Local Government Finance

– in the House of Commons at 11:34 am on 26th May 2004.

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Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government) 12:31 pm, 26th May 2004

I beg to move,

That this House
notes that each year the Government has pledged a 'generous' increase in local government funding, yet council tax in England has on average risen by three times the rate of inflation every year since 1997;
observes that the cumulative additional council tax burden since 1997/98 is £1,716 for a typical Band D household;
deplores the failure of the Government to recognise its role in generating the underlying pressures leading to council tax increases, including new responsibilities, compliance requirements, red tape, targets and assessments imposed by central Government on local authorities;
further notes that unfunded cost pressures force councils either to introduce disproportionate increases in council taxes or cut local front line services;
and believes that this is a further indicator of growing centralisation and Whitehall interference in local communities, eroding local democracy and weakening democratic accountability.

In just over two weeks' time, local elections will be taking place across much of the United Kingdom. The Conservative party believes in the importance of local democracy and local democratic accountability. That is why we alone of the major parties are fighting the local elections on local issues and, in particular, on the record of the Conservative party in local government—a proud record of delivering better services at a lower cost than councils of any other political persuasion. That is the key measure of local government performance, and if we are to have a reinvigorated local democracy, which the Opposition support, and a restored sense of local accountability, there must be transparency about the relationship between council taxes and local decisions, and clarity about where responsibility lies for the pressures that lead to increases in council tax.

Photo of Mr Ivan Henderson Mr Ivan Henderson PPS (Rt Hon Andrew Smith, Secretary of State), Department for Work and Pensions

One of the proposals at the moment is the introduction of a local sales tax, which the Institute for Fiscal Studies said would be a local tax on the poor. Under the proposal, some 12,000 households in my constituency that now receive council tax rebates would lose that support. Will the hon. Gentleman stand at the Dispatch Box and reject such proposals, which are being put forward by the Tory candidate in my constituency?

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

I am somewhat surprised that the first intervention in this debate was about local sales tax. I was anticipating that it might have been otherwise. I will not rule out suggestions of a local sales tax any more than I suspect that the Minister will rule them out. Like us, he is awaiting the outcome of the balance of funding review, which I believe is having its last meeting today. We will see what the balance of funding review has to say about the various options that it has considered. When we have that information, we can have an informed debate in the House about the future of local government finance. I accept the point that the hon. Gentleman makes and his reservations about local sales tax. I could list a number of other reservations about the practicality of such a tax, but I think that it is important that we are prepared to look at the output of this very important review, in which Conservative local government players have been participating along with members of other parties.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

The balance of funding review will have further meetings, as well as the one that is taking place today. I also remind the hon. Gentleman that in last week's Opposition Day debate initiated by the Liberal Democrats, I made it clear that the proposal for a local sales tax met none of the objectives for fairness and effectiveness and was therefore, in our view, entirely inappropriate. I am surprised that he has not taken a similar view.

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

The Minister seems to be prejudging the outcome of his own review, which is surprising. He says that further meetings will occur, but last week he indicated that he hopes to publish the results of the review before the House rises for the summer recess, and I hope that those meetings will not prevent him from doing so.

Over the past few weeks, the House has had several opportunities to debate local government finance. We have debated the capping regime, the budgets set by local authorities, the balance of funding review itself and alternative proposals for funding local government, including local income tax, which the Liberal Democrats favour and which would impose an extra £693 a year tax burden on the average, hard-working family.

In the frenzy to cap, review and replace council tax, it might be too easy to lose sight of the central point: council tax has gone through the roof under this Labour Government, and its level is leading to widespread discontent with the system. Under this Government, the average band D council tax has increased by 70 per cent. to a record £1,167 a year, which is nearly £100 a month out of taxed, take-home income.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

Does my hon. Friend agree that the Government have adopted a relentless, systematic and cynical policy of moving money from the shire counties to the inner cities, which has left counties such as Norfolk and Suffolk in an impossible position? There is nothing inherently wrong with council tax; what is wrong is how the Government have behaved.

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

My hon. Friend is right. Labour's operation of council tax has raised two problems: first, fiddled funding and, secondly, the imposition of unfunded cost burdens on local government. The Audit Commission acknowledges that the Government have been shifting funding away from the south-east to the north and the midlands.

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

I shall make some progress, and then I shall give way.

Before we go any further on capping regimes or reviewing alternatives to council tax, we should examine more carefully the drivers behind soaring council tax. In most cases, those drivers are outside the control of local government, and many of them have got central Government's fingerprints all over them. The purpose of today's debate, which has been called in Opposition time, is to focus attention on the underlying cause of high council tax increases: the burdens imposed by central Government.

Photo of Andrew Miller Andrew Miller PPS (Team PPS), Department of Trade and Industry

Just for clarity, is the hon. Gentleman actually saying to the people of Cheshire that my right hon. Friend the Minister for Local and Regional Government was wrong to shift the balance to correct the huge disadvantage introduced by the original formula?

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

My hon. Friend Mr. Bellingham is absolutely right when he says that the changes in the funding formula have shifted funding from some authorities to others, which has driven council tax increases in those authorities that were losers in that process, and I shall return to that point.

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

I shall give way in just a moment.

Honesty and transparency on the causes of soaring council tax and on the responsibility for the additional burdens now being borne by local council tax payers are essential if the elections on 10 June are to be an opportunity for the electorate to pass well informed judgment on local government up and down the country. Those elections are also an opportunity to send a message to this meddlesome, interfering, bureaucratic Government about the cost burdens that they are imposing on local councils, which local councils are forced to pass on to council tax payers.

When the Minister made his capping statement four weeks ago, he performed a ritual—although it was the first time that he has capped, I have seen the routine before. He built up a head of righteous indignation about proposed council tax increases, claiming that they are unjustified because

"the Government have provided all local authorities with above-inflation increases in general grant."—[Hansard, 29 April 2004; Vol. 420, c. 1019.]

Every year we hear that the settlement is generous and that above-inflation council tax rises will not be necessary, and every year average rises are three times the rate of inflation. The implication of the Minister's view, which is deeply resented by well-run local authorities of all persuasions, is that council tax increases are the result of incompetence, inefficiency or sheer bloody-mindedness.

Photo of Mr Peter Pike Mr Peter Pike Labour, Burnley

I was a member of the Committee that considered the Local Government Finance Act 1992, which introduced the current system of local government taxation. At that time, we pointed out that the biggest single problem was the gearing factor, which causes massive council tax increases. Will the hon. Gentleman admit that that is a serious flaw in the current system?

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

The hon. Gentleman should know about massive council tax rises, as during this Government's period in office his local authority has increased council tax by 60 per cent.

Let us analyse the Minister's statement on capping. He said that the floors and ceilings imposed in this year's settlement ensured that all local authorities received an increase above the retail price increase: a minimum of 3 per cent. for shire districts and 4 per cent. for social services and education authorities. However, the combination of the operation of the ceiling limiting the increase for areas of population growth such as Telford and Wrekin, which is one of the Minister's capping victims; the passporting of education spending above formula spending share; and the effects of transitional phasing of changes in the grant distribution introduced in 2003–04 meant that many authorities would face the need for above-inflation council tax increases, even if it were true that 3 per cent. and 4 per cent. respectively represented a real measure of local government inflation—but it does not. As the Minister well knows, local government inflationary pressures are significantly higher than the increases in the retail price index, and the negative effects of many Government policy decisions are magnified because of the nature of the services that local government delivers and the type of work force who are employed to do so.

The Audit Commission's report into the causes of high council tax increases in 2003–04 estimates that local authorities collectively face some £2.3 billion of national cost pressures in respect of existing services. That is more than half the total increase in local authority spending. The Local Government Association estimates that local government inflation is running at between 4 and 6 per cent. Some authorities—for example, Kent, which recently made a submission to the Treasury in support of its position—argue that local pressures effectively leave them with higher still rates of inflation.

We accept, of course, that there is no typical local authority, because each one faces a different mix of local cost pressures on top of national ones. Leaving local variations aside, however, it is simply disingenuous for central Government to ignore the real local government inflation rate, and it is frankly misleading to describe a 3 per cent. grant increase as above inflation in any way that is meaningful to local government.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

I have been listening to the hon. Gentleman with considerable interest. Will he explain to the House how his policy, as set out by the shadow Chancellor, to freeze expenditure on all but two defined public services—thereby freezing at inflation the vast majority of local authority expenditure—can be reconciled with his argument?

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

As the Minister knows, school spending—[Interruption.] The Minister dismisses that with a wave of the hand, but it happens to represent 40 per cent. of local government spending, which is a fairly large slice, and we have made it explicitly clear that it will be increased. Beyond that, as the Minister knows, the overall total for all services across all departments will be frozen for a period while we try to plug the fiscal black hole that we will have inherited from this Labour Government[Interruption.] The Minister is waving his hands again. He appears not to have read what his colleague the Chancellor said in his Budget speech—that he could make 2.5 per cent. efficiency savings by cutting 40,000 jobs. The Secretary of State for Health has identified substantial savings that he can make in his Department's budget. Surely the Minister is not suggesting that during an initial two-year period we cannot identify waste and bureaucracy that can deliver the savings that need to be made.

Photo of Patrick McLoughlin Patrick McLoughlin Opposition Deputy Chief Whip (Commons)

Did my hon. Friend notice that last week, when the Secretary of State for Health announced that he would be able to cut bureaucracy, he said that he intended to do so by disestablishing about five groups that have been set up since 1997?

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

My hon. Friend is absolutely right. Having spent valuable weeks of my life in Standing Committee establishing the National Care Standards Commission, I was dismayed to see that the Government are ripping up that legislation, which is only a few years old, in order to introduce yet more different tiers and types of bureaucracy.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

The hon. Gentleman has confirmed that the Conservatives plan to cut local government expenditure by £2.5 billion. If he is trying to claim that those cuts will be achieved through reduced waste and bureaucracy, when will he identify that waste and bureaucracy? Will it be before the election?

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

First, the hon. Gentleman needs to listen more carefully. I was careful to re-emphasise that my right hon. Friend the shadow Chancellor said that he will freeze spending on other departmental totals in aggregate. I realise that Labour Members do not find it convenient to acknowledge that. Nothing has been said about local government grant spending. Where the savings will be made to achieve that depends to a large extent on the work that the James review is undertaking on the scope for savings on waste and bureaucracy in government. The Government's parallel review is also examining that.

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

I must make a little progress but I shall come back to the hon. Gentleman.

Central Government are responsible for many of the cost pressures on local government. Employers' national insurance increases have added £280 million a year to the pay bill. Labour's pension tax has hit local authority pension funds by an annual figure, which is now close to £250 million. The need to make good the hit on those funds has compounded the pressure on local authorities, which are already facing additional contributions as a result of the previous revaluation, and will probably be confronted with even higher contributions through the next revaluation.

Photo of John Redwood John Redwood Conservative, Wokingham

Has my hon. Friend noticed that Liberal Democrat councils are the worst offenders, shoving up council tax much faster even than Labour, let alone prudent Conservative councils? Is it not a bit rich that they now want a rip-off local income tax—a Liberal Democrat hand in your pocket—to pay for their spendthrift ways? Will he condemn that and say just how much it will cost us?

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

My right hon. Friend is right. I condemn it absolutely and have already said that the Liberal Democrat local income tax proposal would impose a tax burden of an extra £693 a year on the average working family.

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

I must make a little more progress.

Public sector pay settlements have run significantly ahead of RPI and thus represent a pressure over and above that included in the RPI figure. The most graphic example is last year's teachers' pay settlement at 2.9 per cent., leaving employers with a £60 million unfunded shortfall over and above the spending for which the Government had budgeted. Local authorities also have to face the cost of the pay evaluation exercise and work force reform in schools.

Let me run through the list of cost pressures that local government faces in delivering existing services. Losses due to the changes in the system of rent allowances and housing benefits, although capped, continue to represent a significant hit on some shire district councils. At every level, local government faces a wave of litigation costs. The Commission for Architecture and the Built Environment has calculated that local authorities face bogus or excessive claims of £117 million per annum above the cost of legitimate claims. Before someone asks, I have no idea why the Commission for Architecture and the Built Environment is putting the figures together.

Manchester's litigation budget is bigger than that for repairing broken paving slabs—the cause of many claims. Bradford city council has had to set aside £5 million for the potential cost of meeting a retrospective claim for equal pay, which is being brought on a no win, no fee basis. Doubtless other local authorities will be watching that case with some trepidation.

The Home Secretary has bailed out the Criminal Records Bureau, which has already piled costs on to local authorities through its spectacular inefficiency, with a massive 142 per cent. increase in fees. That is an additional burden of £15 million on local government. Personal social services costs are escalating out of control. Care of the elderly and looked-after children are both demand-led services, the demand for which is soaring, and which central Government consistently underestimate in setting notional budgets.

Unit costs are spiralling. We warned the Government that the Care Standards Act 2000 would have a disastrous effect on the availability of care places and their cost unless funding were increased significantly. It has devastated the sector. Rising staff costs, soaring property values and the imposition of new standards and inspection regimes have caused many care home operators to exit the market, squeezing supply and leading to rising costs for local authority purchases.

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

My hon. Friend has gone through a list of pressures that have led to huge council tax increases over the past seven years, particularly in Lancashire. Does he agree that if the people of the northern regions—including the north-west, where the Ribble Valley constituency lies—vote for regional government in the referendums, that will not only add huge increases to the council tax bills of everyone living in the north-west, but, thanks to the decision announced by the boundary committee yesterday, make local government far more remote from local people, not closer to them?

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

That would make local government more remote from the people and it would cost the council tax payer. The Government are insisting on reorganising local government in any area that is foolish enough to choose an elected regional assembly on unitary lines. Cambridge university estimates that the cost of local government reorganisation alone would add £110 to a band D council tax bill, and that is before taking any account of any local precepting power that regional assemblies may be given under the regional assemblies Bill, which we have not yet seen.

Several hon. Members:

rose—

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

I must make progress. There is a very long list of burdens that this Government are imposing on local authorities and I want to ensure that the House is aware of them all.

All social services authorities face bed-blocking fines, for which some funding has been provided, and the associated bureaucracy, for which none has been provided. Hampshire county council has received £1.2 million from the Department of Health as a grant so that it can recycle it as fines to the local NHS acute hospitals, but it has had to take on an extra 28 people to manage the flow of paperwork and payments and to monitor the system—an extra council tax burden and a piece of absurd bureaucracy.

The landfill tax escalator—increases in the landfill tax without any offsetting reductions elsewhere—is rising to £18 a tonne in April next year and is destined eventually to get to £34 a tonne. It may raise the Treasury £600 million this year, but £360 million of that £600 million will be paid by local authorities, which are by far the largest disposers of waste. All those specific and explicit cost pressures come on top of the pernicious and substantial cost of grade inflation, to which authorities in low unemployment areas are routinely forced to succumb in order to recruit and retain the staff they need to continue to deliver local services.

Photo of Keith Simpson Keith Simpson Shadow Minister (Defence)

I had not wanted to interrupt the long list of extra burdens that the Government are putting on local authorities, but is my hon. Friend aware that many of these initiatives are being introduced simultaneously? I give him a concrete example from my constituency: Broadland district council wrote to me the other day to say that the extra increases in recycling requirements and for wheelie bins, for example, mean that the market cannot cope, so, on average, if people can get hold of a wheelie bin, it costs £2 to £3 more, which, cumulatively, adds another £120,000 to £180,000. That is a practical example. There is a blizzard of these initiatives coming in, and local government is in despair.

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

My hon. Friend is absolutely right. I have reached the end of my list of burdens causing cost pressures on existing services, but I have not yet started on the list of new initiatives that central Government are imposing on local authorities, including initiatives related to waste management.

As a result of the national cost pressures that I have outlined, as well as many others that we do not have time to go into, many authorities face the need to make above-inflation council tax increases, even before taking into account the burden imposed by the wasteful inspection and audit regime, the effect of passporting and the additional responsibilities being imposed—year in, year out—on local government.

Photo of Richard Younger-Ross Richard Younger-Ross Shadow Minister, Office of the Deputy Prime Minister Local Government & the Regions

The hon. Gentleman is throwing figures around like confetti, but will he confirm that the key figure is this: the average increase under Conservative councils for the last six years is 8.9 per cent., which is larger than for all the other parties?

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

I suspect that the key figure for most council tax payers is this: despite the fiddled funding and the new burdens, Conservative councils cost an average of £57 less under band D council tax—[Interruption.] The Minister says no, but Conservative councils cost an average of £57 less under band D council tax than either Labour or Liberal Democrat-controlled authorities in England.

Some additional burdens on local government that I shall discuss in a moment represent genuine services delivered to the public, but the red tape and regulation of the Government's barrage of different inspection regimes are pure dead weight on the shoulders of local government. Local authorities are subject to best value performance indicators and plans, comprehensive performance assessment, examination by the Commission for Social Care Inspection, the Ofsted process, scrutiny by the benefit fraud inspectorate and the adult learning inspectorate, as well as inspection by something called the Office of Surveillance Commissioners.

The Joseph Rowntree Foundation estimates the annual direct cost of external inspection of local government functions to have been £600 million in 2000–01. It notes that that figure excludes indirect costs—local authority compliance, avoidance costs and opportunity costs, not to mention the negative impact of such a prescriptive regime on local initiative and staff morale.

Overall, the Local Government Information Unit estimates that those indirect costs added a further £400 million a year in 2002. That cost will have risen since, as comprehensive performance assessments have been rolled out to all tiers of local government, making the current cost of the Government's bureaucratic inspection regime well in excess of £1 billion a year. Early promises that high-performing councils would be subject to less inspection have not materialised; nor has the promised exemption from capping.

Guildford borough council—a Conservative-run council rated excellent by its comprehensive performance assessment—had to submit nearly 900 different files of paperwork to get the rating. For ease, it put them on CD-ROM. That amounts to 400 megabytes of information that had to be prepared and checked by council staff, all at the expense of local council tax payers, of whom, incidentally, I happen to be one.

A Local Government Association publication, "Improving the Quality of Life for Local Communities", contains an informative cameo relating to one district council employee's experience of the inspection regime. Let me give the House a flavour of it:

"During the autumn of 2003 we had a three week performance indicator audit . . .

Then came the supporting people inspection team, which spent a week inspecting procedures in housing and benefits . . . and a short visit from the DVLC inspection service . . .

This was swiftly followed by a best value inspection for street cleaning services . . .

Immediately after was a visit by the Surveillance Commission . . . Whilst all this was going on the district auditor was inspecting our final accounts arrangements . . . we were having to produce our IEG3 (implementing electronic government) statement to the government office, receiving feedback on our capital strategy and asset management strategy (which had to be submitted to the government officer earlier on in the year), and work on the submission of our Housing Investment Strategy and Business Plan which has to be submitted to the government office.

Oblivious to the pressure and demands on us, the government office were continuing to send out requests for information—we had to fill in a resilience questionnaire . . . we were asked to submit a crime and disorder self assessment document, provide information illustrating local application of 'liveability' initiatives, just to mention a few of these requests . . .

The Benefit fraud inspectorate are coming tomorrow".

That is just one small shire district council. Conservatives have pledged to slash the £1 billion-plus wasted on these centralised local government inspectorates.

M

The irony for me -and I've been dealing with this sort of scrutiny system for the last 9 months as a policy advisor in a chief execs department - is that while MPs clamour for the scrutiny system to be slashed, its output, the figures and performance targets, are the artillery they use in their non-stop debate over funding. Few of them often stop to consider trends in this data, nor measure the cost of data collection (far too large IMO) against its practical use.

Submitted by Mike Bracken Read 1 more annotation

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

In a moment. We will abolish the bloated comprehensive performance assessment and axe the so-called best value system. We believe that the whole inspection regime should be scaled back to a light-touch approach appropriate to the risk. That means leaving competent councils to get on with the job, with only occasional inspection, while focusing attention on the small number of failing, mainly Labour and Liberal Democrat-run councils. The cost of the audit inspection process and the diversion of officer time and attention from the delivery of front-line services add to the sense of frustration and disempowerment in local government, and must be stopped.

On schools passporting, even after the £340 million of additional money that the Government found this year to avoid another fiasco in schools, there are still six education authorities with education spending above the formula spending share, for which passporting has been a trap that led to their entire grant increase from central Government being passported to schools. Clearly, for those councils the Minister's insistence that all authorities have had an above-inflation grant increase has a particularly hollow ring.

They have no choice but to cut services elsewhere and raise council taxes. A regime that penalises those who were voluntarily spending above their formula spending share on schools has to be wrong, and clearly sets perverse incentives for the future.

As if there were not enough central Government burdens already, local authorities face myriad new responsibilities. High among them is the waste management agenda. The European Union's landfill directive, which requires a significant reduction in landfill, and the Government's waste recycling targets, which they have introduced in an attempt to achieve that objective, impose huge additional burdens on local authorities.

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

The Minister says "No", but the LGA estimates that local government will need half a billion pounds over each of the next three years to achieve the targets that the Government have set.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

Does the hon. Gentleman not recall that when the Chancellor announced the changes to the landfill escalator in his pre-Budget report, he made it clear that arrangements were being made to ensure that the impact on local authorities would be cost-neutral?

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

This is the point of today's debate. We hear it all the time: "The impact will be cost-neutral". If the Minister talks to the LGA, he will find that it is a recurrent theme. In discussions with Departments and agencies, local government is told that the impact will be cost-neutral—and what local government invariably finds is that the regulatory impact assessments are inadequate. They underestimate the cost, and local government and council tax payers ultimately pick up the tab. That is part of the reason for Labour's soaring council taxes.

Photo of Andrew Selous Andrew Selous PPS To Shadow Foreign Secretary, International Affairs

My hon. Friend mentioned the costs of litigation to local authorities. Does he agree that it is shameful that authorities such as mine, South Bedfordshire district council, are forced to spend huge amounts of council tax payers' money to fight the planning system, when the Government could very simply apply stop and enforcement orders to unauthorised Traveller developments? That is unacceptable to council tax payers.

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

My hon. Friend is right to draw attention to the large amount of unplanned expenditure that local planning authorities often incur in dealing with unexpected major planning inquiries. He knows that I am very sympathetic about the particular case he mentions. I am glad to see that the Under-Secretary of State, Office of the Deputy Prime Minister, Yvette Cooper, is present, as she is aware of our concern.

Only last week my hon. Friend Mr. Cameron told the House that his council's effort to meet the Government's waste recycling targets had led it initially to propose a 30 per cent. increase in its council tax, just to fund that initiative. That is only one of many examples of good local authorities' diligently seeking to comply with the guidance and directives of central Government, as they are bound to do, without the funding to do it. The end-of-life vehicle directive will in the short term increase the number of abandoned cars, and in the medium term substantially increase local authorities' disposal costs.

Quite rightly, all local authorities have stepped up their emergency planning in the wake of 11 September—including district authorities, which receive no funds at all for that activity. Upper-tier and unitary authorities are estimated to be spending £17 million above the funded level on emergency planning. Following the Licensing Act 2003, there will be an increase of between 500 and 1,000 per cent. in the number of premises that local authorities are expected to license. Fees will be set centrally. That is something over which local authorities have no control, and there are real fears that year-on-year revenue costs will exceed the fee revenue generated. The immediate concern, however, is that there is no provision anywhere for the start-up costs. Authorities are estimating first-year deficits of anything between £40,000 and £700,000, depending on the size of the authority. Those deficits will have to be met by council tax payers.

Compliance with the Freedom of Information Act 2000 will impose substantial direct and indirect costs on authorities. Many are recruiting full-time compliance officers, and anyone who understands how institutions respond to freedom of information will be aware of the huge additional indirect cost that is incurred as working practices change and sensitive material is handled differently in response to freedom of information pressures.

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

I will give way to the hon. Gentleman, as he has been very persistent.

Photo of Mr Roger Casale Mr Roger Casale PPS (Team PPS), Foreign & Commonwealth Office

The hon. Gentleman is giving a very detailed exposition of local government finances, but what seems to be completely absent from it—I do not know whether he has a blind spot, or is conveniently leaving this out—is any mention of areas in which costs have actually gone down. I am thinking of, for instance, the lower costs of servicing local government debt when interest rates are as low as 4 or 5 per cent. rather than 14 or 15 per cent., as they were under the last Government; or, indeed, the costs of collecting council tax. I wonder what the costs of collecting council tax would be if the Conservatives ever returned to power and reintroduced a poll tax, as they seem to be planning to do.

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

There is no reason to suppose that the costs of collecting council tax would change as a result of a change of Government. But the hon. Gentleman is right: of course costs have fallen in some areas. Those step changes have occurred in the past and have been absorbed into the baseline, like many additional costs incurred over the past seven years that I have not mentioned today. We are now talking about the current pressures on councils—new duties under the Homelessness Act 2002, the burdens associated with the shambles of our asylum system, and the recurring investment costs necessary to meet the Government's e-government targets for local government.

Time constrains me from straying into, and discussing in any depth, issues of fire service modernisation and the new burdens on the police. Both represent partially unfunded central Government burdens, and will become a charge on local council tax payers.

Sadly there is no light at the end of this particular tunnel, or if there is it is coming from a train approaching from the opposite direction. Legislation, directives and regulations currently in the pipeline, both domestic and European, will add billions of pounds of additional costs to local government's baseline over the next few years. In a submission to the 2004 spending review, the LGA identified literally dozens of sources of additional cost pressures. They are too numerous for me to list them. As I mentioned earlier, if the Government succeeded in their ambition of establishing elected regional assemblies in any region, there would be the additional huge cost of local government reorganisation.

Local government is buckling under the torrent of legislation, regulations, red tape and bureaucracy. For most authorities it is no longer about exercising community leadership, choice and local discretion. Budget pressures resulting from these burdens mean that central Government's agenda squeezes out local priorities, while council taxes spiral upwards and disillusion with the local democratic process multiplies.

In theory the burdens of new legislation on local government are supposed to be met by the relevant central Government Department, and in fairness to the Minister I believe he has reiterated to his colleagues in Government that that is the rule. The practice, however, is very different. Departments faced with a charge on their existing budgets for additional costs to local government have consistently underestimated the impact of change.

I have here a memo of a meeting between the Local Authorities Coordinators of Regulatory Services and the Food Safety Agency. Typically—I am told—the FSA's initial position was that the implementation of a dozen food safety directives would have a negligible or zero cost implication for local government. There is no realism about the cost of change to local government, and there is no effective system of post-implementation review of regulatory impact assessments.

The end result of all these central Government burdens on local government will be soaring council taxes. Ministers can stand at the Dispatch Box and wring their hands, but, as one of my hon. Friends said earlier, the outcome is not an accident. This Labour Government have, until recently, made no attempt to conceal the fact that their policy of shifting grant to authorities in the north and the midlands would lead to higher council taxes in areas that Ministers considered could afford to pay. It is a deliberate shift of burdens on to local council tax payers. But the extent of central Government's underfunding of cost pressure and the scale of imposition of new responsibilities mean that it is not just the authorities that Ministers intended to target that have had to post massive council tax rises. The proportion of local government revenue spending funded from the council tax has risen from 20.5 per cent. in 1996–97 to 25.3 per cent. in 2004–05. That is a clear and unequivocal measure of the degree of underfunding of the burdens imposed on local authorities by central Government.

Not surprisingly, the public has reacted to the soaring level of council tax. The talk is of capping, reviews and alternatives, but there were no demonstrators and no martyrs in court when the band D council tax was £689. It is not the tax that prompted the public backlash, but Labour's turning of council tax into another stealth tax—increasing it by the equivalent of 3 per cent. on income tax.

Alongside the additional pressures next year, we have hanging over us like the sword of Damocles the £340 million extra provided this year, which the Government have said that they will not consolidate into the baseline for 2005–06. That is the equivalent of an £18.70 band D increase in council tax next year—more than 1.5 per cent. before anyone has spent a single extra penny.

To conclude, and as we approach the local elections, perhaps the worst aspect of all this is the undermining of the transparency and accountability of local government. It is the so-called environmental protection and cultural services block—it has no single Minister to defend it, but has many local discretionary services within it—that always takes the hit and absorbs the cuts in local services, as local priorities have to give way to the central Government's agenda.

The council tax payer sees soaring bills, but at the same time experiences cuts in the services that are most important to him and his family. With the deluge of new responsibilities and burdens set to continue, with ring-fencing remaining a significant factor and with a capping regime in place, there is simply nothing that he can do about it, other than go to the ballot box on 10 June and send a clear and unequivocal message that local council tax payers have had enough of the torrent of burdens and bureaucracy that this meddling, interfering, bureaucratic Government are imposing on our local authorities.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government) 1:11 pm, 26th May 2004

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:

'notes that the Government has increased grant to local authorities by 30 per cent. in real terms since 1997, in contrast to real terms grant cuts under the previous government;
endorses the firm action taken by the Government to reduce council tax increases in 2004–05 to the lowest level for nine years;
notes that Labour councils have the lowest average Council Tax increases at 4.7 per cent. and the lowest average level of Council Tax at £870;
congratulates the Government on its commitment to enhancing the delivery of public services by local authorities and notes the evidence from the Comprehensive Performance Assessment of significant improvement in local authority performance;
welcomes the extension of substantial freedoms and flexibilities to local authorities, including the prudential borrowing regime replacing the capital controls imposed by the previous government;
notes with concern that all of these advances would be jeopardised by the policies of the official Opposition which would freeze expenditure on most local authority services;
contrasts the Opposition's current rhetoric with its track record of centralisation when in government;
rejects its opportunistic approach;
and endorses the Government's commitment to high performing local authorities delivering effective local leadership and quality public services in the most cost-effective way.'.

Last week, we had an Opposition day debate on local government finance initiated by the Liberal Democrats. It was not, I have to say, their finest hour. Indeed, Mr. Steen suggested less than half way through the proceedings that the House should adjourn because the Liberal Democrat case had been so comprehensively demolished.

Today, it is the turn of the Conservative Opposition. Given their own lamentable record in government and their remarkable failure to develop any new policy proposals in this area, it might appear to the impartial observer to have been a rash decision to choose this subject for debate. Now that we have heard the case put by Mr. Hammond, we know that it was. I do not blame the hon. Gentleman: he is an able and assiduous Member and has made the best he could of the very bad hand that he was dealt.

Of course, that raises the question as to why the hon. Member for Runnymede and Weybridge was asked to lead for the Opposition. Over the past few weeks, we have been entertained by various musings on local government from the hon. Members for Meriden (Mrs. Spelman) and for North Essex (Mr. Jenkin). They would appear to be in the lead for their party. Yet cometh the hour, and cometh neither the man nor the woman! It is perhaps not surprising, given their recent accident-prone outings—the suggestions of a return to the poll tax only yesterday from the hon. Lady, and toe-curling, born-again localism from the hon. Gentleman.

I particularly enjoyed the observation of the hon. Member for North Essex in a speech to the New Local Government Network last month when he said:

"Eighteen years of Conservative government not only failed to halt many aspects of centralisation, but unwittingly accelerated it".

I love the use of the word "unwittingly". It must feature in conversations with his own father, who was one of the most senior Ministers in that Government, responsible for many of their extreme centralising tendencies. Let us imagine the discussion between the hon. Gentleman and his father: "Dad, what were you thinking about when you unwittingly abolished the Greater London Council?"

L

The Comprehensive Performance Assessment does not appear to include, however, information such as Northamptonshire County Council downgrading its assessment process for the care of the elderly thereby reducing levels of care to save money whilst also ensuring that performance targets are improved upon. Looks good for the county council in financial and performance assessments but what about the person centered approach to care that the Minister for Social Care keeps mentioning? As in some other counties Performance Assessments have actually ensured a very real loss of public service provision in a key area such as social care. Fewer households not more are receiving care in the community despite an increase being one of the main aims. I would suggest that despite asurances that public services are improving they are actually at bursting point and as with some hospitals massaging waitng list figures for a time there is a very real danger that councils will have to do the same if not already. Social care funding increases, despite government statements, is not in most cases actually reaching frontline public services but is instead going towards national insurance increases, a collosal increase in bureaucracy and fee increases both for criminal records and inspection. It should not be forgotten that it is not just local authorities that pay for these extra burdens but contracted private businesses also. Any increase paid by LA's for contracted placements etc. belive me has totally been eaten up - and more - by these extra costs.

Submitted by Linda Jeffery

Photo of Bernard Jenkin Bernard Jenkin Shadow Secretary of State (The Regions)

I can tell the Minister what he was thinking. He was thinking about smashing the hard left in London, which we succeeded in doing, only for Ken Livingstone to be allowed back into the Labour party. Can the Minister explain that?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

I am delighted to hear the hon. Gentleman acknowledge that his father was taking centralist action to attack local authorities. There we have it. That is the natural tendency of the Tory party. Although they try to pretend that they have changed, we know that the reality is that the Conservatives are deep centralisers. It is hardly surprising, then, that neither the hon. Member for North Essex nor the hon. Member for Meriden chose to speak in this debate. Their party's record in government was one of cuts, centralisation and failure. Their attempt to present themselves today as the champion of local government is risible. Local government is not so easily fooled.

Let us first look at the Conservatives' record. Their period in office was marked by year-on-year cuts in funding for local government. The figures speak for themselves. Throughout the 1980s, local authorities experienced continuing real-term reductions in grant, year on year. Then, after the chaos of the poll tax and the rationalisation of non-domestic rates, we saw a further period of real-term cuts in grant. Here are the figures: in 1995–96, minus 1.9 per cent.; in 1996–97, minus 0.1 per cent.; in 1997–98, when they set the grant rates before being ousted from office, minus 2 per cent. The Conservatives were cutting grants and telling local authorities that they expected them to keep council tax down—with threats of capping. That was the position when the Conservatives left office.

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

Will the Minister confirm that the average band D council tax increase under the last Conservative Government was just less than half the average band D council tax increase during the period of the Labour Government?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

I will confirm that during the 18 years of the Conservative Government there was a chaotic trend, first with huge increases in domestic rates, then abolition of those rates and the chaos and injustice of the poll tax, followed by a vast increase in VAT to 17.5 per cent. in order to cushion the council tax so that the figures that the hon. Gentleman has just quoted could be achieved. As a result of that decision, everyone's VAT bills were subject to a 2.5 per cent. increase. It is pretty rich of the hon. Gentleman to try to claim credit for low council tax figures at that time, when they were achieved at the price of large VAT increases.

Photo of Michael Jabez Foster Michael Jabez Foster PPS (Rt Hon Lord Goldsmith, Attorney General), Law Officers' Department, PPS (Rt Hon Harriet Harman, Solicitor General), Law Officers' Department

As someone involved in local government during the last two years of the Tory regime, I know that the problem was not just the cuts imposed from the central Government. In my own county, over the Tories' final two years, there was a 20 per cent. increase in the council tax along with massive cuts in teacher numbers, in education and across the board.

L

Despite historically being a labour voter and as a less than average paid member of the public I have to say that this governments record regarding my income translates into hefty increases in council tax by a labour...

Submitted by Linda Jeffery Continue reading

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

My hon. Friend reminds us of what life was like in the mid-1990s when the Conservatives were in power. It was grim. We saw schools that were underfunded, social services that were desperate and local authorities that had to lay off staff. Local authorities were unable to deliver the sort of services that local people expected. That was the atmosphere at the time, but Conservative Members now try to pretend that it has all disappeared and been forgotten. People working in local government know the reality and they will go on reminding the Conservatives of their lamentable record in office.

Photo of Richard Younger-Ross Richard Younger-Ross Shadow Minister, Office of the Deputy Prime Minister Local Government & the Regions

Does the Minister realise that there is a trend? I worked in local authorities in the early 1970s, when the Conservative Government were forcing cuts on local authorities and cuts in services. When my wife worked for local authorities in the early 1980s, the Tory party imposed further cuts in services. Is there a trend here?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

The hon. Gentleman is absolutely right. Throughout its period of relatively recent history—my memory may not go back as far as the hon. Gentleman's—the Conservative party has a consistent record of cutting grant to local authorities and, in parallel, telling them that if they do not keep the council tax down, they will be capped. I shall return to the issue of capping in a few moments because it provides an interesting insight into the shape of today's Tory party. Before I do, however, I want to say a little about what has happened since 1997.

Since we came into office, local authorities have received real-terms increases in grant every year, adding up over the seven years of the Labour Government to a cumulative 30 per cent. real-terms increase. That is a wholly different scenario from when the Conservatives were in power. Conservative Members know that that is true and it shows up their own shabby record, so they try to divert attention by claiming that the grant increases have not matched the demands placed on local government.

L

Whilst the Conservative agenda may well be to divert attention from their own record in government it does not negate the fact that grant increases have not matched the demands placed on LA's by central government. This is supported by numerous studies undertaken by worthy organisations such as the Kings Fund and additonally by the Local Government Assocaition, the Association for social Services Directors, every care home and care agency association and numerous individuals both in central and local government. A 30% increase over 7 years only tranlates into 4.2% a year. I am sure if a proper study was undertaken much of this increase would be...

Submitted by Linda Jeffery Continue reading

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

The Minister has again referred to a 30 per cent. real-terms increase. Will he acknowledge that local government inflation pressures are significantly in excess of the retail prices index? He is right to refer to 30 per cent. in excess of RPI, but is not the real increase in local government inflation very much smaller?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

Local government cost pressures have reduced in certain areas but, in others, the pressures have increased. The hon. Gentleman will be well aware that there was a 7 per cent. real-terms cut in grants to local authorities during the final four years of the previous Conservative Government, when the pressures on local government were also increasing. In contrast, there has been a real-terms increase of 30 per cent. in grants over the past seven years. It is simply not credible for the Opposition to complain about pressure when the shadow Chancellor says that a Conservative Government would freeze grants to local authorities. He expects those authorities to cope with all the pressures to which the hon. Gentleman referred, but with no extra money. That is the real recipe for large council tax increases.

I said that the Opposition want to divert attention from their record by saying that the grant increases have not matched the demands placed on local government. In one respect—that of rising public expectations—I am happy to plead guilty. The public now expect their local councils to do more, and to do it better. Gone are the days of hopeless resignation when the Conservative party was in power. Then, local authorities were starved of resources and the public despaired of any prospect of improvement.

I am more than happy to celebrate the transformation over the past seven years to a climate in which people are no longer prepared to put up with excuses and poor performance. They can see the new schools, the extra teachers, the extra policemen on the beat and the real improvements in public services that this Government are determined to deliver. We make no apology for wanting local authorities to do better. Our comprehensive performance assessment has made a very important contribution to creating a climate in which continuous improvement is expected.

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

The Minister claims that there has been a continuous improvement. Will he accept the verdict of the local electorate on 10 June as a conclusive and authoritative judgment on whether the people of this country are happy with the Government's performance?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

The hon. Gentleman began his speech by saying that he thought that the electorate should take decisions based on local rather than national issues. I agree with that and openly concede that the Conservative party generally did well in last year's elections. However, I note that it did not do well in areas where Conservative councils had a poor performance record. For example, the Labour party won control in Plymouth, and the Liberal Democrats did the same in Torbay. It is a healthy sign when the electorate identify failing councils and vote on local issues at local elections. We should not try to assume a national swing, with councillors standing or falling according not to their own merits and performance but to their party's performance nationally. The hon. Gentleman tried to make a localist case today, but anyone who cares about localism will agree that we ought to be working for a framework in which local elections reflect the performance of the local council. I hope that he will accept that.

Of course, the cynics on the Opposition Benches, who have derided every initiative that this Government have taken to improve public services, take pleasure in criticising the comprehensive performance assessment. They ought to do their homework and have a quick surf on the internet to see what Conservative councils are saying. Last week, I had fun looking at internet and website references for the Liberal Democrats and I have had the same pleasure over the past few days in relation to Conservative councils.

For example, in Bracknell Forest, council leader Paul Bettison has said:

"Independent reports show that we have strong systems backing up improving services. I am pleased with these results and determined that we will go on improving and providing high class services at the lowest possible cost."

In West Sussex, council leader Harold Hall has said:

"Receiving the 'excellent' rating was an independent endorsement and a vote of confidence that confirms we are going in the right direction and have programmes in place to improve performance further."

We are working with local authorities to improve the standards of service that they deliver to their residents but, as I made clear last week, we are also taking great care to ensure that new burdens imposed on local authorities are fully funded. The hon. Member for Runnymede and Weybridge may not have been following last week when I spelled out the working of the new burdens doctrine, so I shall do so again.

All Government Departments are made aware that, when they introduce initiatives that will lead to an increase in costs for local authorities, they must provide the funding to cover those costs. Similar procedures apply in respect of private Members' Bills, many of which, although well intentioned, could also impose new costs. If funding to cover the new costs is not available, the new legislative provisions have to be amended to remove the burden.

For example, in the current year, we have had detailed discussions about the introduction of the new licensing regime, a matter raised by the hon. Gentleman. My right hon. Friend the Secretary of State for Culture, Media and Sport has made it clear that fees will be set at levels that allow full cost recovery by local authorities.

Local government representatives will be aware that we have added funding for initiatives such as local authorities' responsibilities under the Enterprise Act 2002, for which we have provided an extra £5 million above spending plans over the 2002 spending review period. We have also made available an extra £1.8 billion for the changes made to the funding of teachers' pensions.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

On the new burdens rules, the assessment of the costs of the services being transferred is crucial. Why will the Minister not give the task of estimating the costs to the Audit Commission? Why has he left the job under the control of his and other Departments?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

The hon. Gentleman does not understand that the assessments are reached through discussion and negotiation between Government and the Local Government Association. He will have heard the hon. Member for Runnymede and Weybridge talk about the list that the LGA has drawn up of the new pressures that it anticipates over the spending review period. That list has been submitted to the Government and I was present at a meeting with my right hon. Friend the Chief Secretary to the Treasury when the matter was discussed. We will continue to discuss the matter with the LGA and a further meeting has been arranged. Eventually, we will come to a conclusion about what level is appropriate.

The House will understand that, in any negotiation, the parties involved are likely to overstate their cases, as they know that they may have to give a bit of ground later. That is a proper and appropriate way to proceed.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

I have in front of me the rules on the new burdens for local authorities. They state that, where possible, Departments should seek independent corroboration of the figures. If the Minister is prepared to go that far, why not a little further? Why does he not pass the matter over to the independent watchdog for local government financial matters? Why does he not give the job of deciding the estimates of the costs to be transferred to the Audit Commission? If he did, the House and local government would be very pleased.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

It is a slightly odd debate when I hear from the Conservative Opposition a wish virtually to eliminate, or at least drastically cut, the role of the Audit Commission, and from the Liberal Democrats a desire to give it more work. The hon. Member for Runnymede and Weybridge made a clear statement of his intention to scrap the comprehensive performance assessment, which is a major part of the Audit Commission's work. The two Opposition parties are pursuing directly opposite points of view. We believe that the Government's approach is appropriate and right. It is a serious way, with representatives of local government, to address and resolve the question of extra cost pressures.

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

Regulatory impact assessments have to be prepared, but local government representatives tell us that hindsight shows that those assessments have consistently understated the costs to local government. It would be a great help if some measure of independent involvement in those assessments could be established. For example, the Countryside and Rights of Way Act 2000 has cost local authorities £18 million a year more than the regulatory impact assessment compiled when the legislation went through the House suggested. That is the sort of problem that local government faces.

L

As a member of the public both using and working in public services I would far rather a comprehensive complaints system than the Comprehensive Performance Assessment system. whilst it may be nice for LA's to see their council's name up in lights (so to speak) it means absolutley nothing to the public in terms of the service provided. In fact it can be...

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Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

I have two things to say in response to that. First, the hon. Gentleman now argues for additional regulatory work. Earlier, he said that the Opposition would tear up the regulatory burden, but now he wants more regulation. That is classic: the Opposition claim to be non-regulators, but when it suits them they are happy to say that they want more regulation. That is typical of the Conservative party's incoherent approach.

Secondly, the hon. Gentleman will accept that, as with any analysis of this nature, some of the figures will turn out to be not entirely accurate. Some estimates are too low, others too high. That is part of the natural process in any negotiation of this sort. I assure the House that we take the new burdens doctrine very seriously and work to ensure that local authorities have sufficient resources to meet the additional obligations placed on them by Government or by private Members' Bills.

Photo of Chris Mole Chris Mole Labour, Ipswich

I welcome the new burdens approach that my right hon. Friend described, and as a practitioner in local government in the 1990s, I contrast it with the introduction of legislation by the Opposition. For example, the child protection legislation required social services authorities to respond to orders of the court placing children in secure accommodation, but gave local authorities no control over the high individual weekly costs of that accommodation. Local authorities could not budget properly for those costs and the then Government made no provision.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

My hon. Friend was of course leader of a council and has practical experience of such matters, so he speaks with great authority—[Interruption.] It was a worthwhile and sensible contribution and I should have thought that Mr. Cameron would have wanted to listen to it. He is on a learning curve in respect of local government and he would learn a great deal by listening to my hon. Friend, who has great experience in such matters.

My hon. Friend made a valid point, which was that when the Conservatives were in government, they used to impose new burdens on local authorities. He mentioned child protection, but I could add examples of legislation on housing, disability discrimination and health and safety. Legislation on all those issues imposed new burdens on local authorities up to 1997—the difference was that, at the time, the Conservatives were cutting grants to local authorities. The Conservatives said to local authorities, "Do more, and we will give you less. And if you increase your council tax by too much, we will cap you." It is sheer hypocrisy for them now to present themselves as the champions of localism.

We are putting in place a framework to ensure that local authorities can improve services and are fully funding the new burdens that we are placing on them. We are also ensuring that local government has new powers and greater flexibility to act for the benefit of its areas. The Local Government Act 2003 provided a raft of substantial new freedoms that help authorities to deliver services in new and innovative ways, engage with their communities on local priorities and work more closely with local business. They also help authorities to improve value for money and drive down costs.

The first—the showpiece element of the 2003 Act—is the new prudential borrowing regime, which puts local authorities in the driving seat in taking decisions about their borrowing. Opposition Members do not like to be reminded that the prudential regime replaces the strict centralist controls over local authority capital spending that their Government introduced in the 1980s, when the father of the hon. Member for North Essex was Secretary of State.

Secondly, there are the new freedoms to charge and to trade, which will increase choice in the delivery of public services and, in the case of trading, generate additional income. Authorities are already benefiting from the retention of revenue from fixed penalty notices and they can retain the income from reducing discounts on second homes, an option which has been widely taken up by local authorities this year.

While we are on the subject of charges, let me remind the hon. Member for Runnymede and Weybridge, who today poses as the champion of local authority discretion, of the very different line he took as recently as this February when we debated the Fire and Rescue Services Bill. He did not argue for discretion then. Indeed, he tabled amendments that would have specifically prevented fire and rescue authorities, many of which currently charge for certain services, from doing so; so much for the thin veneer of localist rhetoric. Behind the fac"ade, there still lurks the old Tory centralising tendency.

We have not forgotten about partnerships with business. The 2003 Act provided the enabling powers to set up business improvement districts, which allow local authorities to work with local business. The local authority business growth incentives scheme will allow authorities to retain part of the increases in their business rate revenue. That scheme will give councils a real incentive to work with business to encourage growth.

Photo of Chris Mole Chris Mole Labour, Ipswich

My right hon. Friend mentioned the two schemes to assist business. Does he recall that only yesterday the CBI gave evidence to the Office of the Deputy Prime Minister: Housing, Planning and Local Government Committee about how it welcomes those schemes as positive forces to improve the relationships between business and local government?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

I am grateful to my hon. Friend for pointing out the widespread support that those new initiatives receive from all interested parties. Those powers can make a real difference to the way authorities operate and the way that they can work with their partners. They also give councils the scope to provide more services and to engage with business to improve the local environment.

The Government are also acting to cut bureaucracy and reduce unnecessary controls. So far, we have abolished 39 consent regimes and are currently proceeding to eliminate a further 54 such obligations, 22 of which are covered by the Planning and Compulsory Purchase Act 2004, which has already received Royal Assent.

Photo of Bill Wiggin Bill Wiggin Shadow Secretary of State for Wales

If the Minister is really concerned about cutting bureaucracy, can he explain why he has capped Herefordshire council to the tune of £253,000, when the rebilling cost will be £100,000?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

I am surprised that the hon. Gentleman has not asked Herefordshire council why it increased its council tax by an amount that the Government concluded was excessive. It is the subject of discussion. The authority has made representations and I shall consider them. After the purdah period associated with the local elections, I shall make our decisions clear. I shall address the issue of unreasonable council tax increases in a moment, and I hope that he will be interested in what I have to say.

We are working with the Audit Commission to ensure that the inspection process is proportionate and targeted, and to cut back on unnecessary inspection burdens. Overall, the volume of inspections this year will fall, and high performers will benefit from dramatic reductions. For example, Hampshire has received only one voluntary inspection in 2003–04, compared with nine inspections over the previous two years. Similarly, with ring-fencing, we have unfenced a total of £750 million of grants this year, reducing the percentage of grants that are ring-fenced from more than 13 per cent. to around 11 per cent. We are on course to get it below 10 per cent. next year. We are committed to a framework that encourages and empowers local authorities to do more and to do it better, to give leadership to their communities and deliver high quality services. But we are also absolutely clear that authorities must deliver value for money, and keep the demands that they make on council tax payers as low as possible.

As hon. Members know, after last year's unacceptably large council tax increases, my right hon. Friend the Deputy Prime Minister made it clear that we expected local councils to come in with much lower increases this year and that we would if necessary use our capping powers if authorities set excessive budgets. I am glad to say that the vast majority of local authorities heeded that warning and, led by Labour councils, have set much lower increases this year. The figures speak for themselves. Labour councils increased their council tax on average by 4.7 per cent., Conservative councils by 5.4 per cent. and Liberal Democrat councils by 6 per cent. That is clear evidence that Labour councils cost less as well as delivering better services for their communities.

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

The Minister's figures would not stand up to scrutiny by any schoolboy statistician. Does he recognise that, to give in to pressure from the Deputy Prime Minister, local authorities have had to sacrifice the priorities of local people? Local authorities have had to accommodate the priorities of central Government and the burdensome pressures from Whitehall.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

The hon. Gentleman is talking nonsense. Local authorities that increased their council taxes by unreasonable amounts last year have this year recognised the reality that the public will not accept unreasonable large council tax increases and moderated their demands. That is good and I am surprised that he does not welcome the trend—[Interruption.] The hon. Member for North Essex mentions capping. I do not know how he has the cheek to do so, given his party's stance. When the Conservatives were in government, they capped and capped and capped. We voted against universal, crude capping, which is what they used to do. Authorities were capped, year after year. We have taken a different approach: we reserved powers and we have used them selectively this year.

The Conservatives have tried by selective use of statistics to hide from the harsh truth. They tried to claim that Labour councils benefited from more generous grant increases. That is not true. Labour councils received an average 5.9 per cent. increase, but Conservative councils received 6.1 per cent. They tried to pretend that the Government had rigged the grant system so that all the money "went north". That is not true—[Interruption.] Such comments have been made time and again—[Interruption.] The hon. Gentleman seems to want to ignore what he and his colleagues said last week—

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. We cannot have frequent conversational interjections from a sedentary position. If hon. Members wish to intervene, they should do so formally in the normal way.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

Thank you, Mr. Deputy Speaker.

The grant increases for the three northern regions this year were 4.8 per cent. in the north-east, 5.2 per cent. in the north-west and 5 per cent. in Yorkshire and Humber. The grant increases in the four southern regions were 5.4 per cent. for London, 5.9 per cent. in the eastern region, 5.6 per cent. in the south-east and 5.5 per cent. in the south-west.

That is more clear evidence that Tory propaganda is completely untrue.

The Tories pretend that they are in favour of low council tax but they have sat on their hands when the Government have taken action to cap excessive council tax increases. This was the party that introduced capping in the 1980s. It was the party that capped, capped and capped again when local authorities were starved of resources and facing grant cuts.

Now, despite the clear evidence that their Back Benchers want effective and tough action to be taken to stop unreasonable council tax increases, the Tory party is reluctant to say one way or the other where it stands on capping. No wonder Lord Tebbit is fed up. No wonder he has denounced it for its

"bland, centrist politically correct agenda".

I much prefer the more robust line that another absent Tory Front Bencher, Mr. Pickles, used to take. He said:

"residents have the right to be protected when their Council runs out of control and spends excessively".

I agree. Sadly, he too has been airbrushed out of the picture by the Tory party.

Photo of Chris Ruane Chris Ruane PPS (Rt Hon Peter Hain, Lord Privy Seal), Leader of the House of Commons

I concur with my right hon. Friend that there is no need for the excessive increases. I refer him to a parliamentary question that I asked the Deputy Prime Minister, which asked

"what the total central funding for local government was in each of the last 25 years".—[Hansard, 24 May 2004; Vol. 421, c. 1435W.]

From 1991 to 1997, it was £42 billion, £43 billion, £42 billion, £43 billion, £42 billion and £42 billion. However, from 1998 onwards, it was £42 billion, £44 billion, £47 billion, £49 billion, £50 billion and £53 billion—a 30 per cent. real-terms increase in funding from central Government to local government.

Photo of Caroline Spelman Caroline Spelman Shadow Secretary of State for Communities and Local Government

In case the Minister does not know—he would wish this to be said if it were one of his colleagues—my hon. Friend Mr. Pickles is in plaster following an accident. Perhaps all hon. Members would like to know that. It is important to set the record straight. Through no fault of his own, he cannot be here today.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

I am grateful to the hon. Lady for highlighting that and I send my best wishes for a speedy recovery to the hon. Member for Brentwood and Ongar. As I say, I enjoy his robust approach and will welcome his return to hear a rather more robust line from the Conservative party than the mealy-mouthed approach that it has taken towards capping.

The Opposition have no policy and no credibility. They have tried to forget their own lamentable record in office, and in the most opportunistic style, which is all too common in the regime of Mr. Howard, they have sought to reinvent themselves as the party of compassionate and caring localism.

No one will be deceived. The party of the poll tax, of year-on-year cuts, of compulsory competitive tendering, of capital controls and of crude and universal capping, cannot miraculously transform itself by donning the sheep's clothing that the hon. Member for Runnymede and Weybridge has unconvincingly tried to wrap himself in today. Their motion is inaccurate, insincere and frankly incredible. The House should reject it.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister) 1:43 pm, 26th May 2004

I take the opportunity to send our best wishes to Mr. Pickles. I hope that the pickled hon. Member is not plastered for too long.

Mr. Hammond made a detailed speech, talking about the financial burdens that the Government have placed on local authorities. I agree with much of his analysis, but the Minister was right to say that the hon. Gentleman was suffering from amnesia. Whether that was deliberate or unwitting is difficult to tell, but the Tories' record on centralisation and burdening local government does not bear analysis. The Minister has done a good job in highlighting that record and how dreadful it was for all those involved in local government when the Tories were in power.

It has been an embarrassing day or two for the Conservatives and their local government team. First, we had the report and interview in The Times about whether the poll tax would be part of their policy. That has now been clarified. It no longer is, although it was in black and white that it was going to be considered. In the Financial Times today, their former local government spokesman, Mr. Curry, suggests that the Conservatives should advocate relocalisation of business rates, so some thinking seems to be going on in the Conservative party, but quite where it is leading we do not know. At the moment we have a vacuum in Conservative policy on local government finance. We know what the Conservatives are against, and we know they can make negative attacks on the Government and on the Liberal Democrats, but we do not know what they are in favour of.

When the Conservative leader, Mr. Howard, was asked by The Daily Telegraph what his position was on the council tax, he said that he was very worried. The journalist therefore asked what he was going to do and he said, "I don't know." That was in April 2003. We hoped that he would have a few lessons, do a policy review or something like that. After all, he was the Minister in the Conservative Government who brought in the poll tax and helped to bring in the council tax, so he has some expertise on local government finance. We thought that the Tories would come up with some policy.

Photo of Mr Paul Tyler Mr Paul Tyler Shadow Leader of the House of Commons

Perhaps my hon. Friend recalls that Mr. Howard was also responsible for bringing in water charges in their current form, which have added great misery to people in the south-west, who face huge rises not just in council tax this year, mostly in Conservative authorities, but in water charges.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

It is not surprising that the Conservatives do not talk about their record in local government, because it is appalling. Now they make excuses for not putting before the electorate before the local elections on 10 June policies on council tax and local government finance. They say that they are waiting for the report of the balance of funding review. That is a derogation of their duty. Before a democratic process, local electors need to know what the Conservatives' position is.

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

What is the position of the Government then?

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

At the moment we do not know, do we? The hon. Gentleman is right, but I do not think that that excuses him. It shows that both the Conservatives and the Labour party are undermining the democratic process by not being honest with the people of Britain.

We do have one bit of Conservative policy on local government finance. We heard the shadow Chancellor of the Exchequer—it was debated earlier—say that he wants to reduce spending on local government by £2.5 billion. The hon. Member for Runnymede and Weybridge, in exchanges with the Minister, tried to clarify that it was about reducing bureaucracy and waste, but the Conservatives have not told us in detail where that money will be saved. They have not said that it will come from reducing spending on education, social services, the environment protective cultural services grant or anything like that. All the voters know is that there will be a £2.5 billion cut. Whether that will be achieved through savings, or whether the balance will be picked up by increasing council tax by 10 per cent., we do not know. The Conservatives are abusing the electorate by not coming clean on that.

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

For the record, as the hon. Gentleman knows, my right hon. Friend Mr. Letwin has said that total non-NHS, non-schools departmental expenditure would be held constant for two years. He has said nothing specifically about the local government finance settlement. The hon. Gentleman is extrapolating.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

The point is that the Tories are not giving us much detail. We have to try to fill in the blanks. If the Tories are going to go into these elections and the next elections as the policy-light party, the voters will find them out.

Despite the Conservatives' difficulty over all these issues and the huge black hole in their thinking, the motion is difficult to oppose because it is factually correct. For a start, council tax has gone up way above inflation since 1997. It has reached painful levels, as the Audit Commission report in December made crystal clear. Part of the reason was the extra pressure put on councils by the Government. The Minister's continual reluctance to admit that does not add to his case.

The Tories' list of charges in that respect was fair. I want to add to it. They made one omission. We have had a debate about which councils, controlled by which parties, are setting the highest council tax, but I think that, if one is going to present a fair position, one should take the average over a number of years. Let us look at average council tax rises by councils run by different parties over the past six years, which I think is a fairly good run, to ensure that different years, when different councils were funded poorly by the Government and others were not funded poorly, are taken into account.

According to that analysis, Independent-run councils had an average increase of 8.3 per cent. over the last six years, Lib Dems had an average of 6.9 per cent., Labour councils had an average of 6.8 per cent.—not a lot of difference—while Conservative councils were the highest, with an average annual council tax rise of 8.9 per cent. I am not surprised that that figure did not appear in the speech of the hon. Member for Runnymede and Weybridge. Year on year, over the last six years, the Conservatives have been increasing council tax and I think they will pay for it.

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

Will the hon. Gentleman give us the same data series for band D council tax? He knows very well that the distribution of properties in local authorities controlled by different parties can distort those figures. What are the percentages in band D?

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

I will give the hon. Gentleman an example of band D in one council over the last six years: Liverpool. Six years ago, the Liberal Democrats took control of Liverpool council. At that time, the band D council tax was the highest in the country—a legacy of the failed Labour administration—but now it is down to 70th. That is the result of six years of Liberal Democrat policies: reducing council tax and improving services in the city. That is why the Government's independent watchdog has shown that the Liberal Democrats in Liverpool have massively improved services in the city and that is why the private sector is backing Liverpool Liberal Democrats by investing £2 billion in the city centre, working in close partnership with the council.

Photo of David Cameron David Cameron Shadow Minister (Communities and Local Government), Deputy Chair, Conservative Party

As the hon. Gentleman is so proud of the Liberal policy record, can he clear up this point? His colleague, Mr. Foster, was asked in an interview:

"Will regional assemblies have tax raising powers—like Scotland—and if so will it be a regional income tax?"

He replied: "Yes and yes". Is that official Liberal policy?

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

I thought that the hon. Gentleman was going to ask about the Liberal Democrat record rather than about our policy, but I am more than happy to answer him. In fact, I answered that point in a debate last Monday. The Government are proposing that regional assemblies should be funded by council tax precepts. We want to scrap council tax precepts; we do not think that they are a good idea. If voters support regional assemblies—

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

Indeed. If people vote for assemblies, and assemblies are formed and the grants passed down, they should have tax-raising powers. National expenditure and national taxation should be cut pound for pound. There would be no increase in overall taxation, which is what the Conservatives are trying to imply; the burden of national taxation would remain exactly the same.

The motion is correct to list the unfunded cost pressures on councils and to argue that they are indicators of increased centralisation under Labour. I want to consider those pressures in four parts. First, there are extra burdens due to the extra controls in the grant system. In his speech, the Minister said that the Government had been reducing the ring-fencing of grants, but they still have a long way to go.

Secondly, burdens are imposed by the number of plans that Whitehall demands from local authorities. I shall analyse what the Government are trying to do about that and show that they have failed to reduce the number of plans. The third set of burdens comes through inspection regimes. Again, the Government are trying to address that problem, but again they are failing. Finally, the Government promised to lift the burden of Conservative financial constraints on local government, but they are dragging their heels on that, too.

Let us examine what the Government say about the significance of ring-fenced grants in relation to council tax in the freedoms and flexibility paper published by the Office of the Deputy Prime Minister last year. Paragraph 42, "Revenue ring fencing", states:

"It limits their discretion to vary spending priorities to meet local needs and the absence of such flexibility contributes to pushing up council tax. Ring fencing also substantially increases bureaucracy for councils and in many cases the grants themselves are poorly focused on delivery."

For once, the Government were actually admitting to failure.

What is interesting, however, is that in 1997, even under the Conservatives, the amount of ring-fenced grant was only 4.5 per cent., but by 2002 it had almost tripled to 12.4 per cent.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

I am sure that the Minister wants to intervene to tell me that the trend is downward, but I shall tell him about the effects of passporting, about the redefinition of ring-fencing and about the fact that all the ills his freedoms and flexibilities paper describes are still with us in spades.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

Actually, I was not going to say that; I was going to ask the hon. Gentleman whether he would accept that certain services, such as "Supporting People", where very large transfers of funding affect very vulnerable people, need to be protected for a period of time to ensure that those services continue. Does he accept that there is a genuine case for ring-fencing in those circumstances, which was pointed out in the paper to which he referred? Although we are fully committed to reducing ring-fencing, does he accept that the Local Government Association agrees that for certain services, such as "Supporting People", the ring fence is appropriate?

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

I am not sure that all the money in grants for "Supporting People" needs to be ring-fenced and I shall list some other grants that certainly do not need to be ring-fenced. The Government have set themselves a target to reduce ring-fencing to less than 10 per cent., but that is still double the amount they inherited from the Conservatives—hardly an ambitious target. They are reducing the number of ring-fenced grants; it was 45 in 2003–04 and is set to be 33 in 2005–06—a reduction of 12. However, when we examine particular ring-fenced grants we wonder why on earth they remain ring-fenced.

The standards fund will continue to be ring-fenced in 2005–06; £990 million ring-fenced and outside the flexibility of overall budget setting. A range of health service grants is ring-fenced, amounting to £300 million. About 10 police authority grants are ring-fenced. They are all separate and I cannot see why they need to be within that category; they could be included in the basic formula and the Government have not explained why that should not be so.

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

Does the hon. Gentleman agree that there is no point in the Government's removing ring fences only to replace them with so-called targeted grants that can be clawed back if they are not spent on the targeted areas?

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

I completely agree. The Government have been redefining and have given themselves a new set of categories; they are trying to manipulate the amount going into ring-fenced grants by reclassifying them. The ring-fenced category still exists; everything in the grant is controlled and has to go to a certain service and the local authority has no discretion whatever. Then there is a new and interesting category that the Government call specific grants. That may be what the hon. Gentleman meant by targeted grants. There is a little flexibility but the money has to be spent on a certain service; it cannot go into the general pot. Finally there is the formula grant, where there is discretion.

Redefining the grants does not make things better. In addition there is passporting, which covers so much council grant—more than 50 per cent. in some cases—especially in relation to education. The Minister has failed to explain the difference between a passported and a ring-fenced grant. The truth is that there is no difference. When one adds passported grants to ring-fenced grants, the amount that the Government control and are forcing local authorities to spend in a particular way has gone up massively. That is micromanagement to an absurd degree and gives the lie to the Government's claim that they are the localist party.

The freedoms and flexibilities paper said that inspection regimes would be reduced and that there would be a far lighter touch. There would be a three-year "inspection holiday" for excellent authorities; for good authorities there would be a minimum

"of 25% reduction in inspection activity".

Fair authorities would receive lighter-touch targeted inspection, while poor or weak authorities would receive targeted inspection. We have contacted authorities in the various categories and in many cases those aims have not been delivered. If the Minister disputes that, he only has to intervene from the Dispatch Box.

We understand that some excellent authorities have not enjoyed the three-year inspection holiday that was promised in the freedoms and flexibilities paper—a point covered in the Local Government Chronicle last week. Good authorities have not seen the amount of inspection reduced by 25 per cent. Does the Minister want to deny that?

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

I am grateful to the hon. Gentleman for giving way. As he heard me say earlier, Hampshire had only one inspection last year—a voluntary one—compared with nine over the previous two years. I could give him many similar examples. He should understand that some excellent authorities are not excellent in education. We always made it clear that there would be a continued role for the inspection of authorities where education did not achieve the highest standard, because education is such an important service. On good authorities, our latest figures suggest that the volume of inspection is about 22 per cent. less than last year, so we are very, very near that 25 per cent. target.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

I can accept what the Minister says, but I will talk to the local authorities that have been contacting us. The odd example, such as Hampshire, may meet his criteria, but other authorities are still being over-inspected, despite the Government's promises. The Government need to go much further; they must adopt a much more strategic approach to minimising the impact of inspection.

The hon. Member for Runnymede and Weybridge told us what such an approach would mean for district councils. I was going to read the same page, but I will not detain the House by reading it again. All I will say is that he did not do the Local Government Association analysis justice because, at the end of the list that he read out, it said that it was looking forward to a comprehensive performance assessment peer review the following February and that there were more than 10 different inspections in six months. As the hon. Gentleman also said, a whole list of Acts of Parliament will affect councils and increase the regulatory burden, with a series of specific new burdens, such as the work force reform.

I happily admit to the Minister that it is not that one is against some of those proposals. Some of them are very sensible, such as those on freedom of information. Of course the Liberal Democrats are in favour of that sort of approach, but we need, first, to ensure that there is a more co-ordinated approach if regulation is increased and, secondly, to give local authorities far more support than has been the case hitherto.

I touched on the new burdens paper in an intervention, when I said that we would like the Audit Commission—a totally independent body—to be responsible for assessing the costs of those new burdens. That paper, which was published last month, also concerns me because the Government will not make their proposals retrospective in any way. The Government have placed a lot of burdens on local authorities in the past seven years, and we have been analysing those burdens in today's debate. No proposal in that paper suggests that the Office of the Deputy Prime Minister and other Departments will reconsider and say, "We gave you that cost. We didn't give you the resources. We are now going to put that right." If the Minister made such a commitment today, he would get support from both sides of the House and, particularly, from those in local government.

Photo of Chris Mole Chris Mole Labour, Ipswich

I wonder whether the hon. Gentleman is suggesting that, on the conclusion of such an analysis, the Liberal Democrat Treasury team would commit themselves to making such a pledge. Although I entirely understand the point that he makes, there is, of course, a financial burden of some significance to the national Exchequer in what he is saying.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

I would certainly support the Government if they were prepared to make that commitment.

The new burden rules paper, which bears re-reading, is also interesting because it does not apply to all new burdens. Paragraph b says:

"the requirement does not apply to policies which apply the same rules to local authorities and to private sector bodies (for example a change in the rate of employers' national insurance contributions), unless these have a disproportionate effect on local government."

Despite the way that the Government spin all the increases that they say they are providing to local authorities, it is very clear that they will not take into account those extra burdens, so we consider their rhetoric and say, "You're not delivering on the things that you promised."

I now wish to move from the inspection regimes and extra burdens to the plan requirements. The Government said in the freedoms and flexibilities paper that they would reduce the number of plans that they require of local authorities in all respects—education, social services, housing, civil contingencies and so on. To be fair to the Government, they published a paper in July 2003, wrote to all chief executives and said that they would reduce the number of plans. The problem is that local authorities have had no update since July 2003, and there is huge uncertainty about whether the proposals consulted on last July will be implemented and, if so, when and how.

Even if the Government were to tell local authorities today that they will press ahead with the reforms described in the July 2003 paper, some local authorities are probably engaged in drafting the plans and strategies and meeting the Government's bureaucratic demands, so money has been wasted already. Even if we read that paper and say that it represents a good attempt at deregulation, we are left with the impression that it is a bit of a numbers exercise.

I should like to ask the Minister—perhaps his junior Minister can answer during his winding-up speech—how many of the plan requirements in the July 2003 paper will result in the abolition of documentary requirements. To any objective reader of that document, it looks as though many of those documents, plans, strategies and requirements are being merged. They are simply being subsumed into one large service plan, so that the amount of work, bureaucracy and cost imposed on local government is not being reduced. There is simply a numbers exercise to reduce the statutory requirement for plans.

Moreover, the Government are now trying to make out in that paper that they are reducing the number of plans to 16, but that is still a huge number of plans for small authorities, such as district councils, to draft, and most of those plans must be submitted to central Government, so the Government are still looking at local authorities' every action.

I shall finish by considering the Government's failure to produce financial freedoms for local authorities. In their 1997 and 2001 manifestos they promised greater reforms, but they have not delivered on all those promises. The Minister was right to say that they have delivered on the prudential capital framework. He knows that we supported and campaigned for that framework, and he continues to have our support. There are already signs in local government that that policy is beginning to tackle some of the investment backlog that the Tories bequeathed in things such as roads.

The Government promised other things such as trading powers—it is all in the Local Government Act 2003, which received its Royal Assent in September, yet the order has still not been considered in the House so that its provisions can be brought into effect. The Government also promised in their 1997 manifesto the relocalisation of business rates. They said that they had been campaigning and consulting on that before 1997, yet that pledge has still not been met. Perhaps that will be done in the balance of funding review, but that will be seven years after the Government's 1997 pledge.

Even where the Government have introduced some of the financial freedoms that they promised—for example, on the charging regime—they have very carefully restricted them. The Minister looks puzzled, but he will know that the Local Government Act 2003 restricts the charging regimes to just pure cost recovery. The Local Government Association, which is cross-party, says that that is far too restrictive.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

Surely the hon. Gentleman understands the difference between trading—where authorities have an opportunity to make a profit, but where they are required to operate in a company structure, on which consultation has taken place, which is why we have not yet introduced the order—and charging, where it is not appropriate, without protection, for authorities to be able to trade essentially against the private sector from a privileged position. That difference between charging and trading is well understood, and I should have thought that the Liberal Democrats supported it.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

The Local Government Association certainly argues against the removal of cost recovery. The right hon. Gentleman will remember that the debates on those clauses of the Local Government Bill were truncated, partly because of a lot of time wasting by Conservative Members. I very much regret that, because we could have had some detailed arguments about the charging and trading regime. I wonder whether there will be a chance to return to that because there are concerns in local government that the charging and trading regime is not working as originally envisaged.

The hon. Member for Runnymede and Weybridge talked about a new set of cost pressures that have been placed on local government, particularly in respect of inflation. Local authorities provide labour-intensive services. Their wage bills are increasing by 4 or 5 per cent., partly because of national arrangements, and they have absolutely no control over that. It is incumbent on the Minister to ensure that local government gets a good deal in the forthcoming spending review, so that those cost pressures, which local authorities cannot control, are met under the grant agreement.

The motion is good in so far as it goes. It is right to point out that the financial burdens have increased under this Government, and I find it bizarre that the Minister is not even prepared to admit that. In fact, a lot of his programmes are intended to try to row back, which suggests that there is some recognition in the Office of the Deputy Prime Minister that the Government's programmes have been burdensome and part of the reason why council tax has increased.

The motion fails, however, in one major respect: if we are to tackle some of the financial burdens, yes we must cut inspections, reduce the number of plans and remove the ring fences around many of the grants, but we must also deal with the fundamental, underlying issue—financial autonomy for local authorities.

As we debated last week, we believe that there is a clear case—whether in terms of accountability or the gearing effect—for local authorities to have much more control of their financial future. Until we get reform of local government finances, which should include local income tax and a relocalisation of the business rate, we will not be able to deal with that.

I have a final question for the Minister. He spent a long time last week attacking the Liberal Democrats' local income tax proposals, but we know that the Chartered Institute of Public Finance and Accountancy put forward a paper to the balance of funding review. The paper does not represent Liberal Democrats' policy; it represents CIPFA's view of the local income tax. Is the Minister prepared to consider that proposal and to consider local income tax in a different form from the one that we are proposing, and possibly in combination with the council tax? We need to know, and this is a good chance for him to clarify the situation. We look forward to hearing the Under-Secretary of State, Office of the Deputy Prime Minister, Phil Hope, answer that question.

Photo of John Battle John Battle Labour, Leeds West 2:10 pm, 26th May 2004

I welcome this debate on local government. It is timely, as we are currently in the throes of local elections in our towns and cities. I am the first Back Bencher to speak, and as I served as a local councillor for years before I came to this place and have served as a Minister, I would like to move the debate beyond a discussion of council tax settlements in previous years. Wider issues are at stake.

I wish to add a little historical perspective and to push the boundaries forward by offering a vision of local governance that deepens our democracy for the future. It is the vision of increased participation, decision making and provision at a local level which I firmly believe the Government are working towards.

I came into local politics in the mid-1970s, and it is easily forgotten that between 1955 and 1975 local authority expenditure tripled, in constant prices. That led to an assumption of dependency on the centre, with funds based on centre-driven growth year after year. Such a mental template became engrained and it has defined the central Government-local government relationship over the past half century.

Today, local authority spending consists of only a quarter of all public expenditure in our neighbourhoods and localities. There has been a fiscal shift and, with it, a change in responsibilities, including the key responsibility of working to eliminate poverty in our neighbourhoods. We must not lose sight of that. The shift in responsibilities means that we must also look at a range of providers that are not limited to local government.

I remind the amnesiacs in the Conservative party of what happened in the early 1980s. My right hon. Friend the Minister referred to the Conservative Government's chaotic approach, and so it was. We did not even have the benefit of annual budgeting, and our budgets were cut by two thirds. I chaired a housing committee at the time and I remember the effect of stopping and aborting programmes. I remember receiving a budget, setting it out, putting out tenders for re-roofing and then being told by the then right hon. Member for Henley, who was Secretary of State for the Environment at the time, "Oh no. Hold up your budgets, and call the tenders back in. We are going to cut the budget halfway through the year." We did what he said, but he then found a bit more money and told us that we had to spend it by 31 December. That meant that the tenders for re-roofing went out in September and the houses had to be re-roofed when the work was least likely to be done—in the winter. I am sure that the then Secretary of State was not stupid; it was done deliberately to discredit local government by making it look inefficient and unable to deliver. We had less than annual budgeting, but we have come way long from that, not least in respect of the comprehensive spending reviews introduced by this Government. They are most welcome.

Some of us have long memories of the Conservative Government's contempt for local authorities in principle, and strangulation of their budgets in practice. However, I want to put that row to one side and to suggest more positively that we can look forward to breaking out of the mid-20th century debate about the relations and tensions between central and local government. We are still a little fixated on the axis of that debate, and we need to focus on the project of deepening local democracy, which involves participation and engagement at a local level in our neighbourhoods and communities. We must ask how that relates to the changing roles of local governance, the national state and, increasingly, to the international agencies that make local contributions.

In societies all over the world, local government's role is being rethought. What does it mean in the context of changing welfare states and increased globalisation in our economies? In recent decades, local government's institutions have been changing their structure, systems of operation, political practice and models of service. I recall the establishment of the local ombudsman in 1974. That moved things on. In 1976, the Layfield committee tackled local-central financing arrangements and dealt with the questions of fiscal tension as the centre gave more resources and asked whether local authorities could retain powers over decision making on priorities at a local level. As a member of Leeds city council, I submitted to the Widdicombe committee in 1986 evidence that addressed relations between committee structures and local authority service departments.

Under this Government since 1997, we have seen the emphasis shift from providing services alone to taking on the challenges of community leadership and identifying and meeting the needs of local areas in partnership with central Government, with business, with voluntary organisations and, I hope and emphasise, with local people—a dimension that we must intensify and improve. We need new efforts to encourage flexibility, and the new deal for communities—to mention just one element introduced by the Government—encouraged the introduction of the neighbourhood partnerships, which we can build on.

In 2003, the Audit Commission, in its "Comprehensive Performance Assessment—Scores and analysis for single tier and county councils", gave most local authorities in Britain positive marks for their overall management and political competence at leadership levels. Best value and better service delivery were making a positive impact, myriads of new partnerships had been established and new local authority executive structures had been adopted with remarkable speed and efficiency. Most had also improved their participation and consultation strategies, but I would suggest that they had started to introduce them.

I want to point out, however, that most of that reform has been in terms of top-down, nationally developed changes. Although initiatives and resources coming down from above—from the centre—are welcome and necessary, they need to be embraced by initiatives at ground-floor level if we are to reach those whom we sometimes refer to as "hard-to-reach people" and tackle the poverty in inner-city, urban and some rural neighbourhoods. If not, the developing acronymic list of hundreds of separate budgetary initiatives will appear not as welcoming regenerating rain on communities, but as hailstones that hammer down and quickly disappear, leaving people feeling damaged without having understood their impact.

Local government core functions have changed. I suggest that there is a much richer, new complexity of inter-governmental networks and what I would describe as a multi-level of governance, which includes, for example, community safety provision, police and fire authorities, crime and disorder partnerships and drug action teams. On education and skills, we have not just the new learning and skills councils, but colleges of further education, universities and employment action zones, as well as schools and early-years provision. Health and well-being is a new dimension that has emerged in the past 10 years. The primary care trusts that the Government introduced and the Sure Start partnerships are all part of a new multi-mix of integrated local service provision.

Budgets are being blended in new ways, but communities must embrace them so that they understand them and can make them work to serve everyone in the localities. I am trying to suggest that the traditional model of local government, with its key task of delivering services as part of the welfare state—it used to be roads, schools and houses—funded from local rates and a central Government grant, has fundamentally shifted.

We have now to consider a new model of networked community governance in our neighbourhoods. That is an invitation to people to participate in building those networks, working with them and delivering services. We need to focus on the needs of local communities, to search out local issues, points of conflict and contact, to develop and work towards local solutions, to reconcile conflicts at a local level and to work across boundaries for more integrated practical solutions. In other words, we need to try to improve the quality of life in our neighbourhoods using a range of services, some of which were not encapsulated in previous central and local government models. That networked community governance is no less susceptible to the conflicts that have always occurred over what we might call "goal definition" or determining local priorities.

I support the Government amendment to the motion, as far as it goes, but I might have added another line, saying "We will continue to look at new and innovative methods of engaging and ensuring local participation." Let me give a practical example. Leeds is now widely acknowledged as one of Britain's most successful cities, but it is not without its inner-city challenges of poverty and social exclusion, including the neighbourhood in which I live. In my constituency, we called people together under the banner of the West Fest conference, inviting them to participate in a consultation process. We are now taking that conference to every corner of every neighbourhood. Its purpose is to engage people, listen and spell out the new complexities of partnerships in multi-level local provision. That includes traditional local government services, but also health services. It involves the police, voluntary groups that provide services for elderly and young people in the neighbourhood, and arts groups and others who provide light entertainment and stimulate imagination in our communities. It involves sports groups who add to the work of the officially provided services by engaging people in activities.

We are experimenting with the development of local people's neighbourhood plans. We say what we need and what we can do together. We must be aware of the complexity of the available services and consider how to knit everything together to meet the needs of the locality, as articulated by the people themselves. Our local councillors in Kirkstall, for example, are involved in a groundbreaking plan for the Kirkstall valley. It will ensure that in the heart of Leeds—from the city centre, through the inner city and out towards the ring road—we will have a sustainable, clean, green wedge of parkland, available for local people as a leisure resource. It will cut a swathe through the inner-city neighbourhoods. We are engaging local communities in the design and development of that plan.

The council is restructuring and re-engaging with the people under the new, dynamic leadership of Councillor Keith Wakefield, who seems to spend most of his time on the streets. I do not mean that pejoratively; I mean that he is out and about, listening to people and engaging with them. I emphasise the word "listening", because he is finding out what people's needs are. He is using new methods to try to include people in the delivery of services, because they should be part of that process.

Out of the West Fest we developed workshops to take into the neighbourhoods on subjects such as local community economic development strategies and social enterprise projects. On the latter point, Mr. Davey mentioned that the Government had promised things that they had not quite yet delivered. I do not concur, because a Bill on community enterprise is about to come to the House from the other place. I am looking forward to that, because it will enable councils to develop community enterprises so that people can open boarded-up shops and set up businesses in them, employing local people and providing goods and services to the neighbourhood.

We are considering providing local public transport, using minibuses in the neighbourhoods that seem to be beyond the larger bus services. We should use the resources that we have, building them into community services. We can take the process further. We are looking at displacing loan sharks by setting up credit union networks. We are developing local schools as centres where community resources are available, day and night and at weekends.

Local participation models are subtler, more difficult and more complex than others, and we need to develop more ways of coming together, replacing complaining with planning and working together to make decisions for the benefit of our neighbourhoods. They are not easy, quick-fix models. They completely invert the top-down approach of the past, which went from central Government to local government to neighbourhood. We should not be setting at odds community participation, through local meetings, and representational democracy in the form of elected councillors. They should be working together. We need them both, so we must find new ways to integrate the representative democracy model with the participative democracy model, to deepen our understanding and practice of democracy.

Let me add another idea to the notion of new localism, to push it a step further. I ask the Government whether there is any space for experimenting with new ways of delivering services, new forms of accountability and the development of a more enabling local state as well as a more enabling national state. The top-down approach must be related to the bottom-up initiatives. For example, let us look closely at local service delivery. Why should the meals on wheels service for a person in my street come from seven miles away, through all the traffic, to arrive there, perhaps, the day before so that someone has to reheat it? Why cannot meals on wheels for the stuck-at-home elderly come from the same street, from someone who lives in the neighbourhood, trained and paid to deliver that service? What I am saying is: let us decentralise meals on wheels.

Why do we not look at service delivery for care of the elderly, care of the sick and child care, including after-school clubs, in local neighbourhoods? Why do we not think intensely micro and see what we can do to meet the needs of the unemployed, such as training, in communities, particularly in inner-city neighbourhoods? Where in the neighbourhood can we look, in future, for resources to meet local needs and to redevelop and rebuild the basic community? We need more new thinking about the practice of local politics and service delivery, but we also need new systems of local governance to develop that.

I shall end with two quotations. The first is from what some Members may think is a strange source: a work called "The Great Disruption", by "The End of History" man, Francis Fukuyama. He was talking about engaging people in groups. We know what it is like when we go to a meeting with people who have never been to a meeting before: they shout for what they want, walk out and go back home. We cannot organise community participation on that basis; there must be some vague rules of the game. Fukuyama said:

"If members of the group come to expect that others will behave reliably and honestly, then they will come to trust one another. Trust is like a lubricant that makes the running of any group or organisation more efficient . . . If people can be counted on to keep commitments, honour norms of reciprocity and avoid opportunistic behaviour, then groups will form more readily, and those that do form will be able to achieve common purposes more efficiently."

That blends the demands for efficiency, best value and delivery, and at the same time sets out a template for the values that we need to solve collective problems in our neighbourhoods.

I know that it is not the done thing in a speech in the House of Commons to recommend a book—it suggests that we might have been reading or misspending our time in the Library. However, in the words of Professor Gerry Stoker from Manchester university, in a seminal book called, "Transforming Local Governance":

"Local government is there to influence the major social and economic dimensions of its locality even if it is not directly responsible for a particular service or policy issue".

The community leadership role is especially important in ensuring

"co-ordinated and effective collective action to tackle the everyday issues that matter to people in their localities".

I recommend Professor Gerry Stoker's book, but everyone in Parliament, whatever their political party, should be much more positive about developing and transforming local governance, which we should support, encourage and champion. I would also make a modest exhortation to the Government to do more to address the challenge of enabling more bottom-up participation and development, which could regenerate and reshape our communities in future and ensure that they are inclusive places that we enjoy living in.

Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield 2:30 pm, 26th May 2004

I am pleased to follow Mr. Battle, whose contribution was thoughtful and constructive. His own experience of local government came through very clearly indeed in his proposals. He told the House that he joined local government in the early 1970s. I joined it in the mid-1960s, and would be more complimentary about it than he was. In those days, the relationship between local and central Government was much closer, more constructive and less party political.

I liked the fact that the hon. Gentleman's speech made very little reference to party politics. He made one or two asides about the Conservatives and Liberal Democrats, but most of his speech was about achieving local government that met the needs and expectations of the people whom it serves. I therefore congratulate him on his thoughtful and constructive speech.

I am sorry that the Minister for Local and Regional Government has left the Chamber. [Interruption.] I am well aware of the reason why he left—he is, I accept, a busy man. However, my contribution to this debate will also form the basis of a strong case that I shall put to him in a meeting on the allocation of resources to Macclesfield borough council that he has granted my hon. Friend Mr. Osborne and myself. If he reads my speech in Hansard or if it is reported accurately to him by the Under-Secretary of State, Office of the Deputy Prime Minister, Phil Hope, he will learn the essence of our case.

Interestingly—and some hon. Members may find this surprising—I oppose my council on the issue of the large-scale voluntary transfer of housing. Local government should give meaningful tasks to elected councillors. In Macclesfield, the council has been forced to transfer its housing stock. The gross revenue from rents in the borough is £14 million a year, but the council has to hand back to the Government £8.5 million in negative housing subsidy. The borough has also been disadvantaged by the Local Government Act 2003, under which capital receipts that debt-free authorities—Macclesfield is such an authority—are allowed to keep are reduced from 100 per cent. over three years to approximately 30 per cent. As a result, my council does not anticipate having sufficient resources left to maintain to the highest standard the council housing that it owns and administers. It will not be able to improve and refurbish its housing stock to the standard that council tenants expect, so it has been forced to consider a transfer. The Government have accepted its application to transfer, which now depends on whether the council tenants agree with it or not.

I have sought to present the facts to the House, as there should be another way of dealing with the matter. It is wrong that my authority, which is debt free, should have to pass much of its rent revenue to the Government. Financial assistance to maintain, refurbish and improve housing through the use of capital receipts is being cut by the 2003 Act, which reduces the capital receipts that councils can retain from 100 per cent. to 30 per cent, so I hope that the Under-Secretary and the Minister can look at that. It is odd that a Conservative Member of Parliament should be supported by a Labour councillor who stood as my opponent at the last general election, other Labour councillors and a large number of council tenants, who are traditionally considered Labour supporters. The current arrangement is unfair, and the Government should find a way to allow Macclesfield to retain sufficient resources to maintain its council housing stock to an appropriate standard. Incidentally, the decent housing standard set by the Government is far below the standard set by Macclesfield council for the standard and quality of municipal accommodation in the borough. The Government are well aware of that, because I went to see the Minister for Housing and Planning, who kindly said that Macclesfield has a good reputation concerning the standard to which it maintains council property.

Turning to the revenue support grant, the Under-Secretary will know that fundamental changes were introduced to the grant formula in the 2003–04 settlement, following substantial consultation with local authorities. That meaningful and lengthy consultation identified the fact that local authorities throughout the country require stability in the formula so that they can produce a robust medium-term financial strategy and can accurately predict the level of external support required. The new formula was introduced for the financial year 2003–04, and, I emphasise, we were told that it would be fixed for three years to allow for proper forward planning. It included an element of funding for "staying in business" and had floors and ceilings to dampen the effect of any major changes to individual authority settlements.

The floor was set at 3 per cent.—that is, no authority would receive less than 3 per cent. increase. The ceiling at that time was set at 12.5 per cent., so no authority would receive more than 12.5 per cent. There were, as we all know from our experience, winners and losers as a result of the new formula, but all authorities would receive a minimum increase of 3 per cent. on the adjusted base. However, significant changes were introduced in the 2004–05 settlement. The provisional settlement was announced in November 2003 and an initial examination of the figures revealed a significant reduction in Macclesfield's allocation, from £7.226 million in 2003–04 to £6.422 million in 2004–05.

It then became clear that there had been some important changes to the formula, in that rent allowances and council tax benefits would be 100 per cent. funded by direct subsidy, and the national park grant—part of my authority's territory is within the Peak national park—would be paid directly to the national park authority. The floor was initially set at 2.2 per cent.—below the rate of inflation—and the ceiling was set at 2.8 per cent., lower than the floor for the previous year, 2003–04. Macclesfield's settlement was at the floor, giving an increase on a like-for-like basis of £137,000 or, in cash terms, just £18,000, equal to 0.25 per cent.

A further announcement, I am pleased to say, was made in December 2003, increasing the floor to 3 per cent. That resulted in a like-for-like increase of a further £50,000, raising the £137,000 to £187,000 or, in cash terms, £68,000, equal to just 0.9 per cent.—less than 1 per cent. For Macclesfield, the result of that poor and unfair settlement is that an increase in expenditure of 6.5 per cent. had to be funded from an 8.4 per cent. increase in the council tax. Savings in the region of £500,000 had been identified by the council from efficiency savings and by redirecting funding from lower priority service areas. The 6.5 per cent. increase in expenditure includes the nationally agreed pay settlement of 3 per cent. and substantial investment to meet the national agenda for recycling and e-government set by the Government. I hope the Minister can see the unfairness faced by Macclesfield borough council.

The external settlement does not even cover the cost of delivering the national agenda. Having regard to the gearing effect, we have little option in Macclesfield but to raise the required revenue through the council tax. My council and the Conservative group that controls it apologise to the residents of the area for having to increase council tax by a greater percentage than they would have wished, but in order to continue to provide the services to the standard that people expect and to meet the additional burdens placed upon local government by central Government, they had no alternative.

To make matters even worse, the Minister for Local and Regional Government, who has had to leave, announced that he would use his capping powers if council tax increases were excessive, and that capping may be applied even to—I use his words—"excellent" and "good" authorities. Clearly, the problem facing some authorities is accepted by the Government. I only hope they will look into these unfairnesses and see whether anything can be done to rectify them.

In summary, the overall situation is that the very limited increase in the revenue support grant for Macclesfield borough council does not in any way—I emphasise that—cover the additional cost of maintaining the services currently provided, and at the same time allocate additional resources to deliver what people believe is right—the national agenda set by the Government. With a cash terms increase in the external settlement of only 0.9 per cent. and an increase in expenditure of 6.5 per cent., we are, in the Macclesfield borough, forced to raise the additional revenue from council tax.

I have sought to present my case factually. I have not sought to score party political points. Every statistic that I have quoted is not selectively chosen by me. It is the reality of the financial situation facing the Macclesfield borough council. Debates such as this are useful for Members of Parliament to advance constituency cases. I am only sorry that some of my colleagues have not chosen this debate to put forward a case. Another colleague plans to speak and will certainly get in. It is the duty of a Government to consider properly and fairly and to respond accordingly to any unfairnesses that are drawn to their attention by constituency Members of Parliament.

Photo of Bill Wiggin Bill Wiggin Shadow Secretary of State for Wales 2:46 pm, 26th May 2004

The Minister's comments in his closing remarks, when he said that he was against universal capping, will sound hollow to my constituents, who have had their council tax capped, their police authority grant capped and their fire authority grant capped. Let me make it crystal clear that I do not want to see council tax rises. I loathe the increased financial burdens that the Government have stealthily piled on to council tax payers. However, the steps that the Government have taken to allow councils to reduce the financial burden are derisory and ineffective.

The Government have capped Herefordshire council by £253,000. That is a sick joke, as it will make virtually no difference to anybody. It cuts just 7p a week off band D council tax, yet it leaves Herefordshire council with even more of a struggle to comply with the increased layers of bureaucracy that the Government have imposed, without receiving adequate Government funding. Herefordshire council is not generously funded against need. It is the most sparsely populated unitary authority in England in which to deliver services so, for example, the cost to the council of the school transport bill is much higher—almost £6 million. Any increase in fuel costs will have a significant impact on the cost in the future.

The council is 36th out of 46 unitary authorities in terms of the level of grant received per head of population through the formula spending share. It is £140 below the average throughout all unitary authorities. The grant from the Government is woefully inadequate. The Government have already removed £5.2 million from the budgets of the former Hereford and Worcester county council and Herefordshire district council, at the point of reorganisation in 1998. The annual repayments of reorganisation costs for Herefordshire council totalled £13 million. It is being repaid on an annual basis, amounting to £1.9 million on this year's council tax.

The county lost £1.8 million extra in the formula spending share because of the Government's delay in implementing population data changes following the 2001 census. Herefordshire council has clearly been heavily disadvantaged by the Government's funding. The formula spending share does not come close to adequately reflecting the cost of delivering the increasing demands and financial burdens placed on local authorities by the Government, such as recycling targets, the transfer of licensing responsibility, library standards, benefit regulations and national care home standards, to name but a few.

I think that my hon. Friend Sir Nicholas Winterton mentioned the implementation of electronic government as well.

The Government's own changes to local authority finance last year meant that the council had to increase council tax by 17.5 per cent. to achieve the FSS level of funding—an increase in the burden on the council tax payer from 32 per cent. to 37 per cent. of total expenditure. However, the council has not compensated for Government underfunding by levying much higher levels of council tax. At £959.53, its band D council tax is below the national average for unitary councils. Despite the disadvantages that this Government have imposed on Herefordshire, the council is committed to reducing the levels of council tax over future years, but demands from this Government, who do not care about the constant increases for the individual council tax payer, make that commitment extremely difficult to fulfil.

The council cannot be seen as a profligate authority. The Audit Commission's judgment gave the council the maximum overall score for the use of resources, and its pattern of spend has not moved significantly by comparison with those of other authorities since it was established in 1998. According to the comprehensive performance assessment, the authority is a good authority in terms both of corporate assessment and its service assessment. [Interruption.] Does the Minister wish to intervene? Apparently not.

In the field of education, the council can demonstrate good performance in the outcome for pupils attending its schools. It has consistently maintained the spend on education at FSS level and has passported the required increases to its schools, despite facing the financial burden of the highest cost per pupil for school transport of any education authority—an issue that is, of course, linked to the rural nature of the county. However, despite the fact that there are four upper or single tier authorities that have higher levels of council tax than Herefordshire, but have avoided capping, the Government have decided to cut £253,000 from Herefordshire's calculated maximum budget requirements.

The proposed revision of £0.25 million equates to a reduction in band D council tax of £3.80 a year, but the estimated rebilling costs, which I mentioned to the Minister earlier, are more than £100,000, which generates an extra cost of £1.25 per annum at band D. The Government's decision to cut the budget is no more than a pathetic party political move ahead of the 10 June elections.

Sadly, the picture for central Government costs and funding is no better for Hereford and Worcester fire authority and the West Mercia police authority, which have both been neglected by Labour Government funding. They have both been capped and forced to cut front-line services because of the increased demand on local authorities. Hereford and Worcester is the only fire authority to be capped in 2004–05, by £2 million, but the cost to the authority of rebilling council tax payers is approximately £0.5 million, and the estimated cost of associated expenses is another £100,000. All together, that amounts to a £2.6 million reduction of the amount being invested in fire services.

The Government do not fund Hereford and Worcester fire authority fairly, allocating a grant worth only £14.72 per person, compared with the average allocation of £19.50 per person for all other combined fire authorities. Hereford and Worcester fire authority protects 5.3 per cent. of the area covered by all combined fire authorities, but it receives only 2.5 per cent. of the total Government-allocated grant. Under the same financial pressure that it faces from increasing local government bureaucracy imposed by this Labour Government, the authority will now have to struggle even harder to deliver the services on which the local communities depend, which in turn threatens to undermine public confidence in the fire service.

The fire authority has expressed deep concern about the impact of that reduction on its ability to deliver an effective service to the communities. Instead of cutting the amount that the local service must spend on wasteful layers of bureaucracy, the Government are forcing the fire authority to cut the money that it can spend and invest in community safety and well-being.

That will result in a cut in front-line services. No funds will be targeted at investing in a modern fire and rescue service aimed at promoting a much greater sense of safety, security and community well-being. Furthermore, the cuts will result in a loss of 195 jobs in the fire authority, with the loss of 39 per cent. of the posts supporting front-line work, 27 per cent. of the whole-time firefighters and 13 per cent. of retained firefighters. Bringing about, in a period of weeks, a reduction of more than 20 per cent. in the size of the brigade is bound to damage the safe and efficient provision of a fire and rescue service.

Despite being in the top half of forces by size and population, West Mercia police authority was excluded from the additional £340 million of Government grant funding for English local authorities that was announced on 11 December 2003. The support that West Mercia receives from central Government is the fourth lowest amount of grant per head of all shire police forces, while it is also the fourth most economical force in terms of cost per head and would need to spend an additional £10.6 million to equal the average of the 31 English shire forces. Nevertheless, the authority has been capped by £517,000. The force has no choice but to bridge the funding gap with council tax increases, because this Government have not provided nearly sufficient funding to accommodate the gross financial burdens that are incessantly imposed on local authorities.

All Herefordshire's local authorities have been inadequately funded by the Government, and they have been capped to score party political points. The underfunding, along with the increased financial burdens placed on local authorities by central Government, has forced the authorities to turn to another source of funding—the council tax payer. That has led to a diminished front-line service.

I deplore the way in which this Government have increased the burden of council tax on my constituents. They have not only increased financial burdens on local authorities, but have not provided nearly sufficient funding to pay for layer upon layer of bureaucracy. Consequently, there has been a cut in front-line services, which is a great shame.

Photo of David Taylor David Taylor Labour/Co-operative, North West Leicestershire

Will the hon. Gentleman give examples of the layer upon layer of bureaucracy that he suggests exists in terms of permanent posts, locations, costs and so on?

Photo of Bill Wiggin Bill Wiggin Shadow Secretary of State for Wales

I am delighted to give the hon. Gentleman examples. I mentioned the extra cost to the education department resulting from sparsity of population; I think that it is an extra £6 million. We also have library standards, recycling targets, transfer of licensing responsibilities, benefit regulations, national care home standards and the implementation of electronic government, to name but a few of the examples that I have. I hope that that answers his question.

Photo of David Taylor David Taylor Labour/Co-operative, North West Leicestershire

I am not sure that it does. To people in this Chamber and elsewhere, bureaucracy is an activity that exists for its own sake, and not because it is raising standards, providing new facilities or driving up quality. Such activities are not necessarily bureaucracy. Is that not merely a vacuous, hand-me-down phrase that is used when people want to have a go at either Governments or local authorities?

Photo of Bill Wiggin Bill Wiggin Shadow Secretary of State for Wales

Whether the definition of bureaucracy suits the hon. Gentleman or the Government is not the issue. What we are seeing is a council, fire authority and police authority that are performing way better than the average, but are being cut and capped.

As I see it, the problem is that the Government have a fundamental belief that they should be targeting percentage increases instead of real financial increases. That results in a mismatch in constituencies such as mine. We can call it bureaucracy or haggle over the definition, but the fundamental problem that I and my constituents face—none of us wants to pay a penny more council tax than we have to—is that in areas such as the one that I represent, local performance and the funding that the Government provide do not match up. As I said, the police authority would have to spend an extra £10 million to reach even the average level among the shire-type forces with which it would be compared. At one stage, I hoped that I would have to pay a lower council tax rate, as I live in my constituency. Unfortunately, however, the nature of the capping and the cuts that will have to be made means that they will be extremely damaging and that they will not deliver the financial saving that I had once hoped for.

I am deeply disappointed that the Government have taken this line with Herefordshire, West Mercia and the Hereford and Worcester fire authority. I urge the Minister to think very carefully about what he is going to do in terms of the safety and protection of my constituents, and I hope that he will revisit that decision.

Photo of Richard Younger-Ross Richard Younger-Ross Shadow Minister, Office of the Deputy Prime Minister Local Government & the Regions 2:59 pm, 26th May 2004

I declare an interest in that my wife, who used to work for Devon county council, has been seconded to the Office of the Deputy Prime Minister, and I understand that I should put that on the record. [Interruption.] I have not asked her whether she enjoys the work, but she has been in post for three weeks.

I am glad that the Minister for Local and Regional Government has returned to the Front Bench. After I intervened during his opening remarks, he said that he could not remember as far back as me, which should worry both him and us. I checked in "Dod's", and the Minister is eight years older than me, so I hope that his memory is not becoming shorter, although that might explain his comments about Labour policy.

The Minister keeps repeating the phrase "Groundhog Day" in debate. He last used it in a debate on local government finance, in which he stated that the Tories were returning to an issue that the Liberal Democrats had raised 10 days previously. However, we have become used to the Tories repeating our remarks from 10 years ago—they catch up in the end.

In that debate, the Minister referred to the excellent speech made by my hon. Friend Mr. Davey, in which my hon. Friend made a clear case for local income tax, but he went on to say that Liberal Democrats

"are no better than snake oil salesmen peddling quack remedies".—[Hansard, 17 May 2004; Vol. 421, c. 759.]

What is his problem with snake oil salesmen? What did a snake oil salesman do to him in the past that makes him dislike them so? What remedy did he purchase that did not work—we have only to look to see what it might have been? He should think of the snakes that the snake oil salesmen must kill.

I am glad to see extra Conservative Members in the Chamber for their Opposition day. [Hon. Members: "Where are the Liberals?"] It is their Opposition day, not ours. The debate is welcome, because we can revisit the issues, pressure the Government to provide answers that they did not give last week and test the Conservative party on its lack of policies on this subject.

Mr. Hammond has a selective memory for council tax rates, and hon. Members have showered figures like confetti today. I did not originally intend to speak, so I have not gone to my local authority to obtain a wealth of figures with which to regale the House on the evil of the Government's settlement in Devon or Teignbridge.

The hon. Member for Runnymede and Weybridge did not answer my question about the average figure for council tax rises over six years. It is all well and good to pick one figure from last year and conclude that the Conservatives did quite well, but I am more interested in the overall figure covering a number of years. The Conservative party's track record over six years is not very good. The average increase in council tax in Conservative-run authorities is 8.9 per cent. per annum, which is greater than that under the Labour party, the Liberal Democrats, the nationalists and the independents.

Photo of Bill Wiggin Bill Wiggin Shadow Secretary of State for Wales

Will the hon. Gentleman address the important issue for my constituents, which is that their local authority has been capped? Until last year, the Liberal Democrats ran Herefordshire council, where council tax increased by 14.3 per cent. Despite that rise, the Liberal Democrats also managed completely to deplete the reserves, and a great deal of the funding that we have levied from council tax payers has been used to repay that depletion. The hon. Gentleman should not take his eye off the ball, and I hope that he bears in mind some of the terrible things that his party has done to councils.

Photo of Richard Younger-Ross Richard Younger-Ross Shadow Minister, Office of the Deputy Prime Minister Local Government & the Regions

Cheap points scoring turns people off politics, which is one of the great tragedies of these debates. [Laughter.] Any hon. Member can stand up and criticise an authority run by another party by saying, "In such and such a case, that council hugely increased council tax."

The response to the point made by Mr. Wiggin is to examine Torbay, which the Liberal Democrats currently run and which is being capped—Torbay has a problem because the Tories used to run it. One can always counter such arguments, but it does not take us forward, and the overall trends are far more significant.

Photo of Hugo Swire Hugo Swire Opposition Whip (Commons), Shadow Minister (Culture, Media and Sport)

The hon. Gentleman was generous enough to inform the House about his connection, through his wife, with Devon county council, which the Liberal Democrats ran until the last county council elections. The Liberal Democrats completely depleted the county's resources, for which we are now paying. It is all very well to say that that is a cheap political point; it is also a factual point, as was that made by my hon. Friend Mr. Wiggin.

Photo of Richard Younger-Ross Richard Younger-Ross Shadow Minister, Office of the Deputy Prime Minister Local Government & the Regions

Mr. Swire mentions the depletion of resources, but what did the Conservative party do in Shepway? It not only emptied the cupboard but took out the shelves as well.

The hon. Member for East Devon and I have worked together on issues relating to Devon county council, which is currently run by not one party, but an amalgamation of four parties. The Devon example shows that parties can work together on funding and come up with a common case on why Government figures are wrong and on why the Minister must listen. I hope that the hon. Gentleman recognises that Conservatives in Devon have worked with the Liberal Democrats, the Labour party and independents to come up with a common position. Cheap points scoring does not occur in Devon county council because the parties understand that they must work with each other.

Photo of Hugo Swire Hugo Swire Opposition Whip (Commons), Shadow Minister (Culture, Media and Sport)

That is the Liberal Democrat trick of pretending that nothing is political and that they are nicer than the mainstream parties. It is entirely correct that different parties currently work together in Devon; my point is that when the Liberal Democrats worked alone, they depleted the council's resources, which is why council tax had to go up so much last year.

Photo of Richard Younger-Ross Richard Younger-Ross Shadow Minister, Office of the Deputy Prime Minister Local Government & the Regions

Last year, the Conservative leader of Devon county council, Margaret Channon, recommended an 18.2 per cent. increase. [Interruption.] The hon. Member for East Devon protests too much—he attended the same briefings as me, and I understood that he supported his county council. The Liberal Democrats, the Labour party and independents supported the rise, which was fair because of the bad grant settlement.

Last year, the hon. Member for East Devon said that the increase in Devon was the Government's fault because of the grant settlement, but the Conservative party also says that the Government have been taking money from the south to give to the north. The Conservative party cannot have it both ways, because it is one thing or the other. [Interruption.] Last year's grant settlement in Devon was a scandal.

Sir Nicholas Winterton made some pertinent points about what has happened in his local authority. I listened to him carefully and, although I do not know the details, he appears to have a strong case that Macclesfield has had a raw deal.

I hope that the Minister listened to what he said, but I have to say that when we pleaded the case for Devon last year, our words fell on deaf ears. Perhaps he has snake oil in them. The pensioners' protest started as a protest against East Devon council, which is run by the Conservatives and which imposed a sharp rise of 18.2 per cent. The greatest burden on local authorities is having to administer the council tax system—a goliath of a machine that is not very effective at raising money.

The poor funding for Devon last year resulted partly from the basis on which grants are given—that is, house value. I had thought that the hon. Member for East Devon accepted that—perhaps a selective memory is contagious in this Chamber. The problem in Devon is that although we have high property values, we have low incomes. It is a gross mistake to make assumptions about what people can afford on the basis of the value of their property. In effect, that suggests that a person has to move home to be able to afford their council tax. That is to be resisted, and it is one of the reasons why the Liberal Democrats have tried to put forward alternatives.

Photo of Bill Wiggin Bill Wiggin Shadow Secretary of State for Wales

Does not the hon. Gentleman think that the local income tax that he propounds will have the same effect? In areas such as his constituency, which may have an elderly population with an income that is generally much lower than average, people will still be forced to move house to avoid the local income tax that the hon. Gentleman's party wants to introduce.

Photo of Richard Younger-Ross Richard Younger-Ross Shadow Minister, Office of the Deputy Prime Minister Local Government & the Regions

That is not the case at all. The grant would be calculated and rebalanced on the basis of the new local income tax, which would resolve the problem. The local income tax would only replace the funding that is already raised by the council tax. One of the reasons why pensioners were protesting in Devon is that they found that 11 per cent. of their income was being paid in council tax. If Conservative and Labour Members are happy that 11 per cent. of the income of an elderly couple should go towards council tax, that is fine: let them sell it to the country. I would argue that one of the reasons why people are signing up to our "Axe the Tax" petition is that they feel that that proportion is too high.

Photo of Richard Younger-Ross Richard Younger-Ross Shadow Minister, Office of the Deputy Prime Minister Local Government & the Regions

Let me finish the point; I have already given way several times. Although I was asked to extend my speech slightly, I might get some odd looks if I extended it too far.

Under a local income tax, the people who paid it—hon. Members should bear in mind that many pensioners would not have to—would pay only about 3.85 per cent. of their income towards it. As a result, some 70 per cent. of the population would be better off.

Photo of Richard Younger-Ross Richard Younger-Ross Shadow Minister, Office of the Deputy Prime Minister Local Government & the Regions

No, I am not saying that. About 30 per cent. of the population would lose out. It is a fair tax, not merely a cheaper tax. Hon. Members here would lose out, the Minister would lose out, and I would lose out, but the average person would not lose out.

Photo of Patrick McLoughlin Patrick McLoughlin Opposition Deputy Chief Whip (Commons)

When we had this debate a few weeks ago, the Minister pointed out that the proposal would take at least two years to take through the legislative process and up to seven years to implement. Does the hon. Gentleman accept that?

Photo of Richard Younger-Ross Richard Younger-Ross Shadow Minister, Office of the Deputy Prime Minister Local Government & the Regions

No, I do not. As usual, the Minister was trying to present the worst-case scenario. He was very selective when he read out the data from the Chartered Institute of Public Finance and Accountancy.

Photo of Richard Younger-Ross Richard Younger-Ross Shadow Minister, Office of the Deputy Prime Minister Local Government & the Regions

I have already given way more than enough, and I want to make some progress. I have two or three more points to make.

One of the most important aspects of council tax or any local tax is its transparency. The grant system is not transparent. I once heard it said that the Minister was about the only person who understands the maths involved in what he says. [Interruption.] I am not sure whether he is shaking his head or nodding. The present system is immensely complex, and many people do not understand it; consequently, they do not trust it or see it as being fair. Even if it were fair, people would not judge it to be such. I would argue that it is unfair because of the burden that it places on people on low incomes, especially the elderly.

Photo of Chris Mole Chris Mole Labour, Ipswich

Will the hon. Gentleman give way?

Photo of Chris Mole Chris Mole Labour, Ipswich

I wanted to make a point about the issue that the hon. Gentleman raises, but it has completely escaped me, so I shall come back to it later.

Photo of Richard Younger-Ross Richard Younger-Ross Shadow Minister, Office of the Deputy Prime Minister Local Government & the Regions

I said earlier that memory loss is contagious—the hon. Gentleman demonstrates that it is extremely contagious and has spread to the other side of the Chamber.

Another concern that people have about local government is the ability of central Government to interfere. That is not a new phenomenon. I used to work in the architects' department of a local authority—Elmbridge in Esher. I lived in Weybridge and went to work in Esher. The local authority was inefficient and there were many problems. The Government of the time were forcing through reductions in funding that led not to improvements, but cuts, in services. During the 1980s, when my wife was allowed to be involved in politics, we ran campaigns together against those cuts.

In the 1990s—sadly, under the Labour Government for some of the time—there have been cuts in services in some areas because the funding formulae have not worked out. The Minister is looking at me quizzically. I shall give the example that I gave when I was a newly elected Member. The 15 local authorities in the south-west made a joint statement to the Minister saying that the funding for social services was inadequate—particularly for child care, which meant that they were having to transfer resources from elderly care to child care to cover their child protection work. That led to the underfunding of care home and elderly care services in the south-west.

Photo of Nick Raynsford Nick Raynsford Minister of State (Office of the Deputy Prime Minister) (Local and Regional Government)

Will the hon. Gentleman acknowledge that although there are undoubtedly real pressures on social services—no one denies that—the Government have made provision in this current spending review period for 6 per cent. real-terms growth in social services spending? That very large financial commitment is far different from what applied when the Conservative party was in government.

Photo of Richard Younger-Ross Richard Younger-Ross Shadow Minister, Office of the Deputy Prime Minister Local Government & the Regions

I will give the Minister five out of 10 for that. I accept that there has been some funding, although at the time that I am describing the director of social services estimated that local authorities were underfunded by £8 billion, and the Government have come close to that figure. The Joseph Rowntree Foundation estimates that a further £1 billion would be required to maintain care home services.

As far as I am aware, that £1 billion has not been found. Consequently, there is still pressure on the care homes sector. The Minister nods in agreement with that.

Centralising tendencies continue to exist. I served on the Committee that considered the Fire and Rescue Services Bill where we made it clear that we believed that the Government displayed centralising tendencies on that. We therefore disagree with the statement that there are no centralising tendencies.

My hon. Friend Mr. Tyler made a point about a subject that we often forget when we make our calculations and consider the costs to elderly people, our taxpayers and local people in our communities—water charges. They used to be part of the rates but they were taken out of the rates and badly privatised by the Conservatives. The equalisation grants that existed were not reintroduced. Consequently, the south-west pays some of the highest water tax bills in the country, and even higher water tax bills are expected. Overall, that means that we face council tax rises and water charges that are above inflation. That is unacceptable.

Photo of Hugo Swire Hugo Swire Opposition Whip (Commons), Shadow Minister (Culture, Media and Sport) 3:21 pm, 26th May 2004

This afternoon's debate has been interesting. I was tempted to agree with Mr. Battle who said that we should look forwards, not backwards. He did not convey that message to Labour Front Benchers. It was extraordinary to hear the Minister visiting the perceived sins of the father on the son, my hon. Friend Mr. Jenkin. Perhaps it is a sign of the Government's desperation as we approach the local elections that he has to hit out not at Opposition Front Benchers but at their parents. That is a little below the belt.

My hon. Friend Sir Nicholas Winterton drew attention to the fact that not as many of our colleagues as there might be are participating in the debate. The reason is simple: they are all out campaigning throughout the country. They are saying that people should bear in mind what has happened in the past and compare the previous situation with the current position. They will spread the message from York to St. Ives and places further north, west, east and south that the Audit Commission's first report in 2002 graded 27 per cent. of Conservative councils excellent. Only 12 per cent. of Labour authorities made the grade and, alas, only 11 per cent. of Liberal Democrat-run authorities were in the same category. Perhaps that is not surprising.

To show that the results were no flash in the plan, the second comprehensive performance assessment, which the Audit Commission announced on 18 December 2003, published updated results for the 150 single-tier and county councils that the first report covered, and a familiar pattern emerged. Conservative-run councils had the highest overall service scores, averaging 3.3 out of 4, compared with 2.9 for Labour councils and, perhaps again unsurprisingly, 3 for Liberal Democrat councils. The Audit Commission found that Conservative councils were more likely to be ranked as excellent and least likely to be ranked as weak or poor. Today, my hon. Friends are relaying those facts with confidence and conviction on the doorstep.

Photo of Hugo Swire Hugo Swire Opposition Whip (Commons), Shadow Minister (Culture, Media and Sport)

I should love to give way but I am running short of time. [Hon. Members: "Oh!"] I shall deliver a little more of my speech and then I should be delighted to give way to the Minister as long as he does not attack my late father for something that he might or might not have done 20 years ago.

This afternoon's debate is about the added burdens that central Government have placed on local government. What better place to start than the comprehensive performance assessment burden? The Local Government Information Unit, not the Opposition, has calculated the figures. It estimates that the annual cost of external inspections of local government is approximately £600 million. That figure does not include the indirect costs of inspection such as compliance, council staff time and avoidance or displacement effects, which amount to probably another £400 million.

I want to talk specifically about the genuine reasons behind the council tax rises in Devon. I shall not go over old ground and the reason for finding the resources so severely depleted by the Liberal Democrats, who had run the county badly for so long. The Audit Commission recently published, "Council Tax Increases 2003/04 Why Were They So High?" Doubtless, it is compelling reading for those with insomnia. It found some interesting answers that I shall examine in more detail later. It states:

"Analysis by the Chartered Institute of Public Finance and Accountancy shows that the total amount that was provided in the local government finance settlement for education was sufficient to meet increased education costs at an aggregate level, with a real 'uncommitted' increase in spending of £225 million."

CIPFA also pointed out that that was equivalent to less than 1 per cent. of local government spending on education. Perhaps the Minister is thinking, "So far, so good." However, the combined effects of the passporting requirement, designed to ensure that all councils increased spending in line with Government requirements, and local choice to spend more than the passported amount, led to an increase in spending in aggregate of £200 million more than the Government had allowed for.

Several factors led to greater pressure to increase spending in 2003–04 than in 2002–03. Employers' national insurance contributions increased by 1 per cent.; employers' contributions to the teachers pension fund increased by 5 per cent., and the pay award for local government staff was approximately 0.5 per cent. above the previous year's amount. Together, those factors contributed to more than half the total increase in local government budgeted spending in 2003–04.

Authorities face a combination of pressures: national and local cost increases, increased demand for services and Government requirements. There is no doubt that one of the major factors behind the increase in council tax has been, as we have heard time and again this afternoon, the steady transfer of responsibility to councils, often without the funding, for matters such as care of the elderly and road maintenance.

In 1995–96, central Government contributed 65 per cent. of net costs to East Devon district council. In 2003–04, they contributed only 49 per cent. That reduction occurred because costs continually increase as new responsibilities are placed on district councils such as East Devon without the provision of additional funding. Even the Government's finance watchdog, the Audit Commission, which investigated this year's council tax rises, stated:

"There are a number of external pressures on councils to increase spending, and therefore, council taxes. These include:

Pressure from central Government to spend more to meet Government priorities."

Devon gets one of the lowest grants in the country. It receives a staggering £182 less per person than the national average—more than 20 per cent. less per head than the national average and more than 28 per cent. less than the north-east. If Devon received the average grant per head of population, it would mean an instant cut of £120 in the average band D council tax bill or an extra £128 million to spend on care services, roads, public transport and schools.

Even compared with our neighbour, Cornwall, Devon receives £67 less grant per person.

The Audit Commission report on council tax commented:

"We found a clear association between the size of grant increase a council received and their increase in Council Tax."

Despite the Minister's protestations to the contrary this afternoon, the Government have also changed their rules on sharing out grants this year, taking money that should have come to Devon and other southern counties and giving it to the midlands and the north. Devon county council lost more than £10 million at a stroke from budgets for care services, roads, libraries and recycling, with Whitehall's decision alone adding 5 per cent. to Devon people's council tax bills.

As from 1 April this year, my district council, East Devon, lost a source of income that previously financed most capital projects there. I refer of course to selling off council houses, which previously allowed it to build up capital reserves of, at one point, about £20 million. That in turn allowed it to keep its part of the council tax rises very small indeed, but that is to go and 75 per cent. of that money will go elsewhere, resulting in a capital loss to East Devon of £1.8 million. In addition to the capital loss, the council tells me that it had a £2 million shortage in day-to-day running costs and had to consider increasing charges for services that it provides and cutting other services and grants.

I could go on, because I have so much to say, but I know my hon. Friend Mr. Cameron wants to begin his speech shortly. I conclude on this. We have heard much this afternoon about the balance of funding review and it is unrealistic of the Liberal Democrats to expect Her Majesty's loyal Opposition to give detailed alternatives to council tax at this stage. [Laughter.] Liberal Democrat Members laugh, but perhaps we are not as flexible as the Liberal Democrats.

In the Brent, East by-election, Liberal Democrats went around handing out facsimile £100 vouchers saying that everybody who voted Liberal Democrat would get £100 back on their council tax. What has happened to that policy? Like so many other Liberal Democrat policies, it has evaporated into the ether of questionable electoral honesty. They are going to replace that with some other form of income tax, but we will shoot their fox by showing that that will cost the average council tax payer in the west country and elsewhere more than they have anticipated.

There is no doubt that local people are suffering. The system is not working. More is being asked of local councils. Local councillors are being undermined by having to cut services and they have to increase council tax as well. Something needs to be done. Clearly the Government are not the right party to do it.

Photo of David Cameron David Cameron Shadow Minister (Communities and Local Government), Deputy Chair, Conservative Party 3:31 pm, 26th May 2004

It is a pleasure to follow my hon. Friend Mr. Swire, who spoke with his usual force and vigour. I refer the House to my entry in the Register of Members' Interests.

This has been a worthwhile debate. We have been trying to solve the mystery of two facts, which are, on the face of it, contradictory. It is a fact that central Government support for local councils has increased, no doubt about it. The figure is 30 per cent. in real terms, as the Minister said if not once, then several times, but it is also a fact that council tax has increased rapidly, right across the country, by, on average, 70 per cent. for a typical band D property. Nobody was warned about that increase but everyone has paid it.

My hon. Friend Mr. Hammond, in a powerful speech, placed the responsibility on the Minister and his Government. He set out in great detail the extra burdens and costs placed by central Government on local government. He placed the Minister, as it were, in the library with the lead piping—responsible for the mugging, if not the murder, of the council tax payers. He is absolutely right and made a wholly convincing case.

The circumstantial evidence is overwhelming and the fact is that almost every council has had the same experience. The Minister is asking us to believe him and to disbelieve all of them, but I just do not think that we can. Let us consider the figures as they relate to some of his colleagues who are in the Cabinet. The tax increase for the average band D property in the Prime Minister's constituency between 1997 and 2004 is 65 per cent. In the Deputy Prime Minister's constituency, there has been a 60 per cent. increase, while in the Chancellor's—this is one of the advantages of holding that post—there has been an increase of only 36 per cent. In the Home Secretary's constituency, the increase is 59 per cent.

Let us consider all the different types of authority: shire districts, on average, up 90 per cent.; shire unitaries up 69 per cent.; metropolitan boroughs up 47 per cent.; inner-London boroughs up 53 per cent.; and outer-London boroughs, as Mr. Davey knows, up 83 per cent. My point is that the increases are across the board—every single council has suffered in the same way.

The Minister made an interesting speech that mainly delved into the past—so far back, indeed, that he talked about the role played by the father of my hon. Friend Mr. Jenkin. My hon. Friend came back with a good rejoinder, which was that his father had been the hammer of the Labour left. I always thought that the Minister had suffered in his time at the hands of the Labour left—I remember when he stood in other parts of London—so I had thought that he would be grateful for the hard work of Lord Jenkin.

The Minister then described a world in which the burdens on local councils were matched by extra revenues. I did not recognise that picture of a world that, as far as I can see, does not exist. Both the hon. Member for Kingston and Surbiton and my hon. Friend the Member for Runnymede and Weybridge asked the Minister an interesting question: why should the Audit Commission not judge the extra cost of the burdens when the Government are considering how to fund local authorities? The answer was non-committal and I hope the Minister will return to the issue when he winds up. Those extra burdens are a real problem. Why not give the Audit Commission more responsibility for identifying them? If that had already been done, some of the arguments that we have had this afternoon would not have been necessary.

The Minister said little about the general question of cost pressures on authorities. I would say that he should get out more to meet them, but obviously if we continue to engage in Opposition day debates such as this we constrain him to appear at the Dispatch Box.

The hon. Member for Kingston and Surbiton began his speech with a reference to my hon. Friend Mr. Pickles. When he used the word "plastered", it occurred to me that, in his party, that might be what could be described as a career-limiting joke, but we all enjoyed it. He made some good points. For example, he pointed out that, in 1997, ring-fencing accounted for only 4 per cent. of local government spending. The Minister says that he has been cutting it back, but he has not yet cut it back to that level. The hon. Member for Kingston and Surbiton then made the valid point that while ring-fencing may be decreasing, as passporting and specific grants are rising, local government spending is still hugely constrained.

Stealing a point that I had intended to make, the hon. Gentleman spoke in some detail about the long list of plans that authorities must produce and the fact that some are now being combined. The Government's legislation is showing a slight Blackadder tendency, in that every Bill must have a cunning plan at its heart. Homelessness, transport and all other legislation begins with the instruction "You, the local authority, must draw up a plan." He made a powerful point in saying that, although the number of plans is being reduced, planning activity—the number of pages of work—will probably remain the same even following the combination.

Mr. Battle told us about something called the Westfest—I assume that it is the Leeds Westfest. I know that he is a keen folk guitarist; I do not know whether he joins in the Westfest, but I hope that he does. He said that the Government were pushing decision making down to local level, which I find hard to square with current experience. He also said that we should break out of the tensions between central and local government. I think that we would all agree with what he said about the importance of involving local people in genuine partnerships in all our constituencies. He spoke of the need for a new model for local government that is much less top-down and that involves participatory as well as representative democracy, and many of us would agree with that as well.

The hon. Gentleman made the interesting suggestion that we should try to devolve services such as meals on wheels to much lower levels. I agree, but problems arise when there are strict national standards that are difficult to meet and a number of instructions coming from Whitehall. Those of us who represent rural constituencies find that our courthouses, police stations and care homes are under pressure because they cannot meet the national standards. People tell me that they would rather have a courthouse, albeit a small one, than no courthouse at all. We shall need to do more work on that.

My hon. Friend Sir Nicholas Winterton gave us a preview of the case that he will put, along with my hon. Friend Mr. Osborne, on the resources given to Macclesfield borough council. He spoke powerfully of the need to allow authorities to plan ahead and spoke at length about floors and ceilings. There are those of us, new to this game, who feel that we have already hit more floors than Frank Bruno and seen more ceilings than Zsa Zsa Gabor, but my hon. Friend was clearly on top of the issue. [Laughter.] An unfortunate phrase, perhaps. He made the point that council tax gearing made the tax increase in Macclesfield worse and I hope that the Minister will listen sympathetically when he goes to see him.

My hon. Friend Mr. Wiggin referred to the capping of his authority. It has experienced a triple whammy: county, fire and police have all been capped. He said that a cap of £250,000 was proposed, but re-billing would involve huge costs. I hope that the Minister will deal with that in his speech.

Richard Younger-Ross told us that his wife now works for the Deputy Prime Minister and that he had not written a speech before coming here today. Putting the two points together, I suggest that his wife, who is clearly an expert in local government matters, should write his future speeches.

We had something of a "south-west fest" between Devon Members—north, south, east and west—and we heard the wonderful statement from the hon. Member for Teignbridge that we could not have it both ways. I thought that that was exactly what the Liberals had been doing for years, but I must have missed out on something. I agreed with him when he said that we needed transparency. All local government finance systems need transparency, but I question whether we would get it from a local income tax. In areas with a low-income base, there will be an even bigger grant system with even more equalisation. To that extent, it will not be a local tax and it will certainly not be transparent. The Liberals are indeed trying to have it both ways.

As I said, my hon. Friend the Member for East Devon spoke with great power and told us all to go canvassing. He is my Whip, so I shall obey him. He spoke with great knowledge about Devon.

My hon. Friend the Member for Runnymede and Weybridge went much further than providing circumstantial evidence. He provided proof that burdens have been added to local authorities and he mentioned three—bureaucracy, costs and unfunded liabilities. I do not understand how the Minister can deny the existence of those burdens. He talked about comprehensive performance assessments and best value. I have to tell him that I visit councils up and down the country and they all say the same thing about the auditing and checking system, the paper work and associated costs. In fact, it is difficult to get them to talk about anything else. They find it largely unnecessary and very expensive. People sometimes ask about our policy: one thing that we could do straight away is to reduce the bureaucracy and burdens that local councils face. That is exactly what we will do.

The Minister mentioned costs. There is a list of costs that local authorities have had to face in the last two years: national insurance, bed blocking, fuel duties, landfill taxes, the Criminal Records Bureau, extra pensions provision, the Labour pension tax and many more. The Audit Commission report of last year has already been quoted, but it bears quoting again. It states:

"National cost pressures taken together account for about £2.3 billion out of the total increase in councils' spending of £4.3 billion. In other words slightly more than half the total increase is due to national pay and price inflation, increased national insurance and general population growth."

That is the report of an independent body: it is authoritative and beautifully makes the point that my hon. Friend the Member for Runnymede and Weybridge put to us.

On the liabilities added to local councils, I accept that many of the objectives are worthwhile, but there are far too many of them, they have been initiated far too quickly and not enough funding has been given to meet them. Hon. Members on both sides of the House have mentioned legislation such as the Care Standards Act 2000 and the Licensing Act 2003, recycling targets, e-government targets and others.

I greatly enjoyed one of the examples that my hon. Friend the Member for Runnymede and Weybridge mentioned in his speech. He told us about the Local Government Association having to draw up its liveability plan. There must be times when people working in local authorities start losing the will to liveability and wonder when they are going to get on with the business of providing services, rather than providing information to the Minister.

I want to deal with the nonsense that we have heard about average council tax. It is mentioned in the Government amendment to the motion and was mentioned by the hon. Member for Kingston and Surbiton. The Conservatives compare what people actually pay and examine the bands. We have used band D, but any band could be used. That is the fair and right way to assess it and it leads to the conclusion that Conservative councils cost people less—in fact, £57 less than Labour or Liberal councils. The idea of comparing average council taxes across the board is ludicrous, as anyone who has looked into the problem knows. It ends up being a comparison of how high house prices are in different parts of the country.

Let me quote the Library on this point, as I am sure that we would all accept its utter and complete impartiality. In its standard note of 4 May 2004, it states:

"Using a council tax per dwelling figure for comparison is not suitable. This is because in different local authority areas the mix of dwellings by value may be significantly different from another. The average band D council tax figure accounts for this."

In other words, the Library endorses our approach. Peter Kellner, more likely to be a friend of Labour than the Conservative party, wrote:

"The proper way to judge figures is to compare like with like—say, band D figures, council by council . . . On this issue, Labour is wrong and the Tories are right."

Photo of David Cameron David Cameron Shadow Minister (Communities and Local Government), Deputy Chair, Conservative Party

I will not give way, as I have only a minute left. As I was saying, it is nonsense to talk about average figures and much better to examine the band figures. Councils and council tax payers throughout the country have been let down by Labour. The 1997 Labour manifesto could not have been plainer when it stated:

"Local decision making should be less constrained by central government."

How can Labour Members possibly claim to have fulfilled that pledge?

We have had more and more spending ring-fenced and determined by Whitehall, and more and more spending has been passported through—again, determined by Whitehall. Taxes, costs and charges have been increased by central Government. Extra bureaucracy has been piled on by central Government to such an extent that many councils now have several employees who just tick boxes and fill in forms insisted on by Whitehall. Extra liabilities are imposed by almost every Government Department.

Taxpayers and local councils desperately need a Government who will cut bureaucracy, which we will. They desperately need a Government who will not add extra burdens to local government without providing resources. Every year, the Government say the same thing—"It's a generous settlement"—but, every year, the same result occurs: an increase in council tax at three times the rate of inflation. Most of all, we need an honest and open way of assessing the costs, pressures, liabilities and burdens about which hon. Members spoke today. In the meantime, all voters have every right to lay the blame for high council taxes at the door of No. 10 Downing street, and on 10 June, they will have the chance to send the Government a message by voting for Conservative councillors and I for one hope that they will do so in large numbers.

Photo of Phil Hope Phil Hope Parliamentary Under-Secretary, Office of the Deputy Prime Minister 3:45 pm, 26th May 2004

I apologise for not being present at the start of the debate. I was chairing a meeting of the balance of funding review, which has been debating—perhaps in slightly different detail—the intricacies of the future of the balance of local government funding. Interestingly, Professor Gerry Stoker, who was mentioned by my hon. Friend Mr. Battle, has contributed to those discussions.

We have had a short, yet helpful—at least from our point of view—debate on local government finance. It is the second such debate in the past seven days. [Interruption.] Mr. Davey suggests that that is because of the local elections, but unfortunately local elections seem to bring out the worst in the official Opposition and the minor parties.

Last week, the Liberal Democrats paraded their proposal for replacing the council tax with a local income tax. That would be an utter nightmare, and we comprehensively demolished the proposal last week. This week, the Tories have let slip their plans to reintroduce the poll tax.

Photo of Caroline Spelman Caroline Spelman Shadow Secretary of State for Communities and Local Government

The Minister was not here for the start of the debate, so for the complete avoidance of doubt and his benefit, may I express categorically that we are not considering bringing back the poll tax?

Photo of Phil Hope Phil Hope Parliamentary Under-Secretary, Office of the Deputy Prime Minister

That was an interesting intervention. I am holding a copy of The Times dated 25 May, which has the headline, "Tories seek answers in poll tax". It says:

"Elements of the widely hated poll tax may be revived by the Conservatives in their local government policy review in an effort to ease the council tax burdens on pensioners."

It says that when Mrs. Spelman was asked whether

"that meant that some of the principles of the poll tax would be considered for inclusion in the plans, she said: 'We will look at that.'"

If there is to be a U-turn by the Conservatives today and another tomorrow, and if we see the usual muddle, confusion and complexity of Conservative party policy, I guess that the local electorate will be able to deal with that at the ballot box, as Mr. Cameron invited them to do.

Photo of Patrick McLoughlin Patrick McLoughlin Opposition Deputy Chief Whip (Commons)

The Minister talks about muddle and confusion. Does he recall the first time that the present Deputy Prime Minister came to the Dispatch Box to talk about local government finance? That was more than seven years ago, and he assured us that he would make local government finance easier to understand. Does the Minister believe that his right hon. Friend has succeeded?

Photo of Phil Hope Phil Hope Parliamentary Under-Secretary, Office of the Deputy Prime Minister

My right hon. Friend the Deputy Prime Minister has increased local government finance by no less than 30 per cent. in real terms. However, enough of the muddle and confusion of the Conservative party, let us hear more about the Government's delivery to councils to fund local services.

It is quite entertaining to watch the Conservatives and Liberals trying to trade insults with each other, but the fact is that the Opposition motion is dreadful. It does not contain a single positive word about the future of local services or local government. It is a wholly negative diatribe—we have heard nothing more than that this afternoon—which contains no acknowledgment of the tremendous work that local government does, serving local communities, or of the real improvements in performance. Local authority staff, managers and elected representatives of all parties work hard to secure better services for local people, but that was completely ignored by Conservative Members.

For this Opposition day debate, a grand total of two Conservative Back-Bench speakers bothered to turn up. A few more have gathered towards the end to lend moral support, but this—

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

On a point of order, Mr. Deputy Speaker. Is it in order for the Minister to criticise Opposition Members for not turning up for the debate, when he did not turn up for the first part of it?

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

I think that the hon. Gentleman is concerned more about putting that on the record than with eliciting from me a ruling on a point of order—which that was not.

Photo of Phil Hope Phil Hope Parliamentary Under-Secretary, Office of the Deputy Prime Minister

Thank you for that ruling, Mr. Deputy Speaker. The Conservative motion is disappointing, but the Liberal Democrats tried to amend it by offering three slogans to be added at the end. That does not say much for Liberal Democrat policy. The party seems to have simply walked away from the problem.

The Conservative motion is an entirely negative diatribe about local government, which does not acknowledge the achievements under this Government. The Liberal Democrats agree with it completely. I consider the sum total of Tory and Liberal Democrat attacks on local councils to be simply unacceptable.

A political party must offer the electorate a narrative about where it has been in the past, where it is now and where it is going in the future. The story that best matches the Conservative narrative is rather unseasonal just now. It is "A Christmas Carol" by Charles Dickens—but in this version the shadow Chancellor, Mr. Letwin, stars as the Tories' very own Ebenezer Scrooge.

Three ghosts haunt the land of local government—the ghosts of Conservative past, of Conservative present, and of Conservative future. The most familiar is the ghost of Conservative past. I will say more of the poll tax later, but it was an appalling debacle. It caused VAT to be raised to 17.5 per cent. It was a very unfair system, and placed a greater burden of taxation on people. It led to real-terms cuts in grants to local councils over a number of years, most notably a 7 per cent. real-terms reduction in local authority grants over the final four years of the previous Government.

We must not forget, either, the impact that compulsory competitive tendering had on services. Crude and universal capping was introduced at that time, as were centralised controls on local council capital spending. I hesitate to mention certain measures introduced by the Tories in Westminster.

Under the Conservatives, crime doubled and police numbers fell. This Government inherited a backlog in council house repairs that amounted to £18 billion. Sir Nicholas Winterton said today that he would make representations to the Government about improving council houses in his area, but perhaps he will explain why this Government inherited a backlog worth £18 million and council houses in such a poor state.

Many hon. Members used to be councillors, committee chairs or leaders of local authorities in those dark Tory years. They remember all too well the dreadful impact on their communities of the centralised and harsh regime imposed by the then Conservative Government. That regime damaged many of our poorest communities. My hon. Friend the Member for Leeds, West was chair of housing in Leeds council at the time, and he told the House about his experience of having to sort out the mess. We know the impact that the past had on local communities.

Have the Opposition learned their lesson? The ghost of Conservative present suggests that they have not. Since 1997, the Conservatives have opposed all efforts at devolution. They opposed the Scottish Parliament and the Welsh Assembly. They opposed devolution to London, and elected regional assemblies for the three northern English regions. They have opposed every Labour Budget, even though this Government have given a 30 per cent. real-terms increase in grants to local councils. They have voted against key areas of legislation to improve local services—in respect of education, housing, planning, policing, transport and child care—which right now are delivering better services for our communities.

The ghost of Conservative present means that Tory councils are putting up council tax this year by more than Labour councils. On a band D average, Tory councils are raising council tax this year by 5.4 per cent. The truth is that Tory councils cost people more.

The Conservatives have pressed the Government about the burdens being placed on local government, but it would help if hon. Members on the Opposition Front Bench spoke to their colleagues on the Back Benches.

The private Member's Bill promoted by Mr. Norman would provide that all regulatory impact assessments conducted by the Government should be externally audited. Can anyone imagine a more unnecessary, bureaucratic, duplicatory, cumbersome burden on local government than that Bill? That is evidence of the reality of what the Conservatives want, and it is in direct contradiction of their Front Benchers.

The Opposition may say that their job is to oppose—although they look rather foolish doing it—so let us look at the Tory alternative, the ghost of Conservative future.

Photo of David Cameron David Cameron Shadow Minister (Communities and Local Government), Deputy Chair, Conservative Party

Given that the Minister did not turn up at the beginning of the debate, will he spend a little time answering the serious speeches by my hon. Friends the Members for Leominster (Mr. Wiggin) and for Macclesfield (Sir Nicholas Winterton)? I thought that that was what one was meant to do when winding up a debate. He should answer the points that they made.

Photo of Phil Hope Phil Hope Parliamentary Under-Secretary, Office of the Deputy Prime Minister

Unless I am much mistaken, this is an Opposition debate, led by the Conservatives on their proposals on local government finance. I apologise for misleading the House in last week's debate, because I said:

"The first thing is that the Conservatives will not repeat their poll tax disaster: for that, we can be thankful."—[Hansard, 17 May 2004; Vol. 421, c. 784.]

I was wrong, and I apologise to the House. The poll tax was not only wrong in practice and in principle but it was political suicide, and it is no wonder that the hon. Member for Meriden was on her feet within 30 seconds—

Photo of Caroline Spelman Caroline Spelman Shadow Secretary of State for Communities and Local Government

There is no excuse for the Minister's not having heard what I said. He does not even have the excuse that he was not here. I shall repeat again, in case he does not retain information very well, that there is categorically no question of us returning to a poll tax.

Photo of Phil Hope Phil Hope Parliamentary Under-Secretary, Office of the Deputy Prime Minister

I have been quoting Dickens, but I turn to Shakespeare:

"The lady doth protest too much, methinks."

It was unedifying last week to see the Liberal Democrats trying to stuff back into the hat the £100 rabbit that they pulled out at the Brent, East by-election. Now the reverse is happening. The Tory poll tax rabbit that we thought had been firmly stuffed back into the hat has popped back up again. We may only be able to see its ears at present, but it is there. The electorate can see it, too.

The poll tax is the least of the Conservatives' worries. Both Conservative contributors to the debate—the hon. Members for Leominster (Mr. Wiggin) and for Macclesfield—made heartfelt pleas for more money for their local councils. That is laudable and understandable. However, perhaps they should consult their Front Benchers about their policies. Not only will we get a new poll tax from the Tories, but they have promised a massive £2 billion cut in grants to local councils. On 16 February the shadow Chancellor revealed that in the first two years a Tory Government would freeze spending on local councils. That would inflict immense damage on local authority services. There would be cuts in neighbourhood warden schemes, cuts in CCTV schemes, cuts in school crossing patrols, cuts in refuse collections, cuts in meals on wheels, library staff and social workers. Streets would not be cleaned and crime would rise.

To make matters worse, the Tories have promised to end resource equalisation. That is the mechanism that ensures that the Government give more support to those areas that have greatest need. Under the Conservatives we would have cuts for all, but bigger cuts for those in most need. It is a disgrace.

I shall conclude by reminding the House of Labour's policies. We have increased grant to local councils by 30 per cent. in real terms. We have seen significant improvements in local authority performance, as shown by the comprehensive performance assessment. We have given new freedoms and flexibilities to local authorities. We have introduced an effective best value approach to improving local services and we have seen, as my hon. Friend the Member for Leeds, West said, tangible improvements to people's lives. That is a positive vision for local government, working as community leaders, delivering better services, working in partnership with others—including the business community, the voluntary sector and the Government—

Photo of Patrick McLoughlin Patrick McLoughlin Opposition Deputy Chief Whip (Commons)

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the original words stand part of the Question:—

The House divided: Ayes 189, Noes 326.

Division number 190 Local Government Finance

Aye: 189 MPs

No: 326 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.

Mr. Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.

Resolved,

That this House notes that the Government has increased grant to local authorities by 30 per cent. in real terms since 1997, in contrast to real terms grant cuts under the previous government; endorses the firm action taken by the Government to reduce council tax increases in 2004–05 to the lowest level for nine years; notes that Labour councils have the lowest average Council Tax increases at 4.7 per cent. and the lowest average level of Council Tax at £870; congratulates the Government on its commitment to enhancing the delivery of public services by local authorities and notes the evidence from the Comprehensive Performance Assessment of significant improvement in local authority performance; welcomes the extension of substantial freedoms and flexibilities to local authorities, including the prudential borrowing regime replacing the capital controls imposed by the previous government; notes with concern that all of these advances would be jeopardised by the policies of the official Opposition which would freeze expenditure on most local authority services; contrasts the Opposition's current rhetoric with its track record of centralisation when in government; rejects its opportunistic approach; and endorses the Government's commitment to high performing local authorities delivering effective local leadership and quality public services in the most cost-effective way.

Photo of George Osborne George Osborne Shadow Minister (Treasury)

On a point of order, Mr. Deputy Speaker. Have you had an indication from Ministers in the Office of the Deputy Prime Minister or, indeed, the Department for Constitutional Affairs that they are prepared to make a statement, before the House rises, on the emerging chaos in the distribution of postal ballots? That is particularly important in my region, where, as with other regions in the north of England, an all-postal ballot will take place for the European and local elections. I have received notice from my returning officer today—other returning officers in the north-west region replicate this view—that, owing to problems with the printing of postal ballots, there may be a delay of up to a week in sending them out. Of course, that may have a catastrophic impact on the election. Have you had any indication that the Government will make such a statement?

Photo of Philip Hammond Philip Hammond Shadow Minister (Communities and Local Government)

Further to that point of order, Mr. Deputy Speaker. There has been huge concern in the House over the past few months about the Government's decision to proceed with this very large-scale postal voting pilot in the face of clear advice from the Electoral Commission that it was not safe to do so. It now appears that Conservative Members' worst fears have been realised and that the process is already descending into chaos. Is there anything that you can do, Mr. Deputy Speaker, to ensure that the responsible Ministers come to the House at the earliest possible opportunity to explain?

Several hon. Members:

rose—

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. I do not think that this is an opportunity to enter into a debate on this matter. The straightforward question to the Chair is whether I have received an approach that a statement be made. The answer to that is no; I have no notice of such a request. However, hon. Gentlemen have clearly raised what appears to be a serious matter, and I hope that those on the Government Front Bench have noted it and that we shall see the consequences of that.

Photo of Patrick McLoughlin Patrick McLoughlin Opposition Deputy Chief Whip (Commons)

Further to that point of order, Mr. Deputy Speaker. The House rises tomorrow. A few weeks ago, a Minister from the Dispatch Box gave the House an absolute assurance that everything was all in order for the postal ballot pilots to go ahead. I have heard in my constituency that the postal ballots have not gone out in Amber Valley because of the same problems that my hon. Friend Mr. Osborne mentioned. You, Mr. Deputy Speaker, should possibly communicate to Mr. Speaker that it is unacceptable for us not to have a statement on this issue at 7 o'clock tonight, so that the Government can inform us what is happening. The Prime Minister said today at the Dispatch Box that he was making urgent inquiries. If he was making urgent inquiries, the House should also be told what is going on in this shambles. The timetable is very tight.

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

That was essentially the same point of order. Nothing that the hon. Gentleman has said has detracted from the importance of the matter that has been raised, but it is not a matter that the Chair can rule on. The answer is that there has been no approach to the Chair as yet for a statement, but I am sure that those on the Government Front Bench will have noted what has been said and the record will be considered if a decision has to be made as to whether any further action is to be taken before the House rises. I cannot add to that.

Several hon. Members:

rose—

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. I have ruled on the point of order. I can rule on a fresh point of order, but I cannot take the same one.

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

I will give the right hon. and learned Gentleman the chance to dispel my scepticism.

Photo of Douglas Hogg Douglas Hogg Conservative, Sleaford and North Hykeham

On a point of order, Mr. Deputy Speaker. You are right to be sceptical, but you have done me a slight injustice. You will know that the Chair has the capacity to take an application for an emergency question. As you know, such an application is normally made in the morning before half-past nine, but there is a discretionary power to take an application for an emergency question later in the day. Do you have the discretion now to take such an application?

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

I would never knowingly do an injustice to the right hon. and learned Gentleman. If he or any other Member wishes to pursue that line, it would be a matter of approaching the Speaker's Office in the normal way. It is not a matter on which I can rule from the Chair.

Several hon. Members:

rose—

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. I have made my ruling. Unless there is a new point of order, I do not think that there is anything more to be said.

Photo of John Redwood John Redwood Conservative, Wokingham

On a point of order, Mr. Deputy Speaker. Given that those of us who debated this issue heard Ministers give categorical assurances from the Dispatch Box that all would be well, what opportunity is there for Ministers to correct the record of the House if they do not make a statement today?

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

That is plainly not a fresh point of order that I can rule on. The matter has been aired and its importance is clearly understood. There are opportunities for action to be taken in response, but there is nothing further that I can say now. I do not believe I am justified in holding up further progress in the proceedings on the Order Paper.

Several hon. Members:

rose—

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

I hope that the hon. Gentleman will be original.

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West

I have seldom been accused of being anything else.

There is a procedural point: it is open to the occupant of the Chair to suspend proceedings so that discussions can take place between the usual channels to find a way of getting a statement or a debate. I have already voted in the European elections; I have been treated more fairly than other people.

Suspending the House for five or 10 minutes, so that the Government can make a statement about how they intend to proceed, might be the most useful way of resolving the problem. This is not just a party game played out here; it is a matter, in the east midlands, of people not being guaranteed a vote in a form that the Government dictated they should have it.

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

I hear what the hon. Gentleman says, but there is no case for suspending the sitting of the House, which has business before it. There is absolutely nothing to stop the most intense traffic between the usual channels, if that is seen as a way of progressing the matter.