Barr (Mr. Rooker) referred, is in my constituency. It is the Frankley estate, not Frankley Beeches.

Hereford and Worcester, the area from which Frankley has now been removed, has been left with no plus factors in the standard spending assessment calculations, except for a small sparsity factor in Herefordshire. The area is not untypical, compared with other authorities.

I do not disagree with my right hon. Friend's proposed figures, but the calculation bears hard on those areas of the country that do not have any deprivation factors which add to the distribution of grant. Those areas are left with relatively small sums, and they feel that they have missed out in the overall distribution.

Can my right hon. Friend confirm that the Department of the Environment intends to review the formulae and the mechanisms for distribution of grant every year on the basis of the evidence that it receives?

My hon. Friend is right. Hon. Members' attitudes, irrespective of party, to the division of grant are always affected by how it hits their areas. The deprivation factors are important, and I am sure that my hon. Friend would not want us to have a system that did not take deprivation into account.

I will confirm that, every year, we reconsider the system with the local authorities. When my hon. Friend the Minister for Local Government, Housing and Urban Regeneration sums up, he will describe in detail our next step. We have also agreed to have an independent review of the way in which we deal with some of the extra costs. I will cover that myself.

rose—

I have managed so far to read only the titles of the reports and two paragraphs, so I shall continue for a moment before giving way.

As I made clear when announcing the provisional settlement, all public expenditure programmes have to be rigorously examined each year. Local government spending is no exception. Within the objectives for the economy as a whole, I have looked very hard both at the pressures on local government spending and at the scope for greater efficiency and effectiveness within authorities. As in previous years, I am grateful for the practical help that the local authority associations have given in setting out and discussing issues.

I announced on 30 November 1995 a proposed total standard spending—TSS—for England for 1996–97 of £44.92 billion. In the light of consultation, we have now adjusted that figure slightly to reflect developments in the first phase of nursery vouchers and in the balance of police grant between England and Wales. The result is that the final TSS figure for England for 1996–97 will be £44.93 billion.

It is worth remembering just how much money that is. It represents a significant amount of public expenditure, and it cannot be ignored, considering the amount that the Government and local government spend from individuals' pockets. All parties are now committed—at least in words—to the restraint of public expenditure, so that amount has to be considered in the same way as any other major amount. It is, apart from central Government expenditure, the largest part of expenditure.

Local government will, of course, be able to spend more than that, because its spending accounts for a quarter of all public expenditure. Councils can spend above the TSS, up to their capping limits, and can, of course, make use of income from fees and charges and can spend from reserves.

rose—

I will give way, but I want to make clear a point that is often not understood outside; sometimes I fear that it is purposely not understood.

First, there is the TSS. As I have said, it is possible to spend more than that, up to the capping limits, by raising more on the council tax. There are other ways in which councils can spend; either from fees or from reserves. So it is always true that, at the end of the year, councils have spent more than the TSS at the beginning of the year. That means that, if we wish to compare like with like, we must compare the year end spending with the following year end spending, or the TSS at the beginning of the year with the TSS at the beginning of the succeeding year.

One cannot compare one set of TSS figures with one set of spending figures. Those of us involved in local government know that, but sometimes that mistake is made. I want to ensure that it does not occur in our discussions, because it shows a lack of understanding of the local government system. I do not want to accuse anybody of that, but sometimes that is the basis for argument.

The Secretary of State is talking about comparisons. What happens with a new unitary authority where making comparisons is difficult? For my new authority of North Lincolnshire, the standard spending assessment will mean cuts across the board—an 8 per cent. cut in education, for example—and a substantial increase in council tax. That authority inherits no balances, and is very much dependent on the standard spending assessment laid down by the Department of the Environment.

The Secretary of State has received delegations from the authority, which made the not unreasonable request for capital borrowing over three years to mitigate the cost of the reorganisation, as well as to help deal with the problems of establishing itself as a new authority. That request has been refused. In those circumstances, does the Secretary of State accept that the education cuts are a direct result of his Department's policy, and have nothing to do with North Lincolnshire, which is a brand new authority with no track record?

There are difficulties when one is transferring from an authority such as Humberside, which has a long history of excessive expenditure. It is difficult for one or two such authorities to move to the new structure without carrying something with them. They carry the history of a lack of efficiency in the services taken over. That has disadvantages, but it has an advantage, in that it may be possible to make significant savings in the running costs.

There is a whole range of provisions. One of the reasons for notional amounts rather than historic figures is that they take into account problems such as those raised by the hon. Member for Glanford and Scunthorpe (Mr. Morley). There is a damping grant should the council tax become excessive.

I am happy to look again at any of the points raised by the hon. Gentleman. The system is designed to help, but I must tell the hon. Gentleman that his circumstances are made worse by the previous management, which was one of the worst in the country—it was recognised as such. Humberside is an unlamented lost county.

May I move my right hon. Friend slightly further north, to deal again with reorganisation? I thank my right hon. Friend, the Ministers and the officials for the helpful way in which they have considered how best to redistribute money in North Yorkshire out of the creation of the new York unitary authority. The county council has done rather better than many of us feared. That must be put on record.

However, is my right hon. Friend aware that we still have a problem with Ryedale district council, which has a notional amount that is almost £750,000 more than the SSA? My right hon. Friend mentioned the use of reserves. Is there any way at this stage in which we could bridge that gap without the whole cost falling on the council tax payers in Ryedale, because the sums that they will have to pay are substantial?

My hon. Friend is perfectly right. I would look sympathetically at a request from Ryedale district council to capitalise some of those costs, which would help it considerably. Unfortunately, it has not yet made such a request, and I cannot respond to a request that has not been made. I hope that my hon. Friend will remind the council that it is a perfectly reasonable way to do things—indeed, the way we expect them to be done. If the case can be supported, I shall consider it carefully.

I appreciate being given the opportunity to intervene. Will the right hon. Gentleman take account of the position in my constituency, where deprivation is severe because of the closure of the mining industry and the ancillary works that supplied it?

Wakefield district council has brought in fees and charges over the past five or six years because of the restrictions imposed by the Secretary of State. It cannot simply keep charging local people, who can ill afford to pay because of problems such as unemployment. Will he reconsider the problems, so that we can be allowed to provide the services in education and community care that people demand?

The hon. Gentleman knows that I have a reasonable knowledge of Wakefield, and I recognise the problems in the area. I am sure that he will agree that, in recent years, we have given Wakefield and the surrounding area extra help in a number of ways. Of course I will examine the points that he has raised. Although we have reached a conclusion on these matters in a number of areas, I am happy to reconsider, because I recognise the problems to which he referred.

Within the system, a significant amount of money is being diverted because of the factors that the hon. Gentleman mentioned. That is why some areas, such as Wakefield, do better than other areas where the resources and opportunities are greater. I shall consider the particular points that he raised.

In my right hon. Friend's introductory remarks, he mentioned his joint responsibility with our right hon. and learned Friend the Home Secretary for the police service, but he did not mention the fire service. He is aware that worries have been expressed in various quarters about fire cover for London, and the possibility that the reduction in the fire service's SSA will disadvantage its ability to provide cover.

Will my right hon. Friend give a categorical assurance that fire cover is wholly adequate in London, and that that will in no way be disadvantaged by the reduced SSA?

As the Minister with responsibility for London, I naturally consider these matters very carefully. I today responded to a Labour Member who has written to me on the very issue my hon. Friend raised.

The fact is that, next year, the authority's SSA will increase by more than £1 million, to £253.6 million. It will have by far the highest SSA per head of any single-purpose fire authority. London does better than any other single-purpose fire authority. Other areas throughout the country note that London has been given additional resources.

The proposed capping limit would allow the authority to increase its budget by more than £5 million compared with this year, which would take its budget more than 2 per cent. above its SSA. The authority's decisions will be very much in its own hands.

About 22 per cent. of the authority's work force are support staff behind the front-line services, Perhaps it could look for ways to make savings there. Perhaps it could look more closely at some of its accommodation and resources that are not being used. There is a wide range of things that it can do. The money provided to the authority certainly ensures that it can give fire cover. Indeed, it would not be allowed to close any installation without my right hon. and learned Friend the Home Secretary being sure that there is still fire cover.

I reassure my hon. Friend on the matters that he raised by pointing to the facts that the authority has been allocated extra money and that London is specifically advantaged by that provision.

Does the Secretary of State accept that the London fire brigade's standard of performance over the past few years has risen substantially? The brigade transferred to computerised call-out with no problems, and changes to its management structure and working practices have made the brigade a credit to London, its management and other employees. That is in marked contrast to the London ambulance service, which fails every national standard, is grotesquely mismanaged, and is run by a quango—unlike the board, which represents people from London boroughs and has been so successful in improving the London fire brigade.

I would not have made that comment about the London ambulance service, especially as I—like the hon. Gentleman—depend on it for emergency services. His comments do not characterise the people who work for the ambulance service.

There are evidently two classes of people in society. There are the people whom the hon. Gentleman thinks will not vote for him, so he is rude about them. There are the people from whom the hon. Gentleman thinks that he might get a vote or two, about whom he is always polite. I do not think it right to attack the London ambulance service in a blanket way, as the hon. Gentleman did.

The improvement in the London fire brigade is creditable, but only what one would expect of a properly run organisation. It is doing its job properly, and will continue to do so. If it becomes better and more efficient, it will have more resources to spend on things that really matter, which are front-line fire services.

The TSS figure of £44.93 billion represents an increase of £1.42 billion—3.3 per cent. over the 1995–96 figure. That substantial increase reflects the importance that the Government attach to education and to the care of the vulnerable and elderly. We have provided for a 4.5 per cent. increase in provision for education and 6.9 per cent. for personal social services, including £418 million transitional community care special grant.

When we talk about priorities, we are concerned that the money made available is used for the proper purposes. It concerns me that there are already signs that local authorities, instead of spending money on education, are seeking to use the money for other purposes.

I have a letter from someone who calls himself the "chair" of Hertfordshire county council's education committee. He is Bob Mays, who leads the Labour group for that purpose. Writing to fellow governors, he began his letter, "Dear Comrade". That would have gone down a bit oddly in Hertfordshire, so the complete salutation reads, "Dear Comrade/Colleague". I am interested to know whether "comrade" is old Labour and the "colleague" new Labour, or whether that form of address is to get everybody involved.

The right hon. Gentleman would prefer "Dear Sir/Madam".

That would be polite, and at least it would not upset the people who received the letter.

I object to the rest of the letter, which shows that, far from extra money being spent on education in Hertfordshire, education will have to make savings. Extra money has been made available, but still savings will have to be made. Much of the money will be used for other purposes.

Local authorities asked to spend more money on education. They said that sufficient money was not made available last time, and that central Government should make sure that it was available this year. We have made additional provision, but Hertfordshire admits that it intends to pinch the money for some other purpose.

Is there not another factor in the equation? Not only does Hertfordshire seem unable to run its affairs properly, but it benefits from the area cost adjustment, unlike Cambridgeshire just over the border. Although Cambridgeshire is not a particularly efficient Lib-Lab coalition, or whatever it is called, at least it has the excuse of not receiving an area cost adjustment. I hope that my right hon. Friend will refer to that difficulty.

I congratulate my hon. Friend on finding yet another way in which to refer to the area cost adjustment. I shall refer to it later, and my hon. Friend the Minister for Local Government, Housing and Urban Regeneration will take the point further.

It concerns me that it appears that, all over the country, Labour councils and Liberal-Labour coalitions are taking for granted the figures that their officers give them. They think, "My goodness, we must spend this, that and the other to stay level." They are therefore not accepting that spending is all about priorities. They said that they wanted to spend the money on education, and that they would be responsible in doing so. It will therefore be a real test of whether they say one thing and do another. We shall see.

Is the Secretary of State aware of the extreme anxiety in Cambridgeshire over his provisional statement that capping in the county would be set at the level of the standard spending assessment? I think that it is only one of two shire counties that have been penalised in such a way.

I should like to quote Mr. Peter Downes, the head teacher of Hinchingbrooke school in the Prime Minister's constituency. The right hon. Gentleman may be aware of the case. Mr. Downes said:

"We are not very far off melt-down—we are getting to the point where there is extreme anxiety whether we can actually keep children in school for the full time."

I am worried about that, and I hope that the Secretary of State is also prepared to express his concern.

The message that the hon. Lady must take back to her area is that Cambridgeshire has the resources to improve its education. If it does not spend them on education, it will be because the Liberal Democrats and the Labour party have misused the money. I understand how difficult it is for her. I would not like to be shackled to the Liberal Democrats. None the less, she is, she chose to be, and she will therefore suffer as a result. Authorities worse run than those run by the Liberal Democrats are difficult to find. I know how hard it is, but all she has to do is give them up. They are not worth associating with.

Will my right hon. Friend consider Devon county council, which is a prime illustration of the terrifying behaviour of Liberal Democrat county councils? It is being given £17.5 million extra, yet in its provisional budget it is allocating only £1.5 million to schools. The rest will be gobbled up by the county council. Is that not disgraceful?

It is not only disgraceful but contrary to what I understand to be Liberal Democrat policy, although I know that that is difficult to define. Although the Liberal Democrats have said that their prime priority is education, they are not planning to use the extra money to fund it. They are planning to use it for a range of other things.

I do not yet know what Suffolk will do, because, like most other Lib-Lab pacts, it has been very careful not to tell anybody in case the schools notice too quickly. I understand that, although it has an allowance of £11.5 million, which it could spend on education, it is planning to spend only £8.4 million on education. I suppose that the rest will go on yet more road signs, since that is the main interest of my local council.

As my right hon. Friend knows, Lancashire is a very unpopular county council, and it does not devote anything like as much as it should to education. Unfortunately, although it has received much more money to spend on education this year, it is not spending it on education. Worse than that, money within its education budget does not even go to schools; it goes to staff at county hall.

My hon. Friend makes a fair point, which no doubt she will want to take up with every school in her constituency and in Lancashire as a whole.

Lancashire appears to have a great deal of money to spend on lawsuits. I wonder whether it should spend some of that money on education, rather than on its continual attempts to use the law courts to implement policies that have not been accepted by the generality of the people.

rose—

I give way to my hon. Friend, and then I shall give way to the hon. Gentleman

Is my right hon. Friend aware that, once again, Sheffield states that it will spend more than its standard spending assessment on education, and claims that its 2.1 per cent. is lower than those of the other three districts in South Yorkshire and much lower than metropolitan councils?

I am aware of that, but, on a list of councils, one is bound to be lower than others. I try to apply these objective criteria—[Interruption.] The Association of District Councils agrees that they are objective. The methodology is agreed with all three Labour-controlled councils.

County councils would like to place more emphasis on one part of the methodology than district councils, because they do better out of it. District councils would like another shift, whereas metropolitan councils or the London boroughs would like a different one. That is perfectly reasonable.

The only people who disagree are Opposition Front Benchers, and I think that only one of them does so. That Opposition spokesman does not understand the system, which is why he finds it so difficult to accept—[Interruption.] I shall just have a word with the hon. Member for North-West Durham (Ms Armstrong), who has not been responsible for this subject for very long. I remind her that the hon. Member for Holborn and St. Pancras (Mr Dobson) is always—[Interruption.] I would like her to listen, because I always thought that she was fair-minded, but she has obviously joined the giggling fraternity.

Westminster city council did very much better under the system that applied when Labour was in power than it does under the present objective system. Labour's system was devised by the hon. Member for Blackburn (Mr. Straw), who used, with considerably greater power, to perform the job that the hon. Member for Holborn and St. Pancras now does.

We accept that the system is objective. Sheffield has rather less than others only because the measurement of its need has been lower than that of its neighbours. If only Sheffield was not saddled with the debts that the hon. Member for Sheffield, Attercliffe (Mr. Betts) and his predecessor, the hon. Member for Sheffield, Brightside (Mr. Blunkett), landed it with, it would be able to spend its money on other matters; but despite that, Labour Members tell us how we should run national finances

The Secretary of State said that the TSS figure of £44.923 is a 3.3 per cent. increase. He will be aware, however, that, when that is deducted from the cost of local government reorganisation, community care and the police, it falls to 2 per cent. As the Government's forecast for inflation is 2.75 per cent. for next year, that works out as a decrease of 0.75 per cent

The hon. Gentleman knows perfectly well that we certainly expect some savings to be made—the idea that they cannot be made is largely a Liberal one.

I visited Liberal-controlled Richmond, which said that it had already made enormous savings and challenged me to see whether I could find further savings. The Liberal leader of Richmond council gave me an exhibition of slides on the wall. The first one was designed to show the enormous savings that it had made. In fact, it showed that, year on year, it had made budget increases—the savings were not there at all. When I asked him what he defined as savings, he said, "Not doing something that we used to do." Then they take the money and spend it somewhere else—and that is counted as a saving. The slides designed to show how the council had cut, cut and cut again, showed instead how it had spent, spent and spent again.

When I went through the savings that could be made, it turned out that the council had not even considered the possibility of collecting the rubbish from front doors rather than back doors, or of going out to private contract in many areas in which it was not forced to do so. It had not even looked at a whole range of mechanisms whereby expenditure could be reduced.

The authority really needed to consider those savings, because, as my hon. Friend the Member for Twickenham (Mr. Jesse') has said, it has a real problem, in that it has entered into a very long-term contract for waste disposal, giving it less flexibility there. I only wish that it had found the flexibility elsewhere, instead of saying that it had got everything right and tickety-boo. Even Ealing, unlike Richmond, has discovered some of those savings. That man had been in power in the authority for 13 years, yet he had failed to find even those fundamental and simple mechanisms.

During our discussions with local authorities, we have agreed to add to the figures that I have mentioned additional funds that they will receive through a special grant to offset the income lost through changes to capital disregards for community care provision. The arrangements for that special grant will be laid before the House in due course

rose—

I must continue for a while.

As part of the consultation exercise, we asked local authorities for their views on the need to address, through a special grant rather than through SSAs and RSG, the localised pressure on a few authorities' social services budgets arising from the provision of care for unaccompanied asylum-seeking children. The hon. Member for North-West Durham should pay attention; I am sure that she would like to know about unaccompanied asylum-seeking children.

Such children will need particular help in certain areas, so we accepted the strong representations making a case for a special grant, and the fact that no one wanted the money to be paid through the RSG. My right hon. Friend the Secretary of State for Health will therefore lay before the House in due course a special grant report for that purpose. The grant will be cash-limited to £3 million in 1996–97, and will provide a better distribution to meet the needs of the authorities concerned than would have been possible within the RSG. The resources remain within TSS.

The total of aggregate external finance—AEF—for England will be £35.65 billion. The revenue support grant element of that total will be £18.02 billion. That is slightly higher than the figure announced in the provisional settlement, as a result of changes to police grant, and the changes in total standard spending and RSG that I mentioned earlier.

The increase in AEF over 1995–96 is 2.8 per cent.—less than the increase in TSS—because we take the view, which I believe the Opposition share, that council tax payers should properly fund a slightly larger proportion of the costs of their local services. But the level of council tax is a decision for each authority, and will depend upon the level of service that it chooses to provide, the improvements that it can make to efficiency and effectiveness, and how well it collects what it is owed. When the taxes are set, local people will be in a position to judge the performance of their councils.

Before all that was set up, I received many requests for a relaxation in the capping limits. I was told that, if that happened, great responsibility would be shown, which would prove to us that all such limits are unnecessary. Authority after authority told me that it would be extremely responsible.

However, I am afraid that, immediately the limits were announced, the leader of the metropolitan authorities went on the radio to say that councils would use the whole lot up—no question. I hope that local councils recognise what that means. If it happens, no Government will have any alternative but to keep that very large amount of Government spending within controls. That is a particularly disappointing attitude, and I hope that it will not be copied throughout the country

Will the Secretary of State give way?

In a moment.

We have listened to the case put to us for more resources for education and social services, and we have allowed more. We were told that these were the top priorities, and there was something of an orchestrated campaign to that effect. There is some sign, however, that that will not be the case, and it is unlikely that education and social services will be the priorities that we know they should be in some authorities. The Government and local people must look carefully at whether the money ends up in the schools—and not education generally—because that is where people believe the money ought to go

My right hon. Friend has mentioned a huge amount of money today that is part of the settlement. Does he agree that all local authorities throughout the country should, more or less, try to match their spending with the level of inflation? If they did that, they would be able to regulate their affairs much better. That is a lesson that could be learnt by the Labour and Liberal Democrat councils up and down the country, including the teacher-led Warwickshire county council. They cannot spend more money than is available, but there is more than enough money available

One can go further, and say that, unless there is an inflationary society, no business can possibly proceed by spending more on overheads and putting up the price of its goods every year. In a society where inflation is under control or is falling, local authorities must do better than match inflation. They must find ways in which they can provide the same services while getting better value for money. If they do not do so, they are not helping people to get jobs, they are not helping the nation to become more wealthy, and they are not helping businesses to expand. Local authorities must do that as part of their economic regeneration contribution. We must press county councils such as Warwickshire to take that step.

I shall be happy to place in the Library a letter that I received from Hertfordshire, which starts off by stating that inflation does not count with that authority because its rate of inflation is higher than the national rate, so inflation is bound to be higher there. I believe that no local authority should approach the job in that way.

rose—

I shall give way in a moment.

It is necessary for parents, school governors and those concerned with care in the community to insist that their share of the extra available resources comes to them. It will be necessary, therefore, to make savings elsewhere, and to continue to improve efficiency.

Here, I must point out to the House that the idea that one ever finishes making oneself more efficient or finding new ways of getting better value is totally foreign to every organisation outside the public service. We all know that councils must find new ways of making the money go further every year if they wish to take on other responsibilities or improve some of the services they provide.

I should like to refer to the distribution of grant.

Will my right hon. Friend give way?

I should like to move on, and then I shall give way to my hon. Friend.

We have worked closely with the local authority associations to achieve a distribution methodology that is simple enough to be understood, robust enough to be able to cope with the changes, and complex enough to reflect the real differences in need. Local government knows, and the Government know, that we can never iron out every local wrinkle, but the system is open to scrutiny, and it is clearly objective.

I know that councillors and hon. Members are concerned about the resources of their local authorities, and I must stress that the Government do not look with favour or disfavour upon any individual authority, as the system makes that absolutely impossible. The previous system allowed one to do that, but now the Government can only alter the distribution by classes of authority, and not by individual ones

Will the Secretary of State give way?

Will my right hon. Friend give way?

I will give way to my hon. Friend, and then later to thehon.Gentleman

Does my right hon. Friend recall that he gave the Liberal-dominated Gloucestershire county council one of the highest increases in education SSA—some 5.3 per cent., amounting to more than £9 million? Was not the council's immediate response that it needed £24 million to spend this year? Does my right hon. Friend recall that Gloucester cut the individual school budgets last year by between 4 and 7 per cent.? Will it not be a disgrace if the bulk of that money this year does not go to the individual school budgets?

It would be a disgrace, but then it is always difficult to know what a Liberal Democrat council will do, because there is no connection between what such councils say in public and what they actually do.

I am aware that that embarrasses the hon. Member for Newbury (Mr. Rendel), who no doubt will speak later. I note, however, that not many Liberals are present to stand up for their county councils. I think that that is because they know just how bad Liberal Democrat-dominated councils are, and how few of them plan to hand the money on to schools. We shall watch them very carefully, and, if they do not hand the money on, we shall know that their words and their deeds do not coincide.

I listened with interest to the Secretary of State's reports of his discussions with various local authorities, including Birmingham city council. I was particularly interested in the issue of Frankley, and the right hon. Gentleman's statement that the city council had accepted that the deprivation indices used for Hereford and Worcester were appropriate for that area.

Further investigations have been made in the light of the right hon. Gentleman's answer to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker). It is clear that Birmingham still objects to the use of those indices for an inner-city area of Birmingham that suffers from extreme deprivation and high unemployment, and has many needs. May I ask the right hon. Gentleman to return to the answer that he gave my hon. Friend, and reconsider the issue of Frankley? If he does not, Birmingham will probably be short by about £1.5 million, the capping limit will be wrong, and the people who will suffer are the people of Frankley.

The hon. Gentleman is mistaken. Birmingham city council wanted to discuss two issues relating to Frankley. It wanted us to treat primary and secondary school children differently, and, in that connection, presented me with a figure for the large loss that it expected to make. When we examined the position in more detail, however, the council agreed that the action that it had proposed would not result in the savings that it had identified. It acknowledged that, in that instance, the methodology did not have the effect that it had assumed it to have.

More generally, the council wanted a complete change in the system, to overcome the difficulty encountered when we move from one year to another at a time of boundary changes. One area has to be moved into another, as it were. To do that, we would have to change the method that we have agreed with the local authority associations. We cannot act unilaterally, because that would be wholly contrary to the way we operate. We have told Birmingham city council that, if the local authorityassociations felt that there was a better way of dealing with the matter, we would adopt it if we possibly could; but the local authorities feel that difficulties are involved in moving at such speed.

This is not a matter on which the Government should act unilaterally. Like previous Governments—I claim no particular credit for it—we have acted after lengthy negotiations with local authorities. The hon. Member for Birmingham, Northfield (Mr. Burden) should address his question to other local authorities, and, if they support the methodology, we can make progress. [Interruption.] The hon. Member for North-West Durham can moan as much as she likes, but that is not only my view; it is shared by many Labour local authorities, as she will gradually come to realize.

rose—

No, I will not give way. I wish to continue my speech.

We pay heed to local government in considering possible changes in the various methodologies. Most of this year's proposed changes flowed from suggestions from those in local government. They encouraged us to make distinct provision for rent allowances and for levies of the national parks; they asked us to look again at the way in which we reflect special educational needs and support services, following the ending of recoupment last year; and they asked us to look again at the pensions element in the formula relating to the police.

We have responded to those representations, and also to the concern expressed in many areas outside the south-east about the area cost adjustment. The review that we set up, chaired by Professor Elliott of the university of Aberdeen, has already begun discussions with local government. Tenders have been invited for research specified by the review team. We have asked the team to report by June.

Reverting to education, what does my right hon. Friend think of the conduct of the Liberal Democrat-controlled West Sussex county council, which wrote to the governors of every school in West Sussex, long before the revenue support grant settlement had been announced, telling them that their spending would have to be cut by £25 million in the next two years? It did so without any evidence. When the settlement was announced, it was found to be far more favourable than it had predicted, but it made no apology, nor has it approached any of the schools to tell them about the improvement that the Government announced in the revenue support grant, which should go straight to the schools.

The only thing I have to say about West Sussex Liberal-controlled council is that it did not undertake much independent research on the matter, but merely took the whip from Liberal-controlled councils throughout the country. There was nothing special about that. A deal was done that they would frighten parents and governors in advance by writing such a letter without any basis.

They did so early enough for a basis not to have been possible. Often, they used examples of how many teachers might have to go, how many books could not be bought and what would be the effect of cuts of 5 per cent. in each school. Stereotype letters were sent to Members of Parliament. They were handed out to Liberal Democrat activists and to some Labour people—happily, some of the latter felt that the letters were a little extreme, even for them.

I have heard of no example of a Liberal Democrat-controlled council that has since written to the governors to say, "We are sorry there was undue alarm. The figures are as follows, and we are hoping to passport this through to you as rapidly as possible, and that you will be able to use it effectively." I will happily give way to the hon. Member for Newbury, if he can cite a single case in which Liberals have apologised for the letter that was sent out, or for the letters that went out from Labour councils.

Perhaps the Secretary of State would like to tell me how many of those authorities are already spending more than the Government now say they should spend.

The interesting thing is that the hon. Gentleman does not explain that any of those authorities has written to apologise. They all said that there would be large cuts. That will not take place, unless the Liberal authorities do not pass on the money that is now available to them.

On the subject of spending by Liberal Democrat-controlled councils, when my right hon. Friend visited Richmond on Thames and was shown the slides about which he was kind enough to tell us, did he notice a rather small, new town hall called a civic centre—the building is rather small for a town hall—on which the Liberal-controlled council spent no less than £12 million, as it is of extremely extravagant design? The people of the borough are still paying the hire purchase on that, which is one reason why, in the last council elections in the London boroughs in May 1994, the Liberals lost four seats to the Conservatives in Twickenham.

I was surprised at some of the things that were included in the slides. Now, I am even more surprised about some that were excluded. Although no doubt the Liberal-controlled council is proud of its new town hall or civic centre, it did not feature. No photograph was included, nor was there any reference to the cost. Indeed, it was not mentioned during the discussion. No doubt my hon. Friend would like to give me further information, so that I can ask for a few more particulars.

The Secretary of State has attacked virtually every Labour or Liberal council in the country. How does he respond to the chairman of a council policy and resources committee who told the Government:

"we found that government spending restrictions were forcing us into cuts that would damage services to the people"?

He wanted another £2 million to spend on education. On top of the cuts, it seems that that council will have to increase council tax by up to 9 per cent. to make up the shortfall in Government grants. That was the chair of the policy and resources committee of Buckinghamshire county council, one of the few—endangered—Tory county councils left.

No council can escape the need to make savings and run itself efficiently. The money that has been provided for Buckinghamshire, as for the rest of the country, is consonant both with its needs and with what the country can afford. There is no other way. [Interruption.] I am even-handed, unlike the hon. Gentleman, in what I say, whatever party is involved.

Local government has received a significant increase in the money that is available. That money needs to be spent on education rather than elsewhere. The hon. Member for Attercliffe is almost the last person in the House to lecture anybody on running local authorities. His local authority is an example of appalling local government. He was in charge of a local authority that could not teach anybody anything about running authorities except how to run up debts. He must not address the House as if he knows anything about the matter.

During the consultation period, we have received representations from authorities about our proposals, and have considered them carefully. We have responded to many of the representations about the data that we propose to use in the calculation of SSAs. Some of those representations brought to light the need for amendments, and in those cases, we have been able to make corrections. We shall continue to discuss SSA methodology with the local authority associations.

I said in November that I would continue to pay a special grant to compensate authorities that have lost more than 2 per cent. of SSA as a result of methodology changes for 1996–97 or for 1994–95 and the incorporation of 1991 census data. That is a fair arrangement that recognises the special problem of a sudden drop in SSA, while also recognising the need to phase out such support, so that grant can be redistributed elsewhere. The Special Grant Report (No. 16) will establish that grant for 1996–97, and some £128 million will be distributed to local authorities in that year.

I announced a scheme last November to damp unacceptable increases in council taxes directly attributable to local government reorganization—a point that was raised earlier. I do not propose any changes to the scheme, which will apply to areas where the direct council tax effect of reorganisation exceeds £104 in band D. Taxpayers in North Lincolnshire will therefore benefit from a grant of about £2.18 million. I shall lay regulations to implement the scheme before the House in a few days.

The capping of local authority budgets is the means by which Government ensure that local authorities play their part in controlling public expenditure. I set out in my statement in November the capping criteria that I had in mind to apply for the coming year. I have now considered carefully the representations made by authorities, and I wish to reaffirm that I still intend my original criteria to apply. A table of provisional cap limits based on those criteria will be available in the Vote Office after I sit down.

Capping is an essential tool for retaining effective control on overall spending. It is an open secret that I would like to be as free as possible with capping, but the reactions of local authorities so far make that stance difficult to maintain. We shall consider carefully how to deal with that. The capping criteria are necessarily provisional.

Will the right hon Gentleman give way?

No, I must finish.

I cannot take my decisions on capping until authorities have set their budgets for 1996–97. When I come to take those decisions, I shall of course take into account all relevant considerations, to ensure that any cap set for an authority will be reasonable, achievable and appropriate. The House will, of course, have an opportunity to debate any orders that cap individual authority budgets.

I am also specifying a base budget in the relevant notional amounts report for authorities that are being reorganised or are subject to a boundary change. That will allow me to make a fair comparison between years for capping purposes.

I now turn to other aspects of local authority finance. Hon. Members will recall that I told the House in November that the Government wished to build on the successes we have already had with challenge funding of local authority spending. In particular, we want to explore whether that approach offers a better and more efficient way of funding authorities' capital expenditure and attracting private capital to supplement public money.

In my November statement, I promised that we would publish a discussion document on taking forward challenge funding in the near future. I am pleased to tell the House that, yesterday, my Department sent a consultation paper on this subject to English local authorities. This outlines proposals for a capital challenge fund that would provide support for the best capital spending proposals submitted by local authorities. We propose that our ideas be tested—.

That is local authority money.

It is interesting that the hon. Gentleman says that it is local authority money. It is the taxpayers' and the people's money. The proposals would bring in more private money, so that, for every pound that the local authority spends, at least £1, and probably £2 or £3, more will be brought in.

The Labour party thinks of only one stakeholder—the local authority stakeholder: it is not the people's money, it is local authorities' money. They say "our money" like they say "our schools". They mean that they are longing to get their fingers on what they think is their money. That money is earned by men and women, who want to make sure that every penny is spent properly. If we can get an extra pound from the private sector, we can provide something much better. [Interruption.] The hon. Member for North-West Durham ought to know that.

That shows what is different about Labour. It wants to talk in modern terms, but has the same atavistic view of everything that happens. Labour Members say, "It's our money, and we are going to spend it. We don't care about partnership when it comes to getting more money for the things that really matter."

That is why the outline proposals for the capital challenge fund will enable us to have a better system, which will ensure that the money goes not only where it is needed but where the schemes to meet those needs are the best, and where they can bring in more money from outside, so that what can be done can be better done. We propose that our ideas be tested by a pilot scheme that will be run in the 1997–98 financial year.

The scheme that we propose would give local authorities a clear lead in deciding on local priorities for capital spending. The best, most imaginative, authorities will be given an incentive to work with local people and businesses to create and implement a local strategy for investment. That would target resources at the areas where they can do most good.

Consultation on those ideas finishes in mid-March. I anticipate announcing our conclusions and the next steps shortly after that. In the meantime, I look forward to a positive and constructive response to the consultation paper because it will mean more money for the very capital projects that all of us want—those that are best fitted to the needs of the people.

I have dealt with the main issues that are covered by the four reports before the House. This year's settlement will help local authorities meet the needs of their citizens in education and other key service areas, but authorities will need to continue to get better value for every pound they spend. They will be watched most carefully by the public to see what their priorities are and whether they are spending that money on the things they said the public most wanted. I commend the settlement to the House.

5.7 pm

The central message from today's debate is that, in the coming year, council tax payers will end up paying more and getting less. As happened last year, there may be a few parts of the country where the council tax does not rise or where services to local people are not reduced, but in most places the council tax will go up and services will come down; local people will have to pay more, and will get less.

Last year, our initial estimate was that the council tax would go up by about 6 per cent. The average turned out to be 5.2 per cent. but before the Secretary of State starts crowing in one of his mini-raves, I remind him that the council tax increase in his constituency was exactly as I had predicted, 6 per cent; in the Prime Minister's constituency it was 8.5 per cent; and in the Deputy Prime Minister's it was 7 per cent.

This year, on the basis of the Government's original statement, we predicted similar increases. It now seems that, even according to the Government, the average increase may be quite a bit higher. When the Chief Secretary to the Treasury gave evidence to the Treasury Select Committee, he let the cat out of the bag. He admitted that the Treasury was working on the assumption that the average council tax rise would be 8 per cent., showing that I was guilty of the serious political offence of failing to exaggerate.

If the average council tax rise is 8 per cent., that will cost council tax payers some £780 million. That is equivalent to adding about half a penny to the standard income tax rate. If the Chief Secretary is right, therefore, the Government's promised 1p reduction in the standard rate will be immediately halved in value by the council tax increase. That is a perfect example of the Government giving with one hand and taking away with the other.

It does not stop there. Budget documents show that the Government expect council tax payers over the next three years to cough up an extra £3.5 billion, equal to almost 2p on the standard rate of income tax. That was recently confirmed by the head of local government finance at the Department of the Environment, who said that the Government were aiming to increase the council tax payers' contribution to council expenditure from 21 per cent. to 26 per cent. He added:

"That represents a view by Ministers that the council tax can take more of the strain of paying for local services."

Will the hon. Gentleman give way?

Let me finish the quotation. The official said:

"It is not a huge change, but nevertheless it is a trend that present Ministers want to see. The downside is that your taxes go up quite sharply".

Is the hon. Gentleman familiar with the publication "Renewing Democracy: Rebuilding Communities", which advocates on page 18 that local democracy would be more responsible if a much higher proportion of money to be invested and spent was raised locally? It appears therefore that the Labour party is proposing exactly what he is condemning the Government for.

As I wrote every word of that document, I am quite familiar with it and it does not mean anything that the hon. Gentleman thinks that it does. The Labour party is saying that, for a start, it would return the business rate—which the Government nationalised, just as they nationalised the water industry—to local control. If he is so concerned about tax rates, he should remember that, if his local authority received from the settlement the same amount of help to provide local services as Westminster city council, rather than paying council tax, people would receive a £489 rebate this year. If Essex county council received the same amount of help per pupil as Westminster council, it would be able to take on 5,350 extra teachers.

As the hon. Gentleman feels that the Government are not giving enough money to local authorities, will he tell us how much more a Labour Government would have given, and how much more of taxpayers' money it would give to local authorities? We want to know how.

The Secretary of State took one hour and two minutes to try to tell us his settlement is. We are now going to question it—that is what we are here for today. The settlement that I am talking about is part of that process. [Interruption.] The object of the debate is to consider the Government's proposed settlement and to find out whether it is adequate. As I always say to the Secretary of State, come the general election, we shall make things clear. We shall not make any promises, as the Tories did at the last election, when they said they would reduce tax and then put it up. We shall not make promises to protect people with mortgages and then take that protection away. We shall make sensible, careful promises. When we go into the general election, people will know what we shall do, and when we win, we shall do it.

The hon. Gentleman has said that he will return the business rate to local communities. That must mean that some will win. Those with a large business infrastructure will presumably gain; others will lose. In places such as Liverpool, where will the strain be taken: on the council tax or on increased Government grant? How will he deal with that redistribution problem?

As the hon. Gentleman knows—so he should not be getting up and asking daft questions—when the business rate was in the hands of local councils, various schemes existed to equalise it between different regions. Those schemes, or fairer variations on them, would obviously be necessary. He, too, is one of the authors of the settlement. If he ensured that the local council that he represents—Craven district council—received from the settlement the same amount of help per head of population as Westminster city council, his council would not need to levy any council tax. It would be able to pay a £528 rebate to everyone. He then asks me about the consequences of our promises.

I should genuinely like to help the hon. Gentleman. Does he accept that his comments on the settlement would be a great deal more credible if he told us his alternative to our proposal? Does he not understand that, by merely saying that sometime, some place, somewhere, he might tell us, he removes his right to make any comment about the settlement? Therefore, I ask him again: what would he do?

The Secretary of State has taken the best part—no, the worst part—of an hour and a bit to try and explain his position, and we are going to analyse what he said and what is in the settlement. If he does not like it, he will just have to lump it. After all, he receives a Secretary of State's salary and a chauffeur-driven car for the privilege of listening to us. I might add that he is responsible for the settlement and that, if his local council, Suffolk Coastal, received from the settlement as much help per head of population as Westminster council, his electors would receive a rebate of £591. If Suffolk county council received the same help per pupil as Westminster council from the settlement, it would be able to take on an extra 2,700 teachers without increasing the council tax.

This year's local government spending level set by the Government does not make full allowance for inflation and for pay increases, such as those needed to attract teachers to inner-city schools. Nor does it allow fully for the cost of educating an estimated 86,000 more schoolchildren; extra contributions that are needed for pensions, police and firefighters; and meeting the costs of new laws on the environment and, rightly, requiring the installation of seat belts on school transport—a measure for which my hon. Friend the Member for Stoke-on-Trent, North (Ms Walley) worked so hard and successfully.

The spending level does not meet the cost of local councils having to pay to central Government the landfill tax, which will cost them more than £70 million. Nor does it meet adequately the cost of meeting other environmental requirements that have been placed on local councils.

The level that the Government have set for the coming year is £1 billion lower than the amount councils are spending this year, before taking into account inflation. The Government assume that councils will make up the difference partly by using their balances and their reserves, but many councils have been drawing down heavily on balances for some years. In some cases—for example, Hounslow, Newcastle, Tower Hamlets and the Merseyside police authority—the district auditor has warned that their balances are too low. Councillors there and in many other places will be faced with the dilemma of cutting services or facing the wrath of the auditor and possibly the courts.

In his Budget, the Chancellor of the Exchequer gave the impression that the Government were increasing their grant for education over and above the amount councils were already spending on schools. That misleading impression has been repeated by other Ministers, including the Prime Minister, and Tory Members have written to school governors and head teachers in an effort to give even wider currency to that myth.

Local education authorities would like nothing better than to have more money to spend on schools. That is why, between them, they are already spending more on schools this year than the Government target for their spending on schools next year. Local council education spending on schools this year is £872 million higher than the Government's target for their spending. If those authorities were to spend next year the amount that the Government want them to spend, their spending on schools would not increase. They would have to cut it by a figure that works out at a reduction of £40 per pupil—so much for the extra money that is available for education.

Publicly, the Government speak about increasing spending on schools—while Tory Members of Parliament write letters to school governors—while furtively setting targets that are lower than current spending. That might be described as saying one thing and doing another.

Local education authorities will do their best to meet the hopes of parents and the expectations that the Government have falsely raised, but it will not be cost-free. Extra spending must come from somewhere. It is likely to result in cuts in other services for children; in price increases for school meals, for meals on wheels and for home helps; and in cuts or price increases for services for elderly and handicapped people, such as those who use day centres or luncheon clubs.

Education authorities must cope with the needs of an extra 86,000 schoolchildren, with the cost of installing seat belts and with the need to provide more money for children with special educational needs.

In many parts of the country, another vital service will be placed in difficulty as a result of the settlement—the fire service. That service is under pressure. Cuts have been made in services almost everywhere, but especially in London and the other metropolitan areas, where fire brigades are run by separate authorities. Those are under even greater pressure. Cuts will be made of more than £4 million in the West Midlands brigade, £2 million in the Tyne and Wear brigade and more than £9 million in the London fire brigade.

For years, those fire brigades have been cutting staff and postponing the renewal and updating of equipment; now they are expected to do it again. They also have difficulty in funding pensions, which take an increasing share of their budget. The trend cannot continue without weakening the service to the public and endangering firefighters by reducing the number of firefighters available to fight each fire and allowing equipment to deteriorate.

In London, the process may lead to the closure of four fire stations, the reduction of 22 fire engines at other fire stations and massive cuts in control room staff. The response times of fire brigades throughout the country may be lengthened—surely something that no one could seriously contemplate, but that the Government apparently do.

Special problems have arisen this year for some of the less urban new unitary authorities that have resulted from the break-up of the counties of Cleveland, Avon and Humberside. Higher-than-average increases in council tax may be needed to maintain anything resembling the present service. That refers to those unitary councils that have already been established, and that take over the running of services this year.

Equally significantly, the settlement fails to provide money to meet the costs of the change to unitary status by the new unitary districts approved by the Secretary of State or recently recommended for that status by the Local Government Commission. Failure to push through those changes in time for elections to the new authorities in May 1996 will increase the costs and uncertainties of staff and of people living in the area. Such delays will almost certainly lead to council tax increases and to cuts in services in years to come, which might have been avoided by finding the extra money now.

The hon. Gentleman's colleagues in local government, Labour leaders of councils, have suggested that the settlement is inadequate to the tune of £3 billion. Does the hon. Gentleman endorse that figure?

I do not endorse anyone's numbers but my own, and the hon. Gentleman is not getting one from me. [HON. MEMBERS: "Oh!"] I explained that earlier. In case the Conservative simpletons did not notice, that was what one of my earlier responses meant.

My hon. Friend mentioned the move towards unitary authorities. Have not some orders yet to be laid, and do not shadow authorities that should start in May 1997 need elections in May 1996? Is there not a suspicion that the Government are cherry picking which orders will come through? Why has no commitment been made that the order in respect of Nottingham will be laid before the end of February?

In fairness to the Secretary of State—it strains my good nature—I should point out that Nottingham was held back because the newly reconstituted Local Government Commission was considering the proposed unitary status of other districts in Nottinghamshire, so it was considered reasonable to hold Nottingham back until that issue had been resolved.

As the commission has recommended that there should be no further unitary districts in Nottinghamshire, however, Nottinghamshire should go ahead, as should Devon, where both Torbay and Plymouth have long been recommended and no further additions are proposed, along with Leicester and Rutland, to which the Minister has already made a commitment. I hope that he will respond to that, but not necessarily today.

The way in which the central Government grant is allocated is as important as its overall size. The Government claim that the allocation is the inexorable product of impeccably objective criteria. That claim is plainly false; no one believes it. The allocation of grant is a racket, designed to secure the Government's political objectives. I have no objection to a Government trying to secure their political objectives; I simply wish that they would accept that that is what they are doing.

One of the basic building bricks of the grant system is the Government's assessment of deprivation, which is not made independently but is carried out by officials at the direction of Ministers. It is a racket that favours a few areas at the expense of most others. Nothing better demonstrates the scale and nature of that racket than the Government's treatment of Westminster city council.

According to the Government's fantasy finance, Westminster is the fourth most deprived place in Britain, while Barnsley, after a score of pit closures, lurks in 313th place. According to the Government, only three places in England are worse off than Westminster-Hackney, Tower Hamlets and Islington. Everywhere else in England is less deprived than Westminster.

As the Duke of Wellington said:

"If you believe that you will believe anything."

If that is wrong, why did Westminster do better comparatively when the Labour party was in power, when it was seen to be more deprived proportionately than many of the places that the hon. Gentleman mentioned? Why did it do better when the hon. Member for Blackburn (Mr. Straw) did the figures than it does now, when they are calculated objectively?

If the Secretary of State inquires, he may find that the council tax—or, as it was then, the domestic rates—in Westminster was roughly comparable with those everywhere else. Westminster's council tax payers are now being subsidised by those everywhere else. He knows it; everyone knows it. It was the object of the exercise.

That was why, when the poll tax was being introduced, Lady Porter said in a memorandum that the man who is now the Secretary of State was more acutely tuned into the political consequences of the original proposal for the share-out, because it would have hammered Westminster and Labour authorities in London would have done better. He knows that it is political and always has been.

I should like to help the hon. Gentleman with his analysis. The last Labour Government, as my right hon. Friend said, was more generous to Westminster, and that was on the basis of a needs analysis. Westminster's need per head was 486 compared with 327 for Liverpool—a difference of 49 per cent. In 1996–97, the SSA paid in Westminster will be £1,265, and that for Liverpool will be £944—a difference of 34 per cent. On the needs analysis, the Labour party gave greater support to Westminster than the present Government do.

Will the—

Come on, answer.

This week, we have had to put up with three amazingly lengthy performances by the Secretary of State and, if he does not mind, I wish to make my speech in my own way and give my answers in my own way. If the Minister of State, who rushes to the aid of the Secretary of State, wants to give the full picture, will he tell us what the rates were in Liverpool, Westminster and the other areas? The sole object of that exercise has been, and is now, keeping down the poll tax and then the council tax in Westminster.

I admit that there are deprived parts of Westminster, such as the ones where Westminster city council housed homeless families in asbestos-ridden blocks of flats. That is not half the story. The Westminster protection racket does not stop there. Massive benefits flow to Westminster from the way in which the grant system treats visitors. For grant purposes, the Government deem that Westminster's resident population increases by 81 per cent., the residents being augmented by commuters and other day and overnight visitors. So Westminster receives more money to meet the needs of those visitors.

Those same visitors add not only to Westminster's costs but to Westminster's income, in particular through parking charges. The income from parking charges is in excess of £20 million a year, which is more than about half the district councils in this country have available to spend in a year. That £20 million excess is not offset against the extra grant for visitors. It is added to it. Westminster receives the extra grant and the income from parking charges. That allowance-for-visitors fiddle does not end there—it becomes even more amazing.

For grant purposes, the Government assume that the visitors to Westminster, like the residents of Westminster, are also the fourth most deprived people in Britain. So, for example, 12 per cent. of the people staying at the Ritz or Savoy hotels tonight will be deemed to be severely overcrowded, thus qualifying Westminster for extra grant. That is the truth of it. All that of course makes no allowance for the £7 million that Westminster received in the past for spending on flood defences, which were never built, or for the £2 million that it received towards the cost of the English National Opera—£2 million that the opera company never received.

It is no good the Secretary of State trying to deny it. The chief executive of Westminster city council accepts that it is true. In an internal memorandum, he said:

"We are vulnerable to the criticism that we receive double compensation for these costs; firstly, via the SSA formulae and secondly, via the generation of parking income … Although the use of this is restricted by law, we are able to contribute some £20 million per annum towards our budget requirements (eg off-street parking, highways, street lighting and concessionary fares for the elderly and the disabled). This contribution is equivalent to a Council Tax of £197."

Some months ago, 14 people from Staffordshire came down to Westminster as visitors to lobby the Secretary of State for Education and Employment for more money in the standard spending assessment for Staffordshire, so that we could have extra teachers in our classrooms. Those people looked with envy at the buildings in Westminster. They also looked with envy at the extra 4,800 teachers available for pupils in Westminster—at the expense of teachers in Staffordshire.

The awful thought for my hon. Friend is that, if those visitors came down by road, they almost certainly contributed to increasing Westminster council's funds. One of the great ironies is that, every time people come by road to lobby the Secretary of State, they help to make the racket an even bigger one.

To be fair, the special help for Tory areas does not begin and end with Westminster city council. Depending on how they are defined, there are only 13 or 14 Tory councils in the country, which makes it easy for the Government to target help on them. It could be described as precision-bombing with money. That is what the settlement has done. According to the Government, Runnymede—I repeat, Runnymede—is the 38th most deprived place in England. It is more deprived than Liverpool, Knowsley or Warrington and more deprived than Easington or Wakefield—which includes Hemsworth—after the pit closures.

According to non-Government assessments of deprivation and wealth, Runnymede is not the 38th most deprived place in Britain. Quite the opposite, it is the 40th most wealthy place in Britain, if judged in terms of realities such as the proportion of households with three or more cars, the size of the house or the number of households in which average pay is above the higher tax-rate threshold. I do not say that those criteria are perfect, but they are much nearer to reality than the Government criteria, which are the reverse of reality, that are applied to some areas.

According to the realistic criteria, another Tory area—Surrey Heath—is the best-off place in Britain. If one knew the area—it is near Camberley, Chobham, Bisley, Windlesham—one would have to conclude, from the visible evidence, that Surrey Heath was pretty well-off. However, it is not well-off according to the criteria that the Government used in calculating their grant to local councils. According to those criteria, Surrey Heath is more deprived than 83 other councils in this country, including Barnsley, Allerdale, Bolsover, Ellesmere Port and Warrington.

If we shift a little to the north, Huntingdonshire, which is represented by the Prime Minister, according to the realistic criteria that I have spelt out, is the 43rd most wealthy place in England. However, according to the Government, it somehow qualifies for a higher deprivation rating than all the councils that I have just mentioned, apart from Barnsley. The Prime Minister's Government recognises that Barnsley is just marginally more deprived than Huntingdonshire. I do not know what that says about what the Government have done to Huntingdonshire during the past few years.

It is almost impossible to spell out the scale of the financial gerrymandering that the Government have used to bail out their friends on Westminster council. Some time ago, when we made these points, Ministers suggested that there was some independent back-up research, from Bristol university, for placing Westminster fourth in the deprivation scale. The Minister of State nods. Mr. Deputy Speaker, if you look at the table produced by Bristol university, it contains even more bizarre rankings than that which places Westminster fourth. According to the table that the Government want us to accept, the Scilly Isles are ranked third. I do not think that the Scilly Isles are more deprived than Barnsley, and Mr. Deputy Speaker, I do not suppose you do either.

On the next page of the tables that have been worked out by the people at Bristol university, it shows that Westminster is ranked 96th. It is clearly just a racket. It is the grants-for-votes scandal. The scale of the scandal is difficult to exaggerate, so I shall not even try. I shall rely on the Government's own figures, which show that if every council in the country received the same grant per head as does Westminster city council, 94 per cent. of councils would not have to collect any council tax at all. Instead, most of them would be able to pay out rebates. Seventy per cent. of them would be able to pay out rebates of more than £500, and nine councils—including Southampton, Portsmouth, Redditch, Stoke-on-Trent, Tamworth and Wellingborough—would be able to pay out rebates of more than £900.

Let us examine the education SSA for this year. If Kent received the same help per pupil as does Westminster, it could have taken on an extra 4,600 teachers; Staffordshire could have taken on 3,250 extra teachers; Essex could have taken on 5,650 extra teachers; Nottinghamshire could have taken on 2,500 extra teachers; Warwickshire could have taken on 1,400 extra teachers; and Shropshire could have taken on an extra 890 teachers. Wakefield, which includes Hemsworth, could have taken on an extra 1,470 teachers. However, those councils could not do that. Instead, they were forced to make cuts and increase class sizes. That is what happens in other parts of the country. Even that—

Will the hon. Gentleman give way?

No, I will not.

Even that is not the end of the story. Westminster council clearly needs central Government help to make up for the funds which it has lost through fraud and mismanagement. The district auditor is about to issue his final report on the homes-for-votes scandal, which he said has cost £29 million. To get that huge sum—£29 million—into perspective, hon. Members should understand that, of the 365 district councils in this country, 261 have total budgets of less than £29 million. Therefore, 261 councils in England have less to spend on their citizens in a year than Westminster has unlawfully squandered in just one of the many financial scandals for which it has been caught out.

It is not only the scandals that consume public money in Westminster, but the grotesque expense of the services that the council provides. According to the Audit Commission's figures—I always use official figures—Westminster spends £53 per head on refuse collection and disposal compared with Camden, which spends £24 and St. Helen's, which spends £18 per head. Street cleaning in Westminster costs £37 per head. In Camden, it costs £14 per head and in St. Helen's, it costs just £2.28.

Westminster's administration of housing benefits costs £226 per claimant—that is the highest figure in the country, like so many others that I have cited—and only 62 per cent. of applicants receive their money within two weeks. In the neighbouring borough of Camden, which has similar problems and a fairly similar population, the equivalent figure is £103 and 95 per cent. of applicants receive their money within two weeks. That is why the Government gave Camden's benefits section a charter mark.

However, the Tory Government never say a wrong word about Tory Westminster council. We can only conclude that it is because they approve of every single thing that the council does. The Government's problem is that they do not have to answer only to the voters of Westminster—although, with the boundary changes, they will lose one Member of Parliament to Labour in Westminster at the next general election. They also have to answer to the people in the rest of the country.

The people know that the Government are furtively pushing up council tax and cutting local services, while at the same time publicly and repeatedly drawing attention to the 1p reduction in income tax. In other words, the Government give with one hand and take away with the other. As a result, local people all over the country will be forced to pay more and get less. That is why the orders are wrong and that is why we shall vote against them tonight.

5.41 pm

As a Member of Parliament who represents a northern seat, I found it bizarre to hear the hon. Member for Holborn and St. Pancras (Mr. Dobson) focus so obsessively on Westminster. It is quite impossible to follow the debate, which has serious implications for the whole country, when the hon. Gentleman dwells obsessively on Westminster.

I cannot understand why the hon. Gentleman is so obsessed with Westminster. Is it simply because his constituency is situated near Westminster? Are there rival football teams? Is lacrosse at the root of his obsession? What is the explanation of his extraordinary obsession with Westminster? Why did the hon. Gentleman not mention a word about Holborn and St. Pancras so that we could, perhaps, get to the root of his obsession with the city of Westminster?

The hon. Gentleman compared the cost of street cleaning in Westminster with the same service in St. Helens but, in so doing, he was comparing the sun with the moon. What conceivable parallel could be drawn between the cost of street cleaning and sweeping in St. Helens and in Westminster? A vast number of people from every part of the country often gather to protest in the City of London and in Westminster.

To protest about the Government.

It is true that they sometimes protest about the Government, but that is an occupational hazard that we readily accept—it is part and parcel of being in government. People come to protest for many other reasons. For example, Turkish citizens may protest about events in Bosnia. I hope that the hon. Member for Sheffield, Attercliffe (Mr. Betts) welcomes the fact that many people, including overseas visitors, come to protest outside the Home Office—quite irrelevantly—about the persecution of Turkish minorities in Bosnia.

Has the hon. Gentleman seen the muck and the rubbish that accumulates in all sorts of central London locations—near embassies and so on—when a large number of people gather to protest and object? That is why there is a little disparity between the cost of street cleaning in St. Helens and in Westminster.

Are the right hon. Gentleman's constituents happy to subsidise Westminster in the way my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) so clearly described? Does the right hon. Gentleman think that it is fair that there should be a double subsidy—as the chief executive of Westminster city council pointed out—in terms of the standard spending assessment on day and night visitors and car parking income? Should not one subsidy be offset against the other? What would the right hon. Gentleman's constituents think about that?

I must be careful how I respond to that intervention as I hope to bend the ear of my hon. Friend the Minister for Local Government, Housing and Urban Regeneration about certain improved transfers to the Selby district. I hope to gain his sympathy in that regard.

As to the hon. Gentleman's question, I simply refer him to the intervention that my hon. Friend the Minister made during the speech of the hon. Member for Holborn and St. Pancras. My hon. Friend pointed out that the situation was worse when Labour was in power: Westminster received more subsidy and more help. The idea that the present arrangement is a Government racket geared to improve the lot of Westminster voters does not stand up to analysis, as my hon. Friend said earlier. I should like reassurances from both parties as to what will happen if there is a little money to spare, as I am particularly concerned that the Selby district should benefit.

The hon. Member for Holborn and St. Pancras referred also to the old, pernicious and damaging system of the business rate. I am very proud and happy to represent the Selby district. The area has a gigantic industrial base, which includes the Drax and Eggborough power stations as well as the whole of the Selby coalfield. If we were to return to the old business rate system, we would have a bonanza, but how much would we then lose in rate support grants? How would the balance be adjusted?

What would happen to the wretched neighbouring areas which have no industry? Some of them—particularly Merseyside—have no industry precisely because the business rate system drove it out. Is the hon. Gentleman suggesting that a return to the old business rate system is a great leap forward to modernity? If that is Labour's policy come the general election, we shall be happy to debate it.

Is the right hon. Gentleman aware that, if my local authority in Stoke-on-Trent had increased expenditure by anything like the percentage by which the Government have jacked up the business rate, it would have been capped three times over?

I should have received notice of that question. I shall ponder it in my bath when I am in a reflective mood, having carefully read the hon. Gentleman's intervention in Hansard.

I am sure that my right hon. Friend will recall that the business rate may not be raised by more than the percentage increase in the cost of living. He will probably also recall that, when the business rate was in the hands of local authorities such as Sheffield, it was used as a mechanism for taking huge amounts of money from business with the result that almost all businesses in Sheffield would have moved out if they could have sold their premises.

I entirely accept my right lion. Friend's reminder. It is bizarre that the hon. Member for Holborn and St. Pancras poured such acidic wit and criticism on the attempts that local government associations have made, in co-operation with the Government, to produce some sort of objectivity in the analysis of need.

The hon. Gentleman showed, mockingly, using various lists, how implausible that seemed to be, but he is offering to go back to the weird system of raising the business rate in an entirely irrational and undifferentiated manner, which depends entirely on the location of historic industrial premises and those that have been swept to new locations as a result of the Labour party's battening on to the fatted calf in certain areas. He gave us a wholly inconsistent critique. He criticised my right hon. Friend's attempt to be objective, but then proposed a return to the old system of business rates.

While I have the attention for a brief second of my right hon. Friend and of my hon. Friend the Minister for Local Government, Housing and Urban Regeneration—and I cannot hold it much longer—I wish to refresh their memories of the peculiarly Procrustean torture that befalls local authorities that have large chunks of their old district removed as a result of structural or boundary changes.

My hon. Friend the Minister was kind enough, at the end of October 1995, to allow me to bring Selby's chief executive, Mr. Chris Edwards, and chief finance officer, Mr. Martin Connor, to meet him to explain the problems that have arisen because the district has suffered a loss of resident population of nearly one third. That is a big chunk—from 92,000 to 72,000. Selby has lost some 20,000 of its resident population through the boundary changes associated with establishing the new neighbouring York unitary authority.

We told my hon. Friend the Minister, and he was kind enough to listen with great patience and perception, thatalas—local government services and their costs cannot be cut precisely to match the transfer of outgoing population. Procrustes had a bed which unwary wayfarers were made to fit. If they were a bit shorter than the bed, they were stretched in an agonising rack; if they were a bit bigger they had bits chopped off.

My hon. Friend the Minister has unwittingly imposed the perversion of that fearful torture on the Selby district—a combination of chopping and stretching. The chopping happens because lots of local government officers have to be chopped off after a big loss of population—which amounts almost to one third. In the case of Selby, that will produce a redundancy bill of £1 million which, considering our grant from central Government is only £4 million, is a large proportion of extra costs. The stretching happens with the services that are left behind—they have to be stretched over a large, but thinner, district. We will have fewer local government officers, which produces redundancy obligations, and probably a poorer standard of service. We cannot cut precisely to match the loss of council tax paying population.

When we met my hon. Friend the Minister on 26 October 1995, the provisional SSA figures were just about to be published. On 30 November 1995, only a few weeks later, my hon. Friend published his provisional SSA figures. I found that Selby's provisional SSA figure was £6.513 million and I thought that, as a result of meeting my hon. Friend at the end of October, we would see some evidence of recognition of our Procrustean dilemma when the definitive figures appeared.

I was appalled to discover that the SSA has fallen from the provisional sum which was published just after I met my hon. Friend. I can only conclude that we in some way offended or outraged him. That is why I am doing my very best today to offend and outrage the hon. Member for Holborn and St. Pancras—so that I may win the enthusiasm, support and friendship of my right hon. and hon. Friends on the Front Bench.

It is certainly true that the so-called relevant notional amount in the case of Selby has been raised to £7.19 million, but that simply means that our capping limit has been adjusted upwards to take account of the problems with local government structural and boundary changes. The sum still has to be funded and financed by the local council tax payer. That will mean, for example, that the estimated council tax for band D, which is now £92.67, is likely to go up—if we go to the full new capping limit of £7.19 million—to £105. That is an increase of 13 per cent. or more.

I just caught the wisp of an indication from the conclusion of the speech of my right hon. Friend the Secretary of State that there might be some help for Selby—and north Lincolnshire—in the new limit that he has established to give special help to local authorities with severe boundary and population movement changes. I shall consider carefully what he has to say. I hope that my right hon. and hon. Friends realise that if we have to spend up to the new capping limit to accommodate £1 million of redundancy money, we will have to do exactly what the hon. Member for Holborn and St. Pancras accused the Government of doing overall. I dispute and repudiate his accusation, but in Selby, because of a unique and non-recurring phenomenon, we will have to charge people more for reduced local government services. People will get a poorer service, but they will have to pay more for it.

I hope that I may assist my right hon. Friend. He mentioned the redundancy and transitional costs that will be especially important for Selby, given the size of the area which is being removed. As he will know, for 1996–97, Selby made an extremely low bid—of £100,000—compared with many other authorities. We met that in full. The 1996–97 bid did not include provision for redundancy and compensation payments, but we expect that that will be included in the mid-year bidding round and further allocations could be made at that stage. I shall bear in mind my right hon. Friend's remarks at that time.

My hon. Friend is very kind not to force me to wait in agony and expectation until he speaks later for that little expression of hope and encouragement. It is very much appreciated. I hope that my hon. Friend will continue to focus on the needs of Selby. There will be a problem if the extra demands have to be paid for purely by local council tax payers and not through the agency of some sort of redistributive mechanism.

In the same spirit, and to save my hon. Friend the Member for North-West Durham (Ms Armstrong) making the point later, may I say that the right hon. Gentleman has made a good case? Selby is in unique circumstances and the help that the Minister mentioned would not breach any principles, or set any precedents for anywhere else. The Opposition would be happy to support any efforts that the Government, the council and the right hon. Gentleman can make to sort out the problem, because Selby has been battered twice rather than just once by the changes.

I am much obliged to the hon. Gentleman for that helpful contribution. I know that he has some geographical and personal knowledge of the Selby district. I hope that I can end my speech on a note of constructive harmony in the expectation that my right hon. and hon. Friends on the Front Bench will listen carefully to me and to the Opposition spokesman and ensure that everything possible is done. I can see other colleagues nodding in every part of the House. Perhaps we can have a general agreement that something special should be done for Selby and that my right hon. and hon. Friends will do their best to secure it.

6 pm

I am delighted to follow the right hon. Member for Selby (Mr. Alison), who is a fellow Yorkshireman. I hope that the support of my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) will prove helpful. When the right hon. Gentleman retires at the next election, we shall be looking for his successor to come from the side of the House that we will occupy—although I, too, shall have retired.

This is not the first time that I have participated in a debate on local government finance. I have not done so for the past two years, but I did so frequently before that. Today, I found the Secretary of State to be courteous, although he was rather cutting about the Liberal Democrats. He took a great deal of time and gave way frequently, but it was not until my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) intervened that he clearly and specifically accepted that local government spending this year is so inadequately supported by central funding that council tax will go up substantially.

Many experts believe that, on average, council tax increases throughout the country will exceed the rate of inflation by a factor of two and, if certain eventualities such as higher settlements, greater costs and more urgent crises assail local government, the burden will be even higher. Some key services will be threatened, as will some of the non-statutory activities normally undertaken by local government.

For example, the Government are supposed to be keen on combatting crime. In the past few months, they seem to have detected a slowing in the rate of increase in crime. In fact, it has much more than doubled since 1979. Many of the villains are not in prison because the rate of convictions has fallen in actual terms. Many local authorities, mine in particular, are keen to see measures to discourage crime, but there will not be any capacity to do that adequately.

I do not believe that the lot of police authorities is particularly pleasant today. The fire services, which have been put under great pressure, have been mentioned. The Minister might like to recall that the number of calls to which fire services had to respond during the drought months created serious problems for those authorities.

I am concerned about education. I welcomed the Chancellor's reference to education in the Budget—he announced that almost £800 million extra for education would be directed to local authorities—but many local authorities are already spending above the level on which the Chancellor's calculations were based. A further 83,000 children will enter our schools and they will have to be catered for from an increase that may well be more fictitious than real.

There is another problem. The Minister will be aware of it because he has visited my constituency on a number of occasions in the past year or two. We have enormously high unemployment. A vast proportion of our young people see no opportunity for employment and a great deal of effort is put into seeking to ensure that they stay on at school or enter further education—anything other than hanging about the streets. The number of young people who have stayed on beyond the normal school leaving age recently has presented serious problems for an education authority that seeks to be sensible and realistic. The Government might say that other authorities have been treated more severely, but I do not believe that we have been given the assistance or the resources necessary to save money.

The same argument applies in respect of old people. People are living longer, but going into care costs a great deal of money. It is sensible to give local authorities the capacity to sustain elderly people in their own homes because the alternative is more expensive. The number of people who reach 90 or even a century has increased appreciably in my area.

Not long ago, I wrote to a couple who I thought had been married the longest in my area—they were celebrating their 65th wedding anniversary. I wrote to them because I know their son-in-law. I congratulated them and reminded the old man that I had seen him by a reservoir not long before. His daughter telephoned me to say that I have in my constituency a couple who have been married for six years longer—that fact did not get into our observant local newspaper.

People are living longer and they need the sustenance and care that can be provided by a local authority. They will not get it if local authorities remain docile and seek to keep council tax down to avoid offending their tax payers and the Government.

This will be a difficult year for local authorities. It has become increasingly difficult for local authorities to bear their burdens while the flagship of the Conservative party has been supported for the past eight years. Seven years ago, I gave the House a detailed comparison between my authority and Westminster. I reviewed the comparison the following year. If my authority had been treated in the same way as Westminster during the past seven years, none of my constituents would have had to pay any council tax, we would have been able to provide twice as many old people with free meals and several hundred more home helps every year and every person in the Rotherham metropolitan borough—man, woman and child—could have pocketed more than £1,250.

The argument advanced in support of the enormous assistance given to Westminster is that it is part of the capital city and has to sustain the responsibility of the centre in promoting national culture, art, music and so on. In fact, the vast majority of provincial local authorities spend a larger proportion of their budget on those purposes than does Westminster. I challenge the Minister to deny that. The average local authority provides a higher level of support for art, culture and music than does Westminster city council. The situation is so bad that the national lottery has to use my constituents' contributions to fund the extravagant schemes and to provide those central responsibilities that the Government assume Westminster bears.

If the authority was efficient, I would not mind so much. During a debate in the House a few years ago, I mentioned an old-age pensioner in my constituency who had not set foot in London since 1955. He received 14 parking tickets and a summons in Westminster for parking a car that had never been there. [Laughter.] Oh yes. It just so happened that the car with false number plates was discovered on the morning of my debate. The person involved was never prosecuted. The car was a large blue Rover. I do not have a blue car for obvious reasons and I suspect that the person involved may have been closer to the political sympathies of Conservative Members.

If my local authority had done anything like that, there would have been demonstrations such as those mentioned by the right hon. Member for Selby. There would have been protests about the incompetence of the council. Yet the Tory flagship must continue to sail. I hope that, after the next general election, we will see rather more intelligence and a greater sense of justice pervading decision making in the Department of the Environment.

Seven years ago, I argued that there was grossly inadequate weighting for the unemployment factor in the determination of central support. The Government decided that it was a good case and there has been some improvement since then. However, I still consider that there is grossly inadequate consideration of the factors of poverty and low pay.

If a community suffers from low earnings and the average household income is therefore extremely low, that has a serious effect. I take the view—and have done so for a long time—that that factor is not given sufficient weight. Any improvements that the Government may have made have been grossly inadequate. There is a strong case for an independent assessment of and arbitration on such factors in the determination of central grants. It is a serious argument. My authority and others in South Yorkshire, which contribute to the Deane valley city grant scheme—over which the Minister has a watching brief—are areas of real poverty. Jobs have been destroyed and the wages of those in work have fallen in real terms. It is a grossly inadequate that that economic reality is not taken into account in the determination of grant. That must be dealt with immediately.

In 1979, Graham Page, the former Minister with responsibility for local government finance, described his task as flying around England in a helicopter dropping bags of money on town halls. That may have been an inefficient system, but it did not matter so much then because, in those days, the rates provided a much smaller share of local government income than does council tax now. [Interruption.] It is true.

Once Lady Thatcher decided that the burden had to be shifted from the taxpayer to the ratepayer, people became a great deal more sensitive to the problems. The Government then became a great deal more critical of local authorities that did not do exactly what they wanted. Local government must serve local needs. It should not depend on a Government who exercise excessive pressure through such measures as capping. Sometimes, local government knows best. Indeed, local government is often more careful in its stewardship of public money than the Government Departments that so often criticise it.

6.12 pm

It is a great pleasure to follow my right hon. Friend the Member for Selby (Mr. Alison). He gave us a lesson in how to charm the Government. As many of us have thought for some time, he is an old smoothie.

It is also a great pleasure to follow the hon. Member for Wentworth (Mr. Hardy). I read his speeches in Hansard before I came to the House. I wish him well in his future retirement. I am sure that it was a slip of the tongue, but the hon. Gentleman said that under Lady Thatcher the proportion of grant raised locally was increased. In fact, it was decreased. Perhaps he was confused by the fact that the gearing was changed.

It is wrong of Labour Members to say that the standard spending assessment figures have been fiddled. No one seriously believes that. They have been examined by the Audit Commission and by such luminaries as Tony Travers from the London School of Economics. All the reports say that the way the methodology works is satisfactory and fair. No one can point to another system in the world that is more fair.

My hon. Friend's long list did not include the Environment Select Committee, which also found the system to be entirely objective.

I am grateful to my hon. Friend for that additional information.

Labour Members have drawn comparisons between Wandsworth and Westminster. If Wandsworth received the same grant as Tower Hamlets, it could give back £1,000 to each council tax payer. Unless my geography is terribly wrong, Tower Hamlets is not exactly a safe Conservative borough. It is certainly not part of some supposed Tory plot. Sooner or later, Labour Members will have to produce reasoned arguments.

The reason why Labour Members say that the SSA figures are fiddled is that they do not want to answer two basic questions. First, if the grant is inadequate, how much extra would Labour be prepared to provide? Secondly, what proportion would be raised locally?

The hon. Gentleman said that the Audit Commission had accepted the methodology. Is he aware that the Audit Commission commissioned a report by Price Waterhouse on the issue of capital financing, which my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) mentioned? It rejected the idea of notional debt as part of the capital financing arrangements within the SSA and suggested a system, albeit an adjusted one, based on credit approvals. Why do not the Government take up that suggestion, which would help authorities such as Birmingham and Sheffield?

The hon. Gentleman knows that in April the way in which local authorities can deal with capital financing will change because of the private finance initiative. That will give them many opportunities, in partnership with private enterprise, to renovate schools, libraries and leisure centres.

There is a certain carnival atmosphere about the debate. The Evening Standard last night said that it was like a ritualised dance. The Opposition come and say that the grant is inadequate and that the world as we know it will come to an end. The Government come and say that the grant is generous and reasonable. The Opposition say that there will be many redundancies among teachers and council staff and that it will be the end of services as we know them.

This year, the Opposition say, "We are not crying wolf. There will be deep cuts in local government services." Of course, that never happens—and why not? Let us take one standard assessment. The largest part of any local authority budget is staffing. Local authorities have to deliver education and social services, which tend to be reliant on high numbers of staff. Compared with last year, there has been a reduction of 1.5 per cent. in the staffing level. However, if we deduct from that all those employees who have transferred to private companies through compulsory competitive tendering or who now come under the arrangements for grant-maintained schools, the figure shrinks considerably.

Hon. Members may say that that is just one year, but comparisons with 10 years ago show that about the same number of people are employed in local authorities now as they were then—despite compulsory competitive tendering and the various new functions that have been introduced. It is simply not true to say that vicious cuts are being imposed.

At the time of our debate last year, one authority screamed loudly about the number of teachers and other staff that it said it would have to make redundant. I am referring to the late, but not very lamented, Avon county council. When it was finally wound up and its reserves were examined, there was an unexpected balance of £54 million. That is enough to absorb the total budgets of five or six district councils. The spokesman for the council said that the balance was larger than had been anticipated. That is a bit like the late Emperor Hirohito saying that the second world war had not gone entirely to his satisfaction.

Mention was made of Westminster city council and other Tory authorities. The hon. Member for Holborn and St. Pancras (Mr. Dobson) is no longer in his place—he is a busy man and no doubt has other things to do. It was a bit rich of the hon. Gentleman to lecture Tory authorities when Camden council ended the 1994–95 financial year with £180 million of uncollected debts. For many years, the majority of that council's staff enjoyed terms and conditions of employment that were described by their chief executive as reflecting unique generosity to the point of illegality. That council spent £1.5 million on computer equipment, then failed to use it. That council lost £300,000 worth of computer equipment for four years. That council was described as having no coherent children in care policy. It was more than a bit rich of the hon. Member for Holborn and St. Pancras to shroud-wave about education cuts, saying that children would miss out, when his own council in Camden took more than £4 million from its education budget in 1994–95 to cover bad debt and interest rate swaps, which had nothing to do with education.

The hon. Member for Holborn and St. Pancras questioned the mix, and expressed concerned that the amount of money that would have to be raised locally will increase. As I pointed out, a Labour document suggests that that will happen. The hon. Gentleman said that he wrote every word of it. On page 18 of "Renewing Democracy, Rebuilding Communities" the hon. Gentleman stated:

"We believe that it would be better for local people to make a healthier democracy if councils were responsible for raising locally a much higher proportion of the money they invest and spend."

The hon. Gentleman said that he did not mean that exactly but that the business rate should be repatriated. That would increase the amount of money raised locally. If that is what Labour Members mean, why not say so? Why use obscure wording when it would be simpler to say, "We will ensure the return of the uniform business rate." Then everyone would understand. This is a clear example of Labour running from a policy that it now perceives to be unpopular.

I am sure that the hon. Gentleman has read the whole document—in fact, his copy is annotated. He will be familiar with its statement that the first thing that Labour wants to do in terms of denationalising Tory policies is to restore the uniform business rate, but Labour is consulting businesses and other interested parties on how to achieve that effectively. We want to make sure that those other interests are involved. That is why we are not prepared at this stage to fling numbers about. If Mrs. Thatcher had behaved that way, the Conservative party would not have wasted £4 billion.

I have read the full document, and very enjoyable it is too. I did not miss out any sentences. I did not fiddle the words to mean something different. It is clear that the document is referring to the uniform business rate, but it says something extra. It says that the proportion should be increased. When Labour consults, it will no doubt be told by business men, "We remember a time when people took roofs off factories, to avoid paying exorbitant business rate." The hon. Member for Sheffield, Attercliffe (Mr. Betts) will no doubt remember, because that occurred in his own metropolitan district council. The hon. Lady is not on a winner. If this is the only denationalisation—[Laughter]. I mean, renationalisation. Those words are so old that we tend to forget them. It is like a journey into the past. If this is the only renationalisation that the Opposition propose, it is not even old Labour.

Does my hon. Friend recall that Labour members of Labour-controlled authorities were on to what they believed was an electoral winner—and it probably was, for them? The bills were paid by the milch cows of business, which had no votes, while the rates of people who had votes were disguised as part of their rent. Labour was able to destroy businesses and jobs. The figures are on record. Businesses voted with their feet and moved out of Labour boroughs. The hon. Member for North-West Durham (Ms Armstrong) plainly wants that situation to return.

My hon. Friend said that the voters did not appear to pay, but rightly pointed out that they did. They lost jobs, investments and opportunities. That was the price paid by people when they decided for narrow, sectional interests to impose ideological policies on local councils.

I will give the hon. Gentleman two examples of raising money locally. Sheffield city council raises extra income from local sources by opening the town hall car park on Saturday. Secondly, all the internal roads for Meadowhall shopping centre were designed by the council's own engineers and received commendations from Meadowhall's owner, Eddie Healey, for doing a job as good as any private firm. Local authorities are restricted by the vires rules that the Government inflicted on local councils, which prevent them from earning money in the ways that I described.

No doubt the hon. Gentleman went round that centre with his personal plumb bob and spirit level, to examine the roads. I do not understand his point. Nobody is suggesting that all the work done by local authorities is bad. We are arguing that heaping debts on the back of local business is not the best way to be involved in the local economy. If the hon. Gentleman wants to involve and to work in partnership with the private sector, and to relieve himself of an obsession with municipal ownership, the people of Sheffield will welcome that approach.

This year, local authorities will r0eceive £900 million, which is greater than expected from last year's statement. Arrant nonsense was talked about local authorities suffering different rates of inflation from the rest of the country. That is a hoary old chestnut. That was true in the late 1970s, but it has not been true for the best part of 20 years. Against the background of additional money, it is only right for the Government to focus on the priorities of education, social services, and law and order.

I share my right hon. Friend's concerns about relaxation of the capping rules. Removing capping is like getting off the back of a tiger. One is safe until one tries to dismount, and then the problems start. With local authorities, the tiger has been smiling through its beard and saying, "It is going to be all right. You can trust us, we are responsible and we will do the right thing." Yet the very moment capping is relaxed, we hear statements like the one made by Sir Jeremy Beecham.

Like many hon. Members, I received a briefing note from the three local authority associations—which are soon to be one—in which Sir Jeremy Beecham said that

"the settlement did not match what councils were spending."

What a daft idea that it should. Indeed, there would something wrong with the settlement if it did match spending. In no other sector would the wish list of an organisation suddenly become its spending plans. The idea that the best way in which to solve a problem is to appoint an officer is entirely wrong. In my experience, the best way in which to solve a problem is to disappoint an officer.

Local authorities use a strange language of compliance. We hear councillors say that as the capping level has been relaxed they will spend up to the new level—just because the Government say that they can. When the Government say that it is possible to raise the level of spending, they are by no means advocating that such a level should be reached. Just because the standard spending assessment has gone up or just because the cap has been relaxed, there is no compulsion to increase total spending.

The hon. Member for Holborn and St. Pancras seemed rather excited about what the Chief Secretary to the Treasury said about expected levels of council tax. I should think that the Chief Secretary, by his nature, has a rather jaundiced expectation of human nature. There is no reason for council taxes to increase by about 8 per cent. Indeed, some councils are planning to cut their council tax next year. We should expect, however, local authorities to start to address priority.

Clearly, we are giving education a high priority this year. In my county of Essex, the total sums available for education are being increased by almost 5 per cent—an increase the size of the allocation for two or three district councils. We have already heard that the Lib-Lab coalition on the council is determined not to pass on those extra resources to schools. All we will see as a result is a further flood of schools opting for grant-maintained status. Every secondary school in my constituency is already grant-maintained. They offer enhanced choice and diversity in education, whether in language or technology.

I would, however, like to take a leaf out of the book of my right hon. Friend the Member for Selby and make a special plea to my hon. Friend the Minister, because we have worries in the Brentwood area. [HON. MEMBERS: "Ah."] They are real worries and I hope that the Opposition will support me in my plea. Our schools are so good and so attractive that we are desperately worried about the prospect of an influx of children of members of the shadow Cabinet. We are not entirely sure that we can take such a number of children, but we will do our best. Should Brentwood schools be favoured by Opposition spokesmen, will my hon. Friend look kindly on the wish to build a number of extra classrooms in our secondary schools to accommodate them?

At least the hon. Gentleman has no need to fear an influx of children of Conservative Members, since they all send their children to private schools.

We are very proud of some of the children who went to private schools in Brentwood, the hon. Member for Blackburn (Mr. Straw) being a prime example. We often see him at old boys' reunions. As someone who did not come from a privileged background, it is always nice to see the toffs doing well on the Opposition Front Bench.

It is also important to concentrate on social services. Along with the rest of my hon. Friends, I have become increasingly worried about the way in which the Lib-Lab coalition on Essex county council has been abusing its position over care in the community. Essex is virtually unique in so far as it has received the largest allocation of special grants and SSA on personal social services. Unfortunately, it has a bunch of old-fashioned, municipal councillors who simply want to organise and control everything. They have ended the Conservatives' modernisation programme of old persons' homes, they have ended the modest charge for home helps and reduced the service, and they have taken money from social services to introduce stress officers for their staff—no doubt so that their staff can explain to the rest of the population why the service has been reduced.

The Conservatives had introduced a scheme whereby a series of old people's homes, whose structure and decoration had been neglected, were offered for sale in the private sector. The controlling group on the council has stopped that process and essentially reduced the amount of money available to help old people get into private homes.

In my constituency a home called Brook House, which is owned by the county council, was threatened with closure just before the last general election. Despite many protests from the local Liberal Democrats, who said that the proposed closure was a disgrace, the home was eventually closed. I had the pleasure of reopening it. Virtually the same staff work there, but in new conditions.

Instead of looking like some kind of poor house or somewhere where old people are sent to be forgotten about—I am talking about the basic surroundings not the quality of the staff—the home now looks like a hotel. That says to our old people that we recognise the work that they have done, respect them and want them to see their last days out in some dignity. We know that it is cheaper for the county council to place elderly people in private sector homes instead of its own homes, yet it does not do so because of ideology.

As I said to the hon. Member for Attercliffe, the private finance initiative is likely to come into being next year. It will enable county and district councils to use some of the disciplines of the private sector in renovating their libraries and schools.

We must ensure that local authorities behave responsibly with their new responsibilities and flexibility. My council of Brentwood is controlled by the Liberal Democrats. The local leader was in the paper saying what a disgrace the settlement was, how the council could not manage on it and how there would be a massive hike in council tax to compensate for it. He predicted large council tax rises and said that it was all the Government's fault.

Sometimes we politicians can be taught a lesson or two by members of the public who say the obvious and cut through much of the political froth. I am grateful to my constituent Mr. Michael Pointer who wrote to the Brentwood Gazette to comment on the local leader of the Liberals blaming the Chancellor for the prospective increase in council tax. He said:

"In fact the Chancellor is increasing the cap by 1.75 per cent., but that does not mean our councillors need spend it."

He points out that in 1992, the council took £4.2 million from the reserves and spent it on revenue, in 1993, it took £2.5 million and spent it on revenue, in 1994 it took £2.7 million and spent it on revenue and in 1995 it took just short of £2 million from the reserves. What the gentleman says in his letter is that the day of reckoning has arrived. Brentwood has a badly run council that has not applied basic housekeeping rules. Frankly, it has been deserted.

I thought—perhaps I am wrong—that the Government were trying to persuade local councils to use up their reserves, on the grounds that that is the best way to keep council services going.

The problem that my local councillors have is that they rely on the hon. Member for Newbury (Mr. Rendel) for advice, which is the road to ruin. The Government are saying, "We don't mind you using your reserves, but we want you to do so in a way that will get your budget down." It is no use substituting measures and hoping that one day something will turn up. The hon. Gentleman has let those councillors down terribly, because he produced an alternative budget that proposed not a penny-piece extra for district councils. He is saying to the Liberal district councillors in Brentwood, "Sorry, chaps. I've deserted you. We want to make education a priority."

I appeared on a television programme with the hon. Member for Newbury. He is very nice to be on television with; he is a very nice man indeed. When I put the point to him, he looked shocked. I do not know whether he was let down by his hon. Friends in his Treasury team—

Nobody told him.

My hon. Friend suggests that no one told the hon. Gentleman. I suspect that that is true. If it is, I do not think that that was fair. He should have been told.

I had an opportunity to talk to my hon. Friend the Member for the Isle of Wight (Mr. Field), who told me about his Liberal-controlled council, which has been given an extra £1.5 million for its education budget. It did not want to give that money to schools, so there was a tremendous row—Liberal against Liberal, shouting at one another. Eventually it offered a compromise: it will keep £300,000 and let schools have the rest.

My hon. Friend the Member for Isle of Wight and I say, "let the schools have the money that has been allocated to them." We shall judge the settlement by whether the money is passed on. Will priority be given to education and social services? If Opposition Members do not do that, we will not, under any circumstances, allow them to forget it.

6.41 pm

The Chancellor pledged in his Budget speech last November that an additional £878 million would be made available for investment in education in 1996–97. Of that amount, £770 million was to be channelled through local government. We now have the finalised local government settlement, but we do not have the additional £770 million that was pledged. The total amount of external finance for local authorities has not risen in real terms. That is the important point. All that the Government have done is to raise the standard spending assessment for education by 4.5 per cent.

To make that increase meaningful, the Government have at least raised the capping limits for many authorities this year. As we heard from the Secretary of State earlier, however, the Government have refused to do what many hon. Members have called for and to remove capping limits altogether. If the Government are serious about local democracy, it is time that capping went.

I wrote in my local newspaper on the Isle of Wight that the council and the Liberal Democrats had campaigned for capping limits to be raised or abolished, but they said that they had never asked for that and tried to suggest to school governors on the island that that was not Liberal Democrat policy. I should be obliged to the hon. Gentleman if he would emphasise the point so that I can take it back to the Liberal Democrat councillors on the Isle of Wight.

I am delighted to underline Liberal Democrat national policy. I cannot tell the hon. Gentleman precisely what was said on the Isle of Wight, but I can tell him, happily, that it is also Conservative party policy, as passed at the last conference, although the Government have not yet taken that on board. Only when capping has been removed can people really hold their councillors to account, because only then will councillors face making real choices about the provision of services and how to fund them. With capping in place, it is not the local electorate who decide what value to place on education for their children but the Secretary of State in London.

There are two ways of looking at the line taken by the Chancellor and the Secretary of State. We could assume that the Government are recommending that councils stick to the SSA for education. If so, it should be noted that last year local authorities spent more than the Government recommend that they spend this year. If we assume that the Government really want councils to stick to their SSAs, that will lead to a cut in education spending, not an increase. If, however, the Government are urging local councils simply to spend 4.5 per cent. more on education regardless of whether they were above SSA last year, with no additional funds from central Government, they are calling for a substantial increase in council tax, coupled with a programme of cuts in other local authority services. Even then, it will not be possible for many education authorities to boost spending by the amount that the Government suggest.

I realise that Conservative Members may be unwilling to take my word on that, so I will quote the words of the Treasury Select Committee, which published its report on 15 January. That Committee, which has a Conservative majority, revealed the extent of the Chancellor's con trick when it said:

"This increase in spending does not, however, have quite the substance the Chancellor claimed for it."

It went on:

"Moreover, when the increase in spending is placed in the context of local authority resources, it seems less likely that, whatever the expectations of parents, local authorities will be able 'to carry that funding through to school budgets.'"

The Committee concluded:

"There seems little doubt that some local authorities will be unable to pass on any increase in spending, and that some schools may neither perceive nor receive any increase in resources."

The Government have told us throughout the debate that that would be entirely the local authority's fault, but the Treasury Select Committee has pointed out that it is inevitable, given the Chancellor's Budget.

Clearly, any increase in education spending will be a matter of too little too late. It will not even be enough to cover the £191 million needed to cover rising pupil numbers. Nor will it be enough to cover the £131 million required for additional costs in the provision of special needs education. It takes no account of the 8 per cent. reduction in schools' capital grants and credit approvals.

Let us consider what it will mean to one education authority. In Cambridgeshire, the SSA for education in the current year was £226.1 million. Next year, it will rise to £237.3 million—up by 4.9 per cent. Generous, one might think. But Cambridgeshire, one of many shire counties no longer controlled by the Conservatives, has already decided to spend £241.1 million on education this year, because the present authority places a much higher value on education than the Government do. That is already some £4 million more than the Government suggest that the authority should spend next year. The extra resources this year have been found partly from reserves and partly by raiding other areas of spending, which have consequently been starved of funding to a level below even that which the Government think appropriate. As was bound to happen, the reserves have effectively run out.

The Government are providing less money than Cambridgeshire was already spending. The authority has no money left to make up the difference. It has increasing pupil numbers and demands for special needs. Moreover, of course, it is not allowed to raise any extra funds because it is capped. In anyone's book, that can add up to only one result: cuts in education.

It is no wonder that the teachers and governors of Cambridgeshire are up in arms. Those figures were produced not by some party political body, but by a combination of the primary governors group, the secondary governors group, the primary heads forum, the local education authority secondary heads, the Special Schools Heads Association and the National Association of Governors and Managers.

I have used Cambridgeshire as an example, but I have received briefings from many other county councils showing that almost exactly the same is happening all over the country—in Cornwall, Devon, Somerset, Gloucestershire, Dorset, Berkshire and Hampshire. The list continues across the country.

The hon. Gentleman mentioned Cornwall. Will he cast his mind back to what was said in Cornwall a year ago by all his Liberal Democrat colleagues—that Cornwall would face horrendous cuts in school budgets, and that teachers would be laid off right, left and centre? They did a survey and produced bogus figures just before the local elections. Does the hon. Gentleman know how many teachers were actually laid off in Cornwall last year? They were fewer than the fingers on my hand.

I am delighted to hear that confirmation of how well Cornwall is being run now. The council has managed to avoid cutting a lot of teachers' jobs despite cuts in Government funding. That is a wonderful example of how well Liberal Democrat councils have managed.

When the Conservatives have succeeded in infuriating such huge bodies of opinion in the way that I have described, is it any surprise that they have lost the confidence of the country?

I realise that statistics will abound in the debate, but there is one that is especially well worth recalling in view of the Government's claim that they are doing so much more for our schoolchildren this year. Since the general election the standard spending assessment per secondary school pupil in England has fallen by 9.5 per cent. in real terms.

Time and again, the Government have raised parents' hopes that their children's education will get the funding that it deserves, only to dash those hopes when it is revealed that Government promises are nothing but a lot of hot air. Their attempt to con parents is motivated by the desperate desire to win votes, but they will soon realise that the British public do not take kindly to a Government who seek to pull the wool over their eyes, especially where the education of their children is concerned.

The Secretary of State continues to play the Chancellor's fiddle. Yet he and the other Conservative Members are already gearing up to criticise local authorities which respond in the only way possible—by cutting services and increasing council tax. We have already heard such criticism in the debate.

The Government themselves produced figures in the Budget Red Book showing that they expect a 10 per cent. increase in council tax revenue this year. That translates into an additional bill of about £61 for the average household. For the Government to cut income tax one day and then reimpose that tax burden in a less fair way the next is nothing new, but it is still dishonest: it is still an outrageous Conservative sham.

The hon. Gentleman talks about dishonesty; would he care to tell us why not one penny piece of additional money was allocated for district council functions in the Liberal Democrats' shadow Budget?

As I hope has become entirely clear—indeed, I believe that the hon. Gentleman himself made it clear in his speech—the Liberal Democrats' priority now is to increase education funding and spending, because we believe that to be in the long-term interests of the country. We have made it clear that where necessary we shall raise income tax to pay for extra education spending. That is where our priority is, and that is where it will remain.

Local Government finance is about more than council tax—

I am interested in the Liberal Democrats' policy on education. I have seen a copy of the resolution passed at their conference which says specifically that the additional penny in income tax that they have said for some time should go to education would be spent on education for the over-16s and under-fives, which would not be relevant to this education debate at all. The resolution is quite clear.

I understand that the motion that the hon. Gentleman mentions was on nursery education and did not cover the whole gamut of what we expect the extra money to pay for.

Local government is about more than council tax: it is about local services that are vital to the quality of life of ordinary, decent people. While local authorities have attempted to shore up funding for education, it is inevitable that other services have suffered. If local authorities now try to boost education spending by the proportion that the Government suggest, other services will have to be squeezed even further. The adjusted spending assessment for social services has been cut by 2 per cent. in real terms, so it seems that the Government regard social services and the vulnerable people whom those services exist to protect as expendable.

The neglect shown by the Government in their funding of social services naturally manifests itself in some sad examples of how vital services have declined. I will give the House the opportunity to hear about two of them.

I recently received a letter from a doctor in Hungerford, in my constituency, referring to what he described as the "sorry state of affairs" that the underfunding of community care has brought about. His patient had been trying to secure bath aids through social services. The House will appreciate that providing handles to enable somebody to get in and out of the bath safely and comfortably can be an essential ingredient in maintaining that person's independence. It is a vital safety measure, and may even save money in the longer term by enabling an elderly person to remain at home rather than having to go into residential care. The response from social services was that the gentleman would have to wait for up to a year—not to obtain the aids, but for a care manager even to visit his home to assess his needs. Goodness knows how much longer it would have taken to have the bath aids fitted. But the real sting in the doctor's letter comes in the last sentence, which reveals that the patient is 90 years old.

Another case was brought to my attention by a special school in Hampshire which caters for a constituent of mine. The boy is described as

"a very vulnerable pupil at our school which provides 52 weeks a year education and care for children with the most challenging behaviour associated with autism. The challenging behaviour can be life threatening."

The young man is now approaching his 19th birthday, and once he is 19 he must move on from the school and will no longer be funded by Berkshire education authority. Responsibility then shifts to social services, which must find a suitable placement.

The school has been pressing social services to place the young man for the past 12 months, but social services have been unable to do so. Meanwhile, the school has provided a place for the boy at a community care home and merely wants social services to agree to fund the placement. But social services have been unable to confirm funding for the placement, on the grounds that they need to find something cheaper. The interests of the young come second to the rigours of an underfunded budget.

In the words of the school:

"With Government pressure on education, care and health budgets, these children and young people are now the victims of a bureaucratic 'ping-pong' between Education and Social Services pre-19 and Social Services and Health post-19 as they argue about who will provide what proportion of funding for their placements."

Those two examples are but the tip of the iceberg, but both show how the Government have put short-term tax bribes before the provision of essential services. In the long term their policies will lead to greater expense, and the tax increases that we have witnessed since the general election. The Government have failed to provide the funding for local authorities to make community care work.

That is not the end of it. The Government are also cutting the funds for highway maintenance. I understand that Somerset, for example, is so desperate to safeguard education spending that it has imposed a cash freeze on highway spending, despite increasing numbers of claims for damage to vehicles, and to human beings as a result of falls. There is more: the Government are also cutting the funds with which local authorities attempt to protect the environment.

Those cuts in every area of local government services will be the prime concern of most ordinary people. In many areas, people will have to put up with cuts in services combined with steep increases in council tax. A further problem is that in calculating spending assessments no account has been taken by the Government of the burden of the landfill tax this year. I hope that local authorities will reduce their use of landfill, and as an incentive to that end I welcome the landfill tax, but in the short term many local authorities will face a considerable burden in terms of the landfill tax.

In Gloucestershire, for example, the impact will be £740,000 in the financial year 1996–1997. Where do the Government believe that cuts should be made to find that money? In a full year, the impact will be about £1.5 million. Even with the change in national insurance contributions promised for April 1997, the impact on Gloucestershire will still be well over £1 million.

What cuts do the Government recommend to find the money for the new tax? Should cuts be made in education? The county's spending on education is over the SSA, yet it has had to make significant cuts in school budgets for the past five years. Should cuts be made in social services? Only today, a demonstration took place outside shire hall in Gloucester about possible cuts in services, including child care provision and adult opportunity centres.

It is frustrating for us all that the Secretary of State has still not rectified the iniquity of the area cost adjustment. I was glad to hear the right hon. Gentleman say today that there is a possibility of future adjustments to the scheme, but that has not happened yet. It makes no sense to place a higher value on the educational needs of children living on one side of the Hampshire—Dorset border than on the other. After all, teachers' salaries are effectively identical in both areas.

The Government are simply starving local authorities of resources, and they are doing so deliberately. They are gambling for electoral gain. The Conservatives' strategy is clear: hammer local government to help pay for tax bribes and, if there is any backlash, blame the Opposition parties who run most councils anyway. They are making one last desperate effort to stop the Liberal Democrat tide sweeping the Conservatives from power right across the south of England in the May local elections, but it will not work. Nobody trusts the Conservative Government any more. Sleaze, incompetence and downright dishonesty have all taken their toll.

It is ironic that the party which promised tax cuts but delivered tax increases now attacks the Labour party for saying one thing and doing another. Tory Members who want to see evidence of what is happening need only look towards their own grass roots. The Conservative party's grip on local government has been decimated, not least by the Liberal Democrats, who have turned the political map yellow from Cornwall to Norfolk, from Cheltenham to Worthing and from the Isle of Wight to Harrogate.

The hon. Gentleman has his party's Treasury spokesman, the hon. Member for Gordon (Mr. Bruce), sitting beside him. As he has given a long catalogue of the deficiencies of the settlement—in social services, community care, education, environment and highways—perhaps he would like to suggest by how much he thinks the Government's grant to local authorities is deficient. If there is to be a "Liberal Democrat tide" people will want to know how much it will cost.

The Minister should have heard by now that we want to put a penny on income tax to pay for increased funding for education. That is our clear priority, and always has been. We have also said that we wish to release housing receipts to enable local authorities to spend more in other areas, but particularly on housing. We also want to change the whole method of financing local government by introducing a local income tax and by removing the cap.

Last May, the Liberal Democrats relegated the Conservatives to third place in local government—not just in terms of the number of councillors we have across the country but, more importantly, in terms of the number of councils we control. When will the Conservatives get the message? They are not trusted to run local authorities and in a matter of months it will become clear that they are not trusted to run central Government either.

It is ironic that a key factor in the breakdown of trust in Conservativism at every level of Government will be the way in which the Tory Government have treated local councils and local services. The Conservatives will deserve all that they get in the local elections in May and in the general election whenever it comes. But even that will be poor compensation for the rundown of local services over which they have presided. It certainly offers no immediate solution to my 90-year-old constituent who cannot bathe in comfort or safety, or to the parents of the autistic young man for whom a sufficiently cheap placement cannot be found. This financial settlement is a disgrace, and the fact that Ministers and other Conservative Members have the gall to commend it to the House shows how shoddy their politics have become.

7.5 pm

The speech of the hon. Member for Brentwood and Ongar (Mr. Pickles) was interesting, but I shall not be led down the route that he would have taken the House. The hon. Gentleman referred to the fact that there have been no vicious cuts. I hope to be able to show him that there are cuts, but that they have been well hidden by the Government's presentation of the settlement.

In November, the Secretary of State for the Environment announced in Parliament the Government's financial settlement for 1996–1997, along with proposals for expenditure and capping-related matters. The Secretary of State today confirmed the announcement. I want briefly to examine the main direction of the national settlement, and look at the implications of that settlement for my local authority, Barnsley metropolitan borough council.

The local authority associations told the Government in July that there was an ever-increasing gap between the demands placed on local authorities by central Government and what the local authorities are allowed to spend to meet those demands. That puts in a nutshell the dilemma in which local authorities find themselves.

In July last year, the local authority associations informed the Government in two comprehensive papers that increased demand plus the new priority requirements for spending would mean that local authority spending needs, as far as total standard spending is concerned, would be some £47.97 billion for 1996–1997. The Government proposal that we have heard today, however, is for £44.923 billion. The Secretary of State claimed at the Dispatch Box today, as he did back in November, that that represents an increase of 3.3 per cent. on the previous year.

The Minister will agree—the Secretary of State did not in any way challenge me when I raised this point—that that 3.3 per cent. is not, in effect, an increase at all. When the figure is adjusted to take account of the provision for local government restructuring, community care and the police, the adjusted increase is 2 per cent.

Given the Government's forecast of an inflation rate of 2.75 per cent. in 1996–97, that means an overall decrease of 0.75 per cent. rather than an increase. That is a clear example of the Government saying one thing and doing another. Local authorities will be in an horrendous position next year. Moreover, as the local authority associations pointed out, authorities had calculated that they would require £3 billion more than the Government propose to provide.

There are three ways in which local authorities can deal with the problem. The hon. Member for Brentwood and Ongar (Mr. Pickles) said that many authorities could use reserves. Others, however—including mine—have no reserves to use. Because Barnsley's SSA is only 1.9 per cent. above the capping level, we cannot take that route, either. Therefore, like many other authorities, we are left with the option of cutting services year on year, and that has begun to affect people's quality of life.

Barnsley metropolitan borough council has again been asked to make large cuts. Following last year's cuts, which amounted to £10 million, it is estimated that this year's will come to about £7 million. Barnsley's provisional SSA for 1996–97 is £159.335 million. I admit that that is 6.5 per cent. higher than the 1995–96 figure, but, after adjustments for community care and rail support funding, the underlying increase is just 2.8 per cent. Given that Government inflation forecast of 2.75 per cent. for next year, it becomes a freeze in real terms.

Barnsley is now 31st in the SSA league table, whereas last year it was 32nd, but we are still at a considerable disadvantage in comparison with most other metropolitan boroughs. In other boroughs, the average SSA per head is 12 per cent. higher than ours, which is £687. The average is £770.

Furthermore, as in previous years, the level of tolerance of spending above SSA varies widely. It is generally accepted that this method of calculating local government finance involves considerable imprecision, and that is borne out by the fact that some authorities with SSAs implausibly higher than Barnsley's are allowed to exceed them by 12.5 per cent. Barnsley is permitted an excess of only 1.9 per cent.

The average level of tolerance for metropolitan boroughs is 5.5 per cent. Barnsley, however, is restricted both to a low SSA and to a low level of tolerance. The Minister will, I think, accept that any rational system would allow authorities such as Barnsley a much higher level of tolerance, so that they could be flexible in meeting local demand. As that is not built into the system, however, there is some irrationality.

The equation for education spending is somewhat imbalanced. The hon. Member for Newbury (Mr. Rendel) gave the figures. The education SSA is purported to have increased by £740 million, but the overall SSA has increased by only £677 million. If the Secretary of State's equation is to be balanced, it will have a far-reaching effect on local authorities. Resources will have to be siphoned from other essential services in respect of which—as I have pointed out—there is a negative inflation provision. In Barnsley, many services provided for elderly people will be hit.

Barnsley makes the delivery of effective education a priority—it spends 45 per cent. of its budget on education each year—but its position is very similar to the national position that I have described. Increases in education spending that match the purported increase in the education SSA will rob other essential services.

Barnsley is probably more deprived than most other metropolitan boroughs of a similar size—

More deprived than Westminster.

Indeed.

More than 8 per cent. of adults of working age are registered permanently sick, compared with a national average of 4 per cent. Because Barnsley is traditionally an area of heavy industry and contains an aging population, a large proportion of the adult population are informal carers—12 per cent., according to an estimate that I saw last year. The pressure on social services and care in the community is greater than it is in most other districts, and the Minister should ensure that that is taken into account in the allocation of resources.

Between 1981 and 1991, total employment in Barnsley fell by 19 per cent; over the same period, there was a national increase of 3 per cent. In the decade between 1984 and 1994, more than 15,000 jobs were lost, and the gross domestic product in the Barnsley and Doncaster training and enterprise council area is estimated to be 41 per cent. below the national average. Factors such as that should he paramount in the allocation of resources.

The Minister will be aware that Barnsley and hon. Members representing South Yorkshire have raised the issue of the supertram time and again. My hon. Friend the Member for Barnsley, Central (Mr. Illsley) will be discussing the subject in his Adjournment debate on Monday, so I shall not go into the subject in too much detail. I understand that the debate is a matter for the Secretary of State for Transport, but the Minister may want to ensure that one of his colleagues is present.

The hon. Gentleman will know that I have had extensive exchanges on the supertram with Mr. Mike Bower, the leader of Sheffield council. Equally, the other districts that are part of the transit authority have made representations. We are seeking clarification of some of the actions that might be possible and continuing that discussion with the authorities concerned—there has been a useful defining of options.

As the hon. Gentleman said, the Adjournment debate on Monday will hopefully give an occasion at least to clarify those aspects that fall within the remit of the Department of Transport. I shall continue to pursue the matter. The hon. Gentleman will acknowledge, as will all the local players, that the number of people using the tram has been disappointing. The fundamental problem has been that the take-up—the number of passengers carried—has fallen below the estimates. That is the heart of the matter, and we could discuss it at some length.

I welcome the Minister's response. I will not take the issue further, other than to say that it has caused unexpected damage to services in the district. That has been all the more disappointing because we understood that assurances had been given.

The real challenge for an area such as Barnsley is trying to restructure after the enormous dislocation caused by colliery closures. It is a problem that the council is determined to overcome. We must recognise, however, that Barnsley has a narrow industrial base, which needs to be expanded and diversified. Traditional industries, such as coal mining, placed too little emphasis on personal development. Upgrading skills and educational attainment is a necessity and has become a key objective for the authority. The rebuilding of infrastructure, much of it worn out, is crucial if we are to attract investment to sustain the area.

Those are formidable challenges for the local authority, but each year, as we start to come to terms with some of the issues—I accept that city challenge money has helped to restructure the local authority—local residents find that their quality of life is worsened because of the system of central Government finance, which is, to say the least, not sensitive to the characteristics of the community. I ask the Minister to review the finance mechanism for local authorities, to ensure that authorities such as Barnsley, which are in most need, are adequately assisted to move forwards.

7.22 pm

There was a leak from the Liberal Democrat Whips Office the other day. I am glad, therefore, that the hon. Member for Newbury (Mr. Rendel) is here. Perhaps he can confirm some of the things that were leaked from that office. For example, on Liberal health policy, the document said:

"Liberal Democrat policy on GP fundholding is found to be 'at best, confused, at worst duplicitous'.

Their policy to put councillors in control of local health authorities is 'a barmy idea'."

On local government it states:

"Noting that some of the parties' councillors are 'potentially a liability', the Liberal Democrat policy staff also believe that: 'Under the Lib-Dems local income tax you would pay income tax twice.'"

I am grateful to the hon. Gentleman for giving me a chance to reply. He will realise that the point of that leaked document was to bring out the misrepresentations of our policy that we expected other parties to produce. That is precisely what he has done, exactly as expected.

I have heard some pretty good Liberal Democrat stories in my time, but I have never yet heard them put out a policy for the sole purpose of arousing Conservative comment, which they can then dismiss. That is remarkable.

To turn to the subject of West Sussex, it is true that the Liberal Democrats have not held office before, and that they have had to play the part of opposition for more than 100 years, which can be a baleful exercise—[Interruption.]—as the hon. Member for North-West Durham (Ms Armstrong) knows from experience.

Last year, West Sussex had an extremely favourable revenue support grant settlement—the second best in the country—and the highest increase in standard spending assessment in the country. Not content with that, the Liberal Democrats proceeded to raid the balances, spend the cash and increase spending by more than 5.5 per cent. in one year. They did it in the knowledge that that sort of thing could not conceivably go on for ever. The public expenditure White Paper forecasts the likely flow of public spending for three years. Nevertheless, they behaved like children let loose in a sweetshop, and started to spend as if there were no tomorrow.

The results are there for all to see. The balances of West Sussex have been run down, and now the Liberal Democrats complain that the outlook is difficult. They complained months before the revenue support grant settlement was reached and wrote to the governors of every school in West Sussex complaining that school budgets would have to be cut by £25 million in the next two to three years—a specific figure.

Naturally, my colleagues in West Sussex were deluged with letters from very concerned governors and parents. There was no basis for their concern. I see that the hon. Member for Newbury—a Liberal Democrat—takes credit for that. It is exactly the kind of behaviour that people in West Sussex will never forget—a false alarm based on duplicitous behaviour.

West Sussex has received another reasonable settlement for the coming year, and it will be interesting to find out just how much of it is spent on education.

Nothing is more annoying to Members of Parliament than to find that, although a settlement is favourable for education and all local authorities are told that they should spend their money on education, they spend it not on that but on other things; and that, where they do, it goes to the local education office and not to the schools. My hon. Friend the Minister and his hon. Friends in the Government will have to find some way of ensuring that the money that Parliament proposes should be spent on education is spent on schools and I hope that he will mention that in his reply.

I do not know the best way to secure that aim, but it is important. One has only to consider the vast disparity between the amount of money that goes to schools and that which is kept by the local education authority in the different authorities. I hope that the Minister will look into that matter, and that, next year, when we return to the revenue support grant, some method will be found of ensuring that the money actually goes to schools.

There is, of course, no more important authority in the country than Horsham district council. Horsham is a totally blameless authority, with low spending. For many years, it was well below its SSA.

The population of Horsham has increased, and the level of Goverment support has been reduced. I do not complain about that, but matters become difficult if the cap is reduced in line with spending. It is difficult for a local authority to plan its future when it knows that the population is increasing, if it cannot take the total support from the Government in one year as the base for another. If it cannot do that, it is lost in the whims of the total SSA calculation, which no authority can accurately compute.

I do not complain about the SSA system, but low-spending authorities, typically those spending rather less than their SSAs, should not be penalised by the formula and the capping mechanism. My hon. Friend the Minister should examine that.

There is one other small point that appears to be inequitable. What if a council appeals against the business rates and finds that, due to the Inland Revenue revaluation, they are higher than originally expected? Horsham council—correctly, in my opinion—decided that the money should be returned to the council tax payers. After all, they should receive the benefit of a more accurate valuation.

It seems hard that Horsham council should be penalised because it has returned the money to the council tax payers rather than hanging on to it. Assessments should be based on the most accurate estimate of business rates, as corrected by the revaluation exercise. If there is a deficit for that reason, it should be made up in the revenue support grant. Horsham council acted properly in returning the benefits of the revaluation exercise to council tax payers. I ask my hon. Friend the Minister to consider that, especially in determining the SSA for Horsham council next year.

Many hon. Members—especially those outside its scope—are concerned about the area cost adjustment. They say that it is disgraceful. I think that the area cost adjustment is much maligned and fully justified. Not enough of my colleagues from the south of England stick up for it. It is an excellent refinement that accurately reflects the extra costs of West Sussex and other parts of the south. I notice that the chairman of the review body comes from Edinburgh. I trust that he will remember that he is a Scot—at least, I hope he is—and therefore strictly neutral.

I hope that my right hon. Friend will forgive me, but the chairman is an Englishman, working in Scotland. The other members of the review panel are a Scot and an Ulsterman. Local authorities in England had difficulty in agreeing on an Englishman to serve on it.

It would have been much better if a member of the review panel had come from Sussex. It should be strengthened by someone whose area gets the area cost adjustment. The panel will naturally proceed on its way with all due academic detachment, but it would have been better if it had been able to take into account the views of local authorities in the south which benefit from the admirable instrument of the area cost adjustment.

7.33 pm

I want to discuss the standard spending assessment for North East Derbyshire district council. There are certain peculiarities about North East Derbyshire that need to be described. Sometimes, the worst case should be considered to test a formula. The SSA formula is inadequate and hits North East Derbyshire in almost every respect.

One problem with the formula is the shape of North East Derbyshire. It is a sort of C-shape that wraps round Chesterfield, which creates problems. It is accepted by the boundary commission as a sensible and viable authority, but the formula creates some difficulties. For instance, the head offices of North East Derbyshire district council are in Chesterfield, which is in another district. That means that standard spending assessment drifts into Chesterfield, even when the councillors and officials of North East Derbyshire work there. That shows that the formula is nonsense.

In North East Derbyshire, many of those fortunate enough to be in employment go to neighbouring authorities such as Sheffield and Chesterfield to work. The net outflow of population is 18 per cent., which is high. We have heard that Westminster has a net inflow of 81 per cent. and gets all sorts of SSA moneys as a result. We are at the other end of the spectrum but there does not seem to be any link between the figures that are taken into account for what is called enhanced population and the services that have to be provided.

The services of a district council chiefly involve people who live permanently in that district, although they may travel for work or entertainment to other areas. Council planning, housing, refuse collection and other costs tend to relate to the services that are provided not for the transient population but for the fixed population.

North East Derbyshire is a socially mixed area. There is a clear distinction between the western and eastern sides. The east end is more working class than the west end. Classically, when Conservatism was strong, the west of the constituency was a strong Conservative area and the east was strong Labour. This affects the operation of SSA because the wealthier elements on the western side are placed upon the backs of the poorer people in the eastern side when the formula is being worked out.

What my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) said about Westminster has been attacked by some Conservative Members as being obsessive. That case is fascinating to us in North East Derbyshire because Clay Cross, where councillors were debarred and surcharged, is there. The scandal in Westminster involves £29 million. The Clay Cross case involved expenditure on behalf of its residents that amounted to something like £60,000. The second group of 11 Clay Cross councillors were debarred over an amount of just over £2,000. They had to be dealt with jointly and severally.

We in North East Derbyshire are very interested in what goes on in Westminster. That case involves £28 million, while the SSA for North East Derbyshire district council is £7.3 million. A bit of that, handled properly and sent to a needy area, would have been used very well by us.

The formula for the standard spending assessment is covered on page 53 of the booklet, "Local Government Finance Report (England) 1996/97". The formula first considers population, which I have already discussed. North East Derbyshire's total resident population is 99,180. That gives, under the formula, a standard spending assessment of £8.4 million. As I have said, when the sums are worked out, the amount shrinks to £7.3 million. To start with, we lose £368,000 because of the population's movements during the daytime into surrounding areas. We receive little in terms of night stays and day visitors because, although we are near to national park territory and a bit of such territory clips the end of the district, the region is not used greatly for such a purpose. People from outside use certain facilities: they come from surrounding areas to go out for evening meals in Dronfield. Generally, however, the region is not able to supply the type of facilities that draw in such extra revenue.

The next factor to consider is population density. That is considered within "enumeration districts". North East Derbyshire is not doing as badly as it has in the past. Previously, wards, not enumeration districts, were taken into account. Because North East Derbyshire region was a C-shape and the wards cut across it, we managed at one and the same time to finish bottom of a table of population density and bottom of a table of population sparsity of comparable authorities as provided by the Audit Commission. The system made calculations on that basis, but dustbin collection is difficult both in rural areas and in highly concentrated urban areas. We probably had more problems in dustbin collection than many other areas because of the region's shape and we had the costs that went with them.

Thankfully, there has been some adjustment in both the sparsity criteria—although we are worried that some of that will be dropped—and in the density criteria. It shows that one can change the formulae to make slight improvements. Those, however, are minor compared with the Herculean task that we face when presented with the consequences of the formula.

The next set of criteria is the social index. Under that index, North East Derbyshire loses £1 million. We do not score well in terms of the proportion of persons sharing accommodation, with more than one person per room or the proportion of people living in flats. The building, especially by Clay Cross urban district council, of decent council housing in the region has meant that resources to tackle its problems are not available.

North East Derbyshire does not score either in terms of the proportion of residents who were born outside the United Kingdom, in the Republic of Ireland, the European Community, the Commonwealth or the United States of America because it has one of smallest ethnic minority populations of any district in England. I do not question the criteria of ethnic provision being considered, but we do not gain anything from such criteria, which are surmounted by other problems that people face. That is not taken into account. The homelessness provisions are based on the 1991 census, but it is getting worse. The current homelessness level is not being considered.

That loss of £1 million is serious to North East Derbyshire and is not justified by the circumstances and conditions there. There must be an adjustment in the formula.

Then there is the economic index. At one time, such an index did not exist and issues such as unemployment were not considered. In areas such as Gosforth Valley, which is part of Dronfield, and Ashover, which is a big rural area, the unemployment level is down to about 4 per cent. In Danesmoor, Clay Cross, Renishaw and Holmewood and Heath, however, it is 20 per cent.

Criteria involving unemployment and long-term unemployment, housing benefit claimants, lone parent families and the mortality rate of people under 75 score highly on the eastern side of the district, but the numbers are diluted considerably in the western area. Therefore, we lose on those criteria as well, even though strong needs exist in the eastern district.

After we work through the above calculations, we come to something like the figure that we started out from: an £8.5 million SSA. However, as with all other authorities, North East Derbyshire is subject to the scaling factor. The figures are multiplied by 0.93021227385—the scientific precision of the Government's scaling factor is incredible. It is worked out in terms of how the authority fits the formula into the total amount that will go towards the differing areas. The figure is multiplied—or reduced because the multiplication is by a figure under 1—by 0.93 rounded up, which means that the amount drops to about £8 million.

Last year, the scaling factor was 0.9979, which was reasonable. Why suddenly has the scaling factor been chopped by such a dramatic amount, leading to considerable cuts? Other cuts arise because, in the formula, amounts of money are transferred to the county council from the district council. Some extra money comes in from rent allowances and interest receipts, but, in the end, we have an SSA of £7.3 million, which is a serious cut on the level that existed the previous year. It is a 7.3 per cent., appropriately, cut on last year's figures.

That figure does not take inflation into account. At no time have the Government produced any of the figures that we are discussing in terms of their real value, comparing one year's monetary values with another. They say things about Derbyshire such as, "It has done very well in terms of education. It has had a 4.7 per cent. increase". But that is not true because the inflation rate has been 3.2 per cent. After doing the maths, the real increase is I think about 1.1 per cent. Even taking that into account, other reasons exist for criticising the Government. Derbyshire is already spending beyond that level on education. That means that, with the Government's figure, there will be no increase in the education budget, which is part of the county council's provision.

North East Derbyshire is suffering an 11 per cent. cut in its SSA—the amount that it is expected to spend. The new provisional capping levels produced in the documents today are only marginally above the SSA for last year—the figures are almost identical. That means that, even if the authority pushes up the council tax considerably, it will reach only last year's figures, which do not mean the same this year because they have been eaten away by inflation.

What are we supposed to do? We are supposed to get a bit of money from the business rate. After inflation, the business rate provision is much the same. In the connection with the business rate, the formula works in that way.

The rate support grant is down by £621,000—nearly 30 per cent., taking inflation into account. That is a ghastly position, and it is well worth contrasting with that of Westminster. If the funding formula that operated for Westminster had operated for North-East Derbyshire, instead of charging council tax we would return £759 to each home.

What are we to do? We must try to make good the shortfall by increasing council tax. If we do so at the level that the standard spending assessment suggests, we shall nevertheless fall short by about 11 per cent.

I am sorry that I have had to produce so many figures, but they are worth producing to show the way in which the formula operates. We have known for a long time what is wrong with the formula as it applies to North-East Derbyshire. The enhanced population is a reduced population. The economic and social factors do not take into account needs in the area. Greater flexibility and movement are needed in the operation of the formula.

We suffered previously from the nonsense of the sparsity and density factors. Even if those problems had all been overcome, they would continue to affect us from the past, because all sorts of services have had to be cut or increased revenue has had to be raised by the council tax and poll tax, simply because of the pressures that existed on us. We need to be able to recover from the position in which that nonsense has placed us.

No one could accuse North-East Derbyshire of being a profligate authority. It is the successor authority to Chesterfield rural district council, Dronfield urban district council and Clay Cross urban district council. Clay Cross urban district council, which I fully supported in its battles, could be regarded as seeking to defend its community. If that council was regarded as profligate, North-East Derbyshire has not acted similarly. North-East Derbyshire has sought to operate respectably. It has been obliged to operate fully within the rules and has not at any time created any problems that might be used by the Government to denigrate its activity.

The Government denigrate Derbyshire county council with great exaggeration. I wish that I had the time now to go through the accounts of Derbyshire county council and the criteria that are taken into account when calculating its standard spending assessment, because only part of its provision is covered by what I have said. Different considerations apply to the police and education.

Police is a problem. Derbyshire police authority is asking the appropriate Minister to visit the area, because we need our certificate of competence returned and we need the resources to achieve that.

I wish to place on record the importance of North-East Derbyshire. The Government should consider it closely to rectify the nonsense of the formula that is applied to it. Although we do not have destitution throughout the area on as wide a scale as might exist in other areas, the formula does not fit us in any way and tells against us time after time.

7.52 pm

I am delighted to speak in the debate. I shall not detain the House for more than a few moments. I am pleased to he able to welcome the local government settlement for 1996–97. I do so for local and national reasons; it is impossible to divorce the two.

Virtually everything that we, as constituency Members of Parliament, hope for and promote—and our constituents' aspirations—depends on the way in which we consider our spending nationally. That impinges on inflation, on tax policy, on ensuing interest rate policy and—although there has been little mention of it during the debate—on the percentage of gross domestic product that the Government take out of the economy. Those issues must be considered.

I welcome the settlement in local terms because the three key beneficiaries of this year's settlement were education, health, in terms of our care in the community settlement, and the police—law and order. Hon. Members know that those three issues, especially in my constituency but in constituencies the length and breadth of the country, have considerable resonance at the moment.

I was interested in some of the comments made by the hon. Member for Newbury (Mr. Rendel), who spoke about the local government settlement in Cornwall and adopted a broad-brush approach. He is the Liberal Democrat spokesman. It is understandable that he will speak about the county. However, the Government's settlement for Cornwall, at more than 3 per cent., was generally accepted to be a good one. It was higher than that of any comparable county—and the national average was about 2 per cent. The education budget in the county increased last year by 5.6 per cent. That, in hard cash terms, is an extra £8.7 million going into county education against the background of a national increase of 4.5 per cent.

The hon. Gentleman has said that the settlement for Cornwall was more than 3 per cent. As I understand it, the SSA increase is 3.1 per cent. but the actual increase in grant is 2.6 per cent. As that increase in grant is less than the rate of inflation, and less than the teachers' pay increase award and will not cover the cost of increased numbers of children, does the hon. Gentleman advise the county council to cut education, to cut other services, not to fund the teachers' pay settlement or to increase the council tax by more than the rate of inflation? What does he advise?

I will not suggest any of those. I am suggesting that there are savings to be made. I am talking not about huge savings but about savings.

It is interesting that, at this stage every year, we get into this ritual dance. I have been in the House for three years. I remember exactly the same debate this time last year, prompted by Liberal Democrat Members. Bogus surveys shot around the county, demonstrating in no uncertain terms that every Cornish child was £100 worse off and more undervalued than anywhere else in the country. We woke up on the morning of the settlement to be told that there would be mass redundancies. Radio Cornwall camped outside county hall. At the end of the day, as my hon. Friend the Member for St. Ives (Mr. Harris) knows full well, there were two and a half redundancies in the teaching profession in the county. There was no mass loss of jobs in county hall.

We must move away from the meaningless argument that the index of assessment for local authorities is simply how large the increase in the internal directory is from one year to the next. We must talk about not only inputs but outputs. There must be some balance in the argument.

I am not quite sure what the hon. Gentleman meant when he replied to the previous intervention. It sounded as though he thought that he could enable the circle to be squared, so to speak, by finding savings in unspecified areas of council spending, so that he could use those savings to increase education spending in the way that he would hope.

If that is what the hon. Gentleman meant, I would point him to the remarks made by the Secretary of State earlier in the debate. Such savings, when they are spent on something else, are not savings at all, according to the Secretary of state.

No. The point that I choose to make—and this is grown-up politics—is that the hon. Gentleman's county is run by the Liberal Democrats. It is, if I may say so, democracy. The council will have to decide priorities. That is no different from what Ministers do every day of the week. The priorities are simple. The hon. Gentleman must decide what the expenditure priorities are. His county was given the tools by the Government in key areas of expenditure. It is up to those people who represent my constituents at county level to determine those priorities. It is ludicrous to suggest that there is any process other than that.

Did my hon. Friend by any chance hear, as a number of us heard one day last week, the Liberal Democrat Treasury spokesman blaming the Government on the "Today" programme for excessive borrowing and public expenditure? Does my hon. Friend have the difficulty that I have in squaring such remarks with the remarks of the hon. Member for Newbury and any Liberal Democrat spokesmen in the House? Whenever they are on their feet, they call for more Government expenditure.

My hon. Friend makes an important point. As he knows full well, the priorities within Cornwall at county level are those of a Liberal Democrat-controlled council. They have to make their choices and set their priorities.

I do not naively or coyly suggest that Cornwall's education settlement last year was anything other than tight. I know that it was. I and my hon. Friends the Members for St. Ives and for South-East Cornwall (Mr. Hicks) have close links with schools in our constituencies. I have a parliamentary education forum and I meet head teachers from all my schools at least four times a year. I am open about last year's settlement. I was told in no uncertain terms by head teachers last year that they were pushed. They had to dig deep. They did not get rid of teachers.

I pay tribute to the quality of teaching in the county of Cornwall and the quality of governors of the schools. They had to make some difficult decisions and they made them well. Education in the county did not suffer. This year I am delighted that the settlement has been significantly more generous, in an economic climate that has allowed it.

I wish to draw to the attention of my hon. Friend the Minister a concern that was drawn to my attention and that of my hon. Friend the Member for St. Ives in a meeting with Kerrier district council two Fridays ago about its settlement this year. My hon. Friend the Minister will be aware that within the constituency of St. Ives lies the Royal Naval Air Station Culdrose. It is among the largest helicopter training schools in western Europe. It is a major provider within NATO cover. It is also a mainstay of the local economy. Research has shown that the defence sector supports 40 per cent. of the local economy of the Helston travel-to-work area, where many of my constituents are based. That is three times higher than the contribution of the defence sector to Plymouth. The air station contributes some £50 million to the district economy annually and to the economic well-being of west Cornwall.

As a result of the reductions in armed forces expenditure some difficult decisions have had to be taken not only as part of "Front Line First" but as a consequence of the peace dividend. RNAS Culdrose is being rationalised and the number of personnel is being reduced, not by huge numbers. Thank goodness, Culdrose has not been affected as badly as some defence establishments, but a significant reduction has been made. The effect on the local economy, which is already hard pressed, is difficult and damaging.

The area is already identified in Department of the Environment figures as the 17th or 18th worst unemployment blackspot in the United Kingdom. It is identified and highlighted in the Department's index of local conditions. In such circumstances, the rationale which purports to lie behind the SSA would dictate that the district's needs should increase to reflect the need for higher spending, greater social need and the commensurate reduction in the economic base. Instead, the reduction in the population as a result of the reduced number of service personnel, has worked right through the SSA formula to give us less support. I hope that the Minister can examine that issue. It was raised, sensibly in my view, by my local authority officials. I hope that my hon. Friend is at least able to reconsider some of the issues that are raised by that matter.

Two key features of recent Government policy can and will change the face of local provision in some important areas. The first is the private finance initiative. I hope that within the next year or so we in Falmouth and Camborne, particularly in Falmouth in the south of my constituency, will have access to a properly funded and resourced community hospital. We have a hospital, but within the local arguments and toing and froing which is always necessary, we are looking to build a new community hospital in Falmouth and Penryn.

It is my hope that that can and will be pushed forward by the PFI. It is perfectly reasonable to use that type of partnership to reduce the waiting list that often exists for money for such projects. I hope that the private finance initiative can help. I know that there is considerable local support for that.

The second feature is the city challenge initiative. I was interested to read a speech made by the Leader of the Opposition in Southwark cathedral the other night. He welcomed the city challenge initiative as one of the major factors which had helped got rid of the Hulme housing estate in Manchester. A great deal of revisionist rewriting of history takes place on the Opposition Benches. I should point out that the Hulme housing estate was knocked down as a result of a decision made back in 1991 by my right hon. Friend the Member for Henley (Mr. Heseltine), now the Deputy Prime Minister, to push forward with city challenge.

I do not wish to tax the House with the mechanism behind city challenge, which involved trading companies and various other partnerships, but it is fair to say that for the Labour party to claim that it was a huge success for either Manchester council or a new idea from the Labour party in local authority provision is—I am trying not to use the word "hypocritical". It may have been ignorance or simply carelessness. This was a decision made by a Conservative Secretary of State, supported by good, solid, Conservative policy.

I welcome the debate, and I welcome this year's financial settlement for the national reasons that I have identified and, more importantly, for the real benefits that it has brought to my constituency and the county of Cornwall.

8.9 pm

Despite Conservative Members' increasingly desperate attempts to cover up what is really going on, we should state quite openly what the proposals represent. They are a continuation of a Government policy that has systematically undermined local government for many years. The orders will further undermine local government's ability to provide vital services for local people. That is the reality of the situation, as exposed today in the contributions of my right hon. and hon. Friends.

I argue that that Government policy is motivated by two basic, and—I believe—flawed, political objectives. The first is a year-on-year reduction in the resources available to local government. I know that the Government would like us to believe that the world began in 1992, but some of us have longer memories than that. We have seen a year-on-year reduction in the resources available to local government, while at the same time the Government have embarked on what can only be described as a propaganda campaign. All hon. Members know that local government resources have been cut dramatically, yet the Government have tried to shift the blame on to local authorities. That is what Government Members have done this evening and no doubt the trend will continue.

The second fundamentally flawed political objective is the Government's desire to take control of local government activities. We hear constantly how Conservative Members are in favour of freedom of choice and of national and local accountability. Yet, over a period of time, the Government have taken control of the activities of local government—they have effectively nationalised local government—in a quite breathtaking manner.

The inevitable result of that systematic Government policy is the on-going crisis in vital services, such as education, social services and housing—to name only three very important areas. Central Government control of local government activities has resulted in historic blunders, such as the poll tax, for which generations in this country will continue to pay. That measure was a direct result of the Government's preoccupation with centralisation and their determination to centralise and nationalise local government activities. The Government's policy is based on the philosophy that central Government are best placed to determine local service provision.

We could compare the efficiency of local authorities, and I readily accept that many arguments could be advanced to develop such a debate. However, we should not allow such arguments to cloud the fact that the Government have made a fundamental mistake: they believe that the mandarins of Whitehall know best what the people of Stoke-on-Trent should have, what they should be doing and how much they should be spending. It has nothing to do with the Government's controlling the national economy—we accept that that is an important argument. However, when more than 80 per cent. of local government expenditure is controlled by central Government, that is not only damaging for local service provision but strikes at the heart of our constitution.

Government propaganda in the past 16 years has sought to discredit local government, and it has forced some very effective local government services into oblivion. The Government have also tried to convince people that the local authorities have caused all of the current problems, but they have failed in that endeavour.

I am particularly impressed by the way in which the Government have been hoist by their own petard. The Government have sought to blame local authorities for the successive reductions in education expenditure imposed on our schools—particularly last year's savaging of the education resource. However, parents are involved in their schools and I am sure that Government Members have been surprised by the way in which parents have turned round and said, "We don't believe the Government any more. We know what is going on here. We know that you are to blame and we are not prepared to tolerate it any longer." The parents know where the responsibility lies for the crisis in our vital services.

The local government finance proposals signal the Government's intention to continue to perpetrate an elaborate confidence trick on the public. The proposals do not suggest ways of dealing effectively with the anomalies in the system. Many such anomalies have been referred to in the debate today, but I shall refer to what I believe to be the most serious and discriminatory anomaly in the present system.

The right hon. Member for Horsham (Sir P. Hordern) referred to the area cost adjustment and the way in which it benefits the southern counties. He argued that it should not be tinkered with. I agree with the right hon. Gentleman: it should not be tinkered with, it should be changed radically. Before I detail that serious anomaly, I make it very clear that I accept that some cost differences must be reflected; no one is arguing that the area cost adjustment should be eliminated.

I have six secondary schools in my constituency, one of which receives £340 per pupil less than a secondary school in Surrey. I do not wish to pick on Surrey, but it has more or less the same urban-rural mix as Staffordshire and it is also very comparable in other ways. When there is a difference of £340 per pupil in the secondary sector and a difference of £220 per pupil in the primary sector, I believe that the system is not reflecting the legitimate differences in the cost of providing given levels of service. It is blatant discrimination, and that abuse should be adjusted—if not removed—as quickly as possible.

I welcome the fact that the Government have established an investigation into the matter. However, I am disappointed that, after all the banging on the Minister's door for three years, he has only now been forced, kicking and screaming, to set up the inquiry. The "Local Government Finance Report (England) 1996/972" contains the education formula:

"The results of (a) and (b) are added together and multiplied by area cost adjustment for education;"

That is for primary education. There is another formula for secondary education, the result of which must also be multiplied by the area cost adjustment. The same applies to personal social services, other social services, the police, fire and so on. I estimate that if that serious anomaly were addressed, in my constituency alone, some £15 million would be available for education. One has to multiply by all those other vital services. We are talking about a loss of hundreds of millions of pounds in Staffordshire alone because of such discrimination.

I hope that the Government will tackle that serious anomaly quickly and act on the report. I hope that they do not postpone matters until after the next election. I hope that my cynicism does not get the better of me. It would be a tragedy if the Government were to succumb to that cynical view and defer any action.

As I said earlier, these proposals are a con trick. For example, the Government insist that the proposals represent an increase in resources over the past year. We should examine that claim in a little more detail. According to the Government's publication, there is an increase of 4.4 per cent. in the education SSA control total—that is about £754 million. That does not replace the savage cuts of about £860 million that were imposed last year. How can that be described as an increase? It bears no resemblance to what local authorities have been forced to spend on education simply to maintain the service. Many Conservative Members have claimed that there is to be an increase of 4 per cent. but, when one takes into account the figures I have mentioned, one can see that that is not true.

The hon. Member for Brentwood and Ongar (Mr. Pickles) referred to local authority reserves. I nearly fell prey to the temptation of agreeing with some of what he said—I resisted. However, he made one valid point when he said that his local authority—I believe that he was referring to his authority—had been spending out of its reserves. Presumably, like many other authorities, it was simply trying to maintain services in the face of Government-imposed cuts. It could be argued that using those reserves camouflages what the Government are doing to our services. However, when the resources available to local authorities simply will not maintain those services, they have little alternative but to use those reserves.

In Staffordshire last year, the county council used £7 million from its reserves to maintain something like an acceptable education system. This year, it will face similar problems. Staffordshire county council put in a bid for £17.5 million to maintain school buildings. The Government did not deny that the county council had made a good case. However, they simply drew a pencil line through it and said that the council could spend only £2.3 million to maintain its school buildings. So buildings that desperately need to be improved will continue to fall into disrepair.

Another important point is that, by using those reserves, local authorities show that they are attempting to maintain services in a responsible manner in the face of continued Government cuts in resources. I praise local authorities that do that. Like everybody else, I know that it is no solution, but it compares notably with what the Government did last year when, after agreeing to a teacher's pay increase, they ran away from it. That was a major contributor to the problems faced by local authorities last year.

Local education authorities, schools and parents are only now beginning to realise that the Government's promise of more resources for education is nothing more than cruel deceit. The Government will be made aware of that realisation when parents begin to recognise exactly what is in store for the education service.

I want to talk about social services where, if one could believe it possible, things are even worse. The SSA control total for personal social services is, according to the Government, to be increased by 0.7 per cent.—a miserly £51 million. I accept that there is £647 million of special transitional grant. The Government are actually saying that because they do not intend to provide any more resources for social services—there is to be a cut—local authorities will have to use some of the special transitional grant money to maintain the services demanded by the local population.

Stoke-on-Trent city council is in my constituency. During successive meetings with the Minister of State and others, for which we are grateful, they have accepted that it is a reasonable, effective and efficient local authority. Despite that, its rate support grant is to be cut by 12 per cent. and its capping limit will, effectively, be frozen at last year's figure. When the Minister responds, I want him to explain why, when the Government are talking about a relaxation in capping limits, Stoke-on-Trent has the same figure as last year. That needs to be answered.

We shall ensure that the public are fully aware of who is responsible for the continuing attack on their services and they will not be conned any more by the Government's desperate camouflage. There is only one small light at the end of the tunnel, which is that these proposals, like other Government policies, will hasten the Government's destruction at the next general election.

8.27 pm

The nine people in the Strangers Gallery probably share the view that the Labour party's anger over this issue has seemed rather half hearted and that, if things were as bad as it has tried to claim, the debate would have been better attended. In its heart, the Labour party knows that this is really a fair settlement for local government, as it represents an appropriate level of revenue spending for local authorities for next year of £44.9 billion, which is a 3.3 per cent. increase.

It would be a good idea to look at how councils make their budgets. Twenty two years ago, when I was first elected to a council, I could not believe how they made budgets, and I still cannot believe it. I have with me Harrow's budget document. It is very pretty, contains many different colours and is very heavy. I have one recommendation to make to councillors—do not read it.

Does the hon. Gentleman realise—after all, he has not been here all day—that if he votes for the rate support grant settlement it will mean substantial help for Westminster? If his borough of Harrow were to receive the same amount per head as Westminster, it could pay a rebate of £436 to each council tax payer. If it were to receive the same help per pupil as Westminster gets from the education settlement, it could employ an additional 470 teachers this year. Is it really a good settlement for those whom he represents?

That is typical of the smug cover story we hear from the Labour party; it is the only act it has. Everyone knows that the cost of running services in central London is very different from that in outer London or anywhere else. If it were not, why would so many Labour boroughs get larger grants?

If the people of Wandsworth received the same level of grant as the people of Tower Hamlets, Wandsworth could rebate £1,000 a head. In Camden, where the SSA for the coming year is £219 million—

Get to Harrow.

I shall come to Harrow in a minute and deal with matters there in some detail. When the hon. Member for Holborn and St. Pancras (Mr. Dobson) intervened, I thought he would explain why, in 1994–95, Camden took £4 million out of its education budget to cover bad debts incurred from interest rate swaps—an idea invented by the then Labour party local government officer who now sits in this House. That action had nothing to do with education. Will the hon. Gentleman intervene again and tell us why Camden did that?

If Camden is so bad in its spending on education, why are its education results far and away the best in inner London and about 10 times as good as Westminster's? Camden came second in the Government's national league table; Westminster came about 91st.

The hon. Gentleman should keep that information from his Front-Bench colleagues or they will be flocking to Camden. I know of no Labour Member who has taken his children away from a Conservative authority to send them to a school in a Labour authority, although many of them—such as the shadow Home Secretary, the shadow Health Secretary and the leader of his party—have done the reverse.

Does the hon. Gentleman accept that Camden council, with its excellent education service, is a net importer of a substantial number of pupils, including many from the Tory borough of Brent?

I am sure that the hon. Gentleman's figures are right, but not many people have the same rosy opinion of Camden. Of course, he has always been satisfied with his own information.

What does that mean?

It is clear what it means. I welcome the hon. Gentleman to the Opposition Front Bench on one of his rare visits.

For people who have never been involved in the local government budget-making process, I should explain that it is a little like the notes my children send to Santa Claus. The difference is that at least their notes have pretty pictures on them. The similarity is quite stark; the budget-making process is a wish list, and everything that is not granted is described as a cut. A council thinks of something that it wants in the coming year and puts it on the wish list. When the Government say that it can have a relatively generous settlement, but not enough to cover everything on the wish list, that is translated as a Government cut. Everybody knows that that is not true.

In Harrow, the controlling Liberal group, with the support of the Labour party, has been banging on about a so-called programme for £20 million-worth of cuts. It is not true and no one believes it to be true. The Liberals are trying to frighten people and they are targeting the vulnerable. For example, they are saying that there will be a cut in the transport service that takes people to handicapped clubs and so on—at a cost of £67,000, from memory. To get people on their side, they are targeting vulnerable people and saying that the services they care about will be cut.

The Liberals are also saying that there will be a cut in the money for schools. Harrow's SSA this year is £147.9 million. For 1996–97, it will be £152.1 million—an increase of £2.8 million. No one is suggesting that that will give Harrow money to throw around, but if it cuts the money for schools on the basis of that settlement, it can only be because the Liberal group chooses to do so.

As a parent, I recognise the importance of good quality education. We all want to ensure that our children receive the best education possible. A starting point is the money that the Government allow councils to spend. For Harrow in the coming year, it will be just over £73 million, a 3.7 per cent. increase on 1995–96. I am pleased that, when money is tight, the Government are giving such a high priority to education.

It is for Harrow council, however, to decide whether to spend that additional money on schools, as I urge it to do, or to retain it at the centre. Some of the items on its great big wish list involve employing more staff at the centre. The council does not have the balance right. It is clear that the new money, as well as a larger share of the existing budget, should go to Harrow schools. It would then be for governing bodies to decide whether to purchase services from the education authority. The most important point to remember is that any cuts made to the delegated budgets for Harrow schools would be the result of the controlling Liberal group deciding to do that. I shall continue to do what I can to prevent it from doing so.

The council's story is that it already spends above SSA on Harrow schools. I am sure that that is right, but if it spends above SSA on education, it must spend below SSA in other areas.

No.

I am not quoting Government figures—they come from the Association of London Authorities, a Labour-controlled authority. If the hon. Lady disagrees with it, she must talk to her Labour party friends.

If Harrow spends more on education, it must spend less on other areas, otherwise it cannot get within the capping limits set by the Government last year. With the additional money, there is no reason for the Liberal group not to continue education spending at the same level.

The hon. Member for Stoke-on-Trent, South (Mr. Stevenson) tried to brush over the impact of the special transitional grant for social services. The effect on Harrow is not just the 0.7 per cent. increase in the personal social services element of the SSA—it will have £30.7 million to spend next year, an increase of 6.6 per cent. in cash terms. That is a £17.663 million, or 92 per cent., real-terms increase on 1990–91—a large rise over a short time. In two areas that everybody agrees are priorities, Harrow has been given extra money. It is for the authority to decide how to spend the money and whether to make nasty cuts in transport for the mentally handicapped and delegated school budgets or to review its expenses.

The first act of the incoming Liberal council was to increase councillors' expenses. The council has a choice.

The hon. Gentleman made a point about personal social services which related to my claim that the Government are trying to hoodwink the public. Does the hon. Gentleman accept that a 0.7 per cent. increase is a cut in real terms, and that to include the special transitional grant required to provide for services transferred to local authorities is dishonest?

No, not for one moment. In cash terms, Harrow council will have 6.6 per cent. extra to spend on social services this coming year. It is fanciful to suggest that the council will have to cut certain social services. That claim is designed only to scare people.

My hon. Friend the Member for Harrow, East (Mr. Dykes) and I have been in discussion with my hon. Friend the Minister for Local Government, Housing and Urban Regeneration, and I place on record our gratitude for the courteous way in which he listened to our points and for the action that he agreed. Our discussions related not to the coming year's SSA but to Harrow council's belief that there has historically been an underestimate of the amount that it should spend.

Harrow has a large number of children approaching the age of five and the council is concerned about the associated expense of providing new classrooms or a new school. In the 40 years following the last war, the calculation of the number of five-year-olds who would present themselves at first school in the borough was broadly right, but for the past four or five years it has proved to be a gross underestimate. Nobody knows whether we are dealing with a prolonged bulge or a trend, which makes planning difficult. My hon. Friend the Member for Harrow, East and I made the point to my hon. Friend the Minister that that phenomenon should be taken into account in considering the money to be made available over the next few years.

Local authorities are concerned about the effect of changes to the benefit rules—which, when it is convenient to Labour, have cross-party support. Some current Department of Social Security expenditure will be transferred to local authorities. The Social Security Committee report published a week ago stated that local authority associations and the Secretary of State should quickly reach agreement, so that everybody is clear as to the source of the funding required.

Although that development is acknowledged in the SSA for the longer term, it does not take into account an influx of refugees into Harrow or any other borough. Most London boroughs, if not all, suffer from the same problem. My hon. Friend the Member for Harrow, East and I urged my hon. Friend the Minister to take account of that factor and to consider what could be done to help at the front end when local authorities have to meet the cost of persons who are given refuge.

Harrow council believes that the borough has the second largest elderly population in London. There is concern as to whether the SSA takes account of that fact. The cost of children in care seems to have escalated over the past few years, and Harrow's capital calculation is undoubtedly the lowest in London. That is historical, and due to the money spent previously.

I am delighted at yesterday's announcement of the capital challenge pilot scheme, in which all local authorities will start from an even base. They will be able to bid depending on the merit of their schemes. I hope that the pilot scheme proves successful and that a larger proportion of capital will be allocated that way. If Harrow is able to make a strong and technically proficient bid, as I am sure it will, it should do well.

My hon. Friend the Minister has offered a meeting at technical level between officials and representatives of the council, to determine the factual position in considering Harrow's SSA in coming years.

People who rely on local government services and parents with children in schools should be clear about the message from the two main Opposition parties. That message is, "No more money." Opposition Members complain about Government funding and follow the rather disreputable advice that used to be given by the hon. Member for Blackburn (Mr. Straw) when he was Labour's campaigns organiser, which was to describe Government policies in such terms as to lead the public to believe what they thought would be Labour party policy. Labour Members have been indulging in that strategy tonight. When one gets through the mire and sees through the Opposition's criticisms, it is clear that there would be no extra money from Labour or the Liberals. Labour's insistence on scrapping compulsory competitive tendering is disgraceful, and a capitulation to the unions that control the Labour party.

Even Sir Jeremy Beecham realises that substantial savings and improvements in the quality of services have been brought about by compulsory competitive tendering. It is a pity that it must be compulsory. Local government should have realised for itself the benefits that CCT could bring, but it did not and had to be compelled. Labour's irresponsible pledge to scrap CCT would increase bills, or reduce spending in other areas to compensate for the extra money that councils would have to spend on services taken back in-house.

This thinly attended, low-key debate is testimony to the fact that Labour's thin arguments have been rumbled. Everybody knows that the Labour party is embarrassed by its record in local government, that it has no strategy, that it would not put any extra money into local government, and that, after this debate, it will crawl away and hope that people will forget everything that it has said.

8.49 pm

I shall not follow what the hon. Member for Harrow, West (Mr. Hughes) said, but I admire his skill in making a little political padding go a long way. It was fascinating to watch him stretch his speech out—presumably in direct ratio to the unavailability of Conservative Members in the Chamber to defend the financial settlement.

The Secretary of State started us on the political track with a speech that was delivered with almost religious fervour. It was religious because so much that was blatantly political was put over in such a sanctimonious fashion. It was the performance of the Elmer Gantry of local government and I do not want to follow him down that road.

The Government are clearly putting extra responsibility on local government, depriving it of the financial means to fulfil those responsibilities, and blaming Labour and Liberal local government for the inevitable increase in council tax—the Chief Secretary to the Treasury estimates that council taxes will rise by 8 per cent.—while presenting themselves as benignly and beneficently cutting direct taxation. That is the tactic: it is as clear as day follows night.

I want to talk about the fate of my authority and of the new unitary authorities, which are a unique and very important feature of local government. We shall be embarking on a brave new adventure come April, to which the Government are committed. Indeed, their reform of local government has created the new unitary authorities. We in Grimsby and Cleethorpes—now North-East Lincolnshire—support that reform. We wanted to control our own destiny and we wanted a local government that was close to the people, so we want the new authority to succeed. I hope that the Government also want it to succeed.

The local government experiment—the brave new world of 13 new unitary authorities which come into being on 1 April—cannot succeed in a welter of redundancies, cuts, debts, recrimination and blame, which the financial settlement has prepared for it. The new authorities are a special case, and need to be treated as such.

I would argue that Grimsby is a special case within the special case because most of the assets of the county of Humberside that are to be divided up are on the north bank. We are trying to find accommodation for 400 council employees and are in a particularly difficult position. On the north bank there is a surplus of offices, but on the south bank, and in Grimsby especially because we did not have the county facilities, there is a dearth of offices.

I do not want to recriminate and attack Humberside. Indeed, I have come to praise it as well as—in effect—to bury it. Humberside did a good job, especially on education and social services, where spending and standards were very efficiently maintained, as befits an area with severe social problems and a high level of unemployment. It fulfilled its responsibility. We also have a high level of single-parent families and Humberside gave them a good service.

It is realistic to say, however, that Humberside has left problems—usually problems which were not its fault, such as those in education. School buildings are deteriorating faster than they can be repaired and maintained. That is no investment in the future of our children and that lack will cause real problems.

In the case of the Havelok school, which I visited recently, the county obtained a grant to remove places—and also asbestos—but the money for that was spent in other schools in other parts of the county. The problem remains, but we do not have the money and we cannot apply again. Such are the problems left in parts of the education provision.

My children went to the Hereford school in Grimsby. I liked them going there; it is the local comprehensive. One should live by one's principles on education matters. That is not at all hypocritical, unlike so many Conservative Members who talk about improvements in state education and send their own children to private schools and public schools out of the state system. The Hereford school, Grimsby is a nice title for a school because it sounds like it should be a public school, but it is a comprehensive.

It is a shame to see the Hereford school nowadays. Some of the one-story buildings that were the house bases when my children were there are deteriorating because the roof is very heavy. The roof is cracking, pressing down on the window frames, which are distorting, and glass is breaking constantly. To support the roof, they have had to put in angle frames, which in turn are cracking. The school roof has needed repair for three years. An expenditure of £200,000 is necessary to make the house bases—still used as kitchens—safe. An expenditure of about £1 million is needed to make the whole school livable in, workable and up to standard, but the money is not available. We have inherited such problems as a new authority, yet it is not our fault. We have not created them, but we have to deal with them.

The other problem that has been left, which is unique to the new unitary authorities, is the lack of balances. Grimsby and Cleethorpes between them have managed to hand on balances of about £1 million, but a local authority needs balances of about £4 million or £5 million if it is to have the necessary flexibility to run things efficiently and manage over time.

The new unitary authorities cannot control their own destiny like an on-going authority because they cannot manage their finances to ensure the maintenance of balances. We have not inherited any balances. Indeed, the balances might be negative because of the verdict on a lawsuit over school meals, which will impose costs on the successor authorities. We could not control that and it is not of our making, so it should be allowed for in the new authorities' financial allocations.

The result is close to disaster. We are inheriting extremely difficult, if not disastrous, circumstances. If North-East Lincolnshire—the merger of Grimsby and Cleethorpes—is to come under the cap limit of £129.7 million, initial calculations mean cuts of £5.9 million in the existing level of services. In other words, there will be a 4.5 per cent. cut in the budget. And that is without allowing for any working balances. That possible £5.9 million overspend is less than recent, more detailed calculations indicate. Allowing for such things as landfill tax, employer's superannuation contributions and other new burdens, the overspend above the capping limit will be £9.8 million.

It is impossible for an authority to take over responsibilities for the first time in April, welcome the new experiment, make it work and make it acceptable to people on the back of cuts of £9.8 million in spending and services. How can it be done? If the Government expect us to do that, they are being unrealistic. This is the Government's reorganisation. We wanted it, but we are partners in trying to make it work. If one partner is to be handicapped by a requirement to impose cuts of £9.8 million—in a new situation for which it is not responsible but which it has inherited—the burden will be too heavy to bear.

What are we to do? Staffing accounts for 60 per cent. of total spending. In a budget of, say, £140 million, social services and education accounts for some £100 million. Are we to have massive cuts and redundancies? If we are to achieve such massive cuts, the number of redundancies will be substantial. The local authority has not talked to the unions yet, but redundancies will have to be made as sure as day follows night, and not in tens or twenties but in hundreds. How can a new authority start by handing out redundancy notices to teachers, employees and others who provide services? How can a reputation and decent service be maintained in that situation? Why should the Government ask us to do that? It is just callous indifference to their own reorganisation. We would have to jettison services and make massive cuts in education. If school budgets are cut less, other aspects of service will have to be cut disproportionately, or we shall have to have redundancies. What a way to begin.

When we ask for help and advice from the Government, we get various suggestions, none of them workable. We are told to involve private finance in local government activity, but that takes time; it cannot be introduced immediately. We are keen to work with local commerce and industry, but developing those relationships, particularly when it is a matter of industry investing money, cannot be done overnight.

The Government tell us that the standard spending assessment has increased, but Humberside was spending over its SSA, so that is no benefit to us. We are told that we have a good deal from the single regeneration budget—we have indeed, and we are very grateful, but we deserved it because of the problems that we had to deal with as a result of the SRB grant; the local authority, which is on a tight, limited budget, has to put up a corresponding amount to secure that grant from the single regeneration budget. If we do not get the money, it is disastrous; if we do, it is increased spending.

I know that the Minister takes our problems seriously, and he has taken time to consider the matter. I hope that he will re—examine it, because the situation is becoming desperate. The new unitary authorities must be treated as special cases. They are not a huge special case—there are 13 of them—but the extra financial help that they need will not be a huge burden. It will not create a gateway that all the other local authorities will use to make demands. The reorganisation is a joint effort by Government and the local authorities, and it must succeed. It will not succeed if the Government continue at the present rate.

The Government have approached this reorganisation in far too mean a spirit. They think that they were too lax in the previous reorganisation, that money was pouring out of the dying local authorities, but it was nearly always for beneficial purposes. Indeed, the people of west Yorkshire are grateful for the West Yorkshire Playhouse, which was one of the beneficiaries of the previous reorganisation. Money was provided by the old west Yorkshire county council. It should be called the John Gunnell memorial theatre, because that was really the source of the finance. Benefits flowed from the previous reorganisation, but the Government feel that they were too generous then, and therefore they will counteract that by being too mean this time. They want to show themselves to be tough. The result will be that new authorities will be strangled before they start.

I ask the Minister to examine the issue again, because we are in a mess. The only way out is to raise the capping limits. If Grimsby had spent to the capping limit, there would not be a substantial increase in council tax. A special case was made last year for the inner London boroughs, so it can be made again for the new unitary authorities. If there is a case for capping limits, it is as a discipline on existing authorities, but a new authority cannot manage its finances in that fashion. The discipline is of no use if there are no balances to inherit. If an authority cannot manage to hit its capping limits this year and the next, capping limits are a form of strangulation, a garrotte, rather than a necessary discipline on local authority spending. Capping limits are totally unreasonable for new authorities.

Another way out, as my hon. Friend the Member for Glanford and Scunthorpe (Mr. Morley) said, is to raise the SSAs for the new unitary authorities, because that brings in revenue support grant money. It is depressing to see the difference between the consultation SSAs for places such as Grimsby and the settlement SSA. Whereas Buckinghamshire—presumably the last Tory council—saw an improvement of 1.32 per cent., or £5 million, between the settlement SSA and the consultation SSA, we lost £500,000. We lost 0.3 per cent.—and we are a new authority that desperately needs the money. So I ask the Government to reconsider raising the SSAs for the new unitary authorities.

Thirdly, I ask the Government to allow the new unitaries, especially that for north—east Lincolnshire, the authority in which I am passionately interested, to capitalise the overspend. There will be an overspend, so why not allow us to borrow to cover it?

The Government say, and I am sure that they are right, that the reorganisation will bring financial benefits and economies to the areas concerned. They therefore want those areas to pay for it, on the grounds that they will inherit the benefits. Fair enough, but please allow us to pay for them over time, by allowing us an increase in our borrowing to finance the capital overspend. The costs will still fall on the area, and when we get the better times that will come from the greater economy and efficiency provided by the unitary authority, we shall be able to pay off the borrowing.

To allow us to borrow and to capitalise now would avoid disaster. Disaster now would alienate the people from the new unitary authorities. They will not be interested in the performance in five years' time, or in greater efficiency a decade hence; we are talking about now. We are talking about how a public, many of whom, especially the teachers, have been reluctant to accept the reorganisation, can be brought to accept it.

Fourthly, I ask the Government to give us an element of greater flexibility in the spending that is allowed for the costs of reorganisation, such as redundancies. Greater flexibility within the categories would be a small matter, but every little helps.

I have tried to avoid the political knock-about that is almost implicit when the Government begin to try to pass the parcel of blame to local authorities by saying, "Labour increases your council tax, while we cut your income tax." That is what is happening now, but I do not want to get involved in that argument today, because the situation in the new unitary authorities is too serious for that.

The test is: will there be a seamless, efficient transfer that improves the quality of the service offered, and makes it more immediate to the people because they have a more direct say and are more involved with it? Given time, and the ability to make a seamless and graceful transition, that will happen. But we must have that ability and that freedom.

At present the prospect, which must be seen in its full starkness, is of a transition accompanied by heavy redundancies—not in tens or twenties but possibly in hundreds—and by substantial cuts in services. We shall have to lop off entire functions, which we shall not be able to afford—industrial development, for example, which is vital to encourage jobs to an area of high unemployment, but which is financially vulnerable if we must have massive cuts. There will also have to be cuts in areas that I regard as sacred, such as education and social services.

Do not force those cuts on us, Minister. I ask the Government not to sabotage their own creation, the local government reorganisation. Let it work. Help it in its hour of need. It would be awful to see it ruined by the alienation, rejection and hostility that would be caused by massive cuts and redundancies, followed by a long argument between the Government, local authorities and politicians in general about who is to blame—that most unseemly, undignified and unnecessary of political arguments.

Something must be done: only the Government can do it—and they must do it soon.

9.8 pm

Last year, the Government got themselves into an awful political mess over the settlement, because ultimately everyone—not only politicians at national and local level but governors, parents and schools throughout the country—believed that the Government were not giving schools a fair deal. People saw the prospect of cuts affecting their children's education, and they reacted and voted accordingly at the local elections.

This year, the Government have from the outset tried to put a spin on the settlement, in an attempt to convince people that somehow, there is extra money for education. The Government tried to spell that out in a series of letters from Tory Members to schools in their constituencies. For local authorities that have education as a function, the education SSA has risen on average by 4.4 per cent., while the actual spending attached to that has risen by about 3 per cent. In total, the SSA for those authorities has risen by only 2.1 per cent., and the extra funding for the authorities has risen by 1.2 per cent.

When the Chief Secretary to the Treasury came to the Treasury Select Committee, he was unable to explain how education authorities would be able to pay for the increase in inflation, the teacher's pay settlement that will be coming soon—which the Government expect the schools to find—and the thousands of extra school children in the next financial year with a funding increase of 3 per cent. Those sums do not add up to 3 per cent.—they add up to an awful lot more.

Even if local authorities tried to spend all the extra money that the Government claim is available for education, they would then have to admit—as the Chief Secretary admitted in the Select Committee—that there will be no extra funding for other important services. During this debate, it has become apparent that no Conservative Member regards any other service as important. Social services, housing, planning, libraries and environmental health are important services that need money, but the Government are not offering that money.

Would the hon. Gentleman, who has vast experience in local government, care to tell us by how much the settlement is inadequate? Is it £3 billion, or £4 billion? Will he set a figure on what local government needs?

If Labour had been in power for the past 16 years, we would not have wasted money as the Government have done on schemes such as the poll tax. That money could have been applied properly to local services that would have benefited local people.

The extra funding for my local authority, Sheffield, next year will be 0.8 per cent. That is a nonsensical figure, as can be seen when one looks at the needs of schools. The Tory argument is that funding should be given to the schools, and not to the central administration of education. Sheffield undertook an independent study of its schools, however, and they came back and said that they wanted no more delegation. Many of them realised—particularly the small primary schools—that having some services, such as psychological support services, funded centrally gave them better value for money.

The reality is that even if the local authority directed every extra penny given to it to education, every one of the schools in my constituency next year will face a cut in funding and a cut in the services that they can provide. Conservative Members do not understand that, in the past few years—when circumstances have been slightly better—schools have been putting away a bit of money for a rainy day. In the past two years, that rainy day has come, and schools are now spending their reserves to keep teachers employed and to buy books and equipment for the children.

Every one of the schools in my constituency is now saying that those reserves are coming to end and—in most cases—have done so already. They will not be replaced next year. Irrespective of what the local authority does, those schools will have a gap in their resources. There will be a cut in services because the reserves that they have will no longer be able to provide services to the children in the form of the employment of teachers, spending on books and equipment and repairs to schools. That is what headteachers and school governors are telling me and, frankly, I am prepared to believe what they say more than I believe the Government's assurances.

On top of that, parents will see their council tax bills drop through the door next month. They must not blame Labour or Liberal Democrat authorities for what will happen. Buckinghamshire—one of the few Tory councils around—estimates that it will have a 9 per cent. increase in council tax. The Chief Secretary admitted that his estimate from the Government's own figures of the increase in council tax is 8 per cent. for the next financial year.

As it is the Government's intention to switch the amounts of money funded locally to provide services from 21 per cent. of the total to 26 per cent. in the next three years, there will be not only an 8 per cent. increase in council tax—on the Government's estimates—in the next financial year, but an 8 per cent. increase in each of the following two years. On the calculations and estimates used by the Chief Secretary, the total increase in council tax will be 25 per cent. cumulatively over a three-year period. Will the Minister answer whether that is the case? There will be a 25 per cent. increase in council tax in the three years, while people get poorer services. Thank goodness the Government will not be in power in the two subsequent years to carry that into effect.

Ministers say that, whatever arguments may be advanced about the amount of money involved, the methodology is all right: it has all been agreed. I challenge that on three grounds. First, there is the issue of capital financing, which I mentioned earlier in an intervention. In a study requested by the Audit Commission, Price Waterhouse concluded that it was wrong to fund capital financing through SSAs and to make use of notional debt. It suggested a different method, involving adjustments to the credit approval levels given to local authorities in the past. Why do the Government not take up that suggestion, which was approved by the Audit Commission—a neutral body, looking objectively at ways of funding local authority services? Is it because some of the biggest gainers would be authorities such as Birmingham and Sheffield?

Secondly, there is area cost adjustment. I welcome the study that is currently in progress. Ernst and Young has already carried out a study for the metropolitan authorities, which effectively demolished the area cost adjustment figures as they stand. An area cost adjustment should be precisely that: it should take into account the difference in the costs of different areas, and accordingly adjust the resources that councils receive from central Government. In fact, however, authorities that bear exactly the same costs receive different amounts of help.

The Minister has commissioned a study, and I welcome that, but, like my hon. Friend the Member for Stoke—on—Trent, South (Mr. Stevenson), I am a little cynical. I fear that nothing will be done as a result of the survey if action would be inconvenient in terms of a general election. I hope that the Minister will assure us that that is not the case.

Thirdly, there is the issue of the shared accommodation figures. They affect the social index, and, in turn, the allocation of money for adult services within the social services budget and for the "other services" block. They also affect funding for children's services. That is an anachronism. Shared accommodation is such a relatively small part of total accommodation that it no longer provides an accurate measure of deprivation in communities. It is not surprising that Westminster ranks so high in the Government's deprivation league tables, given that they are using a measure that has been discredited by every objective observer of their method of calculating SSAs.

My local authority contains two nonsensical features. First, there is the question of Supertram. I support the scheme: I think it important for us to encourage and develop light railway systems, which are environmentally friendly and give people an incentive to use public transport and leave their cars at home. I welcome the funds that the Government have provided. Nevertheless, it strikes me as stupid for the Government to fund Supertram partly through the local authority revenue support grant, in such a way that—although it costs the authority nothing—that spending displaces other spending within the capping limits.

I have to explain to constituents not that their council tax is rising because of the Supertram capital expenditure, but that it will fall for that reason because less money can be spent on education, social services and other important matters. That has always been a reason for grievance, not only in Sheffield but in Rotherham, Doncaster and Barnsley, whose services are being cut although they do not benefit from the tram.

Secondly, the Government calculate the highways SSA on the basis of the number of vehicles that travel down particular roads. Absurdly, they have worked out Sheffield's SSA, and its grant, on the basis of censuses relating to vehicle movements on roads that were dug up so that Supertram could be built. No vehicles could go down those roads. The Government have accepted that that is the case, but they will not accept that Sheffield has lost £900,000 a year—which affects all our services—as a result of that ridiculous way of calculating the highways SSA. Other roads should have been used in the calculation. Sheffield has been particularly badly affected because of the disruption caused by the Supertram works.

Finally, we must also consider the nonsensical way in which fire authorities are funded. It is ridiculous that such authorities can be given a lower capping figure than that required by the chief fire officer to deliver the standard of service required by Home Office regulations. That is a classic case of two Government Departments, each not knowing what the other is doing.

Last year, the Government had to raise the capping level for the fire authority in South Yorkshire because the Home Office accepted the chief fire officer's recommendation that he could not provide a legal fire service within that level. Yet, this year, a fire station in the village of Mosborough in my constituency—one of the largest housing developments in the Sheffield area—will be shut down. That is wrong, and the Minister ought to do something about it.

The settlement does not give any extra resources for education and will mean cuts across the board, not merely in education but in other important services. It will mean large council tax increases of around 8 per cent., according to the Government's own estimates. The grant is not distributed fairly and, in the case of my city, there are clear nonsenses, which I hope that the Minister will consider. Ultimately, if he has no sympathy for the people of Sheffield or for my constituents, he might at least have some for the four remaining Tory councillors on Sheffield city council, who will almost certainly lose their seats at the local elections in May.

9.20 pm

We have had an interesting debate. It has certainly shown the difference between the two sides of the House. It was interesting that almost all the Conservative Members who contributed supported the Government's general case, but went on to plead special cases for their authorities and pointed to some unfairness in the way in which they were being treated. That hints at a slight problem for the Government, who are pleading with all the charm, or otherwise, that they have, that everything is fair and a watertight methodology is being used.

The right hon. Member for Selby (Mr. Alison) made a particular plea and I hope that the Minister will be able to deliver the commitments that he gave to his authority because the problems caused by reorganisation there are problems that we want to be acknowledged. We want the Government to live up to those commitments.

We have been discussing a financial settlement that expresses the relationship between central and local government. An effective democracy depends on alternative and competing sources of power, yet the Government have centralised power and enfeebled local government in ways that many people believed would never happen in this country. It is small wonder that many councillors feel that they have become little more than an administrative outpost of central Government.

Time and again, hon. Members have said that the people have given their verdict. Much as Conservative Members complain about who is running councils, it is not the Opposition but the electorate who control that. They will be somewhat bemused that their wishes are so trounced by Tory Members.

Local government has the potential for being the engine of regeneration. It is local government, rather than central, that has a clear awareness of the needs, desires and aspirations of the local community. Local government is best placed to respond flexibly to changing circumstances in the locality. Local government, rather than central Government, works closely locally on a day-to-day basis with other public agencies, such as health authorities, but also with business and community groups.

The way in which some Conservative Members talk about relationships between business and local government shows that they do not know what has been happening. Extremely effective partnerships between Labour local government and business have been forged up and down the country. In Consett in my constituency, they are central to the town's recovery from the closure of the steelworks. The Government fail to understand the benefits to society from the development of a proper working relationship with local government.

One commentator, the former editor of The Times, Simon Jenkins, has said:

"the Conservatives have concentrated power on the central institution of Downing Street as never before in peacetime…The Tory state is now the most centralised in the western world."

He now works for the Evening Standard. Neither The Times nor the Evening Standard is famed for its support of the Labour party, but we welcome his judgment.

Local government is now exceptionally reliant on central Government for its funding. That is why we have these debates. What can be spent in the localities is, in almost all aspects, determined by central Government. Therefore, it is to central Government that we must bring our complaints and concerns. That is no accident. It is not the result of things happening without anyone knowing but of deliberate decisions to disempower local government.

According to the Prime Minister's former trusted adviser, Sarah Hogg, Ministers and Margaret Thatcher were exasperated with local government in the late 1980s. She said that that was continued in 1990 and that

"More and more Tory MPs thought that the logical solution was for central government to take over completely".

We have heard some of those Tory Members today.

What about Anthony Crosland? He was sick of it too.

Does the hon. Gentleman want to intervene?

indicated dissent.

The revenue support grant settlement this year gives councillors little ability to makes decisions that respond effectively to the needs and desires of their local communities. Instead, councillors, Labour, Liberal and even the odd rare specimen of a Tory, are placed in a straitjacket by central Government.

This month's Treasury Select Committee report—I congratulate my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) on his contribution on this—states that to fund an increase in the areas that the Government have recommended, including education,

"Local authorities are either going to have to make efficiency savings of a level which may be unobtainable in the short, or even long term or substantial cuts in other sectors of their budgets or they will have to find additional revenue from other sources, predominantly the council tax."

Most local politicians do not have the choice of whether to cut services or hike up the council tax. As my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) said, too many councils are being forced both to cut services and raise the council tax as much as they can. Again, local communities will pay more tax and get less services.

Local government and local communities are having to pay the price of central Government economic incompetence and waste. Central Government still take no responsibility for that. They have not even bothered to apologise for the £4 billion poll tax fiasco. Indeed, they are now set on an another significant administrative waste in the shape of their dogmatic, ideological determination to introduce nursery vouchers.

The Government have not even followed the Environment Select Committee recommendation made in October 1995 that the Department of the Environment should attempt to quantify alleged efficiency savings possible in local government. It said that the Department

"is certainly mistaken to imply that all that is required is to offset inflation through efficiency savings".

The Committee recommended that the

"Department makes some realistic attempt to quantify the alleged efficiency savings as propounded by the Audit Commission."

We have been urging the Government to do that for some time, but they singularly refuse to take it on board.

Several hon. Members have questioned the logic of the SSAs, notably my hon. Friend the Member for North-East Derbyshire, who gave a detailed critique of how the SSA affects his constituency and North East Derbyshire district council.

The Secretary of State claimed that he had always considered me a fair-minded woman. I try to be, but that is why I find the inequities in the current funding system objectionable. Neither I nor my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) is alone in objecting to the methodology used in the current funding system. No reasonable person could believe that a system that is meant truly to reflect economic and social need could place Westminster city council fourth in the league table of deprivation.

The Minister and I have had some correspondence about that matter. He may have noticed a recent article by the former local government correspondent of The Daily Telegraph, John Grigsby—again someone not noted for his support for the Labour party.

He has said some nice things about me.

He has said some good things about the Minister, but not about the system. His article states that

"it is the government which has created the unsatisfactory grant regime … Unfortunately for the government's argument, its indices are not the only criteria of deprivation Bristol university supplies. Turn the page"

he suggests to the Minister—

"and there is another list which takes into account economic factors like adult and youth unemployment and single parents. Here, Westminster comes in as the 96th most deprived council. And the second edition of the same publication quotes the environment department's own index of local conditions independently produced for application to local authorities, which rank Westminster as only 25th most deprived."

No Labour Member is naive about the difficulties of ensuring a fair system. As John Grigsby goes on the say, however:

"The Westminster does matter because it is so illogical."

He says that what is of

"fundamental importance is that justice should not only be done, but should manifestly and undoubtedly be seen to be done."

Clearly, justice is not being seen to be done.

Will the hon. Lady simply explain to me why Westminster council did better under a Labour Government than under a Conservative Government if the system is unfair? If she says it is unfair, it was more unfair when Jack Straw drew up the rules.

Order.

I apologise. I should have said the hon. Member for Blackburn (Mr. Straw).

I am tempted by the right hon. Gentleman's intervention. He has sought to intervene a number of times to lambast Labour Members. At least he resisted this time and did not try to abuse people. That his normal method of intervention is to abuse people says more about him than it says about us. My hon. Friend the Member for Blackburn (Mr. Straw) did not devise the system. My father was the Minister at the time and he certainly did not have my hon. Friend as an adviser. The Secretary of State forgets that I have a little knowledge of what was going on in the last Labour Government. He tries to use figures in his normal way: to confuse rather than elucidate. The figures that I have given are clear. They resulted, as he knows, in rates being levied in Westminster that were nothing compared with the council tax being levied today. There are anomalies. The Government know that, and they should do something about them.

Under the Government's "pay more, get less" policy, council tax payers will have to fork out more for the privilege of receiving fewer services. Council tax payers will have to pay the price of Tory economic incompetence. The gap is widening between what the Government acknowledge that councils should spend and the funding that local authorities receive from central Government. The Tories expect council tax payers to fill the gap.

The Secretary of State might try to con us by claiming that the Government are motivated by a desire to enable local government to raise a greater proportion of its funding, but the Minister said this afternoon—and it has been confirmed throughout the debate—that that is not their intention. Their intention is to hide another tax hike—this time, by trying to hide behind the coat-tails of Labour local government.

The Government have failed to take into account the fact that experience has taught the electorate to trust the word and explanation of local councils in preference to the statements of Tory Ministers.

The Government's original figures, produced at the time of the Budget statement, show that the Government expected council tax payers to fork out a 5.2 per cent. council tax increase next year and an extra £3.5 billion in the next three years—the equivalent of nearly 2p in the standard rate of income tax. The final tax hike is likely to be considerably greater, however, and hon. Members have mentioned the words of the Chief Secretary to the Treasury Select Committee.

The Government claim that they are generously giving new money for education. The figure that is floated by Ministers is the supposedly generous 4.4 per cent. increase in the education SSA. It is not only the British people who are more intelligent and sophisticated than to believe the Government—not even their colleagues believe them.

Will the hon. Lady give way?

No; I will not give way.

Let us consider the facts clearly and objectively. Education authorities will receive an increase in central Government grant of exactly 1.2 per cent. in the year ahead. When Conservative Members speak about money, they need to speak about the actual money—1.2 per cent. The increase in SSAs is 4.4 per cent.

How wide is the gap? How much extra would Labour give?

I will not answer questions about how much we shall give until the Government deal with their waste. They should deal with the waste, and then ask us questions about what we shall spend. We know that the Conservatives would not tell us the truth before the most recent general election so, if we try to say anything now, we shall have to change it once we see their cooked books.

It is an illusion that there is more money for education throughout Britain. Parents know that there is not, teachers know that there is not and the Tories know that there is not. That is why the Tories have been blustering and bluffing during the debate.

Will my hon. Friend give way on that point?

I am happy to give way to my hon. Friend.

I was interested to hear my hon. Friend mention blustering. I wonder what she makes of the fact that, in Nottinghamshire, the Chancellor of the Exchequer has been saying that there is extra money for education in Nottinghamshire. The local authority in Nottinghamshire has spent all the extra money in schools, yet next year, in the Chancellor's constituency of Rushcliffe, teachers' jobs will be lost, and £6.3 million of repairs remain to be done at schools. Is he being economical with the truth?

My hon. Friend the Member for Sherwood (Mr. Tipping) will know that if Nottinghamshire received what Westminster receives it would be able to provide an extra 4,000 teachers.

Will the hon. Lady give way?

The Chancellor of the Exchequer might then be able to uphold some of his promises. As usual—

Give way.

Order. From where I am sitting, it seems obvious that the hon. Lady is not giving way.

The Chancellor of the Exchequer, like other Ministers, is saying one thing and doing another. The Government have made commitments on tax which they have not kept. They are not very good at telling the truth about it either, as we saw from Prime Minister's questions yesterday.

This is a pay more, get less settlement. Council tax payers and service users will pay the price of the Government's economic incompetence and waste. Councillors are being placed in an impossible position. They must either cut essential services such as school services, meals on wheels and home helps or they must set the council tax at a level which they know that local people can ill afford. Some councils have to do both. That is not what local democracy should be about.

The Government have made it impossible for local people to determine the level of services or what should be paid for them. Of course, local democracy is not the Government's overriding priority. Their obsession is to stay in power and run the economy into the ground. How can they otherwise afford the income tax cuts that they are looking for?

I believe that the electorate will not be fooled. When they see services cut, they will know that the Government are to blame. When they see their council tax rise, they will blame the Government. That blame will be clearly expressed in the local elections in May and in the general election. I know that people want that election because they are sick of paying the price of Tory obsessions, dogma and mistakes. Instead of the people of this country paying the price, we look forward to the Tory Government paying the price.

9.41 pm

It is not often that, in a debate on local government finance, one can begin with Procrustes, but as my right hon. Friend the Member for Selby (Mr. Alison) introduced him, I have taken some affection for him and done my research. He apparently lay in wait on the Athens road and equipped people who came for lodgings with a bed that was not necessarily the right size. If the people were too long, he chopped them. I did not realise that capping had such a distinguished antecedent, but I am encouraged to know that I follow in such a long tradition. I understand that Theseus fastened Procrustes to his own bed and chopped his head off—he had clearly missed his vocation as a local government Minister.

When the hon. Member for North-West Durham (Ms Armstrong) forgot her speech, she said some sensible things. I agree with one thing that she said; that local government should be the engine of local regeneration. I am grateful for that endorsement of our policies. A Labour Government did not introduce city challenge, from which areas such as Sheffield have benefited. A Labour Government did not introduce the single regeneration budget, from which many Labour-held areas have benefited. A Conservative Government brought local authorities and the private sector into play to promote creative regeneration activities in their areas.

I spent this morning in Dudley seeing regeneration by a Conservative Government in practice. What is happening there demonstrates what can be done by local government if it breaks out of the mind-set in which the Labour party would leave it. We want to develop that concept, so I look forward to the endorsement and support of the hon. Member for North-West Durham for the principle of capital challenge. It works on exactly the same principle as asking local authorities to define their priorities and work in partnership to deliver them. I am delighted that the Labour party, belatedly, has woken up to the creative activities of the Government.

I fear that my text for the day has to be based on the hon. Member for Holborn and St. Pancras (Mr. Dobson). I should like to quote him. He may not live to acquire the fame of Procrustes, but his fame will last at least until the election. The hon. Gentleman said, "I don't endorse anybody else's numbers except my own and you're not getting those out of me.". It is not quite the Book of Revelations, but at least we now have "Dobson's dictum" which appears to be: hear all, see all and let nowt out. Does the Labour party intend to go to the next election without revealing what it will spend? Will Labour Members simply say, "We condemn your settlement and our local authorities say that it is £3 billion short"?

Every Labour Member who spoke in the debate said that he or she wanted more money for education, community care, social services and so on, but the Opposition will not add up the cost—and that is what matters. If they claim that expenditure is inadequate, they must know by how much it is inadequate. The Labour party cannot be a lobby organisation: it is supposed to be an Opposition, yet Labour Members simply say what they do not like and refuse to put a figure on the cost of what they want.

The money must come from somewhere, and it can come from only one place—the taxpayer. It can come from more Government grants of taxpayers' money, or more money can be collected from the taxpayer locally. There is no other way of doing it. The hon. Member for Holborn and St. Pancras must tell us how much money the Labour party would spend and where it would come from, otherwise it is simply mystery money and phantom finance. Opposition Members are afraid to say a word to anyone in case we start to add up the sums for ourselves.

Will the Minister tell us who paid for the £4 billion that was wasted on the poll tax?

Why will the hon. Lady not answer one simple question? Everyone who intends to vote at the next election wants to know how much it will cost. Labour Members exhibit an unusual degree of Trappism when it comes to finance: they will not say a word. [Interruption.] The Opposition housing spokesman, the hon. Member for Greenwich (Mr. Raynsford), is guilty also. He has said that he will release capital receipts, but he will not say how many or for how long. It is all shrouded in mystery. We have only gesture politics; none of the arithmetic has been done. At least we know what the Liberal Democrats stand for—sort of.

Oh no, we do not.

I did say "sort of". I shall give a few examples, but they may not add up to the total picture. The Liberal Democrats would lift the cap completely and remove all safeguards. At least the Opposition would retain some safeguards, with the Audit Commission assuming the curious role of the US cavalry that would gallop over the hill if it thought that people were transgressing. The Liberals offer no such safeguard.

Is the Minister saying that he cannot see the sense in our proposition? We believe that the Audit Commission should set a timetable for improvement and, if councils do not meet that timetable, the Secretary of State could act. Does the Minister think that scandals such as that in Lambeth should be allowed to continue for decades, as occurred under the existing law?

It is Labour-controlled.

Yes, Labour-controlled Lambeth was a disgrace. Something should have been done, but the Government did nothing for a decade. That is why we want to change the law.

There is no point the hon. Gentleman saying that he will do this, that and the other if he will not answer the biggest question: how much money will the Labour party spend? What will it cost? The hon. Gentleman talks about sending in the Audit Commission when councils have overspent or underspent. Such a role would take the Audit Commission into completely new territory. I think that we all agree that it is currently playing a useful role setting out objective indicators to assist local government in managing its affairs.

We agree that some councils should be reformed. Where wrong has been done, we condemn it—irrespective of where it occurs—once it has been proved. However, I do not believe that we should send in the Audit Commission to do any old job; it should stick to its present role.

Will the Minister give way?

I shall give way to the hon. Lady in a moment. She should concentrate on answering the question: how much will a Labour Government cost us? How much would a Labour Government cost the taxpayer, centrally and locally? What is the right amount for the settlement? The hon. Lady can illustrate her point by referring to the current settlement.

If the Government had taken action against councils that were defrauding their council tax payers, the country would be in a better state and there would be more money for the settlement. For a kick-off, the Minister could have recovered the £29 million from Westminster. [Interruption.]

Order. These interventions are very long. The House must settle down. The Minister has a right to reply to the debate. The hon. Member for North-West Durham (Ms Armstrong) was given a reasonable hearing and the Minister must be given the same courtesy.

Let me focus on the arguments.

That will make a change.

Well, the argument is about how much the Labour party thinks it is right to spend on the settlement. I have asked that question a dozen times, but I receive no answer. If the Labour party was to form a Government, all local authorities would parade to its office and ask for more money. They want to know whether they would receive it, but the hon. Member for Holborn and St. Pancras will not give them—or the taxpayer—a clue. It is the most important question in politics.

Is my hon. Friend aware that the former Labour-controlled Greater London council set up a 30-year contract to transport waste and that that contract still has 21 years to go? The cost now falls on my constituents and others in six boroughs in west London. It amounts to several million pounds a year, which is completely inequitable. Will my hon. Friend look to see whether anything can be done to undo the damage done by the Labour-controlled Greater London council?

My hon. Friend is referring to the landfill tax. It is true that some local authorities are locked into long-term contracts that were signed some time ago. They have known the intentions behind the tax for more than a year and I draw my hon. Friend's attention to the fact that, last year, local authorities received £26 million for waste regulation. The responsibility goes to the Environment Agency, but the resources stay with local government and there will be some offsetting national insurance contributions. I promise my hon. Friend that, during the deliberations which must follow the vote tonight, I will pay attention to that issue.

It would be helpful to mention the work on the SSAs that must be done over the next year, because that is important to local authorities. The SSAs must change and develop. Nobody thinks that this is a rigid system that is carved in granite. We make changes and review every year on a rolling programme. People know that that is the case. All the work is shared with the local authority associations and none is done privately.

It is true that interests are not the same. We hear that most obviously in the arguments about the area cost adjustment. Some local authorities have a strong commitment to it, but some think that it is pernicious. There are representatives of each view on both sides of the House. The idea that there is some absolute truth is nonsense. We have to find a system that works well and which people accept as being objective. They must also be able to accept that if they make sensible representations and make a good case, we will try to take it on board.

Our first priority this year is the area cost adjustment review. I do not know what the outcome will be. I have said before that it will have to be intellectually robust and demonstrate a need to spend. If that is the case, we will incorporate it. We are aiming to have the results by June so that they are available for next year's settlement. I hope that local authorities will agree on it, but that is perhaps somewhat optimistic. It is important to be satisfied that it is the best possible intellectual basis for allocating money.

The second area of investigation, which is also important, is the sparsity factor. Here again, many rural areas are concerned about the cost of supplying services in wide open spaces. [Interruption.]

Order. The House must settle down and give the Minister a reasonable hearing. That applies to both sides of the House. There has been chattering on both sides of the Chamber while the Minister has been trying to answer the debate.

There are equally pressing concerns among urban authorities where the population lives in crowded conditions and where there are problems of health, for example—the Webber-Craig authorities. They are concerned to see the SSA formula adjusted to take account of those problems. The sparsity work is scheduled to be completed in time for next year's settlement.

The children's element of personal social services has a completion date of July. It will have an important effect, especially for some urban authorities. The elderly element is also subject to review. Those are the principal elements of work this year. I do not know what will happen—some may neutralise each other or they may push in the same direction. We will incorporate data where they are demonstrably the most effective and up to date available. We do not want local authorities to fall over the edge of the cliff, so we must not give them too difficult a task on adjustment.

Hon. Members will be pleased to learn that authorities that have to deal with the problems of unaccompanied refugee children will receive a grant in the coming financial year. The Department of Health will consult on the means to distribute that.

The hon. Member for Great Grimsby (Mr. Mitchell) and I have had many exchanges across the Chamber on different matters, but I share his desire that the new unitary authorities should get off to a good start.

Which ones?

All of them. Everybody understands that they cannot inherit all the spending patterns of their predecessors. As the hon. Gentleman knows, Humberside has a difficult legacy. I am anxious for the process to work and I shall listen to representations from the new unitary authorities that have a particularly difficult legacy. Of course, one or two of them may get a legacy that they had not expected. Apparently there is an Aladdin's cave in Avon, which had not been anticipated.

I understand the concerns expressed about the fire service. We have taken into account pensions, fire safety and fire prevention. It is a difficult area and it is not easy to find an effective formula. The associations are keen on a particular approach based on fire stations. I have said that I am willing to consider it. Some circularity is involved because it reflects existing spending patterns. Also, certain high costs could fall on metropolitan areas. However, if those problems can be resolved, I am willing to consider objectively whether the formula can be improved.

All these matters are of considerable importance. Many of my hon. Friends raised questions of detail, to which I cannot reply tonight in the short time available. I shall write to them and deal fully with the points that they raised. My hon. Friends the Members for Falmouth and Camborne (Mr. Coe) and for Horsham (Sir P. Hordern) referred to problems in their county areas and difficulties in their district areas.

I understand that the account given by the hon. Member for North-East Derbyshire (Mr. Barnes) was meticulous. I look forward to examining it in the detail it merits.

What happens now is that the preceptors must set their budgets by 1 March and the billing authorities must do so by 11 March. Capping decisions will be taken at the beginning of April and authorities have four weeks in which to decide whether to accept them. If they do, the process ends. If they do not, they have to challenge the cap by the beginning of May. Meetings with Ministers will take place and we will consider the arguments. As I have shown in recent years, where a good case is made, it receives thorough attention. We expect to issue the final caps in late May. That is a traditional timetable and I am sure that local authorities will, as always, avail themselves of the process.

I want to return to the problem that I highlighted at the beginning of my speech—that we do not know where the Opposition stand on these matters. We know that they want to end compulsory competitive tendering and to hand power back to some of the public sector trade unions. We know that they want to end capping, which would impose extra costs on the council tax payer. We know that they want to put business back in the clutches of local authorities by repatriating the business tax, but there would have to be a redistribution mechanism for that. The Opposition say that they will do something about capital receipts, but they do not say what.

The biggest question is: how much would the Opposition spend? That is true of Labour and of the Liberal Democrats. The elector is caught between a rock and a soft touch. I am afraid that the best recourse for them is to support us in voting for this measure.

Question put:—

The House divided:Ayes 300, Noes 264

Division No 42]	[10.00 pm
AYES
Ainsworth, Peter (East Surrey)	Dicks, Terry
Aitken, Rt Hon Jonathan	Dorrell, Rt Hon Stephen
Alexander, Richard	Douglas-Hamilton, Lord James
Alison, Rt Hon Michael (Selby)	Dover, Den
Allason, Rupert (Torbay)	Duncan, Alan
Amess, David	Duncan-Smith, Iain
Ancram, Michael	Dunn, Bob
Arbuthnot, James	Durant, Sir Anthony
Arnold, Jacques (Gravesham)	Dykes, Hugh
Ashby, David	Elletson, Harold
Atkins, Rt Hon Robert	Emery, Rt Hon Sir Peter
Atkinson, David (Bour'mouth E)	Evans, David (Welwyn Hatfield)
Atkinson, Peter (Hexham)	Evans, Jonathan (Brecon)
Baker, Nicholas (North Dorset)	Evans, Nigel (Ribble Valley)
Baldry, Tony	Evans, Roger (Monmouth)
Banks, Matthew (Southport)	Evennett, David
Banks, Robert (Harrogate)	Faber, David
Bates, Michael	Fabricant, Michael
Batiste, Spencer	Fenner, Dame Peggy
Bellingham, Henry	Field, Barry (Isle of Wight)
Bendall, Vivian	Fishburn, Dudley
Beresford, Sir Paul	Forman, Nigel
Body, Sir Richard	Forsyth, Rt Hon Michael (Stirling)
Bonsor, Sir Nicholas	Forth, Eric
Booth, Hartley	Fowler, Rt Hon Sir Norman
Boswell, Tim	Fox, Dr Liam (Woodspring)
Bowden, Sir Andrew	Fox, Sir Marcus (Shipley)
Bowis, John	Freeman, Rt Hon Roger
Boyson, Rt Hon Sir Rhodes	French, Douglas
Brandreth, Gyles	Gallie, Phil
Brazier, Julian	Gardiner, Sir George
Bright, Sir Graham	Garnier, Edward
Brooke, Rt Hon Peter	Gillan, Cheryl
Brown, M (Brigg & Cl'thorpes)	Goodlad, Rt Hon Alastair
Browning, Mrs Angela	Goodson-Wickes, Dr Charles
Bruce, Ian (Dorset)	Gorman, Mrs Teresa
Burns, Simon	Gorst, Sir John
Burt, Alistair	Grant, Sir A (SW Cambs)
Butcher, John	Greenway, Harry (Ealing N)
Butler, Peter	Greenway, John (Ryedale)
Butterfill, John	Griffiths, Peter (Portsmouth, N)
Carlisle, John (Luton North)	Grylls, Sir Michael
Carlisle, Sir Kenneth (Lincoln)	Gummer, Rt Hon John Selwyn
Carrington, Matthew	Hague, Rt Hon William
Carttiss, Michael	Hamilton, Rt Hon Sir Archibald
Cash, William	Hamilton, Neil (Tatton)
Channon, Rt Hon Paul	Hampson, Dr Keith
Chapman, Sir Sydney	Hanley, Rt Hon Jeremy
Churchill, Mr	Hannam, Sir John
Clappison, James	Hargreaves, Andrew
Clark, Dr Michael (Rochford)	Harris, David
Clarke, Rt Hon Kenneth (Ru'clif)	Haselhurst, Sir Alan
Clifton-Brown, Geoffrey	Hawkins, Nick
Coe, Sebastian	Hawksley, Warren
Congdon, David	Hayes, Jerry
Conway, Derek	Heald, Oliver
Coombs, Anthony (Wyre For'st)	Heathcoat-Amory, David
Coombs, Simon (Swindon)	Hendry, Charles
Cope, Rt Hon Sir John	Heseltine, Rt Hon Michael
Cormack, Sir Patrick	Hicks, Robert
Couchman, James	Higgins, Rt Hon Sir Terence
Cran, James	Hill, James (Southampton Test)
Currie, Mrs Edwina (S D'by'ire)	Hogg, Rt Hon Douglas (G'tham)
Curry, David (Skipton & Ripon)	Horam, John
Davies, Quentin (Stamford)	Hordem, Rt Hon Sir Peter
Davis, David (Boothferry)	Howard, Rt Hon Michael
Day, Stephen	Howell, Rt Hon David (G'dford)
Deva, Nirj Joseph	Howell, Sir Ralph (N Norfolk)
Devlin, Tim	Hughes, Robert G (Harrow W)

Hunt, Rt Hon David (Wirral W)	Powell, William (Corby)
Hunt, Sir John (Ravensbourne)	Rathbone, Tim
Hunter, Andrew	Redwood, Rt Hon John
Hurd, Rt Hon Douglas	Renton, Rt Hon Tim
Jack, Michael	Richards, Rod
Jackson, Robert (Wantage)	Riddick, Graham
Jenkin, Bernard	Rifkind, Rt Hon Malcolm
Jessel, Toby	Robathan, Andrew
Jones, Robert B (W Hertfdshr)	Roberts, Rt Hon Sir Wyn
Key, Robert	Robertson, Raymond (Ab'd'n S)
King, Rt Hon Tom	Robinson, Mark (Somerton)
Kirkhope, Timothy	Roe, Mrs Marion (Broxbourne)
Knight, Mrs Angela (Erewash)	Rowe, Andrew (Mid Kent)
Knight, Rt Hon Greg (Derby N)	Rumbold, Rt Hon Dame Angela
Knight, Dame Jill (Bir'm E'st'n)	Ryder, Rt Hon Richard
Knox, Sir David	Sackville, Tom
Kynoch, George (Kincardine)	Sainsbury, Rt Hon Sir Timothy
Lait, Mrs Jacqui	Scott, Rt Hon Sir Nicholas
Lamont, Rt Hon Norman	Shaw, David (Dover)
Lang, Rt Hon Ian	Shaw, Sir Giles (Pudsey)
Lawrence, Sir Ivan	Shepherd, Rt Hon Gillian
Legg, Barry	Shepherd, Sir Colin (Hereford)
Leigh, Edward	Shepherd, Richard (Aldridge)
Lennox-Boyd, Sir Mark	Shersby, Sir Michael
Lester, Sir James (Broxtowe)	Sims, Roger
Lidington, David	Skeet, Sir Trevor
Lilley, Rt Hon Peter	Smith, Sir Dudley (Warwick)
Lloyd, Rt Hon Sir Peter (Fareham)	Smith, Tim (Beaconsfield)
Lord, Michael	Soames, Nicholas
Luff, Peter	Spencer, Sir Derek
Lyell, Rt Hon Sir Nicholas	Spicer, Sir James (W Dorset)
MacGregor, Rt Hon John	Spicer, Sir Michael (S Worcs)
MacKay, Andrew	Spink, Dr Robert
Maclean, Rt Hon David	Spring, Richard
McLoughlin, Patrick	Sproat, Iain
McNair-Wilson, Sir Patrick	Squire, Robin (Hornchurch)
Madel, Sir David	Stanley, Rt Hon Sir John
Maitland, Lady Olga	Steen, Anthony
Major, Rt Hon John	Stephen, Michael
Malone, Gerald	Stem, Michael
Mans, Keith	Stewart, Allan
Marland, Paul	Streeter, Gary
Marlow, Tony	Sumberg, David
Marshall, John (Hendon S)	Sweeney, Walter
Marshall, Sir Michael (Arundel)	Sykes, John
Martin, David (Portsmouth S)	Tapsell, Sir Peter
Mates, Michael	Taylor, Ian (Esher)
Mawhinney, Rt Hon Dr Brian	Taylor, John M (Solihull)
Mellor, Rt Hon David	Taylor, Sir Teddy (Southend, E)
Merchant, Piers	Temple-Morris, Peter
Mills, Iain	Thomason, Roy
Mitchell, Andrew (Gedling)	Thompson, Sir Donald (C'er V)
Mitchell, Sir David (NW Hants)	Thompson, Patrick (Norwich N)
Moate, Sir Roger	Thornton, Sir Malcolm
Monro, Rt Hon Sir Hector	Thumham, Peter
Montgomery, Sir Fergus	Townend, John (Bridlington)
Needham, Rt Hon Richard	Townsend, Cyril D (Bexl'yh'th)
Nelson, Anthony	Tracey, Richard
Neubert, Sir Michael	Tredinnick, David
Newton, Rt Hon Tony	Trend, Michael
Nicholls, Patrick	Trotter, Neville
Norris, Steve	Twinn, Dr Ian
Onslow, Rt Hon Sir Cranley	Vaughan, Sir Gerard
Oppenheim, Phillip	Waldegrave, Rt Hon William
Ottaway, Richard	Walden, George
Page, Richard	Walker, Bill (N Tayside)
Paice, James	Waller, Gary
Patnick, Sir Irvine	Ward, John
Patten, Rt Hon John	Wardle, Charles (Bexhill)
Pattie, Rt Hon Sir Geoffrey	Waterson, Nigel
Pawsey, James	Watts, John
Peacock, Mrs Elizabeth	Wells, Bowen
Pickles, Eric	Wheeler, Rt Hon Sir John
Porter, Barry (Wirral S)	Whitney, Ray
Porter, David (Waveney)	Whittingdale, John
Portillo, Rt Hon Michael	Widdecombe, Ann

Wiggin, Sir Jerry	Wolfson, Mark
Wilkinson, John	Yeo, Tim
Willetts, David	Young, Rt Hon Sir George
Wilshire, David	Tellers for the Ayes:
Winterton, Mrs Ann (Congleton)	Mr. Timothy Wood and
Winterton, Nicholas (Macc'fld)	Mr. Roger Knapman.
NOES
Abbott, Ms Diane	Dixon, Don
Adams, Mrs Irene	Dobson, Frank
Ainger, Nick	Donohoe, Brian H
Ainsworth, Robert (Covtry NE)	Dowd, Jim
Allen, Graham	Dunwoody, Mrs Gwyneth
Anderson, Donald (Swansea E)	Eagle, Ms Angela
Anderson, Ms Janet (Ros'dale)	Eastham, Ken
Armstrong, Hilary	Etherington, Bill
Ashdown, Rt Hon Paddy	Evans, John (St Helens N)
Ashton, Joe	Ewing, Mrs Margaret
Austin-Walker, John	Fatchett, Derek
Banks, Tony (Newham NW)	Faulds, Andrew
Barnes, Harry	Field, Frank (Birkenhead)
Battle, John	Fisher, Mark
Bayley, Hugh	Flynn, Paul
Beckett, Rt Hon Margaret	Foster, Rt Hon Derek
Beith, Rt Hon A J	Foster, Don (Bath)
Bell, Stuart	Foulkes, George
Benn, Rt Hon Tony	Fyfe, Maria
Bennett, Andrew F	Galloway, George
Bermingham, Gerald	Gapes, Mike
Berry, Roger	Garrett, John
Betts, Clive	George, Bruce
Blair, Rt Hon Tony	Gerrard, Neil
Blunkett, David	Gilbert, Rt Hon Dr John
Boateng, Paul	Godman, Dr Norman A
Bradley, Keith	Godsiff, Roger
Bray, Dr Jeremy	Golding, Mrs Llin
Brown, Gordon (Dunfermline E)	Gordon, Mildred
Brown, N (N'c'tle upon Tyne E)	Grant, Bernie (Tottenham)
Bruce, Malcolm (Gordon)	Griffiths, Nigel (Edinburgh)
Burden, Richard	Griffiths, Win (Bridgend)
Byers, Stephen	Grocott, Bruce
Callaghan, Jim	Gunnell, John
Campbell, Mrs Anne (C'bridge)	Hain, Peter
Campbell, Menzies (Fife NE)	Hall, Mike
Campbell, Ronnie (Blyth V)	Hanson, David
Campbell-Savours, D N	Hardy, Peter
Canavan, Dennis	Harvey, Nick
Cann, Jamie	Hattersley, Rt Hon Roy
Chidgey, David	Henderson, Doug
Chisholm, Malcolm	Hill, Keith (Streatham)
Church, Judith	Hinchliffe, David
Clapham, Michael	Hodge, Margaret
Clelland, David	Hoey, Kate
Clwyd, Mrs Ann	Hogg, Norman (Cumbernauld)
Coffey, Ann	Home Robertson, John
Cohen, Harry	Hood, Jimmy
Cook, Robin (Livingston)	Hoon, Geoffrey
Corbett, Robin	Howarth, Alan (Strat'rd-on-A)
Corbyn, Jeremy	Howarth, George (Knowsley North)
Corston, Jean	Howells, Dr Kim (Pontypridd)
Cousins, Jim	Hoyle, Doug
Cox, Tom	Hughes, Robert (Aberdeen N)
Cummings, John	Hughes, Roy (Newport E)
Cunliffe, Lawrence	Hughes, Simon (Southwark)
Cunningham, Jim (Covy SE)	Hutton, John
Dafis, Cynog	Ingram, Adam
Darling, Alistair	Jackson, Glenda (H'stead)
Davidson, Ian	Jackson, Helen (Shef'ld, H)
Davies, Bryan (Oldham C'tral)	Jamieson, David
Davies, Chris (L'Boro & S'worth)	Janner, Greville
Davies, Rt Hon Denzil (Llanalli)	Jones, Barry (Alyn and D'side)
Davies, Ron (Caerphilly)	Jones, Jon Owen (Cardiff C)
Davis, Terry (B'ham, H'dge H'I)	Jones, Lynne (B'ham S O)
Denham, John	Jones, Martyn (Clwyd, SW)
Dewar, Donald	Jones, Nigel (Cheltenham)

Jowell, Tessa	Prentice, Gordon (Pendle)
Kaufman, Rt Hon Gerald	Primarolo, Dawn
Keen, Alan	Purchase, Ken
Kennedy, Jane (L'pool Br'dg'n)	Quin, Ms Joyce
Khabra, Piara S	Radice, Giles
Kilfoyle, Peter	Randall, Stuart
Lestor, Joan (Eccles)	Raynsford, Nick
Liddell, Mrs Helen	Reid, Dr John
Litherland, Robert	Rendel, David
Livingstone, Ken	Robertson, George (Hamilton)
Lloyd, Tony (Stretford)	Robinson, Geoffrey (Co'try NW)
Llwyd, Elfyn	Roche, Mrs Barbara
Loyden, Eddie	Rogers, Allan
Lynne, Ms Liz	Rocker, Jeff
McAllion, John	Ross, Ernie (Dundee W)
McAvoy, Thomas	Rowlands, Ted
McCartney, Ian	Ruddock, Joan
McCrea, The Reverend William	Sedgemore, Brian
Macdonald, Calum	Sheerman, Barry
McFall, John	Sheldon, Rt Hon Robert
McKelvey, William	Shore, Rt Hon Peter
Mackinlay, Andrew	Short, Clare
McLeish, Henry	Simpson, Alan
McNamara, Kevin	Skinner, Dennis
MacShane, Denis	Smith, Andrew (Oxford E)
McWilliam, John	Smith, Chris (Isl'ton S & F'sbury)
Madden, Max	Smith, Llew (Blaenau Gwent)
Maddock, Diana	Snape, Peter
Mahon, Alice	Soley, Clive
Mandelson, Peter	Spearing, Nigel
Marek, Dr John	Speller, John
Marshall, David (Shettleston)	Squire, Rachel (Dunfermline W)
Marshall, Jim (Leicester, S)	Steinberg, Gerry
Martin, Michael J (Springburn)	Stevenson, George
Martlew, Eric	Stott, Roger
Maxton, John	Strang, Dr. Gavin
Meacher, Michael	Straw, Jack
Meale, Alan	Sutcliffe, Gerry
Michael, Alun	Taylor, Mrs Ann (Dewsbury)
Michie, Bill (Sheffield Heeley)	Thompson, Jack (Wansbeck)
Michie, Mrs Ray (Argyll & Bute)	Timms, Stephen
Milburn, Alan	Tipping, Paddy
Miller, Andrew	Touhig, Don
Mitchell, Austin (Gt Grimsby)	Turner, Dennis
Moonie, Dr Lewis	Tyler, Paul
Morgan, Rhodri	Vaz, Keith
Morley, Elliot	Walker, Rt Hon Sir Harold
Morris, Rt Hon Alfred (Wy'nshawe)	Walley, Joan
Morris, Estelle (B'ham Yardley)	Wardell, Gareth (Gower)
Morris, Rt Hon John (Aberavon)	Wareing, Robert N
Mowlam, Marjorie	Watson, Mike
Mudie, George	Wicks, Malcolm
Mullin, Chris	Wigley, Dafydd
Murphy, Paul	Williams, Rt Hon Alan (Sw'n W)
Oakes, Rt Hon Gordon	Williams, Alan W (Carmarthen)
O'Brien, Mike (N W'kshire)	Wilson, Brian
O'Brien, William (Normanton)	Winnick, David
O'Hara, Edward	Wise, Audrey
Olner, Bill	Worthington, Tony
O'Neill, Martin	Wray, Jimmy
Parry, Robert	Wright, Dr Tony
Pendry, Tom	Young, David (Bolton SE)
Pickthall, Colin
Pike, Peter L	Tellers for the Noes:
Pope, Greg	Mr. Eric Clarke and
Powell, Ray (Ogmore)	Mr. Joe Benton
Prentice, Bridget (Lew'm E)

Question accordingly agreed to.

Resolved,

That the Local Government Finance Report (England) 1996–97 (House of Commons Paper No. 164), which was laid before this House on 29th January, be approved.

Resolved,

That the National Parks Supplementary Grant Report (England) 1996–97 (House of Commons Paper No. 167), which was laid before this House on 29th January, be approved.

Resolved,

That the Limitation of Council Tax and Precepts (Relevant Notional Amounts) Report (England) 1996–97 (House of Commons Paper No. 166), which was laid before this House on 29th January, be approved.

Resolved,

That the Special Grant Report (No. 16) (House of Commons Paper No. 165), which was laid before this House on 29th January, be approved.—[Mr. Brandreth]

Local Government Reform (Southport)

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Brandreth.]

10.14 pm

It is a great honour to be a Member of Parliament, and a particular honour to represent the delightful seaside resort of Southport. As you know, Mr. Deputy Speaker, before 1974 my constituency was a unitary authority that looked to Lancashire, not to Liverpool. But since 1974, it has been swallowed up by Merseyside and lost its independence.

The Southport county borough was proudly independent and self-governing throughout most of this century, from the 1900s to 1974. During that time, Southport had some of the lowest rates in the United Kingdom, and, I am pleased to report, was controlled by an efficient Conservative council.

In 1974, when Southport was swallowed up, a new authority called Sefton metropolitan borough council was created, including the parliamentary constituencies of Crosby and Bootle. Because of the geography and the make-up of the area, I have never believed, and nor have my constituents, that the metropolitan borough council works in their interests, or in those of Southport as a whole.

From the time when I was selected as a prospective parliamentary candidate in early 1989, I pledged that, if I were elected—and, indeed, up to and including the election—I would work unceasingly to find a mechanism to ensure that the local government structure for Southport was reviewed. Not content with that pledge, I went further. I publicly promised that I would ensure that such a review would begin in the lifetime of this Parliament, not at some unspecified date in the future. It is now time for that process to commence.

I look to my hon. Friend the Under-Secretary of State to make such a commitment at the end of the debate. Recently, in answer to yet another of my parliamentary questions, the Secretary of State said that the Local Government Commission had completed its review of the structure of local government in the shire counties, and that he was now considering the recommendations in the commission's final report, which was published on 19 December. No doubt my right hon. Friend will spend some time considering the report, but I believe that it is now time for the structure of local government in my constituency to be reviewed.

Southport county borough under the Conservatives had the among the lowest rates in the country. It was well run and efficient, and took much pride in itself and in the town. But since Merseyside swallowed up my constituency, that pride has been a little tarnished, and I am determined to reverse that trend so that Southport can be proud and independent in Lancashire again.

I place on record my thanks to the independent cross-party Southport borough campaign. With my assistance, it organised a referendum within the town, which took place over a period of one month. Before that, in one of a series of meetings that I have had over several years with the Secretary of State, the Local Government Commission and other Ministers at the Department of the Environment, I was asked whether I could demonstrate that at least 5,000 of my constituents wanted a change. I told my right hon. Friend that I could do rather better than that—and indeed, over the month of the referendum, about 23,000 of my constituents made it clear that they wanted that change. I was determined, on their behalf, that the change should come about.

Despite that large number, I do not believe that the Local Government Commission gave me the kind of response for which I would have wished. In fact, in my view the then chairman did not keep his verbal and written promise to me. Since then, I have felt very much alone in my battle with Whitehall and Westminster to ensure that the matter remains on the agenda, culminating in tonight's debate.

I would like to thank also my hon. Friends who have joined me in the House tonight. Blackpool has sought to move away from the control of Lancashire county council, and I am pleased to see my hon. Friend the Member for Blackpool, North (Mr. Elletson) is in his place, as is my hon. Friend the Member for Ribble Valley (Mr. Evans). I am particularly pleased to see my right hon. Friend the Member for Wirral, West (Mr. Hunt), as he has fought so hard for his constituency and for the constituency of my hon. Friend the Member for Wirral, South (Mr. Porter).

Does my hon. Friend agree that there are similar strong feelings about the need for a review of the structure of local government in Wirral, and particularly in the constituencies of Wirral, West and Wirral, South? Thousands of representations have been received over a lengthy period from local people. He has our strong support, and I very much hope that we will have his.

I am grateful to my right hon. Friend. He knows full well that he has my support. We have stood together in these discussions, and I very much hope that at some future date—not too far away—the Local Government Commission will, as a result of my right hon. Friend's efforts, review the structure of local government in the Wirral also.

I should like to place on record my thanks to my former parliamentary assistant and great friend Roderick Brown, my agent, Mr. John Critten, and my parliamentary secretary here at Westminster, Jane Banks, for all their help behind the scenes in bringing this matter to a satisfactory resolution. I am pleased to see that Jane, who doubles as my wife, is here tonight. I am only sorry that, as I did not have a great deal of notice of the debate, other constituents have not been able to be present to see the debate. No hon. Member has a more supportive or politically astute spouse, and Southport is extremely lucky to have her.

May I also place on record my thanks to my right hon. Friend the Member for Mid-Norfolk (Mr. Ryder), the former Chief Whip, who had to bear the brunt of my sometimes gritty determination. I am grateful to my right hon. Friend the Member for Derby, North (Mr. Knight) and to my former Whip my hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown), who know how hard I have had to battle behind the scenes on this issue.

I read with great interest today my local newspapers in Southport—the Advertiser, the Visiter and the Champion. I noticed a front-page article in the Southport Champion with the headline: "Town to quit Sefton? MP Banks pushes for Southport to go it alone."

Further down the front page, there were some comments from the former Member of Parliament, Councillor Ronald Fearn. I quote what he said in the article:

"I have campaigned for this for 20 years. I hope Mr. Gummer gets his finger out and does something. We do not want any more vague promises, we want action."

That comes from a man who, in 1973, voted as a councillor to go into Merseyside in the first place and did nothing in the intervening years. In February 1992, he voted with the Labour party in each and every Division in this House against the creation of the very Local Government Commission that is our only chance of gaining independence from Merseyside.

Is my hon. Friend aware that Councillor Fearn was in this House for four years, but did nothing to get Southport back into Lancashire? My hon. Friend has fought his campaign valiantly to get Southport back where it belongs—in the red rose county of Lancashire.

I am grateful to my hon. Friend. As I mentioned, Blackpool will be gaining its independence from Lancashire county council very shortly, as will Blackburn and, I hope, other places.

The importance of the size of a particular potential unitary authority has also been brought into question. Blackpool and Blackburn have gained independence that they did not have before 1974, and a town such as Hartlepool—of a similar size to Southport—has done so also. I have no truck with those who say that Southport will not be big enough to run its own affairs. It did so before 1974, and it can, and—if I have anything to do with it—will, again.

The only issue of contention has been put about by those with a vested interest, who say that senior citizens will not be able to benefit from the generous current concessionary travel schemes. I do not believe that any successor authority would want to do other than continue to opt into the concessionary travel scheme that currently exists in Southport and the metropolitan area. Any candidate from any political party who said otherwise would not be elected.

Breaking away from Sefton and ceasing to be run by Bootle will allow the tourist industry in my constituency to develop properly. At present, Bootle councillors do not give a damn about what happens in Southport. It is nonsense for them to suggest that we might come third, behind Blackpool and St Anne's as a resort. We have our own product: it is different from Blackpool's, and we are very proud of it.

I believe that, if the Minister is prepared to give the go-ahead tonight, a review can not merely get under way in the lifetime of the present Parliament but begin in a matter of weeks. I should like the Local Government Commission to institute a referendum, so that local people can give their views, to arrange public meetings and consultation, and to take sufficient time to listen carefully to local opinion.

Such reviews take a long time. The shire review has taken at least a year, and it may well take longer than that to complete the review of Southport and Sefton. My constituents must remember that this Government, and this Conservative party, will give them the opportunity of a review and the chance of independence. Mindful of the actions of my predecessor—a Liberal Democrat—and his party's and Labour's policy for regional government, I fear that, in the unlikely event of a Labour Government, those two parties would not complete the review I seek. The interests of my constituents will best be served by the re-election of the present Government.

I am grateful to my right hon. Friend the Secretary of State for the Environment and to his ministerial team for the way in which, over a number of years, they have listened to the arguments that I have advanced, sometimes forcefully. Now, however, the time for debate is over, and the review should begin. We want our independence in Southport to be considered as soon as possible, and I look to my hon. Friend the Under-Secretary of State to announce the review for which I have asked, so that, once again, my constituency can run its own affairs and get out of Sefton and Merseyside once and for all.

10.26 pm

I congratulate my hon. Friend the Member for Southport (Mr. Banks) on stepping into the breach on an urgent basis. I note that he has the heavy brigade behind him in the form of my hon. Friends the Members for Blackpool, North (Mr. Elletson) and for Ribble Valley (Mr. Evans)—and, of course, my right hon. Friend the Member for Wirral, West (Mr. Hunt), who is pushing a similar case to which we must give consideration. I am delighted to respond to the points that my hon. Friend the Member for Southport has made so emphatically. Unusually but effectively, his wife has supported him, campaigning vigorously.

Since 1974, when the change came about, people in Southport have objected to being part of Merseyside. It is not just being in Merseyside rather than Lancashire that is unpopular; given Southport's former status as an independent county borough, people also dislike being part of the larger metropolitan borough of Sefton, along with Bootle and Crosby. My hon. Friend's wish for Southport to be returned to Lancashire is long-standing: he spoke of it on the first occasion he spoke in the House, and he has continued to speak of it ever since.

The Local Government Commission's remit covers structural, electoral and boundary changes. When it was set up in 1992, its first priority was the structural review of the English shire counties; however, in September 1993, we made it clear that the commission would be able to review the metropolitan areas when the shire reviews were completed, where there was pressure for change. There has certainly been strong pressure in Southport, perhaps to a unique degree—aided, abetted and pushed by my hon. Friend.

In September 1993, the Local Government Commission received the results of the ballot carried out in Southport. Of 35,000 ballot papers delivered, an extraordinary 23,000 were returned in favour of a review and less than 1,000 against. That was a positive response rate. From an area with an electorate of 72,000, it must be taken as a dramatic indication of local opinion.

The commission has concluded the shire structure reviews, including the further district reviews in counties such as Lancashire. Its main priority now is the periodic electoral reviews. It is bound by statute to undertake those and, as far as practicable, within no more than 15 years since the previous review. Those are becoming increasingly urgent in a number of places, and that work should take precedence. However, there will be room in its programme to carry out a few other reviews.

My hon. Friend met my right hon. Friend the Secretary of State before Christmas, and he knows that we are aware of the strength of feeling in Southport. I can confirm to him that one of the commission's additional reviews will be that of Southport.

Any review, except for a periodic electoral review, needs a direction to the commission from the Secretary of State. We are considering whether the direction will tell the commission to consider Southport or the whole of Sefton. It is important, however, that it is clear that the commission is not being directed towards a particular outcome.

It will also be necessary, as with the individual district reviews, which have just been completed, for the commission to consider the viability of the remnant authority that might result. That is not to say that it will not know what pressures led to any particular review. I suspect that my hon. Friend will not allow it to forget.

The basic procedures that the commission has to follow in any review are set down in the Local Government Act 1992. There must be two intervals for consultation and representations—before and after it produces its draft recommendations. Although guidance can expand on that procedure, the detail of how it conducts a review should be left to the commission to decide. That would include how it might measure the attitude of the general public. My hon. Friend might like to approach the commission directly to find out what methods it would like to use for the boundary review.

The recommendations at the end of any review are, of course, a matter entirely for the commission. In the case of a review of a metropolitan area, however, some constraints arise from the Act. For example, it defines a structural change only as a change from a two-tier system of local government to a one-tier system; there cannot be a change in the opposite direction.

In addition, a unitary authority cannot be part of two-tier county area. In other words, a unitary Southport self-evidently could not be part of a two-tier Lancashire under Lancashire county council, although the two could be deemed to be joined for ceremonial purposes, such as the lord lieutenancy. It is therefore helpful that the shire structure reviews are now complete—subject to my right hon. Friend's decisions on the commission's final reports on the district reviews—so that the context is clear.

I said that there is room in the commission's programme for a few boundary or parishing reviews and that one of those will be of Sefton. We hope to be able to announce soon what the others will be. That will be when the commission announces its programme of periodic electoral reviews. We are working on the direction and guidance to the commission. We will also be discussing with it what would be an appropriate length of time for the review, given the issues that have to be addressed in metropolitan areas.

Once again, I congratulate my hon. Friend on the force and energy that he has put into this subject, in the face of the failure of his predecessor, and on his success in ensuring that local government in Southport will be considered by the commission.

Question put and agreed to.

Adjourned accordingly at twenty-seven minutes to Eleven o'clock.

Volume 270: debated on Wednesday 31 January 1996

House Of Commons

Prayers

Medical Misconduct

Meat Hygiene Service

Pollution (Bexley)

Sustainable Development

Charity Shops (Business Rate)

Private Business

Edinburgh Assay Office Bill

Oral Answers To Questions

Scotland

Income Tax

Scottish Government

Unemployment

Exports

Film Industry

Forestry Policy

Highlands And Islands

Campbell's Soups

Scottish Council (Development And Industry)

Violent Crimes

New Towns

Nhs Staffing Costs

Glasgow International Airport

Ec Council Of Ministers

Points Of Order

Bill Presented

Protection Of Privacy

Regulation Of Funding Of Political Parties

Regulation Of Funding Of Political Parties

Orders Of The Day

Local Government Finance

Local Government Reform (Southport)