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7 Jan 2003 : Column 94continued
Mr. Patrick Hall: In relation to the role of property owners, I take it that my hon. Friend refers to freeholders. If soand if they are to make a contribution, which sounds fair in principleperhaps they would also like to have a vote. That would entail the grave difficulties of identifying those people. In many town centres, the freeholders are remote, they hardly ever visit, and their property portfolios are looked after by managing agents. That is a problem.
I am mindful of the wish of many Labour Members, if not official or unofficial Opposition Members, to take part in this debatethat may be a comment on the value given to local government by the different political partiesand I will end my contribution with those remarks. I look forward to my right hon. Friend's comments in his summing-up.
Mr. David Curry (Skipton and Ripon): My right hon. Friend the Member for North-West Hampshire (Sir George Young) indicated that, with regard to serving on the Bill Committee, he might wait for the film. I may be a glutton for punishmentor a sufferer from excess nostalgiabut I am willing to serve on the Bill Committee. It is not merely that the Minister's company is invariably entertaining and agreeable, but that once one has got into a habit it is difficult, as all old lags find, to get rid of it. This area is so frequently abstruse that one might as well maintain one's reputation for having expertise in it, especially as few people would even aspire to have such expertise.
This is yet another Local Government Bill and, as we are in a period in which we are giving fundamental consideration to what we must now call the governance of the United Kingdom, it might be sensible to look at what it tells us about the relationship between central and local government: mainly, to lament that the Government do not seem to want to stand back and look at where the proper balance lies between the two authorities, and at the whole issue of authority and accountability.
The political architecture is changing considerably. Multinational decision-taking structures are growing, and although the European Union tends to preoccupy us because of its relationship to the authority of this place, it is far from being the only one. A diversification of authority has taken place within the United Kingdom, with the creation of a semi-federal system, and if we move towards regional government we will have an even more federal system, although a remarkably heterogeneous one, as it will be far from uniform in application. Equally, a process of atomisation as opposed to globalisation has taken place, with devolution "à l'outrance" to the local citizen on the school board, for example. That is passing through the instruments of democratic accountability. Much is therefore changing. At the same time, we see a much more diversified service delivery between the public sector, the private sector and voluntary bodies of one sort or another. Without wishing to trespass on the quarrel between the Prime Minister and the Chancellor of the Exchequer, that is likely to be one of the dominant themes of the next year in politics.
Why are the Government so persistently anxious to maintain their hand on the brake of local government? Why are they anxious to be the back-seat driver and, on many occasions, sit in the front seat too? There are three reasons. First, as the Minister mentionedthis is an excerpt from my speeches as a Minister and the speeches of my predecessorslocal government spends 25 per cent. of all public expenditure. The figure was #40 billion in my day, and it is more now. No Government trying to maintain national competitiveness in a globally competitive marketplace can afford not to take a view on what is the correct volume of that expenditure. There is no point in pretending otherwise or looking back for a lost golden age in which that did not happen. We are in a modern world in which that is an inescapable imperative.
Secondly, there is a need to get value for money in an age of restraint on the share of GDP that Governments feel that they can take, partly for the reasons that I have just mentioned and partly because of the allergies that have overcome the political system about the raising of more money in taxation, particularly in highly visible direct taxation. The Government may be finding some way out of that allergy through their persistent tax increases.
Thirdly, there is the distrust of a political culture in local government, which all parties share. Ironically, the last Conservative Government had the same problem as this Government: old Labour and local government. I do not know which of those Governments have been more inconvenienced by that. We have certainly both been inconvenienced, and that was the cause of a great deal of distrust of what was happening in local government, even though old Labour was often new polytechnic when translated into local government terms. That manifested itself under the Conservative Government in instruments such as capping. There were a series of tough settlements, although the suggestion by the hon. Member for Leeds, West (Mr. Battle) that there were cuts in real terms year after year was a fictional element in his contribution. Compulsory competitive tendering was important as many local authorities had no way of assessing what was a proper place for a service before an element of competition was introduced into the tendering process. The Audit Commission, which has now become a sort of super-gendarme in the firmament of this Government, was an invention of the previous Conservative Government.
The Tory Government used weapons that were largely financial as instruments of control of local government. Under this Administration, the instruments used are much more managerial in approach, although not exclusively so, as that does not take account of the financial instrument of a very great increase in direct grantsa kind of challenge to non-hypothecationwhich has been carried out over the last few years. Best value was the great instrument that replaced compulsory competitive tendering through the wonderful regime of the gendarmes that attended almost every move of local government. The then Secretary of State for Transport, Local Government and the Regions, the right hon. Member for Tyneside, North (Mr. Byers)who is now, in political terms at any rate, deceasedconfessed at Harrogate that the machinery had become too heavy and would have to be unwound to an extent. It was certainly oppressive and time consuming.
Subsequently, we have seen the prescription of how councils were to run themselves, of which the Tory Government never even aspired to dream, and the choice of a mechanism by which they were to discharge their political function, let alone their services. We had elected mayors, a process that went catastrophically wrong in the places where it was tried, cabinets and the mayor plus manager. All those systems were prescribed on the basis of token notice being taken of the views of the general public as expressed in referendums with extraordinarily low thresholds for turnout and the majorities needed to bring about change. The proposals for regional assemblies have further implications for the planning role of local government. We therefore have an incredibly confused architecture of government and confusion as to where the Government see the broad thrust of their strategy leading. I fear that there is no clear strategy.
There have been more generous settlements recently but, because of the way in which council tax works and the gearings that are involved, there have been spectacular increases in the council tax needed to deliver services. At the same time, there has been an increase in micro-management, with the daftest increase of all being that whereby the Government take money off the national health service to give it back to local government so that it can it repay the NHS to deal with the problem of bed blocking. If ever tautology was written into legislation, the Government have managed it with that particular provision.
There is much talk of freedom, which is the new buzzword in local government. However, there are two sorts of freedom: the freedom from and the freedom to. It is important to draw a distinction between the two. Much of what has happened of substance is of the freedom from variety rather than the freedom to. For example, a policy classifies councils in a range from excellence to Hackney, which I suppose is the effective classification for councils at that end of the range.
The rewards offered to councils include a reduction in ring fencing, the removal of the requirement for statutory plans, a reduction in the level of the intensity of inspections and the removal of the never used threat of capping. They are part of a local government parole system. Councils are allowed out on parole after a period of good behaviour, but the classification itself is still a central mechanism that is too dependent on Ofsted's classification of education spending and the way in which Ofsted defines that. There must be greater equivalence between the way in which Ofsted judges education services and the judgment that is made of other services if the classification is to operate fairly.
The inevitable question that we ask ourselves about the Bill is whether it contains more freedoms. As many speakers have said, it contains more freedoms, but we are also moving in the opposite direction simultaneously. It is an itsy-bitsy Bill, like so many other itsy-bitsy Government Bills. The freedoms in it are far from clear cut or they represent an ambiguous new direction. For example, while the Minister talks about freedom, he will no doubt be aware that the Department for Education and Skills, which has always been the most Stalinist Department when it comes to controlling its expenditure, is even now telling local authorities that it must passport through to schools a volume of their budgets. Local authorities that have received a baseline
On balance, I welcome the proposals on capital finance. However, they do not involve freedoms US-style. Although one or two local authorities will have their own credit ratingsthey are very much at the limitthey are not companies going to market. All local authorities will continue to borrow from the Public Works Loan Board and will all pay the same rates of interest. I hope that arrangements will be made so that, if there is early repayment of debt, they do not suffer from some of the disadvantages that have occurred with voluntary transfers. That would constitute a serious disincentive. Furthermore, as my hon. Friend the Member for Mole Valley (Sir Paul Beresford) pointed out, we do not know what the support arrangements will be for the continued capital borrowing that will continue to form the lion's share of the capital investment made by local authorities.
I think that I am in favour of the proposals to trade and change provided that there are the obvious safeguards for competition between local authority and other suppliers. Some of the other measures in the Bill introduce sensible flexibilities, including the new stab at rate relief for small businesses. If I may make a forecast that is born of the scars that I bear, that proposal will be welcomed and then immediately dismissed as being wholly inadequate for the needs of small businesses.
I am hesitant about the proposal for the pooling of housing capital receipts for precisely the reasons that my right hon. Friend the Member for North-West Hampshire has already outlined. I will not repeat what he said other than to say that I hope that we will receive clarification in Committee so that we can understand how the proposal will work.
I am also cautious about introducing too many changes to council tax. It has the advantage of being a very efficient tax in terms of its rates of collection. Many local authorities are very close to collecting the practical maximum of what can be collected. However, I accept that there is a problem, notably for lower-value properties, and the hon. Member for Denton and Reddish (Andrew Bennett) has already mentioned that. If we could introduce a little more logic into the system, we could all escape from the silly political business of swapping arguments about which party charges council tax payers less. We all know that the answer is fundamentally a function of the proportion of houses of different grades that are in each local authority area. The Minister must accept that, because of inflation in house prices, people will be deeply concerned to find themselves suddenly in a new band when the level of services provided remains the same. The council tax is designed to create a balance between capital values and services delivered, and that balance must be maintained.
Where does the Bill leave us? It leaves us with small increases in discretion and flexibility; it maintains a largely command-and-control system from central Government; and the prevailing culture is still that of reward for performance. We have not really considered whether and how we can reassert representative