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Mr. David Curry (Skipton and Ripon): I am grateful to the right hon. Gentleman for early sight of a fairly skeletal statement. He and I have spent a considerable part of our career on opposite sides of the same issues, and I look forward to a constructive, intelligent engagement on a subject that matters enormously to millions of our fellow citizens. I am glad of the healing presence of the Deputy Prime Minister, fresh from his new evening job as anger counsellor.

The Minister has been at his mellifluous, Panglossian best this afternoon.

The Deputy Prime Minister (Mr. John Prescott): A bit of class.

Mr. Curry: I always bring a bit of class, and if it hangs around, I hope some of it will rub off.

This time last year, the Minister set out proposals that led to utter, unadulterated chaos. I suspect he saw it coming, but the blundering collision of the Deputy Prime Minister and the Secretary of State for Education and Skills—the collision of two bulldozers—left a crater deep enough to bury virtually the entire settlement. It led to confusion and incoherence so complete as to be almost inspirational. It led to the biggest council tax increases for a decade, and a campaign by the Secretary of State for Education and Skills and the Minister for School Standards—the Laurel and Hardy of the Government—to blame everybody but themselves.

The settlement is a panic-stricken and desperate attempt to repair last year's damage. The watermark right through the settlement is panic. [Interruption.] I am glad the hon. Member for Blyth Valley (Mr. Campbell) agrees with me. I accept that the bills for next year will not reproduce the increases that we have seen this year. It is amazing how the imminence of elections can concentrate the mind. However, the mere fact that we do not have another catastrophe is not a virtue in itself. We will see yet again, as we see year after year, an inflation-busting increase in council taxes. Year on year, remorselessly, relentlessly and unremittingly, under this Government, council tax bills soar. Every year, Ministers recite the same old litany and say that the Government's proposals are fair, realistic and even

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generous. I have the speeches, which are a sort of black Gregorian chant. Each year, however, the inescapable arithmetic reasserts itself—bigger bills or reduced services. [Interruption.] It is very helpful to have been on the Government Benches, as one knows the tricks.

There are things in the statement that I welcome, but they give rise to questions. On the £750 million reduction in ring-fencing, the Minister talked in his statement of payments outside the formula to direct the money to "the right places". Does that mean that the grants must be used in the general sector from which they came, or may they genuinely be applied freely across the range of local government spending? In other words, may earmarked, ring-fenced grants for social services be spent elsewhere?

I welcome the additional funds to help services other than education. Last year, as the Minister will recall, the real crisis was the way in which education spending muscled every other sort of spending out of local government. Yet we all know that there is an historic shortfall in social services funding, and authorities also face the first year of bed-blocking fines, harmonisation of pay costs, mounting charges in care homes, and the cost of the new care standards and developing new arrangements for children's services, to which everybody in the House attaches enormous importance. I want to be reassured that we are not merely moving from catastrophe to disaster and declaring that that is a victory.

What does the Minister mean by the rationalisation of funding of council tax and housing benefit? There is a real problem here, and it is not good enough merely to say that old-age pensioners and people just above benefit level suffer large council tax increases. People on benefits suffer because so many people fall through the net. We know that more than 1 million potential claimants do not make the claims for which they are eligible.

Mr. Edward Davey (Kingston and Surbiton): Two million.

Mr. Curry: The hon. Gentleman doubles the figure, but that is a Liberal tendency.

It is necessary to make the benefits more accessible and efficient. Help the Aged has produced some extremely sensible proposals, and I am sure that the Minister will want to take them seriously.

I note the deferment of some demands on council waste management requirements. That is welcome, as too many requirements are piling up without being costed. I bet that that was dragged out of the Secretary of State for Environment, Food and Rural Affairs through clenched teeth and that heels were digging into the earth this morning.

At the heart of the statement was the explicit threat of capping. The Minister appealed to reason. One should beware of Governments when they appeal to reason, but I know just how important that little word "reasonable" is. Indeed, I think that the Government could not function without the concept of reasonableness, which they never define. However, we need to know what is reasonable in this context, as he uttered some serious threats. Is it council tax at inflation, or at twice or three times inflation? Is it anything that falls within double

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figures? Is that what is reasonable in this context? When he says that he will consider the trend over more than one year, does he have an aggregate increase in mind, and if so, over how many years? What level of efficiency gain is he asking local authorities to factor into the equation?

I have a question about the total amount of money available. The Minister announced £54.1 billion in total support from the Government and business rates. The grey book has a projected revenue allocation of £54.5 billion. Are we really facing a settlement that is below forecast? If so, it is below forecast by an amount equivalent to the budget of a London borough.

I have come across a helpful little leaflet headed "National Statistics" and "Office of the Deputy Prime Minister", and called "Local Government Finance—Key Facts", which shows just how draconian Labour's council tax policy has been. It raised £11.24 billion in 1997–98, and it is estimated that it will raise £18.9 billion in the current year. Under Labour, the annual increase in council tax has consistently been three times the rate of inflation. Band D has increased by an average of £413 a year or £8 a week. In London, the band D payment is now more than £1,000 and has increased by 63 per cent. under Labour, so it is no wonder that the Labour party is so anxious to recall Ken Livingstone to the party colours if he can be extracted from his latest demonstration.

We have got used to Labour's pretence that public expenditure can rise painlessly, as borrowing and stealth taxes can take care of it, but the council tax is the tax from which it cannot hide. If I leave a rake on the floor of my tool shed and step on it, it will rear up and smack me in the face. Labour council taxes are that sort of tax; they are straight, up-front, in-your-face, cash-on-the-nail taxes, and as we all know, they hit the worst-off first. There is no escape. When services are delivered by local councils—[Interruption.] Just wait, it's coming. When services are delivered by local councils, every 1 per cent. of increased public expenditure that they have to fund requires a 4 per cent. rise in council tax. Even if the Government were to provide every penny of the increase in aggregate, which never happens, the distribution formulae would require local tax rises.

That is the matrix at the heart of the system, so there is no escape from that stark logic. Public expenditure increases require higher council tax bills. That is not alchemy, accident or miscalculation, but logical necessity. When the Government embark on a massive increase in public expenditure—significantly higher increases than we have seen—

Mr. Ronnie Campbell (Blyth Valley): He's trying to bring back the poll tax.

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I am sorry to interrupt the right hon. Gentleman, but the hon. Member for Blyth Valley (Mr. Campbell) should control his excitement.

Mr. Curry: The hon. Gentleman is repenting of agreeing with my earlier statement.

When the Government embark on a massive increase in public expenditure, well ahead of inflation and significantly higher than in the past, the bigger bills

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automatically fall on the council tax payer's mat. It is no wonder that when the Minister's beaming countenance appears on the television screen, the prudent householder's hand moves instinctively to protect her wallet. What is the Government's response? It is very predictable. We are told that they are going to take council tax out of the new cost of living index.

The Minister makes much of the arrangements for education funding. This year, education funding was the biggest part of the problem. What we saw did not require the insight of a prophet or sage. At its worst and most perverse, we saw authorities such as Barnet and Essex ordered to increase education funding by more than the total increase in the whole Government grant. We also saw a massive increase in tax to keep essential services in place. It was the classic Labour formula of over-promise and under-delivery, followed by a desperate attempt to dispose of the dead bodies that littered the stage.

The price of the educational override that we now have, which was introduced by the Secretary of State for Education and Skills, is a system yet more complex, difficult to understand and incapable of taking the additional strain. The poor old Deputy Prime Minister has lost another round to the Education Secretary and is reduced to following the Lord Mayor's show and trying to work out how the bits fit together.

I fear that it will be the humble services that suffer in this settlement, at an average of about 2.2 per cent. for district councils. Pavements, street lights, pothole repairs, recreation and parks are the services that are often the closest to the citizen. This is the settlement that could mark the year when the streets begin to crumble. Of course, if the Minister is right and has paid the penance for last year's catastrophe, there will be rejoicing in the streets, and even the pensioners of Devon will invite him down again to share a grateful libation.

This settlement is quite simply bad news. To use the technical expression—I am sure that the Minister is familiar with it—the citizen has been stuffed. It is bad news for pensioners, for people on low incomes, communities and others. It shows the same old spin, blather, centralisation and panic, and the same old Labour.

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