The new standard spending assessment formula for 2001-02 has been achieved following thorough consultation and independent examination. For example, when we last discussed this issue in this Chamber, we were asked to consider issues such as sparsity and rurality. Because any new formula must, of necessity, produce winners and losers, you also asked that ways should be found to cushion authorities that might find themselves to be losers.

All that has been done. We commissioned the distribution sub-group to consult as widely as possible and its recommendations have been endorsed by the consultative forum on finance and the Partnership Council. You have a copy of the final recommendations. I am particularly pleased that the Welsh Local Government Association has endorsed the report as an improved way of distributing revenue resources.

Full implementation of the proposed SSA formula depends on better data than is available now. I will ensure that better quality data is produced in the coming years. I welcome the constructive spirit of Janet Ryder’s amendment 2 and I agree that the purpose of this review is to achieve greater social justice and recognition of the circumstance of deprivation and delivering services in dispersed populations. My only disagreement with Janet’s amendment 2 is that it requires that no further incorporation of new data should take place until 2003. I have had discussions with the Welsh Local Government Association on the question of how to handle new data. Our joint view is that we should seek to minimise unnecessary turbulence. However, if significant new data becomes available, we should not exclude the possibility of considering and agreeing to its incorporation as it becomes available. It is on the single point of keeping the options open on the incorporation of new data that I must ask the Assembly not to support Janet’s amendment. However, I stress that there is a great deal of common ground between us on the issues that her amendment brings into the debating arena. I am particularly grateful to Professor Hugh Coombs and David Adams Jones for their work as independent members of the group. They have confirmed that the consultation and the resulting recommendations have been arrived at in a professional and objective way. That needs to be stressed.

There will always be winners and losers. As you know, I have already allocated £4 million in additional resources for a scheme that will provide transitional relief where necessary. On the current available data, this should ensure that no authority that has the average real and substantial growth in budgets would need to increase its council tax by more than around 9 per cent in any of the three years.

Janet Ryder’s amendment 3 requires that we spend £11 million on transitional arrangements. If I can limit council tax increases to around 9 per cent in any authority at a cost of £4 million, that is sufficient protection. I expect that the scheme I propose will apply to three authorities in year one—Merthyr Tydfil, Monmouthshire and Blaenau Gwent, and one authority in year two. It will end after three years. I fear that Janet’s amendment 3 would extend the transitional arrangements forever and a day. I ask the Assembly to vote against this amendment.

Beginning the implementation of the new formula in the next financial year will bring substantial improvements to the financing of local services in Wales. When the Conservative Government reorganised local government in 1996, it was grossly irresponsible in leaving the question of distribution unresolved. Since that date, all Welsh authorities have struggled, with no ability to plan for their futures. The poorest authorities inherited spending commitments way above their standard spending assessments and were reliant on fragile, unpredictable damping arrangements. David Davies’s amendment 1 continues the irresponsible attitude of the Conservatives in Wales. It represents fundamental opposition to this sensible measure of redistribution. In seeking to protect those very few privileged enclaves of Conservatism left in Wales, its aim is to keep local government in a state of permanent uncertainty and disarray. I ask the Assembly to reject David Davies’s amendment.

I commend this review to you. It will lead to a sensible and just redistribution to the areas of greatest need in terms of deprivation and rurality. I do not intend that any authority will be worse off in real terms, compared to where they are now, by the implementation of this review. I expect all local authorities to use this new framework for distribution to plan efficiently for their futures. I commend the new SSA formula for 2001-02 to the Chamber today.

In the second line, delete ‘as the method of distribution of the 2001-02 local government revenue settlement’ and replace with

but recognises that there is still much to be done. The Assembly recognises that it would be wrong to rush through such important changes to local government finance because of political priorities and will delay the introduction of the new formula until the 2002-03 local government revenue settlement, to allow further consultation and change.

I had hoped last year that we would never see a repeat of the fiasco of that local government settlement. Many rural authorities saw a cut in their grant because £18 million was siphoned off to bail out four local authorities that had been mismanaged by their councillors for decades. That situation was criticised at the time by the Liberal Democrats, who voted against the budget, by Labour councillors and by the local Labour Member of Parliament—Brian Gibbons, take note—in Monmouth. He was so outraged that he organised a meeting with the Secretary of State for Wales—which I attended—to complain about the situation. The Labour Secretary of State for Wales accepted that it was unfair and that it should never happen again. Please take note once again, Brian—he was your own Secretary of State for Wales. Following that debacle, as Members are well aware, I repeatedly raised the council tax formula in the Committee and in this Chamber. On numerous occasions, I was told by past and present members of this administration that the new formula would ensure a fairer settlement, and that it would take close account of the costs of delivering services in rural areas.

The formula that we are being asked to support today is fundamentally flawed. It is so flawed that even the distribution sub-group that drew it up admits its shortcomings. It also admits that regression analysis, which is the method used to calculate the formula, is not ‘a perfect tool’. In the short time that I have, I will outline a few key reasons why this formula is flawed.

As I have said—and as the Minister echoed—we were led to expect a formula that would deliver fairer funding to rural areas. However, the small print shows that the weighting given to rurality has dropped from 8 per cent to 6 per cent. Rurality—

I do not want to take interventions yet because I am aware of the time.

Rurality is calculated not by the distance by road from an isolated settlement to the nearest town, but by measuring the geographical distance as the crow flies. That is absurd. Even the officials—and the Minister was at the meeting when I raised this issue—found it difficult to state why they had done that and to defend that method. They based their calculations of rurality on the notion that rural people can sprout wings and fly directly to hospitals, shops and libraries, rather than using a car to get from A to B on the road.

Criticisms of the cuts in funding to rural areas are answered by the cry that funding for deprived areas has massively increased. On the surface, it has. However, if you look again, the real picture emerges. The key to determining whether or not a household is deprived should be its income. However, that factor is not considered in making that determination. All sorts of other factors are considered—practically everything you could think of—such as the number of single parent households, the number of people on different forms of benefits, and even, I believe, the number of household utilities such as washing machines and so. However, by not considering average incomes, areas where many people are struggling on low incomes but are not getting benefits—as is happening in many rural areas—are effectively discounted from their fair share of the money.

In calculating deprivation, the final formula will therefore be skewed in favour of the south Wales urban Labour strongholds. That is unacceptable. It is appropriate that, on Halloween, this administration wants to play its own game of trick or treat. It is tricking areas such as Monmouthshire out of what is rightfully theirs to treat its strongholds in the Valleys.

The one thing that has not been considered is coyly alluded to in this document. We are informed that different levels of efficiency are common to all authorities. In other words, some local authorities are more efficient than others. That is news to none of us. However, we have a right to know which local authorities are less efficient than others. We have a right to ask why questions are not being asked about inefficient local authorities, whose profligacy is causing well-run areas to suffer. Why does rural Monmouthshire spend only £16.88 per household on rubbish collection, while, just up the road, the more urban area of Merthyr Tydfil spends well over twice as much? I am happy to give way to the Member for that constituency now if he wishes to intervene.

Thank you, David. You are, if nothing else, a good sport when it comes to interventions.

What is your definition of rural? I think that the people of Anglesey, Gwynedd, Conwy and Pembrokeshire would be surprised to learn that, given the enormous amount of extra spending per head—an extra £15 per head in Pembrokeshire, and an extra £37 per head on the Isle of Anglesey—they are being done down by an urban conspiracy.

There are many rural areas around Wales, for example, Brecon and Radnorshire, which will loose out as a result of how this formula was calculated.

I will give way in a minute, although you are not a good sport when it comes to interventions.

In that case, I will not take any further interventions. I am sorry, Kirsty.

Let nobody be fooled that the dampening scheme that is being introduced will limit the rises, because it will do so only to some extent this year. However, in the following years, the same rises will apply.

Ni fydd y Blaid Geidwadol yn derbyn y fformwla newydd gan ein bod am sicrhau chwarae teg i ardaloedd cefn gwlad. Nid yw hon yn fformwla deg. Mae’n drwydded i gymryd arian o gefn gwlad i’r Cymoedd bob blwyddyn.

We hope that even at this late stage, the Liberal Democrats will remember that while they now have obligations to the Government of Wales, they have a higher obligation to the people whom they claim to represent. We hope that they will support us, along, I hope, with the Welsh Nationalist Party, in saying to the Executive today that we reject this motion. We want it returned to the distribution sub-group and rewritten so that it properly reflects everybody’s needs in Wales.

Further to that point of order, I have been quite happy to refer to you as Plaid Cymru in the past. However, this afternoon I heard members of your group referring to us as the Tory party. You cannot have it both ways. We are the Welsh Conservative Party. You start calling us the Welsh Conservative Party and I will stop calling you the nationalists.

I also propose amendment 3. Add at the end of the motion

These transitional arrangements should be funded in addition to the rates support grant and sets aside £11 million in 2001-02 for this purpose.

During the initial debate on this formula in July, Peter Law, the former Secretary for Local Government said:

‘The Assembly will have further opportunity to debate the proposals in the light of responses to the consultation, ahead of consideration by the Partnership Council this autumn’.

No debate was held prior to consideration by the Partnership Council this autumn. The date of this debate was delayed and one is left wondering why. Was it to allow the draft budget to be announced last week? Whatever the reasons, we are at last debating this new formula for the distribution of the revenue support grant to local authorities.

All that any formula can do is to distribute the resources available. It cannot address the problems caused by the lack of adequate resources made available to local government over many years nor the unacceptably high gearing impact on council tax levels. Recognition should be given, as has been said, to the individual members of the distribution sub-group for their contributions to a difficult task. They undertook a piece of work in a comparatively short timescale and their achievement must be recognised.

The formula is a distribution mechanism rather than an assessment of need. It could be said that no formula could realistically be expected to reflect the spending needs of 22 local authorities and that this new formula presents an improvement over the present formula. It will work in a small way towards the redistribution of wealth and the achievement of social justice in Wales. It also has the potential to be used as a tool to rectify the appalling lack of investment in our communities over recent decades.

The devastating effect of 18 years of Conservative Party rule—

Welsh Conservatives.

Nevertheless, the effect of 18 years of devastating attacks by that party on public spending and public services left local government starved of resources to provide adequate levels of services and will take many years to rectify. Combined with this was an inadequate and badly thought-out reorganisation of local government, the funding of which required a transitional mechanism throughout its lifetime.

Many hoped that the advent of a Labour Government at Westminster would herald a new era for local government. Instead we have seen a continued attack on the freedom of local government to meet the needs that it has identified within its own communities. This attack has taken the form of increased hypothecation, or in simpler terms, central dictation to locally elected members as to how they should spend the moneys available to them.

The new formula does not address this problem. All that is achieved by this motion is to set in place a mechanism for the distribution of those funds to local government. I note that according to the draft budget that was announced last week, more money will be available to local authorities. However, the amount of freedom that will be given to local authorities to spend that money was not shown. I look forward to a debate in Committee on that aspect.

If it was hoped that by delaying this debate for a week until after the announcement of the draft budget it would be accepted per se then, I am sorry, it will not. As it stands, the motion fails to address some of the problems that have come to light during the consultation period and it does not openly recognise the need for a transitional scheme. Edwina has acknowledged it today but we feel that it should have been included in the motion.

In the debate in July I said that for the consultation to be meaningful the responses had to be taken into account. I am pleased that some of these responses have been included. This is not the formula that was originally debated. A number of points that Plaid Cymru sought to include in the original motion, which have all been highlighted in various responses in the consultation process, have not appeared in this final version. This has led to the amendments that I propose today.

Janet Davies will expand on the issue of deprivation in urban and rural areas, but I would like to mention the major problem regarding the paucity of some of the statistics. This new formula should have given a statistical distribution of revenue, but because of the lack of data in some areas, it still had to rely on subjective decisions. That is a cause for concern. This consultation exercise has shown the need for further analysis and data gathering.

It is still not possible to produce either ward-based statistics or per-head costings of service delivery. Given the serious deficiencies that remain in the proposed formula, Plaid Cymru calls for a further review. The aim of this review would be to produce a more credible, robust formula within the next two to three years by undertaking fundamental statistical analysis work. This could be done in two ways, either by using the new local government statistics unit, which I understand will have a service level agreement with the National Assembly, or by commissioning outside consultants such as the present review that was carried out by Pion Economics and the University of Wales Swansea. The distribution sub-group would still play a leading role in this formula’s development by commissioning, monitoring and assessing the work of the independent agent. Either of these paths will require additional and adequate funding. The Minister for Local Government and Communities could practice building her Chinese walls as she argues with herself, as the Minister for Finance, for the extra funding.

During the debate in July, Peter Law accepted Plaid Cymru’s amendment to set a timescale for the collection of data and said that that would be helpful. He said,

‘By setting a target date we will signal to local authorities that we are serious about our intention to collect more robust data in the future. Some of the statistical work for the review has been hampered by the lack of adequate information so we must address this information deficit.’

Bearing that statement in mind, I look forward to the coalition Government coming forward with a timescale and framework for this review after it accepts this amendment.

Whichever route is chosen, a clear timetable needs to be set. This has led to the inclusion in the amendment of a review date of May 2003. That would seem to meet the timescale of much of the further work deemed necessary by the ad hoc group on transitional arrangements. It would be detrimental to local government funding to be subjected to continuous change and it would not be acceptable to put a formula in place without setting a review date. We propose a sensible interval for a review, which will allow local authorities to plan ahead while making provision for new data to be incorporated into the formula. Ironically, that was the idea behind this present review; to produce a scientific method of distributing the revenue formula and to introduce it in one go. That has not been achieved and there is still much work to be done.

As was said in the original debate on the formula in July, any new formula will produce winners and losers, causing some councils to make significant reductions in their spending and/or significant increases in council tax in one year. To implement this formula successfully, some transitional arrangements need to be made. This was the conclusion of the ad hoc group. We agree with it and Edwina has acknowledged it. I note that the Minister for Finance, Local Government and Communities intends to only provide transitional arrangements for three counties. That is not acceptable.

It has been acknowledged in the draft budget that some transitional arrangement is necessary but even given the increase in money that appears to be available to councils, Plaid Cymru does not think it sufficient. The amount that appears in the draft budget is added to the overall amount available to councils as their revenue support grant. I acknowledge that, given the way the budget was presented, it is hard to show this and set it out clearly. However, it needs to be clearly shown that any transitional money is additional to any revenue support grant allocated to local government. That is what has led to my amendment 3.

We do not find David Davies’s amendment 1 acceptable because it would merely note the work done on the formula and seek to delay its implementation. Any new formula will create winners and losers. It is important that adequate transitional mechanisms are in place to ensure that councils can adjust their budgets accordingly.

Plaid Cymru strongly believes that for the formula to be fully acceptable, it must address the deficiency in data. To facilitate that, a framework and timescale for a further review needs to be developed as a matter of urgency. Also, to implement the formula successfully an adequately funded transitional mechanism must be put in place. For those reasons, if our amendments are not adopted, we cannot support the motion.

How local government funding is distributed is fundamental to the Assembly’s agenda of tackling poverty, delivering sustainable development and ensuring inclusiveness in Wales. I believe that common ground exists among the majority of the Members, and certainly among those in local government, in agreeing that the current formula has had its day. It not only penalises councils with some of the worst problems and the lowest council tax bases, but fails to reflect the social and economic geography of Wales. That we have had what amounts to a permanent damping scheme since 1996 illustrates that that formula has become unsustainable.

Whatever happens, we cannot have a repeat of the local government settlement last year, when councils and politicians were at each other’s throats over how the damping scheme was implemented. In recent weeks I have said, and I repeat it now, that the new funding formula is not robust. That is not just my opinion. In its report and following the consultation exercise, the distribution sub-group highlights the need for further work. That work includes highways data, the collection of further indicators at school level, the development of an improved measure of enhanced population, the use of Best Value data, ward level data for social services, the use of 2001 census data and much more. All of these data are fundamental to the new formula’s effectiveness. The WLGA has accepted this, but has taken the view that despite the problems, the new formula is still better than the existing one.

The Liberal Democrat group’s view is that we must progress. If we are serious about tackling the many inequalities in Wales, we must recognise that local councils are the best vehicle for delivering the policies that will do that. Their funding, therefore, must reflect their need. We should accept the WLGA’s view that the new distribution formula is needed but must be amended as the new data becomes available to ensure that it becomes more robust over time.

Having accepted that, the questions of implementation and timing remain. If we are to introduce this new formula, the next financial year is the optimum time to do so. The new partnership administration had already taken on board the view of Liberal Democrats and others that in introducing the formula we should seek to minimise its impact on those who will lose out as a result. Any formula is just another way of distributing scarce resources. It is inevitable that there will be winners and losers. Our job is to ensure that we help the losers to adjust as best we can. The 8 per cent extra funding for local government next year is the best settlement for Welsh councils since the mid-1980s. It means that we can give local government the opportunity to expand services while keeping council tax increases to a minimum. Those going around Wales shouting about double figure council tax increases have been shown to be no more than scaremongers. Despite the new formula, we will be able keep the maximum council tax increase to no more than 9 per cent, with the vast majority of councils well below that.

While this money is available, we have an opportunity to minimise the formula’s impact. In future years, it may not be. If we adopt David Davies’s amendment 1 and delay the implementation, the impact on councils such as Monmouthshire will be greater and there is no guarantee that by 2002-03, as stipulated by David, the formula will be substantially any more robust than it is at present.

I have much sympathy with Janet Ryder’s amendments. Her amendment 2 reflects very much what I have already said. However, the WLGA has asked that we retain an element of flexibility regarding the new data, and it is right that if data becomes available that will make a significant difference, then we should introduce it as soon as possible to be fair to local authorities. That is why I oppose stipulating specific review dates. We cannot be too prescriptive about this, but this is one of the traps into which the amendment has fallen.

Janet Ryder’s amendment 3 is also worthy of consideration. I agree that, having looked at the figures, we need transitional arrangements. The danger is that we must not build those transitional arrangements into the new formula forever and a day, as Edwina has already said. They must be short-lived and they must be fully funded by the Assembly. The £11 million figure proposed by Janet will make the system too reliant on transitional relief. The figures show that it can be done for £4 million and that it can be phased out over three years. That is the correct approach, and we shall therefore vote against this amendment too. I hope, therefore, that we will adopt this motion unamended.

I declare an interest as a member of Rhondda Cynon Taff County Borough Council. Local government finance has been a cause of great dissatisfaction to the residents of Wales for a considerable time. This is particularly true of my council, which has had particular problems. I will not dwell on that—it would take up all my five minutes and more. People find it totally unacceptable in this day and age to pay more council tax year on year for fewer and fewer services. In the ward where I live, in the past three and a half years, we have seen this reduction in services. We have seen the closure of local housing offices, bus services cut, grant offices moving out of the valley altogether, which is not surprising considering their longer and longer waiting lists for grants. Yet during this time of reduced services, we have seen the council tax increase by approaching 100 per cent since the reorganisation of local government. You can sell an increase in council tax for improved services. I can understand a reduction in council tax for reduced services, but an increase in council tax for reduced services is totally unacceptable. Yet this is a direct result of Government policy.

Coming from the Valleys, I welcome the greater emphasis on deprivation in the formula. I am, however, disappointed that the overall effect on the standard spending assessment is generally so small. I do not pretend to understand the intricacies of regressive analysis, but I am reliably informed that the method used in this case is flawed. However, we are prepared to accept it, as the proposed formula for 2001-02 is an improvement on the present one. But this must be an interim measure. There are major deficiencies in the proposed formula. There is also a deficiency, as we heard, in the data, particularly in identifying deprivation at sub-ward level.

Local authorities’ spending has a vital role to play in addressing the increasing divide between the ‘haves’ and ‘have nots’ in our society. Deprived communities by definition have unmet needs and local councils need to provide services and facilities to improve the quality of life in these areas. They need basic services, such as community centres and education facilities to address the increased social exclusion caused by the information technology revolution. We need things such as homework clubs, youth and recreation facilities, and, importantly, outreach workers to help disaffected youth. All those facilities must be provided locally where they are accessible to the most needy in society. That is expensive. These needs are not exclusive to Valley communities. They are also needed in rural communities. Rural and Valley communities have similar problems; for example, rural areas suffer from high travel costs. However, that can also be true in linear Valley communities where services have been centralised and where access to such services involves long, expensive journeys.

The effect of the change in the formula, as I have said, is disappointing. That emphasises the need to increase local government spending as a whole. The last three years, following on from the 18 years of Conservative rule, have been wasted. During that time, we have seen further erosion of the assets of local authorities. The backlog of repairs for schools, council houses and basic infrastructure, such as roads, bridges and pavements, is scandalous. We need a massive injection of resources into local government, not only to address that backlog, but also to improve and introduce new services that are needed desperately by our communities.

As has been said twice before, in any change of formula for distribution of resources, there are winners and losers. Some councils will be in a situation of either increasing council tax at a disproportionate level, or cutting services, as I described previously. To implement the new formula in a fair way, it is essential that adequate transitional support is forthcoming from the Assembly. A 9 per cent increase is far too high for any council, when other councils may not have any increases. These resources in the transitional arrangements should be additional to the rate support grant to prevent the squabbling we saw earlier this year over the local government settlement. This formula must be an interim arrangement, until a further improved distribution formula is in place; a formula that will adequately address the needs of all the communities of Wales, particularly those that are deprived.

Are Huw’s comments a case of doubting Thomas?

Janet Ryder is saying that they would like to involve themselves in the redistribution of wealth and opportunity, but they would like to delay it as long as possible and if they cannot have it quite the way they want it, they will not vote for it. We will miss an historic opportunity to fulfil the manifesto pledges of a Labour led administration to carry out that redistribution. The Tories, to give them credit, have much more clarity of sight when—

The Welsh Conservative and Unionist Party, or whatever it is called. You will need big compliment slips for this.

The Tories, to give them credit, are more clear-sighted on this issue. I have done it again. Can I be bleeped out when I make that mistake, so that we can continue.

David Davies is more clear-sighted on the issue. He recognises redistribution of wealth and opportunity when he sees them and it scares the hell out of him. He argues honestly and with honour and, as his party’s historical mission would have him do, he argues against the redistribution of wealth and opportunity. You are right, David, this is about redistributing money to areas of Wales that are underprivileged, including the south Wales valleys. That is why I will vote in favour of this.

The Member obviously missed the point in my speech when I made it clear that I am not against giving money to deprived areas. My complaint was about how deprivation has been calculated. It has not been calculated by looking at the relative wealth of different areas. It has been calculated in a nebulous fashion by looking at different factors that favour certain parts of Wales that have been mis-run by his colleagues for decades. Those areas will benefit. However, nobody is asking why they must spend much more than other areas on public services.

I must tell you, David, poverty in Wales is probably the most studied animal since the giant panda. We have had study after study, and document after document, and they all point towards the same geographical areas of Wales. Those are the areas that have also been agreed by the European Commission to qualify for Objective 1 as being worthy of additional help. The reason why these areas are worthy of additional help is, in one word, poverty. It is as simple as that. David, as all Welsh Conservatives, describes what is, in reality, the defence of wealth and privilege, and dresses it up as frugality and efficiency.

I welcome this historic decision to redistribute money to local authorities according to deprivation and relative measures of wealth, despite the fact that all of us would have liked for some things to be slightly different and for certain measures to have a different emphasis in the proposals.

You mentioned measurements. Will you comment on the measurement of unmet need and how this will be accommodated in the next spending assessment?

You have got me there, Brian.

That is an important issue.

I will admit freely that ‘unmet need’ is somewhat too vague a phrase for me to be able to engage with it.

We understand it.

This is by no means a perfect settlement for areas such as Merthyr and Rhymney, David. I would have liked for the deprivation measures in the document to be as strong as they were in the original document in July. However, there has been some dilution, which I regret. The deprivation measures that we have must be held constantly in mind as we look at new data that becomes available and any modifications that it might provide as we monitor the system over time. I make a plea to the Minister to look at a problem that affects Valleys authorities in particular, which is the disproportionate number of properties in council tax bands A and B. The largest local authority in my constituency, Merthyr Tydfil, has no less than 81 per cent of its properties in bands A and B. This causes a double gearing effect—it is difficult to raise any appreciable amounts of money from council tax without bumping up the rate to more that it should be. I ask the Minister to consider that as an item for future action.

Although I have some reservations and, like everyone else in the Chamber I am sure, would like to see some things in the document written slightly differently, I will vote for it and I will support it. The major opposition party will stare redistribution of wealth in the face again, and will retreat again. Do not dress it up by saying that because your amendments, which would have made the document perfect, have been rejected, you cannot vote for it. The simple fact is that what is offered, however imperfectly, is a simple redistributive formula for local government funding in Wales, but the Welsh nationalists will run away.

Would you remind him of your ruling, therefore? This is the second time that he has called us ‘nationalists’ this afternoon. There are a number of things I would like to call Huw Lewis and his colleagues, but I restrain myself in this Chamber.

He said it at least three times. I counted to five.

I do not think that anyone is against helping areas of deprivation. This is a fairly crude measure, which I find stunning. Huw Lewis admitted that he is not totally in favour of the measure that he will support. Therefore, it is assumed that just because we have a crude measure everybody should support it. However, there are large areas of rural Wales that will be worse off under this formula. We were told that rurality would be given additional weighting. It has, in fact, been given less weighting in the new formula than in the old formula. I find the suggestion that there is no deprivation in rural Wales offensive. There is significant deprivation in large parts of Brecon and Radnorshire and in other parts of Powys. How will they be helped by this formula? They will not be helped; they will be further disadvantaged.

I listened to the draft budget speech, delivered by Edwina Hart when she was wearing her finance hat rather than her communities hat, and heard her present it as a great success that some local authorities would only have single figure increases. The Deputy Minister for the environment today mentioned the scaremongering about double figure increases. Somehow there was a quantum leap between 10 per cent and 9 per cent. The figure of 9 per cent is unacceptable to those authorities that had swingeing increases last time. This formula does not begin to address that matter. To suggest that this is a redistributive measure, which we must all, therefore, support, does not give the proper thought that we should be giving to this debate. There are many people on low incomes in rural Wales who will suffer swingeing increases, having also suffered them last year. It is wrong to try to dragoon people to vote for this motion by saying that it will help the poor. It is wrong-headed and not what this is about—rural Wales is also disadvantaged.

A factor that has not been addressed is that this formula does not give sufficient weight or take proper account of an ageing population in some areas, which is a serious issue for large parts of Wales. On behalf of the rural poor and the elderly—it is particularly bad for the rural poor who are also elderly—this formula does not help. It is wrong to present it as a success and as a socialist measure that we should all support because it will help everybody. Large parts of Wales are not spoken for by the administration, and the new formula serves to underline that fact.

I support the main resolution. As many have said, this is a start of a process that will rectify the injustices of the ad hoc reorganisation of local government following the poll tax fiasco. Even though it is not ideal, it is the start of a process. Consequently, to support the line suggested by David Davies would be wrong. Plaid Cymru’s line is also wrong, because even though the formula may not be perfect, it is the beginning of a corrective process. It reminds me of the sinner who was praying for the Lord to save him, but not to do so just yet. Plaid Cymru has a choice to make a decision on this. Will it start on the road towards redistribution or will it fail to jump the jump yet again?

I welcome the fact that, in this standard spending assessment formula, my local authority, Neath Port Talbot, has achieved a minor redistribution that is 1 per cent more than the previous formula and will achieve an extra anticipated £1.6 million. Notwithstanding what has been said from the Conservative benches, Neath Port Talbot will still have one of the highest council tax rates in Wales, and not because of inefficiencies. Time and time again when the Audit Commission looks at the performance of Labour-run councils, Labour councillors perform well in the better half of the table. For example, in my own authority of Neath Port Talbot, we have the best education results across Wales. That is miles better than local authorities such as Monmouth. I entirely reject the argument that the reason we have high spending and high needs in authorities such as Neath Port Talbot is because of inefficiency.

Will Brian explain why he and the Labour Party are intent—he said that Labour-controlled councils perform well time and time again—on punishing those councils, such as Flintshire and Wrexham, without putting in transitional arrangements to help the councils that are run by their own party and do a reasonably good job? That is not acceptable to them. They are going to turn their backs on great parts of Wales.

The point is reasonable because our local authority, equally, will get no transitional arrangements. I do not disagree with your point. However, we are starting on a process and we are either going to work together to address these issues, or we are going to fail yet again to move forward, as your party recommends. If we want to move forward, let us pull together on this particular issue.

I agree with David Davies’s point about regression analysis. I am sure that Saint Thomas is looking down on me in a benefactory way for having made such a confession. However, there are problems with using regression analysis as a means of informing a new local government resource allocation mechanism. I am pleased to see that the distribution group is saying that it will try and use more clearly identified objective measures of need and, also, to use more carefully informed first value review outcomes as a means of allocating resources to these well identified needs. The other point that I make—and the redistribution group makes the point clearly and regrets that it had to use the old census data from 1991—is a strong plea for having robust, valid data for what is happening in Wales. That brings us to the importance of ensuring that there is a 100 per cent compliance with the new census that is due to take place next year. A great deal of the mechanism and theory will not count for very much if we are not going to have robust census data. I hope that in this Chamber today, all political parties will be able to unequivocally sign up to a campaign to get maximum compliance with the 2001 census so that, when we come to this subject again, we will be proceeding from the best evidence base.

The aim of the review of the standard spending assessment formula was to get resources increasingly targeted on deprivation. It is unfortunate that this debate has once again shown up a false dichotomy of priorities between rural and urban areas and the valleys and the cities. Any deprived area is deprived. We should stop talking about whether rural, urban or valley areas should get more or less. That is not a helpful way to proceed. There is a need for adequate statistics. The missing ward level statistics, particularly for social services, are causing problems in this review. They are vitally important services for vulnerable people in all communities—rural and valley communities and cities such as Cardiff, Newport and Swansea. There may be special challenges in rural areas, but there are also special challenges in every other area. I was amazed that the Labour Government commenced this review in the light of the lack of statistics in these areas. I cannot understand that they did not realise that there was a lack of statistics. Perhaps nobody told them. Statistics do not always reflect deprivation in different types of areas. That is something that must be looked at in the future. It is essential that councils have enough money to provide good services and that we enable them to relieve deprivation and address the challenges that arise. The Deputy Minister for local government is claiming responsibility for the Liberal Democrats—that is what I understood him to say—in obtaining transitional funding for some councils. He describes references to the double figure council tax increases as scaremongering, but accepts the increase as 9 per cent. Nick Bourne has already made this point, but it should be made strongly, that the public will not be totally euphoric about the promise that the rise in council tax will be no more than 9 per cent.

We must ensure that councils can control the level of council tax and that people on moderate incomes do not see this tax rise above the increase in their income in one year again. That is bad. Plaid Cymru—The Party of Wales’s attitude towards deprivation has been attacked. I assure the Assembly that we want action now, but it is important to get it right and not to make the local council funding even more unstable. There have been problems with instability in the past. If we are going to talk about not being fully behind attacking deprivation, perhaps we should recall some of the UK Labour Government’s recent actions on low incomes and benefits. We should not forget about those—[Interruption.]

Above all, we must not, however indirectly or inadvertently, set community against community. That is absolutely important. The formula acknowledges that there are also single parents and others in rural communities. The formula has made a start to address inequality, but I am afraid that it has much further to go.

Make no mistake, this formula is a major improvement for local government in Wales. I understand that all the spin, rhetoric and propaganda must be heard because that is what politics is all about. However, the fact remains that what the Minister presented this afternoon is a move forwards and a target against deprivation. That is what this National Assembly is here to achieve, on behalf of the people of all the communities of Wales and, if nothing else, it is doing that.

Sut y bydd y fformwla newydd yn ymwneud â phroblemau mewn ardaloedd difreintiedig sydd yn rhan o ardaloedd breintiedig, megis Butetown yng Nghaerdydd?

There is deprivation and deprivation. I wish you had not asked that question because when you live in a virtual reality like this one, you sometimes get a false perspective. Owen John talks about Cardiff, the capital city, and I am proud of the achievements of the council, which is Labour controlled, and what it has done for the people of Wales. However, we need some perspective when we consider these issues. When Owen John talks about Cardiff and the Valleys, he does not always look east at the Gwent Valleys. He talks about the Glamorgan Valleys. There are enough problems there. If you look at the Valley areas, you will see deprivation like no other. The formula takes account of that deprivation by looking at the relative strengths and weaknesses in each community and the vast amount of wealth in places like Cardiff compared with Merthyr Tydfil or Blaenau Gwent, which I represent. This formula takes account of that, at last, and that is right.

We are moving in the right direction, but it is not what everybody wants. I can pick holes in the formula because we, in Blaenau Gwent, cannot understand some of the things in it. However, in fairness, it takes account of the fundamental problem of social deprivation, which is what the Assembly is here to do. I pay tribute to the Welsh Local Government Association for its work with the Assembly in the past.

I listened carefully to David Davies, who is affectionately known as ‘the Monmouthshire Mouth’. Many people in the Valleys communities would have found what he said offensive. Nevertheless, I am used to David. He speaks as a Conservative local government spokesman for Monmouthshire—he does not speak for Wales. He may speak for the little Conservative enclaves around Wales, but he does not speak for the greater number of people in Wales who have been asking for such a long time for something to be done to target deprivation. However, selfishness, indifference and callousness have always been the hallmarks of the Conservative Party. We know that because of the position that we are in today, having experienced two decades of Tory oppression. It is due to the situation under the Conservative Government that—

Has not your party controlled Blaenau Gwent for decades?

My party has been in power in local government in Blaenau Gwent for decades and I am pleased to say that it has an AM and MP who have been fighting for social justice for the people of the community. Things would have been worse if we had not had a Labour administration in local government during those two decades of Tory oppression; we would have been off the map by now. This afternoon, I heard an ex-Tory Minister among the nine guilty men over on the Conservative side of the Chamber break cover for the first time that I am aware. The Conservatives are guilty in communities like mine where we are surrounded by deprivation because that party and those people put us in the position that we are in today. They introduced the 1996 reorganisation, but they did not introduce a funding regime nor a formula. They left us high and dry to fight our way through it.

You began reasonably, but since then you have given way to wild hyperbole. You said that only other politicians were guilty of sin. I remind you that your party was in central Government for a large part of the last century and, therefore, for some of the time that there has been deprivation in Blaenau Gwent, which undoubtedly exists. To try to pretend that it was all the fault of the wicked Conservatives will not wash.

You cannot get away from the fact that we had 18 years of Tory oppression. I saw what they did in my community and others saw what they did in the Valleys communities. We are paying the price for that now no matter what they say in this Chamber, as they sit in their £35,000 per year seats, eight of which were won through proportional representation. They sit here and enjoy this Assembly, after a Conservative Member of Parliament for New Forest East—that lovely place that sounds so leafy—said today that the Assembly should be wound up and abolished. If they believe that, they should resign today and be out of here on principle or they should deplore what Julian Lewis said. However, they have still not said a word about it. Perhaps Uncle Mott will give us a fairy story later now that he is chair of the Agriculture and Rural Development Committee—

You were not here last week when Peter Rogers told us about Uncle Mott.

I noted what was said last week from my hospital bed.

You asked for one word from us to disagree with what Julian Lewis said, therefore, I will tell you that the Welsh Conservative Party is totally committed to the Assembly being a success, which is a view that I have expressed in this Chamber many times.

We welcome that. It is the only thing that the Welsh Conservatives have ever said that I have welcomed.

These deprived communities need help and support, because the deprivation is like no other. It is the cutting edge of poverty and we need—

I would like to give you the opportunity to clarify something that you said because you have repeatedly used the words ‘deprivation’ and ‘Valleys communities’ together. Of course, you are correct about that. I represent the Gwendraeth Valley and I lived in the Gwent Valleys during those years that you described and nobody can deny the depredations of the Conservative Government nor the damage that it caused.

However, will you join me in asserting that there is deprivation in communities that are defined by this formula as rural and across the road in Butetown? We cannot simply say that it is adequate to have a formula that lumps all areas together in that boundary. Therefore, as Janet Davies said, when we discuss deprivation, let us not divide communities and say that the north is deprived and that the south is not or vice versa. Let us not say that the Valleys are deprived and that the cities are not. Let us say that for too many years, too many people have been poor because they have been neglected by Government. Does Peter agree with me?

Helen Mary tactically took 30 seconds of my time.

I must make up for 18 months of not being on the back benches.

Forget deprivation, I am talking about total poverty, and you will not get better examples of that than where I come from. I challenge anybody to come to Blaenau Gwent. We will arrange for two buses to take the whole Assembly up there, anytime, free of charge. My council will be pleased to sponsor it and we will look after you well.

When you consider this formula, in places like Anglesey, Gwynedd, Conwy, Pembrokeshire and Caerphilly, the figure is less than 0 per cent. It is curious that no one mentioned that. Many rural areas will benefit from that. In Denbighshire, Wrexham, Carmarthenshire, Swansea, Rhondda Cynon Taff and Newport, the figure will be between 0 and 5 per cent. They have never seen such figures before, and we are seeing them now because this Assembly has got to grips with the problem and dealt with it. It will not be everybody’s cup of tea, but it is a move in the right direction and it targets self-deprivation. We should support the formula fully today.

I thank my colleague Peter Law for replying to the debate on my behalf.

I must address some points that have been raised. We need to talk about the proportion of funding distributed on the basis of sparsity and rurality. The proportion of the formula based on dispersion indicators is now similar to the current formula at around 8 per cent. The recommended formula takes on board the issues surrounding the difficulties and costs of providing services to these remote communities.

Do you agree that the new formula targets sparsity payments, removing the anomalies that led to Cardiff receiving sparsity payment last year and targeting them to rural communities? Will you take on board the concerns of councils like Powys about the efficacy of some of the figures that are available in this formula and will you review them year-on-year to ensure that the statistics are fairer?

We need to review the figures year-on-year because we must ensure that the statistics available are fair. When I consider the gain of the total of the SSAs, the most rural authorities like Anglesey, Gwynedd, Conwy, Denbighshire, Powys, Ceredigion, Pembrokeshire, Carmarthenshire and Monmouthshire have gained.

I will not give way.

David Davies referred to inefficient councils. I am fed up with this crude way of looking at matters. Ultimately, we must recognise that in local government, authorities are entitled to manage things how they wish. We put down the settlement, but it is up to them to manage their local services appropriately. We can offer guidance and indications of where we want money to be spent and I am not talking about hypothecation this year. We can give clear directions hopefully through our agreements with local government. Ultimately, local authorities have to assess what they require for their local electorate and I must emphasise that point. I do not accept that problems in some areas arise from the inefficiency of Welsh local government. We were left with a mess after local government reorganisation and, as Peter Law said, some authorities were in a difficult position, but at that time, we should have considered the local funding mechanisms. It is all very well to rant like the Conservatives, but reorganisation was not done properly and we are now paying the penalty. This year, we are starting to put matters right by introducing a decent local government settlement that will ensure decent council tax levels.

I thank the Minister for allowing me to intervene. In condemning the Conservatives’ ranting, will she also condemn the ranting from the Member for Blaenau Gwent? I cannot believe his audacity, when you consider that the only place you can find a quorum for councillors in Blaenau Gwent is in the police station—[ASSEMBLY MEMBERS: ‘Oh.’]

That is the most awful comment—

In the interest of co-operation, I withdraw that comment.

I will not take more interventions, because I am aware of the important debate that is to follow. Points were raised about indicators of services. I am particularly concerned about social services, especially for the elderly. The standard methods used throughout all services did not produce population as a relevant factor in social services for the elderly. This is probably due to the fact that indicators used represented a high proportion of the elderly population. The Assembly was not able to follow the review’s recommendations in this area, but we must look at further data, as the years go by, to address some of those issues.

There has been much talk about regression analysis, but I do not want to go into this area because I see Phil Williams looking at me. Regression analysis looks at the expenditure of all authorities against a number of explanatory factors. If an authority has overspent, its assessment is likely to be some way below its expenditure. There are issues about the way information has been collated and dealt with, but we must work through those together. There has also been much talk, particularly in relation to the amendments, about the formula’s future. We must recognise that the current formula is subjective. The new formula has been developed using standard statistical methods as recommended in the independent review. I am sorry that I cannot accept Janet Ryder’s amendment 2 in the case of how we develop the formula. I have given a commitment to Welsh local government that I will try to bring new data on line year on year so that we can get the changes to which Kirsty has alluded, perhaps in areas in Powys, when the good data starts to come in. There are some key areas there.

There is no attack by the Labour Government in the Assembly, or in Westminster, on local government. I value—and I will state this publicly—our partnership with local government. My concern to get this new formula through is on the basis of the partnership that we have had with local government, and the fact that we have worked with it on the formula. No formula is perfect. A formula does not solve the ills of Wales, but will help to address elements of those ills. It is only through partnership with local government and giving it the necessary freedom to operate that we will get true democracy working, and services that people want at local level. I deny that we have taken a hard line on these areas. If we ever need to have a row with local government in the interest of the people of Wales, we will have a row. In the main, we must accept that local government is our partner and is responsible for large numbers of services that we undertake.

Geraint Davies’s contribution was pie in the sky. You cannot have a budget in which you demand, on one hand, everything for health and on the other hand, say that there must be more money for local government. Everything has to be measured in the round when you have budgetary responsibilities. This is a good local government settlement. It is 8 per cent of Assembly assistance to local government this year. We have been able to target expenditure. I am sure that when the local authorities see the full extent of the settlement, they will be pleased that we are moving in the right direction. It is difficult to move in the right direction, because there are areas of local government that have been underfunded in other years.

There has been much scaremongering. Nick, I do not know how you had the audacity to say that it has nothing to do with you. The scaremongering tactics about what will go on in Powys—12 to 14 per cent—are not true. I accept that 9 per cent as a ceiling will not upset anybody. It is up to local authorities how they set their council tax. I make funds available from the centre and they must make their position clear.

I thank everybody for their contributions to this debate. This settlement is not perfect but this is the way forward. We must recognise that there is more work to be done. I am sorry that I was not able to accept Plaid Cymru’s amendments. I ask you to reject Plaid Cymru’s amendments 2 and 3, and David Davies and the Welsh Conservatives’ amendment 1.