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4.56 pm
Mr. David Curry (Skipton and Ripon) (Con): As far as this debate is concerned, clearly the floor has already hit the ceiling, and there is nothing between the two. It is a matter of some regret that we are discussing in just two hours the disposal of about 25 per cent. of public expenditure. I am afraid that that is a reflection on priorities, and I think that the business managers should get together to ensure that in future we can have proper debates on matters of such importance.
The Government's handling of local government finance over the past 12 months has been characterised by incompetence, confusion, panic, and now intimidation: incompetence, because the Government utterly failed to foresee, then to get to grips with the dislocation caused by the application of a new formula—rigged, as it happens, to drag money to Labour metropolitan areas; confusion, because the Government sought desperately to bail themselves out by ordering the passporting of education funding, while all the time the Secretary of State for Education and Skills, whose blundering had caused the problems in the first place, sought to blame everyone except himself for the mess; panic, because the Government threw money at this year's settlement without sorting out the inevitable problems that flow from the Secretary of State's pre-emptive strike by prescribing the distribution of schools funding from Whitehall; and now, intimidation as the Government try a combination of cash and confrontation to bludgeon councils into setting a council tax increase in "low single figures"—or is it a "reasonable" increase—accompanied by an increasingly histrionic letter-writing habit that suggests that even the Minister has scant faith that the settlement will stand up as reasonable in its own right?
The Government are right to feel panic. Last year's incompetence has led to massive council tax rises because the Government decreed additional spending, but failed to provide for it in grant. The council tax increases were the direct consequence of the Government's miscalculations, as the Audit Commission made clear. So now we are back—with a vengeance—to crude and universal capping. Even the Deputy Prime Minister mocked himself—at least it saved us the trouble—when he talked yesterday about "exercising his sophisticated view" in implementing capping, and could hardly conceal his smile.
Capping has an interesting pedigree. The Minister quoted my reference to Procrustes when I was doing my job, as he is doing his. That reference was double-edged, which is why I used it, and it turned out to be right in the end. In June 1993, the now Secretary of State for Foreign Affairs said:
- "The Labour party is wholly and unequivocally opposed to the capping of a council's budget. It is an abuse of central power, it demeans democracy, it undermines the right of local people to decide what services they are ready and willing to pay for, it is in breach of one promise after another from the Conservative party, it serves no economic purpose, and it has not worked in its own terms."—[Official Report, 9 June 1993; Vol. 226, c. 385.]
Does the Minister remember his perorations about the new freedoms for councils that perform well? Is he aware of the sheer effort and energy that go into preparing for comprehensive performance assessment inspections? Does he remember the praise that he heaped on councils that were rated excellent, while encouraging those that were merely good to make one last heave? Does he know that, of the councils that received threatening letters from him and had a CPA inspection, nine were rated excellent: five Conservative, three Labour and one without overall control—Hartlepool—and 15 were rated good: five Conservative, two Labour, two Liberal Democrat and six without overall control? Does he remember that, in December 2002, the Deputy Prime Minister promised that excellent and good councils would be exempted from reserve capping powers?
We are now in the perverse position whereby councils that are rated excellent are awarded freedoms, but may be capped, while poor councils have no freedoms, but may not be capped. That is not the only perversity. On the first day of the new financial year, the Department removed controls on capital but enforced controls on revenue through capping. I understand that it is called the new localism
Sir Paul Beresford (Mole Valley) (Con): Does my right hon. Friend agree that it is curious that whenever the Minister mentions capping, he refers to one of his favourite Tory councils? It is an excellent council, which he keeps threatening with capping, but charges the lowest average council tax in the country. It is Wandsworth.
Mr. Curry: It will be interesting to note whether the Minister takes into account the absolute level of council tax when he determines his capping criteria.
There is a third perversity. The Government have created turbulence and introduced the famous floors and ceilings to control it. However, there are two sets of floors and ceilings. The interaction of floors and ceilings for the general grant and that for education expenditure means that, for some local authorities, the entire grant increase must go to education. Those authorities are: Richmond, East Sussex, West Sussex—which has a princely total grant increase of £6,000—Windsor and Maidenhead, Southend and Bromley, which last year had to increase education spending by more than the increase in the entire grant for all purposes.
Mr. Raynsford: I am sure that the right hon. Gentleman would like to correct the impression that he gave that West Sussex received a total grant increase of only £6,000. That is not the case. He is referring to the supplement as a result of the Chancellor's pre-Budget report. The increase to West Sussex is much larger.
Mr. Curry: The bonus that West Sussex received was, for the reasons explained, a princely £6,000.
The distribution is skewed. London faces a £247 band D precept from Mr. Livingstone. After the distribution of £340 million in central grant, the increases after passporting are 6.6 per cent. for Labour councils, 6 per cent. for Liberal Democrat councils and 2.5 per cent. for Conservative councils. Labour councils have got nine out of 10 of the highest settlements and Conservative councils have got seven out of 10 of the lowest settlements.
We do not even know how capping will work. Is reasonableness a criterion? Are low single figures a criterion? Yesterday, the Minister said that he had written to 54 authorities that were rumoured to be planning increases of more than 5 per cent. He also said:
- "That is not necessarily an indication of the level at which we will cap".—[Official Report, 4 February 2004; Vol. 417, c. 746.]
Will the Minister relate capping to grant increases? Will he recognise the impact of floors and ceilings? Will he take account of the absolute level as well as the percentage increase of council tax when considering whether to cap? Let us consider a council such as Runnymede in Surrey. It currently charges £85.10 at band D, which makes it the second lowest in the country, against an assumed national average of £181.56. That council proposes to charge £100.44—an increase of 17.5 per cent.—partly because of the hit caused by the calculation of council tax benefit. It has written to the Minister to confess. It has put its hands up, but it will leave its precept as one of the lowest in the country. Can it expect a letter or is it a special case?
Andrew Bennett: On the question of the cap, I accept all the problems that the right hon. Gentleman has outlined for the Government, but where does his party stand? Would it have a cap if it were ever in government?
If not, would he go round the country to justify the council tax increases of 9 per cent., 10 per cent. or higher in most local authorities?
Mr. Curry: If we were in government, we would not have got into this mess in the first place. We would not have rigged the formula, we would not have betrayed the excellent councils and we would not have imposed the burdens on local government that this Government have.
Does the Minister recall that the figure for Kent to which he objected was in a council document that reproduced the Treasury's estimate of the increase in council tax as a yield of 7.3 per cent.? In fact, that was wrong because the Treasury's figure for the assumed yield from council tax is an 8.2 per cent. increase, which is rather higher than low single figures.
Now we hear, at last, that the Minister might be going to cap Ken. We look forward to seeing the Livingstone letter. The planned increase is still 9.9 per cent., as the Minister said, so perhaps the Government have overcome their fear that the Mayor of London's pledge of allegiance to the Labour party is so qualified that he has to be handled like cut glass. It should not be a difficult letter to write, just a standard draft. The Deputy Prime Minister could even top and tail it, and could perhaps finish with a few words saying what personal pleasure it gives him to see Mr. Livingstone once more embraced in the bosom of the Labour party.
The settlement is much better than last year's, and of course councils should budget as tightly as possible and constantly seek to eliminate waste and duplication. However, there is a problem with local authority inflation and the constant demand for the delivery of new services, without the assurance of the long-term funding to support them. Public service pay is rising at a rate of some 5 per cent. a year, and 60 to 70 per cent. of local authority costs are on pay. For example, we have seen pay increases in the fire and rescue services. We also know that demand is increasing. There is not an hon. Member in this House who has not seen people at his surgery concerned about problems in social services relating to care of the elderly, threats to places in residential homes and local authorities' difficulties in funding those care home places, particularly with the new standards that are being applied. That is a major constituency issue for all of us. A home has closed near Skipton in my constituency, and the only alternatives offered are miles away in Bradford and Lancashire, too far for any relatives to visit. People in their 80s, towards the end of their lives, have been displaced into a completely alien environment.
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