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Question put forthwith (Standing Order No. 31(2 ) ), That the proposed words be there added.

Question agreed to.

The Deputy Speaker declared the main Question, as amended, to be agreed to (Standing Order No. 31(2) ) .

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Local Government Finances

Mr. Deputy Speaker (Sir Michael Lord): I have to tell the House that Mr. Speaker has selected the amendment in the name of the Prime Minister.

7.17 pm

Robert Neill (Bromley and Chislehurst) (Con): I beg to move,

This is an interesting opportunity for the House, it seems to me. For once, this year we were denied something of an annual ritual. Normally-on occasion, this does not happen, but it is normal practice-the local government finance settlement is announced to a waiting world by the Minister in an oral statement in the House, so that hon. Members can ask the Minister about it. It is usually quite a lively exchange. This year, for reasons that have not yet been made apparent although I hope that they will be, the Minister chose to announce the local government finance settlement in a written statement. I am at a loss to understand why.

It might be because of great shyness on the part of the Ministers, or because, as a consequence of the recent reshuffle, they have not quite worked out who is responsible. The Minister for Regional Economic Development and Co-ordination might have been engaged in the Department for Business, Innovation and Skills on that day; or perhaps-I hope not to be uncharitable-the Government did not want the local government finance settlement to be dissected and debated in this Chamber. Always anxious to be helpful, we have used our Opposition day debate to ensure that it can be. I think it is a shame that the Government have forced us to do that, because one would have thought that something of such significance would have been debated in Government time.

This is not a technical or inconsequential matter. The local government funding settlement affects every family and every community in the country. The sums involved amount to, at a modest estimate, about £47 billion in 2010-11. The fact that the allocation was slipped out, rather than announced as it has been in previous years, can only mean, it seems to us, that the Government have something to hide.

What the Government have to hide is apparent from a reading of the settlement document. I do not pretend that it is necessarily the most exciting document that right hon. and hon. Members will have read, but it is important. I was taken by the introductory note that is helpfully supplied with it, which sums up many of the problems from which local government finance suffers. Immediately under a statement that the document is the explanatory note for the local government finance settlement, it says:

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It might be simply for economy of printing that a word has disappeared, but it is, unfortunately, indicative of the layer upon layer of complexity that has accrued to the local government finance settlement in recent years. I am sure that that was genuinely inadvertent, but it is not a happy start.

When one gets through to the logarithms that take up the better part of several pages, one can understand why the Government might not want too much dissection of Government funding, but when one has ploughed through that, certain things become apparent. Despite the wording of the amendments, which I shall address in due course, there is no getting away from the fact that the Government do not want a debate on Labour's record over the past 12 years on council tax, which is a key issue in relation to this local government finance settlement. If implemented, the settlement will mean that council tax bills have more than doubled on Labour's watch-the percentage figure is 106 per cent. If anyone wants the exact figures, the average band D payment has gone up from £688 when Labour came to office to £1,414; it has more than doubled. The Government do not really want to have a debate about that.

Mr. John Redwood (Wokingham) (Con): Is it not also the case that, under this Government, there has been a huge switch in the grant, from the south to the north and from the rural to the urban? Might they wish to conceal that as well?

Robert Neill: My right hon. Friend is absolutely right and I shall return to that point later. That switch has been commented on by a number of independent commentators who are respected academics. One has only to look at the tabulations that are set out in the report to see quite clearly that, for reasons that are not yet apparent but that I hope will be apparent after Ministers have attempted to justify the position, there has been exactly such a shift.

Mr. Lee Scott (Ilford, North) (Con) rose-

Julia Goldsworthy (Falmouth and Camborne) (LD) rose-

Robert Neill: I shall give way to my hon. Friend, who caught my eye first, and then to the hon. Lady.

Mr. Scott: Does my hon. Friend agree that another problem is that Ministers continually make announcements about moneys that have to be spent by local authorities out of the grants that are given, but that the Government never properly fund them?

Robert Neill: The debate on additional unfunded burdens is a long-running one, particularly under this Government. It is something that I recall from when I was involved in local government as a councillor, and it has got worse, not better. I shall give an example relating to this year's settlement that has been flagged up to me by the Local Government Association.

Several hon. Members rose -

Robert Neill: I said that I would give way to the hon. Member for Falmouth and Camborne (Julia Goldsworthy) next.

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Julia Goldsworthy: The hon. Gentleman has just been talking about the fact that council tax has doubled since 1997. Does he think that that is entirely down to central Government policy, or is it down to the structural failing of the council tax system?

Robert Neill: That is an interesting point, but I doubt whether most people would agree with the hon. Lady. I note that the former Prime Minister, Mr. Blair, whom Labour Members might remember, stated in 1997 that the council tax system worked well. Unfortunately, it has been broken-perhaps beyond repair-by the policies of the current Government. On the other hand, if the hon. Lady is going to say that the alternative is a local income tax, then, if she will forgive my saying so, she has certainly got the wrong solution to the problem.

Mr. John Gummer (Suffolk, Coastal) (Con): Does my hon. Friend agree that constituencies such as mine-indeed, the whole of Suffolk, Norfolk and Devon-will now, in addition to the fact that they have all lost money in recent years, be faced with the cost of local government reorganisation that they did not ask for, do not want and know will be very expensive?

Robert Neill: I completely agree with my right hon. Friend, and I shall mention that in relation to another topic that I was going to deal with, and make it relevant to the debate.

Chris Ruane (Vale of Clwyd) (Lab) rose-

Richard Burden (Birmingham, Northfield) (Lab) rose-

Robert Neill: If the hon. Gentlemen will give me a few moments, I shall finish this point.

The reorganisation is another example, albeit of a different kind, of an unfunded burden. It is a burden that was not sought and that will have an impact on local government finances. No provision has been made for it here, it is not desired, and it is quite extraordinary that it should be pushed through in the dying days of this Government. All I can say to my right hon. Friend is that we will try to protect the residents of those three counties. If there is a change of Government, the Conservatives will take all steps to reverse that decision, even if the present Government have had the temerity to pass it into law and even if such a change requires legislation. Anyone who has spent money on it will find that that is a guaranteed way of losing their money. I hope that the Government will not pursue that entirely ideologically driven and pointless agenda.

Chris Ruane: The right hon. Member for Wokingham (Mr. Redwood) said that there has been a shift of finance from rural to urban areas. Is the hon. Member for Bromley and Chislehurst (Robert Neill) aware that when his right hon. Friend was the Secretary of State for Wales, he sent £120 million of the block grant from Cardiff to London?

Robert Neill: I have always attempted to be a useful student of history, but there are limits to how far back one can go. Perhaps the hon. Gentleman should reflect on this point: if, as has been demonstrated, there has been a shift away from the south-east of England, London and the midlands towards the north, and if his
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Government are right in saying that that shift is needs-driven, why have needs increased so much in those areas on this Government's watch?

Several hon. Members rose -

Robert Neill: I shall give way again in due course, but I should like to make a little more progress first. I know that it is fairly normal for there to be a lot of interventions at the beginning of a debate, but if hon. Members will bear with me, I shall try to fit them in in an orderly fashion.

Richard Younger-Ross (Teignbridge) (LD): Will the hon. Gentleman give way regarding Suffolk, Coastal?

Robert Neill: I shall give way purely on Suffolk, Coastal and the reorganisation. [Hon. Members: "Oh!"] I want to move on, and I think that Mr. Deputy Speaker would not want us to prolong the discussion of local government reorganisation too much.

Richard Younger-Ross: The point that the right hon. Member for Suffolk, Coastal (Mr. Gummer) made about wasted money is entirely right. The impact of the reorganisation will be a severe burden on Devon's taxpayers. That reorganisation has been driven partly by a second reorganisation by the boundary committee for England, which is driven by internal Labour party politics rather than anything to do with the electorate. [ Interruption. ]

Mr. Deputy Speaker: Order. Perhaps the hon. Member for Bromley and Chislehurst ought to take his own advice and get back on track.

Robert Neill: I have heard what my hon. and learned Friend the Member for Torridge and West Devon (Mr. Cox) has said, and no doubt the House has. I shall move on to the next part of my speech.

I was just observing that there has been a shift not only of funding within England, but of burdens, particularly on to council tax payers. A marked trait under this Government has been a shift of the financial burden away from the Treasury on to the council tax payer. That has been demonstrated conclusively by the amount of local government revenue that has to be raised by council tax, as opposed to the amount that is provided by central Government. That is not just about numbers or bill amounts; it is about the real impact that that has on people and their lives. I have already observed that council tax has doubled on the Labour Government's watch. This settlement means that band D bills will go up this year by a further £23, at a time when inflation is negative. The average bill at that level will come in at £120 a month.

It is sometimes forgotten that the poorest are usually the hardest hit by such changes. For example, the increase in council tax will eat up one third of the increase in the basic state pension. There is lots of evidence from many sources to demonstrate that the level of council tax is one of the key areas of concern for many families, because it has grown exponentially over the years.

Mr. Andrew Love (Edmonton) (Lab/Co-op): Will the hon. Gentleman give way?

Richard Burden (Birmingham, Northfield) (Lab): Will the hon. Gentleman give way?

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David Taylor (North-West Leicestershire) (Lab/Co-op): Will the hon. Gentleman give way?

Robert Neill: I will give way first to the hon. Member for Edmonton (Mr. Love).

Mr. Love: Will the hon. Gentleman explain how it can be that all Labour councils in London are committed to freezing their council tax next year and protecting their public services? How are they able to achieve that?

Robert Neill: Perhaps they have taken a lesson from the excellent Conservative Mayor, who has managed to do the same without the aid of grants skewed in his favour. I give way to the hon. Member for Birmingham, Northfield (Richard Burden).

Richard Burden: I want to take the hon. Gentleman back one more time to the question from the right hon. Member for Wokingham (Mr. Redwood) about the alleged shift from rural areas to urban ones. When I talk to Conservatives in Birmingham who are doing something wrong, their normal answer is, "Well, we just don't get enough money." That is an urban area, so is he suggesting that its funding should be cut?

Robert Neill: In due course, I shall deal with the question- [ Interruption. ] It is very interesting that Labour Members have become so used to the politics of the one-liner that they cannot follow an argument that requires more than two paragraphs to develop. In due course, I shall set out precisely how a sensible rebalancing of the local government financing system can be achieved. I am sorry that their crib sheet is not comprehensive enough to deal with the matter.

John Austin (Erith and Thamesmead) (Lab): Will the hon. Gentleman give way?

David Taylor: Will the hon. Gentleman give way?

Robert Neill: With respect, I want to make a bit more progress before I give way again.

I think that the Government's track record is a pretty good reason why they did not want a debate on this topic. Their amendment is full of all manner of telephone-number figures, but it bears no resemblance to the reality of the experience of local authorities or their residents. For example, I referred earlier to the amount of expenditure that has to be met from council tax. It has gone up by something like 3 per cent., from 22 per cent. to 25 per cent., on this Government's watch. In money terms, that means that council tax payers are having to raise an extra £14.3 billion. That is a measure of how the burden has shifted away from the Treasury and on to council tax payers, and it makes the figure in the Government's amendment, which boasts about giving an extra £8.6 billion over the period, look pretty sick. It is nowhere enough to compensate for the burden that has been shifted away from the Treasury by the Macavity approach of this Government.

I give way to the hon. Member for Erith and Thamesmead (Mr. Austin).

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