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Mr. Watts: Does the hon. Gentleman believe that returning the business rate to local councils will automatically increase budgets? That may not be the case. The way in which the Government set up the redistribution network would determine whether local councils receive more cash to provide services.
Mr. Stunell: I thank the hon. Gentleman for his contribution, which brings me neatly to my next point. The Liberal Democrats believe that the proper role of central Government financing for local government is to achieve equalisation of resources, not to support the fundamental service. A significant fraction of the non-domestic rate is generated in the City of London and the fundamental task of central Government is to arrange an appropriate redistributive formula. In another life, I wrote a paper on how that redistribution should be organised.
Jackie Ballard: It makes good reading.
Mr. Stunell: I thank my hon. Friend for that remark, and I would be happy to forward a copy to the Minister, if she would undertake to read it.
Dr. Whitehead: Will the hon. Gentleman send me a copy?
Mr. Stunell: I am happy to put a copy in the Library, if that would suit hon. Members.
I have been critical of the Government because, while they have said the right words, they have done the wrong things. It is possible to make a speech from the Dispatch Box that sounds plausible and looks good in Hansard, but unfortunately bears no relationship to reality. Councils of every political persuasion face further reductions in the services they can provide and higher rises in council tax than the level nominated by the Government. The problem is not incompetence on the part of local councils, as I have demonstrated. It is not that local government cannot manage; it is that Government are bungling and fudging.
Mr. Andrew George (St. Ives):
Does my hon. Friend agree that not only is the council tax regressive, but so are the powers associated with it? In my constituency, council tax payers in mobile homes have to pay sums well above their ability to pay, while wealthy second-home owners get a 50 per cent. reduction in their council tax. If the system is to reflect ability to pay, that issue must be addressed.
Mr. Stunell:
I agree with my hon. Friend. If the council tax is to be retained, it needs major surgery, including the introduction of a band below A that deals with the situation that he mentioned. Some of us would also argue that we also need another upper band to deal with some of the discrepancies at the top end. However, in the long term, the council tax should be replaced by a fair and progressive tax, based on ability to pay.
Dr. Alan Whitehead (Southampton, Test):
I apologise for not being present for the beginning of the debate. I wish to point out the apparent contradiction in the motion. The Liberal Democrats claim that they want more financial autonomy for councils, but the motion also calls for more money from the centre for councils, which logically means a higher gearing ratio when councils come to set their council taxes and, therefore, possibly less financial autonomy for councils.
I understand why the Liberal Democrats have advanced that position today. As a result of the collapse of the Tory vote in the shires, several authorities are under Liberal Democrat control, especially in the south of England. The Liberal Democrats find life difficult being in control, because they are more familiar with holding the balance of power. When they have to make the budget all by themselves, it can be a difficult process for them. It is also more difficult to write "Focus" leaflets when in control than when in opposition.
I can see the "Focus" leaflets being ground out as we speak. They will say that the Liberal Democrats raised the iniquity of the local government settlement with the Government in Parliament and did not get a satisfactory answer. However, I have some sympathy with the Liberal Democrats. The SSA system has been manipulated in the past by Government. It is also true that the conjoining of the SSA system to the idea of universal capping has meant that, increasingly, councils have spent up to their SSA limits. That has meant a decreasing amount of discretion on spending available to local government.
In recent years, local councils have invested large sums of money in commissioning reports and lobbying Government to tweak various measures in the SSA to the councils' advantage, possibly at the expense of examining the services they provide. In the past, we have seen outrages, such as the time when the Conservative Government tweaked the indicator on tourist bed nights to assist a particular local authority, which shall remain
nameless. Its name begins with "W", which gives hon. Members a choice. Local councils believe that it can be worth their while undertaking complicated exercises to petition Government about the SSA system.
For various reasons, the SSA system does not achieve a transparent and fair distribution of money to local government. The Government have introduced a three-year freeze on the methodology of SSAs, so that the basis of the distribution can be considered. However, it is difficult to introduce a system of local government funding that does not produce winners and losers.
Not everyone can be a winner all the time. Our standard spending assessment system is the most complex system of evaluating the distribution of local government funding anywhere in the world, except the state of Victoria, Australia. One may regard that fact as good or bad: a system perceived to be fair is likely to be complex, and a system that is simple and transparent is likely to lose out on perceived fairness of equalisation. We have, however, an immensely complex system that is also not perceived to be terribly fair. We must consider distribution.
I favour putting a greater proportion of local government spending at the discretion of local authorities. Among other things, that would lower the gearing effect, creating a more genuine relationship between what local government says it raises from local taxpayers and the outcomes of local taxation. I hope that the review will consider that point.
I, too, have written a paper on the subject; I will swap it with the hon. Member for Hazel Grove (Mr. Stunell). The system is devilishly complex, and there is no easy, fairies-at-the-bottom-of-the-garden solution, as the Liberal Democrats sometimes pretend. We must take the matter seriously and spend time getting the system right. I hope that the Government can come up with a solution that the Local Government Association and local authorities will agree provides fair distribution.
Jackie Ballard (Taunton):
I spoke earlier with some visitors from the United States of America who are examining the United Kingdom system of government on a Hansard Society scheme. Those visitors expressed surprise at the level of centralisation in our structures of government. They had noticed that local government did not have the freedom to do whatever it thought was in the best interests of local communities. They had noticed, too, local government's lack of financial freedom either to determine local taxation or to introduce different methods of taxation, such as the sales taxes or tourist taxes applied by many states of the USA.
Mr. Sanders:
We don't want a tourist tax.
Jackie Ballard:
We may not want those particular taxes, as my hon. Friend says, but the point is that local government in other countries has freedom to decide on the taxes appropriate in local areas. What may not be
Pluralism is not only about having the choice of which political party to vote for. It is also about having many centres of power within a democracy. Clearly, the Government are not particularly familiar with that concept.
Tomorrow, we shall debate the Bill that introduces best value. The Local Government Bill gives an extra 23 or 24 powers to the Secretary of State--I lost count of the exact number because one power was removed during the Bill's previous proceedings, a fact for which we are incredibly grateful. The Labour Government are continuing the process begun by the Conservatives of weakening local democracy and bringing more power to the centre.
The Minister has said, however, that she wants local government to be more accountable to local people. How can it be, when the local government funding system is so opaque? Is it thanks to Liberal Democrat councillors, for example, that Liverpool has had a 0 per cent. council tax rise this year? Or was that thanks to the Government's settlement? Is council tax above average in Buckinghamshire because of Conservative failure, or is that the fault of the mean Government settlement?
Who is to blame for service cuts in many local authority areas across the country? Is it the Secretary of State for Education and Employment, who says that all increased funding should be passported to schools? Or is it the fault of local councillors, of whatever political persuasion? How can a local citizen know whom to thank or to blame? [Hon. Members: "Blame the Liberal Democrats."]
It is incredibly easy for each of us to say, "If in doubt, blame this party or that party." My hon. Friend the Member for Southwark, North and Bermondsey (Mr. Hughes) asked earlier whether the Labour council or the Labour Government were to blame for service cuts in his area. He is lucky: in his area, the answer is obviously Labour. Voting decisions for people in his constituency are easy, but the answer is not so easy for people in other constituencies.
The hon. Member for Liverpool, Riverside (Mrs. Ellman) gave credit for the freeze in council tax in Liverpool to the Government, but she blamed service cuts on Liberal Democrat councillors. Of course, Liberal Democrat Members will say exactly the opposite, which makes my point precisely. [Interruption.] If the Minister wants to intervene, I should be happy to allow her to, but as she keeps mumbling from a sedentary position, I find it difficult to understand her.
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