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Mr. Deputy Speaker: Order. That is far too long an intervention.
Ms Armstrong: I understand the point that the hon. Gentleman is trying to make. But I did not say it was sufficient; I said it was given for a specific purpose. The authority made the decision not to use it for that purpose, and that is part of the problem that it has this year.
Mr. Robert Jackson: Will the Minister give way?
Ms Armstrong: No. I believe that I have given way twice to the hon. Gentleman.
Mr. Livingstone: She has not given way to me, either.
Ms Armstrong: Fine. I said that I would give way when I had finished the Oxfordshire case, and I shall do so.
Mr. Livingstone: The problem is that in the 1980s a Conservative-controlled council kept spending at a bare minimal level. Now that a decent coalition has come together, the council is caught because of its inheritance. It is not fair, because the system depends on whether one has the good or ill fortune of having had a council of a particular complexion in the past.
The Minister speaks of the need for accountability, but is she not aware that Oxfordshire councillors went to the people on the same day that we in the House were elected, and won an overwhelming mandate for the council's budget? What right has a Cabinet dominated by people from Scotland and the north, who have had the good fortune to have long-standing Labour councils that have built up decent services, to tell people from southern areas that we cannot catch up?
Ms Armstrong:
It is interesting to hear that the hon. Member now wants to represent a shire area. I would welcome him to Durham; we, too, are a shire area. We may be in the north, but my authority suffers many of the same problems as Oxfordshire, but with the lowest income per household of anywhere in the country. I will not take lectures, even from my hon. Friend, about problems in local authorities.
Somerset has set a budget of £288.145 million, £3.4 million above its provisional cap, and says that all the additional money will go to schools and social services. It argues that it has the lowest permitted increase of all the counties and no significant useable balances. It also stresses how efficient it is.
It is worth repeating that capping is not fundamentally about efficiency. I hope that I can introduce a regime that is much more about efficiency. If it were, local authorities could simply increase expenditure as they saw fit, provided that they remained efficient. Such an approach, however, takes no account of the need that all Governments have to ensure that local authorities work with them in their public expenditure ambitions.
Somerset claims that all its additional spending above the cap is for education and social services. If that were to be the case, a budget at cap would involve those services being reduced by £3.4 million. In fact, Somerset has told me that, if it budgets to cap, the £3.4 million of savings will be made this year by cutting capital expenditure.
Mr. David Rendel (Newbury):
Liberal Democrat Members recently congratulated the Government on signing the charter for local self-government, which was an excellent thing to do. Surely the Minister must realise that that is completely incompatible with what she has just said about the need for Governments to control local government expenditure.
Ms Armstrong:
The hon. Gentleman will see in Hansard tomorrow that that is not what I said.
As with Oxfordshire, we accept that Somerset has no significant useable reserves but, as I have already explained, that of itself cannot be sufficient reason to agree a capping concession.
Sir Robert Smith:
The Minister is saying that the absence of reserves cannot be accepted of itself as a condition for lifting the cap. She said in the case of Oxfordshire that the reason for not wanting to do that was that it would set a precedent, but she also said that she was planning to change the whole capping regime, so surely it
Ms Armstrong:
I think that I have dealt with that matter already. It is truly remarkable what hon. Members hear: they hear what they want to. I did not say in regard to Oxfordshire that anything was a precedent. Indeed, I talked about Oxfordshire not having useable reserves, and that not being a reason to lift the cap. The hon. Gentleman may disagree with my explanation, but I have none the less given it.
Having carefully considered all the relevant aspects of Somerset's case, I do not consider its position to be sufficiently different in degree or in kind from that of other local education authorities to justify a relaxation in its capping limit. Its permitted increase of 2 per cent. was the same as that of 10 other counties, and more than the average for metropolitan districts. We therefore propose that its original cap should be enforced. If the draft order is agreed by the House, it will result in a reduction of council tax in Somerset of £20 for a two-adult band D household.
Warwickshire has set its budget at £294.335 million--£2 million above its proposed cap. Warwickshire's case is unusual in that it turns on a single issue: the interaction between capping and the supplementary credit approvals that it has received for its major schools reorganisation programme. The difficulty for Warwickshire is that, although it gets additional standard spending assessment to cover the costs associated with the SCAs, it cannot increase its expenditure in the same way--the allowance was not passported through. As a consequence, the costs of servicing the SCAs have to be met by making reductions elsewhere in its budget.
We would not normally make a capping adjustment to reflect the costs of SCAs. However, we are keen to encourage authorities to grasp the nettle of removing surplus places. Warwickshire has made a serious attempt to tackle the problem of surplus places. Its reorganisation programme is by far the largest in the country; it has needed £27 million of SCAs from the Department for Education and Employment and has involved the closure of 24 schools and the merger of 22 more.
The results have been impressive: surplus places are down from 19 per cent. at the beginning of the 1990s to a projected 9 per cent. by 1999. Warwickshire has demonstrated that the £2 million that it has budgeted above the cap is an accurate reflection of the impact on its revenue budget of the schools reorganisation programme. It has also said that, if the cap is relaxed, all the additional £2 million will go to schools.
We have taken account of the fact that Warwickshire has been prepared to take tough decisions that will lead to savings in the longer term. We therefore propose that Warwickshire be capped at £294.335 million, £2 million above its original cap. That means that it will not have to reset its budget or incur the costs of rebilling.
We have considered carefully all the points raised by all the authorities involved in the capping process, to ensure that the caps that we have proposed are reasonable, appropriate and achievable. Where there are special circumstances, we have been prepared to make a concession. If the order is approved, we shall serve a statutory notice on each authority formally setting its cap.
The authorities will have 21 days to reduce their budget in line with their cap and to set new lower council taxes. The final outcome will be a reduction in this year's council taxes in the affected areas of more than £9 million.
I commend the order to the House.
Mr. Tim Yeo (South Suffolk):
In proposing the order, the Minister attempted to claim that it maintains the previous Government's policy. That is an argument that I have heard with interest and increasing astonishment. It is not an argument that has been much used by the Government, even on those issues on which they have been attempting to maintain our policies. It is also not an argument that rests easily with their constant insistence, on many other issues, that they will stick to their manifesto commitments. Indeed, the inclusion of a commitment in the manifesto apparently removes the need for the Government to ask for parliamentary time to allow a debate to take place before the policies are implemented.
As regards this order, the argument is completely flawed--and not merely by virtue of the fact that it reverses the stance that the Labour party took when we last debated this matter just over a year ago. Since the previous Government set out the figures for council spending--the standard spending assessments, the provisional capping limits and all the rest of the data--the situation has materially changed in three respects. First, the inflation target has been officially increased from 2 per cent. to 2.75 per cent. both for the current year, 1997-98, and for 1998-99. By loosening the reins on inflation without any compensating increase in the spending limits, the Government have effectively cut the level of service that councils can provide and that council tax payers can reasonably expect to receive.
4.48 pm
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