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7.36 pm

Sir George Young (North-West Hampshire): I hope that the hon. Member for Sheffield, Attercliffe (Mr. Betts) will excuse me if I do not pursue his interesting arguments, but in the time available I have one or two points of my own to make.

I think that we have just gone past Groundhog Day, but I think that, listening to this debate, we all had the impression that we have been here before. It is absurd that in a debate of this importance some six Back Benchers get called, and I hope that in future we can have more time to debate what is a fundamental redistribution of a huge sum.

My case against the settlement is that the Government have made it virtually impossible to deliver not the commitments that councillors have made, but those that the Government have made. They are willing the end but they have not willed the means. They have made it clear that they want to drive up the standard of public services, particularly education and social services, and I share that ambition. However, the impact of these redistributive proposals makes that impossible not only in my Hampshire constituency but in swathes of the south-east. As I said in the last debate on these matters, what the Chancellor bestoweth in his Budget, the Deputy Prime Minister taketh away in the revenue support grant settlement.

Monday's letter, which we all received from the Minister for Local Government and the Regions, said:

"Our proposals for the funding of local authorities' revenue expenditure next year provide another significant boost to enable them to make real improvements in their services."

He went on to say that councils should be able to do that

"while maintaining reasonable levels of council tax".

However, to avoid cuts in services Hampshire county council, which was recently awarded top marks for efficiency, is having to increase council tax by 15 per cent.

The Minister will say that Hampshire's grant increase is 3.7 per cent. or £23 million, but the budget increase is 8.2 per cent., or £78 million. A standstill budget would

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be 7 per cent., so the gap has to be met by a council tax increase of 15 per cent. Does the Minister consider that increase reasonable? It gets worse: Hampshire county council has to passport an increase of 5.9 per cent. to the schools budget, as required by the Department for Education and Skills. That is £26 million, £3 million more than the whole of the grant increase that the council gets from the Government, so that has already been swallowed up by a mandatory increase in one service, leaving minus £3 million in grant to achieve the Minister's ambition for real improvements, coupled with a reasonable increase in council tax. It is simply not believable.

With minus £3 million in grant left, the county council has to address everything else, including the pressures on social services. Last year, because of the lack of supply, prices rose by 13 per cent., and they may go up by 10 per cent. next year. Added to that are all the other inescapable costs: the increase in national insurance contributions, increases in the landfill tax and the crazy idea of fining social services departments for bed blocking. I hope that the House of Lords, however it is composed, will defeat that Bill.

The Minister made a plea for certainty and stability. I support that. He said that there would be no more changes in the formula. However, we are worried about the changes that have already been announced. Will he shortly announce the floors and ceilings for the year after next so that local authorities have some certainty in their forward planning?

If the Minister hoped that the councillors of Hampshire would carry the can for the council tax increase, I have news for him. Councillor Ken Thornber, leader of the county council, ably supported by Hampshire's Members of Parliament, has led a vigorous campaign, which received extensive coverage in the local press. The Hands Off Hampshire campaign has explained what is going on to ratepayers. They have got the message that the Government believe that, in Hampshire, we are all healthy and wealthy and suitable targets for redistribution. They know that they will pay an extra £2 a week on average because the Government have switched resources.

Of course, people in Hampshire acknowledge that other parts of the country have greater needs and fewer resources. We have no difficulty with the regional support grant reflecting that. However, we believe that what is happening is beyond what can objectively be justified and that it is driven by political imperatives. I predict that people in Hampshire will respond by ensuring that the political motives that have driven up the council tax are changed at the earliest opportunity through the ballot box.

7.41 pm

Mr. Geoffrey Clifton-Brown (Cotswold): As many of my hon. Friends have said, the debate is so important, given that it involves £39.9 billion of public money directly from the Government and considerably more in council tax, that we should have more time for it in future. I urge Government business managers to ascertain whether we can hold a similar debate shortly.

Conservative Members made excellent contributions, notably my hon. Friends the Members for Mole Valley (Sir P. Beresford) and for Banbury (Tony Baldry) and

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my right hon. Friend the Member for North-West Hampshire (Sir G. Young). They point to the genuine difficulties that they and other similar southern authorities experience. That is not surprising. The grant increase is 5.9 per cent., which amounts to £3.2 billion. The increase in national insurance takes up £280 million; that in pension contributions takes up £100 million; and that in the local government pay settlement above inflation takes up £490 million. A large part of the 5.9 per cent. is therefore already swallowed up by Government-imposed increases.

The Minister said that local authorities had a choice of whether they wanted to pay the increases. How can they choose whether to pay increases in national insurance, pensions or a nationally negotiated local government pay settlement? They have no choice. The average increase in the country is only 3.86 per cent. The Secretary of State for Education and Skills tells us that we must pass on an average passported increase of 6 per cent. to education. As either the hon. Member for Kingston and Surbiton (Mr. Davey) or the hon. Member for Ludlow (Matthew Green) said, that is roughly three quarters of any local authority budget.

It is hardly surprising that many southern authorities must make a whopping double-figure increase in their council tax to maintain services and make up the shortfall. As my right hon. Friend the Member for North-West Hampshire said, as well as the increases that the Government have imposed directly on local authorities, his authority faces an increase in landfill tax, huge increases for waste disposal and problems with the social services block. Many authorities also have a problem with the census. That leaves some southern authorities in genuine difficulty. No wonder their council tax payers will suffer a huge increase.

Mr. Liddell-Grainger: I wonder whether my hon. Friend knows that west Somerset, which has the smallest district council in England, has got just over £200,000 and cannot carry out its duties. My hon. Friend is right. The chief executive is sick to death of Government intervention.

Mr. Clifton-Brown: One of the Government's great claims when they reviewed spending distribution for local government was that local authorities would have more discretion. Not only has the settlement been mean but the Government have exerted more control over passported increases. Local authorities therefore have less discretion over how to spend their money on other services.

Angela Watkinson (Upminster): Does my hon. Friend agree that the review gave the Government an opportunity to put right historic anomalies caused by the old system? The London borough of Havering, for example, has experienced perversely low settlements for a long time, as the Minister knows. Instead of taking the opportunity to do the honourable thing, he has given Havering the lowest increase in London—3.5 per cent.—and made the borough's financial difficulties a hundred times worse.

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Mr. Clifton-Brown: My hon. Friend is entirely right. I was about to say something about London authorities' increases.

Andrew Bennett: Will the hon. Gentleman give way?

Mr. Clifton-Brown: I will give way to the Chairman of the Select Committee shortly, but I will not give way to anyone else.

Conservative London boroughs have benefited from a 3.72 per cent. increase on average, whereas their Labour counterparts have received 5.6 per cent. That may not seem much of a difference, but by golly, it is a big difference given the budgets with which those authorities are dealing. The Minister of State's borough, for instance, has received a 7.6 per cent. increase, while one of its closer neighbours, Richmond-upon-Thames, has received only 3.5 per cent. How can such differentials be justified? One has a strong suspicion—even if it is not based on fact—that this Labour Government have treated Labour authorities in London more generously than they have treated Conservative authorities.

Andrew Bennett: I wonder whether the hon. Gentleman will exemplify this idea of meanness. Is he saying that the Conservatives are committing more money? Or are the Conservatives actually saying that they will take money from some authorities and give it to those that they think have done badly in this regard?

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