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I hope that the Conservative spokesperson condemns capping in general. The issue of re-billing in Surrey and the fact that it went right through the system is not the only problem; capping in general is a problem. Central Government use a heavy hand to set priorities that may have little or no impact on the final budget, yet they have a huge impact on the quality of services. I agree with hon. Members who said that if the Government must have some kind of capping system, they need to
find a way to avoid re-billing, and that going through a judicial review process, which will cost goodness knows how much more, would utterly undermine any purpose whatever.
Part of the problem for police authorities is that they have no elected mandate. They raise and set taxes, but they are not directly accountable to the people from whom the taxes are raised. That probably allows the Government to do their worst in overruling the authorities ability to set priorities. I would like police authorities to have some form of directly elected mandate and nomination of local authority representatives. That would give them a much stronger hand and the ability to say to central Government, Dont interfere in what were doing. We havent only consulted; we have a direct mandate to be here and to set our own priorities and budget.
Hon. Members have said that Surrey consulted. From my hon. Friend the Member for Chesterfield (Paul Holmes), I know that those in Derbyshire consulted heavily, yet central Government still overruled what the police authority was prepared to do. Some form of elected mandate would help a great deal.
Paul Holmes: Many hon. Members from Surrey have commented on the fact that Government inspectors have recognised that the Surrey police authority is very efficient in handling its finances and policing operations. The same is true in Derbyshire. Government inspectors say that Derbyshire is highly efficient and has made £40 million in efficiency savings. Central Government are therefore saying to highly efficient police authorities, Even though youre very efficient and everybody across your county agrees with what youre doing in raising a bit more money out of council tax to make up for Government underfunding, were going to cap you and stop you doing that. Where is the logic and the local accountability in that?
The hon. Member for Runnymede and Weybridge (Mr. Hammond), who is no longer in his place, accused the Government of petty political vindictiveness, but I am not sure that that is actually the cause. I think that it is simply the case that unless the Government are prepared to wave their stick around at some point in the process of council tax setting, they cannot instil any fear into other local authorities. At least one or two local authorities and police authorities need to be picked off, bullied in public and made an example of so that the Government can continue to claim that they have some authority.
Mr. Wilshire: Would the hon. Lady not describe it as vindictive or suspicious if the Government want to wave that stick about? I agree that they want to make a case of somebody; they are picking on a county where there is not a single Labour MP to complain.
Sarah Teather: It is certainly vindictive, but I am not sure that I give the Government credit for that much thought. I suspect that the process is much more random than that. I think that they merely pick a couple of random councils to make public scapegoats of so that they can claim to have some authority over local authorities.
The fundamental problem, as the Minister well knows, is that council tax is a deeply unpopular tax. That is why the Government need to wave their big sticks around when it comes to budget-setting timein order to demonstrate that they are doing something about council tax. We all know that council tax rises are above inflation every single year. The tax is felt keenly, particularly by the low-paid, because they know that it is unfair. It is not based on their ability to pay or even on the price of their house. It bears no relationship to whether they own their property and is based on a notional value that is decades out of date. Until the Government are prepared to grasp the whole of local government finance, introduce a system of local taxation based on peoples income and ability to pay and devolve power and finance-raising down to local authorities in a serious way, I am afraid that we will go through the same charade every year. It is deeply depressing.
Justine Greening (Putney) (Con): I congratulate my hon. Friend the Member for Mole Valley (Sir Paul Beresford) on securing this important debate. The fact that so many Surrey MPs have turned up and that they have so eloquently represented their constituents concerns about the capping of the Surrey police precept demonstrates to the Minister, I hope, how important the issue has become. I welcome him to his new role.
I shall keep my comments as brief as possible, because a lot of questions have been posed and concerns raised, and we now need the Minister to answer them. It seems to me that todays debate involves irony on painful irony. Council tax has doubled under Labour, yet Ministers have made no complaint about it. Different approaches are taken in different parts of the country. The Met precept, charged by the London Mayor, has quadrupled in the past 10 yearsit has been frozen, thank heavens, now that we have a new and better Mayor. Again, the Government took no action on that. Yet when Surrey police, which clearly faces a range of challenges on the policing frontperhaps more than most police forcesput a toe out of line, the Government imposed a disproportionate cap that, as we have heard, will cost practically as much to enforce as it will raise.
Justine Greening: My hon. Friend is absolutely right. We have heard today that the Surrey police authority has been evaluated by the Audit Commission and rated by residents. People are happy with its performance. The key question that the Government need to answer is who should make the decision. Why should it be the Minister and his Department rather than residents?
Mr. Ian Taylor: That is exactly the point. Why are the Government intervening when the Surrey council tax payer is providing half the funding for Surrey police, Surrey taxpayers are contributing massively to the central Exchequer and the force will have to be reduced by a further 24 officers to pay for the diktat that the Government are imposing centrally?
The other irony is how much money is being wasted on regional and local government by Ministers. In the past 10 years, the combined cost of unelected regional assemblies, regional development agencies and Government offices for the regions has risen to £12.8 billion, which is £580 for every household every year. The Government should trim those costs to gain efficiencies before looking to front-line services such as policing.
The hon. Member for Brent, East (Sarah Teather) raised the question of our approach to council tax capping. We would abolish central capping, because we think that residents and local communities should have the ability to cap, if that is what they want and if they decide that what is being proposed is more than they can or are willing to pay. However, that is for local communities to do at a much earlier stage in the process than the last minute. As has been pointed out, we are already in the 2009 financial year, so the savings being forced on Surrey police have been exacerbated. They are not annual savings and will have to be taken over a much shorter period.
We need more local decision making, and with that should come more local accountability from the police. We have discussed our plans to have more local democracy in the form of directly elected police commissioners and the ability for local residents to introduce their own referendums on local issues, if enough of them want to do so, and that should include capping.
I will leave the Minister with a final thought. The question that he must ultimately answer is simple. Why is it for him to decide to cap Surrey polices precept and not for the residents who have been so clearly represented here today by their Members of Parliament?
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr. Shahid Malik): It is a pleasure to respond to the debate in your company, Mr. Weir. It appears that half the Opposition Front Benchers have taken the trouble to turn up today to wish me well in my reinstatement as a Minister. I am touched, and I thank them. I congratulate the hon. Member for Mole Valley (Sir Paul Beresford) on securing this debate, which is our second in the past few weeks.
I should begin by explaining the background of how we got to our present position in relation to Surrey police authority. The Government have made it clear in every year since 2004-05 that we will take capping action against excessive council tax increases. That followed successive years of high increases early in the decade, which happened despite the generous grant increases that authorities received from the Government. That culminated in an average band D increase in England of 12.9 per cent. in 2003-04. Surrey police authority took the opportunity that year to set an increase of 40.1 per cent. I am sure that all hon. Members agree that such increases
The Minister is not correct in saying that there is a real-terms increase for Surrey. There may have been nationally, but there was a negative increase for Surrey, where the figure went down in real terms.
Successive years of grant increases and the use of our capping powers led to the average band D increase in England coming down to just 3 per cent. in 2009-10. The average increase per household this year is even lower. At 2.6 per cent., it is the lowest average increase per household since council tax was introduced by the Conservatives in 1993.
Our involvement with Surrey police authority started just over a year ago. One local authority and several police authorities, including Surrey, set excessive council tax increases in 2008-09. We designated Surrey for capping, but after considering its challenge, decided not to cap it in-year. Instead, we set it a notional budget requirement for that year, which was lower than the budget requirement set by the authority. That meant that the authority was allowed to retain its excessive increases for 2008-09 and did not have to re-bill. Our action in 2008-09 limited Surreys scope for increases in future financial years. We also gave it an opportunity to avoid setting an excessive increase in 2009-10. Unfortunately, Surrey did not take that opportunity and has set an excessive increase for 2009-10.
there is no requirement on the Surrey police authority to calculate notional level of Council Tax (based on the notional budget requirement) 2008/09 and Surrey police authority will set their budget requirement and their precept for 2009/10...in the normal way.
Mr. Malik: I was going to deal with that point later, but I will deal with it specifically now. It is clearly untrue. [Interruption.] I am sure that hon. Members want me to respond. As long ago as October 2008, Surrey was well aware of the implications of its course of action. It was also told about that on several occasions thereafter.
Of 15 authorities that have been set notional budget requirements, Surrey is the first that has gone on to set an excessive increase in the subsequent year. In 2009-10, the Government reiterated to all authorities that they would not hesitate to take capping action against excessive increases. We said explicitly that we would require authorities to re-bill if necessary. In December 2008, the then Minister for Local Government, my right hon. Friend the Member for Wentworth (John Healey), wrote to all local authorities to make that clear.
If the authority is now crying foul because it is faced with re-billing costs, it has only itself to blame. The authority is threatening a judicial review to argue that the Secretary of State does not have the power to set a capping principle by reference to a notional amount of council tax. I will therefore not comment further on that matter. However, it is not the case that the authority was first informed about its 2008-09 notional council tax in January 2009, as has been suggested.
Mr. Ian Taylor: The Minister is talking about the notional precept. I want it on the record that the actual increase in precept levied by Surrey police authority for 2009-10 is 4.89 per cent. That is below the 5 per cent. threshold.
Mr. Wilshire: I am grateful to the Minister for giving way. He said that Surrey police authority was well aware in October. He subsequently said that Surrey police authoritys claim that it did not know something until January was untrue. He has twice asserted that the information put out by Surrey police authority is incorrect. Will he send the proof of his claims to all who have attended this debate? What was the authority told, by whom, on what date and was that in writing or by e-mail? Will he provide us with copies so that we can sort out who is telling the truth?
From October 2008, the Department made it clear to the authority several times that any council tax capping principle in 2009-10 would operate by reference to a notional amount of council tax for 2008-09. Frankly, I do not think that I can be any clearer. If the hon. Gentleman wants me to repeat that point, I can do so for the next 15 minutes, but I do not think that he does.
Surreys estimate of the re-billing costs is £1.2million. That looks somewhat on the high side compared with the costs incurred by other authorities. For example, last year Lincolnshire police authority estimated re-billing
costs at about £1 million, whereas the actual cost was £380,000. We will have to wait to see the actual re-billing costs in Surrey.
Mr. Malik: Having been in this job for five minutes, I apologise that that was not at the top of the priority list for my briefing this morning. I am sure that I will be briefed on that in due course. The hon. Gentleman will understand why I have not had such a briefing.
Rather than question Surrey, I questioned the billing authority in my area. It said that the cost will be £4.65 per bill. I chose to ask that authority and not Surrey because it is dealing with the matter.
Mr. Malik: It is not for me, nor for anybody in this Chamber, to tell the authority what it should do to live within its cap. However, I note that its papers show that it will have reserves of £9.4 million by the end of 2009-10.
Sarah Teather: I thank the Minister for giving way. He said that police authorities were given notice that they would have to act within a notional precept and that they had been given a firm view of what that precept would be. That is not true. Earlier this year, the then Minister for Local Government said:
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