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That this House notes that the Governor of the Bank of Englands letter of 16th June 2008 to the Chancellor of the Exchequer said that 1.1 per cent. of the 1.2 per cent. increase in recent months in inflation was due to global energy and food prices; further notes the Governments global leadership and supports the Governments action to tackle price rises with action on an international level, including pushing for a successful conclusion to the Doha round of negotiations in the World Trade Organisation and examining the impact of biofuels on food production; acknowledges the significant increases in world prices, with the oil price rising by 80 per cent. and food prices up by 60 per cent. in the 12 months to May 2008; recognises that these increases in global prices affect every country and put real pressure on family budgets throughout the UK; further acknowledges that the measures that the Government has taken and will continue to take to support families, individuals and businesses throughout the UK include extra tax credits, increased tax allowances, further winter fuel payments and increases in child benefit; considers that a strong and stable economy delivers the most important support for working families; and supports the Governments actions that have delivered unemployment, inflation and interest rates all at historically low levels.
Mr. Deputy Speaker (Sir Michael Lord): Before we start the debate, it may help if I offer the House guidance on the scope of debate on the order. The order applies to Lincolnshire police authority. The authority was originally considered for capping, along with six other police authorities and Portsmouth city council. The debate may cover the position of Lincolnshire police authority and refer to the fact that the other seven authorities are not to be capped, but it would not be in order to focus exclusively on those authorities that are not being capped, as they are not covered by the order. I hope that that is helpful to the House.
That the draft Council Tax Limitation (Maximum Amounts) (England) Order 2008, which was laid before this House on 26th June, be approved.
The order will be made under section 52F(4) of the Local Government Finance Act 1992. As you have said, Mr. Deputy Speaker, it caps the rise in council tax levied by Lincolnshire police authority this year. It is the only one of our decisions on eight designated authorities that requires parliamentary action at this stage, and that decision is therefore the focus of our debate this afternoon. Subject to the Houses approval, the order will be made, and I will issue a notice to the Lincolnshire authority about its maximum 2008-09 budget requirementin other words, its cap. The authority will then have to recalculate its budget so that it is at or below that maximum, and recalculate its precept on the council tax. It will then have to arrange for the district councils, as billing authorities, to send out revised council tax bills for the current year.
In December and February, I said in statements to the House on the formula grant distribution for 2008-09 that keeping council tax under control remains a high priority for the Government. I said that we expected the average council tax increase in England to be substantially below 5 per cent. this year. I also said that we would not hesitate to use our reserve council tax capping powers as necessary to protect council tax payers from excessive council tax increases. No authority could have been unclear about our intent.
Most authorities recognised the public concern about council tax levels, particularly at this time, when all households are under pressure. Some 98 per cent. of authorities did not set excessive increases; two thirds set increases below 4.1 per cent.; one in six set increases below 2.5 per cent. this year; and a further 21 authorities either did not increase council tax or reduced it. That means that this year there has been the lowest average increase in council tax for 14 years at just 4 per cent. Alongside that, by 2010-11, central Government grant for local government will have increased by 45 per cent. above inflation, and it has consistently remained above inflation each and every year for the past decade. Also, investment in police has more than doubled since 1997, with an extra £3.6 billion. Funding is higher and councils are deciding to keep tax rises lower. The threat of council tax capping is helping to keep those rises down.
However, a small minority of authorities imposed excessive increases on their council tax payers. As a result, as I explained in my statement to the House on 27 March, we designated eight authoritiesseven police authorities and one local authoritywith a view to capping them in-year. All eight authorities challenged their proposed cap, as is their right. My right hon. Friend the Minister for Security, Counter-Terrorism, Crime and Policing and I met all seven police authorities together to hear their cases in person, and I also met Portsmouth city council to hear its case. Having considered carefully the representations that they made to us, I made a statement to the House on 26 June.
Keith Vaz (Leicester, East) (Lab): I thank my hon. Friend the Minister for the way in which both he and the Minister for Security, Counter-Terrorism, Crime and Policing accepted representations from Leicestershire police authority and others for which caps were proposed. My hon. Friend has said that Leicestershire will be capped next year. Can he confirm that he will be prepared to accept more representations before finally deciding on next years position?
John Healey: That will indeed be the case. We propose to designate Leicestershire, Warwickshire and Cheshire police authorities for next year and allow them a maximum council tax increase of 3 per cent. When we formally announce the confirmation of that, there will be an opportunity for them to make representations, which we will take into account. I wish to signal clearly that we intend to follow through the decision that I announced on 26 June in respect of my right hon. Friends police authority.
We are protecting council tax payers in those three counties, and we will protect others by setting a lower threshold for capping in future years for Bedfordshire, Norfolk and Surrey police authorities and Portsmouth city council. Finally, we will protect council tax payers in Lincolnshire by going ahead with setting a maximum budget requirement for the police authority, although at a higher level than I proposed on 27 March. It will be equivalent to a 26 per cent. increase in council tax, rather than the 79 per cent. increase that it planned.
Mr. Douglas Hogg (Sleaford and North Hykeham) (Con): The Minister has fairly said that this is to be effectively a standstill budget for Lincolnshire. Does he accept that given that, Lincolnshire police will not be able to improve its services in either the current year or future years?
The police authority told us that to put in place a balanced budget, it needed £5.3 million more than our proposed cap would have allowed, which included the cost of rebilling. We have gone further than that and allowed an increase of £5.7 million. It has confirmed in a press release that there will be no redundancies as a result of the decision, and it must now take the tough decisions that every police authority and local authority has to take. It must decide how to make the efficiencies that are needed and improve services
at the same time within a tough budget and tough financial circumstances. I am confident that it will be able to do that.
Mr. John Hayes (South Holland and The Deepings) (Con): The Minister has acknowledged in the House that Lincolnshire has specific problems, and he was good enough to seek and receive representations from the authority. Given the history of policing in Lincolnshire, the need to develop the service offered is profounda rock-solid case, in the chief constables words. The budget may allow Lincolnshire police to stand still, but surely it will not allow it to grow and develop in the way that it wishes.
John Healey: The hon. Gentleman is always assiduous in making a strong case for his areas interests, but the police authority budget, following the action that I have proposed to the House, means that the authority will have more than £10 million above the level of last years budget. It can add a 26 per cent. rise on its council tax precept, which is more than it said that it needed to set a balanced budget. We have taken into careful account the full case made by the authority, both in writing and in person to my right hon. Friend the Minister for Security, Counter-Terrorism, Crime and Policing, who, I am pleased to say, is sitting on the Front Bench, and to me.
Mark Simmonds (Boston and Skegness) (Con): I am grateful to the Minister for giving wayhe has been extremely generous. Does he accept and acknowledge that the very fact that he has allowed a 26 per cent. increase in the precept supports the Oppositions view that there are serious problems with Home Office funding for Lincolnshire police authority funding?
John Healey: The decision reflects aspects of the case, to which we listened carefully and which we accepted, made by the police authority, which challenged our original decision under the set process. However, the hon. Gentleman must take into account the fact that this year Lincolnshire police authority has received the fourth-largest rise in police grant of any police authority in the country. It is therefore not the casethis cannot seriously be arguedthat the Government have not taken into account the pressures faced by Lincolnshire police authority. It is not rightI have not heard any Opposition Member argue for thisthat that police authority should be able to impose a 79 per cent. increase in council tax on Lincolnshire council tax payers this year.
Lembit Öpik (Montgomeryshire) (LD): Perhaps the Minister has missed the principle. I served on Newcastle city council when it was capped by a Conservative Government, and I remember the objections from the Labour party and Labour councillors to the principle of central Government making that diktat. Surely, it is up to voters in the local area to make the judgment and decide whether they agree with the decisions and so on, rather than requiring an intervention from Westminster.
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