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Roche, Mrs. Barbara

Rogers, Allan

Rooker, Jeff

Rooney, Terry

Ross, Ernie (Dundee W)

Rowlands, Ted

Ruddock, Joan

Salmond, Alex

Sedgemore, Brian

Sheerman, Barry

Sheldon, Rt Hon Robert

Shore, Rt Hon Peter

Short, Clare

Simpson, Alan

Skinner, Dennis

Smith, Andrew (Oxford E)

Smith, C. (Isl'ton S & F'sbury)

Smith, Rt Hon John (M'kl'ds E)

Smith, Llew (Blaenau Gwent)

Snape, Peter

Soley, Clive

Spearing, Nigel

Spellar, John

Steel, Rt Hon Sir David

Steinberg, Gerry

Stevenson, George

Stott, Roger

Strang, Dr. Gavin

Straw, Jack

Taylor, Mrs Ann (Dewsbury)

Taylor, Matthew (Truro)

Tipping, Paddy

Turner, Dennis

Tyler, Paul

Vaz, Keith

Walker, Rt Hon Sir Harold

Wallace, James

Walley, Joan

Wardell, Gareth (Gower)

Wareing, Robert N

Watson, Mike

Welsh, Andrew

Wicks, Malcolm

Wigley, Dafydd

Williams, Rt Hon Alan (Sw'n W)

Williams, Alan W (Carmarthen)

Wilson, Brian

Winnick, David

Wise, Audrey

Worthington, Tony

Wray, Jimmy

Wright, Dr Tony

Young, David (Bolton SE)

Tellers for the Noes :

Mr. Peter Kilfoyle and

Mr. Gordon McMaster.

Madam Speaker-- forthwith declared the main Question, as amended, to be agreed to.

Resolved,

That this House welcomes the widespread indications of economic recovery in the United Kingdom at a time when many other major economies are in deepening recession ; recognises that the interests of industry are at the heart of the Government's policy and acknowledges the comprehensive programme of training and employment opportunities for unemployed people that the Government has put in place ; welcomes the Government's commitment to its Manifesto pledges including its commitment to improving the efficiency and effectiveness of public services through the Citizen's Charter ; deplores the scare-mongering stories about public spending peddled by the Opposition ; and applauds the Government for its determination to maintain low inflation, sound public finances and firm control over total public expenditure upon which a sustainable economic recovery depends.

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Council Tax

Madam Speaker : I now call Mr. Secretary Curry--I mean, Mr. David Curry.

10.28 pm

The Minister for Local Government and Planning (Mr. David Curry) : I do not blame you, Madam Speaker, for being slightly confused ; I am fairly confused about this myself. [Interruption.] I have never been modest when starting something : give me six months and we shall see.

I beg to move,

That the draft Council Tax Limitation (England) (Maximum Amounts) Order 1993, which was laid before this House on 7th June, be approved.

This debate is the last piece of local government finance business for the first year of the council tax. That tax is now fully in place and has widespread support. It avoids the unlimited bills of the old rating system and the problems of the community charge. It is fair to local taxpayers without being administratively burdensome for authorities.

The successful introduction of the tax would not have happened without the help and close co-operation that we have received from local government. The council tax is a success story for which local authorities up and down the country can take much of the credit. The experience that we have all gained in working on it with local authorities has been fruitful, and we have built up trust and lines of communication between local and central government at all levels. My right hon. Friend the Secretary of State and I are determined to continue to build upon that approach.

With regard to council tax capping, local government cannot--and, I believe, now does not--expect to be exempt from the need for the restraint of overall expenditure. Last year local authority expenditure in England was £60 billion--that is £1,000 per head. Taking the United Kingdom as a whole, local authority expenditure accounts for a quarter of total public expenditure, and more than 9 per cent. of our domestic expenditure.

However, it is not our aim that authorities should be capped. As in previous years, we announced provisional capping criteria in the autumn preceding budget setting. Our aim was to achieve as much as possible by setting out clear and fair guidelines in advance, so that the maximum was done by voluntary restraint, leaving as little as possible to be done by capping. But we made it clear that, should any authority budget too high, we would cap it, and hence safeguard council tax payers against excessive bills, and also safeguard the public expenditure position.

In the event, 416 of the 419 English authorities have set their budgets within the cap. That is by far the highest number since capping began. The fact that 416 authorities have set affordable budgets and council taxes is further evidence of the sense and responsibility of local government.

Of course, Government have had their part to play. This year, standard spending assessments increased on average by 3.1 per cent. at a time when inflation reached its lowest level for decades. We are satisfied that each authority's SSA this year is a fair measure for its spending on the basis of the most up-to-date information that we have. But we are already seeking improvements in SSAs,

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and, as is well known, in the coming year we are undertaking a thorough review of the SSA and the area cost adjustment that is a component of it.

We especially wish to be able to have regard to the new information available to us from the 1991 census, and to take advantage of the need to incorporate that more up-to-date information to consider how we can improve the SSA system as a whole. I have to be careful when I say SSA, because I am more used to talking about SSSIs, and I appreciate that SSAs are not the same thing.

We have invited every local authority to submit any comments that it wishes to make on SSAs, or to put forward any evidence that it may have that would support changes in the method. Throughout the review my officials have had, and will continue to have, frequent discussions with the associations that represent local authorities. Our object is, with the help of local government, to obtain SSAs that we judge are the best and fairest measures for local authority spending given the information and data available to us.

Mr. Jeff Rooker (Birmingham, Perry Barr) : When he conducts the review, will the Minister think it worth while to ask local authorities, especially education authorities, about discretionary funding to students in further or higher education? More than half the authorities in England have cut that funding, and that has had an especially bad effect on mature students with household responsibilities, who may be unemployed at the time. The fact that more than half the authorities have had to cut that discretionary funding in order to remain within the capping limits is of concern to Members on both sides of the House, but because the funding is discretionary, the information is not usually collected. The Government should take a hard look at the effect of the new council tax on discretionary funding.

Mr. Curry : As I said, we are examining the whole methodology of the SSAs. I have encountered in my constituency in North Yorkshire the problem that the hon. Member for Birmingham, Perry Barr (Mr. Rooker) mentioned, so I recognise that it is a subject for concern. But I must make one cautionary statement. It would be wishful thinking to believe that one can carry out a review from which everybody will gain.

If some authorities believe that they are being underpaid in the present system, there must, by definition, be others that are doing relatively well out of it. Therefore, when we correct the balance, we are likely to find a number of complainants and a number of beneficiaries. They may be different people, but I have no doubt that those who complain will wish to line up as vigorously as they do at present.

I understand the point that the hon. Member for Perry Barr made. Nothing is excluded from the review, but, at the same time, we must make sure that it is practicable, that there is a time scale in which to do it, that local authorities are consulted and that the details with which they have to work are available to them as soon as that is possible within the constraints of the new budgetary timetable. The hon. Gentleman will understand that.

What of this year's capping round? On 1 April my right hon. and learned Friend the then Secretary of State took his capping decisions. He had regard to all relevant considerations, including the budgets that authorities had set and the provisional criteria that he had announced to

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the House on 26 November. He decided to adopt criteria for identifying the authorities in respect of which capping was necessary which broadly gave effect to those provisional criteria. Authorities were, therefore, selected for capping which had budgeted excessively or whose budget represented an excessive increase over the previous year.

On the basis of the criteria, my right hon. and learned Friend identified three authorities--Castle Point, Gloucestershire, and Harlow--for capping. At the same time, my right hon. and learned Friend proposed for each of these authorities a cap, or maximum, for its budget.

The toughest cap that we could propose would require a designated authority to reduce its budget so that it was no longer excessive or represented an excessive increase. But we could do that only where, having regard to the authority's individual circumstances, we believed such a reduction would be achievable--that is, that it could be made in such a way as to avoid significant disruption to essential services.

In other cases, we would require only smaller reductions which we judged it would be right to demand of the authority, given its particular circumstances, in the financial year.

In the circumstances of Harlow and Castle Point, we judged that it would not be right to demand the full reductions in a year for those authorities. For Gloucestershire, however, we proposed a cap which would require the full reduction. In terms of the council tax for a band D dwelling with two adults, our proposals meant for Harlow a tax reduction of £288 ; for Gloucestershire and Castle Point reductions of £55 and £18 respectively.

Authorities were notified on 1 April of their designation, the general principles on the basis of which they were designated, and the amount of the proposed cap. They then had 28 days to tell us whether they accepted the proposed caps. If they did not accept, they could suggest an alternative cap and put forward a case in support of it.

All three authorities suggested alternative caps. Castle Point and Gloucestershire wished to retain their original budgets. Harlow proposed a cap of around £2.1 million less than its original budget, but still £4.6 million in excess of the proposed cap.

My predecessor met representatives of each of the three authorities to hear their oral representations in support of their cases. Before taking his decision, my right hon. Friend the Secretary of State considered all the points very carefully, including those made at the meetings.

For Castle Point, whose difficulties arise solely from the need to meet in 1993-94 a £2.2 million deficit which was due to incorrect budgeting in previous years--

Mr. Andrew Mackinlay (Thurrock) : By whom?

Mr. Curry : By the treasurer. For Castle Point, it was clear that the cap at the level proposed would be very tight. However, the authority told us that it was planning to generate substantial capital receipts during 1993-94 from asset sales. If we issued a statutory direction, Castle Point could use some of these receipts to pay for about £0.5 million redundancy costs that would otherwise be charged against their 1993-94 budget. We decided that it would be right to issue such a direction, and on this basis we concluded that a cap at the level originally proposed would be right for that authority.

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For Harlow, all parties on the council agreed that a cap of more than £11.2 million was required. We considered Harlow's case and considered that, given the magnitude of the budget reductions--about 30 per cent.--and the relatively short time in which they must be made, the original proposed cap was too tight. We judged that a relaxation of £600,000 to a cap at £11.8 million would be appropriate given Harlow's circumstances.

For Gloucestershire, we decided after very careful consideration of all available relevant information that the cap should be set at the level originally proposed.

In all cases, we have undertaken an extremely searching analysis of the authorities' individual circumstances. We are satisfied that the caps that we have now decided are reasonable, achievable and appropriate in all the circumstances of the authorities concerned. In the one case in which we have relaxed the proposed cap--Harlow--the tax reduction for a band D dwelling with two adults is now £263 and for a band G dwelling, £438.

If the order is approved by the House, we shall then serve the statutory notices on the three authorities formally setting their caps. Within 21 days thereafter they must reduce their budgets in line with the caps ; new lower council taxes must be set as soon as practicable afterwards. Each of the capped authorities must meet from within its budget the costs of issuing the new council tax bills. It will be for each authority to decide how to live within its budget, but we are satisfied that they will be able to provide an appropriate level of service if they choose to do so.

Ideally, of course, no authority would be capped. But we should not let the fact that we have needed to cap three authorities detract from the fact that it is a considerable achievement for local government to bring in the council tax at an affordable level throughout the country. For the council taxpayers of Castle Point, Gloucestershire and Harlow, the order will mean reductions in their bills and it will require those authorities to curb their excessive budgeting, and I commend it to the House.

10.40 pm

Mr. Jack Straw (Blackburn) : The Labour party is wholly and unequivocally opposed to the capping of a council's budget. It is an abuse of central power, it demeans democracy, it undermines the right of local people to decide what services they are ready and willing to pay for, it is in breach of one promise after another from the Conservative party, it serves no economic purpose, and it has not worked in its own terms.

The Conservative party was elected 14 years ago on pledges to give back power to local people. Those pledges have been broken. Also, 144 separate Acts of Parliament have been forced through in those 14 years, each cutting councils' power a little more, each transferring more power to Whitehall or to the unelected quango state. Although only three authorities are specifically named in the order, all councils--all 419 of them--have been capped this year. That is what every council understands.

Former Councillor Bill Dixon-Smith, the former leader of the Association of County Councils, who lost his seat in Braintree when the Conservatives were swept from power in Essex, not least in revulsion against the capping of two authorities in that county, pointed out that the capping

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powers given to the Government and their use of them has meant that in every case the council tax has been set not by local authorities but by central Government.

Capping orders are but the culmination of the transfer of power from local taxpayers to the central state. Such orders give greater power to the Secretary of State over democratically elected local councils than any powers otherwise exercised outside wartime. Given the seriousness, given the fact that hundreds of people will lose their jobs as a direct result of the order, given that thousands will suffer through reductions in services and given, too, that the Secretary of State actually signed the order and is present, I must say to the Secretary of State that it is outrageous that he has left it to his Minister to speak to the order rather than doing so himself.

I welcome the new Minister to his job and I wish him well. Had the Secretary of State spoken, I would have welcomed him to his new job, but I can understand his reticence, for this Secretary of State was once the Minister for the community charge--the apostle for the poll tax, who evangelised the new system in even less guarded terms than his predecessor in both jobs, the right hon. and learned Member for Folkestone and Hythe (Mr. Howard).

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