HC Deb 11 June 1991 vol 192 cc793-845 3.46 pm
Mr. David Blunkett (Sheffield, Brightside)

I beg to move amendment No. 12, in page 1, line 6, at beginning insert— `( ) This section shall have effect for the period between Royal Assent and a date specified by an Order made by the Secretary of State, such date to be not later than the date of implementation of a scheme of local taxation which shall be based on the occupation of property.'.

The Chairman of Ways and Means (Mr. Harold Walker)

With this it will be convenient to discuss also the following amendments: No 15, in page 1, line 9, leave out from 'shall' to end and insert `have no effect during the period specified in accordance with subsection () above'. No. 19, in page 1, line 11, leave out from 'also' to end and insert 'have no effect during the period specified in accordance with subsection () above'. No. 20, in page 1, line 17, after 'subsections', insert (),'.

No. 38, in page 1, line 19, leave out '1992' and insert `1993'

No. 57, in clause 7, page 7, line 2, leave out 'two' and insert '12'.

Mr. Blunkett

First, with the indulgence of the Committee, I should like to add the thanks of my hon. Friend the Member for Sheffield, Heeley (Mr. Michie) and of all elected Sheffield Members to the thanks offered to Helen Sharman by the Prime Minister earlier this afternoon for her presence in the House. All of us from Sheffield and across Britain wish her well and congratulate her on her tremendous feat on behalf of the country. [HON. MEMBERS: "Hear, hear."]

Today and tomorrow, spent in Committee, should and could have been used not to centralise power still further in the hands of the Government but to bring immediate relief to poll tax payers across Britain. We could have used this time to ensure that the poll tax disappeared by 1 April next year and that people who have suffered under it could breathe a sigh of relief knowing that a property tax would be reinstated. Instead, this afternoon, we have a petty little measure which, as can be seen from the Order Paper, seeks to cap all authorities in Britain irrespective of their size or spending power.

The amendment seeks to limit the range of capping powers to ensure that the proposed future property tax —hopefully, our fair rates—is introduced as quickly as possible. If there is not a general election between now and this date 12 months hence we will have sat through the winter on the proposed council tax. If we are to see a future in which people are free to raise and spend money sensibly, it is clear that capping should go at the earliest opportunity.

The Bill seeks to do the exact opposite—to spread capping to those authorities with budgets of less than £15 million per year, irrespective of their circumstances and the method by which those resources are raised and spent.

It will be recalled that, originally, capping was not to apply at all under the poll tax. In its original draft, it was conceived to be unnecessary, because the poll tax would bring accountability to every local authority in Britain. It was said that the poll tax would bring accountability by ensuring that the individual paying a flat rate tax would be made aware of exactly what money was being raised and spent in the locality—that it would not be spread across the generality of electors, but would be concentrated on each individual. As a consequence, they would feel the pain—I use the word advisedly—that came from spending on public services, and they would remove elected representatives who were minded to raise and spend money on the very public services that Conservative Members praise one day and do their best to destroy the next.

When it was discovered that the Prime Minister of the day was minded to keep hold of the bureaucratic central controls which capping had brought from 1985, when it was realised that there were electors throughout the country of all shades of local authority political opinion who would want to spend money on services rather than destroy them, the Government had a change of heart.

The right hon. and learned Member for Folkestone and Hythe (Mr. Howard), who now occupies the post of Secretary of State for unemployment, decided in a speech on 28 October 1987 that capping would be necessary. But, in introducing the idea that, after all, central controls and bureaucratic power would be needed, he said: Let me make it clear that we are only taking such powers because of the appalling record of a dozen or so authorities in managing their affairs under the present system. I have every confidence that the pressures of accountability will in general deal with the problem of overspending by local councils. He went on to say: The new system will be short, sharp and effective. It has certainly been short and it has certainly been sharp, but no one in the Chamber would describe it as having been effective. The poll tax has not been effective either in its intentions or in terms of bringing to heel the desires of local people to have their own services.

Mr. Clive Soley (Hammersmith)

It got rid of the previous Prime Minister.

Mr. Blunkett

We must be grateful for small mercies.

On 17 March 1988, in Standing Committee E dealing with the Local Government Finance Bill—I remember it well, as will my hon. Friend the Member for Hammersmith (Mr. Soley), because we used to sit until 2 am listening to the verbiage that poured out in favour of the poll tax, and it came as a great relief to me shortly after 17 March to enter hospital with pneumonia and have the relief of being at death's doorstep take away the necessity of sitting through the proceedings on the poll tax Bill—the right hon. and learned Member for Folkestone and Hythe, who was one of a number of people who were responsible for the poll tax and all its works who are still in the Prime Minister's Cabinet, said: Its effect is to remove from the field of selection the large majority of authorities, whose total spending is relatively insignificant. The community charges levied by those authorities will generally make up only a fraction of total local community charge when the precept of other authorities is taken into account. From the point of view, therefore, of protecting local charge payers, it seems unnecessary to keep such authorities in the field of charge limitation."—[Official Report, Standing Committee E, 17 March 1988; c. 1491.] That is about to be overturned by the Bill.

I realise that Ministers' statements are not worth the paper that they are written on, but it is opportune to remind the right hon. and hon. Gentlemen now seated on the Government Front Bench of what their colleagues said. The simple lesson for the British people is that they should not believe a word of what is said or written by Ministers, because shortly afterwards they will change their minds. As the then Secretary of State for the Environment said in 1985, when chided about the introduction of capping after it had been made clear in the early 1980s that it would never be introduced: That was then, and now is now. On Report and Third Reading on 25 April 1988, the Government had an historic opportunity to pass amendments to banding, but they did not do so. Instead, the then Minister for Local Government said: We have made it clear on more than one occasion that we see a capping power introduced in the clause as a reserve measure. It is not a measure to be used as a matter of course". —[Official Report, 25 April 1988; Vol. 132, c. 47.] Today, that power will be used as a matter of course. It will be applied to every authority, whatever its level of spending or circumstances.

I shall be interested to hear the Government's arguments, but there cannot be any economic justification for such a measure. Small authorities with budgets of less than £15 million do not make up a sufficient spending pattern to have any impact on the national economy, even if we accept that such local spending made a difference.

If we take all the 87 authorities spending £15 million or less that would have been affected by this year's capping criteria, the total sum involved would have reached £102 million. On 3 June 1991, the Secretary of State said that there might well be a de minimis regulation in respect of authorities that spent more than £26 above the standard spending assessment. Therefore, only 40 of those 87 authorities would have been affected. They include Conservative, Liberal and Labour-controlled authorities across the whole country that do not share attitudes of profligacy or unreasonableness or, as the Minister described it in 1988, a tendency towards irrational behaviour. Instead, they seek to provide services for their residents. They do not represent any economic disadvantage to the country as a whole.

Since 1970, the proportion of revenue spending by local government as a proportion of gross domestic product fell from 8.2 per cent. to 7.2 per cent. The capital figure is even more dramatic. Over the same 21 years, capital spending as a proportion of GDP fell from 3.6 per cent. to 1.8 per cent.—an enormous cut of 50 per cent. in the amount spent on repairing and improving our schools, housing, roads and environment. The Government can advance no economic or moral argument for their action, or justify it in other terms. It will only affect people detrimentally.

Mr. Ronnie Campbell (Blyth Valley)

Does my hon. Friend agree with Mr. Roy Thomason, chairman of the Association of District Councils? Mr. Thomason has said: We appear to have a Government that is being run by the Treasury for the sake of Treasury convenience.

Mr. Blunkett

I think that the Conservative chairman of the ADC knows what he is talking about, given his experience of dealing not only with the Government but with the electorate in the area that he represents and in which he lives. [Interruption.] I think that the Conservative Whip is waiting for his list. "I've got a little list": 87 names would have been on it this year. The Government believe that their own supporters and elected councillors have let them down. That has happened for one simple reason. Those councillors wanted to provide services, and they wanted to spend money to maintain them.

4 pm

The Government, not the local authorities, are primarily responsible for the size, and variation in size, of bills throughout the country, and there is no doubt that the way in which the proposed council tax would protect the rich would worsen the position dramatically. Over the next two days, we shall be debating the gearing effect. That will have a drastic impact on the amount that an authority must spend to raise a single extra pound to spend on services.

In Tower Hamlets, the ratio will be 11.3:1, while in affluent south Buckinghamshire it will be only 2:1. We have tabled this amendment because of the dramatic difference between the bills that people in different areas would have to pay. The poorer the area, the more money people living there would have to find to enable an extra £1 to be spent to meet their needs.

That is silly. In such circumstances, capping is not only absurd but positively immoral; it places a much heavier burden on the most deprived areas than on the most affluent. People living in deprived inner-city areas will not only pay more but receive less. This is the new inner-city policy: take from those who have not, and ensure that the benefits go to those who have—unless, of course, the all-ages index of social need to be provided under the council tax arrangements shows Buckinghamshire to be more deprived than Tower Hamlets.

The distribution of the national business rate has also affected the position—as have the standard spending assessments, which were originally to have been varied and improved but which will now remain the same. My hon. Friends will say more about that when we discuss other amendments.

All in all, we are in a mess. The mess that the Government are making, and the Conservatives' decision to continue with capping, illustrates their bewilderment about how to deal with local government finance, their despair in not knowing which way to turn and their undoubted disdain for the need to provide decent services.

The Conservatives want capping, but without pain; centralism, but without the blame; and cuts, but not in their own pet projects or their own areas. That was made clear in the debate that took place immediately before the spring recess. It is very simple: their measures are intended to show some people that they mean business in terms of undermining public services and public spending, while also ensuring that it is the local councillors who must implement the cuts in essential provision.

This is a petty, unnecessary and anti-democratic measure. Our amendment seeks to modify it, and, at the earliest opportunity, to remove it altogether. Nothing in this afternoon's debate will hide the fact that the Government wish to pass the buck, ignoring the consequences of their actions—the cuts, and the hurt that they intend to cause—and, once again, trying to blame local government for what is of their own making.

Mr. David Bellotti (Eastbourne)

I shall speak to amendments Nos. 38 and 57, tabled by the Liberal Democrats.

The proposals before us attack the heart of local democracy. The Bill is before us because the poll tax failed. We are dealing with it after, rather than before, the local elections, because, the Government would have lost 2,000 seats rather than losing nearly 1,000 at the local elections in May if these proposals had been before the local people then. We are dealing with the Bill as long as possible before a general election, because its provisions are so unpopular.

The Liberal Democrats oppose capping in principle—we want to make that clear. We want a grant equalisation system devised between the local authorities rather than devised here by central Government. Our long-term aim is to transfer the raising of local government finance to local government, with a consequent reduction in national taxation. Clearly, that cannot be done immediately, especially given that some local authorities, which are controlled by the left, would spend without limit, irrespective of people's ability to pay, while other local authorities would cut services and fail to provide the level and quality of service needed by deprived people in our communities.

The way round those problems is to make local government more accountable—the Government have often talked about doing that, but they have never achieved it. Liberal Democrats believe that local government could be made accountable by ensuring that all local authorities were fully representative of their local communities. That could be achieved only by proportional representation, so that the Lambeths and the Hackneys, and the low-spending Conservative authorities, could no longer exist.

Our two amendments would delay the Bill for a year, to take it beyond the general election. We consider that only fair, because the Government have often said that they would not cap small authorities that spend less than £15 million. They have never gone before the people to ask for their endorsement of such a policy. Another reason for wanting 12 months' delay is to enable local authorities to consider the measure and begin to plan for a worst case scenario.

If our amendments are not accepted, the worst case scenario would be that at least 88 districts would have to examine their services—refuse collection, leisure, street cleaning and so on—to see where they could considerably reduce their costs. It would be a difficult exercise because of Government policy on competitive tendering. Many local authorities have spent much of their money in giving contracts to private companies, and accepting some in-house tenders for many services. Such costs are tied up for periods of more than a year; often they are tied up for three years, and some authorities have given options for longer periods.

By introducing the Bill immediately, the Government will force local authorities into a situation where they have no room for manoeuvre because of competitive tendering, yet they will be required to make cuts in refuse collection, leisure, street cleaning and so on.

Perhaps more important is the fact that, during the next 12 months, when we are trying to get the economy of the country going, local authorities will be denied the spending opportunities that they had planned in order to create wealth in the local economy. For example, many tourist areas are trying to cater for people coming from overseas to spend money in this country, but that requires proactive marketing. The Bill will require local authorities that have planned to spend in that way to cut their proposals, thus cutting the improvements that would have benefited the local economy.

The Bill is rushed, and has not been thought through. A long list of authorities throughout the country, of all political complexions, will suffer, and people in those communities will suffer too. The least the Government can do to lessen that suffering is to agree to our amendments to delay the Bill for a year. They have made a drastic U-turn. Therefore, it is only fair for them to give the people of the country an opportunity to comment on it. Our amendments would give them that opportunity.

The Minister for Local Government and Inner Cities (Mr. Michael Portillo)

The hon. Member for Sheffield, Brightside (Mr. Blunkett) and I served on the Committee that considered the Community Charges (Substitute Settings) Bill at Christmas. I enjoyed myself so much that it was with a heavy heart that I thought that that was the last Committee on which we would serve for some time. But in local government, one never knows how fortune will smile on one. Since then, we have had the good fortune to be on the Committee that considered the Community Charges (General Reduction) Bill. We thought that that would be the last time that we would serve on a Committee together this year, but here we are joyfully considering this Bill.

The hon. Member for Brightside began by saying that the Government should have offered immediate relief to community charge payers. I remind him that, under the Community Charges (General Reduction) Bill, we offered immediate relief of £140 on the charges set by local authorities. As I recall it, the Opposition were rather scathing about that measure.

Mr. Bryan Gould (Dagenham)


Mr. Portillo

The hon. Gentleman has entered the Chamber and wishes to intervene.

Mr. Gould

I left the Chamber briefly, but have returned to listen to the Minister's first speech. As he mentioned the £140 reduction, and as he must know that many people have discovered to their consternation that they will not receive the full reduction of £140, is he yet in a position to say how many of the 38 million poll tax payers will receive the full £140?

Mr. Portillo

The hon. Gentleman has been trying to whip up this storm, but it will not be whipped up. The public understand perfectly well that, if they are already receiving considerable help with their community charge, it would not be appropriate for everyone to receive the same reduction on their Bill. For example, many millions of people are paying only 20 per cent. of the community charge, yet the hon. Member for Dagenham (Mr. Gould) proposes that one should take £140 off the community charge bills of people who pay only £60 or £70. That seems to be an absolutely absurd point to make.

Mr. Gould

The point that I seek to make, which is keenly felt by many millions of people, is that the Government's constant proclamation that bills have been reduced by £140 is wrong. True to form in the history of the poll tax, when we inquire who gets the full benefit it is not those at the lower end of the income scale but those at the top end. All I want to know—I am sure that many others would like to hear the answer from the Minister, who surely must have some idea of it—is how many people receive the benefit that he constantly proclaims is being made available to everybody.

Mr. Portillo

The hon. Gentleman's premise is incorrect. I have never claimed that everybody's bill would be reduced by £140. If the hon. Gentleman had entered the Chamber in time to hear what I was saying, he would be aware that I said £140 off the community charges that had been set by local authorities. That is a different matter. If people are not paying £140 in community charge—many people are not—it is absurd to think that they should get£140 off their community charge.

Mr. Blunkett


Mr. Portillo

I shall not get far with this speech without interruption.

Mr. Blunkett

I cannot resist asking why that does not apply to the people of Wandsworth.

Mr. Portillo

The people of Wandsworth benefit from a Conservative administration, which set a community charge of £136. They have been uniquely disadvantaged among the people of Great Britain. Everybody else has enjoyed £140 off the community charge set by their local authority, but the people of Wandsworth have enjoyed only £136 off their community charge. The hon. Gentleman raised a delicate point—I do not know whether he intended to do so—because the people of Wandsworth have a complaint on that matter. It would be wrong to give them —4 each; zero is the appropriate figure.

The hon. Member for Brightside went through a series of quotations from Ministers—he did not quote me, but he quoted many others—saying that we hoped that we should not have to have capping. I share his disappointment that we have not been able to get by without it. I should have preferred accountability to work its way through. However, we have experience to judge from and we have seen that where local authorities did not face immediate re-election or perhaps where there were two tiers of authority and people were confused about accountability, local authorities did not face the pressure of accountability to the point where they acted responsibly in setting their charges. There has been a vast increase of 14 per cent. in local authority spending in a single year, and community charges have caused great pain to some people.

Although the Labour party has been willing to proclaim examples of people who have suffered because of high community charges—usually set by Labour authorities—it has not been willing to provide the logical answer to the problem which is that there must be some restraint on local authorities that are imposing such a burden.

4.15 pm
Mr. Ronnie Campbell

Will the Minister give way?

Mr. Portillo

I shall give way in a moment.

I say to the hon. Member for Brightside that the difference between his party and mine is that we, with sadness, have learnt from experience, but the Labour party has not.

Mr. Campbell

My local authority in Blyth Valley has increased its budget since 1979 by 236 per cent. I cannot understand why on earth my authority, having not spent any more money in real terms since the Government came to power, will be capped for being a spendthrift authority. Will the Minister explain that?

Mr. Portillo

I shall deal with the issue of how capping works in a moment, and I want to pick up a point made by the hon. member for Brightside, which is pertinent to the question asked by the hon. Member for Blyth Valley (Mr. Campbell). The hon. Member for Brightside said that it was our aspiration to cap all local authorities, but that is not so. We are bringing all local authorities within the legislation that governs capping, and that is very different. This year we have set out in advance the criteria under which local authorities would be capped if they set excessive budgets absolutely or if they increased their budgets successively from year to year.

Mr. Harry Barnes (Derbyshire, North-East)

Will the Minister give way?

Mr. Portillo

I shall give way in a moment.

The effect has been that all local authorities, with the exception of 14, have been able to set budgets that did not fall within those criteria. Of the 14 that exceeded the criteria and were therefore capped, six accepted without challenge the cap that we imposed. The remaining eight authorities challenged it. Therefore, although the legislation applied to a large number of local authorities, it was necessary to cap only a few because the others, with advance knowledge of the criteria, were able to bring their budgets into line. In the future, as we extend capping to local authorities with budgets of less than £15 million, I expect to see a similar effect. A large number of authorities could potentially be within the capping regime, but I expect that only a small number would cause us to take capping action.

Mr. Harry Barnes

Is not the Minister making a distinction without a difference? If a capping level is determined beforehand, clearly no district authority can go beyond that level because it would put itself into the most abysmal economic circumstances. In a sense, it is being asked to cap itself so the Government do not need to make use of the capping provisions. However, the authority is being capped whether it has done it itself in advance to avoid being capped or whether the Government have engaged the capping provision.

Mr. Portillo

It is true that the local authority has to exercise restraint and that it does so under the criteria that are set by the Government. However, it is extraordinary to say that it is a distinction without a difference. Most local authorities will say that the painfulness of having to make changes once a cap has been applied, and especially if they did not know the rules regarding capping in advance, is out of all comparison with the position whereby they have a year in which to adjust their budget. They know in advance what the criteria will be so they can make sensible plans to fit in with them. I remind the hon. Member for Derbyshire, North-East (Mr. Barnes) that we are not capping any local authority below its standard spending assessment. This year, we are allowing those who came in at the SSAs a 9 per cent. increase on their previous budget. We did not regard any budget as absolutely excessive, as opposed to applying the criteria from year to year, unless it was 12.5 per cent. above the SSA.

Mr. William O'Brien (Normanton)

The Minister said that the Government are not capping authorities that budget within or below the SSA. Can we take it that that is an assurance that will be given for all time and that no authority that spends below its SSA will be capped, as decreed by the Government?

Mr. Portillo

I have no intention of capping authorities below the SSA.

The hon. Members for Brightside and for Eastbourne (Mr. Bellotti) seemed to find this extension to local authorities with budgets below £15 million puzzling. As the hon. Member for Brightside said, it is perfectly true that that does not make a huge difference in macro-economic terms. What local authorities with budgets below £15 million spend does not make much difference to the total level of public expenditure. However, I am surprised that the hon. Gentleman is so fixated on that point. Should not he be concerned, as I am, about the effect on individuals and on the bills that people have to pay?

One could be forgiven for thinking that the hon. Member for Eastbourne is a spokesman for local authorities and their concerns. Time and again, today and in his previous speech on the subject, he mentioned that local authorities were under attack. I never heard him talk for a moment about local people and about the need to defend local people from paying excesssive bills. That is where the Government's concern comes in. Derwentside, whose budget is below £15 million a year, has put £95 extra on people's community charge bills. That is £180 for a couple and progressively more for a larger household. Those are significant sums.

We often hear the Labour party and the Liberal Democrats complain about the burden that has been placed on people and which is difficult for them to afford. However, the burdens are caused by the authorities putting on extra amounts, such as £95 in the case of Derwentside. The crocodile tears shed by Opposition parties are not followed by a willingness to take action to protect people against having such burdens thrust on them.

We propose to introduce a council tax. The community charge, which was proposed to come in at levels that would have been broadly acceptable and which people thought were reasonable for individuals to pay, was forced up and up by a spree in local authority spending. The reason why the community charge turned out to be so much more than the Government had predicted was that local authorities chose the moment of its introduction to spend far more.

I am not prepared to see history repeat itself over the council tax. We have published the figures for what the council tax would have been for this year if it had been in operation. It is not a prediction for the future, but a statement of what would have happened this year. None the less, people will expect when we introduce the council tax that the figures that they are asked to pay will be recognisable and that they will resemble the figures for this year. This time we will oblige local authorities to increase their spending only reasonably. Those that already spend significantly above their SSAs will be obliged progressively to come down towards they so that we can deliver the council tax at figures that people will regard as reasonable and fair.

The Labour party differs with us in the extreme on this matter. It has made a great deal of its own figures—miscalculated figures, I might say. It stands to reason that if we seek to collect the same amount of money from the same number of people—[Interruption.]—I shall not give way to the hon. Member for Dagenham on this point because he misunderstands it again and again—the average amount will be the same. But I shall let that pass.

The important point that I want to make to the hon. Gentleman is that he has based his figures on a level of spending by local authorities which has been achieved by the Government only because we had capping powers available to us. We predicted total standard spending by local authorities this year of £39 billion and we have brought it in at £39.2 billion through the use of the threat to cap.

The hon. Member for Dagenham cannot have it both ways. He resisted the policy that made the level of spending to which I referred possible, yet he now seems to take credit for tax proposals that are based on that level of spending. More particularly for the future, he is not prepared to allow any limitation of local authority spending. The amount that local authorities spend would rise massively if there were a Labour Government intent on not capping local authorities. The bills that the hon. Member for Dagenham believes could be delivered under his rating policy could not be delivered, because local authority spending would rise through the roof.

When the council tax is introduced under this Government, with the accompaniment of the capping criteria, we shall ensure that we deliver reasonable figures. They will be brought about by the restraint that capping imposes on local authorities. That is the greatest single difference between the Government and the Labour party. We can deliver figures like those which we have proposed to the general public. The Labour party could not deliver them, because it believes that we should return to an era in which local authority spending is allowed to rip.

What an extraordinary idea it is that we should delay the extension of capping to local authorities with budgets of below £15 million. The protection that we are talking about is needed now, for the coming year. Local authorities that might be capped will want to know well in advance what the criteria are so that they can avoid being brought into the capping net. For that reason, I believe that it is right not only to introduce the extension to budgets below £15 million but to do so as quickly as possible.

Mr. Blunkett

We believe that the people of a locality should be allowed to protect themselves from this or any other Government. In other words, when people vote in local elections, they should have some chance of seeing their votes matter. If not, and if whatever people do the Government of the day believe that they must protect people from themselves, what is the point of holding local elections? Why not appoint gauleiters? We realise that the Secretary of State had that in mind but that the Cabinet felt that it was not appropriate to admit it before a general election. Largesse would be passed down via an elected mayor to local people and the mayor would have to do a deal with the Secretary of State, presumably over dinner in the evening. Unlike his predecessor, who was in favour of long lunches in the United States where contracts would be made, the present Secretary of State prefers dinners and wine in the evenings.

It is a pretty poor state of affairs when a Government believe that they have to protect the electorate from the electorate. It is only fair to point out that, far from becoming milder and more consensual—I said consensual, by the way—and far from believing in public service and public spending, the Government's attitude has become worse. On 25 April 1988, the Minister I quoted earlier, the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), said: The people of an area certainly will be able to vote for a relatively high-spending authority if they so choose."—[Official Report, 25 April 1988; Vol. 132, c. 51.] In the debate on this Bill in June 1991, in the run-up to an election, when we are told that we have a Prime Minister who is more gentle and caring and who believes in public service, quality and spending, we have an even tighter, more bureaucratic and centralist regime in which everyone must be whipped into line. The same is true of the future.

How are the proposed council tax figures made up and what are the criteria for them? Exactly what will councils be held to? The Minister said that his outline figures, which illustrated what would have been the case this year, will be used in future. He said that councils that levy greater sums than those which have been laid down will be brought into line progressively. He should have said regressively.

Long-term capping and spending reductions, cuts in education, leisure, the environment, libraries, transport and the social services are all prefaced by the promise made by the Minister. There will be cuts to reduce the figure to the projected council tax level, which the Government dreamed up out of the blue and wrote on the back of an envelope when the chairman of the Conservative party made his amazing pronouncement on the "Today" programme on which my hon. Friend the Member for Dagenham (Mr. Gould) delivered the coup de grace.

Mr. Portillo

That is wrong.

Mr. Blunkett

I do not often speak French because, as the Minister says, my accent leaves something to be desired. Unlike some people, I do not spend enough time perfecting it in France. [AN HON. MEMBER: "Would the hon. Gentleman like a villa?"] I accept that offer without equivocation.

Mr. William O'Brien (Normanton)

It was Aston Villa.

Mr. Blunkett

Do not mention Aston Villa to me.

We shall not divide the Committee on the amendment, not because we do not feel strongly about it but because we know that we have to make progress. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.30 pm
Mr. Paul Murphy (Torfaen)

I beg to move amendment No. 2, in page 1, line 7, leave out 'which' and insert 'so far as it'.

The Chairman

With this, it will be convenient to consider amendment No. 1, in page 1, line 8, leave out 'or Welsh'.

Mr. Murphy

The amendments seek to exempt Wales from the extension of poll tax capping to authorities with budgets of less than £15 million. It surprises me and my hon. Friends in Welsh constituencies that the legislation is necessary at all, because to date no Welsh local authority has been capped or is likely to be capped. The previous Secretary of State for Wales, the right hon. Member for Worcester (Mr. Walker), announced on 3 April last year that he had determined principles for designating authorities for charge limitation similar to those determined for England.

On the basis of those principles, about which we never knew, the right hon. Gentleman decided not to designate any Welsh local authorities. Therefore, we never knew which Welsh local authorities might have been designated, because no one was told the principles of the criteria for capping in Wales. We thought that the present Secretary of State for Wales would change everything and would publish the capping criteria for Welsh local authorities, but on 31 October he said that he would not announce such criteria, and we are still effectively in the dark.

The Minister for Local Government and Inner Cities said that English local authorities would be able to avoid being capped, because they know exactly what caused capping, Welsh councils are not able to do that, because they are not given any details. I sincerely hope that the Under-Secretary will give us some hint whether, as poll tax capping will apply to all Welsh authorities, the Bill will mean that we in Wales will know what the criteria are.

Until today, only a few districts in Wales—Cardiff, Newport, Swansea and Rhondda—and the county councils were eligible for capping. The Bill will extend that eligibility to every one of the 37 Welsh districts, and to all the Welsh county councils. Many in Welsh local government feel that there are other reasons why no criteria for Wales have been published. We want to know why we have to follow the English example although we have not followed England in publishing criteria.

The irony is that Welsh local authorities—both district and county—have had responsible and well managed budgets. They have not overspent and they do not have anywhere near the mismanagement that would require capping. They have reacted responsibly to the Government's taunts. Over the past few years, while they have had to respond to the enormous problems created by the poll tax, they have reacted in a way that should be followed by local authorities throughout the United Kingdom, but they have had little thanks for that.

Now they are being told—to use French in my turn—that they are the betes noires of local government. That is despite their responsible behaviour and despite the tremendous jobs they have done, given the enormous financial and economic pressures under which they have had to operate. Now, they are being told that they cannot be trusted by the Government in the matter of the budgets for which they are responsible over the next couple of years.

The right hon. Member for Worcester (Mr. Walker) and the present Secretary of State for Wales have both said, not only on the Floor of the House and in Committee but outside in the Principality, that the relationship between Welsh local government and the Welsh Office has been exemplary. The two have worked together on the local economy, for jobs, and for the valleys initiative.None of that squares with the fact that local authorities have now slavishly to follow England and are regarded as the betes noires of local government.

There is no demand for capping from local government, electors, institutions, academics or the majority of political parties in the Principality. My hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett) referred to the right hon. and learned Member for Folkestone and Hythe (Mr. Howard). Day in and day out, week in and week out, my hon. Friend and I had to listen to the right hon. and learned Gentleman's arguments in favour of the poll tax and to his explanations of why it was so great. He said: The community charges levied by those authorities will generally make up only a fraction of the total local community charge when the precept of other authorities is taken into account. From the point of view, therefore, of protecting local charge payers, it seems unnecessary to keep such authorities in the field for charge limitation."—[0fficial Report, Standing Committee E; 17 March 1988, c. 1491] There was a Welshman from Llanelli, albeit one who had gone to Folkestone, telling us that there was no need for the majority of Welsh councils to be subject to this ludicrous poll tax capping.

Wales is not demanding capping. Nor does it want the Bill. It wants an end to the poll tax in the Principality. There has been in the last couple of years an enormous outcry in the Principality about the unfairness of the poll tax, which has offended the Welsh sense of fair play.

Of particular concern to Welsh local government—because it could bring them within the criteria for poll tax capping—is the amount of money that has been spent in the Principality to set up, administer and sweeten the poll tax. Over £100 million has been deliberately wasted by the Government in that relatively small country as the Welsh Office and its Ministers tried to administer a tax that had no public support.

The tragedy of that is that, according to the Council of Welsh Districts, we could he landed with the tax not, as the Government have said, until 1993 but possibly until 1994. The reality of that is perhaps somewhat different, bearing in mind that there will not be a Conservative Government in 1994. From 1992, Labour will be in power. Meanwhile, the present plan of the Welsh Office is to extend the poll tax, and Welsh councils are reporting that it will not be possible for them to change over to the council tax in time for 1993.

We are told that the whole purpose of the legislation is to increase accountability. The consultation paper, which I assume applies to Wales as well as England, says: It will avoid the risk of a repeat of the substantial increase in spending which accompanied the transition to the community charge. What increase? There was no increase in the Principality, other than what had to be spent to set up the poll tax.

The only accountability, as my hon. Friends have argued, is through the ballot box, and in May, in the one local authority in Wales which Conservative Members had argued should be capped—the capital city, Cardiff—we saw the Conservatives swept out of office. Labour won the city through the ballot box, despite the Conservatives arguing that the city council should be poll tax-capped. If ever there was a case for realising that accountability is through democratic means and not through the nonsense of poll tax capping, that was proved in the capital of Wales in the local elections last May.

Wales should be exempted from this mean Bill because in the Principality it is unwanted and unnecessary, and it will be unloved. It will do nothing to improve the accountability of Welsh local authorities or their services in education, housing, transport and social services. Nothing in the Bill will improve the quality of life of the people in the Principality. It will sour relations even more between central and local government in Wales.

The only way to achieve a revitalised Welsh local government structure is proper accountability through annual elections, a proper fair rating system and unitary all-purpose authorities. Within the next two or three years, with the return of a Labour Government, all those things will become a reality.

The Parliamentary Under-Secretary of State for Wales (Mr. Nicholas Bennett)

This group of amendments seeks to confine the practical application of the clause to England. It would deny to the charge payers of Wales the protection afforded by the Bill to the charge payers of England.

The existing law on charge capping in section 101 of the Local Government Finance Act 1988 applies equally to Wales and England. The provisions of this measure will do the same. There can be no possible justification for treating Wales and England differently. All authorities in Wales, regardless of how large or small their budgets may be, have a duty to their charge payers to exercise prudence and restraint in formulating their expenditure plans.

The Bill gives my right hon. Friend power to act in the interests of charge payers with any authority in Wales that may not budget sensibly, thereby imposing an unreasonable burden on its charge payers. My right hon. Friend did not cap any Welsh authority in 1991–92, and 1 hope that it will not be necessary for him to do so in future years, but he has made it clear that he will not hesitate to use his powers if he considers it necessary to do so.

4.45 pm

The hon. Member for Torfaen (Mr. Murphy) talked in mock indignation about the fury of the people of Wales. That fury is so confined that he has sitting with him on the Opposition Front Bench only one of his hon. Friends from Wales, plus one Back Bencher who has just wandered in. That is the strength of the Labour party's opposition to the clause and support for its amendments.

Mr. Murphy

How many Conservative Members are here to support the Minister?

Mr. Bennett

We are content with the Bill as it is. The hon. Gentleman has tabled amendments but few of his hon. Friends are here to support them. That says something for the bogus indignation of the Labour party on this issue.

The hon. Member for Torfaen asked about the future criteria which may be set. The Secretary of State for Wales did not announce provisional criteria for capping in advance of budget setting by authorities. For 1992–93, my right hon. Friend will wish to consult authorities on the issue in advance of an announcement on the criteria for capping which he is minded to adopt. I should make it clear that that in no way diminishes his determination to take vigorous capping action should it prove necessary to do so.

The hon. Member for Torfaen said that all authorities in Wales had been moderate. I wish that were true. The average charge set in Wales in 1991–92 was £261, a full £33 above the community charge standard spending—the CCSS—and £29 higher than that set in 1990–91. Within that, districts, including communities, set an average charge of £51, about £13 above their CCSS component; and counties set an average charge of £211, about £21 above their CCSS component.

It is clear that some authorities have not been as prudent as they might have been. It is vital that in this measure, which applies to England and Wales, we should not exempt local authorities in Wales from being prudent in future years, that community charge payers should have the protection afforded to them now, and that that should be extended to authorities with budgets of £15 million or less.

These amendments would introduce into the statutory provisions relating to charge capping an inconsistency between England and Wales when none now exists. They would deny to Welsh charge payers the comprehensive protection that the Bill seeks to provide for Wales and England alike. I urge the Committee to reject them.

Mr. Murphy

What the Minister said did not surprise me. Even so, the majority of Welsh Members do not share his view that Welsh local government is in any sense profligate. Indeed, the Secretary of State has often made play of the fact that the Welsh poll tax figures are considerably lower than those in England. That has happened not as a result of Government grant but because Welsh local authorities are good housekeepers.

There seems no reason why we should follow the English example and accept these provisions. There is no reason why we should not be inconsistent and have a rule in Wales that is different from that which applies in England. After all, the Welsh local government structure is separate, the revenue support grant is dealt with separately, and there is a separate association level in Wales which apparently has been working well.

Despite all that, the Minister tells us that threats will continue to be used against Welsh local government. It will do no good for anybody in the Principality slavishly to follow a bad English example. We have tonight an opportunity for hon. Members who represent the Principality, and others, to show clearly that the only way in which local government is accountable to its electors is through the ballot box. That is why we shall divide the Committee on this group of amendments.

Question put, That the amendment be made:—

The Committee divided: Ayes 195, Noes 264.

Division No. 162] [4.48 pm
Adams, Mrs Irene (Paisley, N.) Armstrong, Hilary
Allen, Graham Ashdown, Rt Hon Paddy
Alton, David Ashley, Rt Hon Jack
Anderson, Donald Ashton, Joe
Archer, Rt Hon Peter Banks, Tony (Newham NW)
Barnes, Harry (Derbyshire NE) Hogg, N. (C'nauld & Kilsyth)
Barnes, Mrs Rosie (Greenwich) Home Robertson, John
Barron, Kevin Howarth, George (Knowsley N)
Battle, John Howells, Dr. Kim (Pontypridd)
Beckett, Margaret Hughes, John (Coventry NE)
Beith, A. J. Hughes, Robert (Aberdeen N)
Bell, Stuart Hughes, Roy (Newport E)
Bellotti, David Hughes, Simon (Southwark)
Benn, Rt Hon Tony Ingram, Adam
Bennett, A. F. (D'nt'n & R'dish) Janner, Greville
Benton, Joseph Johnston, Sir Russell
Bermingham, Gerald Jones, Barry (Alyn & Deeside)
Blair, Tony Jones, Martyn (Clwyd S W)
Blunkett, David Kaufman, Rt Hon Gerald
Boateng, Paul Kennedy, Charles
Bradley, Keith Kinnock, Rt Hon Neil
Bray, Dr Jeremy Kirkwood, Archy
Brown, Gordon (D'mline E) Lambie, David
Brown, Nicholas (Newcastle E) Lamond, James
Bruce, Malcolm (Gordon) Leighton, Ron
Buckley, George J. Lewis, Terry
Caborn, Richard Litherland, Robert
Callaghan, Jim Livingstone, Ken
Campbell, Menzies (Fife NE) Lloyd, Tony (Stretford)
Campbell, Ron (Blyth Valley) Loyden, Eddie
Canavan, Dennis McAllion, John
Carlile, Alex (Mont'g) McCartney, Ian
Carr, Michael Macdonald, Calum A.
Cartwright, John McFall, John
Clark, Dr David (S Shields) McKay, Allen (Barnsley West)
Clelland, David McKelvey, William
Clwyd, Mrs Ann McLeish, Henry
Cohen, Harry McMaster, Gordon
Cook, Robin (Livingston) McWilliam, John
Corbett, Robin Madden, Max
Cryer, Bob Mahon, Mrs Alice
Cummings, John Marek, Dr John
Cunliffe, Lawrence Marshall, David (Shettleston)
Cunningham, Dr John Marshall, Jim (Leicester S)
Davies, Rt Hon Denzil (Llanelli) Martin, Michael J. (Springburn)
Davies, Ron (Caerphilly) Martlew, Eric
Davis, Terry (B'ham Hodge H'I) Maxton, John
Dewar, Donald Meacher, Michael
Dixon, Don Meale, Alan
Dobson, Frank Michael, Alun
Doran, Frank Michie, Bill (Sheffield Heeley)
Douglas, Dick Michie, Mrs Ray (Arg'l & Bute)
Duffy, A. E. P. Morgan, Rhodri
Dunnachie, Jimmy Morley, Elliot
Dunwoody, Hon Mrs Gwyneth Morris, Rt Hon J. (Aberavon)
Eastham, Ken Mowlam, Marjorie
Edwards, Huw Mullin, Chris
Evans, John (St Helens N) Murphy, Paul
Ewing, Mrs Margaret (Moray) Nellist, Dave
Fatchett, Derek Oakes, Rt Hon Gordon
Field, Frank (Birkenhead) O'Brien, William
Fields, Terry (L'pool B G'n) O'Hara, Edward
Flynn, Paul O'Neill, Martin
Foot, Rt Hon Michael Orme, Rt Hon Stanley
Foster, Derek Owen, Rt Hon Dr David
Foulkes, George Parry, Robert
Fyfe, Maria Patchett, Terry
Galbraith, Sam Pendry, Tom
Garrett, John (Norwich South) Pike, Peter L.
Garrett, Ted (Wallsend) Powell, Ray (Ogmore)
Godman, Dr Norman A. Prescott, John
Golding, Mrs Llin Primarolo, Dawn
Gordon, Mildred Quin, Ms Joyce
Gould, Bryan Radice, Giles
Graham, Thomas Randall, Stuart
Grant, Bernie (Tottenham) Redmond, Martin
Griffiths, Win (Bridgend) Reid, Dr John
Grocott, Bruce Richardson, Jo
Hain, Peter Rooker, Jeff
Hardy, Peter Rooney, Terence
Hattersley, Rt Hon Roy Ross, Ernie (Dundee W)
Haynes, Frank Rowlands, Ted
Heal, Mrs Sylvia Sedgemore, Brian
Henderson, Doug Sheerman, Barry
Hoey, Ms Kate (Vauxhall) Shore, Rt Hon Peter
Skinner, Dennis Watson, Mike (Glasgow, C)
Smith, Andrew (Oxford E) Welsh, Andrew (Angus E)
Smith, C. (Isl'ton & F'bury) Welsh, Michael (Doncaster N)
Smith, Rt Hon J. (Monk'ds E) Wigley, Dafydd
Soley, Clive Williams, Rt Hon Alan
Steel, Rt Hon Sir David Williams, Alan W. (Carm'then)
Steinberg, Gerry Wilson, Brian
Stott, Roger Winnick, David
Straw, Jack Worthington, Tony
Taylor, Matthew (Truro) Young, David (Bolton SE)
Thomas, Dr Dafydd Elis
Thompson, Jack (Wansbeck) Tellers for the Ayes:
Turner, Dennis Mr. Eric Illsley and
Wardell, Gareth (Gower) Mr. Thomas McAvoy.
Wareing, Robert N.
Adley, Robert Devlin, Tim
Aitken, Jonathan Dickens, Geoffrey
Alexander, Richard Dicks, Terry
Alison, Rt Hon Michael Dorrell, Stephen
Allason, Rupert Douglas-Hamilton, Lord James
Amess, David Dover, Den
Amos, Alan Dunn, Bob
Arbuthnot, James Durant, Sir Anthony
Arnold, Jacques (Gravesham) Dykes, Hugh
Ashby, David Evans, David (Welwyn Hatf'd)
Atkins, Robert Evennett, David
Atkinson, David Fairbairn, Sir Nicholas
Baker, Nicholas (Dorset N) Fallon, Michael
Batiste, Spencer Favell, Tony
Bellingham, Henry Fenner, Dame Peggy
Bennett, Nicholas (Pembroke) Field, Barry (Isle of Wight)
Bevan, David Gilroy Finsberg, Sir Geoffrey
Biffen, Rt Hon John Fishburn, John Dudley
Blackburn, Dr John G. Fookes, Dame Janet
Blaker, Rt Hon Sir Peter Forman, Nigel
Body, Sir Richard Forsyth, Michael (Stirling)
Bonsor, Sir Nicholas Franks, Cecil
Boscawen, Hon Robert Freeman, Roger
Boswell, Tim French, Douglas
Bottomley, Peter Fry, Peter
Bottomley, Mrs Virginia Gale, Roger
Bowden, A. (Brighton K'pto'n) Gardiner, Sir George
Bowden, Gerald (Dulwich) Gill, Christopher
Bowis, John Goodlad, Alastair
Boyson, Rt Hon Dr Sir Rhodes Goodson-Wickes, Dr Charles
Brandon-Bravo, Martin Grant, Sir Anthony (CambsSW)
Brazier, Julian Greenway, Harry (Ealing N)
Bright, Graham Gregory, Conal
Brown, Michael (Brigg & Cl't's) Griffiths, Peter (Portsmouth N)
Bruce, Ian (Dorset South) Grist, Ian
Buchanan-Smith, Rt Hon Alick Ground, Patrick
Buck, Sir Antony Hague, William
Burns, Simon Hamilton, Hon Archie (Epsom)
Burt, Alistair Hamilton, Neil (Tatton)
Butler, Chris Hargreaves, A. (B'ham H'll Gr')
Butterfill, John Hargreaves, Ken (Hyndburn)
Carlisle, John, (Luton N) Harris, David
Carlisle, Kenneth (Lincoln) Haselhurst, Alan
Carrington, Matthew Hayes, Jerry
Cash, William Hayward, Robert
Channon, Rt Hon Paul Hicks, Mrs Maureen (Wolv' NE)
Chapman, Sydney Hicks, Robert (Cornwall SE)
Chope, Christopher Higgins, Rt Hon Terence L.
Churchill, Mr Hill, James
Clark, Rt Hon Alan (Plymouth) Hind, Kenneth
Clark, Dr Michael (Rochford) Holt, Richard
Clark, Rt Hon Sir William Hordern, Sir Peter
Clarke, Rt Hon K. (Rushcliffe) Howarth, Alan (Strat'd-on-A)
Colvin, Michael Howarth, G. (Cannock & B'wd)
Coombs, Anthony (Wyre F'rest) Howell, Rt Hon David (G'dford)
Coombs, Simon (Swindon) Howell, Ralph (North Norfolk)
Couchman, James Hughes, Robert G. (Harrow W)
Currie, Mrs Edwina Hunt, Rt Hon David
Curry, David Hunt, Sir John (Ravensbourne)
Davies, Q. (Stamf'd & Spald'g) Hunter, Andrew
Davis, David (Boothferry) Hurd, Rt Hon Douglas
Day, Stephen Irvine, Michael
Irving, Sir Charles Powell, William (Corby)
Jack, Michael Raison, Rt Hon Sir Timothy
Janman, Tim Rathbone, Tim
Johnson Smith, Sir Geoffrey Redwood, John
Jones, Gwilym (Cardiff N) Rhodes James, Robert
Jopling, Rt Hon Michael Riddick, Graham
Key, Robert Rifkind, Rt Hon Malcolm
Kilfedder, James Roberts, Sir Wyn (Conwy)
King, Roger (B'ham N'thfield) Roe, Mrs Marion
King, Rt Hon Tom (Bridgwater) Rossi, Sir Hugh
Kirkhope, Timothy Rost, Peter
Knapman, Roger Rowe, Andrew
Knight, Greg (Derby North) Ryder, Rt Hon Richard
Knight, Dame Jill (Edgbaston) Sackville, Hon Tom
Knox, David Sainsbury, Hon Tim
Lang, Rt Hon Ian Sayeed, Jonathan
Latham, Michael Scott, Rt Hon Nicholas
Lawrence, Ivan Shaw, David (Dover)
Lee, John (Pendle) Shelton, Sir William
Leigh, Edward (Gainsbor'gh) Shepherd, Colin (Hereford)
Lennox-Boyd, Hon Mark Shepherd, Richard (Aldridge)
Lester, Jim (Broxtowe) Shersby, Michael
Lightbown, David Sims, Roger
Lilley, Rt Hon Peter Skeet, Sir Trevor
Lloyd, Sir Ian (Havant) Smith, Tim (Beaconsfield)
Lloyd, Peter (Fareham) Spicer, Sir Jim (Dorset W)
Lord, Michael Spicer, Michael (S Worcs)
Lyell, Rt Hon Sir Nicholas Squire, Robin
McCrindle, Sir Robert Stanbrook, Ivor
Macfarlane, Sir Neil Stanley, Rt Hon Sir John
MacGregor, Rt Hon John Steen, Anthony
MacKay, Andrew (E Berkshire) Stevens, Lewis
McNair-Wilson, Sir Michael Stewart, Allan (Eastwood)
McNair-Wilson, Sir Patrick Stewart, Andy (Sherwood)
Madel, David Stewart, Rt Hon Ian (Herts N)
Malins, Humfrey Sumberg, David
Mans, Keith Summerson, Hugo
Maples, John Taylor, Ian (Esher)
Marland, Paul Taylor, Teddy (S'end E)
Marlow, Tony Temple-Morris, Peter
Marshall, John (Hendon S) Thompson, Patrick (Norwich N)
Marshall, Sir Michael (Arundel) Thorne, Neil
Martin, David (Portsmouth S) Thornton, Malcolm
Maude, Hon Francis Thurnham, Peter
Mayhew, Rt Hon Sir Patrick Townend, John (Bridlington)
Mellor, Rt Hon David Townsend, Cyril D. (B'heath)
Meyer, Sir Anthony Tracey, Richard
Mills, Iain Tredinnick, David
Mitchell, Sir David Trotter, Neville
Moate, Roger Twinn, Dr Ian
Monro, Sir Hector Vaughan, Sir Gerard
Montgomery, Sir Fergus Viggers, Peter
Moore, Rt Hon John Waldegrave, Rt Hon William
Morrison, Sir Charles Walker, Bill (T'side North)
Morrison, Rt Hon Sir Peter Walters, Sir Dennis
Moss, Malcolm Ward, John
Neale, Sir Gerrard Watts, John
Nelson, Anthony Wells, Bowen
Newton, Rt Hon Tony Wheeler, Sir John
Nicholls, Patrick Whitney, Ray
Nicholson, Emma (Devon West) Widdecombe, Ann
Oppenheim, Phillip Wiggin, Jerry
Page, Richard Wilshire, David
Paice, James Winterton, Mrs Ann
Parkinson, Rt Hon Cecil Wolfson, Mark
Patnick, Irvine Woodcock, Dr. Mike
Patten, Rt Hon John Young, Sir George (Acton)
Pattie, Rt Hon Sir Geoffrey
Pawsey, James Tellers for the Noes:
Peacock, Mrs Elizabeth Mr. Tim Wood and
Porter, David (Waveney) Mr. John M. Taylor.
Portillo, Michael

Question accordingly negatived.

Mr. O'Brien

I beg to move amendment No. 16, in page 1, line 9, leave out from 'shall' to end and insert 'have no effect in respect of any authority to which it would otherwise be applicable where the amount calculated by in relation to the year concerned under section 95(4) of that Act or the aggregate amount of precepts issued by it for the year (as the case may be) is greater than the total amount in respect of that authority calculable from its Standing Spending Assessment'. The amendment refers to the capping of local authorities that have budgets of less than £15 million and who spend below their standard spending assessment. Recently the Minister assured me that he had no intention of capping any authority that spends below its SSA. If we can rely on that assurance, there is little difference between us on the amendment, as it aims to protect from capping those authorities that spend below their budget and below their SSA.

The Rates Act 1984 provided that no authority that spent below its grant-related expenditure assessment—GREA—would be capped. Poll tax capping is carried out under the Local Government Finance Act 1988 and no corresponding protection is afforded to those authorities that spend below their SSA. The protection previously given to authorities that spent below their GREA has not been offered to authorities that spend below their SSA.

Small authorities risk being capped even if they spend below their SSA, especially the crude SSA given to shire districts, which is calculated on the basis of the population and the mixed bag of services provided. The SSA, as it applies now, is a means of grant distribution, but it is an inaccurate criterion by which to assess the efficiency of the authorities. That inaccuracy is a special problem for local authorities with small budgets which are not given a specific SSA to cover a wide range of services such as allotments, cemeteries and street cleaning. Smaller authorities have a problem in trying to meet the requirements of the SSA set by the Secretary of State.

I speak from experience, because I served for 21 years on an urban district authority before the local government reorganisation of 1974. That district authority was similar in size and population to many of the district councils to which the amendment is addressed. Urban district councils undertook similar functions to those now organised under the Association of district councils. In those days there was no call for capping or any of the severe restrictions that the Government are now imposing on small authorities.

In the old days, rates were assessed on the services required and the electorate were called upon to pay those rates. The Government provided grants, as they do today, and those grants were assessed according to the needs and resources of the local authorities. There was no cause to cap any local authority. The electorate decided whether it was satisfied with the efficiency and work of its local authority. If people were not satisfied and did not appreciate the work done they could change the membership of the council. That principle still applies today, when district councils provide services to their areas.

We want the Government to preclude from capping those authorities that spend below £15 million and keep below their SSA. I am prepared to allow the Minister to intervene so that he can assure me that the amendment is acceptable. If so, there is no need to pursue the issue further. Perhaps the Minister can give me that assurance now. The Minister seems not to want to give that assurance. I should therefore like to ask what Ministers intend to do about the principle of capping in general in 1992. The criteria likely to be announced later this year will have a significant effect on the application of capping to local authorities.

Will the Government undertake not to cap any authority spending below its SSA? I know that the Minister has given me an assurance on that, but we must bear in mind the fact that the Government are introducing the principle of year-on-year expenditure, which could have some effect on the capping procedure. Will the Government assure me that under no circumstances will local authorities that spend below £15 million or which do not exceed their SSAs—set by the Government—be capped?

Will the Minister clarify how far down the expenditure scale of local authorities the Government are prepared to go? I referred earlier to the smaller urban district authorities that were in being before the reorganisation of 1974. Many of them are now town councils with certain functions in line with those of the former parish councils. They, too, have budgets. What are the Government's intentions towards those budgets? May I take it that they will not be included in any capping procedure that the Government may apply?

I remind the Minister that, a few days ago when we were discussing local government in a Statutory Instrument Committee, he advised the Committee of his passion and love for local government—emotions which I hope will come to the fore today. If the Minister is sincere he will support this amendment because it protects smaller authorities from the capping rule that the Government want to extend right down to smaller local authorities.

The Government argue that stronger capping powers are necessary to protect charge payers from excessive spending by local authorities. The Secretary of State said as much when we discussed the extended powers that the Government want to take. The Association of District Councils, which covers these smaller authorities, contends that capping powers are wholly unnecessary and that in practice capping makes true local accountability for local authorities' spending decisions impossible. Authorities with small populations and small budgets cannot be made accountable through the ballot box under capping of the nature proposed by the Government.

The ADC asks vice-presidents—there are quite a few of them among Conservative Members—to oppose the proposals in the Bill under which the Government seek powers to cap small authorities. Hon. Members should take the ADC's request seriously.

5.15 pm

I remind the House that the Secretary of State for the Environment already has powers to cap authorities whose spending or whose increases in spending he considers excessive. Those powers are contained in part VII of the Local Government Finance Act 1988. However, the provisions of that Act also ensure that authorities whose spending is below £35 million, as the Secretary of State may specify, are not subject to the possibility of capping.

When we discussed this matter in the Committee that considered the 1988 Act, it was established that, if a council had a budget of only £15 million, capping would not take place. Indeed, the ceiling was set more than twice as high—the Secretary of State of the time said that he would reflect seriously before capping local authorities with budgets of below £35 million. If the Secretary of State's promises were sincere and if the speeches of Members who served on the Committee in 1988 were sincere, why are we here again tonight defending local government against the capping of budgets below £15 million? The limit below which charge capping should not apply was originally introduced in recognition of the fact that authorities spending below that level did not contribute significantly to spending beyond the Government's targets for local government. That was agreed in Committee in 1988, when the Minister felt that there was no cause to cap authorities with budgets below £15 million—or even as high as £35 million.

Why the need to reverse the decision taken in 1988?

Mr. Tony Marlow (Northampton, North)

The hon. Gentleman has stated that the Government are concerned about the total level of local authority expenditure—and they certainly are. Does the Labour party have a view on whether total spending by local authorities should be controlled—

The Chairman

Order. That will have to wait for another debate; it is not in order on this one.

Mr. Marlow

With respect, Mr. Walker, we are talking about charge capping—

The Chairman

Order. I suggest that the hon. Gentleman do me the courtesy of reading the amendment and then reflecting on whether he has grounds for his intervention.

Mr. O'Brien

I was making the point that the Government are going against the spirit of the 1988 Act with regard to smaller local authorities, and I should like to know why. The statement of excessiveness is largely related to a comparison of actual spending with the Government's SSA. That is why we include that in the amendment. The SSAs are made on a national formula which, as Ministers accepted in Committee in 1988, cannot be sufficiently finely tuned to reflect the spending needs of low-spending authorities. Therefore, we want to know why the Government want to change the spirit of the 1988 Act. I hope that the Minister will say why local authorities whose budgets are below £15 million should be caught in the capping process.

I have asked the Minister to clarify how far down the scale the Government intend to go with capping powers. Is there a cut-off point? Is there a limit to how far the Government are prepared to go? Town and parish councils with a budget below £ 15 million need to know why they will be caught in the capping net. There is nothing in the legislation that says where that cut-off point will be.

Many local authorities will have difficulty meeting the requirements of the Government and the guidelines set down by the Department of the Environment, because of the lower spending base that could operate if the SSAs are not set in line with the needs of the local authorities. That is more important to local authorities whose spending powers are below £15 million, because they have statutory responsibilities and obligations. Low-spending authorities could have difficulty meeting those commitments if we are not prepared to give some guidance, assurance and protection to the local authorities.

In the preparation of the 1988 Act, the Government acknowledged the problems that I have described and that is why they introduced the £15 million lower limit for charge capping. They also accepted that the limit may need increasing and that is why we have the £35 million ceiling. That point was accepted by the House, which granted the Secretary of State the power to more than double the limit set by local authorities before charge capping applied.

Therefore, the amendment is important if we are to treat fairly district councils with low expenditure. The range of limits that will be set by the application of the Bill to smaller local authorities could have some significance to the services provided by those authorities. I hope that the Minister will address the points that I have made and answer my questions, so that we can see what is in the Government's mind.

Mr. Harry Barnes

Clause 1 ploughs on with the poll tax. Despite everything that has happened recently—the changes in the Conservative party and the local election results—we are still going down the same path. If there is any reason to distrust the new face of the Government, it is this measure.

The amendment deals with SSAs, and many district councils will have difficulty in moving below the SSA levels. Districts in shire counties are particularly disadvantaged under the SSAs compared even with shire counties and metropolitan districts. However, I grant that the latter have been badly hit by the poll tax legislation.

The booklet on the background and underlying methodology of the SSA published in 1990 by the Department of the Environment's local government finance policy directorate sets out the criteria under which the SSA operates. It points out that SSAs are simpler than grant-related expenditure assessments, because they have reduced the categories of assessment from 63 to 13.

For districts in shire areas, that number of categories is even more dramatically reduced. The 13 categories include education, personal social services, police, fire and civil defence, highway maintenance and so on, and tend to include all other services and capital financing in two general catch-all categories. That concerns the district authorities. If there is something wrong with those limited areas of assessment, the district authorities are placed in considerable difficulty.

As far as those difficulties affect the counties, they are to some extent overcome by the SSA provision in areas that are mentioned. The counties can operate their accounts in such a way that they get by, although they are getting by badly.

Therefore, the anomalies in the SSAs hit district authorities worse than other authorities, especially in shire areas. The problem of the SSA structure can be seen in the district authority that covers most of my constituency in north-east Derbyshire. Will the precepts issued by the parish councils which are outside district control be excluded from the assessment? If not, we are in even greater difficulties.

North-East Derbyshire has a budget this year of £7.3 million, which is £1.5 million, or 27 per cent., in excess of the Government's SSA. Under the Government's chop logic, its council must be one of the most profligate in England. That is nonsense. Independent judgments and the reports of the Audit Commission show it to be an efficient and well-run local authority. By putting services out to tender, it operates in the same way as other authorities, and it also has an efficient and well-run direct labour force.

However, North-East Derbyshire comes bottom of any league table, and it is starved of grants because of the SSA formula. Its SSA per poll tax payer is the lowest of 26 comparable authorities identified by the Audit Commission. It has an SSA of £60.30 per head, which is nearly half that enjoyed by Derby, at £150.37—yet that authority is badly treated under the SSA arrangements. A table that formed part of a parliamentary answer that I received on 5 December 1990 showed that Derby was in the bottom half of the league table of revenue support grant in respect of SSA estimates. Derby is in a terrible situation, yet North-East Derbyshire is considerably worse off, receiving nearly half the amount that Derby does per charge payer.

5.30 pm

In the table to which I referred, North-East Derbyshire was placed 346 out of 366 for English authorities. Worse still, only one council has a lower SSA per poll tax payer, and that is East Dorset. I know that someone has to finish bottom of any league table, and that does not necessarily tell against the Government's position. However, it indicates that the Government think that North-East Derbyshire, in common with East Dorset, is a kind of ideal authority that can manage on almost no grant, and by raising only a limited amount of funding.

However, East Dorset's difference from North-East Derbyshire is emphasised by its political control. East Dorset is represented by the hon. Members for Christchurch (Mr. Adley), with a Conservative majority of 22,000, and for Dorset, North (Mr. Baker), with a majority of more than 12,000—whereas North-East Derbyshire is represented by my hon. Friend the Member for Bolsover (Mr. Skinner) and myself. It is a traditionally solid Labour area, and one that has been seriously affected by the decline in the railways and mining, and, in neighbouring Rotherham, in the steel industry.

It may be that East Dorset does not need much grant—though the hon. Member for Christchurch might argue otherwise. But North-East Derbyshire does, and in the absence of that revenue, the only way that it can maintain its services—many of which are statutory—is by increasing its poll tax. It then places itself at risk of being capped according to the provisions of the Bill.

Why does North-East Derbyshire have such a small SSA and grant per taxpayer? It can only be because the formula is crazy, does not fit North-East Derbyshire's needs, and has insufficient flexibility to take account of the area's characteristics.

After allowing for debt charges, interest receipts, and so on, district authorities in shire areas must consider three main criteria in calculating their SSA. Those characteristics, and the weightings that are applied to them, crucify authorities such as North-East Derbyshire and others that have been criticised by Members of the Government Front Bench, such as Derwentshire.

One consideration is population and the net outflow during the day. North-East Derbyshire loses a considerable number of its population during the day to Sheffield, Chesterfield and pits in Chesterfield and Bolsover. Other towns gain from overnight visitors, particularly in seaside areas, but nothing like that occurs in North-East Derbyshire. That movement out of North-East Derbyshire must have an adverse effect on its weightings.

Ward density and ward sparsity is another consideration. A thinly populated area may qualify for extra grant, as may a densely populated one. The logic of that is reflected in services such as refuse collection and dispersal, when vehicles may either be clogged up in the traffic or have to travel great distances. However, North-East Derbyshire, together with Amber Valley, receives less grant than any comparable authority—£14 per poll tax payer, compared with £30 for Darlington.

North-East Derbyshire takes the form of a large C-shape surrounding Chesterfield. It is an intricate mixture of densely populated and sparsely populated areas, which together present problems of the kind that I mentioned—yet it fails to qualify under the appropriate criteria. It loses out considerably because it does not match up to the ward figures, and so receives a combined amount less than that which almost any other area receives.

If North-East Derbyshire is an ideal authority, its shape must also be ideal. However, if one could stretch out its C-shape in some way, it would be 30 miles long and in many places three miles wide. Its district council offices are in Chesterfield, so it is not spread out: it is like the hub of a bicycle wheel from which spokes radiate. People have to move in and out of that area continually to use the services that it provides. The SSA arrangements do not take account of that.

The third set of social characteristics is represented by the social index, which deals with such matters as the number of houses with no bath or WC, the number of lone-parent families and the number of households in which there is more than one person inhabiting a room. In a host of cases North-East Derbyshire fails to qualify for help, because it is divided into two areas that follow two entirely different patterns. The east is solidly working class, while the west is middle class—although there are, of course, pockets of cross-class occupation.

North-East Derbyshire, then, is sorely penalised in each of those three respects. For as long as we continue to experience the absurdities of the poll-tax regime, we shall need a formula that takes such problems into account. Unless parish moneys were excluded, it would be difficult for North-East Derbyshire to feature on the list of authorities that fall below SSA levels; but it should be possible for district authorities to do so.

Such matters have already been discussed when deputations from North-East Derbyshire have met the Minister, but he has just sent me a letter saying that there is to be no argument about this issue. I have therefore had no option but to raise the matter in the House. I hope, however, that there will be a further deputation, because the lessons of North-East Derbyshire have wider applications. I am sure that many other hon. Members could talk about the effect of SSAs on the areas that they represent.

Like many other district authorities, North-East Derbyshire is obliged to provide a range of statutory services, and it has little room for cuts. If it is operating not profligately but efficiently, in Audit Commission terms, it will have no leeway after spending the necessary amounts on electoral registration, refuse collection, environmental health services, street cleaning, town and country planning, poll tax rebates and the administration of the poll tax system.

If it is to make cuts, therefore, the authority must cut other services. Spending on other services accounts for £2.5 million. If its expenditure proves to be £1.5 million above SSA, North-East Derbyshire will be expected to destroy hosts of services. It will be forced to slash its contributions to the county's concessionary fares policy —thus either ending or severely damaging its operation—and to trading services, cemeteries and crematoria, swimming pools, sports centres, parks and open spaces. Retaining the facilities themselves would involve fantastic loan charges.

If North-East Derbyshire is to live within the limits dictated by what the Government consider that its means should be, it will have to cut many services by 50 per cent. or more. That is idiotic. North-East Derbyshire is no island; it is by no means unique. It is similar to many other authorities throughout the country, many of them Labour. The SSA formula has been manipulated to the disadvantage of North-East Derbyshire.

5.45 pm

According to the booklet that I mentioned earlier, the SSA procedure was intended to be simple and easily understood; the principle of accountability was intended to operate. If I had had more time, I would have read out one of the sections in the booklet, which describes the structure and operation of the system—although no one, including me, would have understood.

The booklet has a lot to say about judgmental considerations. It even applies such considerations to sparsity of population. Those "judgmental considerations", however, are sheer guesswork, and in many of the Government's calculations the guesswork has gone wrong. It is time that the Government started to pull back, instead of continuing to plough the same furrow and producing more and more unjust poll tax legislation.

Mr. Michael Latham (Rutland and Melton)

I suspect that the hon. Member for Normanton (Mr. O'Brien), who moved the amendment, did not want to take yes for an answer. I expect my hon. Friend the Minister to have little difficulty in accepting the spirit, if not the wording., of this amendment: I cannot believe that the Government intend to cap an authority that does not exceed its SSA.

Mr. O'Brien

Will the hon. Gentleman give way?

Mr. Latham

I will, although I think that it is up to my hon. Friend the Minister to answer.

Mr. O'Brien

I told the Minister at the beginning of my speech that, if he agreed with the content of the amendment, I would leave it at that. He declined to accept my invitation, so I must pursue the matter.

Mr. Latham

I am sorry if I appeared to criticise the hon. Gentleman; I certainly did not intend to do so. My hon. Friend, however, will make his own speech, and will want to make his own points rather than simply intervening in the hon. Gentleman's speech. Indeed, he is now indicating as much.

Following what was said by the hon. Member for Derbyshire, North-East (Mr. Barnes), let me make it clear that for me this is not a party political matter. My constituency contains three local authorities, none of them Labour: some councillors are Independent, some SLD, and most—I am glad to say—Conservative.

Nevertheless, I am slightly worried about the position of Rutland district council—and, as my hon. Friend the Minister knows, so is the council. I do not think that there will be any problem provided that the authority keeps within its SSA, as indeed, it has done ever since the introduction of the system. I fear, however, that in such a small authority a tiny amount of spending could be enough to exceed the SSA. [Interruption.] I do not know why Opposition Members are so excited about that; I should have thought that it was obvious.

I know that my hon. Friend received a deputation of small local authorities the other day. I believe that it was led by Beverley borough council, with which Rutland has been associated. The deputation presented my hon. Friend with a strong case, in writing, which I know he is taking seriously. I am sure that he will continue to do so when drawing up the SSA formula for the coming year.

I am happy to accept the Government's assurance. I appreciate that they do not want any local authority to exceed its SSA, thus imposing a burden on its charge payers. Although in principle I regret the introduction of Bills of this nature—and I believe that the Government do as well—I recognise that there may be strong reasons for it. I merely ask my hon. Friend for an assurance that he is thinking carefully about the case put to him by Beverley, Rutland and other small district councils, and that he will respond constructively.

Mr. Allen McKay (Barnsley, West and Penistone)

I assure the hon. Member for Rutland and Melton (Mr. Latham) that of course the Minister will listen; of course he will consider his case. But after all that the answer will be that he gets nothing. It is as simple as that.

The Bill represents a further erosion of democracy and local government. To use a fishing analogy, the Government are closing the mesh on their nets. They have caught the whale and the shark; now they are after the minnow. They have carried on in that way since 1979 and now they are turning on the small authorities simply because of their ideological preference for central Government as against local government. They will not save much money, but it is the principle of the thing that is important. They are after the small authorities.

Ministers may say that, if the small authorities are getting away with it, the large authorities will follow their example. The Government are not exactly running scared—they have not been scared of anything yet, because they have dismissed every logical argument ever put to them in their pursuit of the destruction of democracy in local government.

I shall use my own local authority as a marker. For generations, Barnsley council went about its business lawfully and supplied services, as many small authorities will have done. But then came charge capping.

We have never had a quarrel with central Government about what central Government should spend—differences, perhaps, but never a quarrel. It is for central Government to determine what grant local government receives. Our quarrel is not with that principle but with the idea that central Government should determine how a local authority can spend money on behalf of the electorate who voted it into power.

The Secretary of State and his Ministers argue that they are acting on behalf of the people, but they have never consulted the people on the subject. It is four years since they consulted the people, so they have no authority to say that they are acting on their behalf.

Small authorities, however, consult the people. My local authority consults the people year in, year out. Every year it consults the electorate for permission to spend the money it wants and to provide the services it wants.

What has happened to Barnsley will happen to the smaller authorities now, too. First, we lost a music centre —36 musicians have been dismissed and one of the finest music centres in Britain has gone out of business. Secondly, only this week I found out that, as a result of the authority's having been capped, no further education is being offered to people in our school areas. Dancing classes, language classes and soft furnishing classes, all for aged people, have gone. One hundred and thirty-six elements of further education have had to go, purely because of poll tax capping. That is taking ideology to extremes.

What is being done is destroying the very things that local people wanted, that local government could supply, and that central Government will not supply. There is the ridiculous example of the Sheffield supertram. That was something that the Government wanted, but which under the spending criteria the authorities were unable to supply. Central Government gave money to local government to finance the supertram. The four authorities said, "Fine. We will act as your agent and organise the supertram." But then central Government said, "Wait a minute. If you spend the money that we give you, you will have to cut your services even further." So the supertram became a non-runner. Small authorities will soon come up against such problems, too.

All that we want from central Government is some common sense, rather than an ideological commitment to the pursuit of a vendetta against local authorities, large and small.

I know that the Minister of State has said that he will see representatives of the authorities concerned. I am sure that he will see them, but with all due respect to him—I would see him at any time, because I like discussing the situation with him, even though we disagree—it is the Secretary of State whom we wish to see. I had a letter telling me that the Secretary of State's diary was full—I should hope that it is full; otherwise, the right hon. Gentleman would not be doing his job. But I shall write back and say that, although we accept that his diary is full, we are willing to wait. The Government could give us the first available date—it could be a Saturday or a Sunday or any other day of the week. The Secretary of State should be able to find at least one hour of his time to consider and discuss the authorities' problems with their representatives.

For years we have been trying to get through to Ministers and Secretaries of State the concerns of local government. Of course, there are issues on which we differ and others on which we can agree, but we can never agree with the way in which central Government are treating local government and local democracy.

The Parliamentary Under-Secretary of State for the Environment (Mr. Robert Key)

It is always a pleasure to follow the hon. Member for Barnsley, West and Penistone (Mr. McKay), who, we would all agree, is one of the most reasonable men in the House. We listen to him with particular care and attention. But first I must return to the beginning of the debate and the opening speech of the hon. Member for Normanton (Mr. O'Brien).

I reiterate what my hon. Friend the Minister of State said: we have no intention of capping local authorities that set budgets below their standard spending assessments. The hon. Member for Normanton said that I had a love and passion for local government. I plead guilty to that. Perhaps it is because I want to make it work, but I shall return to that later. My love and passion do not extend quite as far as that of Alan Bleasdale in "GBH", which I am sure the hon. Gentleman enjoys watching as much as I do.

When rate capping was introduced, we made it clear that the exemption reflected the relatively low expenditure incurred by the authorities concerned, and hence its relatively small effect on total local government spending. At that time, we were determined to concentrate our efforts on the worst overspenders and we believed that the effect on local taxation of such district spending decisions would be small. The hon. Member for Normanton asked what had changed since. The answer is that time has moved on and some authorities with budgets below £15 million have greatly burdened their charge payers. This year there have been about 40 examples of authorities budgeting below £15 million overspending their SSAs by more than £26 per adult, which translates directly into an increase of £26 or more in the charge.

Mr. John Lee (Pendle)

My hon. Friend will appreciate that my local authority of Pendle could be affected by the measure and that it regards its SSA as unsatisfactory. I have made a number of representations to that effect to my hon. Friend and his ministerial colleagues. Will my hon. Friend give detailed criteria for the factors that would influence his Department in deciding whether to cap a local authority such as Pendle? I fully understand if he would prefer to write to me rather than to reply immediately. Will he also consider visiting Pendle—perhaps during the recess?

Mr. Key

My hon. Friend makes a tempting offer. I may say that his untiring efforts have had a significant effect on the Government's thinking about local authority finance in the past year and more and I hope that that will be able to continue. I ask my hon. Friend to be patient until we make announcements about the next round of SSAs, at which point we shall be in a position to meet his local authority, if it so wishes, and to listen to its concerns about the SSA methodology and how it may be affected. But I suspect that with regard to this Bill the authority need have no fear. It is unlikely that a sensible and prudent local authority which is not spending above its SSA will be caught by the Bill.

6 pm

As I said, time has moved on. We are determined that the substantial extra sums that we are making available to local authorities from this year onwards should be used to keep charges down and not to boost spending further. We recognise changed circumstances and we have taken prompt action, in line with our duty to protect charge payers, to address the realities of the situation. The means of achieving our goals may have had to change because of the actions of some local authorities, but the goal remains the same—a local tax at acceptable levels.

The hon. Members for Normanton (Mr. O'Brien) and for Derbyshire, North-East (Mr. Barnes) asked about parishes. The cost of providing parish services is included in the districts' SSAs, but parishes themselves fall outside the capping regime. However, as parish precepts do not form part of the calculation that authorities are required to make, under the terms of section 95 of the Local Government Finance Act 1988, in setting their demand on the collection fund for the year, such precepts cannot, under the terms of the statute, be considered by the Secretary of State in relation to his capping powers. Parish expenditure cannot, therefore, bring a district into capping. I am happy to be able to give hon. Members that assurance.

Mr. Peter Hardy (Wentworth)

The Minister will recall that a few months ago I raised the question of parish councils and referred to Wentworth parish council in my constituency. I said that the Government had been remarkably remiss in not referring to the position of parishes and parish councils. At that point, the Minister intervened to say that he would be speaking to them at an early date. Does he realise that what he has just said will bring parish councils no great joy and will prolong the real anxiety felt by responsible parish councils—the vast majority are absolutely responsible, as I am sure the Minister will confirm? They will find his comments most unhelpful and not at all encouraging.

Mr. Key

I am delighted to be able to reassure the hon. Gentleman. Only yesterday, my hon. Friend the Minister for Local Government and Inner Cities met representatives of the National Association of Local Councils, who raised no particular difficulties in that respect. I ask the hon. Gentleman to read what I have said—and, indeed, what I am about to say as I have not quite finished my remarks about councils. I should add that I recall with pleasure my visit to his constituency and to Wentworth.

Mr. O'Brien

This is an important issue. Is the Minister saying that parish precepts will not influence the SSAs and capping levels of district councils? Can he confirm that precepts set by parishes will be held separately from the expenditure of district councils?

Mr. Key

Parishes are included within SSAs but, as I said, parish expenditure cannot bring a district into capping. The capping regime bites on the demand made by the district on the collection fund, regardless of the level of precept levied by parishes on the authority.

Mr. O'Brien

I repeat that this is an important matter. We are talking about district councils' expenditure. Are parish council precepts included in that. The Minister for Local Government and Inner Cities is shaking his head, so presumably they are not included. If he is not, his head must have been shaken by the power.

I want to be clear that the precept for parish councils will not be included in district councils' total expenditure. Is that correct?

Mr. Key

I have already tried to explain the position, and I shall continue to try to do so. It has been argued that it is unfair to include parish expenditure in districts' SSAs but not in their budgets, as that treats authorities which have a large number of parishes in their area more favourably than those which do not. The Secretary of State recognised that, in very marginal cases, an authority might avoid designation through certain of its functions being performed by parishes, and that authorities might devolve functions to provide themselves with greater headroom against their SSA. I should point out that parish expenditure accounts for only a very small proportion of local authority spending, and the Secretary of State did not consider that the issues were likely to be of sufficient magnitude to justify any special provision.

The short answer, then, is that parish expenditure cannot bring a district into capping, and the capping regime bites on the demand made by the district on the collection fund regardless of the level of precept levied by the parishes on the authority.

Mr. O'Brien

I must press the Minister on this important point. We are talking not only about parishes in the non-metropolitan district areas. The arrangements must also presumably apply to parish and town councils in the metropolitan districts. The principle is exactly the same. Ryedale district council's SSA was £6.21 million. Do I take it that any parishes that precepted upon that council could not influence the level of SSA?

Mr. Key

The parishes precept not on the council but on the collection fund. In setting SSAs, district and parish spending are considered together, but capping bites only on the district's demand on the collection fund. That is the important point. I acknowledge that this is an important question and, if I discover that I have said anything that is not correct, I shall leap into print with a letter to the hon. Gentleman.

The amendment would maintain the exemption from capping of authorities in England and Wales setting budgets of £15 million or less for those authorities which set budgets above their standard spending assessments. It is difficult to understand the rationale behind it. That is why I could not help the Opposition by leaping to my feet at an early stage during the opening remarks of the hon. Member for Normanton to say that I agreed with the proposal.

Whatever the hon. Gentleman's precise intention in tabling the amendment, this is clearly another example of the way in which the Opposition have no compunction about exposing charge payers to the effects of overspending by local authorities. There will always be a temptation to spend upwards. Even small authorities with small budgets will be tempted to spend upwards, especially in view of the settlement announced by my right hon. Friend the Chancellor in his Budget last March. It is precisely the authorities that set their budgets over SSA that indulge in the kind of overspending that we seek powers to restrain. The vast majority of the small authorities are not included. Capping has worked to the extent that such authorities have trimmed their budgets accordingly. Only 86 of the 267 local authorities with budgets of under £15 million were spending over their SSAs. I believe that those authorities would not have sought to budget over their SSAs—and over £15 million—if they thought that capping was in prospect.

Come what may, authorities budgeting at or below SSA have nothing to fear from the provisions of the Bill. They are budgeting prudently and sensibly and their charge payers receive a fair deal. It is the other authorities—the authorities spending well above SSA—from which the charge payer needs protection. We are not talking about small sums. About 40 authorities set budgets which added £26 or more to the bills met by their charge payers. In some cases, the effect was very much more significant. My right hon. Friend the Secretary of State mentioned a few examples on Second Reading, pointing out that Derwentside had cost its charge payers an additional £95, Harlow £83, Elmbridge £73 and Watford £56.

The hon. Member for Derbyshire, North-East spoke of the criteria for standard spending assessments. The average increase in standard spending assessments for shire districts in 1991–92 is 28.3 per cent. The increase in total SSAs is 19.4 per cent. North-East Derbyshire's SSA increased 26.2 per cent., in line roughly with the SSAs for other Derbyshire districts.

Each year, we consult the local authority associations about standard spending assessments. My hon. Friend the Minister for Local Government and Inner Cities believes that there is nothing new to be said or heard. When, just before Christmas, we announce our intended SSAs for the following year, we listen to delegations and to the views of Members of Parliament and councillors. It is interesting to note how many district councils are spending money on functions for which the counties are financed under the SSAs—and then districts wonder why we are slightly doubtful about their spending policies.

Mr. Bellotti

Will the Minister bear in mind the Audit Commission's family of local authorities, which takes into account 49 different factors? There is a vast difference in the SSAs of local authorities in the same families.

Mr. Key

That does not surprise me. The hon. Member for Eastbourne (Mr. Bellotti) can be reassured that we constantly consider the families of local authorities. It does not surprise me that there are great differences within the families on the indicators for SSAs. The hon. Member for Derbyshire, North-East laughs, but statistically the methodology of SSAs is sophisticated. However, it is much simpler than the old grant-related expenditure assessment system. Sitting in the centre of the bicycle wheel, about which the hon. Member for Derbyshire, North-East told us, it is interesting that local authorities queue up to tell us that their figures are unfair and that all the authorities around them are overpaid. That is the nature of the beast, I fear.

Mr. Hardy

I shall not labour the point, but an element in the determination of standard spending assessments is the 1981 census. The Minister referred to his visit to my constituency—I am delighted that he enjoyed that and we should be pleased to see him again—but the devastation that he saw has occurred since the 1981 census. The economic condition of my area is based on that assessment rather than on the current position. That makes the SSA for the area quite absurd.

Mr. Key

I well recall that memorable day when I was able to announce Government support of more than £20 million for local authorities in the hon. Gentleman's constituency. How I should like to be able to repeat that on my visits to his constituency.

I am sure the hon. Member for Wentworth (Mr. Hardy) is aware that another census has just been taken. Once the figures have been analysed and are available to us, it will make a substantial difference.

It is important to recognise that the Labour party has never suggested that it will replace the system of SSAs. Will it replace that system?

Mr. O'Brien


Mr. Key

If the Labour party is committed to replacing SSAs with a grant mechanism, it should tell us and, more important, local authorities exactly what it has in mind, because there has been a deafening silence so far.

Mr. O'Brien

If the Minister reads Hansard, he will find that on Second Reading my hon. Friend the Member for Dagenham (Mr. Gould) explained our policy no fewer than three times. I am surprised that the hon. Gentleman has not read Hansard, which clearly shows all the options.

6.15 pm
Mr. Key

Our SSA reports are copious—I recall that there are almost 100 pages—but I do not think the detail given in the speech of the hon. Member for Dagenham was quite as clear as that.

My hon. Friend the Member for Rutland and Melton (Mr. Latham) mentioned Rutland authority. I acknowledge the contribution that it, Beverley and several other small authorities have made in their serious critique of the methodology of SSAs as they affect small rural authorities. I enjoyed my discussion with officers and councillors from those authorities and I assure my hon. Friend that we are carefully considering the substantial work that was done. I look forward to the results of that work, to which I shall respond in due course. I have much enthusiasm for the methodology of SSAs; I am never sure why, but I find it compelling. I should be sorry if a Labour Government did away with them.

The hon. Member for Barnsley, West and Penistone mentioned the Sheffield supertram. As he knows, we are holding discussions on that and more meetings are planned. I look forward to resolution of the problems. As discussions are being held, it would be unwise for me to say more tonight.

There is no question of the destruction of democracy. I am not scared about that, but if I am scared about anything it is about parts of our country where local democracy is not thriving. I sometimes worry about the future of local democracy.

Mr. Blunkett

I worry all the time.

Mr. Key

The hon. Member for Brightside worries all the time. I hope that he does not, because he is a cheerful fellow; I hate to think of him worrying all the time.

There is a problem in some of our great cities, but it should not be addressed on a party political basis, because it is a problem of democracy. Opposition Members may agree that when one visits a city area one increasingly meets people who say that they are the real representatives of the community. They say, "Don't listen to him; I really know what the people think." There is much diversity among the people who queue up to say that they represent communities, but what they have in common is that most of them are not elected councillors. That is a real problem for democracy.

The amendment would not only reduce but, in practice, eliminate the purpose of the provisions of clause 1. Once again, that shows that the Opposition are more interested in pandering to the interests of their friends in local government than in protecting charge payers, and I call on the Committee to reject the amendment.

Mr. O'Brien

The purpose of the amendment is to prevent authorities that spend less than £15 million and below their SSAs from being capped. The Minister assured us that the Government do not intend to cap such authorities, but we have often heard that from Ministers in Committee. Local authorities, especially Rutland, that spend 10p, 15p or 20p per week too much per charge payer may be capped. It is now getting so ridiculous that there must be some protection for local authorities, which is why we have tabled the amendment.

The Minister said that there would be a precept on the collection fund with regard to parish and town councils. I remind Conservative Members that the same was said about the police, about the fire service and about public transport, but they are all subject to capping. If we are to have assurances that there will be no further approach to capping for parish and town councils, it is imperative that the amendment is accepted to protect authorities such as Rutland. A very small increase in expenditure could put such authorities into the capping criteria. That is very dangerous for local authorities and for democracy within those authorities.

Mr. Latham

I am sorry to interrupt the hon. Gentleman, but he must not take that line. He has tabled an amendment and asked for an assurance, which he has been given. He should withdraw the amendment.

Mr. O'Brien

We have had so many assurances. We referred to those given during the debate on the Local Government Finance Act 1988, which are being overturned tonight. Therefore, the assurance that the Minister is now giving us does not impress us one bit. If Conservative Members are interested in their local authorities and want to protect them, they must support the amendment. Because we are concerned about the future and the protection of local authorities, we will press the amendment to a Division.

Question put, That the amendment be made:—

The Committee divided: Ayes 209, Noes 286.

Division No. 163] [6.20 pm
Abbott, Ms Diane Cartwright, John
Adams, Mrs Irene (Paisley, N.) Clark, Dr David (S Shields)
Allen, Graham Clarke, Tom (Monklands W)
Alton, David Clelland, David
Anderson, Donald Clwyd, Mrs Ann
Archer, Rt Hon Peter Cohen, Harry
Armstrong, Hilary Cook, Robin (Livingston)
Ashdown, Rt Hon Paddy Corbett, Robin
Ashley, Rt Hon Jack Cryer, Bob
Ashton, Joe Cummings, John
Banks, Tony (Newham NW) Cunliffe, Lawrence
Barnes, Harry (Derbyshire NE) Cunningham, Dr John
Barnes, Mrs Rosie (Greenwich) Davies, Rt Hon Denzil (Llanelli)
Barron, Kevin Davies, Ron (Caerphilly)
Battle, John Davis, Terry (B'ham Hodge H'I)
Beckett, Margaret Dewar, Donald
Beith, A. J. Dixon, Don
Bell, Stuart Doran, Frank
Bellotti, David Douglas, Dick
Bennett, A. F. (D'nt'n & R'dish) Duffy, A. E. P.
Benton, Joseph Dunnachie, Jimmy
Bermingham, Gerald Dunwoody, Hon Mrs Gwyneth
Blair, Tony Edwards, Huw
Blunkett, David Evans, John (St Helens N)
Boateng, Paul Ewing, Mrs Margaret (Moray)
Bradley, Keith Fatchett, Derek
Bray, Dr Jeremy Faulds, Andrew
Brown, Gordon (D'mline E) Field, Frank (Birkenhead)
Brown, Nicholas (Newcastle E) Fields, Terry (L'pool B G'n)
Bruce, Malcolm (Gordon) Flynn, Paul
Buckley, George J. Foot, Rt Hon Michael
Caborn, Richard Foster, Derek
Callaghan, Jim Foulkes, George
Campbell, Menzies (Fife NE) Fraser, John
Campbell, Ron (Blyth Valley) Fyfe, Maria
Canavan, Dennis Garrett, John (Norwich South)
Carlile, Alex (Mont'g) Garrett, Ted (Wallsend)
Carr, Michael Godman, Dr Norman A.
Golding, Mrs Llin Mowlam, Marjorie
Gordon, Mildred Mullin, Chris
Gould, Bryan Murphy, Paul
Graham, Thomas Nellist, Dave
Grant, Bernie (Tottenham) Oakes, Rt Hon Gordon
Griffiths, Win (Bridgend) O'Brien, William
Grocott, Bruce O'Hara, Edward
Hain, Peter O'Neill, Martin
Hardy, Peter Orme, Rt Hon Stanley
Harman, Ms Harriet Owen, Rt Hon Dr David
Hattersley, Rt Hon Roy Parry, Robert
Haynes, Frank Patchett, Terry
Heal, Mrs Sylvia Pendry, Tom
Henderson, Doug Pike, Peter L.
Hoey, Ms Kate (Vauxhall) Powell, Ray (Ogmore)
Hogg, N. (C'nauld & Kilsyth) Prescott, John
Home Robertson, John Primarolo, Dawn
Howarth, George (Knowsley N) Quin, Ms Joyce
Howells, Dr. Kim (Pontypridd) Radice, Giles
Hughes, John (Coventry NE) Randall, Stuart
Hughes, Robert (Aberdeen N) Redmond, Martin
Hughes, Roy (Newport E) Rees, Rt Hon Merlyn
Hughes, Simon (Southwark) Reid, Dr John
Illsley, Eric Richardson, Jo
Janner, Greville Rooker, Jeff
Johnston, Sir Russell Rooney, Terence
Jones, Barry (Alyn & Deeside) Ross, Ernie (Dundee W)
Jones, Ieuan (Ynys Môn) Rowlands, Ted
Jones, Martyn (Clwyd S W) Ruddock, Joan
Kaufman, Rt Hon Gerald Salmond, Alex
Kennedy, Charles Sedgemore, Brian
Kirkwood, Archy Sheerman, Barry
Lambie, David Sheldon, Rt Hon Robert
Lamond, James Shore, Rt Hon Peter
Leadbitter, Ted Skinner, Dennis
Leighton, Ron Smith, Andrew (Oxford E)
Lestor, Joan (Eccles) Smith, C. (Isl'ton & F'bury)
Lewis, Terry Smith, Rt Hon J. (Monk'ds E)
Litherland, Robert Smith, J. P. (Vale of Glam)
Livingstone, Ken Soley, Clive
Lloyd, Tony (Stretford) Spearing, Nigel
Loyden, Eddie Steel, Rt Hon Sir David
McAllion, John Steinberg, Gerry
McAvoy, Thomas Stott, Roger
McCartney, Ian Straw, Jack
Macdonald, Calum A. Taylor, Mrs Ann (Dewsbury)
McFall, John Taylor, Matthew (Truro)
McKelvey, William Thomas, Dr Dafydd Elis
McLeish, Henry Thompson, Jack (Wansbeck)
McMaster, Gordon Turner, Dennis
McWilliam, John Wallace, James
Madden, Max Walley, Joan
Mahon, Mrs Alice Warden, Gareth (Gower)
Marek, Dr John Wareing, Robert N.
Marshall, David (Shettleston) Watson, Mike (Glasgow, C)
Marshall, Jim (Leicester S) Welsh, Andrew (Angus E)
Martin, Michael J. (Springburn) Welsh, Michael (Doncaster N)
Martlew, Eric Wigley, Dafydd
Maxton, John Williams, Rt Hon Alan
Meacher, Michael Williams, Alan W. (Carm'then)
Meale, Alan Wilson, Brian
Michael, Alun Winnick, David
Michie, Bill (Sheffield Heeley) Worthington, Tony
Michie, Mrs Ray (Arg'l & Bute) Young, David (Bolton SE)
Mitchell, Austin (G't Grimsby)
Moonie, Dr Lewis Tellers for the Ayes:
Morgan, Rhodri Mr. Allen McKay and
Morley, Elliot Mr. Ken Eastham
Morris, Rt Hon J. (Aberavon)
Adley, Robert Arnold, Sir Thomas
Aitken, Jonathan Ashby, David
Alexander, Richard Aspinwall, Jack
Alison, Rt Hon Michael Atkins, Robert
Allason, Rupert Atkinson, David
Amess, David Baker, Nicholas (Dorset N)
Amos, Alan Baldry, Tony
Arbuthnot, James Batiste, Spencer
Arnold, Jacques (Gravesham) Bellingham, Henry
Bendall, Vivian Gorst, John
Bennett, Nicholas (Pembroke) Grant, Sir Anthony (CambsSW)
Benyon, W. Greenway, Harry (Ealing N)
Bevan, David Gilroy Greenway, John (Ryedale)
Biffen, Rt Hon John Gregory, Conal
Blackburn, Dr John G. Griffiths, Peter (Portsmouth N)
Blaker, Rt Hon Sir Peter Grist, Ian
Body, Sir Richard Ground, Patrick
Bonsor, Sir Nicholas Grylls, Michael
Boscawen, Hon Robert Gummer, Rt Hon John Selwyn
Boswell, Tim Hague, William
Bowden, A. (Brighton K'pto'n) Hamilton, Hon Archie (Epsom)
Bowden, Gerald (Dulwich) Hamilton, Neil (Tatton)
Bowis, John Hannam, John
Boyson, Rt Hon Dr Sir Rhodes Hargreaves, A. (B'ham H'll Gr')
Brandon-Bravo, Martin Hargreaves, Ken (Hyndburn)
Brazier, Julian Harris, David
Bright, Graham Haselhurst, Alan
Brown, Michael (Brigg & Cl't's) Hawkins, Christopher
Bruce, Ian (Dorset South) Hayes, Jerry
Buchanan-Smith, Rt Hon Alick Hayward, Robert
Buck, Sir Antony Heseltine, Rt Hon Michael
Burns, Simon Hicks, Mrs Maureen (Wolv' NE)
Burt, Alistair Hicks, Robert (Cornwall SE)
Butler, Chris Higgins, Rt Hon Terence L.
Butterfill, John Hill, James
Carlisle, John, (Luton N) Hind, Kenneth
Carlisle, Kenneth (Lincoln) Holt, Richard
Carrington, Matthew Hordern, Sir Peter
Cash, William Howard, Rt Hon Michael
Chalker, Rt Hon Mrs Lynda Howarth, Alan (Strat'd-on-A)
Channon, Rt Hon Paul Howarth, G. (Cannock & B'wd)
Chapman, Sydney Howell, Rt Hon David (G'dford)
Chope, Christopher Hughes, Robert G. (Harrow W)
Churchill, Mr Hunt, Sir John (Ravensbourne)
Clark, Rt Hon Alan (Plymouth) Hunter, Andrew
Clark, Dr Michael (Rochford) Hurd, Rt Hon Douglas
Clark, Rt Hon Sir William Irvine, Michael
Clarke, Rt Hon K. (Rushcliffe) Irving, Sir Charles
Colvin, Michael Jack, Michael
Coombs, Anthony (Wyre F'rest) Jackson, Robert
Coombs, Simon (Swindon) Janman, Tim
Cope, Rt Hon John Johnson Smith, Sir Geoffrey
Couchman, James Jones, Gwilym (Cardiff N)
Cran, James Jones, Robert B (Herts W)
Currie, Mrs Edwina Jopling, Rt Hon Michael
Curry, David Kellett-Bowman, Dame Elaine
Davies, Q. (Stamf'd & Spald'g) Key, Robert
Davis, David (Boothferry) Kilfedder, James
Day, Stephen King, Roger (B'ham N'thfield)
Devlin, Tim King, Rt Hon Tom (Bridgwater)
Dickens, Geoffrey Kirkhope, Timothy
Dicks, Terry Knapman, Roger
Dorrell, Stephen Knight, Greg (Derby North)
Douglas-Hamilton, Lord James Knight, Dame Jill (Edgbaston)
Dunn, Bob Knowles, Michael
Durant, Sir Anthony Knox, David
Eggar, Tim Lang, Rt Hon Ian
Evans, David (Welwyn Hatf'd) Latham, Michael
Evennett, David Lawrence, Ivan
Fairbairn, Sir Nicholas Lee, John (Pendle)
Fallon, Michael Leigh, Edward (Gainsbor'gh)
Favell, Tony Lennox-Boyd, Hon Mark
Fenner, Dame Peggy Lightbown, David
Field, Barry (Isle of Wight) Lilley, Rt Hon Peter
Finsberg, Sir Geoffrey Lloyd, Sir Ian (Havant)
Fishburn, John Dudley Lloyd, Peter (Fareham)
Fookes, Dame Janet Lord, Michael
Forman, Nigel Lyell, Rt Hon Sir Nicholas
Forsyth, Michael (Stirling) McCrindle, Sir Robert
Franks, Cecil Macfarlane, Sir Neil
Freeman, Roger MacGregor, Rt Hon John
French, Douglas MacKay, Andrew (E Berkshire)
Fry, Peter Maclean, David
Gale, Roger McNair-Wilson, Sir Michael
Gardiner, Sir George McNair-Wilson, Sir Patrick
Gill, Christopher Madel, David
Goodlad, Alastair Malins, Humfrey
Goodson-Wickes, Dr Charles Mans, Keith
Gorman, Mrs Teresa Maples, John
Marland, Paul Shepherd, Richard (Aldridge)
Marlow, Tony Shersby, Michael
Marshall, John (Hendon S) Sims, Roger
Marshall, Sir Michael (Arundel) Skeet, Sir Trevor
Martin, David (Portsmouth S) Smith, Tim (Beaconsfield)
Maude, Hon Francis Soames, Hon Nicholas
Mayhew, Rt Hon Sir Patrick Spicer, Sir Jim (Dorset W)
Mellor, Rt Hon David Spicer, Michael (S Worcs)
Meyer, Sir Anthony Squire, Robin
Mills, Iain Stanbrook, Ivor
Miscampbell, Norman Stanley, Rt Hon Sir John
Mitchell, Andrew (Gedling) Steen, Anthony
Moate, Roger Stern, Michael
Monro, Sir Hector Stevens, Lewis
Montgomery, Sir Fergus Stewart, Allan (Eastwood)
Moore, Rt Hon John Stewart, Andy (Sherwood)
Morrison, Sir Charles Stewart, Rt Hon Ian (Herts N)
Morrison, Rt Hon Sir Peter Sumberg, David
Moss, Malcolm Summerson, Hugo
Moynihan, Hon Colin Taylor, Ian (Esher)
Neale, Sir Gerrard Tebbit, Rt Hon Norman
Nelson, Anthony Temple-Morris, Peter
Newton, Rt Hon Tony Thompson, D. (Calder Valley)
Nicholls, Patrick Thompson, Patrick (Norwich N)
Nicholson, Emma (Devon West) Thorne, Neil
Oppenheim, Phillip Thornton, Malcolm
Page, Richard Thurnham, Peter
Paice, James Townend, John (Bridlington)
Parkinson, Rt Hon Cecil Townsend, Cyril D. (B'heath)
Patnick, Irvine Tracey, Richard
Patten, Rt Hon John Tredinnick, David
Pattie, Rt Hon Sir Geoffrey Trotter, Neville
Peacock, Mrs Elizabeth Twinn, Dr Ian
Porter, David (Waveney) Vaughan, Sir Gerard
Portillo, Michael Viggers, Peter
Powell, William (Corby) Wakeham, Rt Hon John
Raison, Rt Hon Sir Timothy Waldegrave. Rt Hon William
Rathbone, Tim Walden, George
Redwood, John Walker, Bill (T'side North)
Rhodes James, Robert Walters, Sir Dennis
Riddick, Graham Ward, John
Rifkind, Rt Hon Malcolm Wardle, Charles (Bexhill)
Roberts, Sir Wyn (Conwy) Watts, John
Roe, Mrs Marion Wells, Bowen
Rossi, Sir Hugh Wheeler, Sir John
Rost, Peter Whitney, Ray
Rowe, Andrew Widdecombe, Ann
Rumbold, Rt Hon Mrs Angela Wiggin, Jerry
Sackville, Hon Tom Wilshire, David
Sainsbury, Hon Tim Winterton, Mrs Ann
Sayeed, Jonathan Wolfson, Mark
Scott, Rt Hon Nicholas Woodcock, Dr. Mike
Shaw, David (Dover)
Shaw, Sir Michael (Scarb') Tellers for the Noes:
Shelton, Sir William Mr. John M Taylor and
Shepherd, Colin (Hereford) Mr. Timothy Wood.

Amendment accordingly negatived.

Mr. Blunkett

I beg to move amendment No. 17, in page 1, line 9, at end insert 'after the making of an Order under subsection (4) below'.

The First Deputy Chairman of Ways and Means (Sir Paul Dean)

With this, it will be convenient to consider the following amendments: No. 18, in page 1, line 10, after 'above', insert 'and after the making of an Order under subsection (4) below'. No. 21, in page 1, line 19, at end insert `(4) the Secretary of State may make an Order to give effect to the provisions of subsections (1) and (2) above after he has laid before Parliament a statement specifying that the calculation of the amount of £15 million referred to in section 101(1) of the 1988 Act does not in respect of any authority include any revenue expenditure arising in connection with a project all or part of whose capital cost is funded by the European Community.'.

Mr. Blunkett

I want to take up the issues that we left at the end of our debate on the previous group of amendments which relate to the effect that expenditure has on the capping criteria, its relationship to the SSA and the question of money that is returned to us from the European Community in the form of grants and allocations for specific projects.

At the end of our previous debate, there were some interesting exchanges between the Minister and my hon. Friend the Member for Normanton (Mr. O'Brien) about the way in which the collection fund, the draw-down and precepting related to capping. We look forward to the Minister's reply with some interest because the Opposition and local authority treasurers believe strongly that precepting on the collection fund has an effect on the amount that the major collecting authority can draw down without itself being subject to capping.

That also relates to the level of expenditure that is counted by the main spending authority before it runs into difficulties with the Government's criteria. There is no better example of that than the farce that relates to the expenditure of moneys that have been returned to us from the Commission in Brussels. I use the words "returned to us", because, as hon. Members know, the amount that we contribute varies from time to time. It will vary in the coming year by doubling to more than £2 billion.

Some of that money is due back to local authorities in a variety of schemes, such as RECHAR. As hon. Members know, authorities spending that money immediately find themselves disqualified by the Government from taking up other forms of national aid or capital expenditure permissions to enable them to continue their normal programmes on capital. The system works in a ridiculous way. Money from Europe, whether RECHAR or a range of other schemes—RECHAR is a particular example because it was never intended to be counted as part of the capital programme—results in authorities having to cut their capital programme to be able to accept resources that have been allocated from Europe. Their basic credit approvals are not increased—in other words, they are not shown to be additional in terms of the extra help—so local authorities have to make cuts. That has always applied under the present Government. The additionality rules have been ridiculed because of their impact and because this country has a lower level of expenditure on capital than our European Community partners have. They do not apply the same additionality rules.

However, as a result of capping, revenue expenditure is treated in the same way, so that when capital allocations are made by the European Community the revenue that backs it up to provide for the debt charges and, in some cases, the running costs of projects approved for EC aid is counted for capping purposes. The authority is forced to cut its normal mainstream budget in order to accept our money back from our European partners. A dafter position one could never expect to come across. Without capping, the position would not arise. [Interruption]

I hear that the Whip is doing his bit again going round the houses drawing up his little lists. Perhaps he would draw up the list of authorities that have been denied help by the rules that currently apply. Perhaps he would whip in some of his colleagues so that they can hear about the way in which their people—not their local authorities—are affected. [Interruption.] I welcome the Secretary of State to the Chamber to hear about the absurdity of inner-city areas—which he offers to help through the city challenge scheme—being unable to take up European help as a result of his capping proposals.

The urban programme included a disregard in respect of capping. Our amendment seeks to extend a disregard for capping purposes to all similar resources from Europe. The disregard should apply equally to all other sources, including central Government. In the debate on the previous group of amendments we were discussing precepts, outside draw-downs on collection funds and amounts paid to an authority from elsewhere but which nevertheless count for year-on-year increases in expenditure. Those amounts should be set aside for capping purposes. If not, every amount that is allocated, for example for critical training programmes, from European moneys will be counted for year-on-year expenditure by local authorities.

My hon. Friend the Member for Barnsley, West and Penistone (Mr. McKay) described the position on the scheme for the South Yorkshire supertram rapid transit system. Even though central Government have agreed to aid the scheme through the Department of Transport, the scheme falls foul of the rules. The local authorities, which are part of the passenger transport authority, are subject to the capping criteria in respect of the activities of the passenger transport authority. I underline that fact for the sake of the Minister who will reply to the debate. The local authorities find themselves cutting their mainstream essential services in order to take up the allocation of funds from a Government Department. Exactly the same thing happens when funds are allocated from Europe.

The additionality rules should be changed for capital expenditure and the impact of the revenue consequences should be disregarded for capping purposes. It is simple. If someone offers one some money, should one be penalised for spending it? Let us use the analogy of the family budget, which in the early days the former Prime Minister used to use. Someone comes along and offers the family some extra cash from outside, money which the family gave to the person to help him along in the past. That is what we do by contributing to the European Community.

The person says, "You are on hard times. You have been recognised as a deserving case." Of course, under the Government's criteria, only deserving cases can receive EC help. The person says, "I want to give you back some of the money that you gave me last year." The family has to say, "We are terribly sorry. We would love to take it and we realise that it would help us to pay for the extension that we managed to build with the capital that you gave us last year. We would love to be able to heat and light it and let our son and daughter sleep in it, but unfortunately there is a rule which says that if we accept your money, the Government will take away some of the supplementary benefit." That is the absolutely silly position. One cannot accept back the help that one originally gave.

6.45 pm

We want the Government to clarify the position once and for all. If they mean anything that they say about urban regeneration, improving training and alleviating unemployment, they must accept the amendment. Unemployment is not taken into account in standard spending assessments, so it cannot be taken into account when resources are allocated to combat unemployment and provide more training programmes.

The silly attack made on Derwentside council on 3 June during the Second Reading debate was referred to again today. Derwentside took action to combat the results of the closure of the Consett steelworks. It took sensible, entrepreneurial and enterprising action. It got off its backside and took action. It did exactly what the Secretary of State asks authorities to do in his city challenge scheme. He encourages local authorities to come up with a comprehensive scheme to tackle the unemployment, economic decline, degeneration and environmental despoliation which has taken place as a result of economic collapse. He encourages them to show initiative and come up with something that competes with any decent scheme anywhere else in Europe. He asks them to provide the wherewithal to make the scheme work and give people the backing that they need to show their own enterprise in creating jobs. Derwentside did it.

Now what do the Government say? They say, "You can have economic regeneration, you can have leisure facilities or you can have a decent environment, but you cannot have all three. You have to choose between investment in training and enterprise, such as programmes to set up workshops and technology parks,"—those schemes did everything that all hon. Members would want to do for their area—"associated leisure provision and economic regeneration." It is too daft for words.

The £6 million spent in Derwentside—according to the Government it is such an evil amount of money to spend —has ensured that many people in the area have jobs who would not have had them otherwise. It has reduced the call on supplementary benefit. It has reduced the amount that has had to be drawn in redundancy pay. It has reduced the demand on the family credit budget and the amount that would otherwise have to be paid out in housing benefit and free school meals. However, instead of applauding the authority for saving the Government probably substantially more than £6 million in benefit payments, the Government ridicule Derwentside local authority.

Derwentside is one of the authorities that benefit and should benefit from European Community aid. It is one authority, like many others in former steel and coal-mining areas, which the EC funds are intended to assist. The Government should help such authorities by lifting the ridiculous rules on additionality and capital. For goodness sake, they should accept the amendment and help local authorities to do a job of work in preventing unemployment, restoring jobs, providing training schemes, working in partnership with the private sector and making the money work. The Government should stop capping authorities and disregard the revenue consequence of capital expenditure.

In simple terms, the Government should allow local authorities to spend European Community money which does not damage our economy but helps it and which is not a drain on the local taxpayers but assist them. They should not penalise local authorities for spending that money. It is simple. There cannot be a more straightforward case and I shall be fascinated to hear the Government wriggle about why they are not willing to accept the amendment.

Mr. Portillo

The hon. Member for Sheffield, Brightside (Mr. Blunkett) asks for clarification. I am happy to supply it because, unusually for him, parts of his speech betrayed a misunderstanding. I shall cover matters that are familiar to him and which he understands perfectly well, before dealing with the issues on which the misunderstanding arises.

Our view of money from the European funds is that they should not merely fund domestic expenditure but should be additional to the amount that the Government would otherwise have to spend. That is the concept of additionality, and it means that our global total for public expenditure is increased by the amount that we expect to receive from European funds. In that way we ensure true national additionality.

We make capital allocations to local authorities, and they may spend money that they hold or credit approvals or supplementary credit approvals. The Government's aim is to control total public expenditure. The amount spent by local authorities is an important part of that, and allocations to local authorities are made in the light of totals set at national level that take account of European funds.

Whether the amount that a local authority spends is financed by receipts or money provided by the Government in credit approval, supplementary credit approval, or by grants received from Community funds makes no difference. It all comes within the capital allocation, which is not necessarily increased because part of it is financed by a Community grant.

A local authority in receipt of a European fund grant has an important advantage in that it no longer has to seek credit approval for that part of the money, and it does not have to draw on its receipts or borrow. Obviously, it is the cheapest possible way in which a portion of an authority's capital spending can be funded.

I think that the hon. Gentleman understands those concepts. Of course I am concerned that some local authorities have found it difficult to spend enough within their capital allocations in respect of money made available from European funds. That is why, last year, we top-sliced £25 million from credit approvals and why this year we shall top-slice £45 million. I have tried to ensure that part of that top slicing is made available to cover the gap for local authorities that receive money from European funds but which lack the capital cover to spend in line with what they will receive.

That deals with capital allocations and the way in which we are trying to address the matter through flexibility on credit approvals to help some local authorities to spend money that has been allocated to them by the Community.

I was asked how European fund grants are treated in the context of capping. It must be left to local authorities to decide which projects are worth pursuing and which should be included in their budgets. That applies whether or not they have assistance from the Community. Leaving local authorities to decide on their priorities fits in well with the city challenge initiative of my right hon. Friend the Secretary of State. That challenge is largely about asking local authorities to organise their priorities and to put together packages of money for them.

Projects that receive a grant from the Community funds but which require the local authority to make some contribution so that the Community grant is not 100 per cent. of expenditure are no exception to this general rule. If the matter is important enough for the local authority to include in its budget, it will do so irrespective of whether that part of it is financed by the Community. The project should stand on all fours with others.

If the local authority receives money from the Community fund grant, it will need to raise that much less itself. The budget on which capping bites is that which the local authority funds from the community charge, the uniform business rate, the rate support grant and other specific grants. It does not include Community grant, because that is not part of the authority's budget. That money is outside the demand that the local authority makes on the collection fund. Therefore, it is outside our consideration for capping. I think that the hon. Gentleman misunderstands that point. We would not cap a local authority in respect of Community grant on part of a project.

Mr. Blunkett

The Minister's answer sounds extremely plausible until we think about what happens to European social fund allocations for, for example, training schemes. In such cases the local authority spends the money and a claim on EC resources is submitted afterwards. EC money is retrospective and the local authority draws on the collection fund to pay, for example, the wages of staff working in a training workshop which is 50 per cent. funded from the social fund. Would the authority be affected in the year in which it draws on the collection fund by capping for that expenditure, even though in future the authority would be reimbursed? If the Minister can answer that question, I shall be happy to concede that he has scored a goal against me.

Mr. Portillo

Before I answer that question, I should say that I got carried away in thinking that specific grants were within the budget of a local authority. I should have said that they are not, which means that the budget is even more restricted than I suggested.

The demand made by a local authority upon the collection fund will potentially be within the criteria for capping. I was not trying to score a goal against the hon. Gentleman but to offer clarification. If, in a subsequent year, a local authority is reimbursed by the European Community, the amount is not within the budget. Presumably that means that, in the subsequent year, the local authority has some other amount freed up, so that, taking money one year with another, the amount that it has had to spend has not brought it within the criteria for capping.

I am sure that the hon. Gentleman did not intend this, but the amendment literally means that, if any part of an item of local authority expenditure is funded by the European Community, all the expenditure, not just that part of it, should be exempt from capping. That would not be appropriate, as even the hon. Gentleman may think. Perhaps he will not think that way because he is against capping altogether, so I shall not try to pin that one on him. I think that he was intending to exempt that part of expenditure which comes in grant from European Community funds.

I hope that I can reassure the hon. Gentleman by saying that that is outside the budget and therefore not susceptible to capping. I have to recognise that, if the local authority spends the money in advance, then in the year in which it makes the demand on the collection fund, that demand, for whatever purpose, can bring it closer to the criteria for capping, but it will reap the advantage in the following year, when the grant is received and the grant will not bring it any nearer to the criteria for capping.

7 pm

Mr. Blunkett

I am grateful for the Minister's explanation. He will realise that my hon. Friends and I are in favour of not counting expenditure, whether from the EC or the local taxpayer, on projects that had been agreed as part of an EC programme, whether under the regional or social funds or under RECHAR. RECHAR is additional to the amount that the Government have already taken into account in terms of top slicing. It has to be like that, because RECHAR allocations are made after predicted capital allocations are announced by the Government.

However, we have had a prolonged and difficult debate about whether RECHAR will be accepted and whether authorities will have the necessary specific supplementary credit approvals. It is not a national issue. The debate is about the local authorities taking up schemes that they have drawn up and then had approved through RECHAR, and whether they will be able to go ahead with those projects when they receive the allocation.

It is fine if the authority gets a boost the year after, when the grant comes in, but in the year in which it spends the money, if it has to draw down on the collection fund, that authority can be pushed into fulfilling the criteria for capping, particularly that on year-on-year expenditure increases. That is important for authorities that may be capped in one year even though they will be helped the year after, and so have to make cuts in services that were supposed to be enhanced by the allocation of European moneys, rather than cancelled out.

The crucial point is that, the more complicated and centralised are the regulations that restrict the freedom of local authorities to act, the more that, in applying general rules, local authorities are restricted so that they cannot do their jobs properly. An authority may be capped one year simply because it has drawn down on the collection fund, but it will not be capped the next year because it has received resources that have lessened the demand on the collection fund. That makes no sense to us and no sense to those outside.

Furthermore, it makes no sense to count for capping purposes the money for a project that is supposed to be an additional benefit to the mainstream programmes of a local authority—that applies to inner-cities activities as well—rather than a substitute for what is already going on. The 50 per cent., or whatever the sum might be, that the authority has to find should not be included in the capping criteria—just as, retrospectively, the EC contribution is not.

The Minister's explanation has been helpful. I used the "goal against me" example with a smile, because I sometimes do not mind having a goal scored against me. It is winning the game that counts. It is important that we all have the same understanding when it comes to sorting out the Yorkshire rapid transport system, because otherwise education and home help services will be cut to pay for a project that does not involve additional local fund raising or poll tax increases, and has been agreed by local and central Government to make sense. On that basis, I am happy to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

The Second Deputy Chairman

Before I call the hon. Member for Normanton (Mr. O'Brien) to open the debate, I remind him and the Committee that we have had a fairly good run on amendments to clause 1, so it would not be appropriate to go over the ground that we covered in those debates.

Mr. O'Brien

I appreciate that, Sir Paul, and I shall not go over the debates on the amendments. According to the explanatory memorandum: Clause 1 provides that section 101 of the 1988 Act, which exempts from charge capping English and Welsh authorities whose budgets are less than £15 million, is to cease to have effect. Therefore, the clause is important and significant.

It is sad to realise that the Government intend to press the capping of these authorities whose budgets are influenced by small amounts of expenditure. Examples have been given of how district authorities with budgets of £5 million, £6 million or £9 million can easily come into the capping range as a result of small increases in expenditure. As I said in a previous debate, this could represent as little as 20p or 30p per poll tax payer. Through our amendments to the clause, we tried to protect those local authorities that will be brought into the capping range, as that can only have a severe effect on their services.

Another disappointment is that, where local authorities, through their own efforts, have acquired additional financial support from either the EC or some other source, the Government have decided that that will be included in the limits set by the clause.

We also debated the precepting of parish, town and county councils in Wales on the collection fund. This is an important matter and we shall read carefully in Hansard tomorrow the answers to the questions on it. I hope that what the Minister said is correct, and it will not be part of the overall expenditure for district councils.

There is a gleam of hope for local authorities, because the clause will not apply before 1 April 1992, and we all hope that before then there will be a general election. I am sure that those serving in local government will welcome a general election because the Labour party has said that capping, as applied by the Government in the past two or three years, will be abolished, as will the poll tax system. People are hoping for an early general election, so that a Labour Government, who believe in and support local government, can introduce the policies that are needed to help local authorities to meet their responsibilities.

Mr. Harry Barnes

The clause is incredible, considering that the Government are supposed to be following a new policy and replacing the poll tax. It is especially incredible when later clauses are supposed to pave the way for the introduction of the new so-called council tax.

While all that is going on, we are back with the old form of poll tax legislation. The flavour of the debate smacks of what has been going on for a long time on the poll tax scene. All this is happening following the district council elections in which the Conservatives were devastated. Despite those results, and despite the verdict of the electorate—the people were obviously opposed to Conservative policies and especially the poll tax—at the first opportunity, the Government are back down the old poll tax route. Indeed, they are acting contrary to everything contained in their election manifesto, in which they were committed to the principle of accountability, with the link between local electorates and their councillors being of supreme importance.

All the injustices of the standard spending assessment, linked to the Government support grant, are bad enough in that many district councils have been forced to charge higher amounts than they would have charged had there been a fair system of grant in operation. Now, such charges must stop and services will be destroyed. Apart from services that must be provided in accordance with statutory duties, important local authority ancillary services will come to an end.

The area of Derwentside has come in for strong criticism from the Government. Not only did it have special needs because of the high rate of unemployment there, but the Government's funding arrangements for the area meant that Derwentside had to find ever more funds from its own resources. I referred earlier to a written answer that I received on 5 December. That was accompanied by information that was placed in the Library showing money coming from revenue support grant, from the business rate and from the poll tax.

7.15 pm

In the Committee debates on the introduction of the poll tax for England and Wales, we were told that, in rough and ready terms, 50 per cent. of the total would come from central Government funding, 25 per cent. from poll tax monies and 25 per cent. from the national business rate.

By 5 December last, of Derwentside's total standard spending assessment—which it obviously had to go beyond—only 18.3 per cent. came from revenue support grant. That contrasted with authorities better able to handle financial matters, such as Westminster, which got 57.8 per cent., and Wandsworth, with 49.6 per cent. Other authorities appeared at the high end of the figures, but many were at the low end, and Derwentside, on 18.3 per cent., was only 162 from the bottom of a list of 336. My area of North-East Derbyshire received 11.3 per cent. in revenue support grant.

How could such figures be called reasonable and just in view of the great disparities between areas? Reference has been made to Audit Commission reports giving figures of comparable areas. They show wide deviations between SSAs per charge payer. Are the Government's SSAs and calculations wrong, or is it suggested that the Audit Commission's judgment about authorities being comparable is wrong? I have shown how the figures deviate widely —by as much as 100 per cent. in some cases—and I am sure that other Audit Commission reports reveal additional fantastic disparities.

Nothing in the Bill begins to eliminate the injustices of the poll tax legislation. Those injustices must be corrected if the Government are to be seen to be introducing a paving measure for a new policy. Later we shall discuss the problems of valuation. The Government's so-called new schemes are full of nonsenses and our fear is that although we may do away with the most unjust form of taxation ever invented in any western democratic system and we shall put in its place the second most unjust system.

We should be doing something to help local authorities get by until fresh legislation is introduced. Instead of provisions designed to cap authorities, we should have provisions remedying the problems that have been created by the Government's poll tax legislation. In the past, I have spoken at length about the massive attack involved in electoral legislation caused by the poll tax. While this is not the time to develop that point, sooner or later we shall need a full debate on that and similar issues.

In the meantime, there is no justification for the Bill. The Government are trying to gallop it through so that legislation of a sort is enacted before the next parliamentary recess.

Many authorities will be hit by the Government's criteria. An article in the Municipal Journal of 31 May entitled "Beyond Belief" lists the authorities that are likely to be included in the Government's criteria. The authorities mentioned are not only Labour-controlled but include authorities controlled by the Liberal Democrats and the Conservative party. As the majority are Labour-controlled, the Government claim that the measure is essential and necessary because they are dealing with profligate bodies. They are not.

Some of those authorities may have policies that could be considered problematic, but that is a matter between them and their electorate and not a matter for the House. Many are simply engaged in ordinary local government activities with the support of, and a stream of recommendations from, the Audit Commission and others to show that their activities are perfectly reasonable. I described the case of North-East Derbyshire, but many other authorities, such as Hartlepool and Easington in the north-east, are in a similar position. Those fall into the category of authorities that are likely to be capped or be threatened with capping, and will therefore have to cut their own throats in terms of expenditure. We must stop further development in that direction.

The districts of Conservative Members such as the hon. Member for Welwyn Hatfield (Mr. Evans) will be hit by those measures. The hon. Gentleman should understand what is happening, as he served on the Committee that introduced the iniquitious poll tax legislation. I hope that he will not support the measure in the Lobby tonight, because this is an opportunity for Conservative Members to decide whether they have finally jettisoned the poll tax and are looking for an alternative, however inadequate, or whether they should go down the same road and vote at the Whips' behest. We must ensure that we inform their constituents that they have not departed from the principles upon which they initially built their case.

Mr. David Evans (Welwyn Hatfield)

The hon. Gentleman might like to know that Welwyn Hatfield is a Labour-controlled authority. It has the 18th highest community charge simply because the Labour authority has overspent, year in, year out, on services that its neighbours have provided at a much lower cost.

Mr. Barnes

If time allowed me to go through the 366 authorities, I would give the details of the amount of grant that Welwyn council receives from the Government. They are available in the Library and need to be carefully examined to see whether there is any credence in the hon. Gentleman's argument. Welwyn Hatfield probably operates exactly according to the general principles. A set of criteria has been devised which hits at certain authorities and not others.

Despite considerable efforts by Opposition Members, we never discuss the make-up and structure of the standard spending assessment and the grants that are linked to it. We have simply been told that there is a magical formula that allows the system to function fully and well, but that is not the case. The Government have deliberately manipulated and fiddled the arrangements. If a genuine principle is involved, they should be willing to talk to those authorities that feel that they are being badly treated because they fall foul of many of the conditions that have been laid down. North-East Derbyshire is one such authority. We are not allowed to meet the Minister to discuss those matters so we cannot have an impact on changing the way in which the formula will operate under the clause.

Mr. Bellotti

I begin by referring to the standard spending assessments and drawing attention to the serious problems in different parts of the country, especially Sussex. If all the Minister's faith will be put on SSAs and subsequent figures will be based on them, how can he justify the fact that the SSA for Wealden is £100 of relevant population in 1991–92; for nearby Lewes it is £94; for Adur it is £88, but for Hove it is £173? That is why, some two years ago, the Hove borough council did not need to levy a rate for its then ratepayers. There can be no justification for those disparities of SSAs in the same area. It is not surprising that some district councils in Sussex look to Hove and ask, "Why?" If the Government are to base their future spending plans on SSAs they must deal with that issue in East Sussex and say why Hove has double the SSA of authorities in the same area.

The same problem applies in other parts of the country, and hon. Members have referred to that matter throughout the debate. If the clause is to be approved, neighbouring authorities will suffer when they try to deliver a level service.

Some local authorities have special conditions in their make-up. It is essential for the local economy of Eastbourne that tourism, in all its manifestations, is backed. If the clause goes through, Eastbourne will have to make almost £1 million worth of cuts next year. Like most tourist resorts in this country, it will have to cut its tourism budget. As 9 per cent. of Eastbourne's population is employed in tourism, unemployment will increase if we withdraw the ability of the local authority to encourage economic generation. There will be more empty hotels and less money coming into the country from abroad.

Is the Minister saying that local authorities that depend on tourism should not spend money on, for example, cleaner beaches which is a Government policy? Eastbourne and 34 other resorts have just been awarded blue flags for the state of their beaches. Is the Minister saying that those local authorities should not spend money on encouraging people to spend time and money in their areas? Like other resorts, Eastbourne also spends money on providing plants and flowers. The Carpet gardens in Eastbourne are known internationally. Will budgetary cuts mean that those local authorities can no longer spend money on such things? It could be argued that they are luxuries beyond what local authorities must provide for people's needs. However, they provide economic generation and growth.

The Minister has not dealt with any of those issues tonight. His arguments have all been based on finance. Indeed, every decision that the Government make with regard to local authorities is finance-led.

We were given to understand that the clause would provide the assurances that we sought about the position of parish and town councils at the lower tier of principal authorities. On examination, however, those assurances prove nothing of the sort. It is not true that the Government do not take into account the expenditure of those parish and town councils in reaching their decision to cap. I should be interested to receive a further response from the Minister about the position of parish councils. Is it true that the Government will not take account of any level of spending by parish councils so that whatever the level of that spending, it will not count in any way towards a decision to cap? If the Minister can confirm that he will not take that spending into account we shall be rather more assured. We have listened carefully to the Minister, however, and we are not convinced.

7.30 pm
Mr. O'Brien

Does the hon. Gentleman agree that the Minister has not properly clarified the influence that parish and town council precepts will have on the SSAs of district councils? The problem applies not to the non-metropolitan districts alone, but to the metropolitan ones. The hon. Gentleman has raised a pertinent point, as it appears that there is no cut-off point at which capping will apply to authorities lower down the scale.

Mr. Bellotti

I am grateful to the hon. Gentleman because we both failed to understand fully the Minister's response. I hope that we shall receive further clarification from the Minister so that we are clear as to the exact state of affairs before we vote.

During the speech of the hon. Member for Pendle (Mr. Lee) there was an interchange that might have led hon. Members to believe that Pendle will not be affected by the proposals. That is not so. Pendle local authority will need to consider cutting its services by more than £500,000. It is not alone in that because another 88 local authorities will have to consider what cuts to introduce next year.

Should the clause be accepted the Minister must spell out the effect of those cuts on local services. The clause does nothing to meet the needs of local communities. It attacks local democracy and it will not lead to accountability. It is not worth supporting.

Mr. Portillo

I believe that we have made some progress in clarifying some of the issues, sometimes to the surprise of the Opposition.

I shall repeat what I said about parish councils. Parishes do not precept on districts, they precept on the collection fund. Potentially we may cap what a district demands from the collection fund. What the parish demands from the collection fund—what it precepts on the collection fund—is an entirely separate matter. When we draw up an SSA—a level of spending that is appropriate —we lump the district and the parish together on the ground that what parishes do is in substitution of what districts might otherwise do. The SSA takes account of district and parish spending together. When it comes to capping, however, what the parish precepts is outside the conditions for the capping of the district because the parish precepts on the collection fund, not the district.

Mr. O'Brien

The Minister has now introduced a different dimension. He is now referring to the concurrent functions of parish and district councils. Is he saying that there must be clear demarcations between the functions of the district and parish councils? If one particular function is the responsibility of the district council, does that mean that the parish council should not precept for that particular service?

Mr. Portillo

No. The hon. Gentleman seems intent on trying to smell a rat that is not there. The justification for setting the SSA for a district and parish together is that parishes do in certain places what districts do in other places. Therefore, the only fair way in which to set the SSA is to set it according to what the parish and district spend together. Since the parish precepts on the collection fund directly, not on the district, and since we are concerned only with capping what a district demands on the collection fund, what the parish precepts has nothing to do with drawing the district nearer to being capped.

Mr. Gould

The capping criteria are defined in terms of the SSA. Does that mean that it is possible that a district could find itself exceeding its SSA because of a precept made by the parish which, as the Minister said, would be included in the district's SSA?

Mr. Portillo

No, that is not possible. The SSA for a district is set without reference to whether parishes exist. Where parishes exist we assume that they are simply doing things that districts would otherwise do. In those circumstances the parish precepts on the collection fund, not the district. We are concerned only with what the district precepts on the collection fund. That is the only thing that we are seeking to cap. Perhaps the hon. Gentleman has identified that there is asymmetry between the way in which the SSA is determined and the way in which the capping operates—that I do not deny.

Mr. Gould

I am sure that we are both aiming to clarify this rather tricky matter, but surely the asymmetry is the important point. That may lead to a situation in which the district is capped independently, but it may be capped on the basis of a criterion—the SSA—that depends to some degree on the expenditure by the parish council. That is what I understood the Minister to say when he said that the parish's expenditure counts towards the district's SSA, but, because it precepts separately, does not impinge upon the cap, at least not directly. I suggest that it may impinge indirectly because of its influence on the SSA.

Mr. Portillo

If the hon. Gentleman is looking for a problem, I accept that there is one, but he has got the wrong one. The problem is the opposite. Where a parish exists the district may be unfairly advantaged, not disadvantaged, because what the parish is spending is precepted directly on the collection fund and does not figure as part of district spending. I have given the game away. There is a slight problem, but it is precisely the opposite of that suggested by the hon. Member for Dagenham (Mr. Gould). In view of that I had better move on to other matters raised in the debate.

I wish to be a little more helpful to the hon. Member for Sheffield, Brightside (Mr. Blunkett) about the European Community. Where a local authority spends some money and subsequently gets a grant from the EC, in the year that it spends the money it must find it from the collection fund. In the year after, it will get the money from the EC. However, if, in year one, when the local authority spends that money, it already knows that it is going to get a grant from the EC, it can take that into account in the year that it spends the money because the budget is assessed on an accrual basis. If an authority is already certain that it will receive EC money, albeit that that money will not pitch up until year two, it may take it into account in year one. I believe that that is a more helpful answer to the hon. Member for Brightside.

I have not said that I will not meet the authority that the hon. Member for Derbyshire, North-East (Mr. Barnes) represents. I have said that, at the moment, there is nothing new to hear from him and nothing new for me to say to him. However, when we propose SSAs, certain local authorities and certain hon. Members will want to have meetings and my hon. Friends and I shall be as open as we have always been to agree to such meetings.

I was amazed by the speech of the hon. Member for Eastbourne (Mr. Bellotti). It is not for me to do his work for him and to tell him why the SSA is higher in Hove. However, it is higher because the social conditions are different and he should know that better than anyone else. The method by which the SSA is calculated is available for him in the numerous statistical reports which show how the SSA is calculated.

I was especially surprised that the hon. Member should talk about tourism. Last year I increased the weighting given for tourism from 25 per cent. of a resident night per tourist to 50 per cent. of a resident night per tourist. No local authority in the country benefited more from that change than did Eastbourne. So when the hon. Gentleman failed to mention that fact, it struck me to the core as an example of remarkable ingratitude and insensitivity.

I feel that the House wants to bring this matter to a resolution. I reiterate that the Government are determined to deliver the council tax at reasonable levels. We have set out figures for what the council tax would have been this year. We are determined that we shall not have a repetition of what happened with the community charge when local authorities allowed their spending to go through the roof and arrived at community charges well in excess of what the Government had estimated.

We have given our reasonable estimates for the council tax. We intend to deliver the council tax close to those figures, and the only way in which that can be achieved is by restraint on local authority spending. We are in favour of that: the Labour party is dead against it. That is why our figures for the council tax are credible and why the Labour party's figures for a return to the rates—

Mr. O'Brien


Mr. Portillo

—are wholly incredible. That is why this clause should stand part of the Bill.

Mr. O'Brien

I tried to intervene on the Minister because he referred to the introduction of the council tax. Some of the problems alluded to in this debate have been caused because the Government want to ensure that the council tax is put in place without a great deal of upset and rancour on the part of local authorities.

The Minister omitted to mention one element about which I wished to ask him a question. If the Government want a smooth transition to a council tax, will they announce the provisional capping criteria before local authorities' budgets are set? That will include district councils. When we considered the budget proposals of local government for 1991–92 we referred only to the metropolitan districts, the London boroughs and the shires, but now 333 authorities are under the threat of capping. So do the Government intend to announce the capping criteria for all local authorities, including the districts, before the budget process commences? If so, when can we expect the announcement?

Mr. Portillo

I intend, as last year, to set out the provisional criteria for capping for all local authorities well in advance, but I cannot yet say on what date I shall do so.

7.45 pm
Mr. O'Brien

I am sorry to come back on this issue, but given that local authorities will have to work within the Government's guidelines on their expenditure it is disappointing that the Minister has no knowledge of when the statement on budget-capping criteria will be made. If the Minister cannot tell us that tonight, will he consult the Secretary of State and let us have the information tomorrow, when we continue this debate? It is important that local government be given the information as quickly as possible so that representations can be made. One problem this year was the shortage of time For representations to be made by local authorities that were to be capped.

Question put, That the clause stand part of the Bill:—

The Committee divided: Ayes 273, Noes 211.

Division No. 164] [7.45 pm
Adley, Robert Chalker, Rt Hon Mrs Lynda
Aitken, Jonathan Channon, Rt Hon Paul
Alexander, Richard Chapman, Sydney
Alison, Rt Hon Michael Chope, Christopher
Allason, Rupert Churchill, Mr
Amess, David Clark, Dr Michael (Rochford)
Amos, Alan Clark, Rt Hon Sir William
Arbuthnot, James Colvin, Michael
Arnold, Jacques (Gravesham) Coombs, Anthony (Wyre F'rest)
Arnold, Sir Thomas Coombs, Simon (Swindon)
Ashby, David Cope, Rt Hon John
Aspinwall, Jack Couchman, James
Atkins, Robert Cran, James
Atkinson, David Currie, Mrs Edwina
Baker, Nicholas (Dorset N) Curry, David
Baldry, Tony Davies, Q. (Stamf'd & Spald'g)
Batiste, Spencer Davis, David (Boothferry)
Bellingham, Henry Day, Stephen
Bendall, Vivian Devlin, Tim
Bennett, Nicholas (Pembroke) Dickens, Geoffrey
Bevan, David Gilroy Dicks, Terry
Blackburn, Dr John G. Dorrell, Stephen
Blaker, Rt Hon Sir Peter Douglas-Hamilton, Lord James
Body, Sir Richard Dover, Den
Bonsor, Sir Nicholas Dunn, Bob
Boscawen, Hon Robert Eggar, Tim
Boswell, Tim Evans, David (Welwyn Hatf'd)
Bottomley, Mrs Virginia Evennett, David
Bowden, A. (Brighton K'pto'n) Fairbairn, Sir Nicholas
Bowis, John Fallon, Michael
Boyson, Rt Hon Dr Sir Rhodes Favell, Tony
Brandon-Bravo, Martin Fenner, Dame Peggy
Brazier, Julian Field, Barry (Isle of Wight)
Bright, Graham Finsberg, Sir Geoffrey
Brown, Michael (Brigg & Cl't's) Fookes, Dame Janet
Bruce, Ian (Dorset South) Forman, Nigel
Buchanan-Smith, Rt Hon Alick Forsyth, Michael (Stirling)
Buck, Sir Antony Forth, Eric
Burns, Simon Franks, Cecil
Burt, Alistair Freeman, Roger
Butler, Chris French, Douglas
Butterfill, John Fry, Peter
Carlisle, John, (Luton N) Gale, Roger
Carlisle, Kenneth (Lincoln) Gardiner, Sir George
Carrington, Matthew Gill, Christopher
Carttiss, Michael Glyn, Dr Sir Alan
Cash, William Goodlad, Alastair
Goodson-Wickes, Dr Charles Mates, Michael
Gorst, John Maude, Hon Francis
Grant, Sir Anthony (CambsSW) Mayhew, Rt Hon Sir Patrick
Greenway, John (Ryedale) Meyer, Sir Anthony
Gregory, Conal Mills, Iain
Griffiths, Peter (Portsmouth N) Miscampbell, Norman
Grist, Ian Mitchell, Andrew (Gedling)
Ground, Patrick Mitchell, Sir David
Grylls, Michael Moate, Roger
Hague, William Monro, Sir Hector
Hamilton, Hon Archie (Epsom) Moore, Rt Hon John
Hamilton, Neil (Tatton) Morrison, Sir Charles
Hannam, John Morrison, Rt Hon Sir Peter
Hargreaves, A. (B'ham H'll Gr') Moynihan, Hon Colin
Hargreaves, Ken (Hyndburn) Neale, Sir Gerrard
Harris, David Nelson, Anthony
Haselhurst, Alan Newton, Rt Hon Tony
Hawkins, Christopher Nicholls, Patrick
Hayes, Jerry Nicholson, David (Taunton)
Hayward, Robert Nicholson, Emma (Devon West)
Heathcoat-Amory, David Onslow, Rt Hon Cranley
Hicks, Mrs Maureen (Wolv' NE) Oppenheim, Phillip
Hicks, Robert (Cornwall SE) Page, Richard
Higgins, Rt Hon Terence L. Paice, James
Hill, James Patnick, Irvine
Hind, Kenneth Patten, Rt Hon John
Holt, Richard Peacock, Mrs Elizabeth
Howard, Rt Hon Michael Porter, David (Waveney)
Howarth, Alan (Strat'd-on-A) Portillo, Michael
Howarth, G. (Cannock & B'wd) Powell, William (Corby)
Howe, Rt Hon Sir Geoffrey Rathbone, Tim
Hunt, Sir John (Ravensbourne) Redwood, John
Hunter, Andrew Riddick, Graham
Hurd, Rt Hon Douglas Roberts, Sir Wyn (Conwy)
Irvine, Michael Roe, Mrs Marion
Irving, Sir Charles Rossi, Sir Hugh
Jack, Michael Rost, Peter
Jackson, Robert Rowe, Andrew
Janman, Tim Rumbold, Rt Hon Mrs Angela
Johnson Smith, Sir Geoffrey Ryder, Rt Hon Richard
Jones, Gwilym (Cardiff N) Sainsbury, Hon Tim
Jones, Robert B (Herts W) Sayeed, Jonathan
Jopling, Rt Hon Michael Scott, Rt Hon Nicholas
Kellett-Bowman, Dame Elaine Shaw, David (Dover)
Key, Robert Shaw, Sir Michael (Scarb')
Kilfedder, James Shelton, Sir William
King, Roger (B'ham N'thfield) Shepherd, Colin (Hereford)
Kirkhope, Timothy Shepherd, Richard (Aldridge)
Knapman, Roger Shersby, Michael
Knight, Greg (Derby North) Sims, Roger
Knight, Dame Jill (Edgbaston) Skeet, Sir Trevor
Knowles, Michael Smith, Tim (Beaconsfield)
Knox, David Soames, Hon Nicholas
Lang, Rt Hon Ian Spicer, Sir Jim (Dorset W)
Latham, Michael Spicer, Michael CS Worcs)
Lawrence, Ivan Squire, Robin
Lee, John (Pendle) Stanbrook, Ivor
Leigh, Edward (Gainsbor'gh) Stanley, Rt Hon Sir John
Lennox-Boyd, Hon Mark Steen, Anthony
Lester, Jim (Broxtowe) Stern, Michael
Lightbown, David Stevens, Lewis
Lilley, Rt Hon Peter Stewart, Allan (Eastwood)
Lloyd, Sir lan (Havant) Stewart, Andy (Sherwood)
Lloyd, Peter (Fareham) Stewart, Rt Hon lan (Herts N)
Lord, Michael Summerson, Hugo
Lyell, Rt Hon Sir Nicholas Taylor, Ian (Esher)
Macfarlane, Sir Neil Taylor, Teddy (S'end E)
MacGregor, Rt Hon John Temple-Morris, Peter
MacKay, Andrew (E Berkshire) Thompson, D. (Calder Valley)
Maclean, David Thompson, Patrick (Norwich N)
McNair-Wilson, Sir Michael Thorne, Neil
McNair-Wilson, Sir Patrick Thornton, Malcolm
Madel, David Thurnham, Peter
Malins, Humfrey Townend, John (Bridlington)
Mans, Keith Tracey, Richard
Maples, John Tredinnick, David
Marland, Paul Trippier, David
Marlow, Tony Trotter, Neville
Marshall, Sir Michael (Arundel) Twinn, Dr Ian
Martin, David (Portsmouth S) Vaughan, Sir Gerard
Viggers, Peter Wiggin, Jerry
Wakeham, Rt Hon John Wilkinson, John
Walden, George Wilshire, David
Walker, Bill (T'side North) Winterton, Mrs Ann
Walters, Sir Dennis Wolfson, Mark
Ward, John Wood, Timothy
Wardle, Charles (Bexhill) Woodcock, Dr. Mike
Watts, John
Wells, Bowen Tellers for the Ayes:
Wheeler, Sir John Mr. John M. Taylor and
Whitney, Ray Mr. Tom Sackville.
Widdecombe, Ann
Abbott, Ms Diane Fatchett, Derek
Adams, Mrs Irene (Paisley, N.) Faulds, Andrew
Allen, Graham Fearn, Ronald
Alton, David Field, Frank (Birkenhead)
Anderson, Donald Fields, Terry (L'pool B G'n)
Archer, Rt Hon Peter Flynn, Paul
Armstrong, Hilary Foot, Rt Hon Michael
Ashdown, Rt Hon Paddy Foster, Derek
Ashley, Rt Hon Jack Foulkes, George
Ashton, Joe Fraser, John
Banks, Tony (Newham NW) Fyfe, Maria
Barnes, Harry (Derbyshire NE) Garrett, Ted (Wallsend)
Barnes, Mrs Rosie (Greenwich) Godman, Dr Norman A.
Barron, Kevin Golding, Mrs Llin
Battle, John Gordon, Mildred
Beckett, Margaret Gould, Bryan
Beith, A. J. Graham, Thomas
Bell, Stuart Grant, Bernie (Tottenham)
Bellotti, David Griffiths, Win (Bridgend)
Benn, Rt Hon Tony Grocott, Bruce
Bennett, A. F. (D'nt'n & R'dish) Hain, Peter
Benton, Joseph Hardy, Peter
Bermingham, Gerald Harman, Ms Harriet
Blair, Tony Haynes, Frank
Blunkett, David Heal, Mrs Sylvia
Boateng, Paul Healey, Rt Hon Denis
Boyes, Roland Henderson, Doug
Bradley, Keith Hoey, Ms Kate (Vauxhall)
Bray, Dr Jeremy Hogg, N. (C'nauld & Kilsyth)
Brown, Gordon (D'mline E) Home Robertson, John
Brown, Nicholas (Newcastle E) Howarth, George (Knowsley N)
Brown, Ron (Edinburgh Leith) Howells, Dr. Kim (Pontypridd)
Bruce, Malcolm (Gordon) Hughes, John (Coventry NE)
Buckley, George J. Hughes, Robert (Aberdeen N)
Caborn, Richard Hughes, Roy (Newport E)
Callaghan, Jim Illsley, Eric
Campbell, Menzies (Fife NE) Janner, Greville
Campbell, Ron (Blyth Valley) Johnston, Sir Russell
Canavan, Dennis Jones, Barry (Alyn & Deeside)
Carlile, Alex (Mont'g) Jones, Ieuan (Ynys Môn)
Carr, Michael Jones, Martyn (Clwyd S W)
Cartwright, John Kaufman, Rt Hon Gerald
Clark, Dr David (S Shields) Kennedy, Charles
Clarke, Tom (Monklands W) Kirkwood, Archy
Clelland, David Lambie, David
Clwyd, Mrs Ann Lamond, James
Cohen, Harry Leadbitter, Ted
Cook, Robin (Livingston) Leighton, Ron
Corbett, Robin Lestor, Joan (Eccles)
Cryer, Bob Lewis, Terry
Cummings, John Litherland, Robert
Cunliffe, Lawrence Livingstone, Ken
Cunningham, Dr John Lloyd, Tony (Stretford)
Davies, Rt Hon Denzil (Llanelli) Loyden, Eddie
Davies, Ron (Caerphilly) McAllion, John
Davis, Terry (B'ham Hodge H'I) McAvoy, Thomas
Dewar, Donald McCartney, Ian
Dixon, Don Macdonald, Calum A.
Doran, Frank McFall, John
Douglas, Dick McKay, Allen (Barnsley West)
Duffy, A. E. P. McKelvey, William
Dunnachie, Jimmy McLeish, Henry
Dunwoody, Hon Mrs Gwyneth Maclennan, Robert
Edwards, Huw McMaster, Gordon
Evans, John (St Helens N) McWilliam, John
Ewing, Mrs Margaret (Moray) Madden, Max
Mahon, Mrs Alice Ross, Ernie (Dundee W)
Marek, Dr John Rowlands, Ted
Marshall, David (Shettleston) Ruddock, Joan
Marshall, Jim (Leicester S) Salmond, Alex
Martin, Michael J. (Springburn) Sedgemore, Brian
Martlew, Eric Sheerman, Barry
Maxton, John Sheldon, Rt Hon Robert
Meacher, Michael Shore, Rt Hon Peter
Meale, Alan Short, Clare
Michael, Alun Skinner, Dennis
Michie, Bill (Sheffield Heeley) Smith, Andrew (Oxford E)
Michie, Mrs Ray (Arg'l & Bute) Smith, C. (Isl'ton & F'bury)
Mitchell, Austin (G't Grimsby) Smith, J. P. (Vale of Glam)
Moonie, Dr Lewis Soley, Clive
Morgan, Rhodri Spearing, Nigel
Morley, Elliot Steel, Rt Hon Sir David
Morris, Rt Hon J. (Aberavon) Steinberg, Gerry
Mowlam, Marjorie Stott, Roger
Mullin, Chris Straw, Jack
Murphy, Paul Taylor, Mrs Ann (Dewsbury)
Nellist, Dave Taylor, Matthew (Truro)
Oakes, Rt Hon Gordon Thomas, Dr Dafydd Elis
O'Brien, William Thompson, Jack (Wansbeck)
O'Hara, Edward Turner, Dennis
O'Neill, Martin Wallace, James
Orme, Rt Hon Stanley Walley, Joan
Owen, Rt Hon Dr David Warden, Gareth (Gower)
Parry, Robert Watson, Mike (Glasgow, C)
Patchett, Terry Welsh, Andrew (Angus E)
Pendry, Tom Welsh, Michael (Doncaster N)
Pike, Peter L. Wigley, Dafydd
Powell, Ray (Ogmore) Williams, Rt Hon Alan
Primarolo, Dawn Williams, Alan W. (Carm'then)
Quin, Ms Joyce Wilson, Brian
Radice, Giles Winnick, David
Randall, Stuart Worthington, Tony
Redmond, Martin Young, David (Bolton SE)
Rees, Rt Hon Merlyn
Reid, Dr John Tellers for the Noes:
Richardson, Jo Mr. Robert N. Wareing and
Rooker, Jeff Mr. Ken Eastham.
Rooney, Terence

Question accordingly agreed to.

Clause 1 ordered to stand part of the Bill.

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