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5 Mar 2003 : Column 918—continued
Mr. Clifton-Brown: Roughly, out of the 3 per cent. cost increase that I have just mentioned, 1 per cent. relates to the issue of ACT and pension contributions, 1 per cent. to underfunded public sector pay increases and 1 per cent. to national insurance changes. Those costs mean that 3 per cent. of the Government's so-called 5.9 per cent. average increase is immediately taken up. Furthermore, they do not fund the amounts passported through education. How are local authorities supposed to maintain services without increasing council tax?
Mr. Raynsford: In an earlier debate, the hon. Gentleman gave us an interesting insight into his mathematical skills by suggesting that an increase of 5p a week was equivalent to an increase of £25 a year, rather than £2.50 a year. [Laughter.] That is true; it is an indication of just how out of touch the Opposition are. He is out of touch once again in respect of the figures that he has just given to the House. The total increase attributable to national insurance increases is £230 million, which compares with £3.8 billion of additional grant. That is the reality. That is what the Tory party is trying to hide, as it is Tory authorities that are increasing council tax unreasonably this year. When the full analysis is carried out, he will have to explain why Tory councils are making the largest council tax increases by far this year. It is not because of the grant. As I have pointed out, many Tory councils have received a very similar grant to that received by Labour councils, and they include Solihull, which, although its grant is similar to that of Labour Birmingham or Coventry, has introduced a council tax increase of four or five times the size. Why is that? Why is Tory Wandsworth, which reduced its council tax by 25 per cent. last year— an election year—imposing a 55 per cent. increase this year? Tory authorities are taking such cynical action because they are trying to blame the Government for their decisions.
Andrew Bennett (Denton and Reddish): What would be the implication for local councils of the 20 per cent. cut in public expenditure that Conservative Members are considering?
Mr. Raynsford: My hon. Friend, who chairs the Office of the Deputy Prime Minister: Housing, Planning and Local Government Committee, knows only too well that if the Conservative party ever came back to power, we would return to the days of cutting Government grant year after year. A Conservative Government would do that even more savagely if they fulfilled their leader's pledge and made a 20 per cent. reduction in overall public expenditure. A 20 per cent. reduction in council grant would lead to huge increases in council tax.
Mr. Luff: Indeed, it would. However, there is no such plan and I wish that the Government would stop talking such nonsense.
Will the Minister do Worcestershire county council the kindness of accepting a delegation from the relevant portfolio holder and the director of finance and reassure them that spending will be not be capped? Receiving such a delegation would enable him to understand why the council is obliged to increase its council tax by so much simply to deliver standstill services.
Mr. Raynsford: It is slightly odd that the hon. Member for Mid-Worcestershire (Mr. Luff) takes that view. Worcestershire county council has received a 6 per cent. grant increase from the Government. That is more than twice the level of inflation. There is no basis on which a council that receives that amount of grant can justifiably claim that it has no option but to impose an unreasonably large council tax increase.
If one considers the council tax that different local authorities set this year, one realises that it is possible for prudent and sensible authorities to budget in a way that does not impose unreasonable demands on their council tax payers. Let me tell the hon. Gentleman, who is so keen to support the county councils, a few home truths. Two years ago, in an election year, the average increase in county councils' council tax was 6 per cent. Last year, when no elections took place, it increased to 9 per cent. This year, the provisional figures suggest that increases will be 13 per cent. That is far greater than the increases of most other authorities.
Why does that happen? County councils have the same social services and educational responsibilities as other authorities—I referred to some in the west midlands—which have set substantially lower council tax increases. There is no good reason for unacceptable council tax increases.
Earlier, I referred to Wandsworth, but let me give one more example to kill for ever the myth that Government grant is somehow responsible for council tax rises in a year when all councils have had an increase in grant that is above inflation. The district council of Weymouth and Portland in the south-west threatens to impose a council tax increase of more 50 per cent. Yet Government grant to that authority has increased by 12.5 per cent. What does it need to avoid imposing an unreasonable increase on its council tax payers? It raises serious questions if 12.5 per cent. is not a sufficient increase on which to budget prudently.
All the evidence suggests that authorities can budget prudently. This year, authorities that are getting good Government increases should be able to impose a council tax demand that is not unreasonable.
Against that background, it is clearly inappropriate to accept the amendment this year. As I have already made clear, we do not wish to use capping powers. We want local authorities to budget but we expect them to act prudently. We cannot turn a blind eye to authorities that not only impose unreasonable tax increases on their residents, but act in a way that appears to be motivated by electoral considerations or profligacy. Every hon. Member should condemn that.
The hon. Member for Kingston and Surbiton must surely have learned a lesson from the fate of Richmond upon Thames council, which last year had an unenviable reputation for imposing the highest council tax of any authority in the country. Not surprisingly, the Liberal Democrats no longer control Richmond upon Thames council. I therefore put it to him, in the nicest possible way, that it might be in the interests of his party if he were to take a more prudent and rigorous attitude towards those members of his party who do not believe that they have a responsibility to moderate their council tax demands. If we do not send out from this House the message that we expect local authorities to act prudently, the public will take a very dim view of our responsibilities—our serious responsibilities—towards the ordinary people who ultimately have to pick up the tab.
We cannot accept the new clause. I hope that the hon. Gentleman will withdraw it and send out a message that authorities should act prudently and responsibly.
Mr. Clifton-Brown: Ministers will not blind council tax payers with science. Even "The World at One" today ran an item on whether the Government were skewing the local government finance distribution system through resource equalisation, taking money away from prudent and well-run southern councils to give it to their friends in the north. People are tumbling to that, and they will certainly tumble to it when council tax bills fall through their letterboxes.
Mr. Raynsford: The hon. Gentleman seems to believe that the louder he shouts, the better his chance of persuading people. I have to tell him that usually the opposite is true—if one has a sound and strong case, one needs only to put it across in a sensible and modest voice. In a year when every local authority in the country has had an above-inflation grant increase, there is no justification for some of the profligate council tax demands that are coming through, particularly from Conservative authorities. I am surprised that the hon. Gentleman—who, in his opening remarks, referred to the Government of the party of which he is a member taking action in the 1980s against councils that, in his view, were acting unreasonably—cannot bring himself to condemn those Tory authorities that are imposing wholly unreasonable council tax increases on their residents.
We cannot accept the new clause. I hope that the hon. Member for Kingston and Surbiton will withdraw it, but, if not, that the House will reject it.
Mr. Edward Davey: I am afraid that the Government's argument will not wash with the electorate. They know that the blame for many of the high council tax rises lies with this Government. It is not good enough for the Minister simply to say that every council has had an above-inflation increase. He should look at analyses that show the effects of ring-fencing, or of the passporting requirement that his colleague, the Minister for School Standards, imposed in respect of the education grant on the ability of councils to manage their budgets. The right hon. Gentleman knows, because he will have heard many local authority councillors and council officers make this argument, that although they may have had an increase, their ability to manoeuvre in using that money has been sorely limited. Therefore, in areas where they have not had sufficient grant, where there are huge demands and huge cost pressures, they are having to make good the lack of grant through council tax increases. The Minister knows that, owing to the effects of gearing, a small shortfall in grant revenue means that council tax has to increase significantly to make amends. His argument does not wash under analysis and it will not wash with the electorate.
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