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Mr. David Watts (St. Helens, North): Does the hon. Gentleman think that his speech has any credibility, when the previous Government slashed public services for 18 years and, at the same time, jacked up the council tax and the poll tax to unheard-of levels? St. Helens council faces a 1.9 per cent. increase in council tax this year, which is in stark contrast to the cuts that it experienced under the previous Administration.

Mr. Burns: The answer to the first part of the hon. Gentleman's intervention is yes, but I am sure that his Whip has noted his remark and that, when the reshuffle occurs, his bid will be fully considered. In answer to his second remark, I shall deal later with areas such as St. Helens and the fiddling that has occurred this year in the setting of the amount of money that local authorities have received. If he would care to wait a little, I will explain why certain parts of the north have done considerably better than certain parts of the south, due to the Government's allocation of funding.

As I was saying, the effect of the settlement in Essex has been particularly difficult for the police and has resulted in 36 fewer bobbies on the beat compared with two years ago. The pledge "tough on crime and tough on the causes of crime" seems to be rather hollow in my county because, despite the tremendous work that the police are doing, they have found themselves financially squeezed, with their resources and equipment reduced year on year and fewer bobbies on the beat.

The settlement has had a similar effect in Barnsley. In an earlier debate, the hon. Member for Barnsley, Central (Mr. Illsley) told the House about the £2 million-worth of cuts in services there. There have been redundancies among teachers in Somerset, cuts in social services in Oxfordshire and education cuts in Brent. If the Deputy Prime Minister wants to join the real world to discover what is really going on as a result of his settlement which he thinks is so wonderful, I can recommend no better

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person for him to talk to than his hon. Friend the Member for Brent, East (Mr. Livingstone), who wrote in the Evening Standard on 29 January:

"How has it all gone so sour so quickly?"

I asked the Minister during her remarks what her answer to that question would have been if she had had the pleasure of meeting her hon. Friend. I am not sure whether it was out of nervousness because she did not know the answer or the result of in-fighting within the Labour party, but she dismissed her hon. Friend in fairly rude terms. I hope for her sake that the hon. Member for Brent, East does not read Hansard every day.

Ms Armstrong: Does the hon. Gentleman accept that Brent still has the 18th highest standard spending assessment in the country?

Mr. Burns: If the right hon. Lady were to go to the main street in Brent to give that message to pensioners who are facing cuts in provision for their care, if she were to meet children in children's homes who are facing cuts in services and if teachers in Brent who are facing redundancies and cuts were to hear what she has said, I think that--to put it politely--they would laugh her out of court.

It is not the SSA that is of interest to the people of Brent. They are interested in the services that are provided and whether there is enough money for an effective, efficient service, and the hon. Member for Brent, East does not believe that that is the case. He has made it clear in the Evening Standard that he is appalled.

I am trying to tell the right hon. Lady--this is only one example--that the wonderful financial statement that has been spun round every studio in the country is not quite so wonderful in the real world with real people who are receiving real council tax bills and who have to pay them.

One of the well-rehearsed arguments about the current settlement is that the Government have penalised the south of England, and possibly London, to the benefit of the north. The hon. Member for St. Helens, North (Mr. Watts), in an intervention that was designed to be helpful to the Government, referred to the wonderful situation in St. Helens. As St. Helens is a beneficiary of the settlement, I shall deal with the hon. Gentleman's intervention as I promised.

Given that shire counties and district councils increasingly have to raise more of their revenue themselves, it is fair to ask whether all such councils are treated equitably by the Government or whether there is a geographical bias in favour of one part of the country over another. To my mind, that can best be considered by examining which councils face the best and the worst changes in their total external support and percentage of SSA between 1998-99 and 1999-2000.

Of the 10 shire counties with the most favourable change in TES relative to SSA, six are in the north-east or the midlands, while, of the 10 with the least favourable, change, nine are in the south-east. If, on the same basis, we consider what is happening to the shire districts, we find that, of the 25 districts with the most favourable change, 15 are in the north of England and two are in the midlands. Out of the 25 districts that have done least favourably, 10 are in the south-east, eight are in the south-west and one is in East Anglia. Only three are in the east midlands, with only three in the west midlands.

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Interestingly, there are no shire districts from the north of England in those figures. That analysis shows categorically that, of both shire counties and shire districts, there is a geographical bias in the 1999-2000 settlement against councils in the south of England. The logical conclusion to be drawn is that that area of England has fared particularly badly compared with the rest of the country in this year's settlement.

Mr. Brian White (Milton Keynes, North-East): Will the hon. Gentleman give way?

Mr. Burns: No, I shall not for the moment.

Consequently, the pressures on council tax increases and service cuts will be the greatest in this area--hence the litany of examples that I gave earlier.

In total, over the past two years, shire counties have lost about £250 million and London £140 million, while metropolitan areas have gained about £365 million. I am sure that any hon. Member, particularly from a constituency in the south, south-west or south-east, will recognise how skewed the settlement has been.

I am delighted to see that there are three Liberal Democrat Members in--

Mr. Andrew Stunell (Hazel Grove): Four.

Mr. Burns: I apologise to the hon. Gentleman. I thought that he was a Scottish nationalist. He has obviously made a great impression since he entered the House.

I am pleased to see four Liberal Democrat Members in the Chamber, especially as their hon. Friend the Member for Southwark, North and Bermondsey (Mr. Hughes) commented earlier in the debate about the number of hon. Members present.

Mr. Stunell rose--

Mr. Burns: I will give way, as I was wrong about the hon. Gentleman's party.

Mr. Stunell: I am a Liberal Democrat and I do not come from Scotland, although I am called Andrew. Perhaps that explains the link in the hon. Gentleman's mind. May I point out to him that there are in the Chamber at present more Liberal Democrats than Conservatives, as there are in local government in the country?

Mr. Burns: I accept that there are more Liberal Democrats in the Chamber, but the hon. Gentleman is wrong about local government. Following the local elections last May and by-elections since, the Liberal Democrats are no longer the second party of local government. They are the third party, and no doubt they will be even more so in about eight weeks.

I shall deal briefly with council tax benefit. The full bill for council tax benefit is met by central Government. However, despite vigorous opposition from local authorities, the Government have decided to proceed with the reforms that they outlined in their White Paper "Modernising Local Government" which will transfer to local authorities some of the responsibility for meeting the cost of council tax benefit above a certain threshold from

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the beginning of the next financial year. That is the wrong way to proceed, as it will have a disproportionate impact on council tax payers in areas where an above-average proportion of residents receive council tax benefit. As the Local Government Association rightly said, that will mean that the nearly poor are paying for the really poor. That is an extraordinary philosophy for any Government, let alone a Labour Government, to adopt unashamedly.

Mr. Burstow: Will the hon. Gentleman give way?

Mr. Burns: No, I am not giving way.

That is an arbitrary and unfair system. I urge the Government to think again and to take account of the effect on people just above benefit level.

Finally, I shall deal with capping. In their manifesto at the last election, the Government promised to end what they described as "crude and universal" capping. However, they have not lived up to their promise or the expectations that they raised before the general election. The changes that they have made for the coming year could best be described as arbitrary and retrospective capping, especially as the changes further blur accountability in local government and reduce transparency.

By deciding not to announce provisional capping limits, but retaining the power to cap budgets if they exceed what they deem appropriate, the Government have given themselves the opportunity to decide the capping criteria that they eventually use on the basis of which councils they wish to affect. That is a ridiculous and unfair way to proceed. It is clear that the Government have no intention of changing their policy at this late date, but I warn them that there will be severe repercussions in the coming year, which they will find it extremely difficult to justify to the people who will be so badly penalised as a result of that policy. It is unfair to have left local authorities effectively in limbo without laying down some criteria in advance of then setting their budgets.

I can only reiterate that the Deputy Prime Minister's expectation that the average council tax increase would be 4.5 per cent. has turned out to be a hollow sham. As council tax bills land on people's doormats, they will see clearly that the claim that the settlement is the best deal for local people is patently false--a myth which cannot be justified--and, in the coming six to eight weeks, Labour candidates up and down the country will rue the day in December last year when expectations were raised so high. The bills that council tax payers will have to pay in April will not live up to what they were led to believe would happen.

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