HC Deb 04 May 1999 vol 330 cc775-7

'Chapter IVA of the Local Government Finance Act 1992 (limitation of council tax and precepts), as inserted by Schedule 1 to the Local Government Act 1999, shall not apply to the Greater London Authority:.—[Mr. Simon Hughes.]

Brought up, and read the First time.

Mr. Simon Hughes

I beg to move, That the clause be read a Second time.

New clause 7 would exclude the Greater London Authority from rate capping and council tax capping. It would give the GLA the freedom to which local government aspires. The Government have moved some way towards that freedom, but they have not yet given it to local government.

In Committee and on Second Reading, we debated what sort of beast the GLA will be. We had always understood—and it was the Government's position before the election—that London would have regional government. That has shifted over the past two years to citywide government and local government. Ministers have described the GLA in various ways, but it is a creature all to itself. We are not against that, except that we feel that it should be a regional government creature, not a local government creature. However it is defined, it is clearly not the local authority delivering first-tier services in London, because there are 33 of those—32 boroughs and the City of London—and they will remain.

If the GLA is to match the aspirations of the people of London, if we want the mayor and the assembly not to disappoint people and if we want the hype that will surround the GLA' s election next year to be justified, we must give it as much financial freedom as possible. There were only ever two options for doing that. The first was to allow a variation in the tax that could be collected in London. That power has been given to the Scottish Parliament, although the Labour party has promised that it would not use that power initially. The Welsh Assembly has not been given that power. We argued that London's government should be given tax-varying powers—up or down—but the Government regard that as too great a concession and too great a degree of devolution. No doubt they did not want to lose control of that issue.

The second option is contained in new clause 7. It is a more modest proposal and it would at least allow the GLA to decide how much money it sought from Londoners without having to ask the Government's permission. One of the themes of debates on the Bill has been how much the Secretary of State will have control over everything that the GLA will do. We wrung a concession out of the Government in Committee which will mean that traffic wardens' uniforms will not be subject to the agreement of the Secretary of State. That was a great concession that London could be trusted to decide such matters on its own.

Sadly, when it comes to the big decisions, the Government wish to retain hold of the apron strings. We hope that the Government will take this opportunity to give Londoners more of the powers they want for their new authority next year. The Government should be generous and allow London to decide on London's finances.

Mr. Ottaway

We do not support new clause 7, although not for the reasons that the Minister might expect. The Conservatives believe that it is a desirable long-term objective to get rid of rate capping.

Mr. Hughes

But not yet.

Mr. Ottaway

We happen not to be in office at the moment, so we could not get rid of it.

Mr. John Smith (Vale of Glamorgan)

Not for a long time.

Mr. Ottaway

The hon. Gentleman should not count his chickens.

It is difficult to get rid of rate capping in isolation. It has to be done in conjunction with other reforms to ensure that local government expenditure does not run out of control. There were many good reasons for introducing rate capping. Lord Callaghan said in the 1970s that the party was over for local government spending, and the rate-capping regime followed.

Although the proposal in new clause 7 is desirable, we will be unable to support the Liberal Democrats on it. One cannot take one authority in isolation and exempt it. If rate capping is to be abolished, it has to be for all local authorities, equally and fairly. We share the Liberal Democrats, sentiments about rate capping. Indeed, I suspect getting rid of rate capping is a common objective. However, it is many years since we had a Liberal Government and the harsh realities of office are such that it is a bigger job than they think. We agree with the principle, but we are unable to support the new clause.

Mr. Raynsford

We have had a revealing debate. We heard further evidence of the Tory party U-turn process, in which it is dissociating itself from what it stood for in government, and we had another example of the Liberal Democrat nirvana in which everything is possible if we would only give as much power as possible to devolved assemblies and let them do what they want with no regard to anything else that is happening. We reject both approaches.

We made it clear in the White Paper that the GLA would be subject to the same arrangements for limiting council tax increases as local authorities generally. The GLA is sui generis a citywide authority, but it will operate within the local government ambit and its revenues will come from traditional local government sources—precepts, non-domestic rates and Government grant. Therefore, it should be subject to exactly the same disciplines as other local government authorities, for the reasons that the hon. Member for Croydon, South (Mr. Ottaway) rightly stressed.

Replacing crude and universal capping with reserve powers for limiting council tax and precepts fulfils a manifesto commitment given by the Government. The reserve powers will be far more flexible than the system put in place by the previous Administration. The Government have a duty to protect local tax payers and must have those reserve powers, but we have made it clear that we hope that we will not have to use them—for the GLA or for any local authority.

New clause 7 is not only unacceptable; it is irresponsible and I urge the hon. Gentleman to withdraw it.

Mr. Simon Hughes

I shall remind Ministers of that when they get rid of the Prescott version of capping, as they say they intend to do. We will continue to press for the walls of central Government to crumble before devolution until we have succeeded. It seems that the Government will not give in tonight, but we will return to the issue. Reluctantly, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

8 pm

Forward to