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Mr. Raynsford: We have ensured, through the floors and ceilings mechanism, that every local authority has received an increase this year that at least matches that of inflation. No authority will have to cope with an increase that is less than inflation, and most benefit from substantially larger increases than that.
We shall review the system in the coming year. As part of that review, it will be our objective to ensure that the new framework is fairer and reflects the circumstances that lead to real needs for spend for all authorities. I hope that my hon. Friend can take comfort from that. I appreciate that in certain cases, where there have been changes as a result of local government reorganisation, the patterns of spend have not necessarily fully reflected the need to spend. It is our wish, through the review of standard spending assessments, to have a better framework for the future.
With the good grant increases that we have provided this year and the prospect of stable grant settlements, all authorities should be able to deliver improvements to public services while setting reasonable council tax increases. This year, we have made changes to what must be shown on council tax bills. [Interruption.] Liberal Democrat Members seem to think this a matter for humour. Their electorate will not find it humorous if their authorities impose unreasonably large council tax increases when there has been an overall 7.5 per cent. increase—three times the rate of inflation—in Government grant to local authorities. We expect local authorities to make full use of the generous settlement that I am announcing this evening and to ensure that they do not impose unreasonable increases in council tax on their council tax payers.
Mr. Don Foster: I do not find the situation humorous. What I found humorous were the shakes of the head from many Labour Members in response to the Minister's statement that councils will be able to deliver improved services as a result of this settlement. On the increases in council tax, what is the right hon. Gentleman's estimate of the average increase that is likely to result from today's settlement?
Mr. Raynsford: This is a matter for local authorities rather than for the Government. It is not for me to make an estimate. I hope that local authorities will discuss this with their council tax payers and come to a sensible and appropriate conclusion.
There is already evidence that a number of authorities are making decisions showing their awareness of the need to be moderate in their demands. Liverpool city council, for example—a Liberal Democrat-controlled council—has indicated that it does not expect to increase its council
tax at all. I welcome that. I wish that a number of other Liberal Democrat councils that are talking about large increases would follow suit. A number of other authorities have indicated to us the likelihood of modest increases. The treasurers of the Special Interest Group of Municipal Authorities predict an average increase of some 4.5 per cent.I put it to the House that given a settlement of 7.5 per cent. in increased grant, it should be possible for all authorities to budget for the coming year with moderate increases. I do not welcome the alarmist figures that have been put around by some commentators and some hon. Members, nor the behaviour of one or two local authorities which appear to be stoking up unreasonable expectations. I cite only the Mayor of London, whose proposed 34 per cent. increase in budget rightly aroused real concern among members of the Greater London Assembly, who have sought to scale down that figure. I welcome moves to achieve a more reasonable settlement in London.
Mr. Kevan Jones (North Durham): I note what my right hon. Friend says. Durham county council is a very well run and moderate council, as my right hon. Friend the Prime Minister, who represents Sedgefield, also knows. Durham is facing a critical situation this year because of having one of the lowest settlements of the shire counties. Some £2.7 million has been taken away or lost because the education support grant received last year is not being provided this year, and the council faces imposing an increase in council tax of between 10 and 17 per cent.
Mr. Raynsford: I am aware of the pressures faced by Durham county council. My hon. Friend has spoken to me about this and I have responded by looking at a number of issues relating to Durham county. Under the settlement for Durham the overall increase of 5.6 per cent. is more than double the rate of inflation. Durham has also benefited from a number of initiatives, such as the one that I referred to earlier on bed blocking. That has secured an additional £1.8 million for Durham county.
I do not underestimate the pressures on social services. I acknowledged those when meeting my hon. Friend and in my earlier contributions to the House. I hope that when Durham county comes to fix its council tax for the coming year, it will have regard not just to the need to maintain its services but to economy and to what it is reasonable to expect council tax payers to contribute.
Mr. Christopher Chope (Christchurch): Will the Minister give way?
Mr. Raynsford: I will give way for the last time. I really must make progress.
Mr. Chope: I am grateful to the right hon. Gentleman for giving way. He is being uncharacteristically coy about giving a prediction for council tax increases in the coming year. Can he confirm that the council tax increase at standard spending, which is the increase if a council spends at standard spending next year and is doing so this year, will be more than twice the rate of inflation? Why is he so coy about mentioning that in public?
Mr. Raynsford: The hon. Gentleman, who has been a Minister, will know that there is no question of a standard
increase in council tax for an authority spending at standard spending. The reality of the system, as he will know, is that there are huge variations between actual patterns of spend and SSA. That is one of the reasons that we are conducting a review of SSA. For authorities that are receiving an increase in grant which averages 7.5 per cent, there is no reason why unreasonably large council tax demands should be made. We expect authorities to approach this in the sensible way that a number are already doing, and I have highlighted one or two examples. I hope that all authorities will be prudent, because the public do not expect unreasonable demands to be made in council tax.To encourage this, we have made changes in the current year to what must be shown on council tax bills. Voters will see clearly which of their councils are responsible for any increase in council tax that they are required to pay. Bills will show clearly how much different tiers of authority are charging. They will also show how much in percentage terms each tier has increased its part of the council tax compared with the previous year. Any substantial increases will therefore show up clearly on bills. If some councils set substantial increases, their council tax payers and local electorate will have every reason to question their council's decision.
Although we have reserve capping powers, the Government do not operate a system of crude and universal pre-announced capping—unlike the previous Government. Decisions on council tax are primarily for local authorities to take after consulting their local electorate and tax payers. Given this very good grant settlement, councils will find it hard to justify any unreasonable increases.
The Government have taken the necessary steps to set up a proper framework for partnership between local government and central Government. We have listened to the points made to us in consultation and we have responded. The local government settlement that I have outlined continues the trend under the Government of steady and substantial investment in local government and in the services that it provides, and I commend the motion to the House.
7.40 pm
Mr. Malcolm Moss (North-East Cambridgeshire): We have heard the same record playing this year as in each of the past four years of the Labour Government, and it is is getting rather worn and thin. Every year, Ministers promise a generous settlement for local authorities and every year they say that there is no reason for high council tax rises; but every year council tax has risen by three times the rate of inflation—not just this year or last year, but in each year that the Labour Government have been in office.
In December, the Secretary of State claimed that there would be an increase in Government grant and business rate of 7.4 per cent. He said that there was no reason why we should see large increases in council tax next year.
Last year, the Government announced a 6.7 per cent. increase in revenue support. The then Minister for Local Government, the right hon. Member for North-West Durham (Ms Armstrong), pledged:
- "I am confident that councils will be able to implement reasonable council tax increases, lower than last year's".—[Official Report, 27 November 2000; Vol. 357, c. 659.].
I noticed with interest that the Minister ducked the question put by the hon. Member for Bath (Mr. Foster) as to the right hon. Gentleman's predictions for council tax rises in the coming year. Let me give the right hon. Gentleman some help. It comes from one of his Labour colleagues—Mr. David Wilcox, the secretary of the county councils Labour group. He wrote to one of his colleagues:
- "Coming local elections are causing some concern with Labour authorities that perhaps should be going for increases of around 10% but that consider they may have to cut the rise back in an election year.
So far the highest proposed rate rise that I have been notified of comes from a jointly controlled council and is at 12%, although it could come down below 10% at the end of the day."
- "At this moment 9.9% feels like safe ground with 8.9% looking attractive."
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