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Mr. Raynsford: As the hon. Gentleman would know if he had been listening, the per capita increases that have been set out are not made on a like-for-like basis, so there are no proper grounds for comparison. He will be well aware that Sedgefield is an area in County Durham with serious problems of deprivation following the disappearance of traditional industries, and authorities with such problems have far more significant cost needs. The formula system rightly takes account of that, as well as the special needs of areas, such as the one represented by the hon. Gentleman, where there is sparsity. Sparsity is therefore a factor in the settlement. The system also takes account of pressures in areas with high costs, and areas such as Cambridgeshire have received substantial grant increases because of changes to the area cost adjustment.

Anyone who understands the way the formula works will know that it takes account of the cost pressures on local government, and distributes funds in the fairest possible way to authorities to ensure that they receive a settlement that enables them to deliver services. The difference—the hon. Member for Meriden would do well to listen—between what happens now and what happened when the Conservatives were in government is that in those days councils did not receive increases in grant, but often suffered cuts. In the eight years in which Labour has been in office, councils have received good grant increases year on year, as has been accepted by fair-minded commentators of all political persuasions.

The right hon. Member for Skipton and Ripon (Mr. Curry)—I am delighted that he is here today—has long experience in this subject, and had the difficult task of announcing much less generous settlements when he was a local government Minister. In the debate on 2 February, he said:

"I am tempted to say that this settlement is as good as it gets. It might well be the best settlement of the decade."

Mr. David Curry (Skipton and Ripon) (Con): Would the right hon. Gentleman like to read the words that immediately follow that quotation? I said that from now
 
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on the air would be thick with the chickens of Labour's economic policy coming home to roost, and that settlements would be much tougher if Labour won the election.

Mr. Raynsford: No, that was not it. I shall remind the right hon. Gentleman of what he said:

"I suspect that whichever party wins the . . . election, the next settlements will not be as welcome as this one." —[Official Report, 2 February 2005; Vol. 430, c. 945.]

I do not think that his party will take much comfort from that. However, I shall come on to future settlements, as I have already told hon. Members.

Dr. Julian Lewis (New Forest, East) (Con): The Minister referred to fair-minded commentators. Does he accept the objectivity of the Audit Commission and, if so, how does he explain the fact that it has noted that

"grant redistribution—which moved grant from London and the south to the Midlands and the north—led to some councils putting up council tax more than others. We found a clear association between the size of grant increase a council received and their increase in council tax"?

Is the commission making that up?

Mr. Raynsford: That report from the Audit Commission is a year and a half out of date. [Interruption.] No, it did not reflect accurately the grant distribution at the time and, on that particular issue, it got it wrong. The hon. Gentleman will know from the figures that I have just quoted that, this year, authorities in the south of England received grant increases of no lesser value than those in the north. There was no question of a differential, and the different increases in council tax, with Conservative councils introducing much larger charges, do not relate to grant levels. There is not a correlation between the levels of grant increase and the levels of council tax increase.

Several hon. Members rose—

Mr. Raynsford: I have already given way, and I shall make some progress.

It should be a source of shame to the Opposition that the largest increases in council tax reported this year have all been made by Conservative-led councils. The protestations from the hon. Member for Meriden about the unfair impact of high council tax increases have a strong whiff of humbug and hypocrisy about them, as the problem has been created by her own party. Instead of seeking to divert attention with specious attacks on a Government who have given far more generous funding to local government than her party ever did, she would do better to try to get a grip on her own councillors, who have shown a cavalier disregard for the impact of high council tax rises on local residents. While she fails spectacularly to tackle the problems in her own backyard no one will have any confidence at all in her or in her party's ability to keep council tax down.

Mr. Hammond: The Minister has sought to justify his redistribution of grant. Assuming for a moment that we buy that argument, that still means that authorities that have had grant redistributed away from them are faced
 
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with a simple choice: cut services or increase taxes. What services would he like my council, Runnymede, to cut if it does not increase the council tax?

Mr. Raynsford: The hon. Gentleman has made a fundamental mistake. He has forgotten that every council got a grant increase that matched or was higher than inflation; no council has had money taken away from it. When his party was in power, councils used to have grant taken away. I ask him to go back eight or nine years and remember what it was like when his party was in government and cut grant. Under this Government, councils have all had an increase in grant. He should remember that, and perhaps he should do his homework a little better before he makes further interruptions.

Because the Opposition parties know in their hearts that the 2005–06 local government settlement is a good one that enables all properly run councils to deliver high-quality services without imposing unreasonable council tax increases, they have sought to divert attention from this year's outcome by running scare stories about supposed future threats. The Liberal Democrats are just as guilty in that regard as the official Opposition. Take the issue of revaluation. The Opposition motion "notes with alarm" the plans for   revaluation. The implication is that they do not wish any revaluation to take place. If the hon. Member for Meriden is saying that they do want revaluation to take place, I would be grateful if she confirmed that. I am happy to give way to her.

Mrs. Spelman: In my opening speech, I made clear our position on revaluation. Of course we understand that a property-based tax has to take account of changes in the value of property, but the revaluation exercise does not have to be a stealth exercise to garner more money for the coffers of the Chancellor or for a massive redistribution to compound further the problems of inequity that arise from the present system.

Mr. Raynsford: That is an interesting intervention, because it reveals just how badly briefed the hon. Lady is. We have repeatedly made it clear that there will be no increase in the yield as a result of revaluation. Revaluation is taking place simply to ensure that we should base values on up-to-date values, rather than on values that are 14 years old. It is nonsense to base values for council tax purposes on 1991 values that have to be notionally imputed for all new properties, so revaluation is necessary. We are doing it on a basis that ensures that we have up-to-date values, but with a clear commitment that there will be no increase in the overall yield. That has been made clear year after year, time after time. The hon. Member for Runnymede and Weybridge was in the Committee when we made that clear two years ago. We have repeatedly said that, and I am only sorry that the hon. Lady has not understood that that commitment has been given.

Mr. Curry: The right hon. Gentleman will know that revaluation is often associated with the concept of rebanding. It does not mean anything to say that there will be no increase in overall take. What matters is where
 
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the take happens within the bands. There is much speculation that there will be a new low band, which means a lower take for councils with large numbers of properties in the low band, and there is also speculation about the addition of at least two new bands, which would mean higher council taxes. In addition to that, if there is regional valuation, areas that have done relatively well in house prices in a generally depressed market will find their bands increased. The Minister's assurance means nothing unless he is also prepared to say that there will be no rebanding exercise, because it is rebanding linked to revaluation that gives rise to people's concerns.

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