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Local Government White Paper

3.31 pm

The Secretary of State for Transport, Local Government and the Regions (Mr. Stephen Byers): With permission, Mr. Speaker, I should like to make a statement about the local government White Paper that we are publishing today.

The White Paper sets out a new vision for local government at the beginning of the 21st century. It seeks to establish a partnership between central and local government, reflecting the critical importance of local authorities, both as a tier of democratic government and as a body with the responsibility to deliver high-quality public services to local people.

Democratically elected councils should be part of the fabric of our communities. The services that they provide have a vital part to play in sustaining and enhancing social and economic prospects and the environmental quality of our towns, cities and countryside. They can have a profound effect on the opportunities and quality of life of the people who live and work there. They are responsible for educating children, providing care for the vulnerable, making places safer and cleaner to live in and providing reliable local transport.

People therefore expect a great deal from their council, and those expectations are rising. To meet them, councils have constantly to seek new and more effective ways to deliver customer-focused services and to lead their communities. The proposals in the White Paper will provide a framework in which all can do so, through the application of the Government's four principles of public service reform.

The first principle is to establish a national framework for the delivery of high-quality services and effective community leadership. For example, people everywhere want high-quality education for their children. Secondly, within that framework, we intend to free up local councils to meet their communities' particular needs, recognising that those will be different in a London borough and, say, in a shire district council area. The third principle is to ensure that councillors and council staff have the skills and money to do their jobs well. Finally, we intend to provide more choice for people in the services that they want to use.

I want to tackle the trend towards excessive central prescription and interference, which dominated central- local relations in the 1980s and 1990s. The White Paper reverses that approach: it marks a pronounced step away from centralisation. It is about increased freedoms, better incentives and a significant reduction in the number of controls, consent requirements, plans and over-elaborate guidance, which have all too often characterised the top-down approach to local government that we saw in recent years.

The White Paper is truly about local government, and it is a fundamental shift away from local administration. It is based on a belief that we do not need to control everything and on a recognition that local authorities are often in the best position to respond to local needs and aspirations.

I hope that this approach will encourage local political and civic leadership. Today's reports into this summer's disturbances in Oldham, Burnley and Bradford show how

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important it is to have a leadership with a democratic mandate who are prepared to take the often sensitive and always difficult decisions necessary to ensure social cohesion. The White Paper has at its heart community leadership and the democratic renewal of local government.

We want to reduce the bureaucratic burden for all councils and give them the freedom to innovate and focus on driving up standards. We therefore intend to cut the number of plans and strategies that councils are required to produce, to scale back the number of area-based initiatives and to give greater scope to rationalise partnerships. We shall remove many of the present requirements to obtain Government consent before acting. More than 50 will be abolished, and another 30 are under review. We shall also provide councils with wider powers to provide services to others.

With these new freedoms come responsibilities. For the first time, we will produce a clear performance profile for each and every council. The Audit Commission will compile a scorecard and will identify each council as either high performing, striving, coasting or poorly performing. It is our intention that further freedoms over and above those for all councils will be given to high-performing authorities. We will also intervene decisively where councils are failing their local people. Where councils are not collecting their council tax or providing high-quality public services, for example, that will not be acceptable, and we will take the appropriate action.

The Government agree with the Local Government Association that there should be joint ownership of the service priorities for local government. It is therefore our intention that, through negotiation and dialogue, we will agree with local authorities a single list of priorities for local government.

The White Paper also sets out our specific proposals for the reform of local government finance. Last week, I announced to the House that next year will be the final year in which the grant to local authorities will be based on the present standard spending assessment formula. We will be bringing forward our detailed proposals for a new system of grant distribution next year, but I can inform the House that I have decided to abolish the standard spending assessment mechanism and replace it with a system that is easier to understand and better reflects the real cost of services and the needs of the local area.

We also intend to give local authorities greater flexibility to undertake capital investment. We shall scrap the system of credit approvals; instead, authorities will be free to borrow for capital investment without consent, provided they can afford to service the debt. Where a council sees a need, for example, for a new library or leisure centre, it will no longer need central Government permission to go ahead with such a project.

As a consequence of that approach, we shall abolish the "receipts taken into account" mechanism, which has acted as a disincentive for local authorities to dispose of surplus assets. I know that there has been concern about the growth of ring-fenced funding and the way it limits local discretion. We shall therefore restrict ring-fenced funding to areas that are genuine high priorities for the Government, and where we cannot achieve our policy objectives by specifying outcome targets.

The setting of council tax itself is very much a local decision, but we also recognise that the risk of high council tax increases affects local taxpayers. We have

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already ended pre-announced universal capping. Our long-term goal is to dispense with the reserve capping powers altogether, but we intend to proceed with caution. However, we feel that we should take the first step towards ending capping, so I can announce today that the power to cap will not be used in respect of high- performing authorities. A large number of authorities and hon. Members have raised with me the difficulties created for councils by the council tax benefit subsidy limitation scheme. The principles underlying the scheme are sensible, but in practice its application has proved complex. Some have proposed that we should simplify the scheme or find ways of reducing its impact. Having considered all the options, I have decided to abolish it altogether.

The proposals in the White Paper form part of the Government's agenda for modernisation and reform. For many, they will be challenging; they are meant to be. We proposed the changes not for their own sake, but because local people will benefit from the requirement that all services should be delivered to an acceptable standard; from the fact that the changes that we all want to see—better schools and social care, improved local environments, better transport and other vital local services—will get the priority that they deserve; and from effective community leadership by councils that are in touch with local people and working to meet their aspirations.

The proposals will put the "local" back into local government, allowing local councillors to make a difference to their communities. That is vital if we are to re-engage people and, as a result, achieve an increased turn-out at local elections. The White Paper outlines a new and lasting basis for effective local government. I want central and local government to work together in a constructive partnership to deliver the high-quality public services that local people have the right to expect. In a practical and tangible way, the White Paper shows how we can achieve that and I commend it to the House.

Mrs. Theresa May (Maidenhead): I should like to thank the Secretary State for giving me prior sight of the statement. I was interested to hear on the Radio 4 "Today" programme this morning an item saying that the Prime Minister had agreed that policy should always be announced first to Parliament—which was immediately followed by an item announcing the contents of this White Paper.

Strong, independent and effective local government is essential for our democracy and for people's quality of life. We want councils to be better able to understand and meet local needs, deliver high-quality services, and respond to and stand up for local interests. Local government has traditionally been an engine of change in this country; many policy innovations have come up from local government. Today, Conservative councils throughout the country are responding to local needs, providing the public services that people want and finding new ways to deliver effective local services. To the extent that the White Paper heralds a change in the attitude of central Government and a genuine move to freedom for local councils to respond to the needs of their communities, we welcome it. However, to the extent that it merely pays lip service to the ideas of freedom and deregulation, we challenge it.

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I must tell the Secretary of State that Members of Parliament now know not to take at face value what he tells the House. Following the fiddled figures of the local government settlement last week and our experience with Railtrack, Members know that with this Secretary of State more than any other, they simply cannot believe what he says. The devil is in the detail, and so it will be with the local government White Paper—[Interruption.]

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