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8 pm
Sir Paul Beresford: My hon. Friend has been too generous to the Government. Universal capping has been brought back, in effect, as council tax benefit clawback. What they have done with the second part is bring in subjective capping in a vicious way; it could be applied extensively, viciously and selectively, even on a purely political basis. We have seen the beginning of a trend. The standard spending assessment has been utilised to redistribute funds--
Sir Paul Beresford: Or manipulated, as my hon. Friend says. It has been manipulated to shift funds to friends, colleagues or crony councils throughout the country.
Mr. Jenkin: I agree with the points that my hon. Friend makes.
As I said on Second Reading, we approach the Bill from the perspective of an Opposition party that is re-evaluating its policies on local government. My right hon. Friend the Member for Richmond, Yorks (Mr. Hague) has been making it clear for more than a year that we are reassessing our view of local government. He said to the Local Government Association conference last year--[Laughter.]
I note that the Minister for Local Government and Housing is laughing, but my right hon. Friend got a better reception at the conference than she did last year, and I bet that she is not looking forward to it this year. He said on that occasion:
I was struck by some of the reasons that were advanced in favour of capping in Committee. The Minister for Local Government and Housing used two in particular which caused me amusement. She said:
The Minister was a little more honest later when she said:
The argument is a constantly developing one. A most interesting paper that was produced by Peter Watt, senior lecturer in economics at the university of Birmingham, advances an argument that perhaps puts local authority spending and, in particular, local authority taxation into perspective. Our amendment seeks--I will come to the detail of it in due course--to set a sunset on the general regulation of local authorities, particularly with regard to capping.
I have no doubt that the argument will be advanced against the amendment--whatever its detail may be--that capping is necessary in the national interest, but Mr. Watt points out that the macroeconomic gain in controlling local authority expenditure is very limited. He points out that council tax is about--
Mr. Deputy Speaker:
Order. The hon. Gentleman should return to the details of the new clause, as he suggested that he might do soon.
Mr. Jenkin:
I am advancing the argument, which is implicit in our amendment, that capping will reach the end of its useful life and should be phased out. The amendment provides a mechanism by which capping powers in the Bill will expire. I have no doubt that the Government will advance the case that those capping powers are necessary in perpetuity. I advance the argument that it is possible to run a good economy without necessarily having such close control over a relatively small part of our national expenditure.
Various arguments are advanced: we need a balanced budget; the shift between private and public spending causes inflation. However, the theory is based on the assumption that households do not benefit from local authority services.
Ms Armstrong:
I wonder whether the hon. Gentleman could perhaps tell us which amendment he is speaking to because I think that he is speaking to the next group of amendments.
Mr. Jenkin:
I beg the House's pardon. When I said amendment, I meant new clause 5. I am grateful to the hon. Lady for putting me right.
It is also argued that increased council tax feeds into the retail prices index; the argument was advanced extensively during our period of office. However, rates and now council tax should perhaps not be in the RPI; there is a question as to whether they do have an inflationary effect. Money taken out of council tax feeds directly into the economy in another way. Even if council tax is in the RPI, it is not clear that an increase in--
Mr. Deputy Speaker:
Order. The new clause relates to best value reviews. The hon. Gentleman should come to the nub of the argument.
Mr. Jenkin:
The nub of the argument is that the emphasis that has hitherto been placed on the importance of capping for its macroeconomic effects has been overstated, but I will curtail my comments on that score.
It is important to understand that bitter opposition to the Government's capping powers, which, as my hon. Friend the Member for Mole Valley (Sir P. Beresford) explained in his intervention, are much wider than the capping powers that the Government inherited, has come from august organisations that otherwise provide much support for the Government. They include the Local Government Association. It also opposes, or has expressed reservations, about the considerable powers in the Bill relating to best value. It also opposes the council tax subsidy limitation, which the new clause seeks to curtail.
The new clause creates circumstances in which the best value review powers, the capping powers and council tax benefit limitation powers will be gradually curtailed. The association says that council tax limitation will hit the poorest areas hardest, and that the guideline increases for council tax benefit limitation could be viewed as a direct substitute for the crude and universal capping that the Labour party says it opposes.
Mr. James Gray (North Wiltshire):
Am I right in thinking that new clause 5--the sunset new clause--will mean that the provisions with regard to capping will expire after three years? Is that my hon. Friend's suggestion?
Mr. Jenkin:
I am making the case for the new clause and then I will explain its detail.
Mr. Deputy Speaker:
Order. The hon. Member for North Wiltshire (Mr. Gray) has tried to steer the hon.
Mr. Jenkin:
The new clause refers to the requirement for an overriding order. Let me turn to the details. It refers to a number of powers that may be exercised--[Interruption.] I am finding it difficult to concentrate, because the Minister for Local Government and Housing keeps giving advice in a stage whisper.
"I am committed to local decision-making and to effective local government."
He went on:
"all of us in this room must think about how we can once more make local democracy vital and effective"--
something which the Minister for Local Government and Housing seems to have forgotten about very quickly as she has settled into her comfortable ministerial office. He added:
"As we carry out our thinking our guiding principle will be this: we believe that decisions in our society should be taken as closely as possible to the people affected.
23 Mar 1999 : Column 228
That is the objective of our policy. That is what the amendment seeks to achieve.
If we can achieve more independence and more accountability for local authorities, with all the tough choices and difficult responsibilities that entails, then we should be able to strip away the controls that fetter councils--including capping.
I want to be able to trust local government to take serious decisions affecting local people without the risk of heavy-handed intervention from central government."
"We have said consistently that we do not run away from the fact that there is a national interest which--in terms of this country ever being ready to adopt the euro and make those changes--is the amount of its debt. The amount of a country's public borrowing is one of the Maastricht criteria: it is an aspect of the national interest, which is very important."
I never thought that I would hear monetary union advanced as an argument for capping local authority expenditure.
"The Government have a responsibility to local council tax payers to retain reserve powers to protect them, if necessary--as we promised in our manifesto."--[Official Report, Standing Committee B, 23 February 1999; c. 466-69.]
There is a legitimate reason, perhaps, to maintain controls over local authority taxation, but not perhaps over the overall local authority budgets.
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