HC Deb 12 February 1996 vol 271 cc708-54
Mr. Deputy Speaker (Mr. Michael Morris)

Madam Speaker has selected the amendment in the name of the Prime Minister.

7.13 pm
Mr. David Rendel (Newbury)

I beg to move, That this House calls for reform of the financing of local councils so that they can realistically meet needs within the communities they serve; condemns the Government's financial priorities which are leading directly to the imposition of higher council taxes and cuts in local services; and believes that the Government's assault on local authorities, which continues year after year, is directly related to the massive reduction in Conservative representation at a local level. I wish to make it clear at the start that I hope that the debate will not descend into the trading of insults about whose councils are worse than others. Many debates on local government in the House have been degraded in that way, and I hope that it will not happen tonight. If we chose, Liberal Democrat Members might use our time to attack Westminster or Lambeth, just as Labour spokesmen might do nothing but attack Wandsworth, or perhaps Tower Hamlets as it was under the Liberal Democrat administration, while Conservative spokesmen might do nothing but discuss Cornwall or Walsall.

If we do that, however, we shall merely succeed in losing what little esteem Members of Parliament are left with in the eyes of the public. Nothing makes politicians lose the respect of the public so fast as Members of the House using valuable debating time merely to criticise one another's councils. The public believe that instead we should consider positive ways in which all local authorities might be helped to provide better services at a lower cost.

People may say—and many do—that local government is on the brink of crisis, but a crisis is usually short-lived, whereas, sadly, the problems of local government are of long standing. Local government now faces a challenge from central Government that is perhaps greater than at any time in history. For the past 15 years, local government has been attacked by a Conservative Government who are keen to centralise as much power as they can. Even before that, there was always an imbalance in the relationship between local and central Government.

For too long, local government has been regarded as the property of central Government, its powers and responsibilities relating not to the public, but to Ministers and bureaucrats in Whitehall. Under the past three Conservative Administrations, local authorities have been regarded as the localised implementers of the philosophy and politics of the new right Conservative Government in Whitehall.

Mr. Nigel Evans (Ribble Valley)

I hope that the hon. Gentleman will be constructive and not use the debate merely as an opportunity to knock the Government.

Mr. Rendel

I am happy to be constructive, as the hon. Gentleman will find if he will be patient. I said that it was important to use the debate to consider the whole of local government, not just to criticise individual councils.

For far too long, local government has been the property of central Government. We must change all that. From May 1996, the Conservatives will be left in control of no more than a small handful of local authorities. As their losses in local government have increased, so their determination to control local government from their Whitehall bastion has also increased. Every year, our local authorities find it harder to cope with the financial burden placed on them by central Government. They do so under a dead weight of bureaucracy and over-regulation.

Mr. David Nicholson (Taunton)

The hon. Gentleman talks about the powers and restrictions that central Government place on local authorities, and I believe that we can have a reasonable debate on that. Nevertheless, I draw his attention to the specific case of Taunton Deane borough council, held by the Liberals since 1991, which has never been capped. Two years ago, the council was awarded an extra grant of £1.3 million from central Government—the Minister for Local Government, Housing and Urban Regeneration, my hon. Friend the Member for Skipton and Ripon (Mr. Curry), knows my opinion about that—which was far more than any other council in Somerset or Devon, and the grant has not been significantly reduced since. This year, the council proposes to increase its precept by 158 per cent., resulting in a huge increase in council tax", as the Somerset County Gazette reports. What has the hon. Gentleman to say about that?

Mr. Rendel

I have already made it plain that I hope that the debate will not be degraded by that type of intervention, and I shall not even honour the hon. Gentleman with an answer in that respect. I hope that no other hon. Member will seek to degrade the debate in the way that the hon. Gentleman has done.

Every year, our local authorities find it harder to cope. As the Conservatives have been driven from town halls throughout the country, the Government have wreaked their revenge. To ease the burden on central Government—largely to pay for reductions in income tax—the Government have increased the burdens placed on local authorities. At the same time as local authorities have had their resources pulled from under them by central Government, increasing statutory responsibilities are being passed on to them from central Government.

One need only think of the nightmare represented by care in the community or the endless red tape of compulsory competitive tendering. It is fair to sum up the problem which confronts local authorities of all political complexions as that of having a wide range of responsibilities dictated by central Government, without the resources needed to meet them or the freedom to secure those resources.

Let us consider some recent financial settlements. Last year, the Government at least had the honesty to admit that the settlement was very tough. They could hardly do otherwise when their own press release confirmed that, bearing in mind the new burdens in respect of community care, the contribution from central Government had decreased in cash terms. It meant a cut in Government funds of well over 3 per cent.

This year, unfortunately, there has been rather less honesty from Ministers. In November, the Chancellor of the Exchequer pledged that an additional £878 million would be made available for investment in education for 1996–97. Of that, £770 million was to be channelled through local government. As I asked in the debate on the local government settlement, where is the extra £770 million? Funding from central Government for local authorities has not risen in real terms.

Mr. Nigel Waterson (Eastbourne)

Will the hon. Gentleman confirm that his party's alternative Budget at the end of last year showed no extra money for local councils? Does that mean that the extra money that Liberals wanted for education—equivalent to 1p on income tax—would not be spent under their plans, or does it mean that new taxes would be imposed? Or does it mean that money would be taken from some local councils and given to others?

Mr. Rendel

The hon. Gentleman is wrong in his description of our alternative Budget. It is clear that the extra money from income tax would be spent on education. That is a local authority service. That money would have gone to local authorities for that reason.

This year, the Government have increased the standard spending assessment for education by only 4.5 per cent. Yet local authorities are already spending more this year on education than the Government suggest they should spend next year. If local authorities are to fulfil the Government's pledge of an increase in spending on education of 4.5 per cent., the reality is that the Government are, in effect, pressing local authorities to increase council tax by an average of 8 or 9 per cent., and to cut other services to the bone.

Even then it will not be possible for many authorities to boost spending on education by the amount that the Government suggest. I remind the House of the report produced by the Select Committee on the Treasury and Civil Service, which was published on 15 January. One section read: This increase in spending does not, however, have quite the substance that the Chancellor claimed for it. There seems little doubt that some local authorities will be unable to pass on any increase in spending, and that some schools may neither perceive nor receive any increase in resources. In Cambridgeshire, for example, the education SSA for the current year was £226.1 million. Next year, it is due to rise to £237.3 million, an increase of 4.9 per cent.

Mr. David Wilshire (Spelthorne)

I am fascinated by the hon. Gentleman's argument. My hon. Friend the Member for Taunton (Mr. Nicholson) was told off for using a specific case—presumably one which did not suit the Liberal party's purposes—but we are now being treated to a specific case from the hon. Gentleman. What are the Liberals up to? Do they understand the case that they are putting, or are they merely making it up on the hoof as they go along?

Mr. Rendel

The interventions are becoming more and more futile. I referred to the need not to make foolish interventions merely to describe where certain councils had gone wrong in order to make cheap party political points. I am talking about the way in which the Government's financing of local government has affected certain councils. That is a very different matter.

Cambridgeshire has already decided to spend £241.1 million on education this year because the authority places a greater value on education than do the Government. That pattern is repeated in a range of county councils from Northumberland to Cornwall. Indeed, it covers the length and breadth of England. As my hon. Friend the Member for Gordon (Mr. Bruce) will no doubt confirm when he replies to the debate, exactly the same pattern is repeated in Scotland and Wales.

The Conservative party controls only a tiny handful of education authorities. No doubt that is why the counties place a greater emphasis on education.

Mr. Jacques Arnold (Gravesham)

Will the hon. Gentleman give way?

Mr. Rendel

No. I have already given way enough.

The Government's position no doubt helps to explain why they treat counties and local education authorities in general with such contempt. Even in Buckinghamshire—the last county left in Conservative hands—the council has made it clear that the settlement for 1996–97 is a disaster. It has calculated that it will need to make budget cuts of £12 million to contain expenditure within the capping limit. Yet that limit already assumes an increase in council tax of almost 7 per cent. Any additional Government funding for education will clearly be too little, too late.

In keeping with this evening's theme, what new money there may be will not cover rising costs that are beyond local authority control, such as the £191 million needed for rising pupil numbers or the £131 million required for special needs education. Nor does it take into account the 8 per cent. reduction in schools' capital grants and credit approvals. Vital repairs and maintenance for schools can be delayed for only so long: there comes a time when investment must be made in the infrastructure of our education system.

How can children be expected to learn in damp, decaying classrooms? How can teachers be expected to teach in Dickensian conditions where school buildings are a threat to health and where books are outdated and bedraggled? Conservative Ministers have raised the hopes of parents throughout the country, who thought that at last their children would receive the quality of education that they need, but it is clear already that those hopes were falsely raised.

The Government are guilty of deliberately misleading the public. Their strategy is obvious. They promise new money that will go through to local authorities. When that money does not materialise in schools, Ministers and Conservative Back-Bench Members berate local authorities for not passing it on. How callous can the Government be in toying with parents' concerns for their children's future in that way? How low can their regard for local government be when they seek deliberately to discredit local authorities throughout the country with a campaign that is based on deceit and misinformation?

We are not here merely to talk about what is wrong with local government funding. We must talk also about what we can do to improve it. The solution to the problem of local government funding lies in a change in approach by central Government. The Government must decentralise power. They must allow local authorities to have freedom properly to manage their own affairs. That means giving local authorities greater freedom in raising revenue and in setting spending priorities. It means also raising a larger proportion of funding locally.

At the most recent Conservative party conference, it was decided to end capping. The Conservatives were right to do so. Unfortunately, the Government are now so deaf to good advice that they do not listen to it even when it comes from their supporters. Capping is an unacceptable infringement of the principle of local decision making and local accountability. In addition, the constraints introduced by council tax precepts have had the unfortunate effect of pushing up local authority charges. When leisure facilities and the cost of meals on wheels soar above the rate of inflation, it is obvious who suffers the additional burdens. We know that they are faced by those who can least afford them.

In Northumberland, for example, the exceptionally tight budget will mean that the school uniform allowance will be halved. Voluntary groups will be charged to use school premises when they have never had to face such charges before. Discretionary transport provision will come to an end. A further 120 families in the county will be hit by the introduction of charges for respite care. There will be substantial increases in the cost of home help.

The Minister for Local Government, Housing and Urban Regeneration (Mr. David Curry)

I am anxious to have a clear idea of what the hon. Gentleman's party is proposing. When he says that capping must come to an end, is he proposing not to apply capping, or to repeal the legislation that makes it possible for the Government to cap? There is a great difference between the two.

Mr. Rendel

In a few moments, I shall be introducing a completely different system, which will not require the Minister's question to be answered.

Releasing capping in isolation presents its own problems, especially if accompanied by a stingy financial settlement which leaves authorities with no choice but substantially to increase council tax. The problem is that council tax was not designed to bear the weight of being a major source of local tax revenue. It is not suitable for that purpose, because it is simply not fair. It is unfair essentially because it has many of the elements of a simple charge rather than being a really progressive tax. There will be great resistance this year to the Government's proposed council tax increases. Whether they like it or not, Labour and Conservative Members alike will have to address that issue.

If local authorities are to raise a larger proportion of their own revenue and if the council tax is inherently unfair, what is the alternative? The Minister will be glad to hear that I am coming to that. The Liberal Democrats have had a policy on that for many years. We have argued consistently that the right way to raise local taxation is not by taxing personal property but by taxing personal income. It is one of the most basic principles of the modern liberal state that people contribute taxes according to their ability to pay. Our support for a local income tax is not new, nor is the idea confined to our party.

The Layfield report in 1976 took the view that a local income tax is the only form of taxation that warrants serious investigation for the raising of substantial extra council revenue. Furthermore, in a comprehensive new report for the Rowntree Foundation, Sir Charles Carter is due to show his support for a local income tax. I cannot see why the other parties are so resistant to this idea. I hope that it is not simply because they did not think of it first and therefore will not endorse it. Whatever the reason, I suggest that there is now a new impetus for local income tax and that they can no longer avoid giving it serious consideration.

Mr. Malcolm Bruce (Gordon)

Does my hon. Friend recall that, when the Deputy Prime Minister was charged with getting the Government out of the mess of the poll tax, he admitted that local income tax was a viable alternative but that he was not prepared to support it because it was Liberal Democrat policy?

Mr. Rendel

I thank my hon. Friend for that helpful intervention.

Mr. Robert Key (Salisbury)

Will the hon. Gentleman give way?

Mr. Rendel

No, I have given way to many Conservative Members.

Other changes to local authority funding are required and some of them can be introduced fairly quickly and easily. It is imperative that central Government release local government capital receipts, which are estimated to be about £5 billion. Those funds should be invested in Britain's infrastructure, and not left languishing in accounts at the behest of Whitehall. That investment is desperately needed. With so many people suffering the indignity of homelessness, how can the Government stand by their line that the money must stay where it is in the banks? When will they learn that homelessness will not be solved by market forces alone?

The area cost adjustment still needs reform and the formulae used to allocate funding according to need have had their shortcomings embarrassingly exposed. One small but important example of that was passed to me recently by the London borough of Kingston. According to central Government estimates that were used to calculate Kingston's grant, Kingston has 224 children in care. In reality, it has 616 children for whom it is statutorily responsible. Making these changes to the funding system will no doubt sharpen the accountability of local government. Local authorities must have the flexibility to respond to local need.

Of course, with the enhanced revenue raising powers goes greater and more transparent responsibility. As a Liberal Democrat, I naturally favour improving the democratic process to match the improvements made to the funding system. There would be no need for capping in any of its forms if people could be made properly accountable through a democratic system of local government.

Mr. Tom King (Bridgwater)

The hon. Gentleman proposes two substantial increases in public expenditure. He proposes a substantial increase in revenue-raising powers. He has said that local income tax would substantially increase the revenue available to local government and that he would remove capping. That would lead to an increase in public expenditure and, as he knows, if substantial capital receipts are released, that would also increase public expenditure. [Interruption.] I am surprised that I am being barracked. I assumed that we were getting a clear statement of Liberal Democrat policy and I thought that I was following it.

Does the hon. Gentleman's call for increased public expenditure in two areas mean that there would be an overall increase in public expenditure by the Exchequer? If that is not the case, where would the savings come from?

Mr. Rendel

It is clear that the right hon. Gentleman has not understood the local income tax system that we would introduce. Perhaps that is why he does not favour it. Under the system, as local income tax increases and more and more funding is raised by local authorities, an equivalent decrease will occur in national income tax, which means that income tax as a whole will not increase. However, there will be an increase in local fund raising compared with national fund raising.

I realise that some hon. Members may not share the Liberal Democrat enthusiasm for representative voting. I warn hon. Members that, if local authorities are to have greater freedom to respond to local need, we must accept that the political process must be effective enough to ensure that they do so respond. I commend that point to Labour Members as well as to Conservative Members. This year's financial settlement was a disgrace in its deceitful conception, and it needs to be condemned by the House, but it was the direct product of a funding system which sees local government merely as the whipping boy of Whitehall. That relationship needs to be broken.

We must move from local government to local democracy. That requires Westminster-based politicians to let go of some of the reins of power and to trust the public to set their own priorities and govern their own communities. That may not be easy for the Conservatives, who have lost nearly all their influence in local communities, and it may also not be easy for the Labour party, which becomes more centralist the higher its opinion poll ratings go, but it is essential if we are collectively to win back the trust of the public of large. There is no better way for the House to prove that it is packed with public servants who have the interests of others at heart.

Education, transport, care in the community, and the environment—many of the most important aspects of our society—are dealt with by local government. If those services are to be run successfully, a proper system of funding local government is not just an option but a necessity. All those who care about local government recognise that, and I hope that all hon. Members will recognise it in the vote tonight.

7.36 pm
The Minister for Local Government, Housing and Urban Regeneration (Mr. David Curry)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: congratulates the Government on the priority they have given to education and the police in the 1996–97 settlement for local government; approves the rigorous approach that Government takes towards all public expenditure, including that of local government; commends the flexibility they have given to local authorities to respond to local priorities; and urges local authorities to make the most efficient use of the resources available and to use their freedom responsibly in providing local services.". The hon. Member for Newbury (Mr. Rendel) asked for a debate on principles rather than on the performance of individual councils. I am happy to oblige him. This is an important issue, and I shall seek to demonstrate that the Conservative approach to local government in no way resembles the hon. Gentleman's epigrammatic description. It is part of a much more constructive approach and has a clear vision of the job that local government is there to do. That job must always move with the times, must be developing and must be organic, because circumstances change.

I should like to set out three propositions. First, Governments must have a view of the total volume of public expenditure that is acceptable in the economy. I cannot think of a Government who would not be willing to accept that starting proposition. The second proposition is that as local government spends about 25 per cent. of total public expenditure, Governments need to take a view about what is a desirable level of local authority spending. However attractive it might be to those in the town hall or to whoever occupies the Opposition Benches at any moment to ignore that, it is inescapable that Government have to come to that view.

I noted with interest an interview with the hon. Member for North-West Durham (Ms Armstrong) in the "Parliamentary Monitor", a journal that I noticed only because one of its representatives came to interview me today. The headline over this little chunk is "Reserving the right to cap". I shall quote the hon. Lady faithfully. She said: We have found that too many Labour councils are fed up with being labelled by the extreme activities of two or three councils. We have said therefore that we will reserve capping powers to make sure that no council thinks it can act above and beyond the needs of the country. I commend the hon. Lady for that because it is common sense. Governments must take that view. At some stage, they may have to say, "The national interest has determined that we must limit the total volume of expenditure, and local government must be a part of that constrict."

Mr. Robert Maclennan (Caithness and Sutherland)

How long is the Minister's memory of history? When was capping introduced for the first time? He speaks as though it is like the laws of the Medes and the Persians and is utterly unalterable.

Mr. Curry

My memory does not necessarily extend to the Medes and the Persians, although I am currently reading John Julian Norwich's excellent book on the history of the Byzantine empire. I have noted that capping took place rather frequently under those regimes, although perhaps with rather more dire consequences than those which the hon. Gentleman has mentioned.

The third proposition is that Governments must set priorities in public expenditure, and that spending by local authorities and through local authorities is necessarily in competition with other public spending. That is the reality of the situation, whether in relation to health, community care, foreign aid, social services or the police service. In the modern state, those three propositions are inescapable. According to the Liberal Democrats, it appears that none of those choices must be made. That is what separates us, right at the beginning.

If the money available to local authorities is inadequate, it can come from only two places: in the form of more grant from central Government, or from the local taxpayer. Ultimately, the money will come from the taxpayer; it must come from the taxpayer wherever it comes from. The right hon. Member for Berwick-upon-Tweed (Mr. Beith) has more sense than most people in his party, because he has acknowledged that simple truth.

There are three components to local government—[Interruption.] I am trying to oblige the hon. Member for Newbury by focusing the debate on the central issues, rather than doing a Cook's tour of the local authorities.

Mr. Toby Jessel (Twickenham)

In relation to the central issue, to which the hon. Member for Newbury (Mr. Rendel) referred, did my hon. Friend notice that he suggested not only no capping of local authority taxes, but that there should be a locally imposed income tax? The hon. Gentleman did not mention his party's policy to restore the Greater London council and other regional councils, which presumably would, if they had their way, have the power to impose a local income tax without any parliamentary or central Government capping. That would be a double whammy. How on earth does the hon. Gentleman imagine that people with families to support, and young executive and professional people in places such as Twickenham and Richmond, will possibly manage if two lots of income tax were imposed without any kind of capping?

Mr. Deputy Speaker

That was a very long intervention.

Mr. Curry

My hon. Friend is right. One thing I noticed in the remarks by the hon. Member for Newbury—because it was not there—was a definition of what is local. At what level will the tax be raised? Will it be raised by one of the new, super-duper regional assemblies which the Liberal party would impose on us? Another thing I noticed was the hon. Gentleman's statement that it would all net out to be the same because, if one raises more tax locally, one could raise less tax centrally. I can only say: would that that would happen. All my experience tells me that I can believe it when I see it. As I do not expect to see it, I see no need to suspend my disbelief.

Local authority finance has three basic components: the revenue support grant, the redistributed business rate and council tax. There are various grants and other finance, but the current expenditure of local government essentially comes from those three sources. What are the options for changing that? Let us examine the options, both within the structure and outside it.

The hon. Member for Newbury, and the hon. Member for North-West Durham, too, espouse the idea of the locally raised and retained business rate. Perhaps they forget—I may speak about the hon. Gentleman's memory—that local business rates were completely discredited by the time we scrapped them, that rate poundages varied enormously from place to place and from year to year, that business had no idea what bills it would be called on to pay in the next year or subsequently, that the less responsible councils viewed local commerce and industry largely as a convenient milch cow, and that relations were often very poor. Hugely complicated grant arrangements were needed to compensate for the very uneven distribution of rateable resources across the country. Is it therefore necessary or helpful to introduce that change in those circumstances?

Another option for changing local authority finance, as the hon. Member for Newbury suggested, is to get rid of capping. He said that the argument over whether we must get rid of it in statute or merely not apply it is irrelevant, because they will do something else in any case. That was the heart of his argument. I acknowledge that there are two points of view on that argument. Considered from the local authorities' point of view, I can quite understand people there who say, "We would like to get rid of capping. We want to be able to take the decisions".

That is a natural and understandable reaction. However, there is the wider view, which has caused the hon. Member for North-West Durham, who has left the Chamber to find some crucial piece of evidence—for reasons which I completely understand—[Laughter.] I must defend the hon. Lady. She has left for a reason with which I sympathise entirely, which has nothing to do with this debate. In her circumstances, I should have done the same thing. I shall explain to Liberal Members what those entirely honourable reasons are, should they be overwhelmed with curiosity on this matter.

There is a wider, national view—which has led the hon. Member for North-West Durham to retain in her proposals the power to cap, even if she would not wish to use it on every occasion—in relation to what can be afforded. That point of view is just as legitimate. We have, if one likes, two legitimacies that are in conflict. I accept that there is bound to be a conflict, depending on one's perspective. In government, one must take the wider view, which has consequences for what one is willing to permit local government to spend. This year, there has been more generous capping criteria to allow education funding to pass through to schools—I shall come to the point made by the hon. Member for Newbury in relation to that in a moment—if that is the decision of the local authority.

One can equally amend the revenue support grant formula and its principles. It is an organic system that must be upgraded and brought up to date—for example, by new census data. From time to time, it is reasonable to test parts of the system to discover whether it is resilient, robust and providing the best possible answers. I do not defend the system as some sort of crystal structure, every aspect of which must be defended. However, it is a well worked out and sophisticated system, and we must strike a balance between what is understandable and what is comprehensive so that it is accessible.

We share with local authorities and take part in those discussions. I think no one accuses us of not wanting to maintain the genuine debate on the mechanisms for distribution of the grant. That is why this year—which is of great interest to many hon. Members—the examination of area cost adjustment and the sparsity factor of the children's element in the personal social services will have a crucial impact on the way in which the grant is distributed. However, we cannot satisfy everyone.

When people come to talk to me and my hon. Friends about those matters, I notice that the system which they regard as the most objective that could be devised almost invariably coincides with a system that would redirect the most resources towards that local authority. I do not blame local authorities for that because it is natural. However, we can never satisfy everyone because there are bound to be natural conflicts, and a balance must be struck between them.

The hon. Member for Newbury said that he would get rid of the council tax. I pose the question whether, with the turbulence that I accept local government has been through, now is the time to tear up by the root a taxation system that has been there effectively for only a couple of years and to start all over again.

Mr. Rendel

Is not that precisely what the Government did with the poll tax, which was quickly thrown out?

Mr. Curry

That is precisely what we did, because the community charge did not deliver what we demanded of it. The council tax, on the other hand, is delivering a very high rate of collection—much higher than any previous system. The system is accessible and readily understandable. It is easily perceptible. It conforms with Adam Smith's definition of a good tax. The council tax works effectively and it is a stable tax. Therefore, in those circumstances, would it be sensible to start again and tear up the existing structure that is settling down well?

I said earlier that I would not cite local authorities simply to denigrate them. However, I shall this once cite an authority, but with a hint of praise. Lambeth is now beginning to collect a far higher proportion of the council tax that it should be collecting than it ever has before. Collection is a crucial element in local government finance. Councils need to collect as much tax as is legitimately due to them—just as they should fill voids and collect local authority rents. All that is part of the essential management tool of delivering efficient local government.

Mr. Key

I want to underline and endorse everything that my hon. Friend has said about the reform of local government taxation. I was previously a local government finance Minister, and I can only say that what the hon. Member for Newbury (Mr. Rendel) said is absolute nonsense. My right hon. Friend who is now the Deputy Prime Minister looked at the whole question of local income tax in great detail. It is not true to say that we did not look at that, together with every other system.

One of the disadvantages of local income tax is that economically poor areas would have a very low tax base, while all the rich areas that currently seem to return Liberal Democrat authorities would have massive, overflowing coffers. That would necessitate very substantial transfers from one to the other, and we would not end up with a better system.

Mr. Deputy Speaker

Order. These interventions are too long.

Mr. Curry

I am grateful to my hon. Friend the Member for Salisbury (Mr. Key), who speaks from experience.

I come now to more fundamental changes. The Liberal Democrats are still, I think, saying that they would raise an additional 1 p on national income tax and direct it specifically to education. However, there is only one way that that could happen under the present structure—it would have to be wrapped up into a specific grant and its use limited to the education sector. If the hon. Member for Newbury did that, he would hypothecate it—yet the whole tenor of his remarks was that he wanted to give more freedom to local authorities.

If he delivers that 1 p to local authorities through the standard spending assessment system, he cannot hypothecate it, and therefore cannot guarantee that it would go to education. Any council—whether Labour, Liberal Democrat or Conservative—that wished to spend that money on building roads, or building pyramids for that matter, would be legally entitled to do so, even if it would not be wise. Therefore, the hon. Gentleman cannot guarantee that that money would go to education unless he is prepared to eat his own words and deny local authority competence and decision making.

Mr. Malcolm Bruce

In a sense, the Minister is correct—but is he not showing the dishonesty of the Chancellor of the Exchequer, who claimed in his Budget that he was giving £878 million extra to education? He cannot deliver, either.

Mr. Curry

There is no contradiction—[Interruption.] The hon. Member for Gordon (Mr. Bruce) should listen. There is no contradiction either in what my right hon. and learned Friend the Chancellor said or in what the hon. Member for Newbury said. My right hon. and learned Friend may find £700-odd million for education, just as the hon. Gentleman may find the product of a 1p income tax for education—and earnestly wish that money to go through to education, adjusting the capping criteria to try to ensure that it does. What my right hon. and learned Friend, the hon. Gentleman and I cannot do is to require in any statutory or legal sense that that money should go to education.

Mr. King

The hon. Member for Gordon (Mr. Bruce) is completely wrong. My right hon. and learned Friend the Chancellor made it clear that he could not compel that money to go to education, but said that he looked to local authorities to ensure that it did. Liberal Democrat Somerset, having made the biggest complaint about education and having said that its top priority is education, did not put the money into education when it had the funds to do so, but put it into other services instead.

Mr. Curry

I have never made the claim that that money must, in some quasi-statutory sense, go through to education. Last year there was a major campaign—in some cases orchestrated by local authorities—protesting against the settlement and focusing on education. Therefore, it would be extraordinary if those local authorities, having been given the extra resources, did not spend them on education—the very thing that they highlighted as the chief priority.

My first objection to a local income tax is that it would be wrong to get rid of the council tax. It is working, it is effective and I know of no one in local government who wishes to pull it up by the roots and start again. Secondly, local income tax means differential rates of tax. There would be a real threat to some of the inner-city areas and attempts to regenerate life there. It would also be a difficult match with the benefits system. I do not buy the idea of local income tax. Council tax is doing the job better—

Mr. Nigel Waterson (Eastbourne)

Has my hon. Friend seen the internal research document "Towards 1996", produced by the Liberal Democrats? [Interruption.] Perhaps "Towards Oblivion" would be a more apt title. The document states: Under the Lib-Dems local income tax you would pay income tax twice.

Mr. Curry

Knowing that the hon. Member for Newbury wished to conduct this debate in a high-minded manner, I wrestled with my conscience over whether I should use that excellent Liberal Democrat document, which I understand was drawn up by someone described as a political warfare officer. I decided not to use it. I can only deprecate my hon. Friend's decision to introduce that sort of note into this debate.

I do not know what has happened to site value rating. When the hon. Member for Newbury was chided with having dropped it in the rate support grant last year, he wrote a letter to us protesting that it was still on the Liberal Democrat agenda. However, it has not appeared in today's discussion, so I do not know whether it is still there.

Let us be clear about the education settlement, against the background of statutory powers that I have described. In cash terms, comparing like with like and SSA with SSA, the figures are up—an increase of £74 million. Just under £200 million accounts for pupil numbers, while £322 million accounts for teachers' pay. The remainder covers other sources of inflation.

Ms Hilary Armstrong (North-West Durham)

Does the Minister agree that comparing, like with like—cash that was spent last year against cash that will be available this year—there is nothing like a 4.4 per cent. increase?

Mr. Curry

But that is not comparing like with like. Last year's outcome cannot be compared with the money that the Government are making available this year. That is comparing things that are not alike. Every year, local authorities spend more than their SSA and they will continue to do so. The capping criteria allow that additional money to come through. I use the word "money" advisedly because in education everybody talks about resources, as though that is something much grander than money. In fact, most of the time we are talking about money, and it is important to remember that.

Ms Armstrong

Will the Minister explain how much councils will have to spend above SSA this year to meet the education budget in real terms as opposed to last year, given the rise in pay, the rise in pupil numbers and other commitments? How much does he estimate council tax will have to rise to cover that?

Mr. Curry

The hon. Lady is asking the same question in a different way. The only thing that we can compare is what the Government make available to local authorities one year with what they make available the next year. If councils choose to spend other resources—for example, from reserves—that is entirely a matter for them

Ms Armstrong


Mr. Curry

I am not giving way again; I have already given way to the hon. Lady twice.

There is a tendency to discuss education as if the only issue which matters is money, whereas many recent events have suggested that the method and quality of teaching also have a great deal to do with educational performance. We do ourselves a disservice if we discuss education purely in terms of money.

The hon. Member for Newbury talked about capital receipts, which I know are very beloved of the Opposition. The deputy Leader of the Opposition, the right hon. Member for Kingston upon Hull, East (Mr. Prescott) was—I think—on "Today" a week ago talking about capital receipts lying idle. They are not lying idle; it is the Opposition's great and frightfully convenient myth. Capital receipts are in fact used to finance local government activities. For example, the interest from them replaces borrowing. Such capital receipts are not where they are needed in many circumstances, so there would have to be clear compensation for the way in which capital is allocated.

The Opposition are clutching at a great straw in thinking that they would be able to be frightfully prudent about public expenditure and at the same time give local authorities so much extra money. They will find that the straw turns out to be rather feeble when they try to float on it.

In a debate that I have tried to keep free from indulgence in any unnecessary invective, I rather resented the hon. Member for Newbury saying that homelessness cannot be addressed purely by market forces. Nobody is trying to address homelessness by market forces. The rough sleepers initiative introduced by the Government—we are now considering a successor programme to it—is a very deliberate programme of co-operation with the voluntary sector, using public money specifically to help people, and has nothing whatever to do with market forces. It is entirely designed to find effective ways to help people who desperately need that help.

I do not care what sort of flags people want to fly on it. I am concerned simply with being able to meet the dramatic needs that we encounter. Indeed, voluntary organisations would also resent the implication that somehow they were lending themselves to some exercise in the application of market forces in areas that do not lend themselves to such application.

I remind the House of the state in which we found local government in 1979. Not universally, but in many cases, we found a monolithic local government, divorced from the private sector. It was not used to working with the private sector and there was barely any contact between public and private sectors. Local government was corporatist and dominated by the trade unions which worked for it. There was a closed shop; there was no competition for services or service delivery. In many respects it was wasteful, due to levels of unnecessary management.

We have sought to transform local government. We have introduced efficiency—yes, by public expenditure restraints. That is one of the classic means by which one introduces efficiency. I would not want to pretend that that has not happened. Local government has experienced what is known in jargon as delayering. It has seen more professional management, which—I think—has been accepted.

The establishment of partnership with the private sector, has been dramatic and effective. That partnership has occurred through such practices as compulsory competitive tendering, although many local authorities are still extremely resentful of that process. Partnership with the private sector has been especially noticeable in regeneration schemes such as city challenge and single regeneration budgets, where public resources have been used alongside private resources in order to get value for money as well as more money to get value out of. That has been crucial in bringing about what has often been a mind change in many local authorities, which now consider partnership instinctively instead of having to be—almost—dragged, kicking and screaming, to accept that the concept is valid.

We have seen a new culture of partnership, the development of value for money through the Audit Commission value-for-money studies, and performance indicators, which were intended as a tool for punishment and found to be useful by local authorities. Incidentally, such performance indicators have also given the electorate a great deal more power and information than ever before. Accountability must start with information. We have developed the enabling concept of local authorities that has been widely accepted in local government. Indeed, the most intelligent parts of local government have sought to develop it. That does not comprise a minimalist, static view of local government. It is positive, creative and dynamic.

Of course, we must continue to make efficiencies and implement vigorous cost control. We are approaching the end of the structural review, we have a settled tax in the form of council tax, a widely accepted concept of enabling, and a concept of partnership regarded as necessary and desirable.

Local government next needs to combine a period of stability with measured change and development. There are three essential roles for local government. First, it must play the necessary role of regulator on behalf of central Government and on its own behalf. Trading standards and environmental health officers are doing a necessary job as regulators. That role should have as light a touch and be as user-friendly as possible.

Secondly, local government plays the role of enabler in the way in which services are provided. Thirdly, it has the role of regenerator; the local authority at the heart of its community trying to bring about regeneration, renewal and economic development, which it should develop. We will be introducing a trial scheme—capital challenge—whereby local authorities compete for capital. That idea has a lot of sense to it. I would like local authorities, for example, to consider bidding for capital challenge money to extend and get better value for existing SRB or estate action schemes.

We are introducing the estates renewal programme to tackle some of the most difficult problems on the most deprived estates. Would it not make sense to make those bids alongside SRB bids and estate action programmes? That would also enable better and more extensive value for people. Thinking creatively in such terms is one of the essential functions of local government that I hope they will undertake.

There is a new culture, although one cannot be certain how long it will last and whether it is really imbedded. Some of the Opposition policies such as the end of compulsory competitive tendering, the end of capping with the most meagre safeguards, wholesale changes in, for example, the financial basis of local government, and changes in business rates are what local government does not need.

Local government has found a new role; the Government have endowed it with a new role. I have enjoyed the warmest and most friendly relations with all people in local government, irrespective of political party. I could justify that and the people who come to see me would also argue that that is so. That is because I esteem what it does. Its role is essential. A new role for it, at the heart of its local community in partnership, is emerging and I hope to continue to promote it from the Government Benches.

8.6 pm

Mr. Thomas McAvoy (Glasgow, Rutherglen)

The Minister was right about the Government's attitude to local government. There is no doubt that local government has been the whipping boy of the Conservative Government in the past 17 years. The Government have repeatedly attacked local government, constrained its powers and functions and struck at its financial basis. I shall not respond in too much detail to what the Minister said, because he was obviously dealing only with English local authorities. I await the speech of the Under-Secretary of State for Scotland, the hon. Member for Kincardine and Deeside (Mr. Kynoch), to hear the Government's response to the debate from a Scottish perspective.

I heard the hon. Member for Newbury (Mr. Rendel) appeal for a high-minded approach to the debate and criticise deceit and misinformation. Deceit and misinformation immediately call to mind the most recent "Focus" leaflets in my area. I have never seen more consistent deceit and information than that in Liberal Democrats' focus leaflets. People who live in glasshouses should not throw stones.

I want to address issues in my local area, which I am elected first and foremost to do. I am especially pleased that the Under-Secretary of State for Scotland is present. On behalf of the Government, he certainly has a lot to answer for. The Conservative base in Scottish local government has all but vanished. The Conservatives do not control a single new unitary council. Indeed, there has not been a Conservative councillor in the Cambuslang area of my constituency since 1982.

The Scottish revulsion for the Conservative Government, driven on by Thatcherism, led many middle-of-the-road, decent Conservative voters to start voting Liberal, and they have continued to do so. They would not go the whole way and vote Labour, but what will happen in the coming year when those Tory-Liberal voters find out that the leader of the Liberal party has declared that he will support not the Conservative party but a Labour Government? I do not know, but I shall await the outcome with interest. The Conservative base in Scotland has been destroyed despite the Government's attempts at gerrymandering through the unwanted and uncalled-for reorganisation of Scottish local government.

As a former Strathclyde regional councillor, I know that the council has done a first-class job. For the benefit of the Under-Secretary, who is a new boy in this regard, I should point out that Strathclyde regional council was repeatedly praised by Conservative Secretaries of State for Scotland for its responsible attitude to the organisation of its services and the raising of money for those services.

The previous Secretary of State for Scotland, the right hon. Member for Galloway and Upper Nithsdale (Mr. Lang), denied that there would be any job losses because of the reorganisation of Scottish local government. He then said that there would be losses, but only at the edges, and that they would amount to about 1,000, if that. On Friday, I attended a meeting at the city chambers in Glasgow, where I was shown figures that 8,000 jobs will be lost in Scottish local government, and the number is rising.

My constituency is divided between two local authorities: South Lanarkshire, covering Cambuslang, Halfway and Rutherglen, and the new Glasgow city council, covering Toryglen. South Lanarkshire new council is under pressure because the grant settlement from the Government completely ignores any pay awards for local authority staff, including teachers. If the Minister wishes to deny that, he is welcome to intervene. It means that any nationally agreed pay awards have to be met in full by each local authority from whatever resources it can find or, more likely, from the cuts imposed to finance them. It is a cumulative problem, because, according to the figures that I have, no allowance has been made in the grant for the past three years for pay awards.

One opinion put forward at the meeting in the city chambers in Glasgow was that English authorities had received allowances in their grants to deal with a 4.5 per cent. increase, yet there is no comparable increase for Scottish local authorities. I should like the Minister to respond to that point.

There is also pressure on local authority services because of additional works and costs undertaken by local authorities that are not reflected in the grant. The Convention of Scottish Local Authorities produced an extensive list of works and costs that were ignored by the Government when they arrived at the grant settlement. One example is the landfill tax that local authorities will have to pay from October 1996, which the Scottish Office has completely ignored.

The Government have retained capping and, in some ways, reinforced the capping of local authority expenditure. In simple terms, in the coming financial year, if a local authority can increase expenditure by only 1 per cent. on that for 1995–96 before being capped, extensive cuts are inevitable. Local authorities in Scotland are being forced to cut services to reach the Government capping limit and thereby avoid action by the Secretary of State for Scotland.

Local authorities, including South Lanarkshire, are, in effect, experiencing another round of cuts, and face service reductions as a result of vacancies not being filled. They also face extra charges on the community, redundancies and the closure of facilities. At the end of the exercise, they are still looking for significant increases in council tax because of the relatively small increase in grant.

South Lanarkshire is a new council for Cambuslang, Halfway and Rutherglen. Twenty years ago, we were incorporated into Glasgow district council, which, in the eyes of many folk, was not a success. We are now part of South Lanarkshire. Despite that council's difficulties, it has recognised the special needs of Cambuslang, Halfway and Rutherglen through special measures in the forthcoming year. With great difficulty, it has managed to keep the increase in council rents down to about £2 a week, which, although still high for council tenants, is comparatively low—life is all about comparisons, and the increase is certainly less than the going rate of council increases in Scotland.

In addition, councillors in the rest of South Lanarkshire have taken the wider view and allowed extra capital spending on the housing programme in the Cambuslang and Rutherglen area. That displays a degree of tolerance and good will towards our area that we very much appreciate.

In many ways, all councils in Scotland are in trouble but the figures that I received on Friday for the new Glasgow city council are frightening. Conservatives and others will say that Labour is always crying disaster, that it is merely going through the motions and that, after we have had a little panic and cried wolf, things will settle down and everything will be fine. Only in the longer term will we be able to establish whether there is any credibility in that view.

It is a matter of fact, not opinion, that it costs the new Glasgow city council £874 million to provide its current services. That is what it cost last year, with no expansion of the council budget. For the coming year, grant-aided expenditure results in only £807 million being available. Glasgow city council therefore faces a £67 million shortfall. Surely that must be recognised as a special case.

I am not arguing that the cake should be redistributed in Glasgow's favour but, as someone whose constituency covers two different councils under the new system, I am already on record as saying, and have no hesitation in repeating, that whichever council covers the city of Glasgow will need special help. There is possibly more need in that area than anywhere else in Scotland. With the disaggregation of Strathclyde regional council services, Glasgow city council faces a desperate situation. A deficit of £67 million is equivalent to a cut of almost 8 per cent. in its budget. Various measures have been suggested that would reduce the amount required, through departmental cuts, to £45 million or just 5 per cent., but such cuts are draconian.

Examples of the measures that Glasgow council needs to take include increasing charges for school meals and milk, home helps, recreational facilities, burials and cremations, community education and letting fees. In addition, charges would need to be extended to a wider range of home care and social services, and charges would be introduced for under-five nursery provision and for entry into museums.

Dr. Norman A. Godman (Greenock and Port Glasgow)

Does my hon. Friend agree that the problems that he is outlining are exacerbated by the fact that the new councils have literally no experience of, for example, social work policies, procedures and practice? The same is true of education, so the new authorities face a difficult future.

Mr. McAvoy

I am grateful to my hon. Friend for that intervention, which reinforces a point that I intended to make later. There will be a learning curve for the new Glasgow city council, which is to be a unitary authority. The Government expect the council to acquire the necessary expertise and knowledge without providing the expenses for training. The training needed to ensure that services are kept to the present high standard will be expensive for the council, and I am grateful to my hon. Friend for reinforcing that.

The closures of services to which I have referred are not in my imagination, as there is a £67 million shortfall to be met. The options for the council include closing primary and secondary schools, but Strathclyde has tried hard to deal with the problem of surplus school places. The council is considering closing community education facilities and residential schools. These include, for instance, the Carnbooth school, the only school in the area that caters for deaf and blind children. Councillors were so desperate at one stage that they even considered closing that school, although I now believe that they have decided to look at other measures. That is the sort of desperate attitude that the Government have forced on councillors who are trying to balance the budget.

Other facilities considered for closure included elderly people's homes, local authority day centres and hostels, libraries, museums, public halls and the district court. Only last week, the Secretary of State criticised Glasgow district council following the cancellation of a whole day's court cases at the district court, which resulted in many cases not being fully processed. The Government are forcing such situations on councils, and are then criticising them. Despite all these potential cuts, a massive increase in council tax faces Glasgow residents if no help comes from the Government.

On social work, Glasgow district council benefited from the fact that Strathclyde regional council was able to draw resources from a wider area to spend on areas of need—many of which, unfortunately, were in Glasgow. That meant that a disproportionate share of Strathclyde's budget was spent in the city of Glasgow—rightly, as that was where the need was. Strathclyde spent 40 per cent. of its social work budget in the Glasgow area because of the level of need, but only about 30 per cent. will come to Glasgow in grand-aided expenditure. More account should have been taken of the fact that the disaggregation of staff will leave Glasgow in a terrible position.

I maintain that Glasgow needs special help, as the position that it faces is far more critical than anyone could have foreseen. All the factors that I mentioned relating to the local government reorganisation of Strathclyde and the disaggregation show the pressure that is on Glasgow.

The Parliamentary Under-Secretary of State for Scotland (Mr. George Kynoch)

The hon. Gentleman has argued strongly for extra money for Glasgow, and has talked about not wanting a redistribution—a matter that I may return to when I respond to the debate. As he is reaching the end of his speech, may I ask him where he expects to get the extra funding? Will he follow his hon. Friend the Member for Dundee, East (Mr. McAllion), who, in a slip on BBC television, indicated that he would take it from the health budget?

Mr. McAvoy

I would recommend that we do not follow the example of the former Secretary of State for Scotland—the current President of the Board of Trade—who wasted £30 million of taxpayers' money on a private hospital. I ask the Minister—who may not have experience of the matter—to check the figures that show how much money was wasted in Scotland, never mind the United Kingdom, on the poll tax debacle. The Minister should not preach to us when there are examples of disgraceful waste in his own backyard.

Mr. Kynoch

I should be grateful if the hon. Gentleman answered the question. He has given an example of a one-off cost, when what he is referring to is an on-going situation. How would he fund it year on year? Would the money come from health, as the hon. Member for Dundee, East said?

Mr. McAvoy

We will make sure that there are no more of these "one-off costs", as the Minister calls them. I can tell him that £30 million would keep Glasgow and Scottish local government going for a wee while.

8.24 pm
Mr. Nigel Evans (Ribble Valley)

I am grateful for the opportunity to take part in the debate. I shall make a short speech, to allow other hon. Members to speak.

I was amazed by the introductory speech by the hon. Member for Newbury (Mr. Rendel), who pleaded with us not to pick on any Liberal Democrat councils and use them as examples of authorities in which there is either flagrant waste or services are not up to scratch. He went on to criticise Government expenditure and Government policy and tried to use the debate simply as a political ploy. I do not accept that. I have a list of Liberal Democrat-controlled local authorities and, if the hon. Gentleman is not careful, I shall start to read them out and describe some of the problems suffered by local people in those areas.

The hon. Gentleman said that we need better services at a lower cost. There was nothing in what he went on to say that led me to believe that his party's proposals would provide better services, and certainly not at a lower cost. The hon. Gentleman, who obviously lives in a Liberal Democrat dreamland, added that we need extra expenditure on a number of services, but gave the impression that nobody would have to pay for that extra expenditure. That is absolute and complete tosh. If there is to be extra expenditure on education, social services or any of the areas to which the hon. Gentleman referred, somebody somewhere must pick up the tab. He was dishonest, in that he was not prepared to say how much that tab would be and who would have to pick it up.

I am fortunate that I live in Ribble Valley, one of the most beautiful areas in the United Kingdom. I am also fortunate, in that Ribble Valley is a Conservative-controlled local authority. Our only problem is that we have the vast-spending Lancashire county council above us, and we must pay the brunt of our local authority council tax to that county council. I have no doubt that more will be said about that in the House on Wednesday morning.

The Liberal Democrats demand extra expenditure nationally, with the party's alternative Budget last year stating that its expenditure plans amounted to about £10 billion. That expenditure will have to be found through higher income tax. I know that the Liberal Democrats have grandiose plans, and that they want to introduce punitive rates of tax for those earning more than £100,000. Those rates of tax, however, will find their way down to those earning less than that amount.

We also have the delights of the local income tax to look forward to. I did not understand the hon. Gentleman's comment that the Liberal Democrats would be raising a lot from the local income tax, so that tax would come down nationally as one tax balanced with the other. I assume that, under the party's proposals, the council tax will be abolished and that the Liberal Democrats will not run the council tax alongside the local income tax. Therefore, all that extra money will have to be found.

I live in an affluent area, and local people would have to pay the local income tax. Some of the money raised in my area would have to be siphoned off to pay for expenditure in some of the poorer areas of the north-west, where there are specific problems and where extra money is needed. The Government ensure through the current system that money reaches the areas that need it. One can only imagine what sort of system the hon. Gentleman has in mind following the introduction of a local income tax.

Some people would argue that one Chancellor of the Exchequer is bad enough. But can one imagine what it would be like if we had a local Chancellor of the Exchequer in every town hall throughout the country? He would have to respond to Liberal Democrat councillors, who would be dreaming up grandiose plans for where they wanted to see tax income spent. That local Chancellor would then raise tax locally. I assume that that system would be an absolute nightmare.

Not only would we have a local income tax and other grandiose plans, but the cap that currently protects people from these technicalities would be removed. Councils could then go on a massive spending spree without any intervention from central Government, who would tell them, "Hold on. Local people need protection from those spending plans." That system would be an absolute nightmare.

Mr. Rendel

The hon. Gentleman clearly did not listen to what I said about the need for greater accountability in local authorities. If local accountability is increased by means of a proper voting system, there will be no need for capping.

Mr. Evans

Good grief—are not talking about proportional representation, are we? That would enable councils to shunt off their spending responsibilities. No doubt they would try to make out that central Government were to blame—obviously, the Liberal Democrats would never be in control of central Government—while hiking up local spending. They would hide behind proportional representation, trying to gain power that was disproportionate to the votes that they were securing. It would be a nightmare.

On top of that, the Liberal Democrats would impose regional government, while signing away much of the power that we have at Westminster to Brussels. They are, of course, a federal party: they believe in a United States of Europe. That would be an absolute disaster. There would be tier upon tier of local government, hiding behind the word "democratic". The people would have to pick up the bill for all those tiers of bureaucracy, and there would be no improvement in services.

I was rather surprised that the hon. Member for Newbury did not mention businesses. For six years, I was a member of West Glamorgan county council. Before the introduction of the uniform business rate, local businesses used to trot along to the council year after year and beg it to take account of their spending plans so that the burden did not fall on them. They were trying to plan for the next 12 months without having the faintest idea how much they would have to find to pay their rates.

Many business people knew that the process was no more than a facade: they would make their pleas, and be ignored. It was like talking to a brick wall. Up would go the council and business rates—and it was particularly difficult for small businesses working on the margins to find the extra money from their profits or, if they were not making profits that year, from some other source.

The hon. Member for Newbury did not say what he would do to help small businesses. One thing that the Government have done is ensure that businesses can plan for the future: they know how much they will be charged. We must ensure that that system of rating is retained.

We know that the Liberal Democrats are big on bureaucracy. In Richmond, for instance, there are a good many extra committees: it seems to be thought that, just because meetings continue until 9 pm, 10 pm or 11 pm, people in the area are being given a better deal, but we are aware that that is not the case.

Mr. Chris Davies (Littleborough and Saddleworth)

Has the hon. Gentleman read the auditor's letter to Richmond council? Does he accept that what he has said is simply not true, and that the council was highly praised by the auditor?

Mr. Evans

I have also discovered that, according to the Audit Commission's January 1995 paper "Paying the Piper", £500 million of extra money could be found through savings if only best practice were followed.

Mr. Wilshire

Is my hon. Friend aware that Richmond council is pouring tens of thousands of pounds into opposing the construction of a fifth terminal at Heathrow airport, although all independent local surveys show that the majority of people support it?

Mr. Evans

I did not know that, but I am delighted that my hon. Friend has been able to share the news with the House and the nation.

The Liberal Democrats keep banging on about education. They tell the country that they will put a penny on income tax to pay for extra education services, but, as has been pointed out, they cannot guarantee that the money will be spent on education, just as we cannot guarantee that the extra £700 million or £800 million that is going to local authorities will be spent on it. On Wednesday morning I shall make an impassioned plea to Lancashire county council, asking it to follow the Chancellor's guidance, and I hope that as a result it will spend its budget on education.

The Liberal Democrats cannot even do their sums right. We need only add up all Littleborough and Saddleworth's education spending plans. Their education spokesman had to admit that the accumulated spending plans meant an increase of 2.5p, not 1p.

Mr. Chris Davies

Would the hon. Gentleman care to tell me where the local authority called Littleborough and Saddleworth is?

Mr. Evans

The hon. Gentleman represents the area.

Mr. Davies

There is no such local authority.

Mr. Evans

The Liberal Democrats' education spokesman visited the constituency during the by-election—I was there throughout—and had to admit that their expenditure plans amounted to 2.5p on income tax, rather than 1p. I am amazed that, given the opportunity to comment on that, the hon. Gentleman chose to make a pedantic point about the name of the constituency.

It is also a great shame that the Liberal Democrats confuse education spending with the delivery of the service. That does not add up either. We know that, in some parts of the United Kingdom where twice as much is spent on education as in other parts, the outturn is not as much as it is in those other areas. Money is not all that matters.

Since 1979, the amount spent on education has risen by more than 50 per cent. The Government are keeping their commitment, but we need to ensure that other provision remains, such as grant-maintained schooling. I understand that the Liberal Democrats, along with their friends in the Labour party, do not believe in that. My parents could not afford to send me to an independent school, but, thanks to the assisted places scheme, the parents of 60,000 young people will be able to ensure that their children enjoy the education that they consider best for them: the Government are providing the money to make the extra places available. The Liberal Democrats do not want that, however. The same applies to the national curriculum and to testing, which ensures that standards continue to rise.

We must keep an eye on how Liberal Democrats behave within their areas. They say one thing and do another. They say that they are looking after the people, that they want services to be financed properly and that the council tax should be kept as low as possible. A couple of weeks ago, the Clitheroe Advertiser and Times reported that the Liberal Democrat councillor on Ribble Valley council had suggested that we introduce car-parking charges in Clitheroe for the first time. Goodness knows at what level the charges would be introduced, but, according to the newspaper, the aim is to raise some £400,000.

I cannot think of such a devious way of introducing a new tax. Not only would local residents have to find the extra money to park their cars in Clitheroe; the charge would harm small businesses in Clitheroe. There are many small businesses in the area—not the major chain stores that operate in such villages, but smaller stores, mostly family-owned, working from early in the morning until late at night. Along with local Conservatives, I shall fight hard against the introduction of such charges.

The hon. Member for Newbury had a wonderful opportunity to say how the Liberal Democrats would improve local services with the money that was available. It is a great shame that he did not do so. There were several interventions on his speech, but he failed to give an honest answer. There is one thing that the Liberal Democrats have in common with Labour nowadays: they simply do not answer the questions that they are asked, because they dare not do so.

8.38 pm
Ms Hilary Armstrong (North-West Durham)

I was interested in the remarks of the hon. Member for Ribble Valley (Mr. Evans). The problem is that he does not know his Government's policy. The car park charging policy comes from the Department of the Environment. It is part of the manner in which the Government expect local authorities—

Mr. Nigel Evans

indicated dissent.

Ms Armstrong

The hon. Gentleman should learn about the policy.

Mr. Evans

I am not having that.

Ms Armstrong

The hon. Gentleman may not be having it, but that is the guidance—the virtual instruction—from his Government. Perhaps he should talk to the Secretary of State.

Several Conservative Members misunderstood local government finance, either deliberately or because it is difficult to understand. I am reminded of the words of Lord Ferrers, the Minister for the Environment and Countryside, who is responsible in the other place for local government. Last Thursday, in answering a question on the current revenue support grant settlement, he said: My Lords, it is a fact that some council taxes in London may rise. Given that the total standard support, commonly known as the TSS,"— I do not think that that is what TSS is, but never mind— has increased by more than the AEF and that SSAs in inner London are falling due to changes in the ACA brought about by changes in the NES, with consequent reductions in RSG and NDR, it is not surprising that council taxes in London may rise. In response to that, my noble Friend Lord Stallard said: My Lords, I nearly said that the Minister's replies so far were NBG. Several hon. Members would concur. Lord Ferrers later said: My Lords, it is a complicated subject."—[Official Report, House of Lords, 8 February 1996; Vol. 569, c. 330.] I suspect that the hon. Member for Ribble Valley is in much the same position as Lord Ferrers. He clearly does not understand that more than 80 per cent. of the money that local government is able to spend is from central coffers. Changing the balance between the amount of money spent and raised locally and the amount raised centrally is of critical importance to the balance between central and local government.

I argued in a similar debate less than two weeks ago that this has been the most centralising Government this century and that there is more power in Whitehall and No. 10 Downing street than ever before. Part of our argument is that we need to change the balance. Conservative Members and the Minister refuse to address that issue.

I agree with the Minister that the council tax works better than did its predecessor, the poll tax, on which billions of pounds were wasted, but it is also true that there is now so much central Government control that the amount that local government can raise through council tax is very limited. The gearing effect caused by the amount spent by central Government is so huge in some areas that to raise spending even to present capping levels would be impractical. Local people could not afford that amount of money. The problem is that the Government have controlled local government spending to a degree that means that it is not possible for council tax to be used even in the way in which the Government initially intended it to be used.

Mr. Rendel

I appreciate the hon. Lady's attack on centralisation by the Conservative Government, but it is fair to bring to her attention a recent notice sent to every member of the Labour group in Bedfordshire, which states: This letter is to give you notice that the decision taken at the Labour Group on 31st January 1996 'not to set a budget' is null and void and that we will be reconstituting the Labour group. It goes on to show that the central Labour party is taking firm control of the Bedfordshire county Labour group. It is not only the Conservative but the Labour party which is keen to centralise control of local government.

Ms Armstrong

I do not accept that.

I argued strongly in my previous speech that there must be an honest working relationship between the centre and the localities. I have never tried to give the impression from the Dispatch Box or anywhere else that that means that central Government should abdicate any responsibility.

Some things are not acceptable. Corruption is not acceptable and central Government should do something it. Malpractice is not acceptable and central Government must have reserve powers to take action against it. We argued for that consistently through proceedings on the Audit (Miscellaneous Provisions) Bill, and I shall continue to argue it. Having a relationship does not mean that one side should abdicate responsibility. That is precisely what the Government have done. They have so tried to control local government that they have stifled any opportunity for local differentiation and determination. We want a proper working relationship that is much more balanced than at present, but we will not abdicate responsibility from the centre.

I want to deal with the problems of the current settlement and its dishonesty. We covered some of that ground during the Minister's speech. It is not honest for the Government to say that they are giving 4.4 per cent. more to education, when they know that education budgets last year were higher than the level at which they have set SSAs this year. The Minister kept saying that we have to compare like with like. He went on to say that authorities could use balances and that there were other ways—such as charges, which the hon. Member for Ribble Valley seems to think are not Government policy—through which local government could raise the difference.

The Minister seems not to have read the reports from the Treasury and Civil Service and the Education Select Committees. The Education Select Committee stated: We believe that it would not be possible for all local authorities and schools to draw upon reserves in future years in a way that a number of authorities managed in 1995–96". The Secretary of State for Education and Employment, in her submission to the teachers' pay review body, said: some schools and authorities drew heavily on their reserves to meet the cost of the 1995 teachers' pay award … the Review Body should consider whether reserves in some schools and authorities have dropped below prudent levels". She would not have said that if she did not know it to be the case. The opportunity to draw on reserves is not there in the way that it was last year. The Treasury and Civil Service Select Committee made the same point.

It is dishonest of the Government to pretend that there is money floating around in the system that can be used to meet their priority of more spending on education. Local authorities last year spent substantially more than the level at which Government have set SSAs this year. Even if expenditure were at the capping levels, it would not meet the 4.4 per cent. that the Government are talking about.

Mr. Wilshire

Will the hon. Lady confirm that I heard her correctly? Is she saying that SSAs for education should be increased to existing levels of expenditure, and is she committing the Labour party to funding local authorities up to that new level?

Ms Armstrong

I really am beginning to worry about Conservative Members. They do not seem to be able to listen. I am saying that the Government are playing a con trick on people. Conservative Members have written to schools to say that the Government have given their authorities more money to spend on education—I have copies of letters from almost every authority—which means that the schools should not need to make cuts. That is simply not true.

The Government have not given authorities more money, nor have they enabled them to meet increases. The Government know and admit that the reserves have fallen and that they were fully drawn in some places last year. There is no additional money in the system for school budgets to be increased by that amount in those authorities.

That is not the full extent of the dishonesty, however, because the Government have also admitted that there will be 86,000 more pupils in the system this year. They have approved a pay rise that is above the rise assumed when they set the standard spending assessment. They have legislated for all school transport to be fitted with new seat belts. Those changes alone—with inflation—more than outstrip the additional amount in the SSA, so it is a dishonest con trick to tell schools that there is extra money. There is not, and the Government know it.

They are undermining their credibility, but more than that, they are trying to undermine the credibility of schools, which will have to deal with all those issues because they have a legal responsibility to do so. Whether the Government are prepared to behave responsibly or not, governors need to and will do so. They know that they are being conned.

Mr. Kynoch

By implication, the hon. Lady is saying that she and the Labour party would put more funding into education. Would she answer my hon. Friend the Member for Spelthorne (Mr. Wilshire), who asked a sensible and reasonable question. How much extra is she pledging, and where would she get it? Would she take it from health, for example?

Ms Armstrong

I am talking about the Government's honesty. They have made pledges and commitments that they know do not stand up. It is no good trying to brush that off by asking what the Opposition would do. We are talking about the Government's revenue support grant settlement this year and about letters that Conservative Members have sent to schools, saying that this is the money that is there. Yet the Government continue with their pretence. They continue to try to blame anyone else, including people who have not had responsibility for any of the actions of the past 17 years. It is convenient to blame them, because the Government refuse to accept responsibility for anything that they do.

This Tory trick—

Mr. Nigel Evans

How much extra money?

Ms Armstrong

I did not know that we were in government. Would the Minister like to swap sides, so that I can take responsibility for this year's revenue support grant settlement? Then I would be in government. If they want to swap sides, let them do so. Let them call a general election. Then we will take responsibility. I am not going to take responsibility for Government mismanagement and waste this year, or for Government cons about what is going on.

Mr. Jessel

Bring back Ernest.

Ms Armstrong

I will not rise to that, because I might have to tell the hon. Gentleman what he would say to him.

The reality is that the Government have perpetrated that con and pretended that they have given more money when they have not. That is not the only con. We also heard from the hon. Member for Ribble Valley all that business about what it would cost in extra tax and so forth. He accused the Liberals of taking with one hand and giving away with the other in their local income tax plan. That is even more proof that he does not know or understand what has happened this year.

The Government cut income tax by 1 p in the Budget. They have said that, at the most modest levels, they expect council tax to rise this year by the equivalent of 0.5p on income tax. In the Red Book, they said that, in the next three years, they expect the equivalent of 2p on income tax to be raised through the council tax. So the Government cannot tell the House that there is no balance between income tax and council tax. Given their assumptions for the development of council tax in the next three years, they know that the amount raised will be the equivalent of 2p on income tax.

We know very well that the Government are giving with one hand and taking away with the other. They are perpetrating the dishonesty that councils can raise more in tax, which will put more money into the budget. Councils will have to raise more in tax, but that is because the Government have deliberately pushed down their contribution this year and pushed councils into putting the tax up, which will be more unpopular. Once again, the Government are saying, pay more locally and get less. The gearing effect means that councils will have to raise much more money to make up for the money that is not coming from central taxation.

The way in which the Government have approached the issue is totally dishonest. Education spending is already above SSA. To spend at SSA in the next year would mean reducing spending by the equivalent of £41 per pupil. The Chief Secretary to the Treasury has admitted that council taxes will have to rise by an average of 8 per cent. to meet the Government's targets. The Treasury and Civil Service Select Committee questioned the ability of some local authorities to pass on additional educational provision to schools, and observed: This increase in spending does not, however, have quite the substance the Chancellor claimed for it". As usual, the Select Committee expresses things in rather modest terms, but it is an important view. The Government have been dishonest in so many ways in the settlement, and that is a consequence of the Government's wish to do down local government and of their feeling that there is no room for local government.

I noted with interest the earlier words of the Minister for Local Government, Housing and Urban Regeneration. He claimed success in working with local government. That is true, and he has won the respect of many people in local government, but he has done so because he is seen as out on a limb. The Minister is seen as someone who is not at one with the rest of the Government in their approach to local government. When we remember that the Government contemplated getting rid of local government altogether soon after the Prime Minister became leader and sought ways to get rid of the poll tax, we know just how far out of touch with the rest of the Government the Minister is.

It is critical that local government is able to act in the interests of local people. That is the aim and the whole essence of local government, and that is what the next Government will seek to enable local government to do. However, we cannot allow the Government to get away with such dishonesty, and local taxpayers know that they will pay more and get less. Local taxpayers know that the extra money that they will be asked to pay in council tax is simply a device that allows the Government to pretend that they are reducing taxation by cutting income tax rates. The Government need to pretend that to go into the next election, but we will ensure that people know that taxation has not been reduced—it has increased and will continue to increase.

9 pm

Mr. Nigel Waterson (Eastbourne)

I am pleased to have the opportunity to take part in this serious debate. We all owe a considerable debt to the hon. Member for Newbury (Mr. Rendel) for introducing the debate, as it has given us an unprecedented opportunity to consider the roots of the Liberal Democrats' failure in local government. I wish to develop my personal theory as to why that failure has been so obvious and comprehensive.

Mr. Malcolm Bruce

That is why we control so many councils.

Mr. Waterson

If the hon. Gentleman will have a little patience, I may be able to explain some of his party's present woes.

The fundamental problem is that the Liberal Democrats are a natural party of opposition. We all know that they would do anything for a vote, and all too often they take two sides of the argument on the same issue. That approach, coupled with some quite vicious campaigning techniques, means that the Liberal Democrats run, or have a part in running, a number of local authorities. Unfortunately, fantasy has now collided with reality, and making promises has collided with the need to make decisions.

A document called "Towards 1996" has been much quoted in recent weeks in the Chamber. It was produced by researchers working for the Liberal Democrat Whips Office and contains the following poignant remark: Obviously this document will have a very limited circulation. Life never turns out quite as one plans. However, the document contains some especially interesting comments about local government. It makes the following fair point: Due to our strong base it is imperative that Local Government is seen as an unmitigated triumph for the Liberal Democrats. That is a high test to set, and we should examine to what extent the Liberal Democrats have lived up to it.

Let us take the Liberal Democrats' own words on the subject. The document continues: Some of the councillors are new, politically inexperienced and potentially a liability. Those of us who suffer with Liberal Democrat-controlled councils can agree with that. It also states: Our local government power base means that we may get blamed for some of the shortcomings of local government. That sounds as though the shortcomings of local government were an act of God and nothing to do with those who run it.

The sad truth is that all too often the Liberal Democrats behave as though they were still in opposition. There are three distinct features to that approach. First, they blame everything on the wicked Government, even when the blame lies clearly on a failure in the local authority. In my area, the Liberal Democrats used to blame the county council for all their woes. That is a little more difficult now that the county council is run by a Lib-Lab pact. The second feature is an apparent inability or unwillingness to make decisions about anything really important. The third feature is an abdication of decision making to the general public. The Liberal Democrats will do anything to distance themselves from the possible unpopularity and the responsibilities that flow from actually making a decision.

All those factors, I submit, can be seen at work in the recent behaviour of the Liberal Democrats in East Sussex. Some months ago, the Liberal Democrats began by trailing stories of enormous cuts in spending, long before any realistic notion of actual funding levels could possibly be ascertained. Week by week, drip by drip, they issued press releases to the local media: they spoke of cuts to the fire service; then, a week later, there was a release about cuts in the library service; then there was one about cuts in social services and old peoples' homes being shut down. They also spoke about cuts in policing and, above all, in education. The latter was perhaps the most serious scare story of all, because, next to their own health and that of their families, parents most worry about the future of their children and their children's education.

The Liberal Democrats in East Sussex set up what they grandly described as a strategic forum to produce a document of some length establishing how the massive cuts were to be apportioned between the different sectors of education. That consultation drew in teachers, governors and parents, as well as local councillors, and played cynically on the emotions and expectations of parents, teachers and governors.

The Liberal Democrats went further. They demonstrated how they were abdicating responsibility by asking the public to tick various boxes to express an option as to whether French lessons or perhaps music lessons should be cut. That exercise not only showed the inability of elected councillors, acting on the advice of professional officers, to make decisions, but—

Mr. Malcom Bruce

What about the views of the public?

Mr. Waterson

The problem with that approach is that, if a child happens to be doing rather well at music, the last box that his parents will tick is that calling for a cut in music lessons, while the parents of a child who is miserably poor at French are unlikely to call for French lessons to be maintained.

Mr. Wilshire

The hon. Member for Gordon (Mr. Bruce) has asked about the views of the public. Perhaps my hon. Friend would care to comment on the tactic adopted by the Liberal Democrats in Waverley. When they consulted the public, 63 per cent. said that they wanted a standstill budget and 11 per cent. said that they wanted a reduced budget. The listening Liberal Democrats, having consulted the public, put the council tax up by 7 per cent. Is that what they mean by listening to the public?

Mr. Waterson

I am grateful to my hon. Friend for yet another example of such tactics. I learned of a further example from the television at the weekend, which revealed that another Liberal-controlled council in Surrey consulted the public but proceeded to ignore what they said. One of the excuses for doing so was that an unduly large proportion of the respondents were older than the average age of the population. That was somehow supposed to be a reason for dismissing the public's view. In my type of constituency, we are fairly familiar with that kind of fake consultation process of which the Liberals are so fond.

The results of the public spending round on education have been very different from how they were described by the Liberal Democrats in their various documents. I apologise to the Opposition spokeswoman, the hon. Member for North-West Durham (Ms Armstrong), for quoting some of the points that I have made to parents, governors and teachers in an attempt to put the record straight about spending on education.

In East Sussex, despite all the gloom and doom-laden predictions, the education standard spending assessment has been increased by £7.264 million or 3.4 per cent. over the previous year. Just as important, by relaxing the capping criteria, the county council can, if it so chooses, increase its budget by no less than 3 per cent. That goes to the heart of the issue so eloquently described by my hon. Friend the Minister.

Ms Armstrong

How much money was raised in addition to what the council already spends on education?

Mr. Waterson

The reality, and the line taken by the Conservatives on the county council, is that, if that money is transmitted straight into education and schools, there is absolutely no reason for any cuts in school budgets.

Ms Armstrong

There is no extra money for schools.

Mr. Waterson

There is no reason for such cuts, and certainly not of the order trailed by the Liberal Democrats and some of their fellow travellers. I have sought assurances—as have many governors, teachers and parents—that the extra funding will be passed straight on to our schools.

We have heard very little recently from the Liberal Democrats about the alleged cuts in education funding. We also heard about cuts in police funding. That scare story was somewhat exploded by the following headline, which appeared in my local paper at the beginning of January: "£5m Christmas boost for Sussex police force". The Sussex police chief constable was said to welcome a Christmas present of £5.5 million to recruit more bobbies on the beat and to improve technology. The £5.5 million will provide for an extra 110 officers on the beat. That increase is over and above the large increase the previous year. More recently, the various committees have been asked to indicate what are called exemplary cuts of 1.5 per cent. of their budget. Again, a series of local media stories suggested that these were, in fact, the real cuts to be made.

The strategy now emerging, apparently, is that no real decision has been made about any budgeting in East Sussex as we near the end of the budgetary process. At the last meeting of the committee which considered these matters, the Liberal Democrats refused to discuss specifics and sought to rule out of order Conservative councillors who tried to initiate debate on the budget. The truth is that they are currently wallowing in indecision as to how to allocate money in the budget for East Sussex.

We know the problems involved in one of the solutions put forward by the hon. Member for Newbury—the freeing of the proceeds of council house sales. The hon. Gentleman's document states that the policy is worthy but no longer stands up". His document continues: The freeing up of council house receipts should be kept as a front line policy as it is easily understood by the masses, however, detailed research should be carried out so that we know how much money still remains from the sale of council houses. That strikes me as a cynical policy, cynically set out in a cynical document produced by a deeply cynical party.

Mr. Rendel

The hon. Gentleman has ranted on for some time about the inefficiencies and inadequacies of councils run by the Liberal Democrats. Perhaps he will tell the House why, whenever Liberal Democrat-run councils take over from Tory-run councils, the Liberal Democrats tend to increase their majority at the following election.

Mr. Waterson

I do not know whether there is such a rule. However, I assure the hon. Gentleman that that trend will shortly be reversed. It takes a little while—even in Liberal Democrat land—for the chickens to come home to roost, but coming home to roost they are.

I commended the hon. Gentleman earlier on his choice of subject for the debate, but in fact it was an unfortunate choice for the Liberal Democrats, as it has given us the opportunity to direct a piercing shaft of light on their party's policies on local government and thus to throw into sharp relief the hypocrisy at the heart of so many of those policies. It is local government by scaremongering and it shows, time and again, that there is absolutely no point in voting for the Liberal Democrats in local government because, if they win power, they do not have a clue what to do with it.

9.13 pm
Mr. Chris Davies (Littleborough and Saddleworth)

Few things show more clearly the extent of the problems that local councils face than a letter which I received only last week from the governors of Fir Bank county primary school, in which the governors stated: Over the last few years the school has seen the loss of two teachers, one by non renewal of contract, the second by redundancy. This has caused massive upheaval in teaching practice. The budget allocated to the school has been well monitored but the school has to run on a shoe string. There are not sufficient text books and other resources are scarce. The position places a very committed teaching staff under great strain, a situation which cannot be good for them or the school in general. I endorse those sentiments.

I am sure that hon. Members of all parties have received similar letters. That school is in the metropolitan borough of Oldham. Oldham is not unique among local authorities in difficult financial circumstances. It is not a low-spending education authority, but the position has become worse in recent years. In last year's Budget, cuts of £900,000 were imposed on the education budget, and this year it looks as though the position will get worse. A similar cut seems likely as the council increases its charges for supply teacher cover.

In their letter, the governors entreat me as their Member of Parliament to give the funding of primary education your urgent attention". No doubt the two Labour Members who also represent the borough of Oldham receive similar letters. Given the stand that they took on income tax—"stand" is perhaps the wrong word; I should perhaps refer rather to the sit that they took—when they had the opportunity, I can only suppose that they answer such letters with pious platitudes. In that division, the Liberal Democrats made it clear that we believe that quality public services and, above all, the provision of a good education system are among the hallmarks of a civilised society, and we did not seek to avoid the fact that there is a price to be paid for those services. Conservative Members have tried to criticise us for that tonight.

It is not the Labour party but the Government who must shoulder prime responsibility for the financial problems of local authorities and the cuts that they are being forced to make in services throughout the country. The Government must bear responsibility because they directly control four fifths of local government finance and limit local authorities' freedom of action with what is left to spend. For years, the Conservatives have systematically undermined local government, stripped it of powers and authority to work for the community, robbed it of financial independence and reduced its status to no more than that of a Government agency, and it is obvious why they have done so—why they have repeatedly curbed the powers of local authorities to act on behalf of the best interests of their communities. The reason is that the Conservative party, which used to boast of being a party that supported decentralisation, has become a party of centralisation—a party which supports the concentration of power.

In recent years, far too many decisions have been taken by small groups of Ministers meeting in Cabinet Sub-Committees, and no true challenge has been posed to their decisions in any of the legislative processes through which their decisions passed. Power that used to be dispersed throughout the country has been centralised and locally elected representatives have little chance to influence it.

Over the years, local authorities have been repeatedly described by the Conservatives as profligate, inefficient and even financially irresponsible. I would never defend financial inefficiency in local government—people deserve value for money from their public representatives and public organisations—but for the Government to talk about financial responsibility is the pot calling the kettle black.

In the past 15 years, local government spending has increased by 21 per cent. and central Government spending has increased by exactly three times that amount—63 per cent. Perhaps that is not surprising, considering the way in which some of that money has gone—the disaster of the poll tax, the amount being paid to consultants advising the railway privatisers and the cost of paying for the privatisation of the Property Services Agency.

Central Government is capable of making enormous mistakes and the Government have made them, to the taxpayers' cost. Meanwhile, their policies have put local authorities of every political composition between a rock and a hard place when making financial decisions each year: they have no room for manoeuvre—no opportunity to take local needs into account.

Let us take some examples of local authorities which could hardly be described as run by wild-eyed fanatics. Wokingham district council—a Conservative council, run with the support of some independents—is already spending up to its capping limit, and expects to have to cut 5 per cent. this year. So much for the Government's generosity. Penwith district council in Cornwall, run by independents and Conservatives, is spending up to its capping limit, and cuts this year appear inevitable. Rutland district council, a mixture of Conservatives, independents and Liberal Democrats, is spending up to its capping limit and expects to make cuts of 7 per cent. this year.

I am not knocking the councils that I have mentioned: I merely draw attention to the difficulties they face. Councils of all political compositions face the same problems. The settlement that Ministers have described as generous is far from that. The income tax policy announced by the Chancellor of the Exchequer in the autumn of last year is leading to council tax increases and service cuts in the spring of this year. The conclusion is inescapable that in its desire to centralise power the Conservative party's thinking is linked directly to the loss of Conservative influence at local level.

We had a rather predictable attack from the hon. Member for Eastbourne (Mr. Waterson) on Liberal Democrat control in the area that he represents. That is not a new phenomenon. Over the past 15 or so years, the number of Conservative councillors has dropped markedly, from 12,100 in 1979 to 4,800 now. For all the hon. Gentleman's criticisms, the Liberal Democrats have overtaken Conservatives in local government: we have become the second party, while the Conservatives have been relegated to third place. In some authorities, Conservatives are desperate to see the introduction of proportional representation to ensure that there is some Conservative representation left.

The process will continue. In May, not many elections will take place. Again, however, the Conservative party can expect to lose seats. Indeed, they will probably lose 300 or more, while at the same time the position of the Liberal Democrats, the second party in local government, will be duly strengthened.

Liberal Democrats are not acting irresponsibly. Three quarters of my party's councillors either run councils or are part of administrations where there is no overall control. Three quarters of our councillors have influence over the decision-making process within local authorities. Only one quarter of Conservatives left in local government have such influence. Despite what the hon. Member for Eastbourne said, the electors are likely to give their support and endorsement to Liberal Democrat-run authorities in greater numbers in May.

Mr. Waterson

The hon. Gentleman may have misunderstood what I said. I did not contest for a moment that in many local councils, including Eastbourne, Liberal Democrats have control over the decision-making process. I said that they either make the wrong decisions or refuse to make any decisions.

Mr. Davies

I take the point that the hon. Gentleman is trying to make. It does not conflict with my argument.

As we look towards the May elections and as we reflect on the Government's record over the past 15 or 16 years, with declining representation in local government, it is clear that the Conservative party is facing oblivion at local level. It is rotting at its grass roots. It must concern Conservative Members, many of whom have been in this place for many years, that they return to their constituencies and find themselves at civic functions surrounded by Liberal Democrat councillors, their opponents, rather than the Conservative brethren of old.

Mr. Nicholas Winterton (Macclesfield)

I have been listening closely to the hon. Gentleman's argument. Macclesfield is a Conservative-controlled authority. It is in the north-west and it has overall Conservative control. Does he agree that in some councils where there is Conservative control, Liberal and Labour councillors will work closely with the controlling group, as they do in Macclesfield? The responsible Liberals in my borough, like responsible Labour people, appreciate that the borough council must live within its means. They understand that they cannot blame central Government for all the problems that face local Government. Will the hon. Gentleman seek to present a balance while advancing his argument? Will he accept that there are good Conservative authorities and good Conservative councillors, who are to be found in my borough and who work closely with representatives of his party?

Mr. Davies

I am pleased to hear what the hon. Gentleman says, and I fully endorse his view about members of different parties working together for the common good of the community. That is at the heart of my party's belief in local democracy. Parties and politics should not always dominate in local decision taking.

I hope that it is a cause for some regret among hard-working Conservative councillors who have lost their seats over the years that, when they had the opportunity, they did not put up more resistance to the transfer of local government powers to central Government. It has certainly been a cause for regret among members of my party who strongly support the principle of local democracy that those Conservative councillors were not heard shouting from the rooftops about what was happening to the authority of local councils over the years.

Britain has a well-established local government base, but it is demoralised, undervalued and confined in its ability to tackle local problems and meet local needs. We need a new constitutional balance, with a clear separation of powers and duties between central and local government. Local authorities must have freedom and must be encouraged to become more innovative, entrepreneurial and dynamic. The Liberal Democrats want local government that is efficient and effective, and which not only provides services such as those specified by the Government but seeks out new ways to meet the needs and aspirations of its communities.

The reform of the financing of local government is essential to that. We seek the establishment of a local income tax because we believe that it would be the most effective means of giving local councils greater freedom and greater flexibility. Of course, it must be matched by commensurate initial reductions in levels of central Government taxation.

As I have said, there must be a clear separation of powers. Instead of curbing the authority of local democracy, the Government should be seeking to build on it, encouraging it to new endeavours and giving local people the opportunity to deal with the problems they face in their own communities in their own way, through the work of their locally elected representatives.

9.26 pm
Mr. David Wilshire (Spelthorne)

I was told earlier that my right hon. and hon. Friends on the Front Bench warm to the idea of me speaking on local government, probably because they recall that I spent 11 years in it. I hope that they will not be too put out when I say that I agree with the first 12 words in the Liberal Democrat motion. However, I suppose I should hasten to say before somebody on the Front Bench writes something particularly uncomplimentary about me in the little blue book that those are the only 12 words of the motion with which I agree, and that the remainder of the motion contains some of the worst rubbish that has come before the House in a long time.

From my perspective, the greatest amount of rubbish is contained in the final 14 words of the motion, because they relate to the loss of Conservative local government seats. That is the greatest amount of rubbish I have heard in the context of my constituency, because in May, despite the words of the motion and what we have heard in the debate, my Conservative group kept overall control of Spelthorne borough council. That is splendid, but it gets better.

In May, this great Liberal Democrat party was on the march, on the rampage. That month, it started out with three seats out of 40 and ended up with three seats out of 40—a great Liberal Democrat triumph. The story gets better still, because there was a county council by-election in my constituency in December, and instead of the Liberal Democrat party standing still as it did in May, it went backwards. That was because by December my electors had had the chance to see the Liberal Democrats in action in Surrey and they did not like what they saw.

So much for the last 14 words of the motion; but some earlier parts are not much better. Perhaps in the few moments that are available to me I can give a few examples. First, the motion suggests that reforming local government finance will mean that, somehow or other, there will be a magical ability realistically to meet needs. That is what the motion says, but it is bland claptrap. The hon. Member for Newbury's speech made it crystal clear that the Liberal Democrats are not intent on reforming the local government finance system: they are intent on embarking on a spending spree with local government finance.

We were told about a new system. We were told that the Liberal Democrats want to raise more money locally—I believe that I am quoting—as well as raising more money through income tax to spend on local government.

Mr. Rendel

indicated dissent.

Mr. Wilshire

The hon. Gentleman shakes his head, but he said that his party wants to raise more money locally—I wrote it down. The Liberal Democrats' most recent manifesto said that they wanted to put 1 p on national income tax to spend on local education. That is what they said; I am not inventing it. Liberal Members have also said in this debate that they want to end capping, so that they can go on a real local spending spree.

Mr. Malcolm Bruce

indicated dissent.

Mr Wiltshire

The hon. Member for Gordon (Mr. Bruce) shakes his head, but I heard them say that. That is exactly what they intend to do.

Let us see if Liberal Members shake their heads and try to deny that, earlier in the debate, they said that they want to release capital receipts, so that they can have another type of spending spree. They are not denying that, which is quite helpful. Liberal Members have not proposed the reform of local government finance in this debate, but a disaster for local government finance and for local citizens.

Mr. Nicholas Winterton

Although I have not been in the Chamber for all the debate, the one advantage of the new technology that we have in our offices is that one can follow the debate verbatim, and see the Speaker's face, from one's office. Does my hon. Friend accept that, if the Liberals were to introduce the type of policy that they have outlined tonight, it would be the most devastating form of hara-kiri and political suicide that any party could ever dream up and implement?

Mr. Wilshire

My hon. Friend is absolutely right. His local electors and my local electors are very sensible and do not intend to do that—they continue to elect Conservative councillors.

Let us take another example from the Liberal Democrats' motion which illustrates the truth of the issue. The motion suggests that we should condemn the Government's financial priorities for local government. What are the Government's priorities for local government? As I understand it, having been a practitioner before I was elected to the House and having taken a close interest since, the Government's first priority is to live within our means, nationally and locally. If we do not do that, we will go bankrupt and have no services at all.

The Government's second priority is to focus local government attention on core services, such as education and care in the community. The Government's third priority is to ensure that local government delivers real value for money. I know that the Liberal Democrats do not much like competitive tendering, because they do not believe in providing real value for money.

Let us compare the Liberal Democrats' priorities against those priorities. I shall use as an example my own county council, Surrey county council, which is Labour and Liberal Democrat-controlled. What are the Liberal Democrats' priorities there? They are fascinating, and more people should know about them. The Liberal Democrats on the Surrey county council are quite determined to close fire stations, which even the Labour party does not want to do. The Liberal Democrats on that council have managed to organise the rejection of a £1 million grant for more nursery education in Surrey. That is one of their priorities in Surrey.

The Liberal Democrats on that council have some positive policies, one of which was absolutely magnificent. While trying to cut spending on education, they wanted to spend £20,000 to provide showers for staff who cycle to work. We should all be aware of that Liberal Democrat policy. The Liberal Democrats in Surrey also seem to be very keen on blocking the provision of adequate funds for the proper inspection of nurseries and old people's homes, which is nothing short of a disgrace.

The motion also contains the suggestion that Government action causes cuts in services. Coming from the Liberal Democrats, that is really rich. Since last December, I have heard the Liberal Democrats in my constituency telling my electors that they will have to face £15 million worth of cuts in county council services. I heard it all winter, until a few days ago, when they announced that they would not have to face £15 million of cuts now that they had seen the Government's settlement. But there was not a word of apology to my constituents for those scaremongering tactics. I have nothing but contempt for those in politics who are willing to frighten the elderly, worry parents and upset county council staff, all in the name of cheap and dirty party politics.

I said that I supported the first 12 words of the motion, which are: That this House calls for reform of the financing of local councils". Two things are wrong with the financing of local government. They are not the things that the Liberal Democrats suggest. The first is the use of a formula to distribute money. The second is the passing of funds from the person who puts up the money to the person who spends it, via two or three other people.

We all know the problem of formulae. They are nonsense; they do not work. They are either too simple, and we all complain about them, or too complicated, and we do not understand them. I cannot understand why the money made available for services in my constituency should depend on the number of foreigners spending nights in hotels in London. If that is what a formula means, it demonstrates that formulae simply do not work.

The other thing about local government finance that worries me is the indirect funding mechanism we use. We all know what happens. Let us use education as an example. The Department for Education and Employment decides what the standards will be and how much money will be made available. It then passes the money to the Department of the Environment, which lumps it together with lots of other things, concocts a formula that depends on nights spent by foreigners in beds in hotels in London and many other things, and then passes it on to the councils.

The councils then ask themselves whether to spend the money on what they were given it for. The money has now gone through another pair of hands. The result is the sort of thing that Liberal Democrat Somerset has just done. The Department for Education and Employment set out to provide Somerset with an additional £7 million for education, but by the time it had gone through the Department of the Environment and Somerset county council, the schools in Somerset received only an additional £4 million. That is what is wrong with indirect funding.

Mr. Patrick Thompson (Norwich, North)

I am grateful to my hon. Friend for giving way, particularly at this late hour and as I have not been present for all the debate. In his reform of local government, will my hon. Friend seriously consider a reform of the way in which we fund education? The funding is not transparent now, as my hon. Friend has said. Would he go further down that road?

Mr. Wilshire

That is exactly where I would go. As the public hold the Government responsible for education and the Government carry the can, they should fund all of it, set the standards and use local education authorities or grant-maintained schools as contractors.

I have confessed that I agree with part of the motion. It falls to me only to work out how I should vote. There are two simple reasons why I will not support the Liberal Democrat motion. First, I have explained that, of all the words in the motion, I agree with just 16 per cent. I hope that even the Liberal Democrats, the great exponents of proportional representation, will accept that, when someone is against 84 per cent. of a motion, that is an absolute majority, and proportional representation becomes bunkum. That is really rather like my majority in my constituency, so they should not get too enthusiastic.

The Liberal Democrats should also understand that I will not support them because I am against a local income tax, which is what they say their motion implies, and I am against frittering away balances and abolishing constraints. It is really rather simple. I am perfectly willing to support the amendment in the name of my right hon. and hon. Friends. I accept that it does not go as far as I would like, but not everything is perfect in this world. It makes a great deal of sense to me, and I commend it to the House.

9.38 pm
Mr. Malcolm Bruce (Gordon)

It has been a lively and interesting debate. The Minister engaged in a very fair discussion of all the points at issue. He acknowledged that there were different ways in which local government could be organised and financed and said that perhaps it was a matter of opinion and judgment which way one chose. Obviously, the hon. Gentleman prefers to support Government practice, but at least he acknowledged the opportunity for a different point of view.

The hon. Member for Spelthorne (Mr. Wilshire) implied that he was against giving local authorities more freedom to determine their own priorities because they would misuse it. The fundamental problem is that currently between 80 and 85 per cent. of funding for local authorities is controlled by central Government, with the consequence that local government does not have genuine freedom to respond to the different needs of different electorates across the country.

The hon. Gentleman knows, as the Government do—despite their spurious claims about putting money into education when all they are doing is allowing spending assessments to rise—that every 1 per cent. increase in expenditure requires a 6 per cent. increase in the council tax to fund it because of the gearing.

Mr. Wilshire

Will the hon. Gentleman give way?

Mr. Bruce

I cannot, because time is limited.

The fundamental problem is that, if we are to ensure that local authorities have genuine responsibility, accountability and discretion, a substantially larger proportion of their budgets should come from their own resources and from an ability to raise revenue from their own communities.

Everyone accepts that there is variation across the country that requires some central Government equalisation. There are considerable difficulties in working out the formula for that. However, the gearing is now completely out of kilter and far worse than it used to be. It is creating real difficulties for local authorities.

A point frequently made is that the Government say that they are increasing the standard spending assessment for local authorities. In other words, they are saying that local authorities can spend more money. However, they are not giving them that money through grants or allowing them to raise it in extra council tax—partly because the gearing is wrong, but also because of the existence of capping. The simple abolition of capping without reforming the system would not solve the fundamental problem.

The Government are deliberately and knowingly misrepresenting the position that they are imposing upon local authorities. The reality is that the amount of Government money going into education is under £100 million—about £80 million, I think. The remainder is simply the Government saying that authorities can spend money—although they have cut their grant and been capped. Of course, no one expects authorities to increase council tax by 30, 40 or 50 per cent. to raise the extra money, so the Government know that they cannot find that money other than through cutting services in other areas. The Government want to claim credit for supposedly putting in additional money while ensuring that the authorities get the blame for not delivering the services. That is what the Government are doing.

The Under-Secretary of State for Scotland, the hon. Member for Kincardine and Deeside (Mr. Kynoch), is to respond to the debate. He would be disappointed if I did not refer to the position north of the border. Scotland is about to embark upon a completely new system of local government. With effect from 1 April, there will be 32 unitary authorities instead of the current mix of district, regional and islands councils. All those local authorities are facing real difficulties before they are even up and running.

I have made some attempt to discover what difficulties are arising in different parts of Scotland. For example, in Dumfries and Galloway—part of the constituency of the former Secretary of State for Scotland, the right hon. Member for Galloway and Upper Nithsdale (Mr. Lang)—which is administered by Liberal Democrats and independents, there is some agreement that, for the first time, the council should spend up to its capping limit. Even so, that represents a 5 per cent. cut in overall spending.

In Perth and Kinross, which is controlled by the Scottish Nationalists, a 10 per cent. cut across the board is expected before the council is even up and running. Highland, which is independent-controlled, is looking at a 10 per cent. cut, as are several other authorities in that area. The hon. Member for Glasgow, Rutherglen (Mr. McAvoy) said that the city of Glasgow is looking to a 10 per cent. cut. Those are real difficulties for local authorities.

The Under-Secretary, like me, represents the new council area of Aberdeenshire. It would be much more welcome to his constituents and to mine if he spent less time attacking a council that has not yet even come into existence and more time trying to work with his constituency to ensure the best possible quality of services and value for money. Although I have pointed out to him that his constituents voted overwhelmingly for the councillors who share the administration—Liberal Democrats and independents—he rejoices in his constituency being the sole repository of the four Conservative councillors in Aberdeenshire.

I shall give the Under-Secretary one specific example, which I agree involves an estimate. Aberdeenshire council estimates that the expenditure requirement to meet the housing capital plan for 1996–97 will be £16.5 million. Council officers estimate that capital receipts will total £6.2 million. Even if the Minister disputes the £16.5 million expenditure requirement, he must surely acknowledge that there is a massive disparity, and that local authorities consistently face the biggest increase in homelessness anywhere in Scotland and probably the United Kingdom. He knows too that Aberdeenshire calculates that his estimate of what it should spend is about £24 million adrift of what it will have to spend if it is simply to maintain existing services.

The current administration and officials are looking right across the board for substantial savings, and I know that they will do their best to find those savings, but if the Under-Secretary continues to insist that the spending assessments determined by the Scottish Office bear any relationship to reality, he will find that there will be no budget for clearing the roads of snow or for road repairs and there will be severe cuts in all other areas. He must accept that his constituents would suffer as a result, especially since those service cuts would be accompanied by substantial increases in council tax. He ought to work with us to try to get the best services for his constituents, rather than work against what they have voted for: to deliver that balance of priorities.

As my hon. Friend the Member for Littleborough and Saddleworth (Mr. Davies) pointed out, one of the fundamental areas in which we take issue with the Government is the extent to which they are trying to squeeze local government to make up for their own failures to budget effectively at national level. In order to fund their own priorities and try to find a shred of credibility in their central budgeting, the Government are squeezing local services so that they can blame the Opposition, which run those councils because the Government cannot win seats on them. That simply will not work.

The Government talk about extravagance, yet they spend £865 million a year on consultants to save—according to independent internal assessments—a few hundred thousand pounds. They spend £250 million a year on advertising and publicity—a 400 per cent. increase since 1979. They are wasting £200 million a year on empty properties—double the figure of two years ago. That is a hell of a lot of waste in central Government that is not being addressed.

I am sick and tired of the Government telling local government about empty properties when 15 per cent. of Government property is sitting empty. Indeed, the Government have a £30 billion borrowing deficit and had an £8 billion overrun on last year's forecast. That is the extent to which they have failed to get their own house in order, and it costs extra money—£2.5 billion a year in interest on the increased deficit.

It is also worth pointing out that, since 1979, Government domestic fuel consumption has risen by 25 per cent. The equivalent figure for local government is an increase of 14 per cent. It is pretty clear which level of government is a good housekeeper. It is not central Government. The conspiracy between the two major parties—in this context, the Labour party's position is deeply disappointing—in their desire to centralise control of all spending and deny local democracy, local accountability and genuine buoyancy of revenues that would enable local councils to do the job that they are much better equipped to do than central Government is deeply offensive. Local councils deliver much better services and provide much better value for money.

In those circumstances, I believe that the motion commends itself to the House, although I have not the slightest doubt that it will not receive the House's support. It is because of the fundamental difference between us and the other two main parties that increasingly people are turning to the Liberal Democrats in local government. They know that we are prepared to fight hard for local services and for a system that will work—something that the Government cannot do.

The Under-Secretary of State for Scotland knows that his party tried to gerrymander the local boundaries to ensure that there would be a Conservative-controlled authority somewhere in Scotland. I listened with envy to Conservative and Labour Members talking about the difficulties of Conservative-controlled councils. We Scottish Members will never be able to testify to that, because there will not be any such councils after 1 April.

Nowhere in Scotland do the Conservatives have any power in local government, because, despite their attempts at gerrymandering, no council supports them. It is sheer vindictiveness that is making them put the squeeze on local government in Scotland and try to blame the Liberal Democrat, Labour, nationalist and independent parties that run the councils, but it simply will not wash.

9.50 pm
The Parliamentary Under-Secretary of State for Scotland (Mr. George Kynoch)

We have had a full and interesting debate. I shall try to deal with as many of the detailed points that have been raised as I can in the short time available, but I begin with some general comments about next year's local government financial settlement, north and south of the border.

The impression given, certainly by the hon. Member for Gordon (Mr. Bruce) and other Opposition Members, is that local government has been singled out for attack by the Government. The motion refers to an assault on local authorities, which continues year after year". [Horn. MEMBERS: "Hear, hear."] I hear some hon. Members shout "Hear, hear," but that is typical of their mental arithmetic and financial controls, because nothing could be further from the truth.

Expenditure by Scottish local authorities, for example, has increased by 20 per cent. in real terms in the past 10 years. As for next year's settlements, local government has been treated very favourably despite the need to constrain public expenditure in order to sustain the economic recovery. In Scotland, the increase in aggregate external finance for local authorities is no less than £148 million. That is 2.9 per cent. up, or £26.5 million more than the Scottish block formula consequences of the English settlement.

Despite all the talk of expenditure cuts, every one of the new Scottish authorities will next year have scope to increase spending by at least 2 per cent. For the majority of councils, the increase is more than 3 per cent. If authorities improve efficiency and effectiveness, as the private sector and the rest of the public sector are having to do, there should be no need for any cuts in front-line services.

Mr. McAvoy

Will the Minister give way?

Mr. Kynoch

No; I shall deal with the points that the hon. Gentleman raised in a minute.

Within the Scottish settlement, my right hon. Friend the Secretary of State has given particular priority to the police and fire services. The police grant-aided expenditure assessment has been increased by some £44 million, or nearly 8 per cent., and the fire GAE has been increased by £13 million, or nearly 10 per cent. I hope that in, budgeting for next year, Scottish authorities will give the same priority to the police and fire services, which are of such great importance. I look to the authorities to take a responsible attitude.

The debate has covered a lot of ground. There has been much talk about the level of Government funding as opposed to local funding. There was talk of 85 per cent. coming from central Government and only 15 per cent. being raised through the council tax. The one fact that all Opposition Members failed to point out was that there is flexibility for local councillors to take decisions locally and to decide how to spend the funds.

As I said, the funds for Scotland next year are some 2.9 per cent. up on the current year, and, in a year of local government reorganisation, there will be an opportunity for local authorities to examine how they deliver services, look afresh at them and build on their experience, to try to find ways of doing things more cost-effectively.

The hon. Member for Newbury (Mr. Rendel) began by saying that he wanted to do away with capping and to move to a local income tax. The hon. Gentleman and all his Liberal Democrat colleagues are really saying that they want to raise extra funds to spend on local government. That is where the Government and the Opposition parties differ. We believe in trying to get a more cost-effective delivery of services with taxpayers' money. It does not matter whether the funds come from central or local sources—it is taxpayers' money, first and foremost. The difference between us is that the Government believe in trying to give good value for money for taxpayers.

The hon. Gentleman said that compulsory competitive tendering involved endless red tape. He should tell his constituents that a process of competitive tendering to ensure that they get the best possible value for money is endless red tape. They would not agree with him.

Mr. Rendel

My local authority has found that—because of the way in which the system was set up—every time it has gone in for CCT, it has had to go for a higher tender than would have been the case had it been allowed under the rules to go for its own people doing the same job.

Mr. Kynoch

I should have thought that the hon. Gentleman would want his authority to go for the lowest tender to deliver the services to the specifications as drawn up.

The hon. Member for North-West Durham (Ms Armstrong) seemed to get in rather a muddle as to what she wanted to do. The moment my hon. Friend the Member for Spelthorne (Mr. Wilshire) mentioned the word "pledge"—an horrific word for Labour Front Benchers—she ran in fright and was unable to say what she would do on local government expenditure. She says that more money is needed in education, but she does not accept that local authorities have the flexibility to spend. The long and the short of it is that significant amounts of extra spending have gone into local government this year, both north and south of the border.

My hon. Friends the Members for Ribble Valley (Mr. Evans), for Spelthorne and for Eastbourne (Mr. Waterson) made valuable contributions on local government expenditure. My hon. Friend the Member for Ribble Valley in particular drew attention to the fact that the extra expenditure advocated by Opposition parties would have to be paid for by somebody—the question was, by whom. He talked about two new or extra taxes that are proposed by the Liberal Democrats. The first is national—a higher income tax—while the other is the local income tax. I have a message for my hon. Friend—in Scotland, we would have a third new tax. The Opposition want a tartan tax and a tax-raising Scottish Parliament that would make us less competitive and would cause major problems for the Scottish people.

The hon. Member for Glasgow, Rutherglen (Mr. McAvoy) talked about the situation in Glasgow, and South Lanarkshire in particular. Of course, he has a problem. The allocation that is given to local authorities in AEF comes as a result of a formula that was proposed not by the Government, as was suggested by some Opposition Members—

Mr. McAvoy

indicated assent.

Mr. Kynoch

I see that the hon. Gentleman acknowledges that fact. The formula is well tried, and was drawn up in its present form in 1985 by the Convention of Scottish Local Authorities in conjunction with the Scottish Office. The formula was discussed in great detail by the distribution committee, and that was the body that decided on the distribution.

The hon. Gentleman said that he did not want the funding to be redistributed within Strathclyde, and I can understand why. While Glasgow may be regarded as a "loser" in this situation, there are many local authorities in the old Strathclyde region—East Ayrshire, East Dunbartonshire, East Renfrewshire, North Ayrshire, North Lanarkshire, Renfrewshire, South Ayrshire and South Lanarkshire—that are "gainers". He will know that there is a transition scheme to take account of the mismatch. That scheme has been agreed by COSLA and was, in fact, its proposal.

The hon. Gentleman referred to Glasgow and the capping limit. Glasgow will be able to increase its expenditure by 4.9 per cent. compared with its notional budget. While the council needs to reduce expenditure to come within the capping limit, it would clearly like to increase expenditure at present by no less than 13.4 per cent.

The hon. Member for Gordon talked about Aberdeenshire, but he has a distinct problem. The notional budget for Aberdeenshire is made up by disaggregating the old Grampian regional budget. That was decided on not by the Scottish Office, but by Grampian regional council which, if memory serves me correctly, was a Liberal Democrat-Scottish National party administration. That administration must be responsible for the existing notional budget of £202 million, while the wish-list budget for the new Aberdeenshire council—a Liberal Democrat council—is some £240 million, a 19 per cent. increase.

The Government believe in good value for money while, I am afraid, the Opposition believe in increased taxation and increased expenditure.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 28, Noes 179.

Division No. 50] [10.00 pm
Alton, David Lynne, Ms Liz
Ashdown, Rt Hon Paddy Maclennan, Robert
Barnes, Harry Maddock, Diana
Beith, Rt Hon A J Michie, Mrs Ray (Argyll & Bute)
Bruce, Malcolm (Gordon) Nicholson, Emma (Devon West)
Campbell, Menzies (Fife NE) Paisley, The Reverend Ian
Chidgey, David Rendel, David
Dafis, Cynog Skinner, Dennis
Spearing, Nigel
Davies, Chris (L'Boro & S'worth) Steel, Rt Hon Sir David
Godman, Dr Norman A Taylor, Matthew (Truro)
Harvey, Nick Tyler, Paul
Hughes, Simon (Southwark) Wallace, James
Johnston, Sir Russell
Jones, Lynne (B'ham S O) Tellers for the Ayes:
Jones, Nigel (Cheltenham) Mr. Archy Kirkwood and
Kennedy, Charles (Ross,C&S) Mr. Don Foster.
Ainsworth, Peter (East Surrey) Duncan-Smith, Iain
Alexander, Richard Durant, Sir Anthony
Ancram, Rt Hon Michael Elletson, Harold
Arnold, Jacques (Gravesham) Evans, Jonathan (Brecon)
Arnold, Sir Thomas (Hazel Grv) Evans, Nigel (Ribble Valley)
Atkins, Rt Hon Robert Evans, Roger (Monmouth)
Atkinson, David (Bour'mouth E) Faber, David
Baker, Nicholas (North Dorset) Fabricant, Michael
Baldry, Tony Fenner, Dame Peggy
Bates, Michael Fishburn, Dudley
Body, Sir Richard Forsyth, Rt Hon Michael (Stirling)
Booth, Hartley Forth, Eric
Boswell, Tim Fox, Dr Liam (Woodspring)
Bottomley, Peter (Eltham) Fox, Rt Hon Sir Marcus (Shipley)
Bottomley, Rt Hon Virginia French, Douglas
Bowis, John Gale, Roger
Brandreth, Gyles Garel-Jones, Rt Hon Tristan
Bright, Sir Graham Gill, Christopher
Brooke, Rt Hon Peter Gillan, Cheryl
Browning, Mrs Angela Goodlad, Rt Hon Alastair
Budgen, Nicholas Goodson-Wickes, Dr Charles
Burns, Simon Gorst, Sir John
Burt, Alistair Greenway, Harry (Ealing N)
Butler, Peter Griffiths, Peter (Portsmouth, N)
Carlisle, John (Luton North) Grylls, Sir Michael
Carlisle, Sir Kenneth (Lincoln) Hague, Rt Hon William
Carrington, Matthew Hamilton, Neil (Tatton)
Carttiss, Michael Hampson, Dr Keith
Cash, William Hannam, Sir John
Chapman, Sir Sydney Hargreaves, Andrew
Clappison, James Harris, David
Clark, Dr Michael (Rochford) Hawkins, Nick
Clarke, Rt Hon Kenneth (Ru'clif) Hawksley, Warren
Clifton-Brown, Geoffrey Heald, Oliver
Coe, Sebastian Heathcoat-Amory, David
Colvin, Michael Hendry, Charles
Congdon, David Higgins, Rt Hon Sir Terence
Conway, Derek Hill, James (Southampton Test)
Coombs, Simon (Swindon) Horam, John
Cope, Rt Hon Sir John Hughes, Robert G (Harrow W)
Cran, James Hunter, Andrew
Currie, Mrs Edwina (S D'by'ire) Hurd, Rt Hon Douglas
Curry, David (Skipton & Ripon) Jack, Michael
Davies, Quentin (Stamford) Jackson, Robert (Wantage)
Devlin, Tim Jenkin, Bernard
Dorrell, Rt Hon Stephen Jessel, Toby
Douglas-Hamilton, Lord James Kellett-Bowman, Dame Elaine
Dover, Den Key, Robert
Duncan, Alan Knapman, Roger
Knight, Mrs Angela (Erewash) Roe, Mrs Marion (Broxbourne)
Knight, Rt Hon Greg (Derby N) Shaw, David (Dover)
Kynoch, George (Kincardine) Shaw, Sir Giles (Pudsey)
Lawrence, Sir Ivan Shephard, Rt Hon Gillian
Legg, Barry Shepherd, Sir Colin (Hereford)
Lidington, David Sims, Roger
Lilley, Rt Hon Peter Smith, Sir Dudley (Warwick)
Lloyd, Rt Hon Sir Peter (Fareham) Smith, Tim (Beaconsfield)
Lord, Michael Spencer, Sir Derek
Luff, Peter Spink, Dr Robert
MacGregor, Rt Hon John Sproat, Iain
MacKay, Andrew Squire, Robin (Hornchurch)
Maclean, Rt Hon David Stanley, Rt Hon Sir John
McLoughlin, Patrick Stem, Michael
Malone, Gerald Streeter, Gary
Mans, Keith Sweeney, Walter
Marland, Paul Sykes, John
Marlow, Tony Tapsell, Sir Peter
Marshall, John (Hendon S) Taylor, Ian (Esher)
Marshall, Sir Michael (Arundel) Taylor, John M (Solihull)
Martin, David (Portsmouth S) Thomason, Roy
Merchant, Piers Thompson, Patrick (Norwich N)
Mitchell, Andrew (Gedling) Townsend, Cyril D (Bexl'yh'th)
Moate, Sir Roger
Molyneaux, Rt Hon Sir James Tredinnick, David
Needham, Rt Hon Richard Trotter, Neville
Nelson, Anthony Twinn, Dr Ian
Neubert, Sir Michael Walden, George
Nicholls, Patrick Waller, Gary
Nicholson, David (Taunton) Wardle, Charles (Bexhill)
Norris, Steve Waterson, Nigel
Oppenheim, Phillip Watts, John
Ottaway, Richard Whittingdale, John
Page, Richard Widdecombe, Ann
Paice, James Wiggin, Sir Jerry
Pattie, Rt Hon Sir Geoffrey Wilshire, David
Peacock, Mrs Elizabeth Winterton, Mrs Ann (Congleton)
Porter, David (Waveney) Winterton, Nicholas (Macc'f'ld)
Powell, William (Corby) Wolfson, Mark
Rathbone, Tim
Redwood, Rt Hon John Tellers for the Noes:
Riddick, Graham Mr. Timothy Wood and
Robathan, Andrew Mr. Bowen Wells.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.

MADAM SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House congratulates the Government on the priority they have given to education and the police in the 1996–97 settlement for local government; approves the rigorous approach that Government takes towards all public expenditure, including that of local government; commends the flexibility they have given to local authorities to respond to local priorities; and urges local authorities to make the most efficient use of the resources available and to use their freedom responsibly in providing local services.