Council Tax

HC Deb 22 May 1996 vol 278 cc351-75 7.13 pm

The Secretary of State for the Environment (Mr. John Gummer)

I beg to move, That the draft Council Tax Limitation (England) (Maximum Amounts) Order 1996, which was laid before this House on 20th May, be approved. In reaching my decisions on total standard spending for England and the capping principles, I looked hard both at the pressures on local spending and at the scope for greater efficiency and effectiveness in authorities. Individual authorities must be equally thorough. They should always be seeking ways to deliver better value for money to their local taxpayers. That means taking a rigorous approach to pay and efficiency and making a realistic assessment of their spending priorities.

The House will recall that the total standard spending for England for 1996–97 is £44.93 billion, an increase of 3.3 per cent. over the 1995–96 figure. That was a substantial increase and it reflected the importance that the Government attach to education and the care of the vulnerable and elderly. We provided for a 4.5 per cent. increase in provision for education and 6.9 per cent. for social services, including further transitional community care special grant.

It is, of course, for each local authority to set its budget and decide its spending priorities. My capping principles for 1996–97 were devised to give authorities the flexibility to make use of the additional resources that we provided for education, social services, fire and police in the settlement. We did that by ensuring that an authority's permitted increase under the capping rules was at least as big as the total of the increases in those blocks of the authority's standard spending assessment. We called that passporting. I am therefore more than a little surprised, given the demands last year for additional funding for education, that some local education authorities have chosen not to pass on the 4.5 per cent. increase in education standard spending to schools. I am especially sad that my county council has failed to do that, but has used the money elsewhere and thus denied schools the money that they should have had.

For county councils and shire unitary authorities, the permitted increase was at least 3 per cent.; for metropolitan districts, outer London boroughs and metropolitan fire and civil defence authorities, it was at least 2 per cent.; for inner London boroughs, 1.5 per cent.; and for police authorities, 3.5 per cent. Shire district councils were able to increase budgets by 0.5 per cent. Authorities that budgeted more than 12.5 per cent. above standard spending assessment would be subject to a cash freeze. Capping always allows an authority to spend at the level of its SSA.

Most local authorities have set affordable budgets and council taxes this year within their capping limits. That meant that when I confirmed my capping principles on 3 April, I was able to propose cap limits that required only two authorities—Cambridgeshire county council and Oxfordshire county council—to reduce their budget requirements. By contrast, my initial cap limits last year would have required nine authorities to reduce their budgets.

In a moment I shall set out my final decisions on Cambridgeshire and Oxfordshire, which are the subject of this order. Before I do so, I should deal briefly with the four other authorities that I formally designated under my capping rules on 3 April—Essex county council and Greater Manchester, Tyne and Wear and Merseyside fire and civil defence authorities.

In the cases of Essex county council, Greater Manchester fire and civil defence authority and Tyne and Wear fire and civil defence authority, designation was purely technical. I had agreed in advance with them that they could set budgets above their caps by specified amounts. They are not required to reduce their budgets or to incur any additional costs, and the process is already complete.

Merseyside fire and civil defence authority set a budget requirement for 1996–97 of £52.78 million. The authority argued that a lower budget would lead to its being in breach of statutory minimum standards for the fire service. That view was backed up by Her Majesty's fire service inspectorate. I therefore designated Merseyside fire authority at its original budget. As with the other three authorities, it does not need to make any further budget reductions this year and the capping process for it is now complete.

Oxfordshire and Cambridgeshire were the only local education authorities seriously to exceed the provisional cap indicated by my capping rules. That was in spite of permitted increases of 3.7 per cent. for Cambridgeshire and 3 per cent. for Oxfordshire—both of which were greater than the average LEA permitted increase of 2.9 per cent. I designated both counties for capping on 3 April and set maximum amounts for them at the level indicated by the capping rules. Both counties challenged those caps and have argued that they should be allowed to confirm the higher budgets that they have set.

In reaching a view on the final capping limit for those authorities, I must take account of the specific local circumstances of each authority. I have, therefore, considered each county's case carefully, and my hon. Friend the Minister for Local Government, Housing and Urban Regeneration has met delegations from each authority to hear its case in detail.

Cambridgeshire's problems stem, in its view, from the fact that it used up all its available reserves last year. However, Cambridgeshire would have been aware last year that its reserves could be used only once and should have budgeted accordingly. It would not be right for us to allow authorities to top up their reserves every time they ran out, not least because the local taxpayer would foot the bill.

Mrs. Anne Campbell (Cambridge)

Will the Secretary of State give way?

Mr. Gummer

If I may finish the next paragraph, I am sure that the hon. Lady will find it helpful.

In fact, Cambridgeshire's total reserves stand at £53.8 million—about 13 per cent. of its proposed net revenue expenditure. It admits that some of its reserves are available to support revenue spending this year. It also admits that a budget at cap is achievable as it has not yet passed on the additional resources to the relevant services. Against that background, I believe that there should be no relaxation in Cambridgeshire's proposed cap, and that the cap is reasonable, achievable and appropriate in all the circumstances of the authority. If the draft order is agreed by the House, it will result in a reduction of council tax in Cambridgeshire of £25.26 for a two-adult band D household.

Mrs. Campbell

Does the Secretary of State accept that, in the view of the district auditor, Cambridgeshire's reserves are now down to six days' spending, not the amounts that the Secretary of State just announced? Does he accept that Cambridgeshire's reason for spending reserves in such quantities last year was that the Minister for Local Government, Housing and Urban Regeneration promised that the area cost adjustment was being closely scrutinised and said that Cambridgeshire might well expect something from that in this financial year?

Mr. Gummer

That is nonsense; the last point was absolutely untrue. We are considering the area cost adjustments and we have said that an independent inquiry is being held, which will report to allow us to make changes, if we think that right, in future years, but I am quite sure—I need not even ask him—that my hon. Friend the Minister for Local Government, Housing and Urban Regeneration never gave any such indication, because it was impossible for any such indication to be given. One does not know, until the thing is properly examined, what, if any, effect there might be. I also represent part of a county that is affected in a deleterious way. Last time we considered the matter, we found that it was much more difficult than I had expected and there were very good grounds for supporting the present system. We are assessing it again, and we are trying to do it as independently as possible, but I am quite sure that my hon. Friend did not say anything of the sort.

Sir Anthony Grant (South-West Cambridgeshire)

No one has been a bigger opponent of the area cost adjustment than I have for at least 10 years. I have mentioned it repeatedly in the House. I have tackled umpteen Ministers—the last one was my hon. Friend the Minister for Local Government, Housing and Urban Regeneration, who was very reasonable in listening to the case put, but certainly never gave any assurance other than that the matter would be very carefully reviewed. There is no delusion about this matter.

Mr. Gummer

I believe that my hon. Friend will agree, first, that the reason for the further investigation into this matter is precisely as he puts it—because he and other of my right hon. and hon. Friends have pressed for it. I am considering the matter independently and as carefully as I possibly can. I think that my hon. Friend will also agree that for a local authority to decide that it will fix its spending arrangements on the basis of a hope that something might turn up in the following year seems to betoken—

Sir Anthony Grant

Micawberism.

Mr. Gummer

I should not like to go as far as that, but the hon. Member for Cambridge (Mrs. Campbell) does the Liberal and Labour parties that run Cambridgeshire county council no favours by suggesting that the reason why they got this wrong was that they hoped that some money might turn up. If we all ran our private finances on that basis, we would suffer from serious problems. I hope that the hon. Member for Cambridge does not run her finances in that way, or she will find herself in difficulties and need counselling, which clearly, in her terms, Cambridgeshire does.

Cambridgeshire had significant extra resources, and those resources could be applied, and have been applied, in such a way as to allow it to keep to a budget below cap. That is what it has done, and I do not think that the authority would criticise the figure that I quoted.

Oxfordshire argues that, since 1991–92, it has reduced total spending by £45 million and that scope for further savings is severely limited. It also argues that, even at its proposed level, the budget represents £5.5 million less than the sum that would be required to keep services running at the same level as in 1995–96.

Nevertheless, on balance, I do not consider Oxfordshire's position to be sufficiently different from other LEAs to justify a relaxation in its capping limit. All the other counties limited to a 3 per cent. permitted increase have managed to set budgets within their provisional cap. The same is true of the inner and outer London LEAs, which were limited to 1.5 per cent. and 2 per cent. increases respectively. Although Oxfordshire's reserves are not large, they are by no means the lowest, as a percentage of budget requirement, among the counties.

I therefore propose that there should be no relaxation in Oxfordshire's original cap, which I consider to be reasonable, appropriate and achievable in all the circumstances of the authority. If the draft order is agreed by the House, it will result in a reduction of council tax in Oxfordshire of £34.90 for a two-adult band D household.

Before I conclude, I remind the House that ordinary people pay these bills. It is all very well talking about this or that standard of service or this and that demand, but ordinary people have to pay the bills, and £34.90 is a sum of importance, not something that must be cast aside.

Mr. Andrew Smith (Oxford, East)

I had not intended to intervene at this point, but as the Secretary of State has not referred to it, I should like him to confirm for the record that he has written to Oxfordshire, offering an extra borrowing facility in recognition of the county's difficulties. As he appeared to dismiss those difficulties, will he explain why he is offering the borrowing facility and give an idea of how much it might be?

Mr. Gummer

If the hon. Gentleman had waited, I was going to cover that in my next comment. I think it important to point out, however, that there is no basic difficulty.

Oxfordshire could do what we have asked it to do, and other counties in more straitened circumstances, in the sense that they have had only a 1.5 per cent. or 2 per cent. increase, have managed to solve their problems, but there is a specific short-term problem, which might mean that Oxfordshire would have to make teachers redundant this year, only to have to employ them again in a year or two's time. That is a result of specific problems in the Oxfordshire profile.

Precisely because that is likely to be a short-term problem, a relaxation in the cap would not be the right approach, as that would give Oxfordshire a permanent increase in its spending power, which could be done only at the behest of other counties. It would put Oxfordshire out of line with other counties.

I am therefore prepared to offer Oxfordshire a supplementary credit approval and a capitalisation direction, which will enable it to capitalise revenue expenditure, to help with its short-term problems. That will, in effect, give the authority another year to get its budget into line with our assessment of an appropriate level of expenditure. I understand that Oxfordshire will make a proposal for an SCA and a capitalisation direction, and I await that proposal.

If the order is approved, we shall serve a statutory notice on both authorities formally setting their cap. They will have 21 days to reduce their budget in line with their cap and set new lower council taxes. In Oxfordshire's case, the reduction can, to some extent, be offset by using the offer of a capitalisation direction and SCA to free up resources. Those resources can then be used to support its existing spending plans. I am sure that hon. Members would expect it to do that to support its education spending plans, for which it has been given the money.

I have considered carefully the points raised by all the authorities involved in the capping process, to ensure that the caps that I have proposed are reasonable, appropriate and achievable. Where there are special circumstances, I have been prepared to make concessions. The final outcome is a reduction of £13 million in this year's council taxes in the affected areas. I commend the order to the House.

7.29 pm

Ms Hilary Armstrong (North-West Durham)

This is the first time that this debate has been held since I have been a member of the environment team. I read with interest what was said in previous years. I have also reflected on the recent comments of the Secretary of State, on the methodology that he has used and on the ways in which he has approached these issues. Once again, I have found that the words used one year are not followed up in succeeding years—and I shall come back to that.

The Labour party has been consistent in the belief that the formulations of the standard spending assessment retain problems. Every time that this is raised, the Secretary of State tells me that it is nonsense and that I have said that it cannot be adjusted quickly. I have said that: it needs proper investigation. Grave concern has been expressed throughout the country about the unfair way in which standard spending assessments are calculated. I will not go through the figures on Westminster tonight. Ministers will not let me have the calculations that they say show that our protestations are wrong. I want to know how the Government calculated the difference between now and 1979, as no one else has been able to do so.

Given the rigidity of the actions of Ministers and the Government tonight, the unfairness and unhappiness throughout the country—apart from Westminster—about the formula used to calculate the standard spending assessment means that we have to return to it. If the Government were interested in working to the agenda of people outside the House, they would be pushing much harder. Last year, the right hon. Member for North Shropshire (Mr. Biffen) said: I hope that hon. Members will reflect upon the fact that we cannot return to this situation year after year because it will worsen year after year. We must now begin to think of a more flexible and acceptable arrangement."—[Official Report, 15 June 1995; Vol. 262, c. 921.] I could not agree more. However, this year the Government have not been flexible, nor have they attempted to address the individual needs of the councils involved. It is significant that today the Secretary of State made a substantially shorter speech than he did last year— although the beginning of his speech was almost the same as his speech last year. He seems to have learnt nothing from last year and he has not defended his actions.

I think that the Secretary of State knows that he is using draconian powers that go far beyond commitments that were made when the system was established and during the passage of the legislation that gave the Government the powers. At that time, the then Secretary of State, the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), made commitments and said that this would be used only as a reserve measure. He said: It is not a measure to be used as a matter of course. The people of an area certainly will be able to vote for a relatively high-spending authority if they so choose. It is important that there should be such a reserve power—rarely, if ever used we hope—to protect the charge payers of an area against extreme cases of extravagant and irresponsible local authorities."— [Official Report, 25 April 1988; Vol. 132, c. 51.] The Government have wandered far and wide from that commitment and it is not being upheld in the order that we are considering tonight.

It is clear that neither of the authorities that we are debating is charged with extreme cases of extravagant and irresponsible spending—those charges have not been upheld by the external audits of the authorities. This goes way beyond what the Government committed themselves to do when they introduced the power.

Mr. Gummer

Will the hon. Lady comment on why the Labour and Liberal Democrat group leaders on Cambridgeshire county council wrote to their counterparts on other English county councils almost three months before the settlement was announced saying that they could envisage a number of authorities contemplating exceeding capping levels, that they would prefer not to be isolated and that they would feel more secure if more councils exceeded the cap on a common basis. Cambridgeshire was contemplating breaking the cap before the money was shared out. That was its intention, regardless of the amount of money that it received.

Ms Armstrong

That is not a point in relation to what I was saying.

Mr. Simon Burns (Lord Commissioner to the Treasury)

Answer it.

Ms Armstrong

I will answer it if I am given the opportunity and the normal courtesies of the House are observed. We have a problematic Whip; he is obviously feeling a little insecure.

The question whether the authorities are irresponsible depends on how they prepared their budget. It would be irresponsible if an authority simply sought to determine its budget and priorities after the Government had pronounced. Councils have a responsibility to their area and to work effectively throughout the year. They have to set the priorities and work out what their electors want them to do.

I have discussed this with both councils and I know that they started their process early. They identified the priorities and what their schools and social services provision would require. They discussed this with people in their counties long before the Government set their rate. If they did not start to do that until after the Government had set their rate, they would be failing in their responsibility to their electorate.

The Parliamentary Under-Secretary of State for Education and Employment (Mr. James Paice)

Answer the question.

Ms Armstrong

I am sorry if the hon. Gentleman thinks that this is not an answer. The Secretary of State complained that the council wrote to other authorities before he set the cap. It was not intent on breaking the cap; it was intent on responding to local demands and to local priorities for spending, knowing what the Government were likely to do. I contend that if they were not working responsibly with their local electorate, the Secretary of State would be right to condemn them. However, they were working responsibly with their local electorate—and I might have something to say to the right hon. Gentleman later about some of his contentions about the authority.

Mr. Gummer

Is the hon. Lady saying that she would commend local authorities that decide that they will think seriously about breaking the cap even before they know how much money they will get? Is the Labour party committed to urging authorities to break the cap even before they know how much money they will receive? If so, that is entirely new Labour policy, which we will be pleased to broadcast.

Ms Armstrong

The Secretary of State is being irresponsible once again: that is his problem. He knows that I did not say that. He is trying to make accusations against those authorities because his argument is without substance. He has shown that he is not concerned about the fact that the authorities have met their statutory responsibilities in service delivery. He is not concerned that they spend less than the average amount per head of population compared with other counties. He is not concerned that the district auditor has commended them for their quality of spending control and for the efficiency of their spending. The Secretary of State simply arrived at a global sum and those authorities have become victims of the global picture. He has not paid attention to local needs. It is the right hon. Gentleman, and not the authorities, who is acting irresponsibly.

Sir Anthony Grant

The hon. Lady should note that Cambridgeshire was found wanting in a more recent auditor's report. It is well below average on two counts: care of the elderly and primary education.

Ms Armstrong

I shall refer to performance indicators later. That is a different matter: it is not so much about the efficiency of the authority as the quality of service delivery. [Interruption.] I wish that Conservative Members would take the matter more seriously; it will affect people's lives.

The Secretary of State said that it is important to approve the order because ordinary people are paying the bills. That is true, but they are also receiving the services.

Ordinary people in Cambridgeshire and in Oxfordshire have been consulted extensively about the amounts that they want to be spent on schools. The Government are trying to con local people about the available expenditure, but the people have seen through them. The right hon. Member for Witney (Mr. Hurd) wrote a letter to head teachers, one of whom sent a copy to me.

The people of Cambridgeshire know that, if the capping order succeeds, available expenditure will increase by 1.9 per cent. over last year. In Oxfordshire, there will be a 2.7 per cent. real increase in available expenditure for schools over and above last year. The amount that the Government announced that local authorities may spend is a phantom figure. Local people have recognised that fact and they have decided that the order does not meet their needs.

The previous Secretary of State said that people could vote for a high-spending authority. There were no county council elections last year, but there were district council elections. The challenge to the cap was an issue in the election campaigns in both district authority areas. The matter was discussed. I was staggered when Banbury, which is in the district of Cherwell, elected a Labour council. Labour won more seats in that area than we believed possible—let alone targeted and expected to win. That shows how the people of Oxfordshire are voting. Labour also did exceptionally well in Cambridgeshire.

Turning to issues of quality and efficiency, Oxfordshire comes 45th out of 47 counties for total expenditure per head. It spends £560 per head. Cambridgeshire ranks a little higher—it is 37 out of 47—and allocates £580 per head. The county average is £629. Performance indicators identified in the recent Audit Commission report show that both authorities are above average and are doing reasonably well. The performance indicators include education, the collection of charges and so on. The authorities are working hard to meet the Government's objectives, regardless of their political persuasion. Referring to Cambridgeshire, the district auditor said: The Council's financial affairs continue to be well controlled. However, the Council now faces significant financial pressures". The district auditor is concerned that Cambridgeshire's good housekeeping is being threatened by financial pressures. We are told that Oxfordshire is also a good authority that is at the forefront of voluntary competitive tendering initiatives. The district auditor said that its tendering process is operated in the interests of council tax payers and that contracts are awarded to the lowest bidder. Oxfordshire is commended by the district auditor for its low staffing and its high standards, among other things.

We are not debating profligate authorities that have upset local people with their overspending. Both authorities suffer as a result of rapidly growing populations. That is a particular problem in Cambridgeshire, but the order does not take account of that fact. In Oxfordshire, there are more children aged one to four than is the average for that population profile and the number of 60 to 80-year-olds is also above average. That puts pressure on the two areas of service provision that are the most demanding financially.

The Government are so obsessed with ideological dogma that they are breaking their commitments on spending and on capping. They have demonstrated that, far from being in control of local government finance,

they have lost sight of reason. The Government are acting against the wishes of the people of Oxfordshire and Cambridgeshire. The people want the opportunity to fund their schools and their social services properly, but they know that the Government will manipulate the figures to ensure that they cannot do that. That is not good enough. We need the flexibility that the right hon. Member for North Shropshire urged on Ministers last year. Once again, the Government have not learnt their lesson and the electorate will ensure that it costs them dearly in the very near future.

7.48 pm

Mr. Douglas Hurd (Witney)

The arguments heard in Oxfordshire this year are not a bad example of an irresistible force meeting an immovable object. There exists a contradiction that the hon. Member for North-West Durham (Ms Armstrong) has done nothing to explain, and which is difficult to explain—how £5.95 million extra for education in Oxfordshire via the standard spending assessment grant is converted into cuts when it reaches schools. At the heart of the matter is substantially more money from the taxpayer to the county, and less money from the county to the schools.

Mr. David Rendel (Newbury)

Will the right hon. Gentleman give way?

Mr. Hurd

No.

The county council is trying to argue that Oxfordshire is a special case and that the calculations were in some way unfair to the county—and, the hon. Member for North-West Durham added, to Cambridgeshire. It is suggested that the calculations are the result of some mysterious conspiracy against my county, or of an experiment in ideological dogma. I cannot understand why my right hon. Friend the Secretary of State should have chosen those two counties for an experiment in ideological dogma which other counties have been spared. The hon. Lady threw no light on that curious proposition. Obviously her claims cannot be true.

The argument that Oxfordshire is a special case dissolves at the touch. The county has not provided the Members of Parliament that represent it the wherewithal for arguing that Oxfordshire is a special case. The arguments leave out of account something that the Government cannot if their criteria are to be real needs— that is, the lower proportion of Oxfordshire children at state schools. Obviously that affects needs and entitlements. Oxfordshire's claim to be a special case is threadbare—and not improved by the absurd threats such as that to close the county museum at Woodstock.

But it is an undeniable fact that the county is not providing or proposing to provide the money needed to run schools and other services. It has been using up reserves to sustain a high rate of spending on education, and it cannot continue to do so. That is no particular credit to the county but is a fact, and one borne in on me and my right hon. and hon. Friends for two years by headmasters, teachers, governors and parents. We have passed on the facts to the two Ministers concerned. The people who talk to us are not playing the political game that the hon. Lady is playing. They are not concerned at how the situation came about. They do not talk about ideological dogma and all that nonsense. They are simply concerned with the facts with which they have to deal, and with the prospects for children and services on the present figures.

Although Oxfordshire does not have a special case, there is a problem—and I am glad that my right hon. Friend the Secretary of State has recognised its existence. I hope that the ingenious help that he has decided on for Oxfordshire will ease the immediate strains in the way that he proposes. I ask him to keep a close eye on how the extra money that he will allow to be borrowed beyond the normal limits is spent. I gather that my right hon. Friend will be having discussions with the county council on that point. I trust that he will ensure that the money borrowed is used for the purposes for which it is intended.

Finally, please will my right hon. Friend try—I know this is difficult—to do more to explain the matter to the public? Every now and then he admits us—as he did today—to part of the mysteries over which he presides, but that is not of great help to our constituents. Will his Department produce a one-page leaflet to be included in council tax demands, such as councils usually provide, showing the objective assessments of need? As long as there are mysteries, there will be accusations of foul play and people trying to exploit the matter for ideological and dogmatic reasons. I thank my right hon. Friend for his remarks, but may we have a little more light on those dark places?

7.53 pm

Mrs. Anne Campbell (Cambridge)

My hon. Friend the Member for North-West Durham (Ms Armstrong) remarked that Cambridgeshire has always been a low-spending authority. It suffered many years of Conservative control, so even Government Members would have difficulty arguing that Cambridgeshire has not been low spending, and that is confirmed by the Audit Commission's report. Of the shire counties, Cambridgeshire is fourth from the bottom in spending on each primary school pupil, 14th from the bottom in spending on secondary school pupils and bottom in spending on the over-16s.

All that is despite the fact that Cambridgeshire has consistently spent 6 per cent. more on education than the Government have allocated in the standard spending assessment. The county's planned budget this year reduces that figure to only 4 per cent. more than the SSA. The people of Cambridgeshire are in no doubt that, if the order is approved, that will result in appalling consequences for the county's education and social services.

The Secretary of State's accusation that Cambridgeshire is not passing on the increase to its schools was perpetrated in a letter of complaint from the right hon. Member for Peterborough (Dr. Mawhinney) to the secretary of the National Union of Teachers in Cambridgeshire. The Government say that the county should spend £237 million on education, but it plans to spend £247 million. It is true that £5 million has been reserved. If that hold-back continues, at least 80 teaching posts already identified by schools throughout the county will be lost—on top of the 100 teaching posts that were lost following last year's disastrous cuts.

The Government say that Cambridgeshire should spend £77 million on central services, but the county is planning to spend £84 million. The Government say that the county should spend £13 million on the fire service, and it is planning to spend more than £14 million. To do so, Cambridgeshire has had to reduce spending on other services by 18 per cent. The county shares the Government's priorities for services and has made sure that money is spent on education, social services and the fire service—not on other services, as it has been accused of doing.

The Government claim that they have given Cambridgeshire £11 million extra this year. In the words of Lord Justice Scott, that is "sophistry". The Government have increased by £11 million not the county's grant, but the standing spending assessment. As the House knows, that is a different matter.

Cambridgeshire was already spending more than the SSA on education, to cope with what the Secretary of State for Education described as a tough settlement last year. The county followed the Government's advice and took £10 million out of its reserves, to lessen the pain of the £17 million cuts imposed. The district auditor has described Cambridgeshire's reserves, which represent only six days' spending, as extremely low. That situation could be repeated this year.

I am glad to see the hon. Member for South-East Cambridgeshire (Mr. Paice) in his place on the Government Front Bench because he has tried to be helpful. When asked on Radio Cambridgeshire today about the county council's problems, he claimed that it was a profligate authority losing £4 million a year on its school meals service. The £4 million excess of expenditure over income is due to the cost of providing free school meals.

Mr. Paice

It is still too much.

Mrs. Campbell

I suppose that the hon. Gentleman realises that the county council has a statutory duty to supply free school meals to children in need. Is the hon. Gentleman suggesting that Cambridgeshire should break the law?

The hon. Gentleman has also complained about the high cost of school meals, but that is because Cambridgeshire not only recoups the cost from children who can pay but provides an element of the overheads. That is why the county cannot cut its school meals service without losing money.

Why is Cambridgeshire struggling to pay for services that everyone else expects of right? In April 1995, the hon. Member for South-West Cambridgeshire (Sir A. Grant) and I went to see the Minister to ask for a fairer deal for funding for Cambridgeshire. The area cost adjustment, which the county does not receive, would have given Cambridgeshire an additional £15 million last year. I know that the hon. Member for South-West Cambridgeshire was quite optimistic after that meeting. He remarked to the Cambridge Evening News that he could see light at the end of the tunnel. The Cambridge Evening News is not a paper to sound a note of false optimism, and the editor remarked that it was too early to start celebrating the fact that the Government were finally beginning to see sense.

I am afraid that the news in October dashed our hopes. The Department of the Environment announced an independent review into the area cost adjustment system—a review that would not report until June this year. Promises that Cambridgeshire's situation could be improved were broken, too late for this financial year.

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

I am sorry to interrupt the hon. Lady as I know that her time is limited, but I want to set the record straight.

I said last year that we were looking to see whether there was an approach to labour costs that was more robust than the area cost adjustment. We were looking particularly at travel-to-work areas. I made it clear, as I have always done, that if that turned out to be a better formula, it would be adopted, but that if it did not, it would not be.

I said the same about the present review. At no stage did I say that we would change the system irrespective of whether the methodology was improved. As the hon. Lady will know, the attempt to make the travel-to-work area methodology work was not successful; I was not prepared to adopt a system that I thought was intellectually flawed. That is why we moved to examining a different formulation. I should be grateful if she reported the facts accurately and did not interpret them in a way that is not true.

Mrs. Campbell

I am grateful for that explanation. The hon. Member for South-West Cambridgeshire and I came away last April with an optimistic view. We certainly understood that something better would be implemented by this time this year—and that was the county's impression too.

When the settlement was announced this year, Ministers and Conservative Members wrote to schools saying that education spending had been increased. That showed a blatant disregard for the truth. I wrote to the right hon. Member for Peterborough to complain about the inaccuracies in the letter that he had sent to schools. He did not bother to answer my allegations; he simply accused me of having an unsavoury reputation for interfering in other people's constituencies. If interfering in other people's constituencies is necessary to bring the truth home to the people of Cambridgeshire, I am prepared to do it any time.

Whom are the Government trying to punish? Are they trying to punish the county council because it is the wrong political colour; or have they decided to punish the people of Cambridgeshire for voting the Conservatives out of office in 1993? Are they so worried about their chances in Cambridge, Peterborough and Fenland in the general election that they decided to cut Cambridgeshire's budget so as to blame the county council? It is not councillors who will suffer: it is the people of Cambridgeshire. Old people in need of care will be subjected to soaring charges, children with special needs will be unable to receive the help that they should have, and children will study in overcrowded classes. There will be fewer curriculum choices, teachers will be overstressed and school governors will face impossible decisions.

Even Peterborough city council recognised this when, at its meeting in January, it noted with concern the county's SSA and capping limit, which limits its discretionary scope. The city council said: This council fully supports Cambridgeshire county council in its bid to seek a higher spending limit and to protect as far as possible service standards for priority services, in particular schools, social and fire services. That was not said by a left-wing council. At the time, the city council was a hung body. That statement, moreover, had the full support of Conservative councillors. Peterborough city council also expressed its heartfelt support for the councillors on Cambridgeshire county council, which was not a Labour council in January. It is now, and one can see why.

The schools have identified 80 redundancies. That has produced outbursts of protest from schools all over the county. I have with me letters from almost all of them protesting about the cuts that they are being forced to make. A head teacher of a school in Huntingdon, the Prime Minister's constituency, was quoted in the Cambridge Evening News as saying: We are not very far from meltdown. We are getting to the point where there is extreme anxiety whether we can actually keep children in school full time. Schools are beginning to realise what a disastrous effect the £5.3 million that has been kept back from the schools budget will have on service provision in Cambridgeshire.

I implore the Minister tonight—indeed, I implore Conservative Members—to take pity on the people of Cambridgeshire, to answer their pleas, and to vote with us in the Lobby this evening.

8.4 pm

Sir Anthony Grant (South-West Cambridgeshire)

I certainly have sympathy with the people of Cambridgeshire, but my sympathies are with the people who pay the bills—the council tax payers. The hon. Member for Cambridge (Mrs. Campbell) made a valiant attempt to defend Cambridgeshire county council under its current regime. The council certainly needs some defending! She made the council out to be a paragon of financial virtue. As I shall demonstrate, the very opposite is true.

We can at least agree, as I have argued here and elsewhere for ages, that the area cost adjustment is ludicrous and grossly unfair to Cambridgeshire. It is absurd to suppose that taking one step over the border from Bedfordshire into Cambridgeshire takes one suddenly into a poorer area with lower costs. Anyone who shops in Bedford and Cambridge can testify to that. Without the area cost adjustment, a large sum of money would have been available to authorities to spend on education and other services in Cambridgeshire.

As for the review, the Minister of State has been the first Minister to apply careful thought to the matter. The hon. Member for Cambridge and I, together with other representatives of local parties, attended a useful meeting at which we put our case. The Minister promised a review, which means exactly what it says. It does not mean that we will like its results or that the Government automatically have to accept them. Nevertheless, the Minister sincerely undertook, for the first time ever, to review this ludicrous system.

I am disappointed that the review did not report as soon as it might have and that it was delayed for a year, but there is no justification for a well-resourced, responsible county council to pre-empt the result of the review, to believe that everything will be fine and to plan its affairs accordingly. That is like Mr. Micawber at his worst; it is a ludicrous way to carry on. Far from being paragons of financial rectitude, the county councillors showed complete irresponsibility if they operated on that basis. They should have conducted their revenue affairs more prudently.

Strange things have come to light. It has been found that a large sum was wasted by Cambridgeshire county council. The transportation department made a loss on its direct labour organisation estimated at £1.9 million—at least. The money has gone down the drain. What is more, the council has just announced bonuses for its staff amounting to no less than £400,000. It has had to call in Price Waterhouse and pay over a fee of £43,000 as a result of all this chicanery. The cost of sending out a new set of council tax bills is estimated at £300,000.

Mrs. Anne Campbell

Will the hon. Gentleman accept that the loss by the transportation department—it is not condoned by anyone—began in 1992–93 under a Conservative administration? Will he further accept that the bonuses paid to staff were started by his noble Friend Lady Blatch when she led the county council? Finally, will he accept that Cambridgeshire complied with the call for an inquiry into the loss of the £1.9 million by bringing in Price Waterhouse, and paying the price for its services?

Sir Anthony Grant

With great respect to the hon. Lady, I do not care whether the system was set up by Winston Churchill, Disraeli or Campbell-Bannerman. That means nothing to me. We are discussing local authority finance and Cambridgeshire county council is responsibility for all its affairs. It is responsible for its books and it is in charge of the transportation department. The information that I read out was wrung out of the county council with great effort.

I calculate the grand total of the loss to be £2,643,000. That is equivalent to no fewer than 150 or 160 extra teachers, who could be employed in the education department. When the Lib-Lab county council was found out, it started whingeing and whining about party politics. Cambridgeshire local politicians of the Lib-Lab persuasion have never been shrinking violets about party politics—nor should they be. Having been hoist with their own petard and made a hash of their finances, they thought that they could pull a fast one on the council tax payers and the Government. An extra £11 million was undoubtedly made available for education in Cambridgeshire and diverted to other uses.

The Minister without Portfolio, my right hon. Friend the Member for Peterborough (Dr. Mawhinney), was absolutely right to say that the county council was treating parents and teachers with contempt. It deliberately set a budget exceeding the limits laid down by the Government because it hoped to use the loudest, most vocal clamour— that of the education lobby. The hon. Lady said that she had received many letters and so did I. Many of them had been dictated to children. People were told to keep writing to their Members of Parliament and all the letters were exactly the same.

The county council thought that by whipping up the education lobby, it could bully the Government and extract more money. When its financial incompetence and mischief were discovered, it tried to involve other councils in the same monkey business. Now that the council has been found out, the rights of council tax payers, which should have been the prime concern, have been protected by the order that we are debating tonight.

I shall undoubtedly continue to fight against the unfair area cost adjustment. I hope that the review will do justice to the cause of Cambridgeshire. Having said that, I support the Minister's decision tonight, as do all Members representing Cambridgeshire—excluding the hon. Lady of course—and the opposition in all Cambridgeshire councils. They will continue to fight that cause and their case will be made clear at next year's elections.

Mr. Hurd

Will my hon. Friend acknowledge that the Minister without Portfolio, my right hon. Friend the Member for Peterborough (Dr. Mawhinney), who cannot intervene, is in his place and supports what my hon. Friend is saying?

Sir Anthony Grant

I am grateful to my right hon. Friend. I had spotted my right hon. Friend the Member for Peterborough. I read the powerful letter that he wrote and that the hon. Lady dismissed. It made sense to me and I quoted it with approval.

Finally, as I know that other Members wish to speak, let me say that I support the Minister's decision. It is high time that the interests of those who pay the bill—the unfortunate council tax payers who have to bear the brunt of all this nonsense and produce the cash—should be safeguarded at last and that is precisely what my right hon. Friend has done tonight.

8.13 pm

Mr. David Rendel (Newbury)

I begin by making two brief points about previous speeches. First, I thought that the Secretary of State made a bad mistake that I would not have expected of him when he said that, because a particular budget was possible, it must also be right. It is possible for Oxfordshire and Cambridgeshire to set an even lower budget than they will be forced to do if the order is approved tonight. It is possible for them to cut the number of teachers further, to make more teachers redundant and to make class sizes even larger, but that does not make it right. So that was an extraordinarily weak point for the Minister to make.

The second point that I would like to take up was made by the right hon. Member for Witney (Mr. Hurd). There is all the difference in the world between a theoretical increase and the theoretical amount of money that the Government apply to education and the actual decrease in the amount of cash that an authority has to spend.

It is somewhat ironic that the only two authorities being capped tonight are the Oxbridge counties. In the past, the Government have used only two excuses for introducing capping. One is to reduce the overall level of public expenditure and borrowing, and the other—this was referred to by the hon. Member for South-West Cambridgeshire (Sir A. Grant)—is to protect the public from outrageous increases in local taxes, including those levied by loony left authorities in the 1980s, but that is not the case today.

Let us consider those two possible excuses. It is worth examining some of the facts relating to public expenditure. The total of £13 million that the Secretary of State wishes to slice off the Oxbridge budgets amounts to 0.06 per cent. of the public sector borrowing requirement. It amounts to a mere 0.017 per cent. of the total spending by local authorities. As a proportion of total Government outlay, it represents not 1 per cent. or 0.1 per cent. but 0.000046 per cent. In macro-economic terms, it is a spit in the ocean, but for Oxfordshire and Cambridgeshire it will make an enormous difference to service provision.

The second excuse for capping is the need to protect the public from excessive taxation. Hon. Members will agree that, whatever else we say about Oxfordshire and Cambridgeshire local authorities, they are not loony left councils.

Members of all political parties now agree that capping should be lifted. Indeed, the Conservative party agreed that at its conference last year. Our motivations may differ, but the basic reason for cross-party opposition to capping is and always has been that capping inhibits the accountability of local councillors, as well as the ability of local authorities to respond to local needs. Surely that is the whole point of local democracy.

Councils should be free to adopt policies and budgets that match the priorities of their local people. Nobody likes a heavy tax burden, and the iniquities of the council tax are well known. However, if the people of Cambridgeshire and Oxfordshire are willing to pay a little extra to provide their children with the education they deserve, and to ensure that community care is properly funded, who are the Government to deny them their wishes?

There has been a test of local opinion—the local elections only three weeks ago. In Cambridgeshire, the Conservatives suffered a net loss of four councillors. In Oxfordshire, they had a net loss of 14 councillors. The public know who is to blame for the cuts in services and the increases in council tax—the Government—and they have demonstrated their support for the position taken by the current Liberal Democrat and Labour administrations.

Anyone who comes to the House and whines about the difficulties that the poor old taxpayers will have to suffer if they are made to pay such a huge amount of council tax should look at the results of those local elections and realise that that is precisely what the council tax payers voted for. The council tax payers clearly rejected the Conservative alternative. Therefore, it is undemocratic for the Secretary of State to seek to overrule the local decision-making process in those counties. He is clearly not doing so for the sake of local people, who have made it clear that they do not want his solution.

Local people in Oxfordshire and Cambridgeshire clearly do not need protecting from a spendthrift local authority by an economical central Government. On the contrary, they need protecting from central Government and their refusal to follow the wishes of local people as they have expressed them through the ballot box.

Moreover, the argument that Oxfordshire and Cambridgeshire should be capped because central Government should protect people from big spending councils is flawed in a another important way. Let us look a little more closely at how much the counties are spending.

Such things are, of course, relative, so I have chosen, as it happens, the one Conservative-controlled county, Buckinghamshire, for comparison. Buckinghamshire has just under 657,000 people and a budget of £413 million. In 1996–97, the county will therefore spend about £629 a head. Cambridgeshire has a proposed budget of £408 million—£5 million less than Buckinghamshire— but it has 687,000 people, which is 30,000 more than Buckinghamshire. Spending per head is £594. Cambridgeshire spends £35 a head less than Conservative-run Buckinghamshire.

Oxfordshire has a proposed budget of only £344 million, and has 590,000 people. Spending per head is £583. Oxfordshire spends £46 per head less than Conservative Buckinghamshire. We are told from the Government Benches that, in practice, Oxfordshire and Cambridgeshire are expensive councils. The Government should look at their own councils first.

I am not suggesting that Buckinghamshire is spending more than it should; that is not the point. The point is that the Government are using Parliament to impose Whitehall-calculated budgets on two counties on the basis that those counties are spending too much. Yet the evidence is clear: their spending is well below that of the only comparable Conservative authority. Their proposed budgets are moderate to low in terms of pounds spent per head, and they are the minimum that each county needs to maintain quality services.

Let us be under no illusions. The Government are going to impose severe cuts on both counties, which will hurt. We ought to bear in mind just what those cuts will mean. The pain will be felt most by children and their parents and by those who rely on social services—almost certainly, the most vulnerable members of both the communities.

Under the proposed budget, Oxfordshire would spend almost £4 million above the education standard spending assessment. With the cap, it will spend only £300,000 above the SSA. The impact on schools will be acute. As a result of the capping order, at least 160 Oxfordshire teachers are likely to lose their jobs, resulting in redundancy costs of £3.7 million at a time of rising pupil numbers, and increasing burdens being placed on schools by central Government.

One principal summed up the predicament of her Banbury school: This September, we had 60 more students with eight less teaching jobs and next September we will have 30 more, plus more in the sixth form. That Banbury school is set to lose another five teachers.

Oxfordshire's social services are also reeling from cuts made last year, and more cuts this year are the last thing that is needed. I have received details from one woman in Abingdon who suffers from acute arthritis. She can barely move her hands and can walk only short distances, yet she still manages to look after her severely disabled husband. They have the help of a home carer twice a day, but the length of visits has been steadily reduced to less than half an hour. That lady is haunted by the fear that more social services cuts forced by central Government will stop home visits completely. As she says: They always ask about family. But we do not have anyone. I have been pressing for more help this year. But I am always given the same answer—there is not enough money in the budget. Cambridgeshire has the fastest growing population of any English county. Nevertheless, it has had to make real-terms cuts in departmental budgets. Environment and heritage resources have been cut, direct and support services have been cut, transport services have been cut, and social services have been cut. The county has budgeted for additional expenditure on education, but that will be wiped out by the order, which will knock £5 million off its education budget.

If the order is passed, there will be up to 116 teaching redundancies. That will be on top of last year's horrendous settlement. Already, secondary school options have been dropped from the curriculum, and class sizes have risen to the point where sixth-form science students are working in classes of 30. Cambridgeshire's largest secondary school is making every effort to protect its teaching posts this year. Its contingency reserve has been reduced to just £464—not £464,000—and the school has 1,800 pupils.

Social services in Cambridgeshire are also being squeezed, but the order will cut a further £800,000 from its social services budget. Those cuts will have an impact on the 5,000 people who receive home care, the 2,500 people who receive meals on wheels and day-centre meals, and the 500 elderly people who have day care.

The grounds for capping either county simply do not exist. The implications for public expenditure as a whole are, as I have said, negligible. The proposed budgets on the other hand are entirely reasonable. Neither Oxfordshire nor Cambridgeshire can be called a big spender. By persisting with the cap, the Government have shown that Conservatives put party politics before local democracy and the needs of people.

The capping order subverts the electoral process, and will cause great damage to services in Cambridgeshire and Oxfordshire. The young, the old, the weak and the infirm will bear the brunt of the Government's short-sightedness. Capping is wrong in principle, but, by applying it to those two counties, the Government are simply being vindictive and small-minded.

8.25 pm

Mr. Robert Jackson (Wantage)

I thank my hon. Friend the Minister for the courtesy and objectivity with which he received the two delegations from Oxfordshire county council that I brought to see him this year to express the council's concern about the level of its revenue settlement grant and the level of its cap. I welcome the Government's decision to allow Oxfordshire a supplementary credit approval, and I hope that, in subsequent discussions with the county council, Ministers will continue to be helpful in agreeing the amount of approval. On that basis, and in that expectation, I shall be joining my right hon. and hon. Friends in the Lobby after tonight's debate.

Nevertheless, while the effects of the cap will be mitigated by the new credit approval, I do not share the assessment of my right hon. and hon. Friends that the cap on Oxfordshire's budget is "reasonable, appropriate and achievable". I continue to be concerned about its effects in the current financial year and about the implications for next year's finances.

In taking that view, I stress that I agree with my Conservative colleagues on Oxfordshire county council, who also do not consider that Oxfordshire has sufficient resources to finance its services. At the time of the teachers' pay settlement last year, the Conservative group pressed for the difference between the SSA assumption for teachers' pay and the level of the actual settlement to be funded either by the Government or by an increase in the cap. I supported them in that campaign, but it failed, leaving a shortfall of £1.8 million, which of course carries on into this year.

I also supported the Conservative group in its bid in January for an additional £1.9 million above the cap ceiling to cover the costs of the landfill tax and changes in pension fund regulations. I reckon that taking those together amounts to a minimum definition of a shortfall in the current year of at least £3.7 million.

Those have been the views of the Oxfordshire Tories, but at the same time, I have felt obliged to make my own independent judgment of the appropriateness of the limits being placed on Oxfordshire's spending. Last year, I was especially concerned about the level of funding for education that was envisaged in the 1995–96 local government settlement. That concern led me in the end to refuse to support the Government in the final vote on the question. I feel that my judgment has since been vindicated by the Government's decision in this year's settlement to accord special priority to education, with a national increase of 4.5 per cent. in the total standard spending assessment for schools.

In spite of that overall increase in the national level of funding for education this year, I remain of the view that the resources allowed to Oxfordshire are insufficient. That is partly a consequence of the overhang from last year's admittedly over-tight settlement. One of its consequences was that many schools in Oxfordshire drew down their balances, as the Secretary of State for Education and Employment urged them to do. To mitigate the cuts in 1995–96, the schools spent some £5 million from balances that cannot be spent again this year. That is why there is an overhang, for which the Government are at least partially compensating with the new credit approval, which was announced on Monday.

Behind these problems, there lies a deeper problem— that of the SSA system as it affects Oxfordshire. This is the critical issue, as it is the SSA calculations that determine both the level of the Government's grant to the county and the level of the cap that they place on the council tax. The Government are currently reviewing the SSA formula, and it is essential that all parties on Oxfordshire county council come together to agree a common position on the changes needed.

I fully understand that, in any distribution around an average, some are bound to be below the average and some above it. The problem is that Oxfordshire's SSA places us below the average to an extent that plainly does not reflect the reality of the county's financial requirements. For Oxfordshire county council, the national changes in SSAs, including the 4.5 per cent. allowed for education, have this year translated into only a 2.4 per cent. SSA increase, below that of all except seven of the other 34 shire counties.

I find it hard to understand why Oxfordshire has such a low-ranking SSA increase, when it faces above-average increases in the size of the key population groups: nought to four years, 11 to 15,65 to 75 and over 75. The county has estimated that, together with inflation at 2.9 per cent. and the effects of new legislation at 0.75 per cent., these demographic factors at 1.15 per cent. have generated a 5.5 per cent. increase in the need to spend at a constant level of service. Yet Oxfordshire's SSA allows only for a 2.4 per cent. increase, rising to 3 per cent. under the cap ceiling.

It is a fair observation that, after Oxfordshire became a hung council in 1985, its expenditure rose too fast. But, in the light of a £45 million cut from the county's budget in the past five years, and in the light of the Audit Commission's comparison of the performance of local authorities, I do not think that it can be argued that nowadays Oxfordshire county council is relatively inefficient. On the contrary, the county council is a comparatively low spender, and the Audit Commission acknowledges that it is one of the more efficient counties.

Nevertheless, I have to say to the county that there is scope for further savings, which the continuing financial squeeze will require it to face up to. Councillors were wrong to reject the advice of the county's officers that Oxfordshire's old people's homes should be "externalised". I believe that the question of the schools structure and the number of schools in Oxford city should be reopened urgently. I also believe that the Government should be more supportive of the proposed changes than they were only a few years ago, when they turned down the county's previous proposals for rationalisation.

I have spoken at length about Oxfordshire's SSA, putting down markers for the review to which the Government are committed and which will, I hope, proceed urgently. I now want to generalise from the situation I have described.

I believe that the Government have become dangerously over-reliant on the principle of formula funding for public services. SSAs were invented to distribute central Government grant amounting to about half local authority funding. There has always been an element of rough justice in the SSA system, but it was a justice that all could understand, and, when needs were understated, the consequences could be mitigated by the local determination of business and domestic rates.

The business rate has now been taken out of the hands of local government and put on a formula basis, while council tax increases have been subject to caps, which in turn are based on SSAs. To borrow an analogy from another area of debate, the Government are trying to play golf with only one club, or—worse—they are forcing local government to play its game with only a single club on a course that is more than ever scattered with bunkers and surrounded by increasingly rough grass.

The Government must recognise the real dangers to locally delivered public services which that trend represents. More than 66 different changes in the methodology by which SSA is distributed were considered for 1996–97. Compared with the previous method of calculation, if all the seven best options had been chosen, Oxfordshire would have had £4 million more SSA than it actually got. If the worst six options had been chosen, Oxfordshire would have been given £9 million less SSA than it actually got.

Over the whole process hangs a promise of improbably large gains and the real spectre of disastrous losses. Meanwhile, the imposition of caps, also based on SSAs, in effect deprives local authorities of the means of coping with these statistical vagaries.

I know that there is a pressing need to control public borrowing and public spending, but I believe that, along with that, it is necessary to recognise that our people continue to expect good public services, and I believe that they are prepared to pay for them. In my view, when the history of the Conservative Governments of the 1980s and 1990s comes to be written, their handling of local government will be the unhappiest chapter. It is a pity that the Government's record of success, which has been considerable in so many other areas, should be thus blemished.

8.34 pm

Mr. Andrew Smith (Oxford, East)

I am grateful to the hon. Member for Wantage (Mr. Jackson) for curtailing his speech to enable me to make this contribution. I will not embarrass him too much by praising the large part of it with which I agreed. It is a great shame that his vote will not follow the logic of his argument.

The hon. Gentleman's speech was a damning indictment of the argument by the right hon. Member for Witney (Mr. Hurd). I have no desire to get into a slanging match with the right hon. Gentleman, who has given distinguished service to this country. However, he has done no service to our county this evening in describing as threadbare the arguments put forward locally by people of all parties and none. I remind him that there were Conservative members on the delegation that originally challenged the SSA. There is no doubt that the balance of opinion, as well as argument, within the county reflects the points made by his hon. Friend the Member for Wantage.

I too rise to speak in defence of essential services in Oxfordshire and the quality of provision, which will be severely damaged if the order is passed; there is no doubt about that. I want to give voice to the widespread and intense anger felt in the county as a result of what the Conservative party is doing to our services.

This debate is not about extra central Government spending. As my hon. Friends know, I would be the last person, as shadow Chief Secretary to the Treasury, to argue for more or to pledge more. However, as hon. Members know, in the matter of local authority finances, there is quite properly a choice to be made locally—the trade-off between the level of council tax and the level of local services.

As my hon. Friend the Member for North-West Durham (Ms Armstrong) said, except in the most exceptional circumstances, it should be up to local people to make that decision, and councillors should be accountable through the local electoral process. The order denies that choice to the people of Oxfordshire, just as it denies it to the people of Cambridgeshire.

Conservative Members should be under no illusions. Passing the order this evening will mean larger classes, poorer delivery of the national curriculum, an inability to cope with the pressure on residential home provision, cuts in family support services and care in the community, damage to library services and more accidents on even more poorly maintained roads. Up to 50 more teachers will lose their jobs on top of the 110 teachers in Oxfordshire who will lose their jobs even with the budget that the county council wants.

The damage that the order will impose is opposed by the overwhelming majority of Oxfordshire people. I pay tribute to the energetic and well-argued campaign waged locally by people of all parties and none, and to the public-spirited crusade that the Oxford Mail has run in support of local services. Local Members of Parliament have been inundated with petitions, letters, faxes and telephone calls from tens of thousands of Oxfordshire residents, 99 per cent. of whom have pleaded with them to oppose the cap and the cuts that will result.

Conservative Members should understand that, in voting for the order tonight, they are giving the strongest possible message to the people of Oxfordshire, the people of Cambridgeshire and the people of the country as a whole that today's Conservative party does not listen, does not care and is not fit to have ultimate control over people's education, social services, libraries and other local provisions.

The Government will argue, as they have before, that they have provided some extra flexibility by encouraging an application for extra borrowing approval in Oxfordshire. That will, indeed, help a little, but no figure has been given, so such an application can only ease some of the short-term transitional problems of implementing the capped budget, such as teacher redundancies. What is more, the Government's argument exposes their bankrupt logic. They will encourage extra borrowing to allow teachers to be sacked. What sort of system is that?

Like the hon. Member for Wantage, I thank the Minister of State for the courteous and seemingly open-minded hearing he gave our representations. However, I do not believe that he has listened enough, or that he has taken full account of the unfair damage that the cap will do to Oxfordshire's services. But, of course, he faced the problem that local Conservative councillors—who had supported our initial representations on the SSA—did not join us in opposing the cap and the damage that it would inflict. If he was receiving advice from such hon. Members as the right hon. Member for Witney, I am not surprised that Oxfordshire has come out of this as badly as it has.

I have no doubt that, if all Oxfordshire Members of Parliament had spoken up for their constituents' interests, and if Conservative councillors had joined us in this campaign, Oxfordshire could and would have extracted a better deal, even from this Government. As it is, the damage will be great. People in Oxfordshire are and will remain very angry.

No one has been able to answer one very simple question. Oxfordshire is not one of the councils that annually knocks on the Minister's door to object to capping and to plead special difficulties. The council supports, as do I, the drive for value for money in public services.

The council has already made very severe cuts in services. As we have heard, in the past five years it has already cut no less than £45 million from its expenditure. Its staffing levels have already been cut, including—last year alone—the loss of 220 teachers and educational support staff.

The council is an efficient authority that has been at the forefront of voluntary competitive tendering. Moreover, Audit Commission performance indicators show that the county has the third lowest expenditure per head of all the shire counties. So how on earth can the Government argue that this very low-spending county is somehow an overspender? That exposes the fallacy and the nonsense of the way in which the SSA system works, as the hon. Member for Wantage said a few moments ago.

Mr. Robert Jackson

Will the hon. Gentleman, who has a position in this matter as shadow Chief Secretary, tell us whether the Labour party intends to change that system?

Mr. Smith

The position is quite clear. I refer the hon. Gentleman to our documents on local authority organisation and expenditure, in which we make it very clear that—yes, indeed—we intend to review the system for local government support so as to make it fairer and to enable local democratic preferences properly to be expressed and reflected in local budgets, so that local people have the say in determining the level of resources of local services, which are there to meet local needs. That is what people want in Oxfordshire, that is what they want in Cambridgeshire, and that is what they want across the country.

As it is, this order is very damaging, as the hon. Member for Wantage knows very well. It is being imposed on two county councils that are already among the lowest spenders. What nonsense it is to claim that Oxfordshire—the third lowest-spending county per head of population—is somehow an overspender that must be punished. That punishment is being inflicted on children, on the elderly, and on vulnerable people who are most dependent on the essential services of our county. It is nonsense—very damaging and unfair nonsense—for which the Conservative party will pay dearly, and which today the House should reject by voting down the order.

Question put:—

The House divided: Ayes 174, Noes 118.

Division No. 132]	[8.43 pm
AYES
Ainsworth, Peter (East Surrey)	Duncan, Alan
Alexander, Richard	Duncan Smith, Iain
Alison, Rt Hon Michael (Selby)	Dunn, Bob
Amess, David	Durant, Sir Anthony
Arnold, Jacques (Gravesham)	Elletson, Harold
Arnold, Sir Thomas (Hazel Grv)	Emery, Rt Hon Sir Peter
Atkinson, David (Bour'mouth E)	Evans, David (Welwyn Hatfield)
Atkinson, Peter (Hexham)	Evans, Jonathan (Brecon)
Banks, Matthew (Southport)	Evans, Nigel (Ribble Valley)
Bates, Michael	Faber, David
Batiste, Spencer	Field, Barry (Isle of Wight)
Body, Sir Richard	Fishburn, Dudley
Boswell, Tim	Forman, Nigel
Bottomley, Peter (Eltham)	Forth, Eric
Bowden, Sir Andrew	Fox, Dr Liam (Woodspring)
Bowis, John	Fox, Rt Hon Sir Marcus (Shipley)(
Boyson, Rt Hon Sir Rhodes	Freeman, Rt Hon Roger
Brazier, Julian	French, Douglas
Bright, Sir Graham	Gale, Roger
Brooke, Rt Hon Peter	Gardiner, Sir George
Browning, Mrs Angela	Gillan, Cheryl
Carlisle, John (Luton North)	Goodlad, Rt Hon Alastair
Carlisle, Sir Kenneth (Lincoln)	Goodson-Wickes, Dr Charles
Carrington, Matthew	Gorman, Mrs Teresa
Carttiss, Michael	Gorst, Sir John
Cash, William	Grant, Sir A (SW Cambs)
Chapman, Sir Sydney	Greenway, John (Ryedale)
Clappison, James	Griffiths, Peter (Portsmouth, N)
Clark, Dr Michael (Rochford)	Gummer, Rt Hon John Selwyn
Clarke, Rt Hon Kenneth (Ru'clif)	Hamilton, Rt Hon Sir Archibald
Clifton-Brown, Geoffrey	Hamilton, Neil (Tatton)
Colvin, Michael	Hargreaves, Andrew
Conway, Derek	Haselhurst, Sir Alan
Coombs, Anthony (Wyre For'st)	Hawkins, Nick
Coombs, Simon (Swindon)	Hayes, Jerry
Couchman, James	Heald, Oliver
Cran, James	Heathcoat-Amory, Rt Hon David
Currie, Mrs Edwina (S D'by'ire)	Hendry, Charles
Curry, David (Skipton & Ripon)	Hogg, Rt Hon Douglas (G'tham)
Deva, Nirj Joseph	Horam, John
Dover, Den	Hughes, Robert G (Harrow W)

Hunt, Rt Hon David (Wirral W)	Scott, Rt Hon Sir Nicholas
Hunt, Sir John (Ravensbourne)	Shaw, David (Dover)
Hunter, Andrew	Shephard, Rt Hon Gillian
Hurd, Rt Hon Douglas	Shepherd, Sir Colin (Hereford)
Jack, Michael	Shepherd, Richard (Aldridge)
Jackson, Robert (Wantage)	Sims, Roger
Jenkin, Bernard	Smith, Sir Dudley (Warwick)
Jessel, Toby	Smith, Tim (Beaconsfield)
Jones, Gwilym (Cardiff N)	Spencer, Sir Derek
Jones, Robert B (W Hertfdshr)	Spicer, Sir James (W Dorset)
King, Rt Hon Tom	Spink, Dr Robert
Kirkhope, Timothy	Spring, Richard
Knapman, Roger	Sproat, Iain
Knight, Mrs Angela (Erewash)	Squire, Robin (Hornchurch)
Knight, Rt Hon Greg (Derby N)	Stephen, Michael
Knox, Sir David	Stern, Michael
Kynoch, George (Kincardine)	Stewart, Allan
Lait, Mrs Jacqui	Streeter, Gary
Lang, Rt Hon Ian	Sweeney, Walter
Legg, Barry	Sykes, John
Lidington, David	Tapsell, Sir Peter
Lloyd, Rt Hon Sir Peter (Fareham)	Taylor, John M (Solihull)
Luff, Peter	Thomason, Roy
MacKay, Andrew	Thompson, Sir Donald (C'er V)
McLoughlin, Patrick	Thompson, Patrick (Norwich N)
Mans, Keith	Townsend, Cyril D (Bexl'yh'th)
Marland, Paul	Tracey, Richard
Marlow, Tony	Trend, Michael
Marshall, John (Hendon S)	Viggers, Peter
Martin, David (Portsmouth S)	Walden, George
Mates, Michael	Wardle, Charles (Bexhill)
Moate, Sir Roger	Waterson, Nigel
Montgomery, Sir Fergus	Watts, John
Neubert, Sir Michael	Wells, Bowen
Newton, Rt Hon Tony	Whitney, Ray
Nicholson, David (Taunton)	Whittingdale, John
Norris, Steve	Widdecombe, Ann
Oppenheim, Phillip	Wilkinson, John
Ottaway, Richard	Willetts, David
Page, Richard	Winterton, Mrs Ann (Congleton)
Paice, James	Winterton, Nicholas (Macc'fld)
Porter, David (Waveney)	Wolfson, Mark
Powell, William (Corby)	Wood, Timothy
Redwood, Rt Hon John	Young, Rt Hon Sir George
Renton, Rt Hon Tim
Richards, Rod	Tellers for the Ayes
Robathan, Andrew	Mr. Simon Burns and
Sackville, Tom	Mr. Gyles Brandreth.

NOES
Allen, Graham	Clwyd, Mrs Ann
Armstrong, Hilary	Connarty, Michael
Ashdown, Rt Hon Paddy	Corbyn, Jeremy
Barnes, Harry	Cunningham, Jim (Covy SE)
Barron, Kevin	Darling, Alistair
Battle, John	Davidson, Ian
Bayley, Hugh	Davies, Chris (L'Boro & S'worth)
Beckett, Rt Hon Margaret	Denham, John
Beith, Rt Hon A J	Dewar, Donald
Benn, Rt Hon Tony	Dixon, Don
Benton, Joe	Dobson, Frank
Bermingham, Gerald	Dowd, Jim
Berry, Roger	Eagle, Ms Angela
Betts, Clive	Etherington, Bill
Blunkett, David	Field, Frank (Birkenhead)
Boateng, Paul	Foster, Rt Hon Derek
Byers, Stephen	Foster, Don (Bath)
Caborn, Richard	Fraser, John
Campbell, Mrs Anne (C'bridge)	George, Bruce
Campbell, Menzies (Fife NE)	Gerrard, Neil
Campbell, Ronnie (Blyth V)	Godman, Dr Norman A
Carlile, Alexander (Montgomery)	Godsiff, Roger
Chisholm, Malcolm	Grant, Bernie (Tottenham)
Church, Judith	Griffiths, Win (Bridgend)
Clapham, Michael	Gunnell, John
Clarke, Tom (Monklands W)	Hanson, David

Hardy, Peter	Prentice, Bridget (Lew'm E)
Harman, Ms Harriet	Prentice, Gordon (Pendle)
Harvey, Nick	Primarolo, Dawn
Hill, Keith (Streatham)	Quin, Ms Joyce
Hinchliffe, David	Raynsford, Nick
Hoey, Kate	Rendel, David
Hoon, Geoffrey	Robertson, George (Hamilton)
Hughes, Kevin (Doncaster N)	Sedgemore, Brian
Hughes, Robert (Aberdeen N)	Sheerman, Barry
Hughes, Simon (Southwark)	Short, Clare
Jamieson, David	Simpson, Alan
Jenkins, Brian (SE Staff)	Skinner, Dennis
Jones, Lynne (B'ham S O)	Smith, Andrew (Oxford E)
Jones, Martyn (Clwyd, SW)	Smith, Llew (Blaenau Gwent)
Jones, Nigel (Cheltenham)	Soley, Clive
Keen, Alan	Spearing, Nigel
Kennedy, Charles (Ross,C&S)	Spellar, John
Khabra, Piara S	Squire, Rachel (Dunfermline W)
Kirkwood, Archy	Stevenson, George
Lewis, Terry	Strang, Dr. Gavin
Loyden, Eddie	Sutcliffe, Gerry
MacShane, Denis	Taylor, Matthew (Truro)
Madden, Max	Tipping, Paddy
Maddock, Diana	Trickett, Jon
Mahon, Alice	Tyler, Paul
Mandelson, Peter	Walker, Rt Hon Sir Harold
Marshall, Jim (Leicester, S)	Wardell, Gareth (Gower)
Michael, Alun	Wilson, Brian
Miller, Andrew	Winnick, David
Morgan, Rhodri	Wise, Audrey
Mudie, George	Worthington, Tony
O'Brien, Mike (N W'kshire)
Pearson, Ian	Tellers for the Noes:
Pike, Peter L	Mr. Robert Ainsworth and
Pope, Greg	Mr. John Cummings.

Question accordingly agreed to

Resolved,

That the draft Council Tax Limitation (England) (Maximum Amounts) Order 1996, which was laid before this House on 20th May, be approved