House of Commons Hansard Debates for 15 Jun 1995

Mr. Dobson: I had always assumed that the Minister was in his right mind, but if he seeks to compare Tower Hamlets and the other boroughs that he mentioned to Westminster, he has clearly taken leave of his senses-- [Interruption.] The Secretary of State made an enormously long speech. If he will keep quiet, I shall get on with mine and hon. Members will be able to speak up for the communities that they represent.

Mr. Curry: The hon. Gentleman knows that there is a connection between those authorities and Westminster city council because they are encompassed by exactly the same methods of calculation. Therefore, if the hon. Gentleman were to seek to re-engineer the SSA system to achieve the deliberate outcome of cutting grants to Westminster, the necessary consequences would be reductions in grants to Tower Hamlets, Lambeth, Southwark and the other inner-city London authorities, unless he were deliberately to rig the system.

Mr. Dobson: If the Minister wants to talk about deliberate rigging of the system, perhaps he should explain to Tory Members who voted for this settlement

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that Westminster city council receives a special allowance, for which virtually no one else in the country qualifies --that is why it was invented--for visitors to Westminster.

Mr. Curry: Anybody is entitled to it.

Mr. Dobson: Yes, just as anyone can eat at the Ritz. Anyone is entitled to the grant, but the grant is especially useful to Westminster.

Many visitors arrive in Westminster in cars and pay parking charges. Westminster city council receives more than £20 million a year in parking charges, which is not offset against any aspect of its grant. It is a racket, it has always been a racket and it will remain a racket so long as the Government are in office.

It is a racket that protects over-spenders in Westminster. The capped authorities spend much less on refuse collection: Newcastle spends £25 per head, Norwich spends £11 per head and Sheffield spends £14 per head. However, the Tories' over-subsidised fat-cat Westminster city council pays out no less than £53 per head on refuse collection. On street cleaning, Newcastle spends £8 per head, Norwich spends £5 per head and Sheffield spends £5 per head. Those councils have been capped so that Westminster, profligate as it is, can spend £36 per head on street cleaning. It beats me why Tory Members from Shropshire, Gloucestershire, Devon, Norwich and Sheffield are willing to go along with that racket, which lines the pockets of a few people in Westminster and does no good for the people whom they purport to represent.

I shall compare the allowance made in the grant for education for the capped authorities with that made for Westminster. If Devon county council were to receive the same education allowance as Westminster, it could employ 2,566 extra teachers this year rather than think about getting rid of teachers. Gloucestershire could employ 1,618 extra teachers, Shropshire could employ 996 extra teachers, Sheffield could employ 892 extra teachers, Newcastle could employ 371 extra teachers and Barnsley could employ 451 extra teachers. I cannot understand why Tory Members voted for a settlement like that. It must be said, however, that that is the basic background to this decision. If something is rotten to the core, the final product--the capping--is also bound to be rotten.

Mr. Tracey: I have been interested to hear the hon. Gentleman constantly talk about Westminster. As he mentioned foreign visitors, will he say how many foreign visitors go to Newcastle, Sheffield, Manchester or the outer London boroughs, one of which I represent? The House should also know the total external grant that a Labour Government would give.

Mr. Dobson: The hon. Gentleman, who does not seem to rank among the star wranglers of the play, confirms my point. There is a grant for visitors because it suits Westminster and it is no use to virtually everyone else in the country. That is why the Government conceived it in the first place.

The decisions on the capping criteria do not make sense either. When the settlement was announced, the Secretary of State chided me, saying that I was new to the job, had misunderstood the figures and had not done my

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homework. I had the audacity to predict that the average increase in council tax would be 6 per cent. as a result of the settlement.

Sir Irvine Patnick: On a point of order, Mr. Deputy Speaker. The hon. Gentleman accuses me, as a Sheffield Tory Member, but appears not to hear when I seek to intervene.

Mr. Deputy Speaker: Order. The hon. Gentleman's point of order is an abuse of the House. He is an experienced Member, not least in the Whips Office, and knows full well the procedures of the House. What he has to say is a matter for his own speech or an intervention if the hon. Member for Holborn and St. Pancras (Mr. Dobson) gives way.

Mr. Dobson: As I was saying before I was so politely interrupted, the Secretary of State said that I misunderstood the figures and had not done my homework, but I predicted that the average council tax increase across the country would be 6 per cent. I freely confess that I was wrong; it was 5.2 per cent.

I plead in justification, however, that in Suffolk, Coastal, represented by the Secretary of State--I use the band D figure, because that is his favourite method--the increase was 6 per cent. It was 8.5 per cent. in Huntingdon, represented by the Prime Minister. It was 7.4 per cent. in the area represented by the Secretary of State for Education and, in the area represented by the chairman of the Conservative party, the right hon. Member for Richmond and Barnes (Mr. Hanley), it was actually15 per cent.

If we then compare-- [Interruption.] The Secretary of State made a long speech. Let me finish my argument. If we compare the increases in those places with the increases in the places that are to be capped, what do we find? We find that, if Barnsley had had its way, it would have been 12 per cent. In Devon, there would have been no increase, allowing for the police. In Gloucester, there would have been no increase, allowing for the police. In Shropshire, it would have been 12 per cent. and in Sheffield 13 per cent.

Staggeringly, if Newcastle city council had had its way, it would have reduced its council tax by 5.6 per cent., but it gets capped. It is a fiddle and a farce. If the Secretary of State wants to confirm that, he is welcome to do so.

Mr. Gummer: Did the hon. Gentleman notice that all those constituencies held by Conservatives can attribute the increase in the council tax to the Liberal-Labour county councils under which we labour? Will he explain why, when the Labour party was in power, Westminster did significantly better by comparison than it now does. If he is saying that there is something wrong with the present system, it is surprising that Westminster fares worse under the system that was introduced with the support of his hon. Friend the Member for Blackburn (Mr. Straw).

Mr. Dobson: I am not entirely sure that my hon. Friend the Member for Blackburn (Mr. Straw) was a Minister of the Crown in the most recent Labour Government. [Interruption.] Oh God, he was a special adviser, so it must be his fault. If we are talking about special advisers, this is the Secretary of State whose special adviser did a bunk on the night of the local elections. One can understand why.

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Who does the Secretary of State believe that he represents? As I understand it, in Barnsley, Gloucestershire, Newcastle, Shropshire and Sheffield, all the parties on the council supported the budget and supported the representations asking to be allowed to go through the cap.

Mr. Patrick Thompson: The hon. Gentleman was talking about his forecasts of the increase in the council tax, and I genuinely want to know what the figure would have been for Norwich. Will he confirm that Norwich's citizens will receive a rebate as a result of the action that the Secretary of State is taking tonight?

Mr. Dobson: The hon. Gentleman will no doubt attempt to catch your eye, Mr. Deputy Speaker, and will tell us what horrors would have befallen the people of Norwich if the Secretary of State had not intervened.

It is not confined to members of the council. Shropshire Tory Members of Parliament, as I understand it, have made representations to the Secretary of State, saying, "Look after the old folks; look after the children in Shropshire". In Devon, one or two Members of Parliament certainly did that. They are not here, but one or two of them certainly started making public representations and then, apparently, changed their minds. The circumstances had not changed; they had simply changed their minds.

There appears to be public opposition from Tories in

Gloucestershire, but I have been told by people from Gloucestershire that they have been led to believe by some of their Conservative Members of Parliament that they are making private representations, so I do not really know where we are.

Those matters were material to the local elections in all those places. The Tories had every opportunity--the right hon. Member for Richmond and Barnes could have raised the subject time and again at his press conferences--to say whether the councils should go through the cap.

What happened? The Tories lost half their seats in Barnsley; they now have one out of 66. They lost half their seats in Sheffield; they have four out of 87. They lost more than half their seats in Newcastle, where they have two out of 78, and they lost half their seats in Norwich, where they have one out of 48.

The Tories also made the issue a topic of the district elections in the counties concerned. In Devon, they lost 64 seats, in Gloucestershire they lost 20 seats and in Shropshire they lost 35 seats. Local people will express some concern that in--

Mr. Nigel Jones: Will the hon. Gentleman give way?

Mr. Dobson: I shall in a moment.

The people of Devon will be uneasy that thehon. Members for Exeter (Sir J. Hannam), for Plymouth, Sutton (Mr. Streeter), for South Hams (Mr. Steen), for Teignbridge (Mr. Nicholls), for Tiverton(Mrs. Browning), for Torbay (Mr. Allason) and for Torridge and Devon, West (Miss Nicholson) all voted for that rotten settlement.

People in Gloucestershire will be uneasy that thehon. Members for Cirencester and Tewkesbury(Mr. Clifton-Brown), for Gloucester (Mr. French), for Stroud (Mr. Knapman) and for Gloucestershire, West(Mr. Marland) also voted for that rotten settlement.

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As we all know, the biggest impact of the settlement, with the exception of Norwich, is the threat to education and social services. It is having the same results throughout the country. Parents, governors and teachers are in revolt about the threat to their children's education. The Government have tried their desperate best to blame the authorities. They have failed in that effort, because people understand that it all depends on that rotten, rigged grant system.

I do not know whether the leaks came from the Education Secretary, who is trying to prove that she is friendly towards education, but shall we say that the newspapers gathered and then received a memorandum, which showed that the Education Secretary believed that the settlement was harmful to schools. She has been going round sweethearting teachers and other organisations, saying, "I am sticking up for you", but she has not done it sufficiently well to ensure that the caps are reduced.

The budget for Gloucestershire is the same as last year, and Gloucestershire is finding it necessary to abandon schemes to provide new centres for people with mental health problems in Newent in the Forest of Dean and in Gloucestershire. There are cuts because of massive cuts in the Government's community care grant. The council is getting fewer hours from 850 home care assistants who used to help people in desperate need in their homes so that they did not need any residential care. Some of those home care assistants have had their hours reduced by 50 per cent. because the county cannot afford to pay them. That, I gather, is being challenged in the courts.

Devon county council suffered the largest reduction in community care grant of any county in the country. It is being forced to contemplate redundancies in the education department, including teacher redundancies. Spending on pupils has, I understand, had to decrease by £270 per secondary pupil in the county, and the council is now confronted with a 10 per cent. increase in the pupil-teacher ratio. However much funny Tories may wish to argue, everyone knows that the lower the pupil-teacher ratio the better off children are. Counties have made substantial economies. Norwich city council has made economies of more than £8 million in one -off or recurrent reductions in expenditure and it has cut its staff by 15 per cent. in the past few years.

The Secretary of State usually rants on--he rants in a most seemly way, as you know, Mr. Deputy Speaker--about the Audit Commission report on the massive increase in white collar workers in local authorities. Sheffield has substantially cut the number of its white collar workers at a time when everyone else appears to be increasing theirs, but it has received no credit.

Shropshire has had to cut its spending by £26 million in the past four years. The cap will lead to cuts in schools, closure of old people's homes, cuts in home care, reductions in teacher jobs and reductions in books for children. The whole thing is wrong. If the Government are trying to ensure that every local authority in the country can serve its local community in the way that it wishes and the way that it has been democratically elected to do, the settlement shows that the Government have got things wrong. If the figures are not the product of their getting things wrong, they are the

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product of a malign approach to the future of many people, especially children and old people, throughout the country, and the country will not forgive them.

5.8 pm

Mr. John Biffen (Shropshire, North): My right hon. Friend the Secretary of State for the Environment was challenged on account of the length of his speech. I regret that, because it is all too much of a rarity now to have a ministerial speech peppered with interventions, yet that is at the heart of the practice of Parliament and the exposition of difficult and arcane topics, and there are probably few topics more arcane than local authority expenditure. It was rather refreshing to hear my right hon. Friend approach the subject with all the fervour of the Cambridge Union. Although I found that approach uplifting, I intend to be a great deal more prosaic in my own comments--

Mr. John Garrett (Norwich, South): And more brief.

Mr. Biffen: And certainly more brief. I shall concentrate upon the fortunes of Shropshire. The county sought a budget of just more than £245 million against the Department of the Environment's preferred budget of £239 million. It is the £6 million difference that has been at the heart of the discussions and the dissent. I pay tribute to the Minister of State for his courtesy and care in consulting Shropshire Members of Parliament--I see that the hon. Member for The Wrekin (Mr. Grocott) and my hon. Friend the Member for Ludlow (Mr. Gill) are in their places. Although that courtesy, alas, did not culminate in justice as far as I was concerned, nonetheless, in this sad world even courtesy has its advantages.

When we move from the statistics to the reality, we are talking about what the county can provide in terms of education, fire services and care for the elderly. I shall make only two points, but I believe that they go to the heart of the general debate rather than to the argument about the formula which sustains local government financing.

First, in examining the county's provision of education, fire services and care for the elderly, we must leave aside the detailed statistical analysis and ask whether they are the consequence of prodigal, feckless or irresponsible budgeting. One may argue about the priorities of that service provision, but I do not believe that it invites any of those judgments.

Shropshire asked to be permitted to make a modest fiscal judgment in order to take account of what it believed to be its responsibility to provide core services in the county. After all, it is not seeking the £6 million from Brussels or Westminster and Whitehall; it is being sought from a council tax that is paid by the Shropshire electorate. That is the heart of the dilemma.

My hon. Friend the Member for Surbiton (Mr. Tracey) touched upon the question of whether the capping structure still has the legitimacy that it once possessed. We must ask whether it has become so pervasive that it has ceased to be a safeguard and has instead become a straightjacket.

That is the heart of our dilemma this afternoon. It is not about the knock- about political relationship between erring counties and Whitehall and Westminster; it is about whether the relationship between central and local

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government has enough flexibility to avoid oppressive centralisation. I sometimes think that the Department of the Environment is inspired by Jacques Delors in its relationship with local authorities. There is no place in the Tory pantheon for that degree of centralist dominance and that desire for formula uniformity.

I do not know how this evening's debate will conclude, although I understand that the motion will be passed. As a consequence of the debate, I hope that hon. Members will reflect upon the fact that we cannot return to this situation year after year because it will worsen year after year. We must now begin to think of a more flexible and acceptable arrangement.

Mr. Deputy Speaker: Order. When I called the right hon. Member for Shropshire, North (Mr. Biffen), I failed to remind the House that Madam Speaker has placed a ten-minute limit on the speeches of Back-Bench Members for the rest of the debate.

5.13 pm

Mr. Bruce Grocott (The Wrekin): It is a pleasure to follow the right hon. Member for Shropshire, North (Mr. Biffen) in the debate. I often agree with his individual arguments but that is probably the first time that I have agreed with everything that he has said. It prevents me from making several points that I would otherwise have mentioned.

Many hon. Members may be surprised that Shropshire should be so strongly opposed to this year's financial settlement. The efforts of Shropshire Members of Parliament and local councillors, who have repeatedly made all- party representations to Ministers in the past four years, has culminated in overwhelming opposition. Ministers always listen courteously to our views and--I hope that it will not be the same pattern this year--then reply that first, we should look at our budget to see if we can make any reductions or economies; and, secondly, say that we should look at our reserves.

Shropshire has certainly made real expenditure cuts in the past four years. I shall not mention them all, as I am trying to make my remarks as brief as those of the right hon. Member for Shropshire, North. There have been cuts in residential care for the elderly--including the closure of Castle Lodge in my

constituency--which always cause upheaval and unhappiness. There have been cuts in expenditure on schools. Hadley Manor school has closed. We have debates in this place where we swap figures and talk about real terms and base budgets, but the reality sinks in when one visits a building that last year was a thriving school but which is now boarded up. Part of the building has been turned into a centre for people with disabilities, and I am delighted about that. But the fact is that a school has been lost and we owe it to our constituents to try to prevent such closures.

Ministers always tell us to look at the county reserves. We have looked at them. In 1990 the reserves totalled £9.7 million and they have now decreased to £3 million--the Department of the Environment has said that that is about as low as they should go. We have made genuine attempts to deal with our problems in numerous meetings with Ministers over the years.

It is against that background that there was such an outcry this year. I have never experienced anything quite like the public response to the announcement of this

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year's figures. Schools decided immediately that they simply could not impose the funding cuts and governors stated that they would not do so. There was unanimous opposition to the figures from the chairman of school governors, as well as all-party opposition on the county council.

Once again, we went to see the Minister. The council leader, Sue Davis; the leader of the Liberal Democrats, John Stevens; and the leader of the Conservatives, Brian Gillow, met the Minister to explain the seriousness of the situation and why they felt obliged to challenge the cap. Therefore, we were tremendously disappointed when we discovered that the Government had decided not to respond to our representations.

Small wonder that education has been hit particularly hard. Councillor Derek Woodvine, who is the chairman of the council education committee, also made representations to the Minister. Staff numbers in one primary school in my constituency will almost certainly decrease from seven to five, while class sizes will increase to 34 pupils. The working hours of nursery assistants employed on the home school link will be cut by two and a half hours a week, secretarial help will be cut by five hours a week and special needs will be cut by nine and a half hours a week. That is the situation at only one school. No wonder there was an enormous amount of opposition to the settlement. The depth of disappointment was not surprising.

I conclude with two thoughts. First, the cuts that will result from the decision will affect all council services. I cannot understand why the Government do not realise that the opposition from Shropshire reflects genuine community feeling. It is not orchestrated and it is not unique to Shropshire; it is a genuine reflection of what people feel and the Government ignore it at their peril. We hear rumours in the media that the Secretary of State for Education may realise it only too well.

Secondly, there really should be a better way of dealing with these matters. My first experience of local government was as chairman of the finance committee on a small district council more than 20 years ago. I look back on those days as a time of benign simplicity. Each year, we knew what the grant would be and we worked out the rate we had to set on the basis of the rateable value. We did not go to and from London with delegations to see Ministers. There was a Conservative Government at the time so it was not all happiness and light, but that was how things were done. They were times of great simplicity, when we did not always think that the people in Whitehall knew best.

Next year, as well as looking at the settlement for Shropshire again, I hope that the whole system of unnecessary bureaucracy, paperwork and delegations will be reviewed, and I hope that we return to the simplicity that worked for so long.

5.21 pm

Mr. Anthony Coombs (Wyre Forest): I do not underestimate the difficulty of hon. Members representing such counties as Shropshire and I understand what my right hon. Friend the Member for Shropshire, North (Mr. Biffen) meant when he said that he would like the settlement to be a framework rather than a straitjacket. However, I would like to say a few words in favour of

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the rate-capping settlement, in the context of a tight local government settlement, but one that I believe will be manageable. I spent 10 years in local government--possibly not as long as many right hon. and hon. Members--and I had some sympathy for the hon. Member for The Wrekin (Mr. Grocott) when he said that the way in which grant is allocated in local government has become increasingly complicated over the years. There seems to be an unnecessary shuffling back and forth from Whitehall. It is a matter of regret that some 80 per cent. of resources in local government is now provided centrally rather than locally.

Local government should be vibrant and responsive to its local communities and raise a greater proportion of its revenue from them. In principle, I am against capping where it is not absolutely necessary, as it avoids the sins of profligate local authorities. Sadly, until two years ago, my local Labour-controlled Wyre Forest district council was overspending by some £2 million, or 20 per cent. per year. The cap let the council off the hook in respect of the local population.

As the Irishman said, "If you want to get somewhere, you have to find out where you are starting from". We start from a system of local government in which 80 per cent. of funding is provided by the taxpayer; we have a budget deficit and no less than 25 per cent. of total Government spending-- something in the region of £43.5 billion this year--is spent by local government. Although only 10 out of 448 local authorities were capped and four of those had adjustments made to their caps as a result of representations to the Secretary of State, we need to control central and local government spending. Capping is one way of dealing with the most profligate or potentially profligate local authorities and providing an effective deterrent to other local authorities that might otherwise be tempted to overspend.

We have to consider, however, not only the possibly justifiable complaints from right hon. and hon. Members that some local authorities have a worse deal than others, but, as the hon. Member for Holborn and St. Pancras (Mr. Dobson) said, the deterrent provided by capping, and the standard spending assessment system in particular, meant that the increase in local government spending was only 5.2 per cent. Although that is higher than the rate of inflation, it is a better performance than local government has produced in recent years.

We also have to bear in mind long-term trends that will lead to significant additional proportions of gross national product--in addition to the 45 per cent. now being spent--going into Government spending because of the aging population and the tendency of local government to spend money on bureaucracy that does not directly benefit the population. The Audit Commission, in paying the piper, showed that between 1987 and 1983 the number of non-manual staff in local authorities rose by some 93,000 people- -enough to fill Wembley stadium--at a cost of £10 billion.

Having heard the speech by my right hon. Friend the Secretary of State, I believe that the capping criteria have been sensitive to local needs generally, although people may disagree. The fact that he changed the formula for inner London boroughs and for police authorities is evidence of that. The fact that only six out of 448

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authorities were capped and then were unable to achieve any adjustment after talks with Ministers, is evidence of a certain amount of flexibility and demonstrates that capping has not been oppressive for the majority of local authorities.

Before we fall out with the SSA system upon which the capping regime is based, we should bear in mind that the Audit Commission recently concluded that SSAs were

"A more sophisticated system for equalising needs than any overseas system . . . and an improvement over its predecessor in many respects."

In another recent study, Rita Hale of CIPFA and Tony Travers of the London School of Economics said:

"no overseas country appears to have a full grant system which goes so far in its attempt to achieve full equalisation." I appreciate that the way in which the SSA is calculated for education and the police service is extremely complex and I do not agree with every instance of it. In the debate on the SSA, I argued on behalf of my own county that the area cost adjustment ought to be either reformed or abolished altogether and that SSA adjustments did not reflect the needs of relatively large towns with inner city problems that are situated in rural areas, such as Kidderminster, Worcester and possibly Bridgnorth and other towns in Shropshire. As any system of allocated grant on a national basis on such a scale inevitably will have an element of sophistication and possibly even rough justice, and as independent reports suggest that it is about as fair as any in the world, it would be unfair and wrong to fall out about it and say that capping necessarily leads to injustice.

In my own county, we have a very tight settlement, particularly in education where teachers' pay has increased by 2.2 per cent. instead of 3.7 per cent. We know that it is a tight year, but we think that it is manageable. If, in the long term, the capping regime reduces local government expenditure and therefore the total demands that central Government make on the taxpayer to allow a lower tax base and a more vibrant economy, it is well worth supporting.

5.28 pm

Mr. David Rendel (Newbury): Capping must go, and capping will go. It must do so because, until it has gone, local government cannot fulfil its real purpose--the accountable provision of genuinely local services that serve local needs and are determined by local people. Capping clearly undermines the accountability of all elected councillors. I recognise that the Conservative party may not worry too much about that as they are now the least important party in local government with fewer councillors than either the Liberal Democrats or the Labour party. The Conservatives face the prospect of falling even further behind the two major parties next year. Surely, a lack of accountability in local government should still be of great concern to Conservative Members. A lot of nonsense is talked by some hon. Members about irresponsible overspending by local authorities. Those Members seem to see it as their life's mission to denigrate their own councils, but in practice there is far more irresponsible waste of resources by central Government nowadays than there is by local government. We have only to look at Whitehall's expenditure on management consultants, for instance, to see that.

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The truth is that only one county council has set a budget significantly under its capping limit, and that is Essex, controlled jointly by Liberal Democrats and Labour. The solitary

Conservative-run county council, Buckinghamshire, is spending right up to its capping limit and has increased its council tax this year by more than 8 per cent.--a long way above inflation. Three quarters of all the counties and the metropolitan and London boroughs are now spending up to their capping limits. Their spending and their revenue is determined not by local councillors but by central Government. The whole system, therefore, needs a complete overhaul--an overhaul that devolves power to local communities and starts from the premise that local people are the best judges of their needs and of what they can afford to pay.

Today, we have to take a decision as to whether we can set the ball rolling. We have to ask ourselves whether seven particular authorities have set such outrageous budgets that local people require the protection of nanny, in the form of central Government. For that is the Secretary of State's view of the purpose of capping. On 1 February this year, the Secretary of State proclaimed: "the capping mechanism was introduced because, in some areas, people were unable to pay the high cost of administrations".--[ Official Report , 1 February 1995; Vol. 253, c. 1109.]

With that in mind, let us look at Devon and Gloucestershire. These authorities have set budgets which, when adjusted for the change in police authority finance, leave their council taxes at the same level in cash terms as last year. In real terms, the figures are well down. In view of the enormous burden placed on local authorities by the local government settlement, that is a formidable achievement. So how can Devon and Gloucestershire be deemed by the Government to be acting extravagantly? Are the Government arguing that the level set last year was absurdly high--was, indeed, completely unaffordable? To argue that would mean an admission that last year the Government failed to cap those authorities at an affordable level. Since that would be the first time the Government have accepted that they made a mistake, it would seem highly unlikely that that is what they are arguing.

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

There is still some hope, however. Let us hear the views of Mavis, Lady Dunrossil, the Conservative spokesman in Gloucestershire who expressed her disappointment when responding to the announcement the other day that Gloucestershire's capping was to go ahead:

"I really thought Ministers had been persuaded by the justice of our case. There is still a chance of over-turning this decision if Gloucestershire's Conservative MPs will openly declare their support for us. The proposed County budget over-cap has the full

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support of all Gloucestershire GM and LEA schools, and involved no increase for the local taxpayers. I appeal to all Conservative MPs to support our schools".

The councils that I am talking about are not profligate, loony councils. Gloucestershire, whose budget this year had the full support of the Conservatives as well as of the Liberal Democrats, has cut the central cost of its education department by 24 per cent. over the past four years. It has made savings of £1.5 million in central administrative departments and has cut the number of staff by 23 per cent.

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

Both Devon and Gloucestershire have already slashed their reserves to just 1 per cent. of their budgets. Indeed, Devon's level of reserves in March 1994 prompted external auditors to remark that the council should

"ensure that there is no further depletion of its non-earmarked balances. In the longer term, it should be looking to rebuild these to more prudent levels".

The level of reserves today is little more than one third the amount that drew this cautionary note.

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

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

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

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

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

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

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

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

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

5.39 pm

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