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Mr. Tom King (Bridgwater): I cannot imagine why my right hon. Friend has excluded Somerset from that litany. I have just come downstairs from dealing with letters of despair from many head teachers in Somerset, who, as a result of the settlement, face the prospect of teacher redundancies and serious problems for their schools.

Mrs. Shephard: It is perhaps because of such views--the views of real people--that the Deputy Prime Minister has announced his intention not to see any delegations next year.

Mr. Eric Illsley (Barnsley, Central): Barnsley council has this year received its highest settlement for a long time--the fifth highest settlement of any local authority this year. However, even with that 7.2 per cent. increase and assuming a 10 per cent. increase in the council tax, the authority this week faced £10.2 million worth of cuts.

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Those cuts come not as a consequence of the Labour Government's settlement, but as a consequence of the previous Government's refusing, for nine years, to alter the SSA methodology. The right hon. Member for Skipton and Ripon (Mr. Curry)--

Mr. Deputy Speaker: Order.

Mrs. Shephard: Could what the hon. Gentleman describes have something to do with the way in which Barnsley is run?

Mr. Michael J. Foster (Worcester): The right hon. Lady mentioned that Worcestershire faced a double-digit increase in council tax. Can she tell the House what proof she has of that? If she has no proof, will she withdraw the remark? If Worcestershire delivers a council tax increase that is less than double digits, will she apologise to the House?

Mrs. Shephard: The hon. Gentleman's remarks have been received with a degree of incredulity by Conservative Members. When I read my list of the worst affected authorities, I made it clear that my source was the Local Government Chronicle. The Local Government Chronicle is equally concerned about the position in London, as is the hon. Member for Brent, East (Mr. Livingstone), who wrote movingly in the Evening Standard of 29 January 1999:

He continues:

    "The nightmare is that this new scheme is supposed to stay in place unchanged for the next three years."

Miss Julie Kirkbride (Bromsgrove): I am overexcited by the intervention from the hon. Member for Worcester (Mr. Foster). Had he been doing his duty by his constituents, he would have said that there was a great likelihood of there being a double-digit increase in the council tax in Worcestershire. Even the director of social services in the county has accepted that there is to be a 4 per cent. real-terms cut in the social services budget in this financial year.

Mrs. Shephard rose--

Mr. Tony Baldry (Banbury): Will my right hon. Friend give way--[Interruption.]

Mr. Deputy Speaker: Order. I must call on the House to settle down. Hon. Members are being most unruly and there is far too much noise.

Mr. Baldry: I am grateful to my right hon. Friend for giving way. I do not understand why Labour Members are being so shy about the fact that the budget for Oxfordshire county council, which was tabled by the Labour group on that council, clearly shows that the Labour group wants a council tax rise in Oxfordshire of 12.5 per cent.

Mrs. Shephard: Indeed. As my hon. Friend makes clear, we know very well who runs the council in Oxfordshire. My hon. Friend the Member for Bromsgrove (Miss Kirkbride) has caused the hon. Member for

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Worcester (Mr. Foster) to stand corrected and we hope that it will be he who apologises if the council tax rise turns out as expected.

Sadly, the figures announced by the Government in December and confirmed today by the Deputy Prime Minister have set the seal on a systematic fix to benefit the Labour party's friends in the north at the expense of rural England, London and the south.

Mr. Phil Willis (Harrogate and Knaresborough): Will the right hon. Lady give way?

Mrs. Shephard: No, I intend to make a little progress now.

Over the past two years, rural areas have lost£250 million of funding, thanks to the Government's changes to the methodology. As we have heard this afternoon, those have been set in stone and it is no good anybody asking to see the Deputy Prime Minister because he will see no one; so rural authorities are set to lose a further £300 million during the two remaining years of this Parliament.

London, too, has been hit. It has lost £140 million during the past two years and will lose a further£180 million during the next two. The hon. Member for Brent, East painted a stark picture in last Friday's Evening Standard when he wrote that Brent faced having to cut education by £2.4 million, to slash provision for old-age pensioners, the disabled and children in care, to close day centres and libraries, to end the youth service, to cut road maintenance--and so on. He pointed out that the picture would be the same in Hackney, Newham, Haringey and Lambeth.

Mr. Prescott: Why is he not here?

Mrs. Shephard: I dare say that the hon. Member is busy canvassing.

The Deputy Prime Minister has attempted to point out that that loss has been adjusted by his use of the special grant system, but as he has also pointed out, that is only transitional. His intention is that the underlying pattern of injustice should continue.

Further disturbing patterns emerge from this year's settlement. Analysis reveals that of the 25 councils that have been the least favourably treated in terms of Government grant, 20 are in the south of England. Their council tax payers have been singled out by the Government for the highest council tax increases.

It is up to Ministers to explain their motivation for those changes, which to the outside world could appear political. Whatever their motivation is, they cannot maintain--not while keeping a straight face, anyway--that the highest increases have been awarded to efficient or well run councils. Time does not permit me to give a full recital of the goings-on in corrupt Labour-controlled councils, but is it not ironic that Labour-controlled Birmingham will get the biggest increase this year? That council accumulated losses of £2.5 million from the super prix. In Birmingham, the question, "How many people does it take to change a light bulb?" gets the answer, "I don't know, but I do know that each one earns£42,000 a year."

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Sheffield has done very nicely too.

Mr. David Lock (Wyre Forest): Having insulted everybody north of Watford by using the expression "friends in the north", will the right hon. Lady tell us whether she includes the people of Birmingham in that category? Does the fact that she has insulted all the people who voted for Labour councils mean that she has given up any hope of making gains for her party in May's elections?

Mrs. Shephard: I find it extraordinary that a Labour Member should think that it an insult to call someone a friend of the Labour party, but that is a problem for the hon. Gentleman.

I suppose that Rotherham council is being rewarded for the fact that its deputy leader has, apparently, been suspended following allegations that money that should have been contributed to the Forum Against Poverty went instead on hotel and prostitution bills.

Mr. David Watts (St. Helens, North): While the right hon. Lady is naming names concerning the scandalous behaviour of Labour councillors, will she take the opportunity to condemn Lady Porter, who happened to run off with millions of pounds of taxpayers' money?

Mrs. Shephard: The best ones are the old ones and that one, as the hon. Gentleman knows, is sub judice.

We have heard a great deal about education from the Deputy Prime Minister. Conservative Members have consistently welcomed the Government's investment in education, and I do so again today. However, it is ironic that after the Government have organised that investment, gift-wrapped it and kept it in the Department for Education and Employment so that it can be announced and re-announced every time the Secretary of State for Education and Employment or the Prime Minister visits a school, not only is it now unavailable to fund the teachers' pay award but it may even threaten some of the gift-wrapped schemes themselves.

As the Brent primary school head teachers' group said in a letter to my right hon. Friend the Member for Richmond, Yorks (Mr. Hague), the Brent education committee is having to consider not only sacking teachers and cutting school budgets but making reductions on some of the Government's flagship projects such as the national grid for learning, the numeracy strategy and the social exclusion initiative.

As Graham Lane, the chairman of the Local Government Association's education committee, said:

Of course, the Government could do that if some of the £1 billion put aside for restructuring pay were used to avert an unnecessary crisis, as local authority employers have suggested.

We have heard much today from the Deputy Prime Minister about the size of the settlement. We have heard rather less about the council tax rises that he expects. In fact, we have no idea how much of an increase he will tolerate, which is not much comfort for council tax payers throughout the country. Capping is a system with faults--no one denies that. It is no substitute for the clarity and

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accountability that could be achieved by a thoroughgoing reform of local government, giving councils financial accountability.

However, by introducing a hide-and-seek approach to local government finance, the Government have, instead of tackling the weaknesses of capping, removed its strengths and put nothing in their place. They have taken decisions out of the public eye. Their object is not to expose high-spending authorities to the control of accountable local democracy but to augment the power of the centre.

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