Community Charges

HC Deb 21 May 1991 vol 191 cc831-97

7.1 pm

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

I beg to move, That the draft Charge Limitation (England) (Maximum Amounts) Order 1991, which was laid before this House on 16 May, be approved. This order is the final piece of business relating to local authorities' budget cycle for 1991–92. It signifies that we have reached the end of this year's capping round.

I make no apology for our having used our capping powers. Part of the Government's responsibility for the management of the economy is the duty to control public expenditure, of which more than a quarter is spending by local authorities. We also have a clear duty to protect local tax payers from unacceptably high bills. If we had not used our capping powers, we should rightly have been open to the criticism that we were shirking our duties.

Opposition Members say, "What about local accountability?" They say, "Let the councils themselves decide whatever spending level they wish"—a rare example of a laissez-faire approach by the Opposition.

Mr. John Fraser (Norwood)

Will the hon. Gentleman give way?

Mr. Portillo

It is very early in my speech, but I will give way.

Mr. Fraser

Introducing the Local Government Finance Bill 1987, the then Secretary of State for the Environment said: These proposals are fundamentally to restore local democracy. He also said: Whatever the figure, voters will know that it reflects the decision on spending which their council has made on their behalf."—[Official Report, 16 December 1987; Vol. 124, c. 1118–26.] Why did he say that?

Mr. Portillo

I do not believe that the hon. Gentleman's constituents, who bear the highest community charge in the land, believe that local democracy for them means the right of their council to charge them far more than most of them can afford. The people of Lambeth look to the Government to offer them some protection against a very high community charge. The hon. Gentleman and his Labour colleague from Lambeth half believe that themselves, although they may not wish to say so today.

The facts speak for themselves. We had the highest hopes that increased accountability would lead to sensible and prudent budgeting by all local authorities. It is a disappointment that, in the event, this has not proved to be the case.

In 1990–91, authorities used the change to the new system as a smokescreen to disguise vastly increased expenditure. Spending rose by 13.5 per cent., and over the two-year period o April 1991 spending rose by more than a quarter. In 1991, authorities overspent by more than £3 billion beyond what we provided for in the settlement. Such staggering increases in council spending cannot be justified. We have acted this year to prevent a repetition —and let no one doubt that we shall act again if necessary.

In the future, the risk of overspending might be even greater, given the fundamental and permanent shift from local to national taxation for the funding of local services that my right hon. Friend the Chancellor of the Exchequer announced in his Budget with the switch to VAT. We have made it clear that we intend broadly to maintain the same balance between national and local moneys in future years. We are determined to ensure that the very substantial extra money that we are providing to local authorities is not frittered away in higher spending but continues to be used to keep charges down to reasonable levels.

That is why we have announced today that we shall soon seek stronger capping powers to bring authorities' budgeting below £15 million per year, into the scope of capping, should they budget excessively. Even this year's experience shows the need for that change. In the case of a district such as Derwentside, with a budget below £15 million, overspending added £83 to the charge this year; and in Harlow—another district budgeting below £15 million—overspending added £68 to the charge.

This year we have acted to achieve as much as possible by deterrence, and as little as possible by actual capping. Last year many authorities, including many Labour authorities, suggested to us that they should be told before making their budgeting decisions what capping criteria we intended to use. I was very grateful for that suggestion, and this year we did just that—we did precisely what authorities asked of us.

In October last year my right hon. Friend the Member for Bath (Mr. Patten), the then Secretary of State for the Environment, announced the provisional criteria for selecting authorities for capping that he intended to adopt. Therefore, before authorities came to set their budgets, they knew our intentions for capping. If they budgeted excessively and were subsequently capped, they did so with their eyes open to the consequences. That approach worked. Of the 39 county councils, 37 budgeted below the intended criteria. Of the 36 metropolitan districts, 35 budgeted below the criteria. Of the 33 London boroughs, 31 budgeted below the intended criteria. That is a measure of how, where authorities have the will and the commitment, efficient and effective services can be provided within prudent levels of spending.

The result is that, in total, local authority spending this year is just £200 million or 0.5 per cent. above the £39 billion for which we provided in our settlement. What a contrast that is to the £3 billion-worth of overspending in the previous year.

None the less, despite all the warnings, my right hon. Friend the Secretary of State judged that 14 authorities had budgeted excessively or had budgeted for an excessive increase over the previous year. He reached that view on the basis of the same capping criteria which he adopted and which gave effect to the intentions announced in October. On 3 April he therefore designated those 14 authorities for capping and proposed caps or maximum limits for their budgets.

The principles adopted were, and were intended to be, demanding. We do not apologise for that. But I stress that no council is designated if its budget is at or below its standard spending assessment. To those who allege inadequacies in calculating the SSAs, I point out that we have increased the SSAs in 1991–92 by an average of 19.4 per cent. over those of 1990–91 to give total standard spending of £39 billion. Events have borne out our view that that amount is fully sufficient to provide for local authority services.

Mr. Matthew Taylor (Truro)

In defending standard spending assessments, will the Minister explain them to the people of Cornwall, who saw an authority that was always judged to be an under-spender suddenly become an over-spender one year, and then, this year, become an under-spender again, despite having spent more? Such arbitrary changes inevitably mean that local councillors, council officers, and people in general can only laugh at the way the system appears to have become complete nonsense.

Mr. Portillo

Is the hon. Gentleman referring to Cornwall county council?

Mr. Taylor

indicated assent.

Mr. Portillo

It sounds as though the hon. Gentleman is asking us to believe that whatever a council chooses to spend in any one year is the measure of what it needs to spend. The Government set out to identify the spending needs of councils by more independent and objective means. In the event, last year spending increased by much more than the Government would have wished. We deplore that, but what were we to do? Were we to ignore the fact that the increase had occurred or to make some allowance for it in the standard spending assessment for the following year? The hon. Gentleman should welcome the fact that we went so far in providing additional SSA to reflect what had already happened.

For those authorities which had been designated, we proposed caps taking account of all the information available to us. I emphasise that our aim was that where authorities were able to reduce their budgets by the full amount implied by the criteria, they should be required to do just that.

The designated councils were notified on 3 April of their designation, of the principles on the basis of which they had been designated and of the amount of our proposed cap. They then had a period of 28 days in which to tell us whether they accepted the proposed cap. If they challenged it, they had to suggest an alternative figure, together with a supporting case.

In the event, six authorities—Greenwich, Langbaurgh, Middlesbrough, Milton Keynes, Reading and Somerset —accepted the proposed caps. The remaining eight challenged, and it is the final caps for those authorities that are dealt with in the draft order before the House. Of those eight, all but Stoke-on-Trent suggested alternative caps at the level of their original budgets. Stoke put forward a cap £0.5 million above its original budget.

Mr. Richard Holt (Langbaurgh)

My hon. Friend has listed both my local authorities among those which have been capped and have accepted the capping, but I must tell him that the criteria used to produce SSAs, which he may describe in the House as independent and objective, do not appear so to those closer to the scene.

The county of Cleveland, in which both my local authorities lie, spends money as though it were going out of existence. It has just produced, as though out of a hat, £860,000 to waste on a public relations exercise. Yet the two district authorities, especially Langbaurgh, are treated extremely badly under the SSAs and come right at the bottom every year. It seems that once an authority gets to the bottom, it stays there. I do not believe that that is independent, fair or just. The Conservative-controlled authority has accepted the capping this year, but I hope that, by next year, the SSAs will not be set in tablets of stone, but will be considered objectively and fairly.

Mr. Portillo

I hope always to be objective and fair in considering arguments put to me on the standard spending assessment. I should have had a little more sympathy with my hon. Friend if the two local authorities that he mentioned had been close to the SSAs—if one could have said they were within a whisker of them—but Langbaurgh proposed a budget 36.3 per cent. above its SSA, and Middlesbrough a budget 21.9 per cent. above its SSA. Even the caps that the authorities have accepted are more than 30 per cent. above that level in the case of Langbaurgh and 17.5 per cent. above it in the case of Middlesbrough. Doubtless during the coming year my hon. Friend and I will discuss the matter further, and I look forward to that.

Miss Emma Nicholson (Torridge and Devon, West)

Does my hon. Friend the Minister agree that the purpose of capping is to achieve value for money for the charge payer? Does not the fact that councils can honour the capping agreement and can cap budgets without cutting essential services or even staff show that there is much fat still in many district and metropolitan authorities and in county councils?

Mr. Portillo

It is certainly a source of great satisfaction to me that this year, by following the principle of deterrence and asking authorities in advance to reduce their own budgets, we have had to cap so very few local authorities. It seems to have been possible, despite much agitation, for most authorities to set budgets that fit in with our criteria.

My hon. Friend the Under-Secretary of State and I met delegations from each of the eight authorities in support of their written cases for a reduced cap. My right hon. Friend the Secretary of State carefully considered the points made at these meetings, with all the other available relevant information, before taking his decisions. In the case of four authorities—Basildon, Ipswich, Norwich and Stoke-on-Trent—he decided that their caps should be set at the level originally proposed. For the remaining four —Bristol, Lambeth, Warwickshire and Wirral—he decided, in the light of their particular circumstances, that some relaxation was justified. As a result, we have decided to increase the caps for those authorities by £1.5 million, £3.9 million, £2.8 million and £3.2 million respectively.

Throughout the exercise we have had but one aim—to require a capped authority to reduce its budget to a level such that it would no longer be excessive or represent an excessive increase. Wherever authorities are able to make that maximum reduction—however tough and demanding it may be—we have required it of them. Only in cases where the circumstances of the authority itself are such that we could not, within this year, demand that of the authority have we decided to aim off and require smaller reductions.

I should make it clear that, in those cases where we have decided to grant an increase in the cap over our originally proposed level, we have done so only after the most searching scrutiny of each authority's circumstances. There is no question of it being an easy ride for an authority seeking a higher cap.

My right hon. Friend the Secretary of State is satisfied that the caps for each of the eight authorities stated in the draft order are reasonable, appropriate and achievable in the light of all the circumstances of the authorities concerned. If the House approves the order today, it will then be for the authorities to decide how to live within their caps.

I have no doubt that we shall hear a great deal from the Opposition about the effects of capping, but I am equally sure that they will succumb to the temptation to indulge in the usual hyperbole and exaggeration that has characterised so many debates on this issue in the past. We are satisfied that councils, if they so choose, will be able to provide an appropriate level of services within their caps. If hon. Members ask what happened in 1990–91, I will remind them. I can do no better than quote from a survey carried out by the National Association of Local Government Officers. Last year, in the case of Basildon, NALGO reported: no cuts required as a result of capping. In the case of Bristol last year, NALGO reported: no redundancies, no cuts in services, no charge increases. And on Lambeth, NALGO reported: managed to avoid closure of front-line services and no redundancies.

Mr. Patrick Thompson (Norwich, North)

In the case of Norwich, which is included in the order, the city council has made great play of possible damage to historic buildings, a cut in programmes to help those buildings, and so on. Will my hon. Friend confirm that Norwich city council has adequate money in its reserves to deal with those problems and therefore that its fears are exaggerated, and indeed false, in that respect?

Mr. Portillo

I understand that at the end of March 1990 Norwich held reserves of £3.9 million. My hon. Friend's authority is not the only one to face costs in relation to historic buildings, and Norwich has a higher standard spending assessment per adult than Exeter, Winchester, Hereford, St. Albans, Lincoln or Warwick. Yet all those authorities, despite their historic buildings, are budgeting below their SSA. Meanwhile, Norwich was planning to budget at £16.5 million—25 per cent. above its SSA.

In 1991–92 we find some old friends still budgeting well in excess of their SSA. In Basildon, the original budget was an extraordinary 121.2 per cent. above the SSA, although we might breathe a sigh of relief as the original budget for 1990–91 was 196 per cent. above SSA. Other local authorities also budgeted high. Bristol budgeted 44.5 per cent. above SSA. I do not need to tell the House that those are very far from meagre amounts and they mean important amounts on the community charge. It is difficult to envisage that any of the designated authorities could not be expected to make savings to reduce their excessive spending.

Among the familiar faces there are also some new ones. Ipswich, for example, set a budget 50 per cent. above SSA. Last year Ipswich escaped designation owing to the operation of the de minimis proviso even though its budget was 96.3 per cent. above SSA. This year we decided not to loosen the criteria by the inclusion of a de minimis proviso beyond an allowance of £10,000 for those authorities whose arithmetic was imperfect.

Mr. Mark Fisher (Stoke-on-Trent, Central)

The Minister has referred to Ipswich. Will he also comment on and explain his decision in relation to Stoke-on-Trent, where the spending level that the council planned was more than £5 million below the level that his officials said was the right level of expenditure for last year? How does he explain how a figure that was correct for last year is far too high for this year, with the same social problems being faced by our city?

Mr. Portillo

The Stoke-on-Trent authority has the highest SSA per adult of all the authorities in Staffordshire, yet six of the districts in Staffordshire have budgeted within their much lower SSAs. Stoke is constantly making comparisons with other authorities, but it gets 13 per cent. more SSA per adult than Warrington, for example, which manages to stay within its SSA while Stoke's budget is £18 per adult above its SSA.

Mrs. Teresa Gorman (Billericay)

Talking about arithmetic being imperfect, I wonder whether my hon. Friend is aware that the Labour leader of Basildon council, councillor Peter Ballard, is apparently a qualified accountant working for the Labour party at its headquarters in the Walworth road. Perhaps that is part of the reason why its budgets do not balance either.

Mr. Portillo

My hon. Friend is a veritable fount of information, but I am bound to say that, although in setting the caps I took into account all relevant information, the point that she has just made was not one that I took into account.

Mr. D. N. Campbell-Savours (Workington)

On a point of order, Mr. Deputy Speaker. I do not know whether you have received a copy of a letter from Mr. Peter Ballard of Basildon district council, which has been circulated among hon. Members this evening and in which he makes an urgent plea on behalf of his local authority because he is faced with having to cut services for the elderly and for young people, recreational facilities and a great number of facilities which are enjoyed by the general public.

Mr. Deputy Speaker (Sir Paul Dean)

Order. It is already clear to me that that is a matter for debate, not a point of order for the Chair. Mr. Portillo.

Ms. Joan Walley (Stoke-on-Trent, North)

rose——

Mr. Portillo

I give way to the hon. Lady.

Ms. Walley

On the point that the Minister has just raised about comparisons with other cities, will he not accept that we are making valid comparisons between our city and other major cities? How does he account to the House for the fact that, for example, Leicester city council has a budget spend of £237 per head of population, while our budget per head of population in Stoke-on-Trent is £128? He says that it is useless to make comparisons, but surely these figures do not square up. Stoke-on-Trent is as large and important a city as Leicester. Ours is one of the larger district councils. If Leicester can hold a budget of that kind, what is wrong with Stoke-on-Trent doing so? Why has the Minister got it in for Stoke-on-Trent? Why can he not give the amount of money that is needed to provide local services?

Mr. Portillo

I certainly do not have it in for Stoke-on-Trent. We try to assess the needs of each city not merely on the basis of how large it is or whether intuitively we think that it is like other cities, but in terms of a series of indicators which tell us whether it is more expensive to provide particular services in that city—indicators relating to social make-up, how many people are on income support, what the proportions of people from ethnic minorities are, how many one-parent families there are. Those are factors which tend to make it more expensive to provide services—education, leisure, refuse collection, public amenities, and so on—in authorities such as the hon. Lady's.

To show that we are in no way mistreating Stoke-on-Trent, I remind the hon. Lady that in a number of programmes Stoke-on-Trent does extremely well. For example, its housing investment programme allocation was £17.7 million last year, and a further £14.5 million this year. So there are ways in which Stoke-on-Trent does extremely well—[Interruption.] The House would like me to make progress; I think that that is right.

In conclusion, I reiterate——

Mr. Lewis Stevens (Nuneaton)

Will my hon. Friend give way?

Mr. Portillo

I will give way, but for the last time.

Mr. Stevens

My hon. Friend has refered to some very large increases beyond the SSAs of many authorities. Having put forward those figures, he can perhaps understand the concern in Warwickshire. Last year its spending was some 10 per cent. above the SSA figure and this year it put forward a budget about 5 per cent. above. I hope that my hon. Friend will understand how Warwickshire feels. Compared with other authorities, it is not profligate in any sense.

Mr. Portillo

My hon. Friend knows, following frequent discussions, that we have considered Warwickshire's case carefully. We propose an increase in the cap, but our proposal leaves Warwickshire's spending 3.6 per cent. above its SSA.

I reiterate the Government's responsibility to protect charge payers from the consequences of excessive expenditure by local authorities in terms of unacceptably high bills, and to ensure that individual authorities cannot, for whatever reason, endanger our wider economic objectives to the detriment of all.

Our approach to capping this year has been entirely vindicated. We shall not tolerate a repetition of the enormous increase in local authority expenditure which accompanied the introduction of the community charge. We have shown that our policy works by telling councils well in advance the levels of spending and the levels of increase that we would regard as excessive. Most of them have fallen into line without the need to cap. That is how we shall limit spending, and that is how we shall ensure that we can deliver the council tax at reasonable levels.

The Labour party proposes no restraint on local spending, which means that such spending would go through the roof. That is why the Labour party's figures for the rates to which it would return are not worth the paper on which they are written.

I have great pleasure in commending the draft order to the House.

Mr. Max Madden (Bradford, West)

On a point of order, Mr. Deputy Speaker. The House is shocked at reports that Rajiv Gandhi has been assassinated and I wonder whether arrangements could be made for the Government to make a suitable statement, perhaps at 10 pm, to enable the entire House to express its sympathy with Mr. Gandhi's family and with all the people of India, and to express the hope that Indian democracy will overcome this dreadful challenge. A statement would enable us all to call for calm among the Indian community in the United Kingdom and throughout the world.

Mr. Deputy Speaker (Sir Paul Dean)

I am sure that the entire House will echo the hon. Member's words. The news has left us all with a sense of deep shock. I have heard nothing about a statement, but I am sure that the hon. Member's comments will be noted by those who sit on the Government Front Bench.

7.32 pm

Mr. Bryan Gould (Dagenham)

I join my hon. Friend the Member for Bradford, West (Mr. Madden) in expressing on behalf of the Opposition—I am sure that I speak for all in this place—the shock and horror that we feel on receiving such tragic news from India.

It is a measure of the extent to which the Government are assailed by difficulties on all sides—difficulties with the national health service, with the economy, with Europe and with education, and not only from outside their ranks but within them, too—that they are reduced to trying to grasp at the straw of claiming that at least with local government finance they have managed to wriggle off the hook on which they impaled themselves. However, even that modest claim can scarcely be justified. The truth is not that concern over the poll tax has subsided but that concern about other issues has increased. The real damage that was done to the Government by the poll tax debacle was to their reputation for competence. It is that competence which is now called into question throughout the range of Government policy on all other issues. It is the Government who could not get the poll tax right who now look so much less convincing on other issues.

Nor is it true that the poll tax saga is over. The Government may at last have steeled themselves to acknowledging that a terrible mistake has been made. However, they have done their reputation no good by dithering over what to do and by their continuing inability to get rid of the poll tax.

The Government's difficulties will become worse. Political commentators may assume that the poll tax fury has subsided, but they have not seen my mail bag over the past week or two nor, I suspect, the mail bags of many Conservative Members. Equally, commentators have not been present at my advice surgeries. I am sure that other hon. Members have detected a clear message from these sources. There is a rising tide of anger among many people who are beginning to discover, as this year's poll tax bills arrive, that they have been taken for a ride over the supposed £140 reduction in their bills. They are already paying a poll tax surcharge in the form of value added tax. Typically enough, half all poll tax payers, and especially those at the lower end of the scale, will not benefit from the full and promised reduction.

That is only the beginning of the troubles. It is starting to dawn on people that the abolition of the hated poll tax is still a long time away. The bills will keep on coming until 1993, according to the Government. According to most experts, the bills will continue to be presented until at least 1994, and possibly until 1996, according to the view of local government treasurers as reported in this week's issue of Local Government News. Anger will grow as it becomes clear that every year of the continued life of the poll tax will preserve all of the tax's unfairness and inflexibility and will cost each household, on average, £140 more than it would have to pay under the Opposition's fair rates proposals.

Mr. Robert B. Jones (Hertfordshire, West)

What would someone living in a house worth £100,000 in my constituency pay under the Labour party's fair rates proposal?

Mr. Gould

I advise the hon. Gentleman to consult the full table that sets out the rates that would be paid under our proposals.

Mr. Jones

They are not set out.

Mr. Gould

Oh yes they are. The figures are set out for a household with a property of average rateable value. I assure the hon. Gentleman that the figures bear close scrutiny. They are based on real figures, not on a 14-band exercise that required district valuers simply to make estimates. That exercise was then translated by lopping off the six top bands and rearranging the remaining eight into seven bands that bear no relationship to any exercise that has ever been carried out.

Mr. Phillip Oppenheim (Amber Valley)

Will the hon. Gentleman give way on that point?

Mr. Gould

No, I shall not give way. I believe that I have dealt substantially and conclusively with the disputed figures.

Each year's continuance of the poll tax can only add to the problem of accountability. I know that the House is not normally disposed to take these matters seriously, but I invite it and all those who are concerned with local government to do so. Imagine the difficulty of collecting the poll tax. The problem is clear in Scotland, where it is becoming greater rather than easier. The problem will be exacerbated over two, three or perhaps four years by a perception that even the poll tax's only remaining friend, the Government, have abandoned it. There will be the further perception, assiduously propagated by Government propaganda, that the tax has somehow been abolished. The problem or the outlook for local government treasurers in trying to collect the poll tax in such circumstances is truly horrific.

It seems that the Government have been so preoccupied with the short-term political question of how to get themselves off the poll tax hook that we must assume that they have not yet bothered to consider the longer-term practical problems that their measures have produced. I urge Ministers, for the sake of local government, to pay some attention to the issues.

We have to consider the Government's capping measures in that context of uncertainty and confusion, which is exacerbated by today's announcement of yet further legislation intended to turn the capping screw even tighter.

It is fair to say that the Government have found it necessary—perhaps against the better instincts of some Ministers—to cling to the rock of capping for fear of being swept away in the sea of confusion which they have created over local government finance. Even in the field of capping there is nothing but confusion and inconsistency.

On this issue, as on so many other local government finance issues, we have been treated by the Secretary of State—how regretable it is that he is not present—to an increasingly weary and familiar spectacle of him standing on his head, not once but 10 times over. He has a long record of being consistent only in his inconsistency on all those issues.

On 18 July 1979, when the right hon. Gentleman was Secretary of State for the Environment for the first time, he promised to set councils free. He said: We will sweep away tiresome and excessive control over local government. Local councils are directly elected. They are answerable to their electorate. They do not need, they do not want, the fussy supervision of detail which now exists. What fine sentiments and how much we Opposition Members agree with him. Fine sentiments, which were almost immediately obstructed in practice by a Secretary of State who did more to impose central Government control on local government finance than any other Minister in history.

Mr. Robert B. Jones

Will the hon. Gentleman give way?

Mr. Gould

No, I have given way to the hon. Gentleman once already.

Mr. Oppenheim

Will the hon. Gentleman give way?

Mr. Gould

I may well give way, but I shall complete this argument before I do so. The Secretary of State introduced grant targets and penalties which led directly to rate capping in 1984.

Mr. Oppenheim

rose——

Mr. Gould

Once I have dealt with the Secretary of State I shall give way to the hon. Gentleman. He may have to remind me again if I overlook him.

At the end of the decade, and out of Marsham street, the Secretary of State had recanted. He wrote in The Times on 10 May 1990 that to introduce universal capping would be to negate accountability and would be an act of centralised power outside our experience. On those grounds alone"— he proclaimed— it should be resisted. But here is the Secretary of State—in spirit if not in person—not resisting capping but enthusiastically supporting it all over again. Here is a Secretary of State whose first act when he took up the reins of office again at the end of last year was to pursue a capping measure, a Secretary of State who has again introduced in his name today's measure and who gave a written answer to one of his hon. Friends announcing that further capping measures will be taken. It is little wonder that politicians, especially the Secretary of State, are frequently not believed and that the Secretary of State's reputation for honesty and principle is now in tatters. If he were present I would challenge him to say, here and now, whether he adheres to the view that he expressed a year ago. If he said that he did, I would ask him why he is acting in the contrary direction. If he said that he did not, I would ask him what had made him change his mind.

I am tempted to ask the Minister of State to explain on behalf of the Secretary of State, because he is clearly a man of some facility in following the twists and turns of his superior's thinking in these matters. But that might be unfair, even to the Minister.

Mr. Oppenheim

Will the hon. Gentleman confirm that any future Labour Government will abolish capping and spending limits? Will he also confirm that his co-called fair rates figures were based on this year's spending, which obviously involved an element of lower spending because of capping and spending limits? If that is so, how can his so-called fair rates figures be taken seriously?

Mr. Gould

I am afraid that the hon. Gentleman simply does not understand these matters. We have established our position on capping on many occasions. Let us make it clear that our proposals for doubling the tax base, for rearranging the grant and for annual elections are a better and more democratic means of achieving the limits in local authority spending which we think appropriate.

Our fair rates figures are based entirely on like with like. We have accepted the same level of spending as the Government have established.

Mr. Portillo

I was intrigued by the phrase that the hon. Gentleman used a moment ago, when he said that it was a better way of achieving the limits which he thought "appropriate" on local government spending. What are those limits and why has he not told us about them before?

Mr. Gould

Because they are the limits that are decided as appropriate by local authorities, which are answerable to their electorate. That is a familiar principle to anyone who claims to believe in the principle of local democracy. I know that it is difficult for Ministers and Conservative Members to grasp that simple concept, but that is the essence of local democracy; and because we intend to strengthen it through our proposals for annual elections, we believe that we have a persuasive programme for ensuring that local electors are able to judge regularly and effectively the level of spending and levels of service which they decide that they want delivered for that spending.

There is a suspicion that the Secretary of State's reason for abandoning his earlier and better judgment on these matters and proceeding with these draconian proposals to cap local authorities was not that he was suddenly persuaded, in some deathbed conversion, of the great merits of capping, but that he was told it would be politically advantageous to use a capping mechanism, which it was hoped would corral and identify Labour authorities so that they could be uniquely accused of overspending.

Unfortunately, the exercise proved more difficult than it had seemed at first sight, and it proved impossible to come up with an objective set of criteria which identified Labour authorities only and excluded Conservative-controlled authorities. Try as they might, the Government could not perform that exercise. Today's announcement shows that they have abandoned any attempt to proclaim and protect the last vestiges of local government independence in matters of finance and that they are prepared to threaten large numbers of Tory-controlled administrations as well. Let us make no mistake: that is what universal capping will mean. As soon as the £15 million threshold is removed, large numbers of smaller Tory districts will be brought into the net. On this year's figures, no fewer than 20 Tory-controlled districts would have been capped under the criteria applied for this year. Elmbridge in Surrey would have had to cut 38 per cent. of its budget, Oadby and Wigston would have been capped to the tune of 19.7 per cent.—although the voters have intervened in the meantime—Arun by 18.3 per cent. and Epping Forest by 17 per cent. I could continue down the list.

Mr. Stevens

rose——

Mr. Gould

Deep cuts in services would have been needed to accommodate that exercise of the capping power, as I am sure the hon. Member for Nuneaton (Mr. Stevens) is about to say was true in Warwickshire this year.

Mr. Stevens

How many Labour councils, under the £15 million limit this year, would have been capped in the process?

Mr. Gould

The hon. Gentleman will forgive me for concentrating on the large number of Tory authorities which figure in these small districts. I am sure that the hon. Gentleman will have considerable fellow feeling for them, given his spirited defence of Warwickshire a moment ago.

The capping exercise is arbitrary in another respect—the criteria for capping are based in part on the Government's calculations of standard spending assessment, which everyone knows bears little relationship to levels of expenditure and is substantially flawed, as is shown by the experience of a large number of authorities such as Greenwich. I notice that the hon. Member for Langbaurgh (Mr. Holt) was anxious to suggest one or two other instances for consideration.

Some authorities, such as Basildon and Bristol, found themselves capped because of the arbitrary nature of the criteria, even though they did not exceed their SSAs—[HON. MEMBERS: "Oh!"] I am sorry; they found themselves capped because they had exceeded their SSAs but had reduced their budgets from one year to the next. That means that excessive weight is placed on that arbitrary criterion. Because the standard spending assessments of many authorities, such as Stoke, had been reduced from one year to the next, they were suddenly and unpredictably caught by the draconian nature of the capping powers that have been exercised.

Mrs Gorman

Is the hon. Gentleman aware that the Government allowed Basildon to increase its spending by 27 per cent. over last year so they have been more generous to Basildon this year? As Basildon was asking to spend over 191 per cent. more than it should have spent, the Government have been inordinately generous to it.

Mr. Gould

The hon. Lady should be clear about the distinction between changes in SSAs and the budget.

Conversely, the other criterion, based on the extent to which last year's budget is exceeded, has caught some authorities, such as Wirral, which has inherited budgets that have been held artificially low by previous administrations in earlier years. The arbitrary nature of those criteria is shown by the fact that, of the authorities that have appealed, 50 per cent. have had their capping levels changed. I do not object to the outcome of those appeals which, in themselves, are welcome. However, the fact that half the caps did not fit is a clear indication of how unreliable the capping criteria are.

Those measures are all taken to trim less than £40 million, or 0.1 per cent., off local government expenditure. That is only a fifth of the extra expenditure forced on local authorities by the Government through their hasty and last-minute move away from the poll tax and in favour of VAT. It is costing local authorities £200 million to recalculate and reissue those bills. We hear little about the Government being capped on those grounds.

That is a further illustration of a wider truth: the best judges of local authority finance and of the services that it delivers are the local authorities themselves and the communities that they serve and to which they are accountable. The Secretary of State made that point eloquently just a year ago, and it should be apparent to anyone who genuinely believes in local democracy. If local people decide that they want——

Sir William Shelton (Streatham)

Will the hon. Gentleman give way?

Mr. Gould

I am halfway through a point that I am trying to make. I shall give way to the hon. Gentleman later.

If local people want, and are willing to pay for, a new nature reserve, better nursery provision or more low-cost housing, why should not they be able to vote for those changes and their delivery? That is what local democracy is about and it is being denied by the Government.

Sir William Shelton

Does the hon. Gentleman persist in saying that he would let Lambeth council spend whatever it wished? The hon. Gentleman talks of local democracy, but is it not true that his party has dispossessed 13 councillors, elected by the people of Lambeth, and has made them resign their seats from the Labour party? Am I not right that the main reason was that those councillors had a debate on the Iraq war and were rather in favour of Saddam Hussein? Moreover, some of them did not pay their community charge, exactly like some Labour Members.

Mr. Gould

I am sorry to be harsh with the hon. Gentleman, but I am always astonished that Conservative Members take the trouble to come into the Chamber, presumably to make a contribution, and then reveal their abysmal ignorance of the subject on which they choose to intervene. The truth is that the Lambeth councillors are still councillors and I recommend that the hon. Gentleman reads our proposals for annual elections and a quality commission, in which he will see that we have a complete programme for some of the problems that have arisen in Lambeth.

The Government's use of capping has virtually extinguished any remnant of true local democracy. Every aspect of local authority finance is now controlled from Marsham street, from the constraints on capital spending to the nationalised business rate, from the level of SSA and essential Government grants to the threat and reality of capping which, under the Government's new measure, will dictate to every local authority the size of the budget that they must set.

Ministers seem insensitive to the charge that they are thereby destroying local government. They appear to understand little and to care less. They preen themselves on having held down budgets and spending programmes, with no regard to the real damage that they have done to local services and to the people who depend on them. I suspect that the hon. Member for Langbaurgh (Mr. Holt), who has some experience in his constituency of what those cuts mean, would, at least behind the scenes, agree with me.

Mr. Holt

I am grateful to the hon. Gentleman for allowing me to intervene again. However, I do not agree with his latter point. Although I disagree with the Government over standard spending assessments, the inefficiency of Langbaurgh council is a byword. Indeed, its civic amenity has a bar with no financial controls, not even a till roll in the till. Until such matters are put right, Langbaurgh council is not a good example to pick.

Mr. Gould

How refreshing it is to hear a Tory Member who is at least prepared to make honest comments about a Conservative-dominated administration. The hon. Gentleman would agree with the general proposition and the principle——

Mr. Holt

No.

Mr. Gould

The hon. Gentleman well knows that a Conservative budget was put forward.

Mr. Holt

No, it was not.

Mr. Gould

Yes, it was. It is clear that we shall not resolve this issue, but the hon. Gentleman will concede——

Mr. Holt

I must put this on the record yet again in the House. The largest party on Langbaurgh council was the Labour party. For some reason, four members of the Labour party defected and became independent. The Liberals then switched their support from the Labour party to the Conservative party, but, every time a budget proposal was put forward by the Conservative party, it was voted down by the Liberal and Labour parties together.

Mr. Gould

The House will conclude from that intervention that the hon. Gentleman does not dispute the fact that the Conservative party took the chair of the committee and a Conservative party budget was eventually voted through.

Let us make no mistake: whatever the truth of the position in Langbaurgh—which the hon. Gentleman may or may not be prepared to reveal—the Government's capping measures and the threat to use them have caused substantial damage and hardship to nursery school provision, lunch clubs for old people, legal, housing and welfare rights, advice centres, leisure and library facilities, youth clubs and the whole voluntary sector, which is the means by which so much local effort is made effective in the local community.

Ministers should not claim that those cuts were painless. They have hurt services and local people notice that damage and those cuts. Those measures could have been perpetrated only by a Government who, if they ever understood and valued local government, certainly do not do so now. There is little point in challenging Ministers on what they believe about those issues. They have shown beyond doubt that they have no beliefs to which they are prepared to adhere. Those Ministers continued to proclaim the great virtues of the poll tax until they were told to jump in another direction and then duly did so. They have not only no sense of principle or consistency but no sense of shame either. They are prepared to follow their Secretary of State in humiliating reversals and clear about-faces, in flat contradiction of their own personally stated positions. The Ministers act not on what they think or believe, but according to what, from day to day, appears to them to serve the interests of their own immediate short-term electoral fortunes. The evidence is that the electorate is as sickened by the spectacle as we are and will impose the appropriate penalty as soon as the general election is held.

8 pm

Mr. Michael Stern (Bristol, North-West)

I shall not follow the hon. Member for Dagenham (Mr. Gould) along his last electioneering path, but will instead return to the subject of the debate and follow on from the remarks that I made in last year's debate on capping. I said then that the decision on whether the Government should cap was effectively determined by Bristol city council through its decision—which was the council's decision alone—to impose on the city a budget far beyond that which people could afford.

In order to explore one of the reasons which justify the Government yet again rescuing the long-suffering citizens of Bristol from the waste and jobbery that are now inseparable from Bristol city council, I shall concentrate on one aspect of the council's inflated budget—the way it sets about collecting public money.

Undoubtedly, the most resented part of the council's community charge announcement for the current year was that the community charge for Bristol included a sum of £40 for every charge payer to cover the costs of non-collection. That sum alone amply justifies a far more savage cap on the community charge than that imposed by the Government. That does not take account of other spending which, in the previous year, led Bristol to announce net revenue expenditure of about 185 per cent. of its standard spending assessment.

A study of Bristol's system for collecting the community charge shows that the problem goes much deeper than irresponsible overspending. This year, the collection losses in Bristol on both community charge and rates averaged £10 per adult. The average figure for comparable authorities was £7. Last year, the cost of collecting the community charge and administering community charge benefits in Bristol was £19.90 per adult. The figure for comparable authorities was £11.30.

Ms. Dawn Primarolo (Bristol, South)

I think I can help out here and correct the hon. Gentleman, who I am sure got his figures from the city treasurer. He is right to say that the estimated cost for the collection of Bristol's poll tax for the year was £19.90, but the probable outturn, which is based on the cost, is £14.65. The cost per head in the big 11 and the metropolitan authorities, which are comparable to Bristol, is £15 per head. Therefore, Bristol is bang on the Government target.

Mr. Stern

I am grateful to the hon. Lady, who quotes the city treasurer's figures, which have also been quoted to me. I am quoting the Audit Commission's figures, and while there is room for a difference of opinion between——

Ms. Primarolo

The treasurer's figures are based on the Audit Commission's figures. The hon. Gentleman should not be silly.

Mr. Stern

I was quoting the Audit Commission's figures, which are independent and would not be available under a Labour Government because I believe that the Labour party intends to abolish the Audit Commission.

The Audit Commission's figure for administering community charge benefits and collecting the community charge in Bristol was £19.90 per adult, and the figure for comparable authorities was £11.30. However, that does not mean that Bristol does not know how to save money. It saves money on collecting rents. At March 1990, its accumulated rent arrears were 25 per cent. higher than those of comparable authorities. Above all, and perhaps most relevant to today's debate, the authority saves money on the staff that it needs to deal with its finances, which presumably includes collecting the community charge. At March 1990, subject to inevitable differences in classification, while its overall staff level was considerably higher than that of comparable authorities, it had 239 fewer financial staff than the figure that other similar authorities reckoned they needed.

The techniques used by Bristol city council to collect the community charge are not just inefficient; they seem carefully designed to create the maximum suffering among people who are entitled to benefits. One of my constituents has dedicated his life to bringing up a large family, every one of whom is severely physically handicapped. Despite having to live largely on benefits, he has nevertheless had the courage to play a considerable part in the local community. Not surprisingly, he is entitled to a high community charge benefit. The council's response was to withdraw that benefit without warning in November and ask him to pay nearly £45 a month—about four and a half times what he had previously been paying. He came to see me nearly in tears because there was no way that he could possibly meet that bill out of his benefit. When I queried the bill, his rebate was reinstated and the only explanation given was that it had been withdrawn as a result of an annual review.

Another constituent was continually being reassessed for the amount of community charge payable despite the fact that there was no change in his circumstances. When I asked why, I was told that there was currently a problem with the computer software interface between the benefits system and the community charge system which meant that some bills were produced unnecessarily. That was in January, nearly 10 months after the introduction of the charge. Clearly the problems have not yet been resolved because the council has just sent out huge batches of arrears notices without any previous explanation to the recipient. Some of them are for tiny sums, and some of them have been withdrawn as soon as they were queried.

One group of people who I believe are wholly blameless for this chaos are the council officers involved——

Mr. Gould

The Government are responsible.

Mr. Stern

The Labour party is not interested in protecting council officers, but Conservative Members are.

There is no evidence that the council officers have done anything other than their best with the resources that they have been permitted by their political masters. The many apologies that I have received on behalf of my constituents for some of the errors and re-errors—I stress that the re-errors affect some of the most vulnerable members of the community—must have been painful ones for councillors to write.

A combination of misdirection of resources and failure to collect sums due to the council can be laid only at the door of the councillors who direct the council's functions. Councillors Robertson, Hammond, Naysmith and Micklewright and their acolytes determined that it was not worth collecting the money due and that the machinery for collection should be so inefficiently applied. Whether they did so out of incompetence or out of a desire to discredit the community charge I cannot say, but their recklessness with public money in Bristol makes it inevitable that the Government should step in to ensure that those councillors have less money to mishandle.

8.7 pm

Mr. Jack Ashley (Stoke-on-Trent, South)

I hope that the Minister for Local Government and Inner Cities will not leave now because I wish to talk about the air of sweet reasonableness that he adopted. He had an air of calculated, warmhearted consideration for local authorities. I have never heard a Minister talk through his hat as much as the Minister did a moment ago.

The Minister said some fine words about Stoke-on-Trent and painted a pretty picture about what was being done to help. He showed that he does not know what he is talking about because Stoke-on-Trent has been heavily penalised by the Government. The Minister said that the Government's caps are reasonable and responsible. How can he say that about a system that hurts authorities that do not merit being hurt? The way in which Stoke-on-Trent has been hurt is shocking. I am surprised that both the Minister for Local Government and Inner Cities and the Under-Secretary of State for the Environment can stand by their decision.

It has been rumoured that the local authority representatives who saw the Under-Secretary, as Stoke-on-Trent did in good faith, got nothing, while those who saw the Minister for Local Government and Inner Cities got some concessions. That is only a rumour, but if it is true it shows a certain division within the Department, whereby the Under-Secretary was used as a foil, almost a bait. Everyone commented on how nice he was—of course he is a nice man of whom I am fond. However, he gave nothing, while the Minister gave concessions. Is there a little bit of political manoeuvring going on? I am prepared for the Ministers to deny that.

Mr. Portillo

The implication that my hon. Friend is a hard man and am a softie is absurdly flattering to both of us.

Mr. Ashley

I am afraid that the Minister has misunderstood even what I said, let alone the policy. The implication was that his hon. Friend was the soft man and that he was the hard man. Far from flattering the Minister, I was insulting him.

I am sorry that Stoke-on-Trent has been included in the Government's proposals. The authority has never been extravagant or profligate. The Government's object is to hit authorities, that have shown those tendencies. Stoke-on-Trent has set low rates for decades, owing to its low-paid workers and pottery industries. Because of that tradition of low rates, Stoke-on-Trent has no proper facilities. It is trying to change that, but is being prevented by the Government, who are adamantly capping the council's finances. That is an unrealistic action: Stoke-on-Trent is being hit as it tries to clamber out of the confinement of the current recession.

Stoke-on-Trent has been called a sick city—and rightly so. In half its wards, the average child will not live to experience retirement. Dereliction in the area is such that three times the national average number of houses have no inside WC and twice the national average number have no bath, while 53 per cent. of its houses are substandard.

Those are shocking figures. People may well call Stoke-on-Trent a sick city—although I prefer to call it a Cinderella city because it has been neglected by the Government and left to rot, yet it could have a glittering future if given the right kind of help. In the next four minutes, I shall plead for help from the Government. Mine will be a short speech, but it will put a reasoned case. I ask the Minister to stand up to the Treasury, and demand a fair deal for Stoke-on-Trent.

Stoke-on-Trent's 1990 standard spending assessment was low, and there was no significant improvement in 1991. The final insult was a £410,000 cut in the provisional assessment. When I complained about the low SSA to the Minister for Local Government and Inner Cities, he gave me an interesting answer. He said that the 16.6 per cent. increase was some way above the class average". "Class average", however, is a meaningless concept when applied to a town such as Stoke-on-Trent. The realistic and relevant criterion would be obtained through a comparison with the nine largest shire districts in England.

Stoke-on-Trent's assessment is £128. The top figure is £237, and the average is £164. Where is the sense in that? Why should one district receive £128 and another £237? There is no justice or fairness there. It is outrageous that Leicester, Nottingham, Portsmouth, Hull, Southampton, Plymouth, Derby and Bristol should all have higher SSAs per head than Stoke-on-Trent. The Government are penalising a city that has already been penalised. Let me make it clear that I am not criticising the other cities that I have mentioned; if they can secure higher SSAs, good luck to them.

I am glad to see that the Secretary of State has arrived in the Chamber. I am in the process of putting the case for Stoke-on-Trent—a special case, for Stoke-on-Trent has been treated very badly.

As I have said, I do not criticise those other cities. I believe, however, that the Government have been grossly unfair; the comparison that I have highlighted is appalling. I hope that the Secretary of State and the Minister will accept that they are damaging Stoke-on-Trent, and preventing it from breaking out of the poverty trap that has been inflicted on the whole county.

As I said, Stoke-on-Trent is a sick city. It is also a poor city. Unless the Secretary of State acts at the eleventh hour, it will become a depressed city. Stoke-on-Trent's achievements are widely known. It has tremendous potential owing to the attractions of its skilled labour force, its excellent industrial relations, its good communications and its enterprising spirit. Tonight, however, it needs help very badly. Even at this late stage, I look to the Secretary of State to provide that help.

8.16 pm

Sir Dudley Smith (Warwick and Leamington)

It might well be asked what a respectable county like Warwickshire is doing in company like this—why it finds itself in the dock, awaiting sentence from my right hon. Friend the Secretary of State and the House, along with all the old lags, by which I mean the profligate, high-spending Labour authorities which thoroughly deserve to be there. The answer lies in the grant settlement. In my speech, I shall submit that the county that I have the honour to represent—as do several of my hon. Friends who are present tonight—is being treated unfairly.

It is only fair that I quote from a letter, dated 13 May, which I received from my hon. Friend the Minister for Local Government and Inner Cities. My hon. Friend wrote: There is no question of Warwickshire being treated differently from other authorities, as I have said SSAs are calculated on general principles and differences in assessments reflect differences in characteristics. A relatively low SSA per adult does not penalise the authority in question, it merely reflects the proportionately lower costs faced by that authority. That may apply in a number of instances. Certainly I regret the fact that my county council was charge capped, although, to be fair, I am sure that it is capable of further economies—scarcely any institutions are not capable of that, if they look into their hearts. I am glad that my right hon. Friend the Secretary of State gave us half a loaf, and listened to the spirited representations made by Warwickshire Members and by the county council. Given the overall position, however—especially in regard to education—I do not think that Warwickshire could cope at this stage without the budget that it set itself. I believe, for two main reasons, that it would be unfair to reduce that budget to anything below £278.3 million.

Firstly, unlike many other authorities, the council decided a year ago not to use the introduction of the community charge as a smokescreen to hide irresponsible increases in expenditure. On the contrary, it took a number of restrictive financial steps to help support national policy, and to protect the population of Warwickshire from a high community charge. It reduced service budgets by £5.6 million, which was more than what was considered necessary, and £3 million of that reduction was intended to be only temporary, such as that relating to maintenance of roads and buildings and teachers in-service training—services that the council wanted to restore. A strong cash limit was set for pay and price increases, actual inflation was £2 million more than the amount that was provided, but the authority had to manage within the limits. The previous year's £1 million efficiency savings was removed from the budget permanently.

The precept was further reduced by taking £3.5 million from reserves and balances. As a result, the precept increased 11 per cent., compared with an average of 17 per cent. among county councils that the Audit Commission regards as fairly comparable with Warwickshire. That was the second lowest increase among county councils. Taking the past two years together, Warwickshire's precept increase is one of the lowest of all county councils.

The plain fact is that if Warwickshire had not made those reductions and used its reserves a year ago, it would not be facing capping along with profligate Labour councils. My right hon. Friend the Secretary of State is a fair man, but it is unfair that Warwickshire, which has behaved so reasonably, is being punished.

Ms. Primarolo

May we assume that the hon. Gentleman will be joining us in the Lobby to vote against the cap for Warwickshire?

Sir Dudley Smith

The hon. Lady is right—I shall indeed. I do not blow hot and cold and fail to follow up my comments. I have much regard and respect for my right hon. Friend, who is a first-class Secretary of State, but he has been ill advised about Warwickshire by his officials and there is only one way to register my protest. Therefore, with much regret, although I hate voting with the Opposition, I shall vote with them today.

My second point in defence of Warwickshire concerns the standard spending assessment formula, which is not only used to distribute revenue support grant but forms part of the criteria for selecting authorities to be capped. The formula consists of numerous elements, many of which Warwickshire regards as demonstrably unfair. I shall try not to weary the House, but I must give one or two important figures. The formula assumes that Warwickshire will earn £6.7 million interest on revenue balances and what are called usable capital receipts. But expected interest is only £1.5 million—a difference of £5.2 million. Revenue balances and expected capital receipts are low, so once again Warwickshire, which behaved sensibly last year in reducing its commitments, is being penalised for using reserves to reduce its community charge.

Mr. Stevens

My hon. Friend puts the case well. Does he agree that Warwickshire had a shortfall when the system changed from rate support grant to revenue support grant which is continuing from the previous year to this year? Grant increased by a modest amount this year, but that aggravated the problem which began in the first year of the scheme.

Sir Dudley Smith

My hon. Friend is right. That is why Warwickshire finds itself in the dock. Officials have not paid sufficient regard to that aspect.

The formula assumes that Warwickshire's labour costs are lower than in the south-east of England. That, too, is unfair as most pay scales are based on national rates. For teachers and police officers—almost half Warwickshire's work force-significant local discretion is not only impractical but is not allowed. This part of the formula leaves the Warwickshire charge payer £26 worse off than a community charge payer in Oxfordshire. No one could say that Oxfordshire is Warwickshire's poor relation. The unfairness is compounded by the fact that, although the formula assumes lower labour costs in Warwickshire than in the south-east, it does not allow for higher costs in Warwickshire than in other parts of the country.

Another unfairness stems from time lags. As the hon. Gentleman will be aware, the M40 motorway was opened recently and should have increased Warwickshire's SSA by almost £1 million. That would have been valuable, but we are not sure whether the figures will be fed through even in time for 1992–93. I am advised that other time lags have had a similar effect.

The SSA formula for the police does not reflect unavoidable costs falling on Warwickshire as a result of its having far more long-serving officers than average, and of its having to pay higher than average housing allowances. My hon. Friends and I have been to see the Home Secretary about that.

The fire service SSA for Warwickshire is £2.6 million less than the 1991–92 budget—a difference of more than 30 per cent. The service has remedied the over-provision identified by Her Majesty's inspector and I am sure that he would not support further reductions.

The county tells me that the SSA formula means that the less permission an authority receives from the Government to incur capital expenditure on credit, the less revenue money it needs to use instead. The authority regards that as nonsense, and so do I. It hits Warwickshire especially hard as the county has the second lowest basic credit approval per charge payer of all English county councils.

A year ago, changes to the Department of the Environment's formula for deciding the appropriate spending for each authority cost Warwickshire £13 million overnight. Once again, it lost out disproportionately. That was the second worst change per charge payer of any county council. On 31 March last year, Warwickshire's education budget was within 1 per cent. of the education SSA's predecessor. The next day, despite adopting a tight budget for 1990–91, Warwickshire was deemed to be overspending on education by £11 million. That was partly a result of the Department of the Environment's civil servants attaching unreasonable weight to additional education needs. Such volatility must call into question the credibility of the SSA system.

Mr. James Pawsey (Rugby and Kenilworth)

Will my hon. Friend reflect on what may happen next year? Will he find time in his speech to ask Ministers whether they will carefully consider the SSAs for next year so that we do not find ourselves in the same position as this year?

Sir Dudley Smith

My hon. Friend anticipates what I was about to say. He knows the line that many of us have tried to develop before. I am delighted that my right hon. Friend the Secretary of State is here because he is the man who can help us.

The credibility of the SSA system is being questioned by Tory, socialist and Liberal Democrat county councillors in Warwickshire and by chief officers. They all believe that something is wrong with the system as it applies to Warwickshire.

Plainly, the situation cannot continue. My hon. Friends and I must go to see my right hon. Friend the Secretary of State fairly soon with my hon. Friends the Members for Stratford-upon-Avon (Mr. Howarth) and for Warwickshire, North (Mr. Maude). I appreciate that they are in a difficult position as they are members of the Government, but we must ask my right hon. Friend the Secretary of State to consider Warwickshire in a different light in order to achieve fairness in the future. I think that we can reach an accommodation and I hope that we shall.

I very much regret that I have no alternative but to vote against the Government tonight.

Mrs. Gorman

Shame.

Sir Dudley Smith

My hon. Friend says, "Shame", but it would be a hollow thing to make a speech such as I have made and then to abstain or walk away. My right hon. Friend the Secretary of State is a perceptive politician. He realises the pressures generated in our county and why I shall vote against the Government. I shall do it not with delight, but with sorrow. In doing so, I hope that my hon. Friends and I will be able in due course to get a better deal from the Department of the Environment.

8.30 pm

Mr. Matthew Taylor (Truro)

I join other hon. Members who have expressed their deep sorrow about what happened tonight in India—the assassination of Rajiv Gandhi. It is an appalling thing to happen in the world's biggest democracy. In our democracy such an event has not been successful in recent years, although very nearly so, and all hon. Members will feel strong sympathy for his family.

Mr. Robert Hayward (Kingswood)

It happened to Ian Gow.

Mr. Taylor

I was referring to party leaders and the incident involving the Prime Minister which was not successful. We have dealt with democratic issues tonight, so, in that sense, it may be relevant.

The order is an admission of failure by the Government. The fact that it is being debated at all shows that the Government have failed to create a system of local finance that it can leave to local authorities to operate. The Government have not created an accountable system in the way that they claimed that they would when they first suggested the poll tax.

The order creates more chaos, adds to the overwhelming cost of the tax and will mean that some poll tax payers will have been faced with a multitude of bills within the space of a few weeks. Another round of capping shows how far the poll tax has failed to deliver on one of its prime aims, which was to increase accountability between councils and the electorate. It is also a reason—admittedly one of many—why the poll tax has had to go.

It must not be forgotten that the poll tax was supposed, in the Government's terms, to rescue voters trapped in high-spending Labour authorities. The Government's logic was that once all those who did not under the old rating system have the burden of huge bills faced huge poll tax demands, they would vote Conservative for lower bills. However, all that has happened is that those who were trapped by high rates are now hit by high poll tax. The local elections showed that across Britain the electorate is voting against the Conservative party which introduced those poll tax bills. The electorate is clear about where the responsibility lies.

However, it is not the promise of high bills and services that creates the Lambeths of this country—it is the electoral system. The Government have been prepared to sacrifice Lambeth residents and others to protect their fiefdoms in areas such as Wandsworth.

The figures for Lambeth, which is being capped again, show how one-party domination of the borough is not supported by the voters. In 1986 and in 1990, most of the votes cast in Lambeth were against the Labour party, but at both elections the Labour party was returned with a majority of seats. In 1990, Lambeth had the highest poll tax in the country and the majority of voters voted against the ruling party, yet Labour still controls the council. Therefore, the accountability argument is meaningless in the face of an unrepresentative electoral system. A fair voting system would ensure that, in party terms, the voters had the council for which they voted. I believe that that would inevitably mean that they were able at last to exercise control over the financial direction of that council.

Capping is thus a product of a corrupt and unfair electoral system combined with a corrupt, unfair and unworkable local tax and a grant equalisation system about which one can say, at the very least, that there is a suspicion that it arbitrarily helps some councils while penalising others.

Capping as a solution not only takes away local democracy, but means real cuts in services—cuts that will affect people's welfare, whether they are cuts in swimming pools and libraries or cuts in social services and education. Poll tax capping is a particular evil if the council is also the local education authority because the education budget is usually the largest and is, therefore, inevitably the one most cut.

Let us consider Tory-run Warwickshire, for example. We have heard much about Warwickshire and I am delighted that at least one Conservative Member who represents a Warwickshire constituency will vote against the Government tonight. I hope that others will follow him because, as he said, they have good reason to do so.

Warwickshire county council set a budget of £278 million, which meant cuts of £7 million in services. The capping limit was £272 million, although that has now been changed to £275 million. At the £272 million capping level, 211 teachers faced redundancy, and even now it is estimated that 20 to 40 teacher redundancies will still be necessary—all this when class sizes in some schools are still in the high thirties. Other cuts include those in in-service training for teachers, in-school maintenance budgets, the removal of support for standard assessment tests and for national curriculum preparation. There will also be cuts in the youth service, in the careers service, in the peripatetic music service, in library services and in adult education —the list goes on. Warwickshire is not a high-spending Labour council; it is a so-called cost-conscious Tory council. So much for the practical effects of the Government's actions on councils run by their own party.

Wirral is a classic example of a council where people have been caught between Government policies and local Labour irresponsibility. Cuts of about £7.9 million now have to be made which could have been avoided had the ruling Labour group made savings last year. Instead, it decided to pick a collision course with the Government, and the Government were only too happy to oblige with a collision course of their own.

Of the £7.9 million in cuts, almost £5 million will be taken from the education budget. That includes a cut of £1 million from the Wirral metropolitan college—so much for the Government's statement yesterday on education if colleges are having their budgets cut rather than increased. The schools budget will be cut by £1.3 million. What type of system allows and encourages education to be a political football and which means that the children in the classroom end up the losers?

Those examples cause me to wonder what cuts we should be facing in Cornwall if the county's Tory Members had had their way. When Cornwall county council was setting last year's budget, the county's four Tory Members called on the Government to cap the county. Fortunately, they did not get their way, not least because the county was not by any stretch of the imagination an overspender. If the Tory MPs had had their way, Cornwall would be facing the same devastation of services suffered in the areas that have been capped. Would we be sacking teachers, cutting vital social services and leaving school buildings in bad repair? Would children have the books and equipment that they need? Would village schools have closed? What did those Tory MPs have in mind?

Inadequate Government funding means that Cornwall county council cannot spend what it needs to spend on education and cannot respond to the cry from parents for the investment to improve decaying Victorian schools which do not have the facilities to meet the Government's minimum standards, to bring them up to the level that parents and children should expect. In an effort to keep the poll tax as low as possible, Cornwall county council has this year set a budget under the standard spending assessment, as it has done every year but one. That one year was not because it wildly spent money, but because, quite extraordinarily and without any discernible reason, the SSA suddenly dropped and the council became, we were told, an overspender instead of an underspender. We are told it is an underspender again this year. This is the ludicrous and laughable system which the Government call fair and equitable but which is about as steady and measured as a yo-yo. The fact that Cornwall county council was fortunate not to be cut back is shown above all by the comments of Conservative Members who represent Warwickshire and who have experienced just how harsh, unfair and unrepresentative is the reality of poll tax capping.

If the order were the final throw of a doomed system, it would not be so bad, but we know that we have years yet to come of the poll tax and that we have years yet to come of the capping system—if the Government get their way. For the country, the demise of the poll tax is not so much a sudden death as like an old-fashioned B-movie horror film in which the monster sinks back into the depths, swiping out all around and taking many with it.

Ministers must tell us tonight what will happen next year if there is a late election. Will the grant system continue unamended? Will we continue to have ludicrous, unaccountable decisions taken in Whitehall as at present? What will be the likely levels of the poll tax? Who will be capped next year? Above all, what will be the impact on council revenues of the additional non-payment resulting from people thinking that the poll tax has been abolished? How easy will it be for local authorities to collect payments from people when the Government now acknowledge that the bills are unfair, and unworkable, and should be abolished? The councils are being put into an impossible situation and the result will be even more chaos and difficulty.

The tragedy is that an alternative is available to the Government. An alternative has always been available. It is fair, accountable, used in other countries and recommended by many independent bodies including the Layfield committee. The alternative is a local income tax, which is the only system directly related to ability to pay, the only system that uses a structure that is already in place and the only system that uses the system of taxation that the Government use nationally because they recognise that it has a measure of fairness. Such a tax would win great local support and would allow devolution of control to local authorities which no other system can do because no other is fair enough. The link between the charge and the council would be there for all to see with a local income tax. The fairness between one individual and another would be there for all to see.

The Liberal Democrats can promise what the other parties cannot—that, under our system, we will not have capping because we will not need capping. We would honour what a local authority decided democratically because, under a fair electoral system and a fair taxation system, there would be genuine local accountability.

Under the council tax, the Government have already made it plain that they will thwart local democracy and introduce vigorous capping powers. It is, as usual, unclear what the Labour party will do and how they will tackle their own party's extravagance and overspending. The truth is that Labour dare not introduce the one thing that would measure the accountability that it claims to want, which is a genuinely representative electoral system. It appears that the only option to which Labour can resort is the wholesale expulsion of its awkward councillors around the country.

The Government may claim that the powers in the order are welcome in the areas affected. Everybody who has contacted me from those areas and everybody from those areas to whom I have talked believes that the powers are anything but welcome. Where we see Conservative local authorities capped, we see Conservative Members denying that the powers are welcome in their areas. They point out how unfair and how harsh capping is. The truth is that the only reason that Conservative Members will support the measure tonight is that most Conservative areas have been removed from any threat of capping by the creation of a ludicrous, unrepresentative and entirely invented system to ensure that most Conservative councils escape. I hope that it will not be simply one hon. Member from Warwickshire who votes against the measure, but that it will be all of them and that they will take many of their colleagues with them.

8.43 pm

Mr. Patrick Thompson (Norwich, North)

I shall not fall into the temptation of following the hon. Member for Truro (Mr. Taylor) in a discussion of all the different methods of raising local government finance. However, I know that my constituents would not welcome a local income tax, which would be highly expensive for many of them and would set up new bureaucracies within local government organisations. The hon. Gentleman's party needs to rethink that aspect of its policy.

I support the Government's decision to cap overspending local authorities. I also favour such action in the case of Norwich city council, which takes in part of my constituency. I will be fairly critical of the Labour politicians who are in charge in Norwich, but that criticism is not intended to be a criticism of the many people who work in Norwich city council and who help to respond to my constituency cases—I say this in the presence of the hon. Member for Norwich, South (Mr. Garrett), who will, I am sure, agree—in a very efficient way. However, I shall be very critical of the Labour politicians who run Norwich city council.

Mr. John Garrett (Norwich, South)

The hon. Gentleman represents part of the city of Norwich which may explain why his visibility in that great city is within a glimmer of vanishing point. Before he starts his attack on Norwich city Labour councillors, will he agree that that city has been under Labour control for 55 years, that in the past two May local elections the Tory party came third and that the representation of Tory councillors on Norwich council is two or three—I cannot remember which—and will almost certainly vanish completely within the next couple of May elections? Is not that a verdict by the people of Norwich on the councillors whom the hon. Gentleman is about to attack?

Mr. Thompson

I should be very much out of order if I were to pursue that point. However, the hon. Member for Norwich, South will know that the Labour vote fell in the most recent local elections in the city part of my constituency. The hon. Gentleman knows that, in two successive general elections, the Tory majority in my part of the city of Norwich——

Madam Deputy Speaker (Miss Betty Boothroyd)

Order. The hon. Gentleman is straying far from the order.

Mr. Thompson

I have to do enough, Madam Deputy Speaker, to respond to what the hon. Member for Norwich, South said. The hon. Gentleman is wholly wrong in every statement. However, I will follow your advice, Madam Deputy Speaker, and return to the order.

I said that I was about to be critical of the Labour politicians who control Norwich city council, but I do not think that this is the right place for me to be critical of my colleagues in the House of Commons, so I shall confine my remarks to the local scene in Norwich.

The city council has chosen to penalise local residents in my constituency by exceeding its target by 25 per cent. and by breaking the £15 million ceiling that the Government have rightly put on its precept. I support, therefore, the decision of my right hon. Friend the Secretary of State for the Environment to intervene to protect individual community charge payers in Norwich and to protect the interests of taxpayers as well. That is inevitable and it is right. After all, if Norwich city council had been left to its own devices, my constituents in the city part of Norwich would have suffered. The hon. Member for Norwich, South does not have my advantage. Within my boundaries, I also have the Tory authority of Broadland district council, which has held down its community charge to the benefit of my constituents.

Mr. John Garrett

Will the hon. Gentleman give way?

Mr. Thompson

I will not give way again.

Mr. Garrett

rose——

Mr. Thompson

The hon. Gentleman does not like it. I am not giving way.

Mr. Garrett

rose——

Mr. Thompson

I have given way once and I am not giving way again. The hon. Gentleman does not like my referring to the comparison between Tory-controlled Broadland district council and overspending Norwich city council.

Mr. Garrett

What about the services?

Mr. Thompson

I will not be tempted to talk about the swimming pool in the Tory-controlled area and the lack of good facilities in the Labour-controlled area.

My constituents, thanks to Norwich city council, would have had to face a community charge of £433, which was excessive by any standards. Thanks to the intervention of my right hon. Friend and other Ministers, and thanks to the intervention of the Government, that has been decreased through the various reduction schemes to £293. As a result of this order, the figure has been further reduced to £277. Whatever Opposition Members may say, the people who matter are the individuals who receive and pay for the services of the local council. Those individuals will benefit from the order as they have benefited from the Government's earlier intervention.

It is the responsibility of the Government and the House to determine the overall level of public spending and taxation. A major share of public expenditure, just over £39 billion in 1991–92, is at present in the hands of the local authorities. The Government have rightly been generous in their financial settlements for local authorities in 1991–92. An extra £3 billion in grants and the distribution of the uniform business rate has been provided. The community charge reduction scheme, which is worth some £1.3 billion, has also been put in place. I make no apologies for quoting those figures. Tonight's debate centres on sums of money and the help that the Government have given for the benefit of our constituents. There has been an injection of some £4.3 billion in the Budget announcement aimed at cutting the community charge by about £140 per head.

Therefore, if we look back to 1990–91, there is no doubt that councils, not just Norwich, have set their community charges at too high a level to be tolerable. But there is no doubt either that because of the Government's action the real difficulties faced by a number of my constituents last year will be effectively mitigated. I say in the presence of my hon. Friend the Minister that I am grateful for the help that has been given to my constituents who are having to pay the charge. I find it difficult to understand why Opposition Members do not look at the matter from the point of view of individual constituents rather than from the point of view of those who are running the council. I cannot press that point too strongly. The changes, together with the prospect of the new council tax, are welcome to me and to my constituents.

Norwich city council has been one of the beneficiaries of the Government's generosity. Its spending target has been increased from £10.3 million in 1990–92 to more than £13 million in this financial year. A rise of some 28 per cent. in SSA is well above the rate of inflation, however that is defined. The SSA formula applies criteria across the country to reflect each authority's social, geographic and demographic characteristics. Therefore, claims by Norwich city council that the formula is in some way arbitrary are wide of the mark. The total external finance from the combination of the business rate and revenue support grant increased from just under £40 million last year to more than £45 million in 1991–92—a rise of some 14 per cent. for the area within Norwich city council boundaries. Therefore, there is no truth in Norwich city council's claim that it is in some way badly treated in the distribution of Government support.

A case is put forward by Norwich city council to justify its overspending, but that case needs close examination and is highly suspect. It claims to limit its call on the poll tax to around the annual rate of inflation, but the increase in community charge precept of some 10.7 per cent. was agreed in March when the retail prices index was running at just over 8 per cent. It is now running at just over 6 per cent. and is still falling. That destroys that argument. Therefore, the community charge per head in Norwich is up nearly 12 per cent. The truth is that Norwich has set the community charge for the people of Norwich well above the rate of inflation and it knows that. That is one reason why we have the order before us tonight.

I want to say a brief word about capital funding, about which there is some discussion in Norwich. We hear complaints from the council that it is unduly restricted in using its capital receipts from council house sales to fund new building—a point that it makes continually in public debate. But the council operates a covert policy to discourage people from exercising their right to buy. The housing committee in Norwich frequently increases the valuation of properties made by its own staff or by professionals—a matter that has already been raised in parliamentary questions by me. The record of determination by the district valuer shows a consistent overturning of the council valuations as being too high. The council also effectively deters some housing associations from operating in Norwich by giving priority to its own applications for approval. Therefore, the crisis in capital funding about which the council so often cries is a crisis of its own making. It is important that that point should be made this evening.

As I said in an intervention at the beginning of the Minister's speech, we have heard before about a threat to Norwich's historic buildings and role as a regional capital if capping were to take place. No one is a more ardent supporter of the preservation of historic buildings in Norwich than I am. That is not a political issue. Anyone who tries to make it a political issue is trying once again to mislead or deceive the public. We have had enough of that. We all want the preservation of historic buildings in Norwich or anywhere else.

The planning committee in Norwich—it is worth listening to this because it is important and I am about to produce figures—plans to spend some £17,160 on historic buildings and monuments in the year ending 31 March 1992, some £35,950 on city towers and walls and some £96,330 on closed churchyards. If those figures are added together, we are talking about a figure of a completely different order of magnitude from the £1.5 million which is involved in the order. As I said earlier, and as my hon. Friend confirmed, Norwich has adequate reserves to cover such expenditure. It is no good Norwich city council deflecting the debate from the main issue to that of the preservation of buildings, which we all support.

It is equally unlikely that the role of Norwich as the focus of civic life, entertainment and sport would be remotely threatened by the order. Every hon. Member in his heart of hearts knows why the order applies to Norwich city council and to the other Labour councils involved. There is no need for dramatic consequences if Norwich city council acts responsibly.

The fact is that the record of Norwich city council—which, as the hon. Member for Norwich, South said, has been in control for far too long—has not been encouraging. The business of that council is conducted largely, in my experience, to enable party political points to be made on behalf of the Labour party generally. High spending has been, and remains, part of that approach. That is unacceptable to my constituents. That is why there was a fall in the Labour vote in the recent local government elections and an increase, despite any delusions that the hon. Gentleman may harbour, in the Conservative vote in Labour-held city wards. If he is complacent about his majority of 300, I think that he should spend a little more time looking after his constituents rather than coming here to make unwarranted attacks on the Government, or on his colleagues.

It is worse than that. Norwich city council is showing an ambition to take in the fringe areas of Norwich and bring them under Labour control. My constituents in Old Catton, Sprowston, Hellesdon and Thorpe St. Andrew would resist that ambition, for the reasons that have been made clear this evening. I shall support them in resisting that ambition of the Labour party.

For that reason, I am pleased to support the order. I shall therefore be pleased also to vote for it. I am sure that Norwich city council's record is exactly as I have described it. The lessons will be learnt at the next general election.

9 pm

Ms. Joan Walley (Stoke-on-Trent, North)

Having sat through this debate, I shall have great difficulty going back to Stoke-on-Trent and explaining to my constituents why the Government have chosen to charge cap the city of Stoke-on-Trent. The more I listened to the debate, the more I remembered all the meetings that the leaders of Stoke-on-Trent city council and the leaders of industry and commerce in the city have had with previous Secretaries of State for the Environment and with the present Secretary of State. We told the Secretary of State that the city urgently needed more money so that it could deal with its problems, but we got absolutely nowhere. The Secretary of State is not even in the Chamber to listen to the debate. He intends to go ahead and charge cap the authority, but we have not been told why Stoke-on-Trent is to be charge capped.

The whole procedure is a sham. No recourse to appeal will be open to the city, following the debate. It is clear that, with a few honourable exceptions on the Conservative Benches, there will be a party Whip and that Conservative Members will vote through this huge reduction for Stoke-on-Trent.

Mr. Hayward

The hon. Lady referred to a Whip on the Government side of the House. Can she confirm that there is a Whip on her side as well?

Ms. Walley

It is not for me to confirm or deny whether there is a Whip on this side of the House. That a Conservative Member should make such a cheap gibe when we are talking about charge capping the city of Stoke-on-Trent shows that the Government have no arguments to put forward and nothing with which to make their case.

We heard earlier that the order is all about saving money, but that makes a mockery of local government. The debate is all about saving the Government's economic policies. How can a Minister stand at the Dispatch Box and say that the Government have to make all these savings and show that their economic policies are working by curbing local government spending? The introduction of these caps will save £9.7 million out of a total budget of £39 billion—and the saving will be made entirely at the expense of a few constituents, including those in Stoke-on-Trent.

The Minister also said that the cuts for Stoke-on-Trent are affordable and achievable. When he sums up the debate I should like him to tell us how they can be achieved for Stoke-on-Trent. I do not think that either the officials sitting in the box reserved for them or the Ministers have scrutinised——

Madam Deputy Speaker

As a Front-Bench Member, the hon. Lady should know that she should not refer to officials or to anyone not in the Chamber itself.

Ms. Walley

I am grateful for that advice, Madam Deputy Speaker.

Mr. John Garrett

It does not matter.

Madam Deputy Speaker

It matters very much indeed.

Ms. Walley

Ministers and the Secretary of State have formulated the standard spending assessment in a way which does not enable the budget of Stoke-on-Trent city council to be closely scrutinised. The SSA has been formulated without access to what is happening in the city. It does not have regard to the everyday problems that my constituents face.

Contrary to what we heard from the Minister, Stoke-on-Trent is not a profligate authority. It is a low-spending council, as we heard from my right hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley). Even last year our limit on spending was £33.7 million. We could have had £36 million, but the Government have decided to set a cap of £25.8 million although our submission was for £28 million. I should like the Minister to say why our expenditure has been so substantially reduced this year compared with what the Government were prepared to allow last year.

The Minister has told us that there has been a staggering increase in the city's spending, but that does not fit the facts. In Stoke-on-Trent it costs £2.7 million to collect the poll tax whereas it cost £445,000 to collect the rates. The Government introduced an uncollectable tax. It is their fault that we have to find an extra £2 million just to collect the poll tax. So the Government are responsible for the overspending.

In an earlier intervention, I said that Leicester city council has £237 per head of population to spend while Stoke-on-Trent has £128. Although in one respect it is not helpful to make comparisons between councils, Stoke-on-Trent and Leicester city councils are both major district councils and some comparison should be made between the amount of money that Stoke-on-Trent city council has to spend and that which similar councils have.

As though all the things that I have mentioned were not bad enough, in the middle of January we suddenly had the news that Stoke-on-Trent was to lose a further £400,000 as a result of changes in the way in which the standard spending assessment is calculated. Those changes affected Stoke-on-Trent city council more than any other council.

Stoke-on-Trent city council is not a partnership authority. We do not have access to other money to make up for the shortfall. We do not have urban aid projects. We have already heard from my right hon. Friend the Member for Stoke-on-Trent, South that Stoke-on-Trent is a sick city. Independent research has shown that the amount and degree of ill health in our city is worse than anywhere else in the country. North Staffordshire district health authority has had visits from the Minister for Health, who gave assurances that she would make representations across Government Departments. She said that she would raise the case with the Department of the Environment and suggest that a way should be found to increase the amount that we can spend on health promotion and prevention of illness in response to the shocking findings to which my right hon. Friend the Member for Stoke-on-Trent, South referred earlier, including the fact that more than half the people in some electoral wards cannot hope to receive their old age pension because they will die before they are even entitled to it.

Stoke-on-Trent city council has done a considerable amount to provide resources to improve the health of people in the city, but initiatives such as the "Colcloughs" series on local radio which pioneers health education and attempts to make people take account of healthy eating and healthy lifestyles and tackle the environment-related illnesses in the city are likely to be cut or damaged.

In the past six months, unemployment has increased dramatically, particularly in manufacturing industry and in the ceramics and allied industries, for which our city is world renowned. The Minister referred earlier to our housing investment programme and how well it had done. But 53 per cent. of our properties are unfit, and it is essential that that be recognised in the Government's housing allocation. It must be reflected in the amount of money that the city council is allowed to spend. The demands that the city's housing problems make on its housing budget mean that the many disabled people in the city who have rightly applied for improvement grants and for assistance with disablement adaptations are not being catered for because there simply is not enough money.

Despite the absence of urban aid funds, Stoke-on-Trent has some very good voluntary organisations. I pay tribute in particular to the citizens advice bureau for its work. I understand that it enjoys a national reputation for the kind of advice that it gives to people in a state of poverty. There is a strong likelihood of an across-the-board reduction in grants to voluntary organisations. How can the Minister justify taking this amount of money away from Stoke-on-Trent city council? By cutting the grants to voluntary organisations, he is preventing them from enabling people to secure extra entitlement.

How does the Minister square the new legislative responsibilities of local authorities, including those under the environment protection legislation, with the funds that are available to them? Stoke-on-Trent city council, through its highways department and its environmental health department, is spending more than £63,000 just to discharge its new responsibilities in respect of litter and other aspects of environmental health. How does the Minister expect us to find that extra money when he is taking money away? The city of Stoke-on-Trent has had years of underspending, and there is a lot of catching up to be done. The order will force us into a poverty trap from which we shall be unable to escape.

The standard spending assessment is flawed. Even the Conservative opposition on Stoke-on-Trent city council agree that the manner in which it is fixed is flawed. They agree with 83 per cent. of treasurers throughout the country that this is not the way to calculate the amount of money that local authorities should receive from central Government. Why does the Secretary of State not take account of the health disparity in the city?

I find it very difficult to advise my constituents as to what will happen next. This debate is our last hope of convincing the Secretary of State that capping should not go ahead. Once the decision has been taken, there will be no redress. Parliament will not consider the matter at a later stage. But, day in and day out, the citizens of Stoke-on-Trent will have to live with the decision, and to meet the cost. Council leaders, trade unions and voluntary organisations will have to make very painful decisions. In the midst of the present Government-inspired recession, local industry will suffer. There will be less money for development of the local infrastructure, on which industry depends.

For all those reasons, I urge the Government to take account of the problems faced by the people of Stoke-on-Trent. It is an almost vindictive act—the Government are forcing through a formula without any regard whatever for the public services on which we all rely.

9.14 pm

Sir William Shelton (Streatham)

I rise once again to speak for my constituents in the infamous socialist borough of Lambeth, where even the Labour bosses have turned 13 duly-elected Lambeth councillors out of the Labour party—out of the positions into which they had been voted. The hon. Member for Dagenham (Mr. Gould) had the nerve to speak of trusting local government, and of true democracy in local government. I was astounded by that. Thank heavens that the Government have come to the rescue of my constituents.

The community charge first announced for this year by Lambeth was £590 a head. The £140-a-head from central Government funds reduced that figure to £450 a head. The capping order, which I shall support tonight, brings the figure down to about £420 a head. That is still outrageously high—as far as I know it is the highest in the country—[HON. MEMBERS: "It is."] My hon. Friends tell me that it is. I welcome the cap, which will protect my constituents. The hardship that a charge of £590 a head would have caused can only be imagined.

I must confess to my hon. Friend the Minister that I welcome the decision to fix the cap at £311 million rather than £307 million, which will give Lambeth about £3.9 million more. As a result, Streatham pool will remain open. More than 11,000 people signed the petitions in about four weeks, and now the pool will stay open, thanks to the Government and to the pressure exerted by my constituents—and thanks, in some part, I acknowledge, to the good sense of some Lambeth councillors.

Mr. James Pawsey (Rugby and Kenilworth)

Is not my hon. Friend being unduly modest? Is it not fair to say that he, too, should take considerable credit for keeping the swimming pool open?

Sir William Shelton

I have always regarded my hon. Friend as a wise and sensible man.

I welcome the community charge reduction scheme. It is almost unknown in my constituency, and, I suspect, equally unknown throughout the country. Yet it will have a profound effect on many of my constituents. In Lambeth in 1989–90 the average rates bill was £516. Any two community charge payers living in what was then an averagely rated house or flat would pay only £568 instead of £840. Any two people paying half average rates would pay only £310 instead of £840, and two people who paid a quarter of average rates would pay £181 between them instead of £840. Those are tremendous reductions. I hope that Lambeth council is aware of the scheme and will implement it.

Lambeth council claims that, because of what it calls the absurd capping, it is having to make cuts across the board. Yet Government funding for Lambeth for 1991–92 is 23 per cent. higher than it was last year—£296 million instead of £240 million. Lambeth also receives some £300 per head more than do residents of Wandsworth, the neighbouring authority. Hon. Members can compare the two boroughs.

Education funding, too, is 18 per cent. higher—£125 million this year as opposed to £105 million last year, plus £6.5 million or so in Inner London education authority transfer grant. I suggest that the Government should consider ring-fencing education budgets. Lambeth council has raised its education budget. It is making cuts across the board, especially in education, despite the fact that it has had a 23 per cent. increase—probably about 15 per cent. or more in real terms.

Adult education is suffering gravely. Teacher numbers have been reduced. I spent this morning in an infants and primary school and the staff are desperately worried. They have been told that there seems to be no provision for special needs in Lambeth education because it is denied that some children have special needs.

I understand that we have the longest waiting list in the country in connection with the right to buy. If it is not the longest, heaven help those that have longer lists.

The services were bad enough before, and I suspect that they will become even worse. I do not know whether it is due to present or past inefficiency and incompetence, but the result has been a debt burden of tens of millions of pounds. It can be estimated at between £40 million and £120 million, depending upon which way it is calculated. Certainly it is so large because of uncollected rates, uncollected rents and uncollected community charge. [Interruption.] I am glad that the hon. Member for Glasgow, Pollok (Mr. Dunnachie) is enjoying my speech so much. If he talked less, he might listen a bit more.

I am told that because of this vast debt from the past only 60 per cent. or less of the community charge is being spent on Lambeth services, the remainder being spent on servicing the debt around Lambeth's neck: 45 per cent. goes on debt arid 55 per cent. on services. So I guess that it is due to past and present incompetence.

My hon. Friend the Member for Enfield, Southgate (Mr. Portillo), when he opened the debate, said that constituents look to the Government for protection and that that is why we are passing the capping order tonight. There is a rising cry of despair in my constituency. My constituents are asking me why the Government cannot protect them by intervening in Lambeth. I draw my hon. Friend's attention to the Labour London manifesto in which there is reference to something called quality control—I am not quite sure what it is—which, it says, will offer just such intervention and protection in councils such as Lambeth.

I ask my hon. Friend to consider exactly what is going on south of the river in my constituency, which is not far from here. Will my hon. Friend intervene soon in housing and in education to protect my constituents? That is my plea to him and my right hon. Friend.

9.23 pm

Mr. John Fraser (Norwood)

I wish to start with a protest at what I regard as the discourtesy of Ministers for education and the environment. The hon. Member for Streatham (Sir W. Shelton), my hon. Friend the Member for Vauxhall (Miss Hoey) and I have met several delegations, particularly of teachers, parents and governors, concerned about the effect of rate capping on education services in Lambeth. We agreed unanimously to approach both education Ministers and environment Ministers to represent Lambeth's case in respect of the cap. Representations were made to the Department of the Environment by the hon. Member for Streatham.

Although it is clear from some of the speeches made today that Ministers have received personal representations from Conservative Members about the capping of their authorities, they have refused to see the all-party delegation of Members of Parliament from Lambeth. It is a great pity that we have been treated with that degree of disrespect. It was not a particularly Labour-party point of view that we wanted to put—it was an all-party point of view reflecting the views of parents, governors and representatives in Lambeth.

Mr. Portillo

I am not sure that I am wholly familiar with the circumstances, but two issues are at play here. We may have overlooked an early letter from the hon. Gentleman—if that is so, I apologise to him—and his subsequent approach may have been out of time, when the consultation period had closed. Whatever the circumstances, I confirm that in principle we are absolutely willing to meet hon. Members who wish to make representations about capping during the period that we are out for consultation on capping. If there has been any discourtesy to the hon. Gentleman, I apologise unreservedly.

Mr. Fraser

I accept the apology—one always accepts an apology in this place—but the Minister asks for the prerogative of mercy after the execution has taken place. I hope that it does not happen again.

Governments of every political complexion will from time to time wish to restrain the level of local authority spending, for two principal reasons. The first reason is that high levels of local government taxation or central Government taxation are politically unpopular. I have never argued for high levels of taxation in Lambeth. Those whom I represent cannot afford that sort of taxation as they are extremely poor people. High levels of taxation are politically unpopular, as colleagues of mine such as Eric Deakins became aware during the 1987 general election. Secondly, high levels of local government taxation can punch a hole through the Government's economic strategy and cause rises in the rate of inflation. That was the lesson of the Labour Government in 1970. That Administration paid the penalty for the increases in rates and rents introduced by many Conservative-controlled local authorities.

What can a Government do? They can do one of three things. They can pay more money to reduce the level of rates or poll tax, as the case may be, as the Labour Government did when they increased rate support grant levels to about 60 per cent. The level varied but it was about 60 per cent. when we went out of office. That is exactly the action that the present Government have taken. They have seen the error of their ways and provided a grant which is to be paid for by an increase in value added tax—a grant of £140 per poll tax payer.

Secondly, there is the democratic sanction—the argument for which was advanced on Second Reading of the Local Government Finance Bill on 16 and 17 December 1988. That argument was advanced today by my hon. Friend the Member for Dagenham (Mr. Gould), speaking from the Opposition Front Bench.

The third option is a statutory restriction of the type that we are discussing today. The fact that we are discussing the order at all is a sign of the Government's failure. When the 1988 Bill was passing through the House we were told that capping would cease, that the subsidy option would come to an end and that the answer would be provided by a sort of angry democracy because local government finance was to be arranged so that it would be possible to penalise the poorest members of the community, who would then be moved to vote against high-spending local authorities. But that has not happened, and that is why the order is a measure of the Government's failure.

The present limit on expenditure as a result of the amendment of the draft order is to be £311 million for Lambeth, which works out at about £1,800 per adult member of the population. There are, however, considerable differences over the local population. There are the most recent census statistics, the estimates of the local authorities and the estimates of the Department of the Environment. As I have said, however, the expenditure per adult member of the borough is about £1,800.

Actual expenditure was £296 million—£11 million above the capped expenditure level of £285 million. If we are to compare one year with another, we must take actual expenditure into account. The effect of the new rate-capped limit means that Lambeth will be able to spend about £15 million more this year than it spent last year, but the increase in expenditure year on year is only 5 per cent. Comparative expenditure would have increased the rate of inflation, which went up to about 9 per cent. Inescapably, therefore, last year's cap and last year's actual expenditure must imply a cut in services of various kinds of about 4 per cent.

Unfortunately, the cut in services is rather greater than the figures would suggest because Lambeth has been forced to provide for past bad debts. I shall not go into the reason why some of them were incurred. It was partly due to previous Government legislation over rates penalties. Be that as it may, however, part of the £311 million cap represents a provision for past bad debt and not expenditure on services. If one takes out the provision for debt, the real cut in services in Lambeth is in the region of 8 or 9 per cent., which is a very severe cut indeed.

It is no use the hon. Member for Streatham saying that Lambeth is getting more central Government assistance for its expenditure. That is absolutely true and we do not disagree about it, but capping limits what can be spent. The effect of increased support is a reduction in the level of the poll tax, which is very welcome, but that does not deal with the problem that as a result of the provision for debt and the level of capping there will be a cut in the real level of services in Lambeth in the forthcoming year.

Sir William Shelton

I listened with great interest to the hon. Gentleman, I understand what he is saying and I entirely agree that the major problem that we face in Lambeth is the provision and servicing of that wretched debt. Together, before next year comes, we should approach whatever Government are in power to seek a way to reschedule the borough's debt or we shall never find ourselves in a good financial position.

Mr. Fraser

I am glad that we have reached a consensus on that. That is exactly the sort of representation that we wanted to make to the Department of the Environment this year, but because our letters and representations were overlooked we did not have that opportunity. I agree with the hon. Gentleman. However one looks at it, there is bound to be a cut in the level of services in Lambeth this year—with the exception of refuse collection and street cleaning, because a contract has been placed for those and therefore no cut in the level of support is possible.

That means cuts in the provisions made for sportsmen and for disabled people, for children attending day nursery schools and for pensioners. People hoping to go to college who are not on a mandatory grant and people hoping to go into business—goodness knows, we need people able to go into business in inner city areas—will suffer cuts. There will be a cut in discretionary grants and the business advisory service is to be abolished.

With the two exceptions that I mentioned, whichever service one considers, the quality of life in Lambeth will be degraded as a consequence of this order. The quality of our life has been degraded enough already. In the past 12 months, the Government have been responsible for an increase in unemployment of 40 per cent. in Lambeth. The same people who suffered the 40 per cent. increase in unemployment—to an average level in my constituency of just below 25 per cent.—will have their standard of life degraded in another way because of the cuts in services which will be necessary as a result of the order.

The unlucky number in Lambeth is not 13 but 25—about 25 per cent. of the people eligible to work are unemployed, about 25 per cent. of the population are on income support, and about 25 per cent. of primary school children need special care and attention. The hon. Member for Streatham will confirm that that is the figure given by teachers in our primary schools.

The quality of our life has therefore suffered considerably already, yet we have to put up with this order as well. For some years, the Government have regarded Lambeth as rebellious—[Interruption.] I must correct the impression given by the hon. Member for Streatham that the national executive of the Labour party has suspended or expelled those 13 people either as members or as councillors. I see that there is a member of the national executive on the Labour Front Bench. My advice would be to show a yellow card to those councillors and then put the matter behind them. That is done, sensibly, by football referees and I hope that it will be done by the national executive of the Labour party.

I represent not councils or councillors, but my constituents. The Government have considered Lambeth a rebellious council for some years and are acting like others who have put down rebellions. The Romans, not content with having put down the Spartacus rebellion, carried out thousands of crucifixions afterwards. At the Monmouth rebellion—not the one last week, but the one in 1685—the Government of the day were not content with putting down the rebellion but continued to hunt for well-meaning men and women in order to sacrifice them. Indeed, there is quite a history of association because those who rebelled in 1685 were proved right by 1688. In the same way, those who opposed the poll tax in 1988 have been proved right in 1991. A further historical association is that both Lambeth and Somerset, where the Monmouth rebellion was put down, were rate capped.

I conclude my speech with a list of the sacrifices that will take place in Lambeth services. Thank goodness, as a result of the increase in the rate cap level, Streatham pool will be saved, but two other lidos and a public bath will be lost. Our library facilities will also be cut. That will he a matter of concern to you, Mr. Speaker, as the facility at Upper Norwood library was available to your constituents and mine. Only this morning I received a letter from an organisation called Amity Reading Club, which deals with literacy provision and social counselling for adults with special learning difficulties. Its classes at the Carnegie library in Herne Hill are to be discontinued as a result of capping. The caretaking facility at the library is also to be cut, so voluntary organisations will no longer be able to meet there when the library is closed.

Lambeth's youth service will be cut by 40 per cent. Those of us who represent constituencies in which there have twice been riots want to put resources into such services. We also want to protect statutory education services, and Lambeth has been forced to cut adult education. I am not talking about degree courses but courses on, for example, ceramics, cooking or sewing, which may make a vital difference to the quality of life of some people and may even inspire them for the rest of their lives. The arts in Lambeth will also suffer enormously as a result of poll tax capping.

Sir William Shelton

I have much sympathy with the hon. Gentleman, but does he agree that, although Wandsworth and Lambeth have more or less the same population, leaving aside teachers and education staff, Lambeth employs some 9,000 people while Wandsworth employs only about 5,500? That additional 4,500 people—presumably members of important unions in Lambeth—represent a very heavy cost on those who live in Lambeth.

Mr. Fraser

The difference between the authorities is that in Wandsworth, for good or ill, people voted for cuts, whereas in Lambeth, for good or ill, people did not vote for cuts. That is the difference that Ministers choose to ignore.

I was concluding with a list of sacrifices. There will be cuts in education. This morning, I had a letter from King's College school of medicine and dentistry which said that, as a result of capping, Lambeth has decided that it will have to withdraw one full-time teacher who works closely with children from five to 16 in King's College hospital. Playgroups and day nurseries will have to be sacrificed. Business advisory services, consumer advice services and voluntary advice services will have to be closed.

Head teachers have written to me, including one who recently wrote from a Church of England school, Christchurch school. The letter said that, because of the cut in teaching staff, teachers would simply not be able to perform the job properly.

Second-chance education, which is important in a borough with a high level of unemployment and deprivation, will suffer, as will adult education. Someone came to see me on Friday who had paid his own money to undertake a first degree and so deserved to get his first grant for his second degree, but that was disallowed because the money was not available as a result of capping. One could go on talking about cuts in community services and in the provision of community halls.

One of the most touching incidents was when I marched through the streets with my constituents recently for a partly voluntary organisation called Centre 70. Everyone receives good value for money because much of the work is unpaid. As a result of the 20 per cent. cut across the board in voluntary services in Lambeth, that centre will have to lose a good value for money scheme for the elderly and frail. Somebody said to me, "Mr. Fraser, what can I do? I have worked 16 years of my life for this organisation and as a result of the cuts I shall lose my job." That is the sort of degradation of the quality of life in my borough that is occurring as a result of the measure.

I have not come to the Chamber to argue for high levels of taxation or poll tax. One way in which we could have resolved the difficulty would have been to relate the average £140 per person poll tax reduction scheme to the level of need from one borough to another. However, the reduction scheme follows exactly the same pattern as the poll tax—it is a per capita reduction, unrelated to need. If the Government had thought to apply it to need and to take from people according to their ability to pay, the measure would not have been necessary and I should not have had to make the complaints that I have made today. The order represents a negation of democracy and a severe attack on nearly all the people I represent.

9.43 pm

Mr. Robert Hayward (Kingswood)

It is a pleasure to follow the hon. Member for Norwood (Mr. Fraser) as I have some experience of Lambeth. A close friend of mine lives in the hon. Gentleman's constituency and has attempted three times to pay last year's poll tax bill by writing to Lambeth council. Each time, the council failed to respond. He is a willing payer, waiting to pay. He has paid the bill on the supposition of what the figure should be for part of the year. What is the Labour party's solution to the problem of London? Today, the Labour party published the policies of a future Labour Government. They plan to introduce another tier of Government, another burden on the very people about whom the hon. Gentleman has just been talking which will cost millions of pounds.

I represent a constituency in which both tiers—Avon county council and Bristol city council—were capped last year. We heard all sorts of threats of Armageddon. My hon. Friend the Minister of State identified the reality. However, I also represent a constituency which, like that of my hon. Friend the Member for Norwich, North (Mr. Thompson), is partly within a city and partly without it.

There is no doubt that Bristol is an inefficient authority. The burden for the average community charge payer in Bristol because of the non-collection factor is £40. In Kingswood, the other half of my constituency, that burden is less than £10. Therefore, in that respect, Bristol is at least four times less efficient than its neighbouring local authority.

This evening I shall relate most of my comments to the implications of what would happen if no capping system were available to the Government.

On 25 April, I wrote to the Leader of the Opposition to ask him what would be the implications of having no system of capping. I asked him to confirm that if there were no limits as you suggest, my constituents could face ever increasing demands since both Councils' spending would be limitless"— that is, the expenditure of both Avon and Bristol. I continued: Could you please clarify this apparent contradiction, and could you please confirm your continued commitment to a second level of local government in the form of 'Regional Parliaments'. On 10 March, I received a reply from the right hon. Gentleman's office. Let me quote it in full: Mr Kinnock has asked me to thank you for your letter of April 25th. The Labour Party's position on the matters that you raise has been set out in great detail, and I refer you to the relevant documentation. The letter did not say what the "relevant documentation" was. I went to the Library and asked for the Labour party documentation, which was accordingly provided.

The capping question—which, according to the Leader of the Opposition, was discussed "in great detail"—is covered in 12 lines. I do not want the House to get the wrong impression. I do not mean 12 full lines on an A4 sheet of paper; I mean 12 half-lines. Those 12 lines confirm that there will be no form of capping.

In his opening speech, the hon. Member for Dagenham (Mr. Gould) said that the sum involved was a puny £40 million——

Mr. David Blunkett (Sheffield, Brightside)

It is £38.9 million.

Mr. Hayward

I accept that figure. I was quoting the figure used by the hon. Gentleman's colleague. That is the figure in the order, although it is not the figure that we would be debating had not the Government given a clear indication of what the capping levels would be.

Avon county council, for example, set its figure minimally below the capping level to ensure that it would avoid being capped, and many other authorities did the same. The Labour party cannot say that we are debating only £40 million, or £38.9 million; by implication, we are debating many more millions of pounds. Labour should state clearly how it would cope with that excess expenditure, rather than merely commenting on the capping order. The hon. Member for Derby, South (Mrs. Beckett) has said that no extra finance would be available. Where, then, will the money come from—whether it is £40 million, £100 million or £200 million? Labour is committed to providing not a penny extra for local government expenditure in the first year. Where the money will come from for the extra tier of government in London is another question.

I have a copy of Labour's document with me. It contains not only the party's proposals in relation to regional government——

Ms. Primarolo

On a point of order, Mr. Speaker. Are we discussing the Labour party's document—which I am more than happy to do—or the capping order for named English authorities?

Mr. Speaker

We are discussing exactly what is in the order. It is legitimate to find connections, but I think that we must stick to the subject of the order.

Mr. Hayward

Thank you, Mr. Speaker. I was attempting to explain what the implications would be if the order were not available to the Government. That is important to my constituents, whose bills last year were reduced by——

Ms. Primarolo

rose——

Mr. Hayward

It is clear that the Labour party is worried about the implications of not having capping orders available to it, because of the impact that that would have on my constituents and many others across the country.

Labour's document states: We believe there is a case for at least some salaried councillors …. we will explore ways of compensating employers for releasing staff for council business. Community charge payers would face those added burdens if capping were not available. They have not been costed or identified but appear only as promises. The Labour party will not say where the money will come from, despite the hon. Member for Derby, South saying that no more money is available.

I welcome the order. We were told a year ago that we faced Armageddon, but that did not prove to be so. It is important to identify why the Labour party's policy document does not propose capping and to consider the implications of that. It would mean limitless bills, as I said in my letter to the Leader of the Opposition, but to which he failed to reply.

9.50 pm

Mr. John Garrett (Norwich, South)

In an entertaining speech, the hon. Member for Norwich, North (Mr. Thompson) failed to say that many thousands of his constituents live in Broadland and take advantage of Norwich services but do not pay for them. I understood him to say that I would be better employed canvassing in Norwich than representing my constituents in the House. If I have got that wrong, I shall give way to him. No doubt that will attract a fair amount of comment in Norwich tomorrow.

We have been hearing much lately about lying in elections. I do not intend to use the word "lies" or "lying", but in the May elections the Conservative party issued a leaflet headed, "Some things you should know before you vote on May 2nd." It said that Labour had put up your Community Charge by £68.00 this year. That is a blatant misrepresentation, because Norwich city council increased poll tax bills by £6. It also said that Labour-controlled Norwich city council has the highest level of rent arrears and empty Council houses in East Anglia. That is not true.

The Conservatives of Norwich offered to lower the Community Charge by a further £68", which as far as I can calculate would wipe out the city council, and to reduce the number of homeless by better management of council houses—hundreds are lying empty", whereas the number of empty council houses in Norwich is below the Government guideline. The killer is that they would construct the relief road for Bowthorpe. Having proposed to cut council services, they try to bribe the electorate by announcing that they will construct a road, but I do not know where they would get the money from. It did not do them any good because, once again, they were wiped out in the local elections: they came third in Norwich. That is a pity, because I should rather see an active and flourishing Conservative party in the city of Norwich. At least it is a political party, not a collection of pressure groups like the Liberals.

Leaving aside the contradiction between poll tax capping and local government accountability, which has been discussed in the House for ages, I simply want to put the record straight about Norwich city council and will quote some figures. I shall carefully avoid what the Minister called hyperbole and exaggeration—tautology if ever I heard it.

The city council proposed a prudent and realistic budget of £18.75 million. That would have meant an increase of £6 a head to cover city services. Tory-controlled Norfolk county council raised its costs by £53, and by £9 a head to cover the cost of late payment of the poll tax. Once again, the city's increase was below inflation. Norwich city council's part of rates and poll tax bills has increased by less than the rate of inflation for 10 years. There was a 58 per cent. increase between 1982 and 1991, compared with a 68 per cent. increase in the retail prices index.

The city's proposed increase included spending an extra £2 million as a result of Government action: the extra cost of collecting the poll tax and running poll tax benefits, £1.5 million; taking over street cleaning and other responsibilities from the county, £200,000; the extra costs for the Government's litter code in the Environmental Protection Act 1990, £100,000; and Government cuts in housing benefit subsidy, £150,000. To keep the bills down, the council used £2.25 million of its reserves. The council has a two-year plan to ensure that it has enough reserves to cover emergencies and to cope with normal cash flow. That has been approved by the Audit Commission as a way of managing the city council's cash flows.

There is no doubt that Norwich spends above its standard spending assessment, but the surrounding districts spend well below theirs because the city provides services that also meet their needs. When the Government changed from rates to the poll tax, their assessment of how much Norwich needed went down by 5.9 per cent., whereas the average for district councils throughout England increased by 11.2 per cent. Without that change, Norwich would have spent up to £17.5 million without being capped—£1 million more than it had planned to spend.

Under last year's Government rules, the council could have spent £20 million without being capped. The changes meant that this year Norwich was liable to capping if it spent more than £15 million. No council can be capped —as we have already heard—if it spends less than £15 million, but that figure has not been changed since it was introduced and has not been kept in line with inflation. The Government told Norwich to cut until it spent only 13.7 per cent. above its SSA. Other capped authorities have been allowed to spend between 17.5 per cent. and 82.6 per cent. above their SSAs. The council has repeatedly asked the Government how they work out the amount by which capped authorities should cut their budgets so that it can determine whether the city council has been treated fairly. However, the Government have persistently refused to give that information.

To cut the council's budget by £1.5 million to £15 million would mean a maximum of £16 a head or 31p a week off the bills in the city. The thousands of people who pay only 20 per cent. of the poll tax bills would benefit by only 6p a week. Although little more than half the poll tax payers in Norwich will see little or no benefit from the city being capped, they will see a reduction in services as cuts have to be made to get down to £15 million. Norwich's levels of spending have been endorsed every year in local elections and, as I said, for the past 55 years Norwich city has elected a Labour council and now has the biggest-ever majority in its history.

The Government's attitude shows that they do not understand the peculiarities of Norwich. Their SSA for districts such as Norwich is based almost entirely on the number of people living in the council's area. In Norwich, that was taken to be 117,000 whereas the county thinks that it is 120,000. However, the city is a regional capital serving an urban, built-up area of 180,000 people. It has a sub-regional population of 286,000, a travel-to-work area of 300,000 people and a shopping catchment area of 600,000 people. It provides recreation, sports, cultural and marketing facilities for a large part of the county of Norfolk. It also acts as a focus for social needs in the county, for example, for the homeless. One hundred homeless people sleep on the streets every night, having been drawn into the city from the surrounding suburbs and rural areas.

Norwich is not only a regional capital, but it has far greater spending needs on, for example, traffic management because of its medieval street pattern. Norfolk county council has always underfunded traffic work, so the city has to make up the expenditure. Of the 11 traffic staff —theoretically a county responsibility—only four are paid for by the county. The city's work on traffic management, meanwhile, has been praised by Ministers at the Department of the Environment.

Norwich has an enormous cost burden from its historic heritage buildings. I do not know why the hon. Member for Norwich, North talks them down because he has none —they are all in my constituency. The city has 1,500 listed buildings, of which 250 are owned by the city council. It has the largest collection of medieval churches in Europe. The bill for outstanding repairs for city-owned heritage properties is £6 million. The council also has to make large grants to private owners and to trusts to keep the buildings in good repair. It is always difficult to sell heritage properties with structural problems and it is especially difficult now. The budget had to reflect all those demands, but it still came up with a standstill on city council-determined services. It managed the absorption of inflation on supplies and services, it managed the absorption of new Government spending requirements, such as those in the Environmental Protection Act 1990, it maintained a prudent level of reserves and it provided appropriate contingency levels.

Norwich has special costs because it is a regional capital and a historic city, and it has to meet the social and recreational needs of at least half a county. It produced a modest and sensible budget. The Audit Commission said: The council faces considerable pressure on both its revenue and capital finances because of the threat of community charge capping and the new capital control system … I am satisfied that the council is taking the necessary steps to keep its finances in a sound position. That is an objective view from an auditor. It was a modest and sensible budget; the Minister's decision is ill-informed and spiteful. He has made his decision simply because Norwich is an effective and well-managed Labour-controlled city.

10 pm

Mr. James Pawsey (Rugby and Kenilworth)

I thank my right hon. Friend the Secretary of State and his Ministers for the almost £3 million additional funding in revenue support grant which they have made available to the county of Warwickshire. The Warwickshire cap was originally set at £272.3 million; on appeal, it has been raised to £275.1 million. Clearly, that is a substantial benefit to my constituents and to those who live in Warwickshire.

The five Warwickshire Members have met my right hon. and hon. Friends on a number of occasions. I take this opportunity to thank especially my hon. Friend the Minister for Local Government and Inner Cities for the courteous and friendly way in which he has listened to our arguments. Clearly, he has not just listened; he has taken our representations on board. I say to him with all the sincerity that I can command that we are grateful to him for that and, in addition, we are grateful for the lifting of the cap to £275.1 million.

I still, however, remain in some disagreement with my right hon. and hon. Friends. When the community charge was introduced, the buzz word. was "accountability". The theory was that the charge would make local authorities more accountable to their electorates. I cannot see how capping achieves that laudable objective.

In Warwickshire, a saving of £16 per head would have occurred as a result of the cap being applied. But the effect of last Thursday's announcement will reduce that figure to £9. That £9 is insignificant when compared with the Government's £140 reduction in the gross amount of community charge.

My constituents have made it abundantly clear to me in more than 250 letters, in innumerable conversations, in meetings and in deputations that they would have preferred a reasonable level of service to be maintained, especially in education, rather than to have had a modest reduction in the community charge bill of some £9 per head. There is, however, another and perhaps even more powerful reason for my disquiet—and I made the point in my intervention in the admirable speech of my hon. Friend the Member for Warwick and Leamington (Sir D. Smith).

In January 1990, I voted against the revenue support grant. On 29 January this year, I voted against the RSG. I am not anxious to make it three in a row. It is a hat trick that I can well do without. I very much hope, therefore, that in putting down a marker tonight my right hon. and hon. Friends will reconsider and will make the necessary adjustments to the standard spending assessment formula which will enable Warwickshire to obtain a fair shake and a sensible revenue support allocation. Such an allocation must be seen to be fair and to reflect more accurately the needs and responsibilities of the county of Warwickshire and its residents.

I want to pursue the point made by my hon. Friend the Member for Warwick and Leamington. He suggested that it would be extremely helpful if the five Warwickshire Members of Parliament—and four are present in the Chamber—met my right hon. Friend to discuss the way in which the formula operates. Clearly there are major problems with the way in which funding is directed to our county. It would be of great benefit if we could have a meeting with my hon. Friend the Minister. I see my hon. Friend the Minister nodding his agreement, and I am grateful to him.

As I have said before in the House, Warwickshire is not a high-spending or profligate local authority. It clearly cannot be compared with the likes of Lambeth, Rochdale or Bristol. Some of the horror stories that we have heard tonight are appalling, but Warwickshire, thank goodness, is not in that league. Warwickshire has a reasonable but not extravagant level of service and the authority is generally efficient. The problem which faces Warwickshire is to balance the desire to remain within Government limits and at the same time to provide a service which is acceptable to the majority of the people of Warwickshire.

Everything hinges on the amount of Government grant, and if the rate support grant is much lower than that which is provided to similar and neighbouring authorities then clearly Warwickshire will need to obtain more from its charge payers. But if it seeks to do that, it will be capped. It is a classic Catch 22 situation. Apparently, the only solution left is to reduce the level and quality of services being provided in the county, and that is not in accordance with the wishes of the majority of those living in Warwickshire

Warwickshire county council would welcome the opportunity of being held truly accountable to its electorate for the level of its community charge. It is certain that it knows what its electorate wants, and that is not a £9 per head reduction at the expense of education or the police. As I said earlier, I base that statement on my postbag and that of my colleagues. Warwickshire people do not wish to see a reduction in services.

Mr. Lewis Stevens (Nuneaton)

rose——

Mr. Pawsey

I shall be delighted to give way again to my hon. Friend. He has a deserved reputation in this House and in his constituency for being an assiduous Member of Parliament

Mr. Stevens

I am grateful to my hon. Friend for those kind words. Does he agree that one of the difficulties facing the county is that, because of the number of motorways and other happenings there, we require more police, but in the current circumstances we may not be given the posts for which we have applied to the Home Office?

Mr. Pawsey

My hon. Friend makes a telling point. He takes the words from my mouth, but that will not stop me repeating them.

I am not an uncritical supporter of Warwickshire, and those who were present in the Chamber last Tuesday for the debate on grant-maintained schools will know that I was highly critical of the county council's education committee. The way in which it seeks to dissuade schools from applying for grant-maintained status is completely wrong. It is as wrong on that issue as the Government are on the amount of Warwickshire's revenue support grant, and that is harsh criticism indeed.

Even with the extra £3 million being provided by the Government, there will be a reduction in the number of teachers in my constituency and a resultant increase in class size. Naturally, parents are dismayed. During the Conservative administration in shire hall residents have seen a steady improvement in education standards and it will be unfortunate if that improvement, in some areas at least, is halted.

However, the effects of capping are not just being felt on the education service. They also occur in the police—the very point made by my hon. Friend the Member for Nuneaton (Mr. Stevens). As my hon. Friend said, there is a real irony here. For some years, the five Warwickshire Members of Parliament have been seeking to increase the establishment of the police in Warwickshire. Our efforts have borne fruit. This year, there has been an increase in the establishment by some eight officers but, sadly, it seems that they will not now be recruited. Even worse, it seems that there is a risk that we shall lose police officers in Warwickshire. The chief constable has made it clear that there will be insufficient funds to pay police overtime.

I wish to quote from an article that appeared in my local newspaper, the admirable Rugby Advertiser. The editor of the Rugby Advertiser wrote: Warwickshire experienced the second highest rise in crime in Britain last year. And in the last four months 25 men and two women officers were injured while policing our streets. The attacks were almost double the figures of the preceding year. These figures are published in the wake of a grim warning from Chief Constable Peter Joslin that if the force has to bear further financial cuts in its budget, the overtime element will disappear and, he believes, the police will have lost control of the streets of the county. That is a pretty damning indictment. On the one hand this point was made by my hon. Friend the Member for Warwick and Leamington —the Home Office believes that more officers are necessary effectively to police the county. On the other hand, the Department of the Environment will not allow the authority the funds necessary to pay them. That highlights the paradox. The Home Office certainly does not think that Warwickshire is wasteful or profligate with resources, manpower or money. If it did, it would not have approved the increase in establishment.

My hon. Friend the Member for Warwick and Leamington referred to the anomalies within the formula. It is necessary for my right hon. and hon. Friends to produce a standard spending assessment that is fair if we are to avoid exactly this same row next year. I do not suggest that the administration of Warwickshire county council is perfect. It is not. There is always room for improvement. Equally, however, the county is not particularly wasteful. Those who run its affairs are conscientious and provide good value for money. I quote from a letter that I received only today from the leader of Warwickshire county council. County Councillor Vereker says: Did you realise that by budgeting to underclaim over £60,000 of the personal allowances to which we are entitled by law, we are indirectly funding about 5 teachers out of our personal allowances! That shows just how conscientious the local authority and its councillors are.

I take no pleasure in voting against my own Government, and I certainly hope that this will be the last time on this issue.

10.13 pm

Ms. Dawn Primarolo (Bristol, South)

Given the lateness of the hour and the fact that other hon. Members wish to speak in the debate, I shall make my remarks as brief as I can.

The hon. Member for Kingswood (Mr Hayward)—as did the Minister for Local Government and Inner Cities when he opened the debate—quoted a National and Local Government Officers Association report about the effects last year of capping. Bristol was capped last year. It is capped again this year. I do not know whether the association has got it wrong or whether the Minister has only partially read the report. Many effects were felt in local authorities such as Bristol. For instance, no vacancies were filled in Bristol. There was also a massive increase in taxi licences and parking fees. Furthermore, there was a massive increase in street licences for traders.

Repairs on housing were made subject to a cash-limited budget. Installation of central heating for those who desperately needed it on health grounds was also cash limited. When the money ran out, the services ceased to be provided, regardless of need.

The speeches made in tonight's debate echo only half of the discussion. Needs and services do not feature in the speeches made by Conservative Members. The hon. Member for Warwick and Leamington (Sir D. Smith) made a direct speech and made clear how he intended to vote. But it is not good enough for he and his colleagues to say that the formula is right when it penalises Labour authorities but wrong when it penalises Conservative authorities. The issue at the centre of the debate is the functioning of local authorities and how services are provided.

The hon. Member for Bristol, North-West (Mr. Stern) spoke earlier in the debate. It is regrettable that even after the figures that he used were corrected in an intervention he persisted in using another series of figures which misrepresented the position in Bristol. For example, he quoted the amount of money that is spent on collecting the poll tax and administering the benefits. He failed to mention the measures that the city has taken to help people who do not have bank accounts to pay it by facilitating payment at post offices.

The hon. Member for Bristol, North-West gave an estimated figure instead of the real figure for the cost of collecting the poll tax. The real figure is £14.65. That is below the average cost of £15 in the metropolitan authorities and the big 11 with which we are comparable. The hon. Gentleman then referred to the loss of money on community charge collection. He said that my figures were wrong and that he would use the Audit Commission's figures. I have the Audit Commission figures. The figure for Bristol is £10 per head, and the average for the big nine cities is £14 per head. So Bristol is no worse than most cities.

The hon. Member for Bristol, North-West then referred to rent arrears. In Bristol rent arrears are running at 10 per cent. The average for similar authorities is 12 per cent. Non-payment of the poll tax and an increase in rent arrears in a city such as Bristol is caused by people's poverty. My constituency has the highest rate of long-term unemployment in the region. People who simply do not have the money cannot pay.

The hon. Member for Bristol, North-West said that he did not attack the integrity of the officers of the authority. He then proceeded to challenge all the figures that they have provided. I refer specifically to the provision for non-payment in Bristol. The Government recommend that the provision should be about 5 per cent., which would be £22 per head. The advice of the treasurer to elected council members from all parties in Bristol was that provision should be about 7.5 per cent. If elected members deliberately ignore the advice that is given to them by their officers, they become liable under various pieces of legislation for possible surcharge for not taking the relevant advice. It is not true or fair for the hon. Member for Bristol, North-West to say that Labour members are dangerous, footloose and fancy free with the authority's expenditure.

The position in Bristol is simple. The problem is with the standard spending assessment, to which many Conservative Members have referred this evening. Despite all the protestations of Conservative Members, the difference, alas, between the Labour and the Conservative budgets was a matter of a few million pounds. A Conservative administration in Bristol would also have been capped. This year, Bristol has been capped below the level at which it was capped last year. In other words, the cap has been tightened, and inflation has cut into expenditure. No account has been taken of the special position in which Bristol finds itself because of its dock; no account has been taken of the fact that Bristol is compared with authorities other than those with which it is comparable; no account has been taken of the fact that the Department operates on the basis of information and statistics that are so out of date that they bear no resemblance to what is happening.

Before the all-party delegation lobbied the Minister, it asked for a meeting with the city's Members of Parliament. I and two Conservative Members attended. I assume that the hon. Member for Kingswood was unable to be there. There was agreement across the political parties that the capping was unjust, that it would destroy services, that the SSA was wrong, that no account had been taken of the dock, and that the Government were simply using the wrong information. It is truly astonishing that Conservative Members should contradict their Bristol council colleagues and the leader of the council.

There will be cuts in Bristol's services. There will be cuts in economic development measures as we plunge further into recession, and as the unemployment rate continues to rise. Desperately needed environmental projects will be cut, as will the advice-giving agencies in the community sector and the voluntary sector. There will also be cuts in the arts, including provision for the Old Vic. Yet this is an area in which Conservative Members, including the Secretary of State for Health, have made a vigorous case for increased expenditure. Swimming pools will be closed, and there may have to be reduced provision for concessionary bus, fares. Bristol will have to reduce its services to the bare statutory level.

This is no way to finance local authorities. If Bristol had received from the Government the same grant per head as did Wandsworth, there would be no poll tax there. Indeed, each poll tax payer would get a rebate of about £300, or, alternatively, the authority would have many millions of pounds of additional money to spend. There is a question that Conservative Members of Parliament representing the city of Bristol will have to answer: why did they vote to give the people of Wandsworth more than the people who sent them to this Chamber? Capping is a disgrace, and I shall vote against it with pleasure.

10.22 pm

Mr. Teresa Gorman (Billericay)

It was worth forgoing my dinner tonight for the opportunity to express in the Chamber the profound relief of my constituents and the constituents of my hon. Friend the Member for Basildon (Mr. Amess) that the Minister has had the good sense to keep Basildon capped. Basildon is one of two Labour councils with which my constituents are afflicted. The other is Thurrock, which is very little better than Basildon. Of course, Basildon is notorious for the way in which it disregards its puppets—the community charge payers. It is the fifth most extravagant council in the country, and if it were not for the intervention of my right hon. Friend the Secretary of State, we should be faced with a community charge of almost £500. That is an absolute disgrace, given the fact that many people in my constituency and in the constituency of Basildon work hard but do not earn particularly high incomes.

The ruthlessness and cunning of Basildon council, which is marginally Labour—but only marginally—is displayed tonight by the fact that it has circulated to Labour Members a letter threatening to close services to the elderly and to children at the same time as it fritters away money on massive subsidies on such extravagances as the Towngate theatre. The council, which should be able to provide a standard level of services for £12 million, budgeted for £26 million. Only the good sense of the Government has held that figure down to £23 million. Fortunately, because of the Government's intervention with the subsidy of £140 and the additional capping, the charge will be little more than £300. At least that amount is manageable for most people.

Basildon council is one of the most spendthrift councils in the country. It recently borrowed £12 million to build a great white elephant of a theatre that costs us £2 million a year in interest charges alone, and £500,000 a year in subsidy. Meanwhile, pavements in other parts of the constituency are cracked, broken and dangerous. The council does not give two hoots about that. The grass verges at the sides of the streets remain uncut, and people are threatened with the closure of the local swimming pool that their children use. That is what Basildon council thinks of the people who foot the bills.

The council spends more than £0.25 million on its public relations exercise—heaven knows, it needs it; its reputation in our area is atrocious. Of course, at the local elections this month the voters showed the council what they thought of its charges and services and there was a 9 per cent. swing to the Tories. We took two Labour seats in wards that were old-style Labour strongholds, and we won another seat from the Liberal Democrats. We reduced the Labour majority to a margin of one. This time next year I shall be able to report to the House that at last Basildon council and its supporters will be relieved of the incubus of the old-style, callous Labour administration under which we have laboured so long.

Among the council's other extravagances is a newsletter —supposedly an information sheet—called Basildon Link. Some £62,000 a year is spent on that in an area where three excellent free newspapers come through our doors and there are two local newspapers that we can buy for 20p. Basildon Link, supposedly a neutral information sheet, ran the headline, "Heseltine's tax horror" above its report on the community charge. I shall ask my hon. Friend the Minister to comment specifically on the following extract from that article. It says that the Government have not once discussed the financial plight of Basildon with councillors". I believe that that statement is extremely economical with the truth, and I shall ask my hon. Friend to tell us categorically whether it is true.

The real reason why councils such as Basildon cost so much is their notoriously wasteful use of staff. Basildon's labour costs are astronomical. It employs 44 per cent. more staff per 1,000 of the population than any other council in the group of councils which the Audit Commission designates as having a similar population. Basildon is one of the most overstaffed councils in the country. It operates all the old Spanish practices— overmanning, feather-bedding and Mickey Mouse-isms —which once existed in old-style industries such as printing.

Such councils cost so much because they cater not for the community but for the National and Local Government Officers Association and Transport and General Workers Union barons who still rule them, although in Basildon that will not be true for much longer.

Basildon spends nearly £1.5 million just to run the town hall, without the services, and on top of that it runs area offices all over the place—there are eight of them.

In the town of Billericay, with a population of about 36,000 souls, there are 12 full-time staff to cater for them. As the Member covering Billericay and a great deal more and with an electorate of almost 90,000 souls, I manage my day's work with one and a half members of staff. That is an indication of the wastefulness which the council inflicts on our voters.

While these enormous sums of money are being wasted on flapdoodle like the Basildon Link and the Towngate theatre, real needs in our constituencies go wanting. We need a level crossing in the town of Wickford over a very dangerous railway, but we cannot have it. The money has gone to subsidise the Towngate theatre. We need a community hall in the town of Billericay, but we cannot have it. The money has gone for a £1.5 million subsidy to the town hall in Basildon. We need our pavements repairing, the verges cutting and the swimming pool to be kept open on a regular basis. All these things are denied to us by the accountant, so-called, Mr. Ballard, who, as I have already pointed out, has got not only our finances in a mess but those of Walworth road as well. So I am here this evening to say on behalf of my constituents that we are extremely grateful to the Secretary of State for what he has done.

In the town of Basildon, next to the monstrous town hall and between it and the Towngate theatre is another little office, which contains the staff who run our local bus service, the Thamesway bus service, which is part of the Badgerline. That bus service, which was bought out by the people who work for it and travels 13 million miles a year, with 300 buses, £80 million a year turnover and 1,000 staff, has an office staff of eight people. That is the private sector for you!

I am quite sure that the Government's measures, coupled with next year's election, will see the end of this bunch, and I say thank you to the Secretary of State for helping us on our way.

10.33 pm

Mr. Mark Fisher (Stoke-on-Trent, Central)

The House is always entertained by the hon. Member for Billericay (Mrs. Gorman) and the overexcitement of the orange box, or soap box, that she climbs on. She said one thing that intrigued me when she waved the local paper. The headline in that paper, as I saw it flashing in her hands, was "Our fate in his hands". That seems to sum up the debate tonight, because the fate of many people in all the authorities that are to be capped is in the hands of the Government.

The question before the House is, should the spending of the authorities named in the order be determined and restrained by Whitehall? Should it be determined by the Government? Have Ministers got their figures right and can they justify those figures? Having listened to the Minister of State opening the debate and to this hon. Friends speaking from the Benches behind him, I remain totally unconvinced that he has got his figures right and that he can justify taking central Government powers to control local authorities in this way.

I speak tonight to try to explain to the Minister of State why the cap, particularly in relation to Stoke-on-Trent city council, is unfair and unjust and will damage local services; and to seek an explanation from the Under-Secretary when he winds up of how this has come about. The right hon. Gentleman knows that Stoke-on-Trent set a budget last year of £28 million and that the Government claim that this is excessive—so excessive that it must be cut. But he knows also that 12 months ago the Minister took a similar look at Stoke-on-Trent and said that it would be appropriate and proper for the city council to spend £33.75 million. That is over £5 million more than the council was proposing to spend this year. How does the Minister explain that last year it was appropriate for Stoke-on-Trent to spend over £33 million while this year anything over £25.72 million is a disaster, so much so that Stoke-on-Trent and its people must be punished? Have the circumstances of the city changed so acutely in the Government's view? I shall be interested to hear the Minister's response because I am confused. I suspect that the people of Stoke-on-Trent are confused by the Government's change of mind over the past 12 months.

When the Minister for Local Government and Inner Cities responded to an intervention by my hon. Friend the Member for Stoke-on-Trent, North (Ms. Walley), he offered a hurried and garbled explanation of the indicators, as he saw them, behind the standard spending assessment. He mentioned several indicators and seemed to say that circumstances had changed. He picked on the city's housing investment programme allocation. It has indeed changed, and the Minister scored an own goal. Last year the allocation was £17.7 million and this year the Government cut it to £14.5 million. The circumstances have changed and, unfortunately, they have worsened for Stoke-on-Trent. The Government reduced the HIP allocation and decided that the city should spend less this year. There seems to be no logic in that.

I am sure that the Minister listened to my right hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley), who spelt out the realities of housing in Stoke-on-Trent, which, sadly, have not changed much over the past year. The city has twice the average rate of houses that do not have a bathroom. It has three times the national average rate of houses without a WC. About 53 per cent. of the city's houses are substandard. Homelessness is rising, and during the winter young people were sleeping on the streets. Things are becoming worse, yet the Government say that less should be spent than that which was expended a year ago. There is no logic in that.

The Minister and his colleagues know the realities of health in Stoke-on-Trent. The Minister for Health visited the city recently to examine in detail its health profile, which has not changed since 1910. The city suffers from industrial diseases. Men in my constituency, and the other Stoke constituences, have a small chance of living long enough to pick up their pension. Those are realities that have not changed, yet the Government say that the city should spend less this year than last year. I find that extremely difficult to justify and I look forward to the Minister's explanation.

If the Government cannot justify the reduction in the SSA, on what other basis can they explain their treatment of the people of Stoke? The Minister said that the city was spending more than comparable authorities, but the authorities with which he chose to compare the city were Staffordshire district authorities. Surely the Under-Secretary of State for the Environment cannot seriously say that the problems facing a major industrial city such as Stoke are to be compared with those of Staffordshire, Moorlands, for example. A comparison should be made with other industrial cities in the big nine. I am glad that the Minister nods his head. My right hon. and hon. Friends have already said that spending levels per year in their constituencies are far in excess of the figure for Stoke. The city is at the bottom of the league with a spending level of £128.

Leicester is a comparable but rather wealthier city, with higher levels of income. Its spending is appropriate at £237. How does the Minister explain the difference between the two cities? The logic of the Government's argument is that services cost 85 per cent. more to be delivered in Leicester than in Stoke. The Under-Secretary knows that that is not true. It does not cost 85 per cent. more to deliver the same services in Leicester than in Stoke, but it seems that that is what SSA is all about. The Government know that they are engaging in Alice-in-Wonderland economies. The figures do not add up. Indeed, when a realistic view is taken of them, they are seen to be nonsense.

So the figure cannot have been reached on a comparative basis. It certainly cannot be on the basis that Stoke-on-Trent is profligate. When I and my hon. Friends met the Under-Secretary a few weeks ago, with the city council leaders, he was kind enough to compliment Stoke-on-Trent on the good, constructive and cautious use that it made of Government investment, for example, with the garden festival. We were grateful for that compliment from the Under-Secretary. Yet three weeks later he turns round and says that we are so profligate and excessive in our expenditure that we have to be capped. The Under-Secretary seems to have a very short memory if he cannot relate those two—a compliment on our extremely cautious and good behaviour when using Government investment, then suddenly saying we are excessive. Would he kindly explain that when he comes to the Dispatch Box?

The Under-Secretary may also say that there is a wise alternative and that there is another budget. However, he knows from the submission made to him when he received the delegation from the city council that all the Conservative councillors supported the budget and our appeal against the poll tax. There was no alternative budget—it was a bipartisan view in Stoke-on-Trent, yet the Minister ignored it.

The Minister of State said that we were doing very well for Government grants. We are extremely grateful for anything that we can get from the Government. Last year, we got £147.60 per person from the Government. Had we got even half what Wandsworth got—I believe that it was £711 per person—in Government grants last year, we would not be in this position. How on earth can the Minister of State seriously say that the level of need in Wandsworth is so acute that it needs more than five times the amount of Government grant to cope with its difficulties than an industrial city like Stoke-on-Trent needs?

The Minister of State and the Under-Secretary know that those figures do not add up. There is no rational economic explanation for the SSAs that they have provided or for this order. The Minister knows that the real reason is political, yet despite that the Minister is saying that the SSA is a brilliant, precision tool that can identify dangerous overspending, which will damage the quality of life for everyone in this country unless it is restrained. So superb is the precision of that tool that it can identify £9.7 million worth of overspend nationally, out of a total spend by local authorities of £37 billion—that is precision to the point of 0.027 per cent. It is reassuring to hon. Members on both sides of the House to know that the Department of the Environment is so confident of its figures that it can home in with that accuracy and weed out 0.027 per cent. overspend around the country.

The truth is that the SSA is a shambles and the Government know it; and the poll tax is a shambles and is totally discredited. The Government do not believe in it any more and nor do the public, yet the Government are asking people in Stoke-on-Trent to accept it, without any explanation of how it has come about. We hope that the Under-Secretary will rectify that in a moment. That is damaging people in Stoke-on-Trent and in all local authorities that are affected by the order. I hope that the Government will be the most damaged because it is idiocies and hypocrisies like this which will see them thrown out at the general election.

10.43 pm

Mr. Michael Irvine (Ipswich)

It saddens me that Ipswich is one of the very few councils to be singled out for charge capping. I do not like to see my town rubbing shoulders with Lambeth and the other high spenders in what I regard as the league of shame. The hard truth is that Ipswich borough council has brought charge capping upon itself by financial irresponsibility and by excessive spending.

I believe that I can claim a degree of objectivity. I am no automatic apologist for the Government, especially on matters of local government finance. After all, I was one of the Conservative Members who rebelled and voted against the introduction of the poll tax. I also abstained in protest against the standard spending assessment set for Ipswich in the past financial year. But although I have been critical of the Government, I have also been strongly critical of overspending by Ipswich borough council, which last year exceeded its SSA by a staggering 96.3 per cent. and escaped capping only by a technicality.

This year the Government set much more realistic SSAs, and they received my support. Despite that more realistic approach, however, this year we in Ipswich find ourselves yet again saddled with one of the highest poll taxes in the country, and our borough council has again overshot its SSA by a significant margin—by a full 50 per cent., in fact. Overspending on this scale demands action by the Government, not to punish or oppress Ipswich borough council but to protect the Ipswich poll tax payer.

Naturally there are anxieties in Ipswich about the impact of charge capping. I met representatives of the National and Local Government Officers Association in Ipswich recently to discuss the issue. They stated their anxieties fairly and effectively. I have a good deal of sympathy with their anxieties, and I hope that job cuts can be avoided. In my view, the employees of the council are as much the victims of the financial unwisdom of the council as are Ipswich poll tax payers in general. It needs to be made clear that any unpalatable consequences of charge capping will be the fault not of the Government but of the borough council.

To put the cuts required of the council in perspective, the council is being required to cut its budget by £1.3 million, from £17.3 million to £16 million. Only a few months ago the Ipswich borough council handed over a brand new five-screen cinema centre that it had built for the Rank Organisation at a cost of £4.6 million to the council. That is more than three times the sum the council is being required to cut from its budget. And what did it get in return for the luxury cinema? It received from Rank an old cinema-cum-theatre suitable for live entertainment but in a poor state of repair and needing immediate expenditure of £600,000—and doomed, no doubt, to run at a loss year in, year out.

I described the £4.6 million five-screen cinema centre handed over by the council to Rank Organisation as a snip for the Rank Organisation but a heavy burden for the Ipswich poll tax payer. I stand by that description. This sort of grandiose, vainglorious project, this sort of gross overspending, is precisely why the Ipswich poll tax payer needs protection and why charge capping is, on occasion, necessary.

10.48 pm

Mr. Frank Field (Birkenhead)

The poll tax in the Wirral is high not because we have a profligate Labour administration. Indeed, in all the discussions between central Government and the local authority, on no occasion has anyone been able to produce any table of heads of major local authority expenditure that would put the Wirral near the top of the expenditure league. No, the reasons why our poll tax is high are as simple as they are deadly.

One of the reasons has already been touched on by my hon. Friend the Member for Bristol, South (Ms. Primarolo). She said that in Bristol, as in Wirral, if there were the same level of Government support as is given to Wandsworth, far from receiving poll tax bills, the poll tax payers would be picking up a cheque from the local authority or the Government. When the Under-Secretary of State responds, will he say whether next year will bring justice to Wirral, as it has brought justice to Wandsworth in the past few years?

That is not the only reason why our poll tax is high. Another reason is that our level of grant is so much below that set for other districts such as Wandsworth. The budget for the previous year was set by a Tory-Liberal administration and had two peculiar aspects. First, the Tory leader thought that the budget should be set by telephone. With the help of a local newspaper, a phone-in was conducted and people were asked to pick figures out of the air for the level at which the poll tax should be set. The Tory leader then took a figure at which the poll tax could be set if all the local authority reserves were used up, and the poll tax was set at that level. We therefore enter the current financial year with no financial reserves and a false budget from which this year's calculations have been made.

The Tory leader knew that the authority could not run at a modest level of services, let alone a generous level, at the figure at which he had set the poll tax without using the financial reserves, so the level of the authority's spending is last year's budget minus those reserves. [Interruption.]

Mr. Jimmy Dunnachie (Glasgow, Pollok)

My hon. Friend can continue until 11 pm.

Mr. Field

I know that.

The second reason why the poll tax is high is therefore the Government have taken last year's fixed budget levels to work out what we should be spending this year.

There is a third reason why our poll tax is high, and it has nothing to do with the current Labour administration. There is overspending on the Merseyside police and the transport authority. In both cases, Wirral council has to levy the poll tax required by those two organisations to raise their budgets. If their budgets had been set at the level at which the Government said that they should have been set, there would have been no question of overspending in the Wirral.

Therefore, my third question to the Under-Secretary of State is this: next year, will he allow authorities such as the police and transport authorities, over which the council has no control, to set budgets way above their SSAs and thus throw Wirral's budget into confusion, or will he take some restraining measures?

I am mindful of the fact that Opposition Members wish to sum up fully, so I shall conclude on the following point. When Warwickshire Members asked if they could come to talk to the Secretary of State and his colleagues about the budget in their constituencies for next year, he quickly turned and nodded. I hope that the same facilities will be provided for Wirral Members. We are debating an authority with one Labour seat and three Tory seats, so the confusion into which Wirral's budget has been thrown affects far more Tory voters than Labour voters. Sometimes one needs to be political in the House, but I am concerned about all the charge payers.

I hope that the Under-Secretary of State will answer the three questions that I have posed. First, why has Wirral been treated as it has? Had we had anything like the deal secured by Tory Wandsworth—and three out of four of our seats are Tory—we should have been picking up cheques, not paying poll tax. Secondly, given that a near-crazy regime governed the setting of our poll tax by telephone and the raiding of reserves last year, will some adjustment be made to what the Government believe Wirral should spend to keep within its budget, even if it were the most responsible body on earth?

Despite all the pressures, had we not had to levy a poll tax for the regional transport authority and the police, we should still have been within the target that the Government had set us. My third question is therefore this: will the Government let those bodies levy whatever charges they choose, with the mayhem that that will bring, or will the Government take measures next year to ensure that the brave efforts made by the new Wirral administration, and the skill shown by our new leader in his negotiations with the Government, are able to bear fruit?

There was some confusion a moment ago, but I think that I was being told that I could speak until 11 pm. Having asked my three questions, however, I shall sit down early in the hope that in the extra four minutes people in the Wirral will be given some clear, positive and encouraging answers by the Under-Secretary of State.

10.56 pm

Mr. Lewis Stevens (Nuneaton)

I am grateful to the Environment Ministers for the courtesy that they showed to Warwickshire Members by listening to their case, and for the easement of nearly £3 million that they granted the county. That takes it to within nearly 1 per cent. of the budget figure that was set and should allow the proposed cuts in services to be considerably modified. My hon. Friends the Members for Warwick and Leamington (Sir D. Smith) and for Rugby and Kenilworth (Mr. Pawsey) put Warwickshire's case forcefully and in some detail. Much of that case has been repeated several times to Ministers, and I have backed it at various meetings.

In the three minutes available to me, I should like to return to the standard spending assessment. My hon. Friend the Member for Rugby and Kenilworth mentioned a figure of £13 million, which originated in the changeover from rates to community charge. That seems to be the missing figure and it is one that crops up time and again.

If we compute the difference between the SSA set by the Government and Warwickshire's proposed budget for this year, we again encounter the figure of £ 13 million. On both sides of the House, questions remain about that SSA. My right hon. Friend the Secretary of State said today that he would extend the capping to many other councils, according to their budget figures, and I welcome that. Capping is inevitable; it is also the only way in which to control local government in the present circumstances.

My hon. Friend the Minister for Local Government and Inner Cities made the point forcefully. Had it not been for capping, it would have been almost impossible to contain local government spending in total for the year. Within the SSA mechanism, however, there is a danger of certain factors being exaggerated—factors that work slightly to the benefit of some authorities and slightly to the disadvantage of others.

I suggest that there should be a fine-tuning mechanism. Factors such as salaries should be taken more into account in SSAs. Police salaries, for instance, may not produce an appropriate average, because long-service employees may be at the top of the scale. Let me make another suggestion: as we move towards a time when authorities will spend less than £15 million, it becomes more crucial to be in tune with the actualities rather than the averages that we have used until now. Unless we move to that, I fear that it will be difficult to ensure that the Government's assessment is fair and reasonable. I appreciate that the task is far from easy, but we must achieve it.

If the Government explain to people and to authorities how the SSAs are made up, we may, by modification, achieve an assessment that works and is acceptable. However, it must be fine-tuned far more than at present.

11 pm

Mr. David Blunkett (Sheffield, Brightside)

Capping is neither necessary nor inevitable. The hon. Members for Nuneaton (Mr. Stevens) and for Kingswood (Mr. Hayward) believe that we cannot survive without capping and that the economy, social life and democratic character of our nation depend on it, but that is patent, blatant, silly nonsense. We did not have capping between 1601 and 1985. The friction between central and local government in the mid-1980s, the enormous cuts in services that were forced on local government from the centre and the enormous cuts in grant that necessitated increases in rates to maintain even a basic service were caused entirely by Conservative Members and the Government. It was their fault that local and central government got into a state in the mid-1980s, and it will be their fault if, in the months between now and the delayed general election, that fiasco continues.

It is clear that the £38.9 million that allegedly will be "saved" by the order has nothing to do with rational judgment of the operation of democracy or the economy or a rational view of how to assess need, levels of service or value for money at local level. The £200 million that was squandered by the delayed decision at the end of March to adjust the amount of central Government money that goes into local authority coffers was a deliberate act to try to ensure that the local elections would not be a fiasco. The £4.3 billion that was cut on achieving the £140 flat-rate reduction was a deliberate effort to save Conservative party seats. That failed, and capping will merely add to the Conservatives' demise. But £38.9 million was spent, without justification, in a pathetic attempt to hold down essential public services.

I wish to deal, first, with the economic argument. I agreed with 99 per cent. of what my hon. Friend the Member for Norwood (Mr. Fraser) said, except his notion that there is a role for central Government in determining the amount that should be raised and spent locally. That is not accepted in the bastion of private enterprise—the United States—and it should not be accepted anywhere else. There is no economic argument in terms of inflation, fiscal or macroeconomic policy for determining what a local authority raises and spends on local services. There are some fiscal and macro arguments on the amount of borrowing in the economy—the same arguments as apply to private-sector borrowing to build hypermarkets, shopping complexes and the leisure centres on which Conservative Members are so keen, but which are priced out of the reach of ordinary people. It is the same argument; in fact, it is a much better argument in terms of public spending because it is less inflationary.

Public spending tends to be on essential items; it tends not to generate imports; it tends to put work into the local economy, to be more directly employee-based and, therefore, to employ people. When people are employed, less is spent on social security benefits. When they have wages in their pockets and they are lifted by a national minimum wage out of the penury of having to claim benefits even though they are in work, they can pay their taxes and national insurance contributions. Therefore, money is put back into the coffers.

It makes sense from everyone's point of view to spend money on decent services, to give people jobs in which they can take pride rather than paying them to stay at home on the dole. Everybody knows that it makes sense. For every job that is lost through the poll tax capping exercise this year in the 14 authorities involved, there will be a price that we, as taxpayers, will have to pay.

£38.9 million will not be saved by this exercise—nor anything like it—because the money will be spent in other ways. It will be spent in not paying people to provide decent services for children in Warwickshire schools. It will be saved through the cut in the amount spent on the needs of the elderly in Lambeth, and it will be saved in terms of the miserable cuts in Basildon and Bristol which have been paraded tonight and of which the relevant Members of Parliament are so proud. It is difficult to take seriously the rantings of the hon. Member for Billericay (Mrs. Gorman) because she is one of the old guard which is supposed to be quiet these days in the new phase of the Tory party. However, she speaks honestly about a Tory view of the world. She wants pavements repaired, but she does not want to employ anyone to repair them. She wants a village hall, but she does not anyone to open it. She wants a town hall, but she does not want anyone employed in it.

The hon. Member for Billericay is at least more honest than the hon. Member for Ipswich (Mr. Irvine), who said that the local community does not want the cuts and that he has much sympathy with the people at the town hall who do not want their jobs to go. He said that it must be the nasty borough councillors who are squandering the extra £1.7 million, not on the jobs in the town hall, which he wishes to protect, nor on the services that the people want, but on mega, magic attendance allowances. We know that that is nonsense and the hon. Gentleman knows it, too.

Mr. Gould

He does not.

Mr. Blunkett

Perhaps he does not know that it is nonsense, but he will get his come-uppance at the general election for not knowing what he is talking about and for trying to have it both ways.

Let us consider the honest, decent John Major face of Conservatism in the form of the hon. Members who represent Warwickshire. I have never seen a group whose members were so sycophantic towards each other. It is all wonderful stuff—no one wants to cut the police, everyone wants the motorways to be checked regularly and no one wants poll tax capping in Warwickshire. Even the hon. Member for Streatham (Sir W. Shelton) does not want poll tax capping in Streatham—he wants it down the road in Vauxhall or in Norwood. He does not want Streatham baths to be closed, and nor do we. We do not want anyone's baths to be closed. We want decent services provided by local people and funded by a decent balance between local and national expenditure.

Of course, we want people in Warwickshire to be proud of the education provided there. We want them to fight for the services that they believe to be right for them. I commend the hon. Members for Warwick and Leamington and for Rugby and Kenilworth and all those who represent Warwickshire. They are right to support the belief in services to local people—whether it is the fire service which is under threat or decent provision in schools. All those things matter, and they matter in Langbaurgh, Bristol and Norwich. Only local people can determine what is right for them. The Government have no right to tell the people of Stoke-on-Trent that they must spend £2.2 million less than they intended to spend. It is not a profligate authority.

I think that it was the hon. Member for Ipswich who said that he did not want to rub shoulders with Lambeth, Somerset, Warwickshire or Langbaurgh. He did not want to rub shoulders with anyone if he could help it. We want to rub shoulders with people who believe in a sense of community, who want to restore a sense of service and who take the Prime Minster at face value. He and members of the Cabinet keep telling us that they now believe in public service, in quality and in public spending, but not in local authorities, and certainly not in the 14 capped authorities.

Much depends on whom one goes to. If one goes to the hard man, the Minister for Local Government and Inner Cities, would one believe that one would get a shift in one's budget? Four authorities went to him, made their case and pleaded their point. They included that bastion of revolutionary socialism, Lambeth. Four authorities went to the nice guy, the Parliamentary Under-Secretary of State for the Environment. Who got the uplift? The Parliamentary Under-Secretary, who clearly did not have authority to do anything, told Stoke-on-Trent that it was wonderful and gave it nothing. He also gave nothing to the other three authorities that visited him. Mr. Hard Guy, whose reputation is in severe danger of crumbling at this last hurdle before the general election, allocated the four authorities that saw him an uplift. There is a lesson in that. If the other six had gone to the Secretary of State, they would have been given a budget increase, not a decrease.

We all know that the Secretary of State does not believe in capping, and nor did the previous Secretary of State or his predecessor even though he took a Billericay view of the world. Nobody, except one or two of the hon. Members who have spoken tonight, who have to say that they support capping to show that they still cling to the hard-line policy of the Minister of State, really believes in it. The fact that there have had to be adjustments shows that all the capping is, at the bottom line, nonsense.

The standard spending assessments on which the figures are predicated are nonsense. In the Local Government Chronicle survey last week, 83 per cent. of treasurers said clearly that they thought that the system was flawed. It does not stand up to scrutiny and it should not do. The SSAs were never intended to be used for determining the exact level of spending in any individual local authority. No Government can know what individual councils should spend. No Minister, no matter how wise, can know the circumstances on the ground. He cannot know about the gaps in the pavement in Billericay, about the temperature of the water in Streatham or whether the council is giving good or bad value for money in Bristol or in Kingswood. Only local people can make a judgment. A decent and fair local democratic system, with annual elections, as we have suggested, and with intervention on quality, not on reducing service, will achieve the results.

The hon. Member for Torridge and Devon, West (Miss Nicholson) suggested early in the debate that reducing people's services somehow increased value for money. It does not. What counts is intervention to improve management, to increase training and to ensure that services are delivered flexibly and sensitively for people who need them, not massive cuts in the budgets and the provision of services. As my hon. Friend the Member for Norwood said, when voluntary sector groups find that their grants are cut and when people discover that their services have gone, they ask one simple question—"Why?"

It is clear tonight that the answer ranges over a number of pounds. In Warwickshire, the figure is £9. For a few pounds a year—not a week—does one get the service that one wants or the service that the Government will foist on people? At last, the Government have decided that they will overcome the pretence that there are good and bad authorities. From the beginning of June when we debate the Bill that the Government will introduce, every local authority is a bad authority. Every authority will have to be whipped into line. Every authority will have to be overseen by a central Government who cannot allow diversity and decentralisation, and who cannot let local democracy work. A dictatorship of parliamentary democracy is no democracy at all.

To add insult to injury, it is those authorities which have fallen into line—the Minister was right when he said this—in terms of getting below the cap which should also be considered tonight. Until the Minister for Public Transport with responsibility for roads and traffic wrote to me yesterday, the Government intended to continue to cap the south Yorkshire authorities for spending on supertram money that they were receiving from the Department of Transport. As daft and stupid a way of running a system I cannot imagine.

Every authority has been affected because they have all had to make cuts. My authority has had to cut 1,300 posts this year. It is a crime that the streets are dirty. It is a crime that education has been cut in the way that it has. It is disgraceful that we cannot care for the elderly. There is only one set of people to blame and it is those on the Conservative Benches tonight.

11.15 pm

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

This has been an important and long debate. After some four hours, I shall do my best to answer the large number of points raised by right hon. and hon. Members. I am grateful to many of my hon. Friends for their contributions to this debate. Warwickshire has been represented in force by my hon. Friends the Members for Warwick and Leamington (Sir D. Smith), for Nuneaton (Mr. Stevens) and for Rugby and Kenilworth (Mr. Pawsey) who have spoken or intervened. In addition, my hon. Friends the Members for Stratford-on-Avon (Mr. Howarth) and for Warwickshire, North (Mr. Maude) have been present in the Chamber for some hours.

We have also enjoyed interventions from my hon. Friends the Members for Amber Valley (Mr. Oppenheim), for Hertfordshire, West (Mr. Jones) and for Billericay (Mrs. Gorman), whose colourful performance enlivened the debate no end. She is absolutely right. I did indeed meet councillors and council officers from her borough on behalf of my right hon. Friend the Secretary of State. My hon. Friend the Member for Streatham (Sir W. Shelton) made a powerful argument and my hon. Friend the Member for Torridge and Devon, West (Miss Nicholson), speaking in her traditional and forthright way, enlivened the debate.

My hon. Friend the Member for Bristol, North-West (Mr. Stern) brought a powerful argument to bear on the situation there. In particular, I thank my hon. Friend the Member for Norwich, North (Mr. Thompson), who made an important contribution which was none the less for the staggering attacks made on him by an Opposition Member. My hon. Friends the Members for Kingswood (Mr. Hayward) and for Ipswich (Mr. Irvine) also made important contributions. I shall attempt to deal with some of the points that they raised, but if time marches on too quickly I may not be able to answer all of them.

My hon. Friend the Member for Billericay brought to my attention the fact that it was alleged that her council, Basildon, had not had the opportunity of making its voice heard. That is not so. I met a deputation from the council on 9 May and councillor Ballard is reported in the local newspaper as saying: It was a friendly, constructive and helpful discusssion. We put all our cards on the table and the minister listened sympathetically. We have heard tonight that my hard and hon. Friend the Minister for Local Government and Inner Cities has turned into the soft man and it is now the turn of the new hard man to wind up tonight's debate. I start by making it clear that the aim of capping is to require authorities to cut their budgets to a level which is not excessive. It is only when we have been convinced that we could not demand that of an authority that we have decided to require a somewhat smaller reduction. In the case of Stoke-on-Trent and Norwich we were satisfied that it was right to require the full reduction for 1991–92. For Ipswich and Basildon we decided that——

Ms. Walley

rose——

Mr. Key

The hon. Lady must contain herself. I promise that I will answer the points concerning Stoke, but if she insists on intervening I shall be less likely to get there.

When we proposed our initial caps for Ipswich and Basildon we decided that in their circumstances some small reduction in 1991–92 was appropriate. We considered all the information submitted by the councils and we made our judgments. It is nonsense to suggest that the decisions are unfair or that the process is cloaked in secrecy. All the councils were given every opportunity to make their case for a higher cap. They took advantage of that opportunity. We listened carefully but concluded that our original judgments were, in most cases, right.

Let me start with the standard spending assessments. We have heard a lot this evening about how inadequate they are. I am at a loss to understand how hon. Members can make that accusation. SSAs are 19.4 per cent. up on last year. Hon. Members may say that that is hopelessly inadequate, but 237 local authorities throughout the country have budgeted within their SSAs. Across the country as a whole, the total of local authority budgets is just a half of 1 per cent. above total standard spending. Our approach has been that authorities budgeting a large amount over SSA must have smaller increases in their spending. The capping criteria reflect that. The eight authorities in this order are the only ones that failed to exercise the necessary restraint. It is gratifying that so many authorities have this year budgeted sensibly. We are pledged to encouraging them to do that in the future.

If the House approves the draft orders, my right hon. Friend the Secretary of State for the Environment will make them shortly thereafter and notices will be served on the local authorities concerned. We hope to do that very quickly. Authorities will then have 21 days to set their new, lower budgets. Charge payers should receive their lower bills next month.

Several Opposition Members have told chilling tales about the effects of capping on education, the social services and the police. I believe that many of these tales are mischievous. They have caused unnecessary anguish to parents and elderly people. The evidence is different. In many authorities capping is encouraging imaginative new ideas about how services are to be provided. Well-managed authorities are moving away from 100 per cent. local authority provision of, for example, residential care, or by stimulating co-operation with the private and voluntary sectors and by setting charges that reflect ability to pay. In education, 104 of the 109 education authorities are pursuing our education reforms without indulging in excessive budgets. Capping is providing a much-needed challenge to authorities that are notoriously inefficient. It is a tragedy that capping was needed to achieve that.

The right hon. Member for Stoke-on-Trent, South (Mr. Ashley) referred to Stoke-on-Trent as the "sick" city. We are very much aware of Stoke-on-Trent's circumstances. We looked carefully at the council's health profile of the city of Stoke-on-Trent that it sent to us and that we discussed. Stoke-on-Trent receives very substantial Government assistance. My hon. Friend the Minister for Local Government and Inner Cities referred to some of it. However, the council chose to increase its budget to 14 per cent. over SSA, which itself had increased by over 26 per cent.

The hon. Member for Stoke-on-Trent, North (Ms. Walley) asked me to explain why Stoke-on-Trent could have spent more last year than it is allowed to spend this year. Let us be clear. Stoke-on-Trent's budget last year was 24 per cent. above its SSA. It was on warning that the Government considered that it was spending too much then. But what did Stoke-on-Trent do? It increased its budget by 16.4 per cent.—hardly the act of an authority that is trying its best to restrain spending. The cap specified in the draft order allows a 7.3 per cent. increase. We believe that this is reasonable and perfectly achievable for Stoke-on-Trent.

The right hon. Member for Stoke-on-Trent, South said that last year the Minister had said that a £33.7 million budget was appropriate and proper. I fear that the right hon. Gentleman has misinterpreted what was said. Last year, as this year, the appropriate level of spending is the standard spending assessment. Last year, Stoke-on-Trent budgeted 24 per cent. above SSA. Such a spending level is far from appropriate; we have never said otherwise. I accept that we did not cap Stoke-on-Trent last year. That is because last year we had a per adult element in our criteria. Therefore, we capped only those authorities that were most substantially in excess of the SSA. This year, having announced our provisional criteria in advance, it was right for us to act wherever a budget was excessive, or represented an excessive increase. We have done that. That is why Stoke-on-Trent has been capped.

I do not say that Stoke should be compared only with the other district councils around. Warrington has many of the problems of Stoke. Stoke receives 13 per cent. more SSA per adult than Warrington. However, we could go on for a long time with such comparisons, and I must move on.

My hon. Friend the Member for Warwick and Leamington spoke at some length about SSAs. We are beginning to discuss with local authority associations the SSA methodology for next year. We shall, of course, consider carefully any fresh evidence about SSAs. We are more than happy to meet my hon. Friend and other Warwickshire Members to discuss the position of Warwickshire county council.

The hon. Member for Truro (Mr. Taylor) also had a good deal to say about SSAs. He said that they were arbitrary and that decisions on distribution of revenue support grant were taken by unaccountable people in Whitehall. All the SSA calculations are discussed with local authority associations and proposals are put out to consultation every year. The final distribution report is debated in the House. Opposition Members can hardly claim that decisions are taken in secret.

My hon. Friend the Member for Norwich, North compared Norwich with the rest of Norfolk. I am grateful to him for comparing Labour Norwich and the surrounding Conservative districts. Labour Norwich set a budget £36 per adult above SSA. Breckland set a budget £24 below SSA. Broadland set a budget £29 below SSA. Kings Lynn and West Norfolk set a budget £35 below SSA. South Norfolk set a budget £25 below SSA.

My hon. Friend the Member for Norwich, North spoke eloquently about the heritage of Norwich. There are many similarities between his constituency and mine of Salisbury. They are both beautiful ancient cities. We accept that Norwich has greater needs. It is a regional centre and has more social disadvantage. Salisbury's SSA is £103 per adult. Norwich's SSA is £141 per adult—37 per cent. more.

My hon. Friend the Member for Rugby and Kenilworth spoke about police authorities. That is an important point. The Government are fully committed to effective policing. The number of police officers has risen by some 15,000 men and women since 1979. My right hon. Friend the Home Secretary announced a further increase of 700 posts last December. We provided £4.67 billion for police expenditure this year—11.8 per cent. more .than in 1990–91. For every £20 that police authorities spend, central Government funding meets about £17. I should add that, in Warwickshire, the police SSA increased by 12.4 per cent. compared with the shire county average of 10.5 per cent. The police service SSA for all forces other than the Metropolitan force is based on police establishments approved by my right hon. Friend the Home Secretary.

The hon. Member for Birkenhead (Mr. Field) asked me three questions. On the question about Wandsworth, Wirral as a whole does not have the needs of, say, Liverpool, Manchester or Wandsworth. It is much closer in character to St. Helens or Sefton and has an SSA to match its characteristics. Wirral's SSA is up 19.2 per cent. over last year. That is a generous increase.

Secondly, the hon. Member for Birkenhead said that Wirral had been penalised because it had a low base from the previous Conservative administration. If we had made a special allowance for spending from balances, Wirral would have had the benefit of that additional spending not once but twice, because it would have been built into the budget for this year. We capped Wirral because it pushed up its demands on taxpayers by 20 per cent. compared with last year. That was too much.

Thirdly, the hon. Member for Birkenhead asked me about taking restraining measures against police and transport authorities, over which he said that Wirral had no control. The police and transport authorities are in a different position from that of the local authority. The police budget does not come within Wirral's budget. It has no bearing on whether Wirral is capped. But if a metropolitan police authority had budgeted excessively, we would have capped it. I accept that the transport authority's budget affects Wirral's budget. But Wirral is represented on that authority and it cannot claim that it has no say in the transport authority's budget.

Local authorities have to play their part in restraining public expenditure. If they do not, the Government cannot stand by. Inflation is now running at just about 6 per cent. Would Opposition Members stand idly by and let those authorities take ever more than their fair share of the nation's resources? We could not do so, and we have not done so.

I commend the order to the House.

Question put:—

The House divided: Ayes 266, Noes 191.

Division No. 151]	[11.30 pm
AYES
Adley, Robert	Browne, John (Winchester)
Aitken, Jonathan	Buchanan-Smith, Rt Hon Alick
Alexander, Richard	Budgen, Nicholas
Alison, Rt Hon Michael	Burns, Simon
Amess, David	Burt, Alistair
Amos, Alan	Butterfill, John
Arbuthnot, James	Carlisle, John, (Luton N)
Arnold, Jacques (Gravesham)	Carlisle, Kenneth (Lincoln)
Arnold, Sir Thomas	Carrington, Matthew
Ashby, David	Cash, William
Atkinson, David	Chalker, Rt Hon Mrs Lynda
Baker, Nicholas (Dorset N)	Channon, Rt Hon Paul
Banks, Robert (Harrogate)	Chapman, Sydney
Batiste, Spencer	Chope, Christopher
Bellingham, Henry	Churchill, Mr
Bendall, Vivian	Clark, Dr Michael (Rochford)
Bennett, Nicholas (Pembroke)	Clark, Rt Hon Sir William
Benyon, W.	Clarke, Rt Hon K. (Rushcliffe)
Biffen, Rt Hon John	Colvin, Michael
Blackburn, Dr John G.	Conway, Derek
Blaker, Rt Hon Sir Peter	Coombs, Anthony (Wyre F'rest)
Body, Sir Richard	Cope, Rt Hon John
Bonsor, Sir Nicholas	Cormack, Patrick
Boscawen, Hon Robert	Couchman, James
Boswell, Tim	Cran, James
Bottomley, Peter	Currie, Mrs Edwina
Bottomley, Mrs Virginia	Davies, Q. (Stamf'd & Spald'g)
Bowden, A. (Brighton K'pto'n)	Davis, David (Boothferry)
Bowden, Gerald (Dulwich)	Day, Stephen
Bowis, John	Dickens, Geoffrey
Boyson, Rt Hon Dr Sir Rhodes	Dorrell, Stephen
Brandon-Bravo, Martin	Douglas-Hamilton, Lord James
Brazier, Julian	Dover, Den
Bright, Graham	Dunn, Bob
Brown, Michael (Brigg & Cl't's)	Durant, Sir Anthony

Dykes, Hugh	Maclean, David
Emery, Sir Peter	McLoughlin, Patrick
Evans, David (Welwyn Hatf'd)	McNair-Wilson, Sir Michael
Fallon, Michael	McNair-Wilson, Sir Patrick
Favell, Tony	Madel, David
Fenner, Dame Peggy	Malins, Humfrey
Field, Barry (Isle of Wight)	Mans, Keith
Finsberg, Sir Geoffrey	Maples, John
Fishburn, John Dudley	Marland, Paul
Fookes, Dame Janet	Marlow, Tony
Fowler, Rt Hon Sir Norman	Marshall, John (Hendon S)
Fox, Sir Marcus	Marshall, Sir Michael (Arundel)
Franks, Cecil	Martin, David (Portsmouth S)
Freeman, Roger	Mates, Michael
French, Douglas	Maude, Hon Francis
Gale, Roger	Maxwell-Hyslop, Robin
Gardiner, Sir George	Mayhew, Rt Hon Sir Patrick
Garel-Jones, Tristan	Mellor, Rt Hon David
Gilmour, Rt Hon Sir Ian	Miller, Sir Hal
Glyn, Dr Sir Alan	Mills, Iain
Goodlad, Alastair	Miscampbell, Norman
Goodson-Wickes, Dr Charles	Mitchell, Andrew (Gedling)
Gorman, Mrs Teresa	Mitchell, Sir David
Gorst, John	Moate, Roger
Greenway, John (Ryedale)	Monro, Sir Hector
Griffiths, Peter (Portsmouth N)	Montgomery, Sir Fergus
Grist, Ian	Morris, M (N'hampton S)
Ground, Patrick	Morrison, Sir Charles
Hague, William	Morrison, Rt Hon Sir Peter
Hamilton, Hon Archie (Epsom)	Moss, Malcolm
Hamilton, Neil (Tatton)	Moynihan, Hon Colin
Hampson, Dr Keith	Neale, Sir Gerrard
Hannam, John	Neubert, Sir Michael
Hargreaves, A. (B'ham H'll Gr')	Nicholls, Patrick
Hargreaves, Ken (Hyndburn)	Nicholson, David (Taunton)
Hayes, Jerry	Nicholson, Emma (Devon West)
Hayhoe, Rt Hon Sir Barney	Norris, Steve
Hayward, Robert	Oppenheim, Phillip
Heathcoat-Amory, David	Page, Richard
Heseltine, Rt Hon Michael	Paice, James
Hicks, Mrs Maureen (Wolv' NE)	Patten, Rt Hon John
Hicks, Robert (Cornwall SE)	Peacock, Mrs Elizabeth
Higgins, Rt Hon Terence L.	Porter, David (Waveney)
Hill, James	Portillo, Michael
Hind, Kenneth	Powell, William (Corby)
Hogg, Hon Douglas (Gr'th'm)	Price, Sir David
Holt, Richard	Raison, Rt Hon Sir Timothy
Howarth, Alan (Strat'd-on-A)	Rathbone, Tim
Howarth, G. (Cannock & B'wd)	Redwood, John
Howe, Rt Hon Sir Geoffrey	Riddick, Graham
Howell, Ralph (North Norfolk)	Ridsdale, Sir Julian
Hughes, Robert G. (Harrow W)	Rifkind, Rt Hon Malcolm
Hunt, Rt Hon David	Roberts, Sir Wyn (Conwy)
Hunt, Sir John (Ravensbourne)	Roe, Mrs Marion
Hunter, Andrew	Rossi, Sir Hugh
Irvine, Michael	Rost, Peter
Jessel, Toby	Rowe, Andrew
Johnson Smith, Sir Geoffrey	Rumbold, Rt Hon Mrs Angela
Jones, Robert B (Herts W)	Ryder, Rt Hon Richard
Kellett-Bowman, Dame Elaine	Sackville, Hon Tom
Key, Robert	Sainsbury, Hon Tim
Kilfedder, James	Sayeed, Jonathan
King, Roger (B'ham N'thfield)	Shaw, David (Dover)
Kirkhope, Timothy	Shaw, Sir Giles (Pudsey)
Knapman, Roger	Shaw, Sir Michael (Scarb')
Knight, Greg (Derby North)	Shelton, Sir William
Knight, Dame Jill (Edgbaston)	Shephard, Mrs G. (Norfolk SW)
Knowles, Michael	Shepherd, Colin (Hereford)
Knox, David	Skeet, Sir Trevor
Latham, Michael	Smith, Tim (Beaconsfield)
Lee, John (Pendle)	Soames, Hon Nicholas
Lennox-Boyd, Hon Mark	Speed, Keith
Lester, Jim (Broxtowe)	Speller, Tony
Lilley, Rt Hon Peter	Spicer, Michael (S Worcs)
Lloyd, Sir Ian (Havant)	Squire, Robin
Lloyd, Peter (Fareham)	Stanbrook, Ivor
Lord, Michael	Stanley, Rt Hon Sir John
Luce, Rt Hon Sir Richard	Steen, Anthony
Macfarlane, Sir Neil	Stern, Michael
MacKay, Andrew (E Berkshire)	Stevens, Lewis

Stewart, Allan (Eastwood)	Waller, Gary
Stewart, Andy (Sherwood)	Walters, Sir Dennis
Stokes, Sir John	Ward, John
Sumberg, David	Wardle, Charles (Bexhill)
Summerson, Hugo	Warren, Kenneth
Tapsell, Sir Peter	Watts, John
Taylor, Ian (Esher)	Wells, Bowen
Temple-Morris, Peter	Wheeler, Sir John
Thompson, D. (Calder Valley)	Whitney, Ray
Thompson, Patrick (Norwich N)	Widdecombe, Ann
Thorne, Neil	Wiggin, Jerry
Thurnham, Peter	Wilkinson, John
Townend, John (Bridlington)	Wolfson, Mark
Townsend, Cyril D. (B'heath)	Wood, Timothy
Tracey, Richard	Woodcock, Dr. Mike
Twinn, Dr Ian	Yeo, Tim
Vaughan, Sir Gerard
Viggers, Peter	Tellers for the Ayes:
Waldegrave, Rt Hon William	Mr. David Lightbown and
Walden, George	Mr. John M. Taylor

NOES
Abbott, Ms Diane	Fearn, Ronald
Adams, Mrs Irene (Paisley, N.)	Field, Frank (Birkenhead)
Allen, Graham	Fisher, Mark
Alton, David	Flynn, Paul
Anderson, Donald	Foot, Rt Hon Michael
Archer, Rt Hon Peter	Foster, Derek
Armstrong, Hilary	Fraser, John
Ashdown, Rt Hon Paddy	Fyfe, Maria
Ashley, Rt Hon Jack	Galloway, George
Ashton, Joe	Garrett, John (Norwich South)
Banks, Tony (Newham NW)	Garrett, Ted (Wallsend)
Barnes, Harry (Derbyshire NE)	George, Bruce
Barron, Kevin	Gilbert, Rt Hon Dr John
Battle, John	Godman, Dr Norman A.
Beith, A. J.	Gordon, Mildred
Benn, Rt Hon Tony	Gould, Bryan
Bennett, A. F. (D'nt'n & R'dish)	Graham, Thomas
Benton, Joseph	Grant, Bernie (Tottenham)
Bermingham, Gerald	Griffiths, Nigel (Edinburgh S)
Blunkett, David	Griffiths, Win (Bridgend)
Boyes, Roland	Grocott, Bruce
Bradley, Keith	Hain, Peter
Bray, Dr Jeremy	Hardy, Peter
Brown, Gordon (D'mline E)	Harman, Ms Harriet
Brown, Nicholas (Newcastle E)	Hattersley, Rt Hon Roy
Brown, Ron (Edinburgh Leith)	Haynes, Frank
Bruce, Malcolm (Gordon)	Healey, Rt Hon Denis
Buckley, George J.	Henderson, Doug
Caborn, Richard	Hinchliffe, David
Campbell, Ron (Blyth Valley)	Hoey, Ms Kate (Vauxhall)
Campbell-Savours, D. N.	Hogg, N. (C'nauld & Kilsyth)
Clark, Dr David (S Shields)	Home Robertson, John
Clarke, Tom (Monklands W)	Hood, Jimmy
Clelland, David	Howarth, George (Knowsley N)
Clwyd, Mrs Ann	Howells, Geraint
Cohen, Harry	Howells, Dr. Kim (Pontypridd)
Cook, Robin (Livingston)	Hughes, John (Coventry NE)
Corbett, Robin	Hughes, Robert (Aberdeen N)
Corbyn, Jeremy	Hughes, Roy (Newport E)
Cousins, Jim	Hughes, Simon (Southwark)
Cox, Tom	Illsley, Eric
Crowther, Stan	Ingram, Adam
Cryer, Bob	Jones, Barry (Alyn & Deeside)
Cummings, John	Jones, Martyn (Clwyd S W)
Cunliffe, Lawrence	Kirkwood, Archy
Dalyell, Tam	Lambie, David
Darling, Alistair	Lamond, James
Davies, Ron (Caerphilly)	Leadbitter, Ted
Dewar, Donald	Lestor, Joan (Eccles)
Dixon, Don	Litherland, Robert
Dobson, Frank	Livsey, Richard
Duffy, A. E. P.	Lofthouse, Geoffrey
Dunnachie, Jimmy	Loyden, Eddie
Eadie, Alexander	McAllion, John
Eggar, Tim	McCartney, Ian
Evans, John (St Helens N)	McFall, John
Ewing, Harry (Falkirk E)	McKay, Allen (Barnsley West)
Fatchett, Derek	McKelvey, William

McLeish, Henry	Robinson, Geoffrey
McMaster, Gordon	Rogers, Allan
McWilliam, John	Rooker, Jeff
Madden, Max	Rooney, Terence
Mahon, Mrs Alice	Ruddock, Joan
Marek, Dr John	Sedgemore, Brian
Marshall, Jim (Leicester S)	Sheerman, Barry
Martlew, Eric	Sheldon, Rt Hon Robert
Maxton, John	Short, Clare
Meacher, Michael	Skinner, Dennis
Meale, Alan	Smith, Andrew (Oxford E)
Michael, Alun	Smith, C. (Isl'ton & F'bury)
Michie, Bill (Sheffield Heeley)	Smith, Sir Dudley (Warwick)
Moonie, Dr Lewis	Smith, Rt Hon J. (Monk'ds E)
Morgan, Rhodri	Snape, Peter
Morley, Elliot	Soley, Clive
Morris, Rt Hon A. (W'shawe)	Spearing, Nigel
Morris, Rt Hon J. (Aberavon)	Stott, Roger
Mowlam, Marjorie	Strang, Gavin
Mullin, Chris	Taylor, Mrs Ann (Dewsbury)
Murphy, Paul	Taylor, Matthew (Truro)
Nellist, Dave	Turner, Dennis
O'Brien, William	Vaz, Keith
O'Hara, Edward	Wallace, James
Orme, Rt Hon Stanley	Walley, Joan
Parry, Robert	Wareing, Robert N.
Patchett, Terry	Watson, Mike (Glasgow, C)
Pawsey, James	Williams, Rt Hon Alan
Pendry, Tom	Williams, Alan W. (Carm'then)
Pike, Peter L.	Wilson, Brian
Powell, Ray (Ogmore)	Winnick, David
Prescott, John	Wise, Mrs Audrey
Primarolo, Dawn	Worthington, Tony
Quin, Ms Joyce	Wray, Jimmy
Radice, Giles	Young, David (Bolton SE)
Randall, Stuart
Rees, Rt Hon Merlyn	Tellers for the Noes:
Reid, Dr John	Mrs. Llin Golding and
Richardson, Jo	Mr. Jack Thompson
Robertson, George

Question accordingly agreed to.

Resolved, That the draft Charge Limitation (England) (Maximum Amounts) Order 1991, which was laid before this House on 16th May, be approved.