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Mr. Sanders: The Minister has that the wrong way round.

Ms Armstrong: I do not; maybe you have.

Mr. Deputy Speaker: Order. I am sure that the Minister did not mean to refer to me.

Ms Armstrong: Absolutely not--I apologise, Mr. Deputy Speaker. The liability rests with the authority

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that sets the budget. If the fire authority sets the budget, council tax benefit subsidy limitation impacts on that budget. The authority must take responsibility for the decisions that it takes.

This is the third local government settlement under the Government and the second within the comprehensive spending review. We are providing unprecedented financial stability for local government, together with proper funding. I acknowledge that some authorities face difficulties. That is why we are continuing to seek long-term reform of the local government finance system. Our proposals for 2000-01 have been widely welcomed by local government. They represent the best deal for local government since the introduction of the council tax. They lay the foundation for reform and modernisation, and enable councils to plan effectively for the provision of decent public services that underpin strong communities. I commend them to the House.

4.40 pm

Mr. Nigel Waterson (Eastbourne): Here we are again, Mr. Deputy Speaker.

This is a Government who like to pretend that they are the friends of local government. They talk a great deal about enhancing local democracy and use that famous word in the new Labour dictionary, "modernisation". When this Government start talking about modernisation, it is time to start counting the spoons. The last thing that they want is vigorous, independent, representative local councils standing up for local people and opposing harmful policies imposed by central Government. As we see from their attitude to the London mayoral race, there are clear limits to devolution under this Government. They are not prepared to tolerate a mayoral candidate who will not wear a pager and take his lead from Millbank or No. 10.

In the rest of the country, the Government wish to impose their own blueprint for local government structures. The Secretary of State is now leaving the Chamber; I am sorry about that. The Government also refuse point blank to allow the so-called fourth option--to let councils and local people choose the status quo if it suits their needs. Yet so unsuccessful have the Government been in attracting genuine support, rather than sullen acquiescence, from councillors for their plans that not one solitary councillor in Labour-controlled Camden could bring himself or herself to support their plans for reorganisation.

Ms Armstrong: That is not true.

Mr. Waterson: I understand that the council voted 40-something to zero, with three abstentions, against the Government's plans for reorganisation and that one of those who abstained was the Labour leader of the council. If the Minister thinks that I am wrong, however, I shall be happy to give way to her.

Ms Armstrong: Council members properly abided by the group whip, which demonstrates, to an extent, that the current committee system does not provide full, free and open access to discussions relating to decisions.

Mr. Waterson: This is unreal. The Minister is saying that the Labour group debated her proposals for local

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government modernisation and decided against them, and that there was then a Labour whip against those proposals. She really should take stock. Is it the case that everyone else is wrong, and she is right?

The Minister may not agree with me about Camden, although I believe that that is a matter of record. She may know, however, that there is a campaign in the Labour party for open local government, which claims to have more than 1,000 Labour councillors as members. [Interruption.] I am sorry if hearing this is painful for Labour Members, but it is what happens when the Government's policies part company with the aspirations of grass-roots Labour party members. Sometimes, that also brings about ministerial resignations.

Ms Armstrong: I will not resign.

Mr. Waterson: The last thing that Conservative Members want is for the Minister to resign, but I was referring to the hon. Member for Liverpool, Walton (Mr. Kilfoyle).

Nowhere is the Government's control freakery more apparent than in local government finance. Their approach reeks of it. Yet again, we have heard much from the Minister about stability; but, as I said at the time of the original statement, it is no consolation for a council that is treated unfairly in year 1 to be told that it can make plans on the basis that it will be treated just as unfairly in years 2 and 3.

Let me take this opportunity to ask the Minister in more detail how she and her colleagues are progressing with the review of the working of standard spending assessments. I am sure that that is of interest to hon. Members on both sides of the House. According to what I last heard, 19 countries' systems were to be considered. I believe that that has now been narrowed down to four: four countries are to benefit from a ministerial visit, or junket. It would be interesting to know what time scale Ministers have in mind for the reaching of conclusions.

The Government are trying to downplay the significance of the settlement. That is hardly surprising; I do not blame them. Let us look at the facts. The settlement confirms that, over the past three years, the Government have channelled £425 million out of county councils, and £180 million out of London boroughs, in order to subsidise largely Labour-controlled metropolitan councils. In this year alone, shire counties' standard spending assessments will be £160 million below the level that they would have reached without the Government's changes to the funding formula.

Mr. Tim Loughton (East Worthing and Shoreham): Does my hon. Friend agree that the migration of funds from the shires to spendthrift northern metropolitan boroughs under Labour control is all the more absurd when the population figures are rising in the south-east--and, because of that, the Deputy Prime Minister wants to impose 1.1 million new houses on us--while the population figures in northern boroughs are falling? Is not the per head settlement weakening all the time in the south-east?

Mr. Waterson: I am grateful to my hon. Friend for making a point that neatly links this debate with the debate that we had only yesterday.

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This year's settlement was particularly hard on shire district councils. Funding for environmental protection and cultural services was cut in real terms, and that makes up a substantial proportion of district council spending. District councils are set to lose 6.1 per cent. of their cash revenue support grant; if we take inflation into account, that means a cash shortfall of more than 8 per cent.

The Government say that they are increasing the grant to every authority. That, however, has been achieved because of a large surplus on the business rate pool from last year, which the Government are obliged to transfer to local authorities. I think it fair to say that, without that money, many councils would face steep cuts--actual cuts--in their overall grant.

Mr. Peter Atkinson: May I return my hon. Friend to the subject of shire counties? The Government do not necessarily discriminate: Labour-controlled Northumberland county council has suffered badly in terms of cuts. I have been sent the records of a meeting between staff and council officers who are worried about the situation. They are quite revealing. The staff said:

The answer was:

    "The council is going through a process of closing old people's homes and cannot spend above SSA for education because of the implications for other services."

Further on in the minutes, a 6.5 per cent. increase in council tax is predicted.

Mr. Waterson: That paints a bleak picture of how Northumberland will fare as a result of the settlement. I intend to return to the Northumberland example when I deal specifically with education.

The Minister adopted an extraordinarily detached attitude to council tax levels, as if they were an act of God and wholly unrelated to the settlement that we are debating. However, last year's increase of 6.8 per cent.--a sharp rise under this Government--came on top of a record increase of 8.6 per cent. the previous year. The average band D household is already paying £100 more in council tax this year than when Labour took power.

That would be bad enough were it not for the fact that, if council spending increases at the same rate as last year, council taxes could go up by more than 10 per cent., with an average band D household facing a further rise of £85. By the end of the process, many homes throughout the country could pay getting on for £200 more in council tax than at the general election. We are not necessarily talking about wealthy people. Ordinary families on tight budgets and elderly people who have trouble meeting such bills may face those costs. Those are serious matters.

If one goes into the figures in even more detail, it will produce some interesting results. If one looks at the real-terms changes in SSA and TES--total external support--one will reach the following conclusions. Last year's settlement was notably biased against councils in the south of England, a point that was made by my hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton). Councils in the south of England and the west midlands will have a smaller percentage of their SSA real-terms increase matched by a TES real-terms increase. The Minister is right to say that council taxes are fixed

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by councils, but within constraints. That produces the potential for higher-than-average council tax increases in those very councils.

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