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Alan Simpson (Nottingham, South) (Lab): There are times in any Parliament when Members of the House have to come into the Chamber to make genuine and difficult decisions about issues of principle—issues of war and peace and the testing of their conscience. I do not pretend that we can expect to be here without having to address such issues. However, this is not an issue of enormous political principle. I shall vote against the order, along with my hon. Friend the Member for Nottingham, North (Mr. Allen), but more out of embarrassment than anything else.
This issue should be consigned to the cock-up theory of history. My hon. Friend came up with a quotation that was used by Neil Kinnock at the time that the local authority in Liverpool challenged the Government of the day over its democratic right to make decisions in defiance of the Government. It was perfectly possible then, and it is possible now, to argue that, in principle, once a Government have determined what they will fund in local government services, what then constrains local democracy should be located between the polling station and the police station. It is for the police to be able to charge councillors when they misspend public money and for the voters to be able to sack councils when they feel that their priorities are wrong.
In the current situation, we do not have a local authority that set out to defy central Government. We do not have a Nottingham authority that sought to provoke a head-on collision with Government policy. In fact, we have exactly the opposite. Nottingham has the 29th lowest average council tax in the country, and it set out to try to second-guess what the Government would do in setting a spending limit. It looked with considerable caution and interest at the early warning signs that were given. It was not one of the initial 65 authorities that received warning letters in respect of the budgets that they issued. It was not one of the 40 authorities that was then invited to come down to London to meet the Minister and his officials to have their budget adjusted.
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In addition to that, the local authority approached all the local MPs and asked us, "Are we likely to be on the list? We do not want to be on anyone's hit list. Are we within the framework and unlikely to be capped?" Every one of us took soundings from Ministers and not one of us received an indication that Nottingham was anywhere near being on the capping list. It therefore came as an enormous surprise and disappointment to the authority to find that, somehow, it mysteriously appeared as a rogue authority.
Following that, we then attempted to comply with the requirements that the Minister set out. On 13 May, Nottingham MPs set up a meeting with the Minister and his officials to try to say, "Okay; if we have to find a way of removing the £180,000 overspend on a £331 million budget, let us talk about the practical ways in which we can do that." Not a shred of the conversation at that meeting was about defiance. Everything in it was about compliance. The authority said to the Minister and his officials, "Just tell us which of the following ways we can adjust the spend this year and accommodate that formally within the budget for the year that follows." It was a practical and constructive response to a line that the Government had drawn.
I do not want to go into too much detail about where the initial confusion lay. It is fair to say that a whole series of percentage increase figures were bandied about. I am prepared to accept that Nottingham, as a local authority, should accept some of the responsibility for the confusion. I also think that the Office of the Deputy Prime Minister should take a degree of the responsibility, because it would have been helpful if the submission sent to the office had been opened on the file. It was not; such is life.
The response to the problem is to find a practical way out that does not breach the principle that the Government set out, which was a line of spending. We should look to construct relationships between central and local government that are constructive rather than punitive. The decision that is embodied in this order is nothing other than punitive.
I cannot explain rationally why Nottingham should have been reincluded on the list when all the indications that we received in respect of every single representation made were that the city would not be on it. My only explanation is that the city was nobbled. I do think that it was necessarily nobbled by the Minister, but by Downing street. I think it was nobbled because, pragmatically, there was a feeling that a Labour authority was needed on the list to give a spurious sense of fairness and balance. So, in pursuit of the spurious, we now have the absurd position in which, for council tax payers in Nottingham to receive a rebate of what the city calculates to be an average of £1.83 per household per year, we will have to spend £250,000 to rebate £180,000, giving a grand total of £430,000 of spending for nothing. This is the politics of the absurd.
I ask the Minister to consider the three options that face him and the House tonight. The first is to remove Nottingham from the order altogether. The second is simply to remove the requirement for rebilling. If there is a principle at stake and Nottingham's name should remain on the list, at least allow us to act in a way that incurs least cost and leaves most resources to be
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deployed in the interests of the council tax payers of Nottingham. Those are two constructive ways out and the city council would happily comply with them. That is the way to embody both principle and pragmatism to address a solution to the line that the Government have defined.
There is, however, a third way out, and it is one that I have never raised in the House before. I have never questioned the tenure of office of anyone. However, I know that if such a decision had been taken by a local authority and had been raised in the House, Members of both sides would say, "We have to question the competence of this local authority and we ought to call on its members to resign or be sacked. We have to ask them to defend their right to occupy their positions in the face of decisions that are monumentally absurd." If we cannot go for either of the two initial options, the same questions have to be asked of the Minister.
7.28 pm
Mr. Malcolm Moss (North-East Cambridgeshire) (Con): It is always a pleasure to follow the hon. Member for Nottingham, South (Alan Simpson). He made an excellent speech in which he exposed the illogicality of the Government's position and their complete lack of principle in what they seek to achieve through the order. I speak on behalf of the district of Fenland in my constituency, and I have to say that, initially, I thought that we had been badly done by until I heard the stories this evening, particularly the story from Nottingham, which defies all logic and description.
The Minister said only in April:
"The Government therefore intend to take action against those authorities whose budget requirements they consider to be excessive."—[Official Report, 29 April 2004; Vol. 420, c. 1019.]
The key word is "excessive" but nobody, not least the Minister or the Government, have actually defined what they mean by it. It can mean one thing in Nottingham and another in Fenland, Shepway or Torbay. No one to whom I have talked in the Local Government Association or who has any experience of local government finance can find a common thread of logic in what the Government are trying to do. Like the hon. Member for Nottingham, South, I have concluded that they decided that they had to make an example of some councils and that they needed a spread of councils. When the Wrekin dropped out, they had to find a scapegoat Labour council, so Nottingham entered the frame. I think that Fenland is the scapegoat Conservative council.
Let us consider what "excessive" might mean, to try to understand why the councils have suddenly been caught in the net. Perhaps the percentage increase was thought to be excessive—I thought that the Minister indicated earlier that that was his main criterion. However, Huntingdonshire district council, which is also in Cambridgeshire, increased its council tax by a larger percentage than Fenland this year, so that cannot be the criterion. Perhaps the Government considered whether there was an excessive increase in band D council tax levels, but the evidence shows that Fenland does not meet that criterion either. Perhaps it was thought that the spending per head in Fenland was out of control or too high, but it has the lowest such spending in Cambridgeshire and one of the lowest of
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any shire district in the country. A further factor considered might have been the finite size of the budget, but as we can see from the order, Fenland's budget of £12.22 million is the lowest of any council in the list. Fenland does not meet any of those criteria, so we must find another explanation.
As my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles) said, it has been obvious for some time that the Government have used council tax over the past five, six or seven years as a stealth tax to draw more money out of tax payers to fund other things. They have kept grants low, and although they boast of a year-on-year increase, they do not explain that some 15 per cent. of the total grant money is kept on one side and ring-fenced for specific grants. The Government and the Minister decide where to spend that money and—surprise, surprise—it is targeted not at my constituency, that of the hon. Member for Torbay (Mr. Sanders) or even those of Nottingham Members, but elsewhere. However, the top-slicing of 15 per cent. of the money for those specific grants means that there is less available to fund the basic services that we all want in our constituencies.
Statistics show that the average total council tax bill in Fenland is the lowest in Cambridgeshire. The total bill is on average £83 a year per dwelling lower than the county average. The bill in Fenland is £60 lower than the average English bill and more than £130 lower than the shire district average. Fenland has a low tax base, with 85 per cent. of properties in bands A, B and C. That will come as a major surprise to many hon. Members in the Chamber because although those statistics smack of inner-city property values, my seat has been held by the Conservatives for the past 17 years—it was Liberal for a brief period before that. That means that every pound that Fenland adds to its council tax raises only £28,000, whereas every pound that neighbouring Huntingdonshire puts on its council tax bill raises double that amount—£56,000. An equalising measure should be built into any sensible formula calculation to compensate the parts of the country—mine is not the only one—with low tax bases because of their low property values. Fenland is penalised principally by its low tax base. It must increase its council tax at double the rate of its neighbouring council to provide the services that the Government demand of it, but that cannot be right.
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