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Mr. John Bercow (Buckingham): Will the Leader of the House reconsider her dismissive response to my hon. Friend the Member for North Shropshire (Mr. Paterson), and arrange, as a matter of urgency, a full day's debate on extortionate petrol prices? That would meet the concerns of my distinguished 81-year-old constituent Mrs. Elizabeth Zettl, of High street, Buckingham, who at the time of the Budget debate was so angry about the Chancellor's policies that she urged me to roll up my speech and throw it at the Government Front Bench--an action that I was prevented from taking only by my natural regard for parliamentary etiquette and my respect for the Chair.

Mrs. Beckett: Let me say to the hon. Gentleman, and to his hon. Friend the Member for North Shropshire (Mr. Paterson), that it is good to see normal service being resumed.

We have already aired the issue of petrol prices. I am sorry to learn of the hon. Gentleman's constituent's concern, but I fear that this tends to happen. My own mother used to scream at the television when listening to the views of Conservative party spokesmen during the last Parliament.

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Local Government Finance

1.17 pm

The Minister for Local Government and the Regions (Ms Hilary Armstrong): With permission, I should like to make a statement about local authority revenue finance for England in 2000-01.

Local councils throughout the country deliver services that strengthen our communities and are vital to our future economic success. As my right hon. Friend the Chancellor of the Exchequer explained to the House in his pre-Budget statement, the Government's reforms are creating a stable economy and sustainable public finances. That means that we can invest for the future, combining enterprise and fairness. This Government invest for a purpose, to secure better delivery of services. We are investing in nursery provision--there will be 48,000 new nursery places for three-year-olds by next March--and in schools, setting rigorous targets for higher standards in literacy and numeracy. By next April, local authorities will have a new grant of £140 million over the ensuing three years to enable carers to take a break.

That action to secure a platform of economic stability and steady growth has enabled us to give local government a measure of stability that is widely welcomed, and the stability that we have created will enable local government to focus its efforts on delivering better services. While ensuring that local councils receive the funding that they need in order to deliver high-quality local services, the Government are modernising the way in which councils are managed to ensure that local people obtain a better deal. We will shortly publish a local government Bill that will pave the way for people to play a bigger part in shaping their local communities.

The July 1998 comprehensive spending review White Paper set out the spending totals for next year, and the details of revenue funding that I am announcing today confirm those totals with minor adjustments. The comprehensive spending review provides local government with the additional resources needed to deliver better services to local people.

My right hon Friend the Secretary of State for Education and Employment is announcing today the provision of an extra £64 million for education spending--[Hon. Members: "Where is he?"] My right hon. Friend is here today. I am making this announcement, and other announcements will be made in the usual way. The additional £64 million for education spending that my right hon. Friend is announcing brings the total additional revenue provision for education next year to £1.8 billion. He is also announcing that we will reschedule the introduction of increased employer contributions to teachers' pensions, which will ease the pressure on school budgets next year by a further£90 million.

Mr. Eric Forth (Bromley and Chislehurst): On a point of order, Madam Speaker.

Madam Speaker: The right hon. Gentleman has been in the House a long time and should know that points of order are traditionally taken after Question Time and statements.

Ms Armstrong: These announcements reflect the top priority that the Government continue to give to ensuring that schools have the funds that they need.

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The comprehensive spending review gives three years of substantial growth in Government funding for local authorities. It was, and remains, the best settlement for local government since the introduction of the council tax.

We have not only provided significant increases in funding, we have also given local authorities the opportunity to undertake sensible forward planning in a way that was not possible in the past. Local authorities can now broadly predict the grant that they will get from Government, because we do not propose to make changes to the grant distribution formulae over the comprehensive spending review period. Local government has welcomed that greater certainty about future funding levels, and I am sure that the House will endorse that view.

Support from Government grant and business rates will be £41.76 billion next year, an increase of £2.2 billion or 5.5 per cent. That increase is more than twice the underlying rate of inflation. I propose that the revenue support grant should be £19.44 billion, subject to any slight alterations following the consultation that I am launching today, and which runs until 6 January 2000. In addition, some £6.92 billion of specific and special grants will be available to councils. Next year, we will redistribute £15.4 billion of business rates to local authorities and I am publishing the basis for the distribution today.

Hon. Members will be aware that the next revaluation for the purpose of non-domestic rates will take effect from 1 April 2000. I am announcing today the details of the transitional relief scheme to phase in changes in non-domestic rate bills as a result of the revaluation. I am pleased to say that there will be limits on the size of annual increases in rate bills over all five years of the new rating list.

In order to give added protection to small businesses, I shall give additional protection to small properties. That will be offset by limits on the amount by which bills can decrease, which will also be more favourable to enterprises operating from smaller properties. Nearly half of all small properties will see their rate bills fall next year and none will see an increase of more than 5 per cent. in real terms.

Revaluation does not mean that more money will be raised from the rates over the next five years. We propose to reduce the national non-domestic rate multiplier of 41.6p in the pound in 2000-01 to take account of the increase in rateable value across the country. That compares with 48.9p in 1999-2000. The revaluation will ensure that the burden is spread fairly between ratepayers, in line with changes in the property market since the last revaluation.

Following the revaluation, the Government will review the current system. That will not be a fundamental review of the business rate, but it will look for ways of improving the approach to valuation in order to increase stability, certainty and simplicity in the system. We will consider changes to the frequency of valuations. Details of the review will be announced in due course.

Increases in council tax are a matter for individual local authorities to decide. However, before they do so, we expect them to consider how they could be more efficient and effective. They should consider the fact that we have provided substantial increases in grant for most councils and should exercise restraint. In 1999, many councils clearly thought much harder about the increase that was

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really needed and what local people would be prepared to pay. The average council tax increase came down from 8.6 per cent. to 6.8 per cent., and we did not have to use our capping powers last year. We want all councils to think in that way in future. However, we are willing and able to act to prevent excessive council tax increases.

I have already announced that we shall continue the scheme for limiting the benefit subsidy that central Government pay when council tax increases are above a guideline. The guideline for the 2000-01 scheme will be the same as last year: a 4.5 per cent. increase in council tax or the higher increase that is necessary to give the council a budget requirement increase that is equal to its full cash standard spending assessment increase. As suggested last year, the scheme will operate cumulatively. We will use the previous year's council tax of every authority at guideline as the starting point. Today, I am issuing full details and an explanatory note about the scheme for 2000-01.

As we explained in our July 1998 White Paper on local government, we propose to keep the method of grant distribution stable while we consider whether we can devise a system that is more effective in putting money where it is most needed and will do most good. In keeping with that policy, and as I have already explained to the House, I propose to make no new changes this year to the general method of grant distribution.

Although the method of calculation will not change, some of the SSAs to be used next year will change because of the new local government structure in London. There will be two main changes. First, some functions, such as maintenance of specific roads, will transfer from London boroughs to the Greater London Authority; we shall need to transfer SSAs to reflect that. Secondly, the boundaries of the Metropolitan police district will be reduced to cover only the Greater London area, and the police authority areas of Surrey, Hertfordshire and Essex will increase. Again, SSAs will need to be adjusted.

We cannot ignore data changes, such as changes in resident population, as those inevitably mean that some authorities do better than others. However, the effects of data changes are less than the effect of changes that would have resulted from adjustments to the grant distribution formulae. We have also given local authorities as much advance notice of data changes as we can, releasing the figures as they became available.

I also propose similar arrangements to last year's for phasing in grant changes. That means that no authority will receive less central support from the Government in 2000-01 than in 1999-2000, and that every education authority will receive at least a 1.5 per cent. increase in central support. Those comparisons will make allowance for changes connected with the creation of the Greater London Authority.

Today, my Department is writing with details of the settlement to every local authority in England. Copies of that material have been placed in the Vote Office and the Library. In keeping with our promises to modernise government, all the details are also available on the internet. The settlement is another step in the Government's modernising agenda. It provides a good grant increase and a stable financial environment. Together with best value and our other reforms, it will

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enable councils to plan and deliver better services for their people. I believe that it will be widely welcomed and I commend it to the House.

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