PARLIAMENTARY DEBATES

HOUSE OF COMMONS

OFFICIAL REPORT

Second Standing Committee on Delegated Legislation

SPECIAL GRANT REPORT ON COMMUNITY CARE SPECIAL GRANT AND SUPPLEMENTARY MISMATCH SCHEME GRANT FOR 1996–97

Tuesday 2 July 1996

LONDON: HMSO

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1

The Committee consisted of the following Members:

Chairman: Mr. Norman Hogg

Adams, Mrs. Irene (Paisley, North)

Bates, Mr. Michael (Lord Commissioner to the Treasury)

Carttiss, Mr. Michael (Great Yarmouth)

Cash, Mr. William (Stafford)

Chisholm, Mr. Malcolm (Edinburgh, Leith)

Connarty, Mr. Michael (Falkirk, East)

Currie, Mrs. Edwina (South Derbyshire)

Deva, Mr. Nirj Joseph (Brentford and Isleworth)

Douglas-Hamilton, Lord James (Minister of State, Scottish Office)

Forsythe, Mr. Clifford (South Antrim)

Graham, Mr. Thomas (Renfrew, West and Inverclyde)

Grant, Sir Anthony (South-West Cambridgeshire)

McAvoy, Mr. Thomas (Glasgow, Rutherglen)

Macdonald, Mr. Calum (Western Isles)

O'Neil, Mr. Martin (Clackmannan)

Renton, Mr. Tim (Mid-Sussex)

Skeet, Sir Trevor (North Bedfordshire)

Squire, Ms Rachel (Dunfermline, West)

Wilkinson, Mr. John (Ruislip-Northwood)

Mr. P. A. Evans, Committee Clerk

2
3 Second Standing Committee on Delegated Legislation Tuesday 2 July 1996

[MR. NORMAN HOGG in the Chair]

Special Grant Report on Community Care Special Grant and Supplementary Mismatch Scheme Grant for 1996–97

4.30 pm

The Minister of State, Scottish Office (Lord James Douglas-Hamilton): I beg to move, That the Committee has considered the Special Grant Report on Community Care Special Grant and Supplementary Mismatch Scheme Grant for 1996–97. May I first welcome the hon. Member for Edinburgh, Leith (Mr. Chisholm) to the Front Bench? I think that this is his first day in his new position. He follows a worthy tradition in his constituency as Ronald King Murray, his predecessor, was also on the Front Bench as Lord Advocate and, before that, Lord Hoy was on the Front Bench for some time. I wish the hon. Gentleman every good fortune in his new role. The orders provide more funds for local government as a result of the reform of local government in Scotland and arise out of strong representations that have been made. The hon. Member for Renfrew, West and Inverclyde (Mr. Graham) will be glad to know that his constituency will benefit under the order by £30 million. I need not detain the Committee for long. The report that we are considering provides for the payment of additional grant totalling just over £37 million to Scottish local authorities this year. That is on top of the aggregate external finance settlement of nearly £5.4 billion which the House debated on 28 February. The report provides for the payment of two special grants. The first, totally £6.875 million, is shared among all 32 councils and compensates them for the additional community costs resulting from the increase in capital limits for residential care. The second grant, totalling £30.143 million, relates to the supplementary mismatch scheme which my right hon. Friend the Secretary of State announced at the meeting of the Scottish Grand Committee in Kilmarnock on 4 March. That grant is payable to 10 councils, with Glasgow city council being the main beneficiary. As I said, the area represented by the hon. Member for Renfrew, West and Inverclyde will also benefit. It is not necessary for me to go into greater detail at present, other than to say that the two special grants 4 will assist local authorities greatly. I strongly comment the report to the Committee.

4.33 pm

Mr. Malcolm Chisholm (Edinburgh, Leith): I thank the Minister of State for his kind words of welcome. I happened to have a meeting with him at the Scottish Office on the day that I was appointed to the Front Bench. I do not think that he will mind me repeating what he said in private about always being glad to see Edinburgh Members of Parliament on the Front Bench. We can agree about that, if on nothing else. To become contentious right away, I have to say that in the past few days I have become very aware of the number of areas of responsibility that Front Bench Members of the Scottish Office have. The concentration of areas of policy in the Scottish Office is the fundamental argument for devolution. In future, no doubt such reports will be dealt with in a Scottish Parliament. The Minister started by saying that more funds were being provided for local government, but there are severe qualifications to that. I would argue that, under the community care special grant, there is a reduction in practice and under the mismatch scheme, there is a raid on the capital fund to provide extra money for the revenue budgets. We are revisiting the crisis of Scottish local government finance, which was debated in great detail at the beginning of March. It was widely—almost universally—recognised throughout Scotland that there was a crisis in March, which resulted from the cumulative effects of the Government's squeeze on local authority finance, plus the false assumptions about the cost of local government reorganisation. It is really those costs that we are dealing with in the mismatch order. The mismatch arose between the grant formula and the inherited expenditure levels. That led, before the Secretary of State's announcement on 4 March, to projections of council tax rises for Glasgow of more than 30 per cent. and council tax rises for Dundee of well above 20 per cent. The Secretary of State had to do something about that crisis, because it was becoming so obvious that such levels of council tax were unsustainable—a position that would be blamed on the Government, whose fault it was. On 4 March, the Secretary of State made a partial climb down at the Scottish Grand Committee in Kilmarnock. That was due, to a large extent, to the Labour party's magnificent campaign against local government cuts. However, that climb down involved not one additional penny. Two devices were used, one of which was a simple transfer from capital to revenue which, for example, got Edinburgh out of its severe 5 revenue difficulties, but at the cost of a raid on its capital allocation. The same strategy is used for the mismatch grant scheme, because the £30 million special grant allocation mentioned in annex C comes from the capital consents for local authorities for 1996–97. Last year, excluding water and sewerage, those consents amounted to £430 million. This year, allowing for inflation, it might have been expected that consents would have been allowed for £443 million worth of expenditure. However, at the beginning of March, the Secretary of State announced that capital consents would be only £361 million. Part of that reduction was in order to fund the £30 million that the Minister described today as "more funds". They may be more funds for the revenue budget, but they are not new funds. The 25 per cent. rule is being introduced this year. When assets are sold, 25 per cent. of that money must go back to repay loans. If we take account of that rule, the accumulative cut in capital consents for local authorities this year is £125 million. This is the price tag on the small grant to the listed authorities in annex C. Even after the £30 million had been allocated, Dundee still faced a council tax rise of 13 per cent., while Glasgow faced a council tax rise of 19 per cent., together with job losses and service reductions. The position would have been worse without the mismatch grant scheme, but the news is still dismal. What will happen next year? Perhaps the Minister can confirm that the £30 million will become £15 million next year and that it will completely disappear the year after that. What are the councils to do then? I shall repeat the question that I asked in Kilmarnock: why should council tax payers pay for the incompetence of the Government, with job losses, service reductions, further decreases in capital expenditure, and double-figure council tax rises that are, in effect, the 23rd Tory tax rise since the general election? The special grant report on community care again appears to be providing more funds for local government, giving almost £6.9 million to local authorities. However, that figure arises through the change in capital limits for residential accommodation that were announced by the Chancellor in the Budget in November. The minimum limit of £3 million was changed to £10 million, while the other limit of £8 million was changed to £16 million. In other words, various individuals in residential accommodation had to pay less, as a result of which local authorities had to pay more. The Convention of Scottish Local Authorities estimated that the additional costs to local authorities arising from the Chancellor's announcement amount to £20 million. There is clearly a gap between that sum and the £6.9 million that is listed in annex A. 6 I would argue that local authorities are better able to assess the cost than the Government, unless the Minister can tell me otherwise and say what research the Scottish Office conducted to arrive at its figure of £6.9 million. I know, for example, that Edinburgh council conducted a survey of elderly people in residential homes and found that it would need an extra £2 million to make up for the money that the elderly residents are no longer having to pay. The table in annex A shows that Edinburgh is being granted £855,000; clearly, there is an enormous gap, with less than half the required money being paid to the council. The COSLA figures show an even larger gap for other local authorities. The direct care of the elderly is not the only cost; there is also the cost of the social workers and financial officials who are making the new assessment. It may not be the largest element, but it must be taken into account. The primary question is: how did the Government arrive at a figure of £6.9 million? The result of the shortfall is that local authorities will purchase fewer places for elderly people in residential accommodation. I have been told by Edinburgh council that that £1 million shortfall will result in the loss of 76 places this year. It will also result in a revision of the eligibility criteria and even fewer people gaining a place in residential homes. The result will be that more people will be looked after in their own homes. In many ways, of course, that would be a desirable objective. However, it is wrong that it should be done in that context. The enormous cuts in the social work budgets in Edinburgh and all local authorities in Scotland are well documented the net result will be a loss of service to elderly people this year and subsequently. The problem is compounded by inadequate Depart of social Security transfers, which has been pointed out in previous years, and by the closure of long-stay beds. Nearly all health boards in Scotland are planning to close long-stay beds, reducing their number over the next five years by at least 50 per cent. Although provision is made for a transfer of resources from health boards to local authorities, I am told that not all closed beds are taken into account. That further compounds the funding crisis for local authority social work departments. We shall not vote against the reports. If we did, local authorities would have even less money than at present. However, I hope that the Minister will attempt to answer some of my questions.

4.43 pm

Mr. Thomas Graham (Renfrew, West and Inverclyde): I should like to add my congratulations to my hon. Friend the Member for Leith on his elevation to the Front Bench. I am sure that he will do a marvellous job for the Labour party. 7 I believe that the Government are engaged in another sleight of hand. I am a former local government councillor. Under the Conservatives, there have been year-on-year cuts and social work services have been constantly slashed. The Renfrewshire authority had to make charges of £10 and £16 a week for home help services, which was devastating for folk with an income of £144 a week. Community care in my constituency, as provided by the local authorities and the health services, needs money; but the service does not now match the care that used to be provided. It has been cut and cut again. The Government have once again used sleight of hand—kidding us that they are giving something, but taking it away with the other hand. I ask the Government to reconsider. they should make more money available for us to carry out community care. At present, too many young people are homeless and too many elderly people need proper treatment for dementia. They need back up; they need sheltered accommodation; and they need to be treated in hospital. That is not happening in my area of Renfrewshire because there is insufficient money to tackle the problems created by the lack of community care and by the Government's lack of consideration and care. We have had enough of cuts. The Minister might think that we are all daft, but he must wait and see what happens at the general election. The time is coming for the Government to be punished.

4.45 pm

Mr. Michael Connarty (Falkirk, East): I apologise for coming in late. The point made by my hon. Friend the Member for Renfrew, West and Inverclyde is important. Local authorities in my area have told me about the extremely onerous cost of putting people from the Royal Scottish National hospital—which the Minister will know well—into specially designed accommodation. It is the only hospital in Scotland specifically designed for mentally handicapped adults. The people in RSNH are the most dependent group in society. When the hon. Members for Falkirk, West (Mr. Canavan) and for Clackmannan (Mr. O'Neil) and I met the board of the RSNH trust, its members said that the problem was a lack of capital from the Government. That capital would allow them to build specially designed accommodation, such as that at Brightons in Falkirk, East, to take people from the RSNH. The problem is unique to central Scotland. People from all Scottish local authorities and health board areas were sent to the RSNH as it was specially 8 designed for the most dependant mentally handicapped adults. That specific problem means that Central region needs extra capital from the Government to deal with those people. When people have been in RSNH for a certain time, they become residents and, therefore, the responsibility of the Forth Valley health board, not of the health board that sent them to RSNH. The limits set out in the report are insufficient to cope with that specific problem, which is faced by the new authority of Falkirk, which includes RSNH. Will the Minister address that problem in his reply?

4.48 pm

Lord James Douglas-Hamilton: I am glad to respond to the debate. First, it is important to realise that the reports represent good news for Scottish local government, especially for council tax payers in many parts of Scotland. The provision of £6.875 million to local authorities under the community care special grant represents a substantial contribution to compensate them for the increase in the capital limits that apply under the residential sector charging arrangements. It is proportionate to the corresponding allocation to authorities in England. The £6.9 million grant is determined by the Barnett formula. The supplementary mismatch scheme grant of more than £30 million provides direct help to council tax payers in 10 of the new council areas in Scotland. That means that taxpayers in those areas will receive a considerable measure of protection while their councils have time to adjust their expenditure and bring it more in line with their grant aided expenditure assessments. Community care funding for local authorities reflects their lead role in planning and purchasing such services. This year, councils have community care resources of £662 million—an increase of £41 million on the previous year. This year, grant-aided expenditure of £332 million, including the Department of Social Security transfer and successor arrangements, has been allowed, mostly for the elderly for residential sector care. That is more than half of the grant-aided expenditure of £662 million. Aggregate external finance is 44 per cent. higher per head than south of the border, so it is a substantial sum. We shall consider the matters raised by the hon. Member for Falkirk, East (Mr. Connarty) before the public expenditure survey round, and on both sides of the boarder. The claim made by the hon. Member for Leith that the £30 million supplementary mismatch was funded from the local authority capital programme was not correct. Other Scottish Office programmes had to be cut to fund the £30 million; local authority capital was only one of the programmes affected—the regional development fund and the roads programmes were also reduced. The hon. Member for Leith should realise that 9 more for local authority current expenditure means less for other programmes—the Scottish block is a fixed cake. COSLA originally argued that Scots local authorities would require £25 million to compensate them fully for the increase in the capital links. However, the convention did not justify that figure with substantive data, and the English local authority associations acknowledged in a press release that the allocation of £64.487 million to English authorities represented a victory for common sense, and was deserving of two cheers. The social services chairman of the Association of County Councils, Jack Bury, said: "Budgets are still tight but this is a step in the right direction." The press release also said that "this announcement deserves two cheers."

Mr. Chisholm: I hear what the Minister says about COSLA not producing evidence. Is he prepared to look at the evidence that Edinburgh Council has accumulated through its sample of elderly residents that suggests that the money being given is less than half the amount required?

Lord James Douglas-Hamilton: The hon. Gentleman must appreciate that we operate according to the COSLA formula, which is laid down. If the hon. Gentleman has factual evidence, he should sent it in—we would welcome that. As the Committee will know, the House discussed and agreed the allocations for English and Welsh authorities on 3 April. The allocation to Scots councils of £6.875 million represented the full Barnett formula consequence. I can only repeat that this is very good news for Scottish local authorities. Of course hon. Members will ask for more—I have never known them not to—but this is a substantial step forward and will give a considerable measure of protection to local government taxpayers. I commend the orders to the Committee.

Mr. Connarty: When he spoke about formulas the Minister completely ignored my point about the Royal 10 Scottish National hospital, which is a burden on Falkirk council. It lies in the constituency of my hon. Friend the Member for Falkirk, West; it is a special hospital set up for the purpose of taking people from all over Scotland. Owing to its location, and the fact that it has been transferred to the responsibility of Forth Valley health board, the vast majority of patients are being accommodated within the Falkirk area. No account appears to have been taken of the special circumstances—the level of care and accommodation that those people require in the community. The Minister did not make any reference to that; it does not appear to have been taken account of in the COSLA formula.

Mr. Graham: I shall not delay the Committee, but has the Minister considered the recent study, published within the past few days, which says that elderly folk in Inverclyde die four or five years earlier than those elsewhere in Scotland? Women live four years less and men live five years less than anywhere else in Scotland: they have less chance of surviving. Has the Minister taken that into consideration, or is this a purely statistical exercise, without the compassion that would provide extra money to look after the elderly?

Lord James Douglas-Hamilton: I can reply to both Gentlemen. In relation to Inverclyde, high-powered group has been sitting for a couple of years to consider Scotland's diet; we hope to publish its report before too long, and to put before the Scottish public the facts to enable them to make more informed choices. I can tell the hon. Member for Falkirk, East that no closures can take place without ministerial authority. I shall consider the points that he has raised and write to him in due course.

Question put and agreed to.

Resolved. That the Committee has considered the Special Grant Report on Community Care Special Grant and Supplementary Mismatch Scheme Grant for 1996–97.

Committee rose at six minutes to Five o'clock.

THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE:

Hogg, Mr. Norman [Chairman]

Bates, Mr.

Carttiss, Mr.

Cash, Mr.

Chisholm, Mr.

Connarty. Mr.

Currie, Mrs.

Deva, Mr.

Douglas-Hamilton, Lord James

Forsythe, Mr. Clifford

Graham, Mr.

Grant, Sir Anthony

Renton, Mr.

Skeet, Sir Trevor

Wilkinson, Mr.