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Dr. Jenny Tonge (Richmond Park): I am grateful to the Secretary of State for giving way and I am very impressed by his remarks about fairness. I am sure that he believes absolutely in democracy. In that case, why does he not simply remove the cap and allow local people to decide the level of taxes in their area?

Mr. Prescott: The hon. Lady--who, even allowing for modern political movements, is not likely ever to sit on this Bench--must understand that we have to strike a balance between local and national interests. Governments are responsible for raising taxes, setting out public expenditure programmes and taking decisions about the grants that local authorities will receive. Fifty billion pounds is a substantial amount under any circumstances.

We must make a judgment, and we believe that that is a fair amount of money. It is twice as much as previous settlements and is sufficient to meet the fair provision of services. At the end of the day, democracy will count in local authority areas. Councillors must argue their case with the people, who will either support or reject them. As Labour controls more councils than ever before--it is a record number for any political party--we must be on the right track.

Mr. Brian White (Milton Keynes, North-East): On the point about local communities supporting council tax levels that are higher than the Government recommend, is my right hon. Friend aware that my authority is

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conducting a referendum on that issue? If the people vote for higher local council tax, will the Government recognise the validity of that result?

Mr. Prescott: My hon. Friend must be aware that we are proposing legislation that will give such powers to local authorities. We would then take that provision into account. However, I am bound to say that that is not the position this year as we are operating under the law as it presently stands. If an authority says that it wants to do A, B or C, we will take its wishes into account. However, its decisions are not binding upon us. Ultimately, we are bound by the national interest, what we believe to be a fair amount of money for local authorities and what is fair for council tax payers. That is a proper judgment to make, and that is our approach.

I was struck by the time that was spent on formal consultation about the settlement. There has been considerable consultation, and it cannot be right to consume so much of the time of councillors and officers. Ministers have had 72 meetings, each involving several local members and officers--and I am sure that Opposition Members are familiar with the pain of constant meetings. Officers travel to London and often lose a whole day. I do not expect any significant changes to the way in which the grant is distributed next year. As a general rule, I shall expect written representations, which will be considered carefully--particularly when there appear to be errors in our provisional calculations. We shall of course continue to meet the local authority associations.

The next three years will offer stable grants, the opportunity to plan with greater flexibility, and the chance to reinvest efficiency savings and to have a fundamental look at the fairness and clarity of the grant system. We have listened to the representations and we have made an extra £30 million available in order to protect those authorities most affected by change. Authorities will receive an average increase in support of 5.5 per cent. All education authorities will receive at least 1.5 per cent. more in grant and no council will receive less grant next year than it received this year. This is the best settlement for seven years, and I commend it to the House.

4.36 pm

Mrs. Gillian Shephard (South-West Norfolk): When introducing last year's local government finance settlement in December 1997, the Secretary of State took the opportunity of making several promises regarding his Government's intentions for local government. Among other things, he claimed that he would achieve a prospect of fairness, increased local discretion allied to greater local accountability, the ending of crude and universal capping, and the restoration of new and more positive relations between central and local government. Has the right hon. Gentleman really just announced his intention to see no delegations next year? Maybe he thinks that, if he does not see people, it will contribute to new and more positive relations between him and local government.

Mr. Robert Jackson (Wantage): As to Labour's promises, Oxfordshire now faces three years of substantial reductions in services and increased council tax. Does my

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right hon. Friend agree that those people who voted Labour and Liberal at the last general election were sold a false prospectus?

Mrs. Shephard: I agree with my hon. Friend. There are many disappointed groups and areas around the country not only as a result of last year's settlement but because of the prospect of this year's settlement.

Mr. Ian Bruce: The Deputy Prime Minister has demonstrated that he is getting wiser as the years go by. He clearly would not give way to me because he knew that the grant situation in Dorset is so appalling that he could not possibly continue with his speech. He has decided--

Mr. Deputy Speaker: Order. The right hon. Member for South-West Norfolk (Mrs. Shephard) is not responsible for the Secretary of State's speech. I am sure that she cannot reply to that intervention.

Mrs. Shephard: My hon. Friend makes his point very eloquently. We know about the situation in Dorset and in the south of England generally. We shall expect the Minister for Local Government and Housing to reply to those points in detail in her winding-up speech.

We know what last year's settlement delivered. It delivered a record 8.6 per cent. increase in council tax across the board--so much for the right hon. Gentleman's commitment to best value. It achieved a political switch of £50 million away from London authorities and £100 million away from shire areas to the right hon. Gentleman's friends in the north--so much for the prospect of fairness and so much for local discretion allied with local accountability.

Dr. George Turner (North-West Norfolk): I thank the right hon. Lady for her kindness in giving way. Before she continues, does she not wish to speak on behalf of the people of Norfolk--whom she and I represent--and thank the Government for the best settlement not only in seven years but in 20? Instead of facing the problems that I faced as chair of education when we could not meet the teachers' pay settlement--

Mr. Deputy Speaker: Order. I call Mrs. Shephard.

Mrs. Shephard: Why does the Secretary of State not give the hon. Gentleman a job--it would spare us this sort of thing? I remind the hon. Gentleman that last year Norfolk got the worst settlement in its entire history, and that it is not under a Conservative Administration that Norfolk has had to face the closure of all its youth centres and the sale of all its homes for the elderly.

In the Deputy Prime Minister's statement to the House on 2 December 1998 on this year's revenue support grant settlement, he could--if he had meant what he said the year before--have put right the damage last year's settlement did, but he chose not do so. For all his hype, today's settlement perpetuates the switch of funds away

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from rural areas and from London, and demonstrates a new trend of a clear disadvantage in funding terms for authorities and their communities in the south of England.

Mr. Prescott: The right hon. Lady told the House that last year's settlement was worse than any under a Tory Administration. In fact, in 1995-96, under a Tory Government, the increase was 0.4 per cent.

Mrs. Shephard: I also said that it was not under a Conservative Administration that Norfolk had to face the loss of all its youth centres and all its homes for the elderly. That happened under a Labour Government and a Lib-Lab council.

This settlement, despite all the right hon. Gentleman's huffing and puffing, will result in council tax rises across the board. He has said little about that. I wonder whether he would like to comment on the fact that the Treasury's assumptions in its pre-Budget report of 3 November 1998 were for a council tax rise of 7.7 per cent., which appears curiously at variance with his predictions.

Mr. Prescott: The right hon. Lady should look up the facts of the case. If she looks carefully, she will see that the Red Book refers to England, Scotland and Wales, whereas our proposal refers only to England. As so often, she is not comparing like with like.

Mrs. Shephard: I can go on. The right hon. Gentleman's view, expressed on 2 December last year, that the settlement was

is not a view shared by local people throughout the country. Local people in Norfolk face a council tax rise of four times the rate of inflation. Local people in Buckinghamshire will have to pay a council tax rise of more than 9 per cent. Local people in Cambridgeshire face both a £12 million shortfall and the Prime Minister's broken promise about their future status in respect of the area cost adjustment. Local people in Worcestershire, Oxfordshire, Surrey, Essex, Kent, West Sussex and Dorset see that the Government's methodology has robbed them of millions, which will inevitably lead to council tax rises in double figures, according to the Local Government Chronicle.

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