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9.29 pm
Ms Hilary Armstrong (North-West Durham): I am delighted that my hon. Friend the Member for Wentworth (Mr. Hardy) managed to speak in the debate. We tried to cut short the winding-up speeches so that as many hon. Members as possible could speak. Most hon. Members have expressed concern about constituency issues. Indeed, many Conservative Members upheld our contention that the allocation system is unfair and needs to be tackled. It is remarkable that, after all this time, and after having constructed and reconstructed the system several times, the Government have still not managed to come up with a system of grant allocation that gets anything like support on both sides of the House.
Many hon. Members have raised issues that arise from the real difficulties facing their local authorities. Many, including my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins)--in a remarkable and powerful speech--and the hon. Member for Ludlow (Mr. Gill), made important and telling points about the inability of local government to be properly accountable because of the way in which the Government have constructed the local government finance system.
An effective democracy depends on alternative and competing sources of power; yet the Government have centralised power and enfeebled local government to such an extent that commentators say that it is worse than at any time this century. It is small wonder that many councillors feel that they have become little more than an administrative outpost for Government. It is no good the Government complaining that councils blame central Government. Central Government have so constructed the system of local government finance that they tell it how much it can have, what it can spend it on and how to spend it. The country has rumbled that and knows that central Government are taking the decisions and deciding how those decisions will impact in every area.
Local government has the potential to be the engine of regeneration in the locality. It is local rather than central Government that has a clear awareness of the needs and desires of the local community; it is local and not central Government that is best placed to respond flexibly to changing circumstances in the locality; and it is local
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As a result of the poll tax fiasco, local government is exceptionally reliant on central Government for its funding. The poll tax fiasco and the nationalisation of the business rate mean that councils are now responsible for raising less than a quarter of what they spend. That is not an accident, but the result of deliberate decisions. Indeed, Sarah Hogg commented in her book:
Mr. Clifton-Brown:
Will the hon. Lady give way?
Ms Armstrong:
I am coming to the hon. Gentleman. Perhaps I can deal with his intervention then.
The revenue support grant settlement this year places councillors--even the rare Tory councillor--in a straitjacket designed by central Government. Many local politicians do not even have a choice between cutting services and hiking up the council tax, because the settlement forces them to do both. Local people will pay more in tax and get less in service.
The Government have turned their back on giving local people more choice and are trying to use local democracy as a cover for further tax hikes. The Budget figures have revealed that, over the next three years, the gap between what central Government believe that local government should spend and the amount that they will fund will widen by £4 billion. The Government have planned for council tax rises next April of about 6 per cent. That would mean a rise in the average band D council tax of about £40 a year.
Councils have been forced to make difficult choices. To protect school budgets, many councillors have to slash other services, including social services, that are already under strain because of the rising community care costs; at the same time, they have to increase council tax bills by more than inflation. The Government have been rumbled, and people know whom to blame.
The Government said that the distribution was fair. Almost every hon. Member who has spoken in this debate has made it clear that that was not so. The Secretary of State kept trying to say that all the associations accepted the settlement. However, the chairman of the Association of Metropolitan Authorities, who also chairs the new Local Government Association, wrote a letter to the Secretary of State on 13 May 1996, so the right hon. Gentleman should have had time to come to terms with what he said.
Sir Jeremy Beecham said that none of the associations was content with the present distribution of SSAs. He said that associations and authorities put in representations each year to try to persuade the Government to change the distribution, but that in the end the decisions were for the Department. It seems that the Secretary of State has a short memory and does not remember what people say to him.
Mr. Gummer:
Will the hon. Lady explain why no Labour chairman of any of the associations has ever used
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Ms Armstrong:
The Secretary of State has already demonstrated this afternoon that he has little credibility, and he is continuing that.
The letter from Sir Jeremy Beecham said that he had pointed out to the Environment Select Committee that some authorities, including Westminster, had benefited from some very strange decisions on SSAs made by the Secretary of State's predecessors. That backs up the arguments of my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson). If I were in the Secretary of State's position, I would want to apologise to the House.
Mr. Clifton-Brown:
The hon. Lady has spent her entire speech criticising the present distribution system. Does she recall her interview with the Local Government Chronicle on 5 January 1996? She was asked whether she would change the system, and replied:
There are clear problems with the system. Several hon. Members have raised the problems with the manner in which Westminster council has been awarded its grant. I invite the hon. Member for Southend, East(Sir T. Taylor) to examine work that I have, from the Library and the Ministry, which demonstrates that the Tory central office brief is leading him up the garden path and that there is serious unfairness. Opposition Members are not naive about the difficulties of getting a fair allocation system, but we are determined to seek one. I am not going to con anyone that it can be done overnight; it has taken the Government years to get to the present unfair position.
In The Daily Telegraph, which is not a newspaper that normally supports the Opposition, the independent, slightly right-wing commentator John Grigsby writes:
Several hon. Members tried to say that everything was all right and that local councils had got it wrong. That belies the history of the past 18 years. The gap between what the Government acknowledge councils should spend
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The typical family will have paid £2,120 extra tax since 1992 and will be paying 35 per cent. of its gross income to the Exchequer by the time of the next general election, compared with only 32 per cent. in 1979. Taxation has gone up by 3 per cent. for every taxpayer. Given that record of mismanagement, it is not surprising that the public sector borrowing requirement is expected to be £4 billion higher than was forecast last year. Projected borrowing has been revised up for next year by another £4 billion. There has been £66 billion more public borrowing in this Parliament, which is £66 billion more than the Tories claimed in the pre-1992 general election budget.
"More and more Tory MPs thought that the logical solution was for central Government to take over completely."
However, those Members still moan and say that local government continues to recognise that central Government are taking the decisions.
"Of course we will be looking at it but I would not like to promise major changes at this stage. I know too much about it to be flippant enough to say you can quickly shift it."
Ms Armstrong:
I shall certainly deal with that. In his speech, the hon. Gentleman raised various issues that demonstrate that his only information source has been the Tory central office brief. I expected more from him.
"The Westminster case does matter because it is so illogical."
He says that it is of
"fundamental importance that justice should not only be done, but should manifestly and undoubtedly seen to be done."
The iniquities of the system are likely to get worse. The deduction of SSA funding because of the introduction of nursery vouchers, which was raised by my hon. Friend the Member for Coventry, North-East (Mr. Ainsworth), will penalise forward-looking councils that provide nursery education for most or all of their four-year-olds and divert it to authorities that choose to provide fewer places. We have made it clear that the system for allocating local authority funding should be open, transparent and independently verified. That means that it will change.
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