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Mr. Davey: The point is that the Tories are not giving us much detail. We have to try to fill in the blanks. If the Tories are going to go into these elections and the next elections as the policy-light party, the voters will find them out.

Despite the Conservatives' difficulty over all these issues and the huge black hole in their thinking, the motion is difficult to oppose because it is factually correct. For a start, council tax has gone up way above inflation since 1997. It has reached painful levels, as the Audit Commission report in December made crystal clear. Part of the reason was the extra pressure put on councils by the Government. The Minister's continual reluctance to admit that does not add to his case.

The Tories' list of charges in that respect was fair. I want to add to it. They made one omission. We have had a debate about which councils, controlled by which
 
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parties, are setting the highest council tax, but I think that, if one is going to present a fair position, one should take the average over a number of years. Let us look at average council tax rises by councils run by different parties over the past six years, which I think is a fairly good run, to ensure that different years, when different councils were funded poorly by the Government and others were not funded poorly, are taken into account.

According to that analysis, Independent-run councils had an average increase of 8.3 per cent. over the last six years, Lib Dems had an average of 6.9 per cent., Labour councils had an average of 6.8 per cent.—not a lot of difference—while Conservative councils were the highest, with an average annual council tax rise of 8.9 per cent. I am not surprised that that figure did not appear in the speech of the hon. Member for Runnymede and Weybridge. Year on year, over the last six years, the Conservatives have been increasing council tax and I think they will pay for it.

Mr. Hammond rose—

Mr. Davey: Does the hon. Gentleman want to try to find an excuse?

Mr. Hammond: Will the hon. Gentleman give us the same data series for band D council tax? He knows very well that the distribution of properties in local authorities controlled by different parties can distort those figures. What are the percentages in band D?

Mr. Davey: I will give the hon. Gentleman an example of band D in one council over the last six years: Liverpool. Six years ago, the Liberal Democrats took control of Liverpool council. At that time, the band D council tax was the highest in the country—a legacy of the failed Labour administration—but now it is down to 70th. That is the result of six years of Liberal Democrat policies: reducing council tax and improving services in the city. That is why the Government's independent watchdog has shown that the Liberal Democrats in Liverpool have massively improved services in the city and that is why the private sector is backing Liverpool Liberal Democrats by investing £2 billion in the city centre, working in close partnership with the council.

Mr. David Cameron (Witney) (Con): As the hon. Gentleman is so proud of the Liberal policy record, can he clear up this point? His colleague, the hon. Member for Bath (Mr. Foster), was asked in an interview:

He replied: "Yes and yes". Is that official Liberal policy?

Mr. Davey: I thought that the hon. Gentleman was going to ask about the Liberal Democrat record rather than about our policy, but I am more than happy to answer him. In fact, I answered that point in a debate last Monday. The Government are proposing that regional assemblies should be funded by council tax precepts. We want to scrap council tax precepts; we do not think that they are a good idea. If voters support regional assemblies—

Richard Younger-Ross: If!

Mr. Davey: Indeed. If people vote for assemblies, and assemblies are formed and the grants passed down, they
 
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should have tax-raising powers. National expenditure and national taxation should be cut pound for pound. There would be no increase in overall taxation, which is what the Conservatives are trying to imply; the burden of national taxation would remain exactly the same.

The motion is correct to list the unfunded cost pressures on councils and to argue that they are indicators of increased centralisation under Labour. I want to consider those pressures in four parts. First, there are extra burdens due to the extra controls in the grant system. In his speech, the Minister said that the Government had been reducing the ring-fencing of grants, but they still have a long way to go.

Secondly, burdens are imposed by the number of plans that Whitehall demands from local authorities. I shall analyse what the Government are trying to do about that and show that they have failed to reduce the number of plans. The third set of burdens comes through inspection regimes. Again, the Government are trying to address that problem, but again they are failing. Finally, the Government promised to lift the burden of Conservative financial constraints on local government, but they are dragging their heels on that, too.

Let us examine what the Government say about the significance of ring-fenced grants in relation to council tax in the freedoms and flexibility paper published by the Office of the Deputy Prime Minister last year. Paragraph 42, "Revenue ring fencing", states:

For once, the Government were actually admitting to failure.

What is interesting, however, is that in 1997, even under the Conservatives, the amount of ring-fenced grant was only 4.5 per cent., but by 2002 it had almost tripled to 12.4 per cent.

Mr. Raynsford rose—

Mr. Davey: I am sure that the Minister wants to intervene to tell me that the trend is downward, but I shall tell him about the effects of passporting, about the redefinition of ring-fencing and about the fact that all the ills his freedoms and flexibilities paper describes are still with us in spades.

Mr. Raynsford: Actually, I was not going to say that; I was going to ask the hon. Gentleman whether he would accept that certain services, such as "Supporting People", where very large transfers of funding affect very vulnerable people, need to be protected for a period of time to ensure that those services continue. Does he accept that there is a genuine case for ring-fencing in those circumstances, which was pointed out in the paper to which he referred? Although we are fully committed to reducing ring-fencing, does he accept that the Local Government Association agrees that for certain services, such as "Supporting People", the ring fence is appropriate?

Mr. Davey: I am not sure that all the money in grants for "Supporting People" needs to be ring-fenced and I
 
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shall list some other grants that certainly do not need to be ring-fenced. The Government have set themselves a target to reduce ring-fencing to less than 10 per cent., but that is still double the amount they inherited from the Conservatives—hardly an ambitious target. They are reducing the number of ring-fenced grants; it was 45 in 2003–04 and is set to be 33 in 2005–06—a reduction of 12. However, when we examine particular ring-fenced grants we wonder why on earth they remain ring-fenced.

The standards fund will continue to be ring-fenced in 2005–06; £990 million ring-fenced and outside the flexibility of overall budget setting. A range of health service grants is ring-fenced, amounting to £300 million. About 10 police authority grants are ring-fenced. They are all separate and I cannot see why they need to be within that category; they could be included in the basic formula and the Government have not explained why that should not be so.

Mr. Hammond: Does the hon. Gentleman agree that there is no point in the Government's removing ring fences only to replace them with so-called targeted grants that can be clawed back if they are not spent on the targeted areas?

Mr. Davey: I completely agree. The Government have been redefining and have given themselves a new set of categories; they are trying to manipulate the amount going into ring-fenced grants by reclassifying them. The ring-fenced category still exists; everything in the grant is controlled and has to go to a certain service and the local authority has no discretion whatever. Then there is a new and interesting category that the Government call specific grants. That may be what the hon. Gentleman meant by targeted grants. There is a little flexibility but the money has to be spent on a certain service; it cannot go into the general pot. Finally there is the formula grant, where there is discretion.

Redefining the grants does not make things better. In addition there is passporting, which covers so much council grant—more than 50 per cent. in some cases—especially in relation to education. The Minister has failed to explain the difference between a passported and a ring-fenced grant. The truth is that there is no difference. When one adds passported grants to ring-fenced grants, the amount that the Government control and are forcing local authorities to spend in a particular way has gone up massively. That is micromanagement to an absurd degree and gives the lie to the Government's claim that they are the localist party.

The freedoms and flexibilities paper said that inspection regimes would be reduced and that there would be a far lighter touch. There would be a three-year "inspection holiday" for excellent authorities; for good authorities there would be a minimum

Fair authorities would receive lighter-touch targeted inspection, while poor or weak authorities would receive targeted inspection. We have contacted authorities in the various categories and in many cases those aims have not been delivered. If the Minister disputes that, he only has to intervene from the Dispatch Box.

We understand that some excellent authorities have not enjoyed the three-year inspection holiday that was promised in the freedoms and flexibilities paper—a
 
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point covered in the Local Government Chronicle last week. Good authorities have not seen the amount of inspection reduced by 25 per cent. Does the Minister want to deny that?


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