HC Deb 18 November 1997 vol 301 cc137-9
6. Mr. Viggers

When he next plans to meet representatives of the Local Government Association to discuss local government finance.[14846]

The Minister for Local Government and Housing (Ms Hilary Armstrong)

My right hon. Friend the Secretary of State has already met the association a number of times to discuss local government finance, and I shall be seeing it again in December at a sub-group meeting of the central-local partnership to discuss the review of local government finance. We intend to meet the association regularly, and to involve it fully in taking forward policies that affect local government.

Mr. Viggers

Did the Local Government Association, at its meeting with the Minister, repeat its estimate that local authorities will be about £1 billion short of funding this year? That shortfall does not take account of either the extra burdens put on local authorities for crime prevention and education, or the change in the Budget to advance corporation tax, which imposes a pension tax liability on local authorities estimated at £300 million a year. What will be the Government's attitude? Will they recompense local authorities for those extra burdens, or will they stand aside and watch what must inevitably be an extremely large rise in council tax rates this year?

Ms Armstrong

In the Budget, my right hon. Friend the Chancellor announced a further £1 billion for local government to spend on education. If the hon. Gentleman cares to wait until the week beginning 1 December, he will hear how that money has been allocated.

We are discussing pensions with the Local Government Association, but it knows as well as we do that that measure will have no impact on local government in 1998–99. The association is seeking a revaluation, and wants to work with us on that.

Mr. Bill O'Brien

Does my hon. Friend accept that Labour Members realise that she inherited a difficult task from the previous Government? Metropolitan authorities outside London face substantial difficulties because of the previous Government's attitude to them. When she allocates resources for the coming financial year, will she give careful consideration to the representations that have been made by the Special Interest Group of Metropolitan Authorities, which represents metropolitan authorities outside London?

Ms Armstrong

I have received representations from a number of organisations and representatives of local government. They have all put a telling and pressing case to us. I assure my hon. Friend that we have listened to the points raised, and that we shall take them into consideration. We made a commitment in our manifesto to a fairer settlement this year. Hon. Members will be able to judge for themselves in the week beginning 1 December.

Mr. Burstow

Before the Minister next meets the Local Government Association, will she and the Secretary of State give an undertaking that, at the time of the announcement of the settlement, they will publish figures that show the real impact of the grant settlement and the capping rules, rather than adopt the smoke-and-mirror tactics that the previous Government used time and again, and which the Minister always condemned when in opposition?

Ms Armstrong

We shall endeavour to make what is an exceptionally complex system as straightforward as possible. We are also conducting a review of local government finance generally. We want to enable the ordinary council tax payer to understand the system. That is a difficult task, given the complexity of the system that we inherited, but it is one of our aims. I look forward to the hon. Gentleman and his colleagues assisting us in that process.

Mr. Skinner

Is my hon. Friend aware that the election result on 1 May gave her and every Labour Minister the power to do something different? We had massive victories in parts of the country where we never expected them because people were aware of the distribution of money to local authorities, such as the fiddles for Westminster council and the paltry decisions for Labour-controlled authorities. Now that we have the power, and we are not a party of protest, let us ensure that we change those priorities, and that we also get rid of rate capping.

Ms Armstrong

You, Madam Speaker, would not want me to reveal precisely how we have sought to make the system fairer. That will be revealed in time, and I trust that my hon. Friend will note that we have heeded our manifesto and have sought to ensure that the distribution of money is fairer than ever it was under the previous Administration.

Sir Norman Fowler

Will the Minister reconsider the answer that she has just given on pensions? Is she not entirely wrong to say that the pensions tax will have no impact on local authorities? That is what she just said, but what she means is that there will be no actuarial review until 1998. However, the impact of the pensions tax has effect now—it starts now and goes on next year and the year after. Will she reconsider her reply?

Ms Armstrong

The impact of the changes in the Budget will not have effect in local government in the coming year. We have agreed the way forward with local government and the Local Government Association, and they are perfectly happy with what has been suggested. They know that there is going to be a review of the actuarial position over the next year, and we have said that we will take it into account when deciding next year's settlement.

Mr. Watts

In view of the Deputy Prime Minister's having said that he wanted to help coal mining areas, can we expect any improvement in the standard spending assessments for those areas, bearing in mind the fact that some of them have the worst SSAs in the country?

Ms Armstrong

I must ask my hon. Friend to wait until he sees the settlement. We have made it absolutely clear that this is a very difficult year for local government because we inherited such a mess. Because it is such an important matter, it cannot be sorted out over night. There is an incredible deficit which local government knows must be tackled. We are determined to tackle the dreadful state in which the previous Administration put local government and to make sure that local government is able to determine how to meet the needs of the population.