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Mr. Eric Pickles (Brentwood and Ongar) (Con): I thank the right hon. Gentleman for early sight of his statement and the accompanying documents. Such release of information is entirely typical of him, and it makes for much better debate.
Over the past four weeks, I have been due to share a platform with the right hon. Gentleman or other Ministers on no less than three occasions. Each time, the relevant Minister has cried off at the last minute, because of some reversal of the Government's fortunes, much to the disappointment of the audience and myself. Given the nature of the Chancellor's financial allocation to local government, I am sure that the whole House will share my relief in finding the Minister in his customary place today. Who would have blamed him if he had decided to absent himself? Indeed, the Deputy Prime Minister has sought to create as much physical distance as possible between himself and today's statement by travelling to China. That seems a little excessive, but it is no doubt a comfort to the great man.
This statement is nothing more than a poor attempt to paper over the cracks of a crumbling council tax policy, a fiddled financial settlement and an abandoned balance of funding strategy. It is a dawn raid masquerading as a strategy. So ill thought-out are the measures that they have provoked a senior Government official, in the pages of today's Financial Times, to use a four-letter word to describe the measures, and pejoratively to invite the Government to depart. I am sure that that anonymous mandarin, in both his choice of words and his sentiment, speaks for the whole nationin spades.
The record clearly shows that the Opposition have been more accurate in predicting levels of council tax than the Government. The Government's winter boasts are soon drowned out by April misery for the taxpayer. I have with me a full list of the Labour Government's predictions on the adequacy of the settlement, and the folly that they produced. I shall let just one speak for the many. Last year, on the settlement, the Minister said:
"We have provided a good settlement, on the basis of which local authorities can plan for future improvements in services without unreasonable increases in council tax." [Official Report, House of Commons, 19 November 2003; Vol. 413, c. 789.]
That settlement did not even have to wait until the spring to be proved inadequate. In a few short weeks, the Chancellor had to bung in an extra £340 million. What is the status of that £340 million? Has it been carried forward to next year? If so, given that £350 million relates to ring-fencing, the Chancellor's £1 billion bung begins to look very smallit begins to look like about £250 million.
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Last year, because of the Government's insistence on passing on increases to schoolswhich they are repeating this year14 local authorities were left with no additional money for their other services. Will that be repeated next year, and how many councils will be affected? The Minister can talk all he likes about floors and ceilings, but he cannot hide the fact that under his Government council tax has gone through the roof. Further unbearable increases are in the pipeline as a direct result of this settlement.
In its small print, the July review predicted that the locally financed council tax element of local government would increase from £18.6 billion in 2004 to £19.8 billion. That represents an increase of 6.7 per cent., or three times the rate of inflation. Will the Minister confirm that on page 209 of the Chancellor's pre-Budget report, issued today, council tax receipts are projected to soar by £1.6 billion? Will he confirm that page 23 forecasts inflation at 1.75 per cent.? We are looking at an increase in council tax receipts over four times the rate of inflation.
The change in council tax receipts clearly mirrors the increase in council tax demand. Since 1997, receipts have risen by 80 per cent., and in England council tax has risen by 70 per cent. The figures clearly marry.
The settlement does not seem to recognise the unavoidable pressure on local authorities. The Local Government Association has measured it at about £1 billion. Let us examine three pressure areas. The Minister referred to certain pressures on pensions. His solution is to try and put it off for a couple of years, but how are local authorities to manage with pension costs due to rise next year by an extra £300 million and the year after by an extra £900 million? Pressure from the growth in waste levels, waste taxation and waste legislation will cause costs to escalate from £225 million this year to £480 million next year.
There will also be more children receiving social care. The Children Act 2004 places additional burdens on authorities. Why are the Government not making adequate plans to meet the growth in children's services with an increase from £94 million next year to £587 million in 2007?
Local government leaders have long argued that the retail prices index is an inappropriate measure to gauge local costs. On 24 June, the Local Government Association met the Chief Secretary to the Treasury, who agreed to start work on a price index for local government. What progress has been made so far?
Then there is the question of the census. The amending revenue support grant report for 200304 was published on 18 November, but the issuing of the report for 200405 has been postponed until next year to ensure that all possible revisions of the data used in the 200405 settlement will be included.
The House will rejoice at the recognition of the disservice done to the Manchester and the restoration of its missing citizens. They will receive an extra £7.8 million. Other areas are less fortunate, however. Worcestershire will lose £1 million, and Norfolk nearly £500,000. The South Yorkshire police authority will lose
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nearly £1 million. Worst of all, Surrey will lose £2.3 million. On 25 November, the leader of its county council wrote this to the Minister:
"Under your proposals, Surrey stands to lose £2.23 million in respect of 200304, a greater loss than any other council in the country . . . Why should the people of Surrey pay for a mistake made by central Government?"
What justification can there be for asking council tax payers to pick up the tab for central Government's own blunders? Every year Labour promises a generous funding settlement for local councils, yet every year under this Government council tax has soared by three times the rate of inflation. This year the average council tax bill in England is over £1,000, an increase of 70 per cent. or almost £500 since Labour came into office. That is equivalent to almost £100 a month from people's take-home pay or pensions.
The reason is simple: the Government have chosen to use the council tax for a purpose for which it was never intended. They have transferred burdens and duties to local authorities without resources. The council tax has become their stealth tax of choice.
The Minister knows that what he has announced today will store up massive council tax increases for the future. His strategy for the council tax is now in tatters; all that remains is for the electorate finally to bury it in May.
Mr. Raynsford: It was interesting that the hon. Gentleman managed to keep a straight face during some of his remarks. He remembers what life was like when his party was in government. He remembers the settlements that Conservative Members announced from this side of the Chamber. Those settlements did not give grant increases to local government; in some years they actually cut grant, and in no year did they match inflation. I do not know how he has the cheek to attack a Government who have provided huge increases.
Let me remind the hon. Gentleman of the figures. In the 199798 settlement, the last that his party presented to the House, £35.9 billion was given to local government. This year's total is £60.1 billion. That is thanks to a Government who have been increasing funding, supporting local government and listening to local government, and who are taking action to tackle the problem of authoritiesand some Tory authorities have a poor reputation in this regardthat are charging too much council tax. We have made it very clear that we will use tough capping powers to deal with authorities that increase council tax unduly.
Last year, Labour authorities increased council tax by 4.7 per cent., Tory authorities by 5.4 per cent. and Liberal Democrat authoritiesI concede to the hon. Gentleman that their record is the worstby 6 per cent. If Tory and Liberal Democrat councils had matched the performance of Labour councils, council tax increases last year would not have been 5.9 per cent.: they would have been below 5 per cent., a target that I would expect most sensible people to endorse.
The hon. Gentleman did not have the gall to admit that his own county of Essex is looking forward to an extremely good settlementa 6 per cent. increase in its
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grant in the coming year. I am sure that when he talks to Lord Hanningfield, he will be able to discuss all the things that Essex county council will now be able to do thanks to the generosity of a Labour Government. That is nothing like what the council experienced under a Conservative Government.
The hon. Gentleman asked about the status of last year's £340 million increase by the Chancellor. It should be seen in the context of our £3.5 billion increase in total spending in the current year: that is £3.5 billion, not £340 million.
The hon. Gentleman asked a very interesting question about the consequences that would appear in next year's settlement. I think that most Members expect a general election between now and then. It was interesting to note his tacit concession that his party did not have a prayerthat it did not have a chance of winning the election, and expected to remain in opposition with no influence on next year's settlement. I must tell him that his party, were it to come to office, would not offer a £3.5 billion increase. It has said quite openly, and the shadow Chancellor has said it repeatedly, that it would freeze local government expenditure. That would be a recipe first for cuts in services, and secondly for massive council tax increases. That is what the Conservative party stands for.
The 6.7 per cent. figure that the hon. Gentleman citedprobably not he but his researchers had delved into the more obscure aspects of the Red Book and other documentsfails to take account of the increase in council tax, so in any case it is not an accurate projection, but if he were to redo it on the basis of today's settlement, the figure would be 3.6 per cent. The Red Book is a reflection of historical patterns of council tax increases, and as further reductions in council tax levels occur as a result of this settlement, we will see a further reduction in the projection.
On pensions, we have already taken action to ease pressures in the coming year, and as the hon. Gentleman should surely be aware, we are already consulting on longer-term changes to enable local government to meet its responsibilities under the local government pension scheme, while at the same time not facing unreasonable costs.
On pressures on social care, the hon. Gentleman obviously has not looked at the details. Otherwise, he would know that the children's services that he claims we are underfunding will receive a 7.6 per cent. increase in resources in the coming year, which is well above the average.
I remind the hon. Gentleman that local government asked us to do an amending report if it turned out that the census figures had to be adjusted, and that Conservative authorities such as Westminster were in the forefront of asking for such a report. Local government knows that such a report does not put in additional money; it simply amends a previous settlement in the light of changed figures, so if authorities such as Manchester deserve an increase because former census projections underestimated their population levels, it is of course right and proper that there be an amending report, which means that there
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must be an adjustment for everyone. That is the inevitable consequence, and that is what local government as a whole asked us to do.
Finally, although the hon. Gentleman did the best job that he possibly could in the circumstances, he knows in his heart that this is a good settlement for local government, which provides the basis for local authorities to continue to deliver improved services with no need for large council tax increases.
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