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Ms Armstrong: This is one of the real anomalies. The revaluations throughout the country have resulted in extremely variable changes. That is partly due to the fact that the previous revaluation for 1995 was actually undertaken in 1993, when there was a severe slump in parts of London. The Government are seeking to ensure that they do not repeat the problems caused by the previous Government with boom and bust, and that we have more sustainable growth throughout the country. The variations are one of the reasons why I announced a review of the revaluation process, to find out whether we can get more fairness and stability and fewer of the excessive moves that were evident in the latest revaluation.

Mr. John Wilkinson (Ruislip-Northwood): My constituents in outer London will have little to thank the Minister for in this settlement. First, is it not the case that owners of businesses are facing an increase in the business rate of up to 5 per cent. per annum in spite of transitional relief, on top of the fact that if they go to work by car they may have to pay car-user charges and, if they own the business, they may have to tax parking space for their employees? When they get home to Hillingdon, they will find that their local authority is not getting adequate compensation for the additional cost of housing asylum seekers. Is it not true also that their quality of life is deteriorating because the police settlement--1 per cent. in real terms--is far below the necessary figure of about 3.5 per cent. in real terms that is required to maintain the same level of service?

Ms Armstrong: I do not agree with the hon. Gentleman. His constituents in Hillingdon will see a 5.2 per cent. increase in their SSA this year and that is

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more than double the increase in inflation. The hon. Gentleman's residents in Hillingdon will recognise that the Government are fulfilling their promises to ensure that public services are funded so that opportunities for local people are better.

Mr. Michael Jabez Foster (Hastings and Rye): May I welcome my right hon. Friend's proposals to review commercial rate values yet again, to create more fairness? In certain parts of the south coast--my constituency in particular--flats on the domestic market have gone down in value since the last valuation, whereas houses have gone up. As a consequence, many of my lower paid constituents who have purchased cheap properties are paying as much as or more than those with houses. In those circumstances, will my right hon. Friend review as soon as possible the domestic rate values which affect the council tax for those constituents?

Ms Armstrong: There was a review of council tax banding and we announced that we were not changing it at this stage. We said that we would return to the matter, but I cannot promise my hon. Friend that that will be done in this Parliament. As there is a banding system, flats are likely to be in a lower band than houses. I hope that we can ensure that his constituents do not suffer because of changes in property prices.

Mr. Robert Syms (Poole): This statement will be greeted with disappointment in Poole simply because the area cost adjustment, which makes a tremendous difference to the amount of money that we have, is not being altered. I have no doubt that the local authority and local Members of Parliament would want to meet Ministers to discuss that matter further. The Minister seemed a little confused. At first she said that she would not see any delegations, but then she said she was meeting one from Hammersmith and Fulham at the request of their Members of Parliament. If the Member of Parliament for Poole and the borough council request a meeting, is she saying that she will refuse to see us: yes or no?

Ms Armstrong: As the hon. Gentleman knows, I have spoken with him about Poole and met his councillors. We are entering a formal consultation period, which is different from the discussions on which I embark during the rest of the year. Had Poole wanted to make representations about the area cost adjustment, it knew that the time to do so was during last year's formal consultation period. We said that we would not move on area cost adjustments this year because we were introducing three-year stability. The authority had the opportunity to make representations on that matter last year.

Kali Mountford (Colne Valley): I am very pleased to hear that there is to be a review of local government finance, which is much needed. My right hon. Friend was so right to say that previous settlements have brought about some perverse results. If we are to have some fairness, objectivity and genuine assessment of need and of the anomalies that arise--not merely between north and south but within regions and local authority areas--is it not essential not only to encourage authorities to take part but to sell the review as something on which they must

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embark? Can she also tell us how soon the review will be completed? It is essential for many of us who want fair settlements in the future.

Ms Armstrong: My hon. Friend is right; the matter needs to be fully discussed throughout the country. I assure her that we are doing whatever we can to ensure that that is done, so that authorities have the opportunity to put forward their ideas. I am keen to get on with the review, but I do so with a sense of realism because we are unlikely to find a system that suits the needs of everyone. However, there are other ways in which we can proceed, and I am anxious to find a method that is easier for everyone to understand. I defy anyone to have a close understanding of how every SSA works; it is the most complex of systems. For the electors, to whom it matters most, the system is virtually impenetrable. We have a responsibility to try to find something better for them.

We are getting on with the matter. I hope that, certainly by the middle of next year, we may at least be clear about the options and will be able to hold consultations on them.

Mr. Owen Paterson (North Shropshire): The previous regime that ran Shropshire county council--the Liberal and Labour parties--increased council tax by 24 per cent. during the past two years. As a result, the Minister asked senior representatives of the council to come to London during the summer. Mr. Malcolm Pate, whom my hon. Friend the Member for Ludlow (Mr. Gill) and I met last week, is now the leader of the Conservative controlling group on the council. He was told, and reported to me, that the Minister had promised a 6.1 per cent. increase for the next three years, in the interests of stability. The council has now received information that the increase will be 5.4 per cent.--

Mr. Deputy Speaker: Order. I trust that the hon. Gentleman will put a question.

Mr. Paterson: Were those representatives deliberately deceived by the Minister? If not, will she confirm today that the increase stands at 6.1 per cent., as she promised them?

Ms Armstrong: I promised no one the exact amount that would be received this year. The Government announced, throughout the comprehensive spending review, the amounts that would be available as a whole to councils each year, and that we would not be changing any of the methodology. We said that the only changes would reflect data changes in each area. I certainly did not tell any authority that it would receive a specific amount every year. I said that their treasurers would have an idea as to what was happening, because they knew the overall figures and they would know about the data changes and other changes in their areas. That is absolutely true.

Mr. Barry Gardiner (Brent, North): My right hon. Friend will recall from last year that my local authority of Brent received the worst settlement in the country, despite being the 20th most disadvantaged. None the less, I hope that she will be pleased to learn that even Brent council is grateful for a period of stability this year, so that it can plan its budget.

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I welcome the review of the basis of local government funding. I urge my right hon. Friend to take serious note of the problems faced by boroughs such as Brent, where over 106 languages are spoken in our schools and where the loss of ethnicity criteria in children's social services last year had the most devastating effect. I trust that she will take that into account.

Finally, on behalf of my business community--for small businesses in Brent--will she tell me what the business rate change is likely to be for them in the coming year?

Ms Armstrong: We will, of course, look at the needs of all authorities in the review, although, as I said, the more I hear today, the less confident I am that we shall find something that everyone is happy about. However, my hon. Friend will be aware that because we have ensured that no authority will receive less grant than last year, some protection has been provided for Brent. I know that that will be welcome.

There are huge differences in business rates throughout the country--even within London. For inner-London authorities, the revaluation has produced an increase of about 21 per cent. for large properties and 34 per cent. for--

Mr. Gardiner: Brent is in outer London.

Ms Armstrong: Yes. In outer London, rate bills will fall for 48 per cent. of large business properties as a result of revaluation. The liability will fall for 56 per cent. of small properties. In relation to small businesses, I assure my hon. Friend that no business will receive an increase of more than 5 per cent. next year.


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