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8.22 pm

Robert Neill (Bromley and Chislehurst) (Con): I thank the Minister for the usual courtesy that he showed in making the statement.

I welcome one or two aspects of the statement. The first is the straight face with which the Minister managed to deliver it, which is always welcome. Secondly, I welcome his announcement that the Government are going to look at migration figures. As he will know, hon. Members from all parts of the House have repeatedly raised the issue in the Chamber, but have been repeatedly ignored. I therefore hope that his arrival in the Department will presage a genuine change of heart. I hope, too, that when he responds to this debate he will say that not only will the process be internal, but that senior representatives of local government will be involved in all the discussions and working parties from the beginning, because local government has thus far done far more work on the issue than any Government agency.

I welcome, too, the optimistic way the Minister dealt with the Government’s retreat in the LABGI fiasco. The simple truth is that the Government have had to
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back down because legal challenge by local authorities in the courts demonstrated that they had got it wrong. On the basis of welcoming the sinner who repenteth, I take the Minister’s comments in the spirit in which they were meant. We hope to have a better scheme in future.

I could not help but smile at the way the Minister presented the settlement as freeing up local government from the dead hand of ring-fencing, when ring-fencing as a percentage of expenditure has increased from one fifth to two thirds under this Government. The Minister’s imitation of the grand old Duke of York is therefore immensely welcome.

Finally, I thought that the Minister looked extremely cheerful on the pages of Local Government Chronicle Plus, in the image of him smiling, standing before a weather map of the grant settlement. The hon. Member for Tyne Bridge (Mr. Clelland) raised a concern previously, so I am sorry that he is not with us, because a glance at that photograph would have shown a black cloud over Gateshead, a lot of black clouds over London—that will come as no surprise—and cheerful sunshine somewhere in the direction of Rotherham. I am sure that that is pure coincidence—or, as the right hon. Lady, the Minister of State, Department for Transport is here, perhaps there was a good result at Doncaster races.

Having said that and having welcomed the fact that there is a three-year settlement, which gives certainty—that is one thing that local government has wanted—I remind the Minister that when I was practising as a barrister, I would sometimes sit in the cells with clients who would say, “What I want most of all, Mr. Neill, is to know where I stand.” The Minister has ensured that local government knows that; indeed, he has given “three years’ hard labour” a whole new meaning.

Now that we have heard all the warm words about greater consultation, I hope that it will be carried forward, because the other serious point raised by Government Members—this is about migration, but the concern runs through the piece—is that if we are to have three-year settlements, to which there are benefits, it is all the more important that the methodology is accurate, robust and transparent. However, huge concerns remain on all those fronts.

The Minister brushed over another significant anniversary this year that has a consequence on the settlement. This year, after 10 years of a Labour Government, is the year that statistics will officially confirm that council tax has doubled, with band D now at £1,374. Now I understand why the Secretary of State is not with us to support the Minister in making the announcement—there is a rumour abroad that she is away tonight modelling for the image that will replace Britannia on the back of the 50p piece, in celebration of Labour’s achievement in doubling council tax.

To move on to some elements of the—

John Healey rose—

Robert Neill: I will happily give way to the Minister—I am sure that he will say something nice.

John Healey: I do not understand why the hon. Gentleman uses band D council tax figures, when fewer than one in six households in the country are in band D.

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Robert Neill: I simply followed the practice that his Department has always used, including its press office, and which every independent expert has used. If the Minister wants to use the figures for bands A to C, as the hon. Member for Tyne Bridge did, which comprise 91 per cent., I should be quite happy to deal with that, too.

John Healey: Let me give the hon. Gentleman some other figures then. If he takes the average council tax rises across all dwellings, he will find that the rises this year are less under Labour authorities than under Conservative authorities, that council tax under Labour authorities is lower than under Conservative authorities and that both are lower than under Liberal Democrat authorities.

Robert Neill: The Minister makes an interesting point, but it is a shame that he did not mention certain other figures, which suggest that families will be spending an extra £53 on top of their council tax, thanks to this Government, and which demonstrate that, when considered across all tiers of local authority, Conservative authorities consistently come in at some £50 a year less than Labour authorities. The Government’s attempt at obfuscation hides the real concern that underlies this settlement.

The settlement does not address the key issues. We have debated the impact of migration at some length—it is a serious issue—but we have not dealt with the persistent transfer of financial burden and risk that has occurred under this Government. The settlement compounds a move that has taken place right across the period of this Administration to increase the financial risk placed on the local council tax payer and to reduce the exposure of central Government. That is illustrated by the way in which much of external aggregate financing is a recycling of the business rate. The amount of support for revenue support from general taxation is again reduced by the settlement, by a further 29 per cent. That is an enormous shift, and the burden is increasingly being placed on local communities while being taken off the balance sheet of whichever Macavity happens to be in charge of the Treasury. That is all part of the hidden smoke and mirrors with which the Government operate.

Mr. Neil Turner (Wigan) (Lab): The hon. Gentleman will be pleased to know that I am not going to claim bragging rights as a result of what happened between West Ham United and Wigan on Saturday. Will he tell the House, however, whether he is making a commitment on behalf of a future Conservative Government that shifts of money to local level would not happen, and that the Conservatives would give a lot more money to local authorities from central Government?

Robert Neill: I congratulate the hon. Gentleman on Saturday’s result, because I would not want to see Wigan go down. If that prevents West Ham from getting into Europe, however, we will have to have a conversation outside.

The key test that we want to apply is to determine whether a system is fair, transparent and open. However, the amount of ring-fencing that exists at the
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moment militates against such a system. Unfortunately, the methodology that underpins the settlement does nothing to reassure anyone about fairness or transparency.

Mr. Rob Wilson (Reading, East) (Con): Does my hon. Friend agree that fair funding is one of the main unresolved issues this evening? Let me give him an example. Reading and Wokingham authorities are next door to each other, yet Wokingham is the second-worst funded unitary authority in the country. It pays 80p out of every pound towards council tax, whereas Reading pays only about 50p. That is having a massive impact, particularly on social services. In Woodley, in my constituency, that is a major concern. This is all to do with the unfairness of funding, even within a local area.

Robert Neill rose—

Mr. Deputy Speaker (Sir Michael Lord): Order. Before the hon. Gentleman responds, may I just say that these are very important and complex matters, but that long interventions—and, perhaps, long responses— mean that time is now moving on? A large number of people are still seeking to catch my eye.

Robert Neill: Thank you, Mr. Deputy Speaker.

My hon. Friend’s point brings me to an issue that I was going to address anyway, namely, the question of getting a transparent methodology. The hon. Member for Wigan (Mr. Turner) also referred to this. What we have now is not transparent. Some of us have spent years grappling with damping and double-damping. Before that, we had various other kinds of massaging, all of which is virtually incomprehensible to the average council tax payer. The present situation is coming rather close to a local government version of the Schleswig-Holstein question, and with similar consequences. Of the three people who understand it, one is dead, one is mad and perhaps the other is sitting in the officials’ box; I do not know.

The reality has a similar impact in other places. Comparisons that ought to be readily achievable on a like-for-like basis are not. We have just heard of an example in Berkshire. The Department has made it clear that emphasis is being placed on the relative needs and relative resources formula this year, and the Minister has said that particular advantage was given under the formula to authorities responsible for social services and waste disposal. Against that background, however, 29 out of the 33 London boroughs—all of which have such responsibilities—now find themselves on the floor. Tower Hamlets, Hackney, Lambeth and Southwark all now find themselves receiving about three times less support than that going to Rotherham, and about five times less than that going to Blackburn.

Mrs. Sharon Hodgson (Gateshead, East and Washington, West) (Lab) rose—

Robert Neill: I shall give way in a few moments.

I do not believe that anyone would say that that fits any set of objective analyses, particularly in respect of the treatment of London, which has some of the most
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deprived local authority areas in the country. That does not seem consistent with an open, transparent and rational system.

Mrs. Hodgson: I am grateful to the hon. Gentleman for giving way. He mentioned the complexity of local government finance, including damping and double-damping. People who are less accomplished than hon. Members participating in this debate might not understand the finer points, but what my constituents in Gateshead and Sunderland and I understand is that we now have a better and fairer settlement in the constituency than we had before.

Robert Neill: I am not sure whether the hon. Lady heard the observations of the hon. Member for Tyne Bridge, who spoke earlier and said exactly the reverse. Still, there we are, I suppose that that is the level of consistency that we should expect from Labour Members.

Mrs. Hodgson: To clarify, I understand that my hon. Friend who spoke earlier represents Tyne Bridge. That constituency includes only a part of Gateshead, with the remainder being other parts of Gateshead and parts of Newcastle and Sunderland.

Robert Neill: It seems that it is damper one side of the river than the other. All I can say to the hon. Lady is that when I was a local councillor and was chairman of the social services committee in the 1980s, I was not under pressure to work out how I could fund the meals on wheels service; and when I was chair of an environmental services committee, I was not under pressure to increase charges to provide key services such as bin collection. Perhaps we can talk only on the basis of our experience, and it is increasingly the experience of many local authorities that this is a bad settlement that fetters them. Where authorities have been efficient, it seems that they have not just cut the fat, but had to get right down to the bone. That is the reality of this settlement.

Julia Goldsworthy (Falmouth and Camborne) (LD): The hon. Gentleman mentioned the Minister’s comments about increases to social services and waste authorities, but is it not the case that much of the increase in grant to cover waste will simply be recycled straight back up to central Government through landfill taxes?

Robert Neill: The hon. Lady makes a valid point and it is compounded by the Department’s announcement earlier this year that it will no longer commit to a hypothecation back to local government of the revenue raised through that system. The hon. Lady is perfectly right; and the Government are making it worse. It seems to us that that is hardly a localising settlement. There is a lack of transparency in the methodology.

Secondly, there is a failure to grasp key issues such as changing demographics. Pressures on adult social care, and increasingly on children and young people, were rehearsed last year by my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles)—and they are getting worse. As a consequence of medical advances, more people are living longer, which often requires more complex interventions. We are also aware of the
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need for much earlier intervention to help young people with particular difficulties. All those raise significant burdens for the responsible authorities, but they are not adequately recognised in the settlement. What we have seen, then, is failure to tackle the demographic time bomb in respect of adult care and young people, failure to make the system more transparent and, indeed, a shifting of ground on some key issues.

All that in the present context inevitably gives rise to a suspicion, particularly when the methodology lacks transparency, that indices of deprivation can be changed or altered conveniently so that certain parts of the country suddenly become more deprived than they were, which does not fit with people’s experience across the piece. If the Government really want the public to trust the system of local government finance, which I do not think they do at the moment, they would have to put it beyond suspicion that the system can be tinkered with to advantage one’s friends and disadvantage one’s opponents. That is a serious missed opportunity that should have been examined further when we moved towards three-year settlements. It will obviously be down to others to sort that out.

Mr. Andy Slaughter (Ealing, Acton and Shepherd's Bush) (Lab) rose—

Robert Neill: I suspect that some reference to some part of west London is about to be made.

Mr. Slaughter: The hon. Gentleman might enjoy such a reference or he might be rather embarrassed by it, but he will have to wait for a while.

All I have heard from the hon. Gentleman is a lot of waffle, preceded by an anecdote about serving meals on wheels in the 1980s. Will he address the central statistical point, which is that in 10 years of Labour Government there has been a real-terms funding increase of almost 40 per cent., whereas in the last term of the Tory Government there was a 7 per cent. real-terms cut? Is that not worth rather more than his anecdotes and waffle?

Robert Neill: I am grateful to the hon. Gentleman for not mentioning Hammersmith, but I must tell him that the statistic that hits most people, including those who voted for him, is that council tax has doubled under Labour. That is probably why the voters evicted the Labour council in his constituency so promptly when they last had a chance to do so, and why he will be next.

Mr. Slaughter: I can give the figures from the top of my head. During the first nine years of Labour Government, Hammersmith and Fulham council, controlled by Labour, increased its council tax by an average of 3 per cent. a year. That compared with 9 per cent. in the country as a whole, about the same as the retail prices index. As the hon. Gentleman wants to talk about Hammersmith and Fulham council, he may wish to explain why the budget that it is agreeing tonight makes £36 million-worth of cuts.

Robert Neill: I am sure that the hon. Gentleman will wish to applaud the steps taken by the current Conservative council—which has been able to reduce
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council tax by 3 per cent. in fulfilment of its election commitment—and to condemn his party’s Government for having increased the floors by what is, by any measure, less than the rate of inflation, thereby imposing a real-terms cut in support for social care and waste services in authorities such as his own. He cannot have it both ways.

My third and final point is this. We must view the settlement in the context of the broader picture of the burdens placed on hard-working families throughout the United Kingdom. All the surveys regularly show that council tax figures are among the top three or four issues identified by people who are concerned about the cost of living. As we know, disposable incomes are being squeezed more and more under this Government. Data produced today demonstrate that they have been reduced by some £1,300 over the last four years.

If we take into account not just the household costs of mortgages and council tax, but the increasing number of charges being imposed for what were once core local government services—of which the Minister insists there should be more rather than less—we see yet more squeeze on people who, in most parts of the country, are hard-pressed already. The settlement does nothing to help that. It will not, I am sorry to say, assist hard-pressed local authorities; it will keep them in a straitjacket. More to the point, it will force householders and families throughout the country to fork out yet again, paying more and getting less. That will be the Government’s epitaph, and whether it is written on the back of a 50p bit or on the back of their redundancy notice does not much matter.

8.42 pm

Mr. Neil Turner (Wigan) (Lab): Let me begin by correcting something that I said in a point of order last Wednesday. I said that the hon. Member for Lancaster and Wyre (Mr. Wallace) was paid by the Tote. That information was given to me and I used it in good faith, but I have since checked it and found it to be untrue. I therefore withdraw the remark.

I welcome the settlement. Obviously it is a difficult settlement, as we all knew it would be. As was pointed out by my hon. Friend the Member for Ealing, Acton and Shepherd's Bush (Mr. Slaughter), in the past 10 years there has been a 40 per cent. real-terms increase in the amount given to local government, and clearly it is not possible for that to continue.

Julia Goldsworthy: I wonder whether the hon. Gentleman knows what the 45 per cent. real-terms increase turns into once the ring-fenced schools budget is removed from it.

Mr. Turner: Whether it goes to schools or to the rest of local government, it is still a 45 per cent. increase from central Government for local government services. How it is divided up is neither here nor there.

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