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5 Dec 2002 : Column 1068—continued

Mr. Eric Pickles (Brentwood and Ongar): I should like to say a little more than the ritual thanks to the Minister for giving us early sight of the statement. To his great credit, he went out of his way to ensure that all hon. Members have a very clear idea of the changes. I am sorry, therefore, to start on a slightly sour note, but I shall be brave about it.

A written ministerial statement promised that the consultation analysis would be available in the Vote Office and the Library. I am sorry to tell the Minister that it is not to be found in either place; I hope that his officials will ensure that that is rectified.

Today, we know the real cost of the Chancellor's vanity and who pays the price of his failure to add up the figures in March. Today, we will see for the first time ordinary families on ordinary salaries in ordinary homes facing £1,000 council tax bills. In the few short years since Labour started to target them, ordinary families' council tax bills have risen by more than 40 per cent. Council tax bills of £1,000 are just the start. The Government have promised a 16 per cent. increase in council tax over two years—a slippery stealth tax buried on page 197 of the pre-Budget report: so much for open government. Council tax bills of £1,000 will be in addition to the £35 a week for every man, woman and child that will be paid in extra taxation. The Government propose the introduction of a new band of council tax, which will push even more middle-income families into higher bands, particularly in the south-east and London. This will make matters worse.

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In last year's statement on the local government finance settlement the former Secretary of State, the right hon. Member for Tyneside, North (Mr. Byers), said:

Yet average council tax in England went up by 8.5 per cent.—four times the rate of inflation and the biggest cash increase in the history of council tax. However, the right hon. Gentleman should recognise that last year was part of the grand tradition of local government settlements established by the Deputy Prime Minister, who said in his statement in 1998:

The reality was that different council taxes rose by 8.6 per cent. in band D—three times the rate of inflation.

The Minister has just said that the distribution of grant to local councils means that there is no reason why councils cannot continue to improve services while sticking to a reasonable council tax increase, yet the Government have promised a rise of 16 per cent. over two years, or seven times the rate of inflation—a rise caused mainly by this settlement and the rising burdens that the Government have placed on local government.

Last year the former Secretary of State promised:

It is right that we should judge him on those criteria. The Deputy Prime Minister has added his own special touch of mystery and ambiguity to a system that was complex and incomprehensible. We now have a system that is more complex, opaque and unjust than the one that it seeks to replace. The labels may have changed, but the reality remains the same. This is looking less like a consultation exercise and more like the last page of XAnimal Farm", when the animals could not tell the pigs from the people. All this has been done just to transfer money from Conservative authorities to Labour ones. It seems that the Government are using a particularly heavy sledgehammer to give money to a few nuts.

It seems that the front-page headline in The Times in July was right when it predicted:

Mr. Steven Pugsley of the Rural Services Partnership said that

Last year, the Government made great play of the fact that there would be no scaling back of grant to pay for the floors and ceilings. The effect of scaling back falls on to a relatively small number of authorities. Birmingham would lose £1 million, Oxfordshire would lose £800,000 and Derbyshire £750,000. This year the Minister has announced the reintroduction of scaling back. What is the cost of this scale-back and will he confirm that it will affect local education authorities? How much money will be cut from education?

The new system depends heavily on a council's ability to raise council tax—resource equalisation. The Minister hopes optimistically that this does not mean

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that we will reward high spending, but it does mean that well-run councils that have been prudent and kept council tax down will be penalised. The system will penalise debt-free authorities that will face having their capital receipts raided to pay for badly run authorities.

Let us put partisanship aside for a moment. Next week we will have the verdict of the Audit Commission on councils in England. Conservative Members suspect that high-performing authorities will lose grant and need the protection of the floor announced today. Equally, we suspect that low-performing authorities will be rewarded by the settlement. Will the Minister give a guarantee that this will not happen?

Poverty and need are treated differently depending on where one lives. Can the Minister explain why, under the formula, Lancashire receives £85.48 more per child than Leicestershire and why Durham receives £83.20 more per child than Buckinghamshire? Is it not a sad reflection on the formula that Labour has chosen to ignore and airbrush out rural poverty?

The minimum grant or floor announced today will be insufficient to meet the needs of local education authorities in that it refers only to schools and pupils. This complex minimum grant takes no account of pressures facing LEAs such as school transport and special educational needs. If authorities are forced to apply for grants wholly on education, little will be left to fund other front-line services. This will lead to a macabre game of musical chairs. Councils will raid social services budgets; pressure from the needs of the elderly will lead to bed-blocking, which in turn will cause the Government to fine authorities, leading to an increase in council tax. It makes no sense to have different Government Departments tugging each other and local authorities in opposite directions, all because, in the words of The Times:

Does the Minister agree with the Chancellor's estimate that council tax will increase by 16.3 per cent. over two years? Will he confirm that band D properties will incur bills of £1,000 for the first time? How many authorities, and how many local education authorities, will receive just the floor figure? How many LEAs' grant will be subject to scaling back, and can the Minister explain the curious fact that, according to his statement, the amount raised through business tax is £1 billion down on the figure published in Hansard last year?

This is a missed opportunity. Consensus could have been reached on reform of the system; instead, the Minister has chosen to ignore advice from Members on both sides of the House. This is the same old Labour, and the same old fiddled figures.

Mr. Raynsford: To change the tone, may I start by thanking the hon. Member for Brentwood and Ongar (Mr. Pickles) for his kind words about the provision of information? I say to him quite openly that this is a complex subject, and we tried our best to ensure that all Members had the opportunity to see the figures, and to understand what we are seeking to do. The full details are in the Vote Office, but, according to the normal convention, they were accessible only from the moment that I sat down.

The Opposition have been scaremongering about council tax increases for some time—long before this settlement. They talked about the threat of cuts in

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services, and about huge council tax increases, but those claims were based on wholly erroneous and unjustified interpretations of the consultation. It is now absolutely clear, as I hope they will have the good grace to admit, that all that scaremongering was unjustified. I hope that they will at least ponder the contrast between this Government's 25 per cent. increase in support for local government over six years, with the 7 per cent. real-terms cut under the Tories.

The hon. Gentleman's claim that the settlement will force up council tax is simply wrong, as is his claim that rural areas will suffer a loss. If he looks at the detailed figures, he will note that rural shire districts across the country as a whole get a 7.6 per cent. grant increase. What a contrast that is with the individual cuts that they suffered under the Tory Government! I can attribute his claim that the scaling factor will result in a loss to education authorities only to his misunderstanding of what it is. The scaling factor is designed to help to pay for the cost of the floors. The floors are supported first by the ceilings, but authorities that would otherwise receive more than the ceiling do not do so, and the scaling factor reduces by a very small margin the grant—

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