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Mr. Nick Hawkins (Surrey Heath): Does my right hon. Friend agree that local authority leaders of all parties will be most concerned about the Deputy Prime Minister's refusal to see any delegation next year? Is not that a negation of democracy and an indication that he wants to entrench for ever the favouring of Labour councils outside shire counties? Is not that a complete refusal to do his job?

Mrs. Shephard: I hope that, by the time the Minister for Local Government and Housing concludes the debate, she will have put right the impression that the Deputy Prime Minister may regret having created.

The Deputy Prime Minister's proposals for council tax benefit subsidy compound the problem that he is creating. [Interruption.] The Minister for Local Government and Housing seems to want to make her contribution now. Perhaps, when she concludes the debate, she will explain why the Government have taken no notice whatever in their consultation of the views of the Local Government Association on the changes to subsidy arrangements.

The LGA has opposed the changes, and we agree with it. It has done so because they will impact unfairly on different parts of the country, with the result that council tax payers in the poorest areas will be hit harder than those in better-off areas. In other words, the nearly poor will pay for the really poor. The LGA believes that the Government should meet the cost of welfare benefits, not local authorities or council tax payers. It believes that the scheme is very complex--at least in that it agrees with the Deputy Prime Minister--and that the guidelines seek to reimpose the very capping that the Government said in opposition they wished to end. The LGA opposes the scheme because, perhaps most ludicrously, it will hit authorities that spend below their SSAs--23 such authorities, including eight in London, which is another hit on London.

The Deputy Prime Minister wants the country to believe that this settlement is the best deal for years. Although he may claim to have increased the global amount, he has done so in a way that is unfair, arbitrary and open to political manipulation. It deepens the divide between country and town, disadvantages London and the south of England, and adds nothing to the clarity and accountability in local government that the right hon. Gentleman never tires of telling us he seeks. For those reasons, we shall oppose motion No. 2.

4.57 pm

Mr. Bill O'Brien (Normanton): I congratulate my right hon. Friend the Deputy Prime Minister and his Ministers on keeping the election promise to local government and on providing this financial settlement. It is the best that has been offered to local government for many years,

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and is fully appreciated. Due to the time limit on speeches, I shall address my remarks to the single issue of the council tax benefit limitation scheme. I ask my right hon. Friend to give further thought to the issue.

I remind the House of the injury sustained by local government over 18 years of Tory rule--18 years of constant attack by Conservative Ministers cutting grants and resources, which in turn meant cutting services and, year on year, increasing council tax. The Tories used the rate support grant formula to award increases in grants to a few Tory councils--but they cut grants to many Labour-controlled and other councils, which now form the Special Interest Group of Municipal Authorities--SIGOMA--of which my authority, Wakefield, is a member.

Cuts in grants meant council tax increases to help to sustain services--essential services in many areas. As a result, local government aggregate spending rose to£2 billion higher than the standard spending assessment. That disparity still applies. It is one of the anomalies that local authorities have to face. [Interruption.]

Mr. Deputy Speaker: Order. There are too many conversations taking place in the Chamber. That is unfair to the hon. Gentleman who is addressing the House.

Mr. O'Brien: I have raised the matter previously. An analysis should be conducted of the aggregate spending and the standard spending assessment, so that we can level the playing field for local government.

I draw attention to the effects of the Conservatives' policies on local government, which have resulted in councils throughout the country being poorer in resources, still being classed as poor councils, and having a substantial number of low-value properties and a high percentage of people claiming benefit. That is the situation in many parts of the north of England, particularly in the mining communities. Many authorities in SIGOMA have an estimated average of more than 20 per cent. of their total council tax income coming from benefit. As a result of social inequalities, those benefit claimants are the very people who require more services.

If a council in the poorer group of local authorities tried to increase its council tax over its budget requirements to sustain services, the application of the council tax benefit subsidy limitation scheme would be devastating, because of the clawback of the rate support grant.

The council tax benefit is payable to help people who cannot afford to pay their council tax. It is a social benefit and, I believe, it should be the responsibility of the Government to meet the cost. Such direct welfare costs should not be a charge on the resources of local authorities. I emphasise that I am speaking of the poorer council group in local government.

I appeal to my right hon. Friend to look again at capping and to review his decision on the procedures for capping. I also ask for more time for all of us to consider the implications of the Government's proposal. As it is not yet statute, more thought should be given to it. I ask for the introduction of the council tax benefit subsidy scheme to be deferred. Because of its complexity, we need more time to analyse it. Amendments have been suggested for my right hon. Friend to consider. Perhaps he would be willing to meet Back-Bench Members so that we could offer our points of view before the final decisions are made.

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I ask for a review of the scheme to localise part of the cost of council tax benefit subsidy. If the proposal were implemented in its current form, it would hit the poorest areas hardest. It is the responsibility of Government, not of local authorities, to meet the cost of welfare benefits. Help given to poor people with their council tax payments is a social benefit.

The guideline increases are widely seen as a direct substitute for crude and universal capping. I supported my right hon. Friend and the policy of the Labour party to abolish the crude capping procedure. As we do not have all the necessary information, we need more time to consider and discuss the Government's proposal.

The capping scheme can apply to local authorities below the SSA. That is a further anomaly that we should consider. The scheme will also obscure the public's understanding of council tax increases. I support the efforts of my right hon. Friend and his Ministers to improve relationships within our communities to generate more interest in local government.

To defer the council tax benefit subsidy limitation scheme would demonstrate my right hon. Friend's fairness. A deferment for a minimum of 12 months would give hon. Members with an interest in local government the opportunity to analyse the system. Again, I reiterate my request for an opportunity to discuss the matter with Ministers.

The application of the rate support grant is widely welcomed, particularly in education and social services. Members of SIGOMA have, on more than one occasion, thanked Ministers for the settlement, which is far in excess of what local government ever received in a single year under the Tories. Because of that background, I hope that we will have an opportunity to discuss the matter so that my right hon. Friend's reputation for fairness remains unspoilt.

5.7 pm

Mr. David Curry (Skipton and Ripon): My right hon. Friend the Member for Richmond, Yorks (Mr. Hague) and my hon. Friend the Member for Ryedale (Mr. Greenway) have asked to be associated with the remarks that I shall make about North Yorkshire.

I am interested in the Government's recently enunciated concept of open government, which means that they will not meet delegations. I hope that does not have too much of an impact on the January sales in London next year.

Two elements are particularly disappointing. The area cost adjustment is a difficult area, but the Labour Opposition did not give the previous Tory Government the impression that it was an insoluble problem. They said they would crack it pretty quickly. It is difficult and there is a distortion, and the trouble with stability for three years is that those who get the money are pleased with the stability, while those who wish that they had it are displeased with the stability.

I am more concerned about the Government's failure to address additional educational needs. That indicator is now out of date. Too much weight is given to ethnicity. There is no perfect correlation between ethnicity and educational underachievement. A significant amount of educational underachievement in, for example, London,

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is to be found in disadvantaged white families. It should be possible to move away from that rather mechanistic formula and to target resources where there is a clear need.

Ms Oona King (Bethnal Green and Bow): In my constituency of Tower Hamlets, 102 languages are spoken in the classrooms, and about two thirds of children have parents who do not speak a second language. That has to affect their chances.


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