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Alistair Burt (North-East Bedfordshire) (Con): I am grateful to the hon. Member for Southampton, Test (Dr. Whitehead) for drawing attention to any distress on the part of my hon. Friend the Member for Meriden (Mrs. Spelman). I assure him that I see no distress on her face. Her clear exposition of our party's position was given with the authority and assurance that she will carry into her new position of local government Minister in due course.
The debate is much concerned with figures, but the council tax represents more than that. We can use the debate to illustrate the way the Government go about their business more widely. They ride two waves with the British people, the first of which is disillusionment. There is a sense that they have squandered the good will with which they came to office. Those in professional and public service circles have a sense of their overbearing centralism, which prevents good professional officers from exercising their discretion and doing their work. The second wave that the Government ride is one of cynicism, which is born of the fact that the public do not trust them any more because there is sufficient evidence of their dishonesty. The council tax draws those two waves together.
Let me give examples from the three authorities that I share the honour of representing. Bedfordshire county council has been given an extra £14.9 million, which no doubt the Minister for Local and Regional Government will trumpet. Some £11.6 million of that will be automatically passported to education, which leaves £3 million to deal with new legislative issues and unavoidable growth. Some £2.5 million is required for additional social services assistance, and there are demographic pressures in the area.
An item called "Supporting People" used to be 100 per cent. funded by Government, but is now only partly funded, leaving a shortfall. Where will the extra money come from? The council must now pick up the costs for preserved rights and residential allowances, as
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no extra funding is available. Bedfordshire county council therefore needs to spend more of its own money, as costs are not accounted for by the Government, yet the Government trumpet their good will towards local government.
Mid Bedfordshire district council was mentioned earlier. The guns of Whitehall are trained on it, because it proposes to make a 13.3 per cent. increase, which, as I told the Minister, equates to £1 a month. It is the 10th lowest rated district council of 238, yet the full might of Whitehall will be brought to bear on it for its unjustifiable activities in protecting its citizens. In a letter to the Minister dated 28 February, the leader of the council, Patricia Turner, raised the issue of what happens in growth areas. Mid-Bedfordshire is such an area, as the Government want to build many more houses there. Mrs. Turner said that
"this Council is in a designated growth area under the Milton Keynes and South Midlands Sub Regional Strategy and we have experienced a tax base growth of 4.7 per cent. in 3 years, equal to 2190 properties. This growth is expected to continue. The calculation for grant distribution, however, applies a band D equivalent of about £180 for each new property to be set against the Formula Spending Share."
There has been a 72 per cent. increaseeight times the rate of inflationin council tax in mid-Bedfordshire since 1997. At Bedford borough council, which covers part of my constituency, the increase has been 66 per cent. or seven times the rate of inflation over seven years. It calculates that even on the Government's own needs assessment, a further £237,000 should have been made available. It is concerned about issues such as the implementation of the Licensing Act 2003, as that is not fully funded and will add 1 per cent. to the costs of the council tax. It is worried about increased pressures for recyclinga good thingthat will add an estimated 7.7 per cent. to council tax costs. The council must bear those additional costs.
The meanest cut for Bedford borough council is the loss of the disabled facilities grant. The Minister looks doubtful, but after our debate I shall give him a copy of a letter from the Office of the Deputy Prime Minister to the council dated 28 February 2005. It says:
The disabled in Bedfordshire borough will receive less as a result of the Government's actions. The former director of the SHAC housing association is giving all his attention to Mid Bedfordshire district council, which is going to charge people an extra £1 a month, yet he shows little interest in whether or not the disabled people of Bedford borough face a reduction in the disabled facilities grant.
As I said earlier, the Government are riding two wavesdisillusion and cynicism. We cannot trust everything that they say. I have given the example of three different councils that are trying to do their best under the Government. The statistics will be used to
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claim that they are receiving more money every week and, indeed, every day from the Government, but their own experience of rising costs affects what they can do with the money. Councillors and people who work in local government know that the figures are fiddled. As my hon. Friend the Member for Ribble Valley (Mr. Evans) said, when the bill comes through the letter box people can see that they have been charged extra and that council tax has increased at a rate many times that of inflation since 1997. The Minister says that the Government are giving councils more money, and that the problem is with the councils. However, it is an insult to electors' intelligence to be told that this year's settlement does not have anything to do with the general election. Until Ministers stop treating the electorate with contempt the twin waves of disillusion and cynicism will go all the way to the Government's gravea moment that cannot come too soon.
Mr. David Borrow (South Ribble) (Lab): Local government finance is, in some ways, straightforward. Local authorities have three sources of money. They get it from central Government in grant, the business rates and the domestic property tax. Those are the three sources that have existed in my adult lifetime. Until 1990, the level of the business rate and the domestic property tax were subject to decision by local authorities. Since 1990, the business rate has been decided by central Government and its rate has been fixed to inflation. The only flexibility that local authorities have is in the council tax.
Today's debate has ignored the fact that we will not have stable, long-term local government finance until we give local authorities control over a bigger proportion of their revenue. The Tory proposal has a lot to commend it in terms of what it does for middle income and better-off pensioners, but for local government it shifts the balance in the wrong direction. It means that local government is more dependent on central Government finance than on revenue raised locally. The Lib Dems' solution of a local income tax ignores the gearing effect. Because there will not be the bill on the doorstep that the hon. Member for Ribble Valley (Mr. Evans) mentioned, local authorities will be tempted to increase the proportion of the local income tax and mix it with the national income tax year by year in the hope that the increase will not be noticed.
I am not necessarily against the concept of a local income tax, but it is only viable if we recognise that to throw away the benefits of a property tax would be stupid. We need to ensure that a property tax is at the core of local government taxation and that should be supplemented with other locally decided revenue raising sources, of which local income tax may be one. Current council tax levels are probably at the maximum that can be supported.
Once we have the Lyons report, we need to deal with the serious issues of finding a long-term, cross-party solution to local government finance. I realise that we will not get it this afternoon, a few weeks or months away from a general election, but until we look in a grown-up way at giving local government a real opportunity to decide its own level of finance and be accountable to its local people, we will never solve the problem because, each year, the amount of revenue
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grant that local authorities receive will be decided by the pressures and strains within the Treasury. We must move away from that to give greater flexibility, power and freedom to local authorities. The Lyons report will be key to that, and it is about time that we discussed the matter in a more grown-up way.
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