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Mr. Rendel: Is not that precisely what the Government did with the poll tax, which was quickly thrown out?
Mr. Curry: That is precisely what we did, because the community charge did not deliver what we demanded of it. The council tax, on the other hand, is delivering a very high rate of collection--much higher than any previous system. The system is accessible and readily understandable. It is easily perceptible. It conforms with Adam Smith's definition of a good tax. The council tax works effectively and it is a stable tax. Therefore, in those circumstances, would it be sensible to start again and tear up the existing structure that is settling down well?
I said earlier that I would not cite local authorities simply to denigrate them. However, I shall this once cite an authority, but with a hint of praise. Lambeth is now beginning to collect a far higher proportion of the council tax that it should be collecting than it ever has before. Collection is a crucial element in local government finance. Councils need to collect as much tax as is legitimately due to them--just as they should fill voids and collect local authority rents. All that is part of the essential management tool of delivering efficient local government.
Mr. Key:
I want to underline and endorse everything that my hon. Friend has said about the reform of local government taxation. I was previously a local government finance Minister, and I can only say that what the hon. Member for Newbury (Mr. Rendel) said is absolute nonsense. My right hon. Friend who is now the Deputy Prime Minister looked at the whole question of local income tax in great detail. It is not true to say that we did not look at that, together with every other system.
One of the disadvantages of local income tax is that economically poor areas would have a very low tax base, while all the rich areas that currently seem to return Liberal Democrat authorities would have massive, overflowing coffers. That would necessitate very substantial transfers from one to the other, and we would not end up with a better system.
Mr. Deputy Speaker:
Order. These interventions are too long.
Mr. Curry:
I am grateful to my hon. Friend the Member for Salisbury (Mr. Key), who speaks from experience.
I come now to more fundamental changes. The Liberal Democrats are still, I think, saying that they would raise an additional 1p on national income tax and direct it specifically to education. However, there is only one way
that that could happen under the present structure--it would have to be wrapped up into a specific grant and its use limited to the education sector. If the hon. Member for Newbury did that, he would hypothecate it--yet the whole tenor of his remarks was that he wanted to give more freedom to local authorities.
If he delivers that 1p to local authorities through the standard spending assessment system, he cannot hypothecate it, and therefore cannot guarantee that it would go to education. Any council--whether Labour, Liberal Democrat or Conservative--that wished to spend that money on building roads, or building pyramids for that matter, would be legally entitled to do so, even if it would not be wise. Therefore, the hon. Gentleman cannot guarantee that that money would go to education unless he is prepared to eat his own words and deny local authority competence and decision making.
Mr. Malcolm Bruce:
In a sense, the Minister is correct--but is he not showing the dishonesty of the Chancellor of the Exchequer, who claimed in his Budget that he was giving £878 million extra to education? He cannot deliver, either.
Mr. Curry:
There is no contradiction--[Interruption.] The hon. Member for Gordon (Mr. Bruce) should listen. There is no contradiction either in what my right hon. and learned Friend the Chancellor said or in what the hon. Member for Newbury said. My right hon. and learned Friend may find £700-odd million for education, just as the hon. Gentleman may find the product of a 1p income tax for education--and earnestly wish that money to go through to education, adjusting the capping criteria to try to ensure that it does. What my right hon. and learned Friend, the hon. Gentleman and I cannot do is to require in any statutory or legal sense that that money should go to education.
Mr. King:
The hon. Member for Gordon (Mr. Bruce) is completely wrong. My right hon. and learned Friend the Chancellor made it clear that he could not compel that money to go to education, but said that he looked to local authorities to ensure that it did. Liberal Democrat Somerset, having made the biggest complaint about education and having said that its top priority is education, did not put the money into education when it had the funds to do so, but put it into other services instead.
Mr. Curry:
I have never made the claim that that money must, in some quasi-statutory sense, go through to education. Last year there was a major campaign--in some cases orchestrated by local authorities--protesting against the settlement and focusing on education. Therefore, it would be extraordinary if those local authorities, having been given the extra resources, did not spend them on education--the very thing that they highlighted as the chief priority.
My first objection to a local income tax is that it would be wrong to get rid of the council tax. It is working, it is effective and I know of no one in local government who wishes to pull it up by the roots and start again. Secondly, local income tax means differential rates of tax. There would be a real threat to some of the inner-city areas and attempts to regenerate life there. It would also be a
difficult match with the benefits system. I do not buy the idea of local income tax. Council tax is doing the job better--
Mr. Nigel Waterson (Eastbourne):
Has my hon. Friend seen the internal research document "Towards 1996", produced by the Liberal Democrats? [Interruption.] Perhaps "Towards Oblivion" would be a more apt title. The document states:
Mr. Curry:
Knowing that the hon. Member for Newbury wished to conduct this debate in a high-minded manner, I wrestled with my conscience over whether I should use that excellent Liberal Democrat document, which I understand was drawn up by someone described as a political warfare officer. I decided not to use it. I can only deprecate my hon. Friend's decision to introduce that sort of note into this debate.
I do not know what has happened to site value rating. When the hon. Member for Newbury was chided with having dropped it in the rate support grant last year, he wrote a letter to us protesting that it was still on the Liberal Democrat agenda. However, it has not appeared in today's discussion, so I do not know whether it is still there.
Let us be clear about the education settlement, against the background of statutory powers that I have described. In cash terms, comparing like with like and SSA with SSA, the figures are up--an increase of £74 million. Just under £200 million accounts for pupil numbers, while £322 million accounts for teachers' pay. The remainder covers other sources of inflation.
Ms Hilary Armstrong (North-West Durham):
Does the Minister agree that comparing, like with like--cash that was spent last year against cash that will be available this year--there is nothing like a 4.4 per cent. increase?
Mr. Curry:
But that is not comparing like with like. Last year's outcome cannot be compared with the money that the Government are making available this year. That is comparing things that are not alike. Every year, local authorities spend more than their SSA and they will continue to do so. The capping criteria allow that additional money to come through. I use the word "money" advisedly because in education everybody talks about resources, as though that is something much grander than money. In fact, most of the time we are talking about money, and it is important to remember that.
Ms Armstrong:
Will the Minister explain how much councils will have to spend above SSA this year to meet the education budget in real terms as opposed to last year, given the rise in pay, the rise in pupil numbers and other commitments? How much does he estimate council tax will have to rise to cover that?
Mr. Curry:
The hon. Lady is asking the same question in a different way. The only thing that we can compare is what the Government make available to local authorities one year with what they make available the next year. If councils choose to spend other resources--for example, from reserves--that is entirely a matter for them.
Mr. Curry:
I am not giving way again; I have already given way to the hon. Lady twice.
There is a tendency to discuss education as if the only issue which matters is money, whereas many recent events have suggested that the method and quality of teaching also have a great deal to do with educational performance. We do ourselves a disservice if we discuss education purely in terms of money.
The hon. Member for Newbury talked about capital receipts, which I know are very beloved of the Opposition. The deputy Leader of the Opposition, the right hon. Member for Kingston upon Hull, East (Mr. Prescott) was--I think--on "Today" a week ago talking about capital receipts lying idle. They are not lying idle; it is the Opposition's great and frightfully convenient myth. Capital receipts are in fact used to finance local government activities. For example, the interest from them replaces borrowing. Such capital receipts are not where they are needed in many circumstances, so there would have to be clear compensation for the way in which capital is allocated.
The Opposition are clutching at a great straw in thinking that they would be able to be frightfully prudent about public expenditure and at the same time give local authorities so much extra money. They will find that the straw turns out to be rather feeble when they try to float on it.
In a debate that I have tried to keep free from indulgence in any unnecessary invective, I rather resented the hon. Member for Newbury saying that homelessness cannot be addressed purely by market forces. Nobody is trying to address homelessness by market forces. The rough sleepers initiative introduced by the Government--we are now considering a successor programme to it--is a very deliberate programme of co-operation with the voluntary sector, using public money specifically to help people, and has nothing whatever to do with market forces. It is entirely designed to find effective ways to help people who desperately need that help.
I do not care what sort of flags people want to fly on it. I am concerned simply with being able to meet the dramatic needs that we encounter. Indeed, voluntary organisations would also resent the implication that somehow they were lending themselves to some exercise in the application of market forces in areas that do not lend themselves to such application.
I remind the House of the state in which we found local government in 1979. Not universally, but in many cases, we found a monolithic local government, divorced from the private sector. It was not used to working with the private sector and there was barely any contact between public and private sectors. Local government was corporatist and dominated by the trade unions which worked for it. There was a closed shop; there was no competition for services or service delivery. In many respects it was wasteful, due to levels of unnecessary management.
We have sought to transform local government. We have introduced efficiency--yes, by public expenditure restraints. That is one of the classic means by which one introduces efficiency. I would not want to pretend that that has not happened. Local government has experienced what is known in jargon as delayering. It has seen more professional management, which--I think--has been accepted.
The establishment of partnership with the private sector, has been dramatic and effective. That partnership has occurred through such practices as compulsory competitive tendering, although many local authorities are still extremely resentful of that process. Partnership with the private sector has been especially noticeable in regeneration schemes such as city challenge and single regeneration budgets, where public resources have been used alongside private resources in order to get value for money as well as more money to get value out of. That has been crucial in bringing about what has often been a mind change in many local authorities, which now consider partnership instinctively instead of having to be--almost--dragged, kicking and screaming, to accept that the concept is valid.
We have seen a new culture of partnership, the development of value for money through the Audit Commission value-for-money studies, and performance indicators, which were intended as a tool for punishment and found to be useful by local authorities. Incidentally, such performance indicators have also given the electorate a great deal more power and information than ever before. Accountability must start with information. We have developed the enabling concept of local authorities that has been widely accepted in local government. Indeed, the most intelligent parts of local government have sought to develop it. That does not comprise a minimalist, static view of local government. It is positive, creative and dynamic.
Of course, we must continue to make efficiencies and implement vigorous cost control. We are approaching the end of the structural review, we have a settled tax in the form of council tax, a widely accepted concept of enabling, and a concept of partnership regarded as necessary and desirable.
Local government next needs to combine a period of stability with measured change and development. There are three essential roles for local government. First, it must play the necessary role of regulator on behalf of central Government and on its own behalf. Trading standards and environmental health officers are doing a necessary job as regulators. That role should have as light a touch and be as user-friendly as possible.
Secondly, local government plays the role of enabler in the way in which services are provided. Thirdly, it has the role of regenerator; the local authority at the heart of its community trying to bring about regeneration, renewal and economic development, which it should develop. We will be introducing a trial scheme--capital challenge--whereby local authorities compete for capital. That idea has a lot of sense to it. I would like local authorities, for example, to consider bidding for capital challenge money to extend and get better value for existing SRB or estate action schemes.
We are introducing the estates renewal programme to tackle some of the most difficult problems on the most deprived estates. Would it not make sense to make those bids alongside SRB bids and estate action programmes? That would also enable better and more extensive value for people. Thinking creatively in such terms is one of the essential functions of local government that I hope they will undertake.
"Under the Lib-Dems local income tax you would pay income tax twice."
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