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5 Feb 2003 : Column 370—continued

Several hon. Members rose—

Mr. Pickles: I will give way to the hon. Member for Kingston and Surbiton (Mr. Davey), but I hope that he is not going to talk about local income tax.

Mr. Edward Davey : Does the hon. Gentleman agree that education passporting is affecting councils such as East Sussex, Kent, Cumbria and my own council of Kingston upon Thames, and that the Government are effectively forcing them to raise their council tax? If so, does he further agree that, if councillors react by putting up their council tax, they still deserve our full support?

Mr. Pickles: Again, I can go further than that, because it is the knock-on effect that I am about to come to, which will have a serious effect in respect of social services.

David Taylor : Will the hon. Gentleman give way?

Mr. Pickles: In a moment.

If the Government think that it is a simple choice between Mr. Nice and Mr. Nasty, they are missing the point: choose one and the impact is on school children; choose the other and it is on care for the elderly. The Government had promised a big increase in social services funding, but that will be impossible for authorities to deliver without a substantial council tax increase or a drastic reduction in other services. In many cases, there will be a straight, stark choice between the young and the old.

By a cruel twist of fate, the very authorities that the Government have chosen to take money from are those with the highest proportion of elderly people. Bearing in mind that we are talking about a county function and about specific districts in which there is a high proportion of elderly people, the list is not extensive, but it includes areas such as Arun, North Norfolk, West Somerset, Rother, Eastbourne, Tendring, Christchurch and East Devon, all of which will suffer from the settlement.

Mr. Nick Hawkins (Surrey Heath): To that list, my hon. Friend can add my borough of Surrey Heath, where I have a large number of retired people or people who are about to retire. When he talks of fiddled figures, will he recognise that one thing that has caused outrage is Ministers coming to the House and announcing a 3.2 per cent. increase. Independent, non-party political borough treasurers then get in touch with Members of Parliament such as me to say that that figure has been arrived at only by fiddling this year's figures, and that the actual increase is 0.8 per cent. which is more than

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wiped out by the increase in national insurance. My independent officers are very angry and they know who is to blame—this Minister, this Government and their fiddled figures.

Mr. Pickles: My hon. Friend is absolutely right. I could not put it better myself.

Several hon. Members rose—

Mr. Pickles: I give way to the hon. Member for Sheffield, Attercliffe (Mr. Betts) but then I will have to make some progress.

Mr. Clive Betts (Sheffield, Attercliffe): May I bring the hon. Gentleman back to his commitment to a fairer and less party political distribution system? One of the fundamental ways in which the new system is fairer is that it seeks only to distribute grant. The hon. Gentleman may have a different view on whether it is a fair system of grant distribution, but that is all it seeks to do. Under the Conservative Government, the system also set arbitrary spending limits for every council and imposed penalties and capping to force local authorities to comply with the Government's diktat. That was a completely unfair, arbitrary political system, which is why this system, having got rid of that element, is so much fairer.

Mr. Pickles: If the hon. Gentleman is applying to serve on the Conservative commission on the reform of local government I shall certainly consider it and let him know in due course.

Make no mistake, the crisis in social care will get worse because of the settlement.

There are concerns about the shortfall in grant for services transferred to local authorities—for example, for funding preserved rights.

Mr. Raynsford: The hon. Gentleman is always courteous in giving way. He has just made a rather important statement. The Conservative party is apparently launching a commission to consider local government funding. When will the commission start its work, and what will be its composition? Will Lady Porter be a member?

Mr. Pickles: I do not want to disappoint the right hon. Gentleman, but I am afraid that his behaviour over the last year has rather ruled him out from joining. However, one never knows. When he leaves ministerial office we may think about calling on him.

Already there are indications that the proposed transfer of residential allowances will have a significant impact on authorities' budgets, particularly the requirement to undertake a financial assessment of all clients by 1 October 2003. The legislation on delayed discharges currently in the other place will increase burdens on local authorities and will only add to the crisis. Care for the elderly and vulnerable children will be squeezed both ways by the pressure of increased demands and the rising costs of providing services.

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When the Minister came to the House to give a statement in December, I made two predictions. I said that the following week the comprehensive performance assessment would be produced and that it would take away tens of millions of pounds from excellent authorities and give poor-performing authorities tens of millions as some kind of reward. That proved to be the case. All the new powers and flexibilities promised in the Local Government Bill, which is currently going through the House, will not compensate for those missing millions. It is ironic that the Government offer flexibility and freedom to high-performing councils and at the same time place them in a straitjacket by taking away that money.

Mr. Love: Will the hon. Gentleman give way?

Mr. Pickles: Not for a while.

My second prediction was that within two years we would see council tax increases of 16 per cent. Here, I am afraid, I have come horribly unstuck. It looks as though figures close to that will be achieved this year. It seems certain that, for the first time, ordinary families on ordinary salaries in ordinary homes in band D will receive council tax bills of £1,000. Throughout the counties, southern England and London there will be massive council tax rises, and London will see increases of over 20 per cent. Council tax has become the ultimate stealth tax. The Minister is right to say that we should judge the Government on council tax rises. The accountants Tenon calculate that the increases since 1997, not including any resulting from this settlement, are the equivalent of adding 2p to income tax.

We now have a chance to consider the formula. There is nothing fair or, for that matter, radical about it. After all, there is nothing radical about pork-barrel politics: to punish one's enemies and reward one's friends is a concept as old as time.

David Taylor rose—

Matthew Green rose—

Mr. Pickles: I shall give way first to the hon. Member for North-West Leicestershire (David Taylor) and then to the hon. Member for Ludlow (Matthew Green).

David Taylor: The whole House and the few hundred people scattered around TV sets will be grateful for the Conservatives' Pauline conversion and will look forward to a politics-free grant formula when the Conservatives are next in power. All the hon. Gentleman's Front-Bench colleagues may be in residential care by then. Will he confirm that the policy is a permanent and major shift from the arrangements that were so generous and friendly to authorities such as Wandsworth and Westminster and so harsh to many authorities in the midlands and the north?

Mr. Pickles: I have to tell the hon. Gentleman that I am feeling pretty sprightly, and we look forward to our return to power very soon. What is so unusual about this Government taking on Conservative policies? After all, yesterday our options for the reform of the House of

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Lords received the closest vote, so I would not mock if I were him. The hon. Gentleman seems to think that this is the only method of allocating funds, but there are plenty of examples throughout the world of grant distribution formulas in which the political system is not involved.

Matthew Green rose—

Mr. Pickles: I promised that I would give way to the hon. Gentleman. [Interruption.] No, I promised that I would.

Matthew Green: We clearly agree that some councils will be forced into high council tax rises or cuts in their services. Will he guarantee that where councils choose to increase council tax, the Conservatives will not campaign against them on that basis at the next set of local elections?

Mr. Pickles: I realise now that I have given way too many times. My hon. Friends were right. I shall give way no more and conclude my remarks quickly so that my hon. Friends can make their points.

This system has taken most of the worst features of the old system and made them vicious. One expert on local government finance put it to me:


The Government have not spent five years carefully deliberating. They sat on their hands for four and a half years before plunging into a hectic round of "What do we do next?" The Select Committee noted that in its critical report on the new formula. The shires have been slaughtered at a time when the rural communities wanted the Government to reassure them that they understood and wished to help. They have received a resounding kick in the teeth.

What have the councils done to offend the Government? Have they challenged the Government's right to govern? Absolutely not. Have they failed to co-operate with the Government's economic policies? Again, absolutely not. Some councils, such as Kent, adopted the Government's anti-poverty strategy and were making it work.

Why are the Government punishing councils such as Kent, Dorset and West Sussex, which the Audit Commission rated as excellent authorities? They do not fit into new Labour's projects and therefore their political influence will be marginalised. The things that they hold dear will be bulldozed and built over, as we heard earlier. In the next few years, as the funds slip away, their efforts will be diverted from innovation and improvement to the survival of their services.

The Government may hold up their hands in horror and say that the formula has unintended consequences in the shift from county to town, and that they are blind to councils' political colour. Let us put that to the test. Let us ignore the fact that all but one of the 12 councils with a deficit in their education funding are Conservative. Let us put aside the fact that Conservative authorities are losers from the formula whereas Labour authorities are gainers. Let us use the Government's

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figures and compare London authorities. The increase in grant for London Labour authorities is 5.6 per cent. whereas as that for Conservative authorities is 3.7 per cent. The Minister may claim that that is because of the nature of the authorities. Let us consider some comparable authorities, for example, Harrow and Enfield. They are similar, yet Harrow gets 6 per cent. and Enfield, a Conservative authority, receives 3.9 per cent. Merton and Bromley are also similar, yet Labour Merton gets 6.2 per cent. and Conservative Bromley receives 3.5 per cent. The boroughs are similar but the outcomes are different. I should be interested in convincing, rather than party political, arguments about the differences between those pairs.


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