Orders of the Day — Council Tax

Part of the debate – in the House of Commons at 4:07 pm on 17 July 1997.

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Photo of Hilary Armstrong Hilary Armstrong Minister of State (Local Government and Housing), Department of the Environment, Transport and the Regions, Minister of State (Department for Environment, Transport and the Regions) (Local Government) 4:07, 17 July 1997

I have tried to make it clear to all hon. Members that the Government have a clear agenda on changing the relationship between central and local government and, indeed, between local authorities and their populations. That is, of course, an important issue. We are already involved in important and intensive discussions with local government on those very points. We shall be bringing forward consultation papers, which will arise partly from the consultation with local government, and they will be available for wider distribution.

I am determined that we move in such a way that local government knows that it is involved, so that the process is not simply government by diktat, saying, "This is what you will respond to." The previous Administration have got us into this situation, and I shall not take unfair decisions in order to try to get out of it. Although I understand what my right hon. Friend the Member for Chesterfield (Mr. Benn) is saying, because of the way in which the previous Administration ordered things, the amount that local government spends is a significant part of public expenditure. That is why the capping regime exists. We shall do what we can as soon as possible.

The House will recall that the total standard spending for England for 1997–98 is £45.66 billion—an increase of 2.5 per cent. on 1996–97—and that the settlement provided for what the previous Administration intended represented a 3.4 per cent. increase in education standard spending assessments.

It is of course for each local authority to set its own budget and to decide its spending priorities. The capping principles for 1997–98 allowed almost all authorities to increase their spending by at least the total of increases in their education, social services and fire SSA blocks. That has become known as passporting. The result was that English authorities could on average increase their expenditure by some 2.4 per cent. Shire counties, which are the relevant bodies today, could increase their expenditure by 2.2 per cent. on average.

I recognise that it has been a tough settlement for all local authorities, and it was not one that we voted for. However, we made it clear to local authorities well before they set their budgets that we had little choice but to stick to the caps already proposed by the previous Administration. By the time we came into power, all authorities had already set their budgets and only three had budgeted over cap. For us to announce a general relaxation of caps at that stage would have been totally unfair to all the authorities that had previously taken tough budget decisions. As a result, when we confirmed the capping principles on 22 May, we proposed cap limits that required Oxfordshire, Somerset and Warwickshire county councils to reduce their budget requirements. All three authorities have challenged their caps—as the legislation allows—and have proposed that they should be allowed to budget at the level that they had originally set.

I should stress that, in reaching a view on the final capping limit for those authorities, we have to take account of the specific local circumstances of each authority. We have, therefore, considered each county's case carefully and I have met delegations from each authority to hear its case in detail.