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I should love to give way but I am running short of time. [Hon. Members: "Oh!"] I shall deliver a
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little more of my speech and then I should be delighted to give way to the Minister as long as he does not attack my late father for something that he might or might not have done 20 years ago.
This afternoon's debate is about the added burdens that central Government have placed on local government. What better place to start than the comprehensive performance assessment burden? The Local Government Information Unit, not the Opposition, has calculated the figures. It estimates that the annual cost of external inspections of local government is approximately £600 million. That figure does not include the indirect costs of inspection such as compliance, council staff time and avoidance or displacement effects, which amount to probably another £400 million.
I want to talk specifically about the genuine reasons behind the council tax rises in Devon. I shall not go over old ground and the reason for finding the resources so severely depleted by the Liberal Democrats, who had run the county badly for so long. The Audit Commission recently published, "Council Tax Increases 2003/04 Why Were They So High?" Doubtless, it is compelling reading for those with insomnia. It found some interesting answers that I shall examine in more detail later. It states:
"Analysis by the Chartered Institute of Public Finance and Accountancy shows that the total amount that was provided in the local government finance settlement for education was sufficient to meet increased education costs at an aggregate level, with a real 'uncommitted' increase in spending of £225 million."
CIPFA also pointed out that that was equivalent to less than 1 per cent. of local government spending on education. Perhaps the Minister is thinking, "So far, so good." However, the combined effects of the passporting requirement, designed to ensure that all councils increased spending in line with Government requirements, and local choice to spend more than the passported amount, led to an increase in spending in aggregate of £200 million more than the Government had allowed for.
Several factors led to greater pressure to increase spending in 200304 than in 200203. Employers' national insurance contributions increased by 1 per cent.; employers' contributions to the teachers pension fund increased by 5 per cent., and the pay award for local government staff was approximately 0.5 per cent. above the previous year's amount. Together, those factors contributed to more than half the total increase in local government budgeted spending in 200304.
Authorities face a combination of pressures: national and local cost increases, increased demand for services and Government requirements. There is no doubt that one of the major factors behind the increase in council tax has been, as we have heard time and again this afternoon, the steady transfer of responsibility to councils, often without the funding, for matters such as care of the elderly and road maintenance.
In 199596, central Government contributed 65 per cent. of net costs to East Devon district council. In 200304, they contributed only 49 per cent. That reduction occurred because costs continually increase as new responsibilities are placed on district councils such as East Devon without the provision of additional funding. Even the Government's finance watchdog, the Audit Commission, which investigated this year's council tax rises, stated:
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"There are a number of external pressures on councils to increase spending, and therefore, council taxes. These include:
Pressure from central Government to spend more to meet Government priorities."
Devon gets one of the lowest grants in the country. It receives a staggering £182 less per person than the national averagemore than 20 per cent. less per head than the national average and more than 28 per cent. less than the north-east. If Devon received the average grant per head of population, it would mean an instant cut of £120 in the average band D council tax bill or an extra £128 million to spend on care services, roads, public transport and schools.
"We found a clear association between the size of grant increase a council received and their increase in Council Tax."
Despite the Minister's protestations to the contrary this afternoon, the Government have also changed their rules on sharing out grants this year, taking money that should have come to Devon and other southern counties and giving it to the midlands and the north. Devon county council lost more than £10 million at a stroke from budgets for care services, roads, libraries and recycling, with Whitehall's decision alone adding 5 per cent. to Devon people's council tax bills.
As from 1 April this year, my district council, East Devon, lost a source of income that previously financed most capital projects there. I refer of course to selling off council houses, which previously allowed it to build up capital reserves of, at one point, about £20 million. That in turn allowed it to keep its part of the council tax rises very small indeed, but that is to go and 75 per cent. of that money will go elsewhere, resulting in a capital loss to East Devon of £1.8 million. In addition to the capital loss, the council tells me that it had a £2 million shortage in day-to-day running costs and had to consider increasing charges for services that it provides and cutting other services and grants.
I could go on, because I have so much to say, but I know my hon. Friend the Member for Witney (Mr. Cameron) wants to begin his speech shortly. I conclude on this. We have heard much this afternoon about the balance of funding review and it is unrealistic of the Liberal Democrats to expect Her Majesty's loyal Opposition to give detailed alternatives to council tax at this stage. [Laughter.] Liberal Democrat Members laugh, but perhaps we are not as flexible as the Liberal Democrats.
In the Brent, East by-election, Liberal Democrats went around handing out facsimile £100 vouchers saying that everybody who voted Liberal Democrat would get £100 back on their council tax. What has happened to that policy? Like so many other Liberal Democrat policies, it has evaporated into the ether of questionable electoral honesty. They are going to replace that with some other form of income tax, but we will shoot their fox by showing that that will cost the average council tax payer in the west country and elsewhere more than they have anticipated.
There is no doubt that local people are suffering. The system is not working. More is being asked of local councils. Local councillors are being undermined by
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having to cut services and they have to increase council tax as well. Something needs to be done. Clearly the Government are not the right party to do it.
Mr. David Cameron (Witney) (Con): It is a pleasure to follow my hon. Friend the Member for East Devon (Mr. Swire), who spoke with his usual force and vigour. I refer the House to my entry in the Register of Members' Interests.
This has been a worthwhile debate. We have been trying to solve the mystery of two facts, which are, on the face of it, contradictory. It is a fact that central Government support for local councils has increased, no doubt about it. The figure is 30 per cent. in real terms, as the Minister said if not once, then several times, but it is also a fact that council tax has increased rapidly, right across the country, by, on average, 70 per cent. for a typical band D property. Nobody was warned about that increase but everyone has paid it.
My hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond), in a powerful speech, placed the responsibility on the Minister and his Government. He set out in great detail the extra burdens and costs placed by central Government on local government. He placed the Minister, as it were, in the library with the lead pipingresponsible for the mugging, if not the murder, of the council tax payers. He is absolutely right and made a wholly convincing case.
The circumstantial evidence is overwhelming and the fact is that almost every council has had the same experience. The Minister is asking us to believe him and to disbelieve all of them, but I just do not think that we can. Let us consider the figures as they relate to some of his colleagues who are in the Cabinet. The tax increase for the average band D property in the Prime Minister's constituency between 1997 and 2004 is 65 per cent. In the Deputy Prime Minister's constituency, there has been a 60 per cent. increase, while in the Chancellor'sthis is one of the advantages of holding that postthere has been an increase of only 36 per cent. In the Home Secretary's constituency, the increase is 59 per cent.
Let us consider all the different types of authority: shire districts, on average, up 90 per cent.; shire unitaries up 69 per cent.; metropolitan boroughs up 47 per cent.; inner-London boroughs up 53 per cent.; and outer-London boroughs, as the hon. Member for Kingston and Surbiton (Mr. Davey) knows, up 83 per cent. My point is that the increases are across the boardevery single council has suffered in the same way.
The Minister made an interesting speech that mainly delved into the pastso far back, indeed, that he talked about the role played by the father of my hon. Friend the Member for North Essex (Mr. Jenkin). My hon. Friend came back with a good rejoinder, which was that his father had been the hammer of the Labour left. I always thought that the Minister had suffered in his time at the hands of the Labour leftI remember when he stood in other parts of Londonso I had thought that he would be grateful for the hard work of Lord Jenkin.
The Minister then described a world in which the burdens on local councils were matched by extra revenues. I did not recognise that picture of a world that, as far as I can see, does not exist. Both the hon. Member for Kingston and Surbiton and my hon. Friend the
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Member for Runnymede and Weybridge asked the Minister an interesting question: why should the Audit Commission not judge the extra cost of the burdens when the Government are considering how to fund local authorities? The answer was non-committal and I hope the Minister will return to the issue when he winds up. Those extra burdens are a real problem. Why not give the Audit Commission more responsibility for identifying them? If that had already been done, some of the arguments that we have had this afternoon would not have been necessary.
The Minister said little about the general question of cost pressures on authorities. I would say that he should get out more to meet them, but obviously if we continue to engage in Opposition day debates such as this we constrain him to appear at the Dispatch Box.
The hon. Member for Kingston and Surbiton began his speech with a reference to my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles). When he used the word "plastered", it occurred to me that, in his party, that might be what could be described as a career-limiting joke, but we all enjoyed it. He made some good points. For example, he pointed out that, in 1997, ring-fencing accounted for only 4 per cent. of local government spending. The Minister says that he has been cutting it back, but he has not yet cut it back to that level. The hon. Member for Kingston and Surbiton then made the valid point that while ring-fencing may be decreasing, as passporting and specific grants are rising, local government spending is still hugely constrained.
Stealing a point that I had intended to make, the hon. Gentleman spoke in some detail about the long list of plans that authorities must produce and the fact that some are now being combined. The Government's legislation is showing a slight Blackadder tendency, in that every Bill must have a cunning plan at its heart. Homelessness, transport and all other legislation begins with the instruction "You, the local authority, must draw up a plan." He made a powerful point in saying that, although the number of plans is being reduced, planning activitythe number of pages of workwill probably remain the same even following the combination.
The hon. Member for Leeds, West (Mr. Battle) told us about something called the WestfestI assume that it is the Leeds Westfest. I know that he is a keen folk guitarist; I do not know whether he joins in the Westfest, but I hope that he does. He said that the Government were pushing decision making down to local level, which I find hard to square with current experience. He also said that we should break out of the tensions between central and local government. I think that we would all agree with what he said about the importance of involving local people in genuine partnerships in all our constituencies. He spoke of the need for a new model for local government that is much less top-down and that involves participatory as well as representative democracy, and many of us would agree with that as well.
The hon. Gentleman made the interesting suggestion that we should try to devolve services such as meals on wheels to much lower levels. I agree, but problems arise when there are strict national standards that are difficult to meet and a number of instructions coming from
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Whitehall. Those of us who represent rural constituencies find that our courthouses, police stations and care homes are under pressure because they cannot meet the national standards. People tell me that they would rather have a courthouse, albeit a small one, than no courthouse at all. We shall need to do more work on that.
My hon. Friend the Member for Macclesfield (Sir Nicholas Winterton) gave us a preview of the case that he will put, along with my hon. Friend the. Member for Tatton (Mr. Osborne), on the resources given to Macclesfield borough council. He spoke powerfully of the need to allow authorities to plan ahead and spoke at length about floors and ceilings. There are those of us, new to this game, who feel that we have already hit more floors than Frank Bruno and seen more ceilings than Zsa Zsa Gabor, but my hon. Friend was clearly on top of the issue. [Laughter.] An unfortunate phrase, perhaps. He made the point that council tax gearing made the tax increase in Macclesfield worse and I hope that the Minister will listen sympathetically when he goes to see him.
My hon. Friend the Member for Leominster (Mr. Wiggin) referred to the capping of his authority. It has experienced a triple whammy: county, fire and police have all been capped. He said that a cap of £250,000 was proposed, but re-billing would involve huge costs. I hope that the Minister will deal with that in his speech.
The hon. Member for Teignbridge (Richard Younger-Ross) told us that his wife now works for the Deputy Prime Minister and that he had not written a speech before coming here today. Putting the two points together, I suggest that his wife, who is clearly an expert in local government matters, should write his future speeches.
We had something of a "south-west fest" between Devon Membersnorth, south, east and westand we heard the wonderful statement from the hon. Member for Teignbridge that we could not have it both ways. I thought that that was exactly what the Liberals had been doing for years, but I must have missed out on something. I agreed with him when he said that we needed transparency. All local government finance systems need transparency, but I question whether we would get it from a local income tax. In areas with a low-income base, there will be an even bigger grant system with even more equalisation. To that extent, it will not be a local tax and it will certainly not be transparent. The Liberals are indeed trying to have it both ways.
My hon. Friend the Member for Runnymede and Weybridge went much further than providing circumstantial evidence. He provided proof that burdens have been added to local authorities and he mentioned threebureaucracy, costs and unfunded liabilities. I do not understand how the Minister can deny the existence of those burdens. He talked about comprehensive performance assessments and best value. I have to tell him that I visit councils up and down the country and they all say the same thing about the auditing and checking system, the paper work and associated costs. In fact, it is difficult to get them to talk
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about anything else. They find it largely unnecessary and very expensive. People sometimes ask about our policy: one thing that we could do straight away is to reduce the bureaucracy and burdens that local councils face. That is exactly what we will do.
The Minister mentioned costs. There is a list of costs that local authorities have had to face in the last two years: national insurance, bed blocking, fuel duties, landfill taxes, the Criminal Records Bureau, extra pensions provision, the Labour pension tax and many more. The Audit Commission report of last year has already been quoted, but it bears quoting again. It states:
"National cost pressures taken together account for about £2.3 billion out of the total increase in councils' spending of £4.3 billion. In other words slightly more than half the total increase is due to national pay and price inflation, increased national insurance and general population growth."
On the liabilities added to local councils, I accept that many of the objectives are worthwhile, but there are far too many of them, they have been initiated far too quickly and not enough funding has been given to meet them. Hon. Members on both sides of the House have mentioned legislation such as the Care Standards Act 2000 and the Licensing Act 2003, recycling targets, e-government targets and others.
I greatly enjoyed one of the examples that my hon. Friend the Member for Runnymede and Weybridge mentioned in his speech. He told us about the Local Government Association having to draw up its liveability plan. There must be times when people working in local authorities start losing the will to liveability and wonder when they are going to get on with the business of providing services, rather than providing information to the Minister.
I want to deal with the nonsense that we have heard about average council tax. It is mentioned in the Government amendment to the motion and was mentioned by the hon. Member for Kingston and Surbiton. The Conservatives compare what people actually pay and examine the bands. We have used band D, but any band could be used. That is the fair and right way to assess it and it leads to the conclusion that Conservative councils cost people lessin fact, £57 less than Labour or Liberal councils. The idea of comparing average council taxes across the board is ludicrous, as anyone who has looked into the problem knows. It ends up being a comparison of how high house prices are in different parts of the country.
"Using a council tax per dwelling figure for comparison is not suitable. This is because in different local authority areas the mix of dwellings by value may be significantly different from another. The average band D council tax figure accounts for this."
"The proper way to judge figures is to compare like with likesay, band D figures, council by council . . . On this issue, Labour is wrong and the Tories are right."
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