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Council Tax

Part of the debate – in the House of Commons at 5:28 pm on 15th June 1995.

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Photo of Mr David Rendel Mr David Rendel , Newbury 5:28 pm, 15th June 1995

Capping must go, and capping will go. It must do so because, until it has gone, local government cannot fulfil its real purpose—the accountable provision of genuinely local services that serve local needs and are determined by local people. Capping clearly undermines the accountability of all elected councillors. I recognise that the Conservative party may not worry too much about that as they are now the least important party in local government with fewer councillors than either the Liberal Democrats or the Labour party. The Conservatives face the prospect of falling even further behind the two major parties next year.

Surely, a lack of accountability in local government should still be of great concern to Conservative Members. A lot of nonsense is talked by some hon. Members about irresponsible overspending by local authorities. Those Members seem to see it as their life's mission to denigrate their own councils, but in practice there is far more irresponsible waste of resources by central Government nowadays than there is by local government. We have only to look at Whitehall's expenditure on management consultants, for instance, to see that.

The truth is that only one county council has set a budget significantly under its capping limit, and that is Essex, controlled jointly by Liberal Democrats and Labour. The solitary Conservative-run county council, Buckinghamshire, is spending right up to its capping limit and has increased its council tax this year by more than 8 per cent.—a long way above inflation. Three quarters of all the counties and the metropolitan and London boroughs are now spending up to their capping limits. Their spending and their revenue is determined not by local councillors but by central Government.

The whole system, therefore, needs a complete overhaul—an overhaul that devolves power to local communities and starts from the premise that local people are the best judges of their needs and of what they can afford to pay.

Today, we have to take a decision as to whether we can set the ball rolling. We have to ask ourselves whether seven particular authorities have set such outrageous budgets that local people require the protection of nanny, in the form of central Government. For that is the Secretary of State's view of the purpose of capping.

On 1 February this year, the Secretary of State proclaimed: the capping mechanism was introduced because, in some areas, people were unable to pay the high cost of administrations".—[Official Report, 1 February 1995; Vol. 253, c. 1109] With that in mind, let us look at Devon and Gloucestershire. These authorities have set budgets which, when adjusted for the change in police authority finance, leave their council taxes at the same level in cash terms as last year. In real terms, the figures are well down. In view of the enormous burden placed on local authorities by the local government settlement, that is a formidable achievement.

So how can Devon and Gloucestershire be deemed by the Government to be acting extravagantly? Are the Government arguing that the level set last year was absurdly high—was, indeed, completely unaffordable? To argue that would mean an admission that last year the Government failed to cap those authorities at an affordable level. Since that would be the first time the Government have accepted that they made a mistake, it would seem highly unlikely that that is what they are arguing.

So are the Government arguing that what appeared at first to be affordable at the beginning of last year turned out unaffordable at the end of it? On the contrary, both counties have council tax collection rates that are much higher than average. Clearly the local people are able and willing to invest in their communities. So if this level of council tax was affordable, as it clearly was, last year, how can the same level of council tax be unaffordable this year? On the basis of the Secretary of State's own rationale for capping, there is no excuse for capping in these cases.

There is still some hope, however. Let us hear the views of Mavis, Lady Dunrossil, the Conservative spokesman in Gloucestershire who expressed her disappointment when responding to the announcement the other day that Gloucestershire's capping was to go ahead: I really thought Ministers had been persuaded by the justice of our case. There is still a chance of over-turning this decision if Gloucestershire's Conservative MPs will openly declare their support for us. The proposed County budget over-cap has the full support of all Gloucestershire GM and LEA schools, and involved no increase for the local taxpayers. I appeal to all Conservative MPs to support our schools". The councils that I am talking about are not profligate, loony councils. Gloucestershire, whose budget this year had the full support of the Conservatives as well as of the Liberal Democrats, has cut the central cost of its education department by 24 per cent. over the past four years. It has made savings of £1.5 million in central administrative departments and has cut the number of staff by 23 per cent.

In Devon, support costs are 36 per cent. lower than for the average county. Over the past three years, Devon's central support staff have been cut by 8 per cent. Senior managers' numbers have been cut by 15 per cent., and this year alone chief officers will have their numbers cut by 15 per cent.

Both Devon and Gloucestershire have already slashed their reserves to just 1 per cent. of their budgets. Indeed, Devon's level of reserves in March 1994 prompted external auditors to remark that the council should ensure that there is no further depletion of its non-earmarked balances. In the longer term, it should be looking to rebuild these to more prudent levels". The level of reserves today is little more than one third the amount that drew this cautionary note.

Contrast this with Buckinghamshire's increase in council tax, at twice the rate of inflation, or Huntingdonshire's increase, at twice the average for English districts. That shows how absurd it is when Conservative Members talk about profligacy merely in Liberal Democrat or Labour-run authorities.

We must examine the real cost of imposing a cap on these authorities. There are likely to be about 3,000 redundancies in the seven authorities covered by the order. I realise that many Conservative Members equate redundancies with efficiency, but even in their terms, ignoring the human cost, is it really efficient for the nation to have to pay all that extra unemployment benefit instead of keeping these people doing useful and productive jobs?

I ask Conservative Members to consider also the enormous cost of re-billing in those authorities; in Devon, it could cost more than £500,000. What kind of folly is it to impose further cuts on already tight budgets, just to spend millions of pounds on unnecessary postage? That is what the Government are doing with their capping recommendations.

We should also think about the impact on our schools, on road safety and on the provision of a whole range of vital services. We should think of the parent of a young child who requires a statement of special needs but cannot get one because there are never enough educational psychologists. We should think of the pensioner who depends on home helps and meals on wheels but who can no longer afford those crucial services even where they are still offered. We should think of the student hoping to further his education but who cannot obtain a discretionary grant because the council cannot afford one. We should think of the child who last year studied in a class of 30 but will now have to study in a class of 38 other children—a genuine example that has come to my attention.

It is time the Conservatives realised that local government services are not just some sort of luxury. Perhaps if they had grasped that fact they might not have had such a complete humiliation in the local elections last month.

Nor can the Government any longer use the argument that capping is necessary for the sake of the national economy—as some Conservative Members argued today. It is now clear that, in some cases at least, the capping regime means that local authority budgets are set higher than they need to be. Many councils feel under considerable pressure to budget right up to cap, whether the expenditure is necessary or not in a particular year, because of a fear that they will otherwise lose out next time round.

Capping can cost local authorities in other ways as well. In Devon, the county has resolved to secure as much European funding as it can—rightly so. That requires matched funding from the county. If the Devon Conservatives get their way, in order to meet their capping restriction, half the cuts will come from their European matching funds budget, thereby costing the county many hundreds of thousands of pounds in European revenue. I want to make it quite clear to all who are thinking of going into the Government Lobby tonight that they will be voting for Britain to lose out on its fair share of European funds.

Now there are strong rumours that the Government may be preparing another U-turn on capping. If there is any truth in those rumours, how can it be right to cap the seven authorities today, with all the costs that that entails, only to abolish capping next month? That is simply ludicrous. If the Government are ready to acknowledge that the system is not working, they should do so now.

Capping must go, and I urge Conservative Members to show some courage and vote against the motion. The order makes no sense. It will cost millions of pounds to implement, it subverts the whole purpose of local government, and the House should have nothing to do with it.