At yesterday's meeting of the Consultative Council for Local Government Finance Sir Jeremy said that while education funding was vital to cope with extra pupils and growing class sizes, it must not be a the expense of other council services.
Worried that social services - as the second biggest local government service after education - would be seen as a likely candidate for cuts to compensate for any more education spending, cllr Beecham said:
'There was public outrage at the scale of the education cuts this year. There will be public outrage again next year if community care is underfunded to protect education. The needs of the elderly, infirm and mentally ill must be met in full. They cannot be treated as a treasury bargaining tool to keep down public expenditure.'
On the question of the abolition of capping, the environment secretary said that would not be a problem if the effects of spending decisions were only a local matter - but they were not. He said that one sector could not opt out of the need for overall control of public spending. For instance more spending by local government could mean less for the NHS.
Mr Gummer told council representatives that he could not make an announcement on the future of capping that day. He warned that the settlement would not be an easy one but he would do his best to make sure that local government was not 'short changed'.
Pressed on the issues of teachers' pay, Mr Gummer said that the independent review body knew that if it proposes something beyond that defined as 'affordable' the money must come from elsewhere within the service.
Local authority representatives went on to raise a number of detailed standard spending assessment issues, and in particular demanded a much more acceptable system for area cost adjustment.
Mr Gummer said that he hoped that local government minister David Curry would offer some ways forward when he met the association chairs on 16 October. He said that in the end it was for the government to determine ACA but he hoped to be able to proceed by consensus.
The local authority side welcomed a promise from Mr Gummer that the government would publish the exemplifications on the police funding formula in the 'next ten days or so'.
The meeting wound up with a discussion of the private finance initiative. Junior minister Sir Paul Beresford welcomed the 'positive and imaginative' response from local government. He agreed that the private sector needed to be persuaded that the PFI was about risk sharing and confirmed that the scheme was meant to provide additional resources, rather than as a substitute for mainstream capital.
The associations has also expressed their concern about the possible effect on council tax levels of the withdrawal of damping grant which could lead to council tax increases of £50 to £100. Mr Gummer said that he would be examining this problem.