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Mr. David Curry (Skipton and Ripon) (Con): Will the right hon. Gentleman repeat what he said here yesterday—that although he expects councils to budget in low single figures, that is not necessarily the figure on which capping might be applied? What is the figure at which capping will be applied?
Mr. Raynsford: I am pleased to discuss capping with the right hon. Gentleman, who was responsible for the same matter when he was in power. Let me remind him of what he had to say on that particular subject in his winding-up speech of 1996. It was a very funny one. As the Minister for Local Government, Housing and Urban Regeneration, the right hon. Gentleman said:
- "It is not often that, in a debate on local government finance, one can begin with Procrustes".
- "apparently lay in wait in the Athens road and equipped people who came for lodgings with a bed that was not necessarily the right size. If the people were too long, he chopped them. I did not realise that capping had such a distinguished antecedent, but I am encouraged to know that I follow in such a long tradition. I understand that Theseus fastened Procrustes to his own bed and chopped his head off—he had clearly missed his vocation as a local government Minister."—[Official Report, 31 January 1996; Vol. 270, c. 1090.]
Mrs. Angela Browning (Tiverton and Honiton) (Con): I hope that the Minister will stop messing about and answer my question. The Devon fire and rescue service will set its own precept for the first time this year, and I am very worried that the formula set out by the Government will have an adverse effect, not least because Devon has more retained firefighters than any other county. Meeting the pay award for retained firefighters will account for 23 per cent. of the budget, not 16 per cent. If Devon had received the national average amount, it would not suffer the projected budget shortfall that people fear will cause fire station closures, especially in rural areas. The £2 million that is the difference between what Devon will get and the national average would have resolved the problem. Without going back into history, will the Minister say something about the future of Devon's fire and rescue services?
Mr. Raynsford: I am happy to talk about Devon. As the hon. Lady knows, I have visited the county and discussed this issue. People are naturally worried about it, but I have told them the same thing as I have told
people elsewhere: we expect councils and all authorities—including the fire and police authorities—to budget prudently and to keep council tax levels down. We look to them to aim for increases in the low single figures.As I have made clear on previous occasions, we do not operate a crude and universal capping system, so we are not saying that anything above a certain level will be capped. That would not be an appropriate way to proceed, but we will use our capping powers if we believe that any authority is imposing an unreasonably large increase. We will take proper account of relevant factors in that decision, but I put all authorities, including those for fire and police services, on notice that they must budget prudently, and that we will use our capping powers if necessary.
Mr. Raynsford: I will give way when I have finished answering this question. The hon. Member for Tiverton and Honiton (Mrs. Browning) asked specifically about fire authorities. There are concerns, for example, about the need for the new combined fire authorities to build up reserves. I have written to fire authorities on that point, quoting advice from the Chartered Institute of Public Finance and Accountancy. I have said that authorities do not need to move immediately to the level of reserves that they might consider necessary. I have suggested that the new combined authorities might wish to discuss with their previous constituent authorities an arrangement that could give them the cover that they want. In that way, the new authorities would not have to make large provision for reserves in any one year.
I have also touched on other issues with the combined authorities, and my officials will meet representatives from all fire authorities tomorrow. The aim is to explore further the practical help that the Government can give to ensure that fire authorities, while keeping their precepts down, can meet their responsibilities and drive forward the modernisation programme that is so important in the fire service. The levels of precept that we have been hearing about are not acceptable. They would be regarded as far too high in a year when local authorities are generally beginning to recognise that they must keep council tax levels down.
Mr. Bob Blizzard (Waveney) (Lab): I hope that my right hon. Friend will use the capping powers if necessary, but he will know that, for many councils, a significant proportion of the budget increase is accounted for by the amounts that they must pay into pension funds to make up shortfalls. Councils have no choice about making those payments, which have a large impact on council tax levels. Moreover, the people who have to pay council tax are angry, because they see no benefit from the extra money that they have to pay. What can my right hon. Friend say to councils about that problem?
Mr. Raynsford: My hon. Friend makes a valid point. My colleague the Under-Secretary, my hon. Friend the Member for Corby (Phil Hope), has issued guidance to local authorities on this matter. We are keeping it under
close review, as we know the real concerns that local authorities have. We shall continue to work with them to ensure that their pension obligations can be met in a way that does not impose undue burdens and unreasonable pressures on council tax payers.
Mr. Raynsford: I want to make some progress, as I have not made much for the past 10 minutes. However, I will give way in a little while.
We certainly expect councils, like any well run organisations, continually to improve their efficiency, and to make better use of their funding. Council tax payers, many of whom are justifiably concerned about what they will face in the coming year, expect nothing less.
The Government will help in that. For example, we are putting in place a number of measures to secure improvements in local government procurement, through our national procurement strategy. We are also building cost-effectiveness and value for money assessments into the comprehensive performance assessment framework for 2005 onwards. We expect all councils to budget prudently and search out savings and economies to ensure that they deliver value for money to council tax payers.
During the consultation period, we received 454 written representations from local authority groups, individual local councils and hon. Members. The Under-Secretary and I met representatives from the Local Government Association, the Association of London Government and groups representing the main classes of local authority, and I shall deal briefly with the main points that were raised. A number of authorities with education responsibilities argued that they should not be expected to increase their spending on schools by the exact amount of the increase in schools' formula spending share—so-called passporting.
Mrs. Anne Campbell (Cambridge) (Lab): Does my right hon. Friend find it as extraordinary as I do that Cambridgeshire county council, which received an 8.5 per cent. increase in this year's grant and has been promised a 7.9 per cent. increase in next year's grant, is still having enormous difficulty in passporting the 6.8 per cent. increase in its schools budget on to schools without raising the council tax by 9 per cent.?
Mr. Raynsford: My hon. Friend raises a valid point and I have good news for her. As a result of the final adjustments to the settlement, Cambridgeshire county council will receive an increase in the coming year of 8 per cent., not 7.9 per cent. The increase is only modest, but most authorities would regard 8 per cent. as a good figure. Even if Cambridgeshire county council were to passport 100 per cent. of the increase in its schools budget, it would still be left with considerable headroom to fund other services.
My right hon. Friend the Secretary of State for Education and Skills and my hon. Friend the Minister for School Standards have been in touch with Cambridgeshire county council, and I hope that the issue can be resolved sensibly and amicably. Recent
discussions have been constructive and I hope that a settlement will be achieved, because large council tax increases in Cambridgeshire cannot be justified when the Government settlement was so generous both this year and last.
Derek Conway (Old Bexley and Sidcup) (Con): The House knows that the Minister is a decent man. He can avoid Devon but he cannot avoid my constituency because he has to drive through it. My constituents want to know what he is saying to his chums who run the local council. They experienced a 17.5 per cent. council tax increase last year and everybody expects the increase to be well into double figures this year. He is the arbiter and has the power to cap such increases. Rather than delving into history and being such a reasonable man, will he please be a hard man and tell the council that it is not going to get away with it and that he will stop it?
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