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Paddy Tipping (Sherwood) (Lab): The Minister will know that there has been widespread consultation on the local government pension scheme and that regulations have been laid before the House. Will he give two assurances? First, will Members have the opportunity to discuss those new regulations? Secondly, even at this late stage, will he meet representatives of the members involved?
Mr. Raynsford: There has been lengthy consultation on the local government pension scheme from 2003 onwards. Because of genuine concern expressed throughout local government at the financial implications of the increasing costs of the scheme and the implications of the actuarial valuation that comes into effect this year, we have made some modest changes—very modest changes indeed—that come into effect from 1 April.
The House will have an opportunity to consider the regulations, which will be debated. I hope my hon. Friend will make whatever points he wishes to make at that time. However, I stress to him that the Government's objective is to maintain the viability of a good pension scheme which ensures that the recipients can receive funded pensions based on final salary. That is not available to quite large numbers of other people. Calls for increased funding going into the local government pension scheme, which would have an immediate knock-on effect on council tax, are not likely to be well received by council tax payers whose own pensions are rather less secure, and in some cases less generous, than those available to local government employees. So there are difficult issues that need to be addressed.
In exchange for the good increases in grant that we are making available to local authorities, we expect to see a continuing downward trend in council tax increases in 2005–06. We will be looking to all authorities to budget prudently and to minimise demands on council tax payers, and we will expect to see an average council tax increase of less than 5 per cent. in England. Hon. Members will recall that we took capping action against 14 authorities in the current financial year. We would prefer not to have had to use those powers, but make no mistake—if necessary, we will take capping action once again in 2005–06 to deal with any excessive increases in council tax.
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Nobody should presume that the capping principles that we applied in 2004–05 are a benchmark for 2005–06. We are prepared to take even tougher capping action this year if that proves necessary. That applies to all authorities, including fire and police authorities. I have already written to all local authority leaders to make clear the Government's views on council tax and capping. None of them can reasonably claim to be unaware of our intentions. We are in a new era now, in which high council tax increases are a thing of the past. We will not tolerate excessive council tax increases in 2005–06 or in years to come.
Mr. Philip Hammond (Runnymede and Weybridge) (Con): Perhaps, then, the Minister will answer the question that I put to the Prime Minister earlier and to which I did not receive an answer. How is an authority such as Runnymede, which has received a 0.4 per cent. increase in per capita total grant between 1998 and now, expected to deliver high quality services and keep council tax low?
Mr. Raynsford: The hon. Gentleman speaks for one of the most affluent local authority areas in the country. He knows that the authority does not face anything like the serious disadvantages that most other authorities face. We expect all authorities to budget prudently. We do not expect them to increase the council tax. They have a substantial council tax base and they have no need to make an unreasonable demand on council tax payers. We expect them to budget prudently and to ensure that demand on council tax payers is kept to the lowest possible.
Our plans for 2005–06 constitute another excellent settlement. We are continuing the Government's provision of a stable and well funded platform for local service improvement. Working with local government, we will continue to develop our proposals for improved financial systems for the future. In return, we can and do expect councils to plan for reasonable council tax increases this year. I commend the settlement to the House.
5.28 pm
Mr. Eric Pickles (Brentwood and Ongar) (Con): Today in the United States of America is groundhog day. The irony of the fact that the Government have chosen this day to present the revenue settlement for local government will not be lost on the House. The repetitious nature of the argument means that we can move backwards and forwards in time, measuring the continuing rise of council tax under the Government. A 70 per cent. increase in council tax since 1997 is a monument to the endurance of stealth taxation under this Labour Government.
The Opposition have a much better record on predicting council tax levels than the Minister, and while I am sure that most authorities will achieve a rate increase below 5 per cent., the Government are deluding themselves if they think that the public will quickly forget the massive increases of the past. This year's figures are just a rest while Labour gathers its strength for a planned massive onslaught on the middle classes of rebanding and revaluation, subject to the will of the electorate.
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During this brief pause in squeezing middle England, the Minister continues in the grand tradition of the entertainer of the House on the complicated matter of local government finance. This year he is the impresario of a unique three-ring circus. The first ring is the fiddled funding that punishes Conservative-controlled authorities and rewards Labour ones. The second ring contains the floors to mitigate the violence of the first ring. The third ring, which grows steadily each year, is the bung to cover the inadequacies of the first two rings.
Let us examine the bung. Each year the size of the bung gets bigger. Last year it was £340 million, and this year, with £350 million ring-fenced, it rises to £1 billion. Surely the chairman of the Local Government Association, Sir Sandy Bruce-Lockhart, was right when in December he commented:
"The money won today is a one-off and doesn't help address the fact that the burden on council tax is unsustainable and is far higher than local councils believe people can afford to pay."
In The Times, Tony Travers, who is much respected, described the settlement as a short-term fix to the deep problem of local government finance. He warned:
So despite the bung, many of the features of the previous settlements that have brought great discredit to the process remain in place.
Mr. Clive Betts (Sheffield, Attercliffe) (Lab): I am sure that the hon. Gentleman recognises that we are dealing with the 2005–06 settlement today, and did not Sir Sandy Bruce-Lockhart, on the morning that the Minister made his initial announcement, say that the Local Government Association wanted £1 billion extra to make it a good settlement that would keep council tax rises low and keep services going forward? That is precisely what my right hon. Friend delivered, so are not the Local Government Association and Sir Sandy entirely satisfied by what was produced?
Mr. Pickles: The hon. Gentleman has considerable experience in running a council, and I am mortified that he seems somehow to have lost his grip on the facts. He needs to remember that Sir Sandy was talking about the burdens on local authorities, and a one-off bung will not take care of those. I will come to that point later in my speech.
As I was saying, some of the features of the previous settlement, which brought great discredit on the formula, remain the same. Once again, four authorities are expected to passport their full increase in grant straight across to the schools budget—Bromley, Poole, Richmond upon Thames and West Sussex. Some of those authorities have not seen an increase in the budget for three consecutive years for the other services.
The Minister measures the increase in grant, but fails to address the increase in costs for local authorities. For example, between 1997 and 2000 the cost of educating a primary school child increased by 29 per cent. in real terms. He was equally silent about the extra burdens imposed on local authorities by the Government. Has he forgotten so quickly the report of the Audit Commission on the causes of higher council spending in the last financial year? It said:
"National cost pressures taken together account for about £2.3 billion of the total increase in councils' spending of £4.3 billion. In other words, slightly more than a half the total increase is due to national pay and price inflation, increased national insurance and general population growth".
All Members of this House will be familiar with the service pressures on their authorities, including pressure on child services and care for the elderly in social services, and in relation to the environment, including waste management and the effects of EU landfill directives. Not so long ago, we had a debate about pressures on licensing and planning fees and freedom of information, and reference was made a few moments ago to increases in pension and insurance costs.
Let me use one item to speak for all those issues—supporting people. We all have supporting people schemes in our constituencies and we are aware of the progress and independence that they can engender among the most vulnerable in our society. The total amount of supporting people grant for England has been cut by 5 per cent. in cash terms to £1.6 billion, and the Government propose to hold it at that level for the next two years. I am aware that the new formula is being consulted on, but it puts into sharp relief a situation in which schemes have been started and seed money offered, after which they have been abandoned. The alternatives for local authorities are to meet the growing needs or cut provision to the most needy in society.
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