No privatisation, no increase

There's nothing flash about the borough of Hammersmith and Fulham, west London. It's the sixteenth poorest borough in the country, with the problems of homelessness and social deprivation to match.

Compare it with Westminster, about three miles to the east, which bustles with business and is host every day to around a million visitors, eager to see the Houses of Parliament and other tourist attractions.

Strange then, on the face of it, that Hammersmith and Fulham should be allowed no increase in its budget next year under the Government's package for local authority spending, while Westminster can spend 16.2 per cent more.

David Williams, chair of education at Hammersmith, says: "No one could say we are an inefficient authority. We spend less on administration than neighbouring Tory boroughs."

But when Environment Secretary John Gummer claimed that councils which had failed to save money throught competitive tendering and privatisation would be those who faced a tough time, Hammersmith and Fulham may well have been one of the councils he had in mind.

The authority has not privatised any of its major services, awarding them instead to its own in-house teams, and has resisted imposing big rises in charges for such things as leisure services and car parking.

Since 1990, Hammersmith and Fulham complains that it has had to slash Pounds 60 million from its budgets. The authority has tried to protect education from bearing the brunt of the cuts, but headteachers complain that their budgets have been nibbled away. Jan Cartwright, head of Fulham Cross girls' comprehensive school, had to lose the equivalent of 3.4 teachers three years ago, and is facing a possible 0.5 per cent cut in her budget next year.

"We can't cut any more staff and maintain the curriculum," she says. "It has to come from things like maintenance. We're being squeezed and squeezed; I don't know how much longer it can go on."

But once again the authority will have to perform a delicate balancing act between raising its council tax - already one of the highest in London at Pounds 725 - by perhaps as much as Pounds 60, and making further cuts.

Hammersmith and Fulham claims that if it had as much Government support as Westminster, it could cut its council tax by Pounds 175, or increase spending on much-needed services by the equivalent amount.

The problem, says the council's managing director Neil Newton, is with the Government formula for what local authorities need to spend. "The standard spending assessment is unrelated to reality and to our pattern of spending, which we can't change overnight," he says. "We are making cuts but as fast as we make them the Government takes more money away."

Westminster's deputy council leader and finance chairman Nick Markham shows little sympathy: "Some other areas haven't looked at their spending in advance and find themselves caught out at the last minute. Then they have to make cuts or put their council tax up."

The 16.2 per cent spending increase Westminster has been allowed, Mr Markham says, is the total rise it could decide on if it were to go right up to its capping limit, the highest amount it could spend without facing massive penalties. In fact, the authority spends around Pounds 13 million below its SSA overall. On education the council spends above the SSA limit, to the tune of around 16 per cent.

The key to Westminster's success, it claims, is its efficiency. It estimates that it saves around Pounds 15 million every year on the services it has contracted out, and the same amount on cutting administration.

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