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Mr. Raynsford: I welcome the right hon. Member for Skipton and Ripon (Mr. Curry) to his new position and congratulate him on having come back after his wilderness years to head such an enormous team of former shadow Cabinet members. I hope that they are all happy in their new roles.

I, too, look forward to constructive engagement. It was interesting that the right hon. Gentleman's first comment implied that he accepted that council tax increases will not be as high in the coming year as they were last year. That probably indicates that he has been talking to his colleagues in Conservative local authorities, because it was those authorities that made this year's huge council tax increases of 16 per cent. He knows very well that his party was responsible.

The right hon. Gentleman will doubtless say that it was not those councils that were responsible, but the Government, so I should like him to remember the views of his former boss, the right hon. Member for Suffolk,

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Coastal (Mr. Gummer), who made similar announcements from this Dispatch Box in the 1990s. He took a very simple view on this issue:

Does he believe that his former boss was wrong? If, on the other hand, he accepts that view, I hope that he will tell his local authorities to restrain their council tax increases in the coming year.

The right hon. Member for Skipton and Ripon asked a perfectly good, technical question about whether my comment on targeting the grant to the right place implied a different form of ring-fencing. I was referring to geographical location, because a number of such grants are specific and relate to circumstances that apply in some authorities but not others. We will continue to ensure that grants related to deprivation go to the right place—to those authorities that need such help—but, as I made clear in the statement, those grants will be unring-fenced.

The right hon. Gentleman talked about unclaimed council tax benefit and referred to various proposals, including those from Help the Aged, to tackle the problem. We are very conscious of the importance of doing that, and we will look closely at any evidence from Help the Aged and others. Indeed, as I said, my right hon. Friend the Secretary of State for Work and Pensions is actively engaged in that regard. The extension of the pension credit provides an opportunity to ensure that the new, more generous rules bring into entitlement those who previously did not qualify.

The right hon. Gentleman also asked about the level at which capping might apply. He will know very well that there are two possible approaches to capping: one is to specify a level in advance, which is the approach that his party often used to take when in government; the other is to say, as we do, that it is not right to impose such crude and universal capping. However, as a responsible Government we cannot stand aside if authorities persistently increase council tax by unreasonable levels. That is why we retain our reserve powers, which we will use in circumstances where we believe it necessary to do so. We do not want to use them, and we hope that authorities will budget prudently, but we will if necessary, as I have made clear to the House.

The right hon. Gentleman asked about the difference between the figures in the Grey Book and those in the settlement. As he will know from his own experience, it is the result of transfers that sometimes take place. This year, there is a transfer relating to council tax benefit and housing benefit, which in future will be fully reimbursed by the Department for Work and Pensions, rather than requiring a contribution from local authorities, which was supported under the revenue support grant. That explains the discrepancy between the figures.

On band D increases, I remind the right hon. Gentleman that when he and his colleagues were in government, they used to boast proudly, year on year, that the average band D council tax in Tory authorities was £250 a year less than that in Labour authorities. I

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bet he has not looked carefully at the recent figures. If he does, he will see that the difference has shrunk virtually to nothing, because of disproportionate increases in Tory authorities. He should certainly talk to his colleagues in local government, in order to advise them that they will incur the ire of the electorate if they go on with disproportionate increases.

On gearing, I remind the right hon. Gentleman that that effect is the consequence of the council tax scheme that his Government introduced. Nothing has changed since the scheme was introduced more than 10 years ago. On education, as we have already made clear, we are committed to improving the position of education authorities to ensure that extra money goes to schools but that other council services will not suffer as a result.

The right hon. Gentleman said that district councils are, as I accept, getting a lesser increase than they got last year. Last year, they got a very good increase, averaging 7.5 per cent., but it is tighter this year. The settlement has a floor of 2.2 per cent., but even so, it is an increase. When his party was in government, district councils used to experience actual cuts in their grant, year on year. I shall remind him of the increases in grant from Government to local authorities between 1994 and 1997, when he was in charge of local government: in 1994–95, 1.1 per cent.; in 1995–96, –0.6 per cent.; in 1996–97, 1.2 per cent.; and in 1997–98, 0.2 per cent. Our settlement guarantees an average increase of 4.7 per cent. and builds on six previous years of increases, so it is pretty cool for him to complain about the level of increase. This Government are funding local authorities, and we expect them to set reasonable council tax increases.

Mr. Edward Davey (Kingston and Surbiton): I thank the Minister for that statement, and join him in welcoming the right hon. Member for Skipton and Ripon (Mr. Curry) to his new position; we look forward to his attacking his own policy on many other occasions. The Minister says that his statement is a good news story for local government. Does he remember saying the very same thing last year? Does he recall that the effect then of that statement was a schools funding crisis and record council tax rises?

Did not the Minister give the game away when, during today's statement, he kept warning councils about their budgets? That was a case of getting his retaliation in first. The truth is that this year's statement is not a good news story for local government either. Many councils, especially those in the shire districts face real-terms cuts because of this low settlement. Is not the timing of the settlement a case of burying bad news under a Bush?

At the heart of the statement is a massive funding gap. Even if the Minister's claim of £300 million extra turns out to be new money, which we very much doubt, does he accept that that will still leave a funding gap of £500 million? Will he confirm that, to fill that gap, authorities will be forced either to hike council tax or to slash services? Will he also admit that the biggest losers in this statement are the police? How can the Government talk tough on antisocial behaviour when they are asking chief constables either to hike council tax precept by 15 per cent. or to cut officers on the front line?

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Will the Minister concede that the Treasury, unlike the Office of the Deputy Prime Minister, is assuming an average council tax rise of 7.3 per cent.—nearly three times inflation? How can he wash his hands of council tax rises, given that both he and the Treasury have built an above-inflation council tax rise into their own assumptions? Worse still, in the light of the massive funding gap, is there not a danger of another year of double-digit council tax rises? How can he square that with his stated view that the council tax is at the limit of acceptability?

Given all that, it is surely incumbent on the Minister to be much clearer about his intentions in terms of capping councils. At least we know that the right hon. Member for Skipton and Ripon supports widespread capping: that is what he did when in office—16 times. How does the Minister square his capping threats with Labour's opposition to capping when in opposition? Why did he change his mind? Back in May of this year, he promised not to cap councils rated excellent by the Audit Commission. Why, by August, had he changed his mind again? The Government are in a mess on council tax because they have made this unfair Tory tax even worse, so is not the real answer on council tax to scrap it, not cap it?

On public services, this statement contains many hidden problems. On education, the Government have gone even further down the road of micro-managing every one of England's 21,397 schools. Given that almost every penny of Government support for schools is now ring-fenced, how does the Minister expect local education authorities to manage the £300 million overhang from this year's settlement? How are they expected to deal with their own demand-led spending on special educational needs and school transport? Given that 2,700 rural schools have fewer than 100 pupils, does not this straitjacket settlement imply a massive closure programme and yet another attack on the countryside?

On social services, will the Minister confirm that the settlement will not meet in full authorities' massive cost pressures in respect of services such as fostering and elderly care homes? For shire district councils, the statement looks particularly bad, with the grant for their core services increasing by less than inflation—something that, when in opposition, the Minister called a cut.

Will the Minister confirm that there is a real-terms cut for services such as recycling, cleaner streets and better lighting? Does not the recycling cut show that the environment remains a low priority for the Government?

The Minister may revel in having the poll tax promoter as Conservative leader and the council-capping champ as Tory local government spokesman, but he must recognise that the past cannot help the council tax payers of today. He knows that the council tax is set to soar again. He knows that the statement will do nothing to stem the seething unrest and unease about the spiteful council tax.

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