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Mr. David Clelland (Tyne Bridge) (Lab): Will the Minister give way?

Mr. Woolas: I shall give way briefly on that point. I think that you would want me to conclude my remarks, Mr. Deputy Speaker, so that hon. Members on both sides of the House can have a chance to contribute.

Mr. Clelland: The £1.7 million that the Minister mentions came from the Department for Transport, not from the Office of the Deputy Prime Minister. On the point that he makes about ongoing discussions, that is not my impression, having spoken to the director of the passenger transport executive only an hour ago. There have been no further discussions since the meeting that he had with the Minister last week.

Mr. Woolas: Let me be very clear, to help my hon. Friend and the House, and repeat what I have said about the settlement. Of course my remarks relate to the distribution of the formula grant. I have not found that
 
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the proposals were particularly unfair to any type of authority, nor that the extra cost of free fares, in so far as they can be estimated at this stage, place a burden out of proportion to existing public transport on any authority.

Mr. Adrian Sanders (Torbay) (LD) rose—

Bob Spink (Castle Point) (Con): Will the Minister give way?

Mr. Woolas: I hope that the hon. Gentleman will be able to catch your eye, Mr. Deputy Speaker, but I need to reach a conclusion for fear of being unfair to the House.

I should just deal with a misconception promoted by several authorities controlled by the Conservative party. There is no political or geographical bias in the system, contrary to what has been said, and no taking from the south to give to the north, or vice versa.

Following consultation, I am broadly confirming the grant distribution proposals that I made on 5 December for both 2006–07 and 2007–08. I have made fairer the adjustments necessary to reflect a change in financing for certain capital projects from supported borrowing to capital grant. In particular, that will help authorities with large building schools for the future programmes. Similarly, where fire and rescue or police authorities have provided evidence that we should do so, we have amended the adjustments necessary to introduce the change in funding arrangements for fire and police pensions. As is usual, we have made corrections to the data used, where that was justified during the consultation.

Very few comments were received on the two amending reports for the 2004–05 and 2005–06 settlements, and I confirm my proposal to make those reports. They will enable us to take account of revisions made to population estimates by the ONS and provide a firm basis to move forward on multi-year settlements.

I can assure hon. Members that we are committed to ensuring that local authorities can deliver effective local services without the need to impose excessive increases in council tax. That is the framework for the settlement, which takes account of the joint work that we undertook with the Local Government Association to look at the pressures that councils face in the next two years and the ways that local and central Government can manage those pressures together.

The joint work with the LGA identified some real pressures over the next two years, particularly in respect of waste management and social services. That is why we provided an extra £305 million in 2006–07 and £508 million in 2007–08 in formula grant above what was previously planned. I make it clear that that extra funding is in addition to the funding provided by Government to meet the net new burdens principle. It gives councils the funding to continue to provide the services that local people need, taking into account the pressures identified by the LGA. There is no need for councils to threaten cuts in service for vulnerable members of society.
 
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We have also agreed to work jointly with local government in a number of respects, including working with the LGA in the context of CSR07—comprehensive spending review 2007—on pay, adult social care and waste. We have also reaffirmed our commitment to discuss with local government the new burdens and measures to mitigate them.

Ms Sally Keeble (Northampton, North) (Lab): My hon. Friend says that there is no need for local authorities to cut services to the disadvantaged or for them to raise council tax. Is there any reason, therefore, why Conservative-controlled Northamptonshire county council should have issued redundancy notices to more than 700 staff, including all 197 of its youth workers, and threatened to charge disabled people for servicing their stair lifts?

Mr. Woolas: I do not wish to enter into specifics—I am more than willing to do so in the wind-up if I have time—but local authorities have received above-inflation grant increases for eight years, and for some 10 years by the end of this settlement period. Although the Government recognise in our work with the LGA the pressures on local government, it is incumbent on all councils to balance their budgets.

Given the substantial investment we have made in local government, we expect all authorities to budget prudently and not place excessive demands on their council tax payers. There is no excuse for excessive council tax and spending increases, and we will not allow authorities to impose excessive increases. We will consider the principles on which capping would be based after councils have set their budgets. We have made it clear that we expect the average council tax increase in England in both 2006–07 and 2007–08 to be less than 5 per cent.

Local government should be under no illusion: we will use our capping powers to deal with excessive increases, as we have done in the past. I am broadly confirming my proposals for alternative notional amounts, which are notional figures used for capping purposes to give a like-for-like comparison of budget requirements between years.

This is an excellent package for local government, as it continues the record investment in councils made by the Government and adds a step change in the stability and predictability of local finances, which has been welcomed by the Conservative-led LGA, and it will therefore enable councils to plan service improvements. I commend the settlement to the House.

8.9 pm

Mr. Eric Pickles (Brentwood and Ongar) (Con): The House is grateful for the Minister's explanation of the change in the grant mechanism. It will long remember that with gratitude. I suppose that it is a matter of deep sadness to him that nobody in the Local Government Association or in any of the councils thought that the change was good or supported it. I accept that the odd one or two might have supported him, but by and large two thirds of local authorities came out against it. [Interruption.] The Minister says that if local government is against it, it must be a good thing. I look forward to his next meeting with the LGA, which I am sure will be fruitful.
 
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At the time of the settlement, the Minister said that the

"Government is providing local authorities in England with stable and predictable funding . . . This is enough money for local authorities to continue to provide effective local services to communities".

With great respect to the hon. Gentleman, that makes me wonder how in touch he is with local services—something that was implied in some Labour interventions. Most councils are receiving a near-inflation increase when their costs are spiralling. Just over half of social services authorities are receiving a below-inflation increase. Many local authorities have had the goalposts shifted, and the only increase they receive is on paper.

Again, I hope the hon. Gentleman forgives me when I say that what sticks in the throat is the sanctimonious lecturing about costs and council tax levels. That comes from the worst Department in the Government. What a title to have; it is an achievement in its own way considering the competition and what the Government have done to dairy farmers, poultry breeders, the armed forces, motorists, train travellers and, most recently, policing.

In the past few weeks, the Department has been described in various ways. MORI said that it is a pantomime horse—in fairness, I think it was only the rear of the horse. Nine out of 10 regeneration experts have no confidence in the Department's plan. The Select Committee on the Office of the Deputy Prime Minister accused it of exaggerating the Government's achievement. More than £168 million were wasted on consultants to demolish 168,000 terraced houses. The Department is accused of operating in a climate of bullying. The ODPM is a byword for incompetence. No wonder the Deputy Prime Minister was forced to admit recently that his Department's left hand does not know what its right hand is doing. From my perspective, I am not sure that that is entirely true. I think that the left hand has finally woken up to what the right hand has been doing for years and does not like it.

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