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Mr. Woolas: With the leave of the House, Mr. Deputy Speaker, I shall reply to the debate.

I thank hon. Members on both sides of the House for their contributions to the debate and will try to respond to their points about the settlement. Over the past few weeks, I have been keeping a private tally of the most
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ingenious arguments that hon. Members have made for why their constituencies are being unfairly treated and good contributions to that competition were made this evening. Hon. Members representing some of the wealthiest areas in the country said that they should be rewarded for living in wealthy areas. Conservative Members said that money is being given to northern Labour areas, while we heard from Labour Members representing northern areas that money is being given to southern Conservative areas; I make no comment about that.

The winner of the competition has to be the hon. Member for Southend, West (Mr. Amess), who complained that the delegation that he led to meet Ministers from the Office of the Deputy Prime Minister resulted in a reduction in his area's grant. I am highly tempted to save that one until the next general election and put out a performance review grant. Unfortunately the hon. Gentleman is not in the Chamber, but the truth is that the reason for the changes was entirely due to statistics. I am well aware of Southend's difficulties due to the fire at its pier and have previously commended the hon. Gentleman on his campaign about population statistics. I referred to that general issue during my opening remarks when I said that the Government rely on the most robust figures available, which are those from the Office for National Statistics.

The hon. Gentleman also criticised the Government for using historical trend population figures. May I re-emphasise the fact that the changes that we have made in the settlement take account of future projections, as well as historical changes, to take on board points made by hon. Members on both sides of the House during the consultation and recent meetings?

The hon. Member for Southend, West said that his council was implementing cuts of £11 million. I wonder why Opposition Members have such short memories. A cut is a reduction in the cash available to spend on services; a cash reduction or a reduction after inflation, if one wants to define it like that. A cut is not a smaller increase than was hoped for. [Interruption.] Opposition Members, who are incredulous at that point, need to get back to the days when they were a party of sound finances. It is not credible to stand before the electorate in May, in the context of increased grants from the Government year on year, over 10 years, and complain about cuts. That is just not tenable.

That is not to say, as I said in my opening remarks, that the Government have not recognised that there are pressures on councils, particularly as a result of an increasing elderly population, increases in the costs of waste recycling and increases in other areas, above the net new burdens identified by the Local Government Association and ourselves, which were provided for in this settlement. Opposition Members cannot have it both ways. They cannot say that the reductions in services in some specific areas of council expenditure are due to this settlement; they are not, and it is not credible for them to argue that point.

Mr. Pickles: Surely the hon. Gentleman has something better to offer us than "Yah boo sucks". Surely he recognises the growing pressures and burdens
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on local authorities. Things are closing down from Rye to Rugby. Things are closing down from Lancaster to Surrey. Things that were funded last year are not being funded. Is it all just a conspiracy to make the hon. Gentleman look bad?

Mr. Woolas: With respect, the hon. Gentleman repeats the mistake that I just warned him against. I am more than happy that he carries on doing so. He needs to listen to his own electorate. They will not put up with what they see as public sector profligacy. This Government have provided above-inflation increases and investment in local government for 10 years. That is a fact that he cannot deny, and no amount of Central Office press releases will change that. It is also the case that the Local Government Association, very responsibly led by a distinguished ex-council leader in Sir Sandy Bruce-Lockhart—not a Labour member, but a Conservative councillor speaking on behalf of all councils—entered into a process with the Government to identify any net new burdens. We did that, and we reached agreement on it. We also identified pressures on local councils over and above inflation.

There are two points that the House has to recognise. The first is that those pressures exist for central Government as well. They do not stop at the county border. The pressures from the increased elderly population, the demands on health and other services, exist for central Government, and it is incumbent on us to ensure that resources are fairly distributed and that budgets balance. One cannot then say that the pressures on councils are the fault of the settlement; they are not. Where there are real pressures, and we have acknowledged them, it is because of the real world.

If the hon. Gentleman wants to intervene again, I will allow him to do so briefly because I will be fascinated to hear what he has to say. My second point is that if local government wishes to be a partner in governance of this country, it has to accept its responsibility in balancing budgets. It is to no one's gain for it to say, month after month, year after year, in the context of a 79 per cent. real terms increase in council expenditure, that the Government should provide more; from where?

Mr. Pickles: Given the nearly 80 per cent. increase in council tax, how can the hon. Gentleman lecture anyone about profligacy when his own Department has wasted £168 million on consultants and when the level of financial competence in the Department is a disgrace? If the Office of the Deputy Prime Minister cannot run itself, how can the Minister possibly lecture others?

Mr. Woolas: I would make two points in response to that intervention, which notably failed to answer the challenge that I put to the hon. Gentleman. My first point in response to his allegations is that, when he sees the figures on the Gershon efficiency savings, he will find that my right hon. Friend the Deputy Prime Minister's Department is leading the field, along with the Department of Health, in that regard. Secondly, I challenge him again to tell the House what his policy is. If he is saying that a 79 per cent. above-inflation increase in grant is insufficient, and that he does not wish to see above-inflation increases in council tax, what is his
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policy? The fact is that there is no policy on offer from the hon. Gentleman, unlike the hon. Member for Brent, East (Sarah Teather), who has an alternative.

Dr. Iddon: Is not the policy of the hon. Member for Brentwood and Ongar (Mr. Pickles) quite clear? He mentioned it earlier when he was whingeing about the dedicated schools' budget. That is where the money would come from, as it always has when the Conservatives have been in power.

Mr. Woolas: My hon. Friend makes a valid point.

The hon. Member for Brent, East once again blamed the system for the increases in council tax. She acknowledged the increase in grant, but criticised the increases in council tax and blamed the balance of funding for the problems. The problems faced by councils—hers in particular; I have met a delegation from her council—are to do with the real-world pressures of an increased elderly population, increased costs of waste disposal and recycling, and increased costs as a result of other demographic changes. Those pressures cannot be wished away by a change in the formula or in the balance of funding. They can be, and are being, addressed by a strategy, agreed in conjunction with the Local Government Association, of addressing those underlying causes.

Both the Opposition parties argue that Her Majesty's Government should recognise a separate level of inflation for local councils, over and above the level for central Government expenditure. That is not a tenable policy; it is economically illiterate. Were we to adopt an inflation level for local government that recognised the demands placed on local government, it would become a self-fulfilling prophecy, and people would be back again next year arguing for even more money. The public would, quite rightly, not accept that.

Mark Hunter (Cheadle) (LD): Will the Minister reflect on his use of the word "profligacy" in relation to local government? Is that really his view? Does he not think, with hindsight, that councillors of all parties up and down the country might find his use of the word offensive in that context? If he does think that his use of the word was valid, will he tell us which services currently provided by councils should no longer be provided?

Mr. Woolas: I chose my words deliberately, as hon. Members would expect, and I expected such a response from Opposition Members. The hon. Gentleman cannot have it both ways. He cannot blame the Government for the pressures on local councils while recognising the 79 per cent. above-inflation real-terms increase in grant that councils have received. If he wants me to enter into a debate about the council of which he was leader, I shall be happy to use the word that he accused me of using.

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