HC Deb 11 December 2001 vol 376 cc713-33 3.31 pm
The Secretary of State for Transport, Local Government and the Regions (Mr. Stephen Byers)

With permission, Mr. Speaker, I should like to make a statement about the local government White Paper that we are publishing today.

The White Paper sets out a new vision for local government at the beginning of the 21st century. It seeks to establish a partnership between central and local government, reflecting the critical importance of local authorities, both as a tier of democratic government and as a body with the responsibility to deliver high-quality public services to local people.

Democratically elected councils should be part of the fabric of our communities. The services that they provide have a vital part to play in sustaining and enhancing social and economic prospects and the environmental quality of our towns, cities and countryside. They can have a profound effect on the opportunities and quality of life of the people who live and work there. They are responsible for educating children, providing care for the vulnerable, making places safer and cleaner to live in and providing reliable local transport.

People therefore expect a great deal from their council, and those expectations are rising. To meet them, councils have constantly to seek new and more effective ways to deliver customer-focused services and to lead their communities. The proposals in the White Paper will provide a framework in which all can do so, through the application of the Government's four principles of public service reform.

The first principle is to establish a national framework for the delivery of high-quality services and effective community leadership. For example, people everywhere want high-quality education for their children. Secondly, within that framework, we intend to free up local councils to meet their communities' particular needs, recognising that those will be different in a London borough and, say, in a shire district council area. The third principle is to ensure that councillors and council staff have the skills and money to do their jobs well. Finally, we intend to provide more choice for people in the services that they want to use.

I want to tackle the trend towards excessive central prescription and interference, which dominated central-local relations in the 1980s and 1990s. The White Paper reverses that approach: it marks a pronounced step away from centralisation. It is about increased freedoms, better incentives and a significant reduction in the number of controls, consent requirements, plans and over-elaborate guidance, which have all too often characterised the top-down approach to local government that we saw in recent years.

The White Paper is truly about local government, and it is a fundamental shift away from local administration. It is based on a belief that we do not need to control everything and on a recognition that local authorities are often in the best position to respond to local needs and aspirations.

I hope that this approach will encourage local political and civic leadership. Today's reports into this summer's disturbances in Oldham, Burnley and Bradford show how important it is to have a leadership with a democratic mandate who are prepared to take the often sensitive and always difficult decisions necessary to ensure social cohesion. The White Paper has at its heart community leadership and the democratic renewal of local government.

We want to reduce the bureaucratic burden for all councils and give them the freedom to innovate and focus on driving up standards. We therefore intend to cut the number of plans and strategies that councils are required to produce, to scale back the number of area-based initiatives and to give greater scope to rationalise partnerships. We shall remove many of the present requirements to obtain Government consent before acting. More than 50 will be abolished, and another 30 are under review. We shall also provide councils with wider powers to provide services to others.

With these new freedoms come responsibilities. For the first time, we will produce a clear performance profile for each and every council. The Audit Commission will compile a scorecard and will identify each council as either high performing, striving, coasting or poorly performing. It is our intention that further freedoms over and above those for all councils will be given to high-performing authorities. We will also intervene decisively where councils are failing their local people. Where councils are not collecting their council tax or providing high-quality public services, for example, that will not be acceptable, and we will take the appropriate action.

The Government agree with the Local Government Association that there should be joint ownership of the service priorities for local government. It is therefore our intention that, through negotiation and dialogue, we will agree with local authorities a single list of priorities for local government.

The White Paper also sets out our specific proposals for the reform of local government finance. Last week, I announced to the House that next year will be the final year in which the grant to local authorities will be based on the present standard spending assessment formula. We will be bringing forward our detailed proposals for a new system of grant distribution next year, but I can inform the House that I have decided to abolish the standard spending assessment mechanism and replace it with a system that is easier to understand and better reflects the real cost of services and the needs of the local area.

We also intend to give local authorities greater flexibility to undertake capital investment. We shall scrap the system of credit approvals; instead, authorities will be free to borrow for capital investment without consent, provided they can afford to service the debt. Where a council sees a need, for example, for a new library or leisure centre, it will no longer need central Government permission to go ahead with such a project.

As a consequence of that approach, we shall abolish the "receipts taken into account" mechanism, which has acted as a disincentive for local authorities to dispose of surplus assets. I know that there has been concern about the growth of ring-fenced funding and the way it limits local discretion. We shall therefore restrict ring-fenced funding to areas that are genuine high priorities for the Government, and where we cannot achieve our policy objectives by specifying outcome targets.

The setting of council tax itself is very much a local decision, but we also recognise that the risk of high council tax increases affects local taxpayers. We have already ended pre-announced universal capping. Our long-term goal is to dispense with the reserve capping powers altogether, but we intend to proceed with caution. However, we feel that we should take the first step towards ending capping, so I can announce today that the power to cap will not be used in respect of high-performing authorities. A large number of authorities and hon. Members have raised with me the difficulties created for councils by the council tax benefit subsidy limitation scheme. The principles underlying the scheme are sensible, but in practice its application has proved complex. Some have proposed that we should simplify the scheme or find ways of reducing its impact. Having considered all the options, I have decided to abolish it altogether.

The proposals in the White Paper form part of the Government's agenda for modernisation and reform. For many, they will be challenging; they are meant to be. We proposed the changes not for their own sake, but because local people will benefit from the requirement that all services should be delivered to an acceptable standard; from the fact that the changes that we all want to see—better schools and social care, improved local environments, better transport and other vital local services—will get the priority that they deserve; and from effective community leadership by councils that are in touch with local people and working to meet their aspirations.

The proposals will put the "local" back into local government, allowing local councillors to make a difference to their communities. That is vital if we are to re-engage people and, as a result, achieve an increased turn-out at local elections. The White Paper outlines a new and lasting basis for effective local government. I want central and local government to work together in a constructive partnership to deliver the high-quality public services that local people have the right to expect. In a practical and tangible way, the White Paper shows how we can achieve that and I commend it to the House.

Mrs. Theresa May (Maidenhead)

I should like to thank the Secretary State for giving me prior sight of the statement. I was interested to hear on the Radio 4 "Today" programme this morning an item saying that the Prime Minister had agreed that policy should always be announced first to Parliament—which was immediately followed by an item announcing the contents of this White Paper.

Strong, independent and effective local government is essential for our democracy and for people's quality of life. We want councils to be better able to understand and meet local needs, deliver high-quality services, and respond to and stand up for local interests. Local government has traditionally been an engine of change in this country; many policy innovations have come up from local government. Today, Conservative councils throughout the country are responding to local needs, providing the public services that people want and finding new ways to deliver effective local services. To the extent that the White Paper heralds a change in the attitude of central Government and a genuine move to freedom for local councils to respond to the needs of their communities, we welcome it. However, to the extent that it merely pays lip service to the ideas of freedom and deregulation, we challenge it.

I must tell the Secretary of State that Members of Parliament now know not to take at face value what he tells the House. Following the fiddled figures of the local government settlement last week and our experience with Railtrack, Members know that with this Secretary of State more than any other, they simply cannot believe what he says. The devil is in the detail, and so it will be with the local government White Paper—[Interruption.]

Mr. Speaker

Order. The language that the hon. Lady is using is sailing a bit close to the wind. Perhaps she should remember that we use temperate language in the House.

Mrs. May

I apologise for any intemperate language that I used, Mr. Speaker, and I trust that the rest of my language will be suitably temperate.

We have been promised by the Secretary of State that the White Paper sets out a new vision for local government at the beginning of the 21st century. We have been promised freedom for councils and deregulation, but, sadly, the statement and the White Paper do not deliver on that promise. In one of the early paragraphs in the statement, the Secretary of State says that he wants to tackle the trend towards excessive central prescription". I do not know whether the House noticed that the Secretary of State was not even able to keep it up for the whole of his statement—[Laughter.] I cannot think what hon. Members are laughing at.

Later in the statement, the Secretary of State goes on to say: It is therefore our intention that…we will agree…a single list of priorities for local government. There will not be any excessive central prescription, but the Government will decide the priorities for local government. Local government will not be able to decide those priorities itself.

The Secretary of State says that the White Paper marks a pronounced step away from centralisation and that it is about increased freedoms, but it is not about increased freedoms for all councils; it is about freedoms for the chosen few. If councils do what the Government tell them, they will be given a little reward, but not all councils will get the opportunity to respond in the way that they believe is right to meet the needs of their local communities.

We have heard such language before. In the education White Paper published earlier this year, the Government promised that where schools were successful, we want to free them from those conditions and regulatory requirements which they tell us stand in the way of higher standards and further innovation. Yet in the Education Bill introduced in the House last week, as my hon. Friend the Member for Ashford (Mr. Green) said, we saw a Bill that centralises power in the hands of the Secretary of State for Education more completely than any previous education measure."—[Official Report, 4 December 2001; Vol. 376, c. 201.] We are likely to see the same in the case of local government reform.

If the right hon. Gentleman is serious about freedom for councils, he will want to ensure that his Cabinet colleagues are serious about it too. Will he therefore give the House an undertaking today that the Government will remove those centralising measures from the Education Bill? Will he commit his Cabinet colleagues in all other Departments affecting local government not to introduce any more net regulation for local government?

What confidence can the House have that the rest of the Government are signed up to a freedom agenda for local councils, if we see them doing something very different? From the way the Secretary of State's Cabinet colleagues have been keeping away from him in recent weeks, we can have no confidence that his agenda will be driven through.

The Secretary of State says that the Government want to reduce the bureaucratic burden and give councils the freedom to innovate and focus on driving up standards. The aim of reducing the bureaucratic burden is interesting. We are to have a joint study report next year on reducing the regulatory burden; then we are to have the piloting of a new policy evaluation tool…which will seek to prevent the imposition of unnecessary burdens. The right hon. Gentleman might like to explain to the House what that means. If it means that the Government will not introduce further regulation, why does he not say so? The best way of ensuring that local councils have freedom from regulation is abstention by politicians from imposing new regulations on councils. Will the Secretary of State tell us what his target is for reducing the number of new regulations to be introduced for local government each year?

Then we come to the clear performance profile for each council—the scorecard—and more mechanistic targets and league tables that will be set by the Government. Most voters, when they vote in local government elections, assume that they are making decisions about the performance of their local council. They do not expect their council to be told what to do by central Government.

That is what is sad about the statement from the Secretary of State. If he is really interested in local democracy and in increasing voter turnout at local government elections, he will want to restore to local government true democracy and true autonomy for all councils, so that when people vote they know that their vote will make a real difference and that they are not merely electing people to be agents of central Government.

We are told that there should be joint ownership of the service priorities for local government. That will lead to unitarisation by creep. Will the Secretary of State confirm to the House that it is Government policy to abolish county councils or to see county councils removed from local government through the imposition of regional assemblies and regional government? With regard to the league tables, will he set out to the House how the performance of each council will be determined? How will it be determined when a council's performance is high in one area of service but not others?

Then came an amazing statement. The Secretary of State announced with a flourish that he had decided to abolish the standard spending assessment mechanism. [Interruption.] Labour Members seem to think that that is some great new announcement, but I must tell them that their Government announced in 1997 that they were going to reform the standard spending assessment. Obviously, they were not listening to the right hon. Gentleman last week, as he made the announcement then as well. Again, all that we have this week is a promise of details in future. When will those details be published and what opportunity will hon. Members have to question him about them?

One of the main ways in which the Government control local authorities is through ring-fenced funding. They claim that they are going to reduce the amount of such funding. What is the Secretary of State's target for the amount of budget that will be ring-fenced in future? It has increased under this Government from just over 4 per cent. in 1997 to 15 per cent. next year. If the right hon. Gentleman is so interested in reducing the proportion of budget that is ring fenced, why did he not make the announcement last week in respect of the local government settlement, and why did he increase the proportion of ring fencing in that settlement?

The Secretary of State has announced four bands or performance levels for local government. He has gone from being the blue-eyed boy striving to do his master's bidding, through being a coasting Minister, to being a poor performer. He had the opportunity today to take radical measures to restore local government and local democracy and to bring forward a programme of decentralisation and deregulation to all councils. Frankly, he has flunked it. He has run scared from that challenge and local democracy will be the poorer for it.

Mr. Byers

Of course, the Conservatives have one fundamental problem with local government: they do not have any time for it at all. That is not only my view. There are Opposition Members who served in local government while a Conservative Government were in power. Indeed, the hon. Lady did so, as did I and some of my Labour colleagues. We know full well that the Conservative Governments of the 1980s and 1990s destroyed local government because they had no time for it. Local councils that were prepared to stand up for jobs and services were denigrated by Conservative Governments. They were attacked by the Conservatives and funding was cut, and when the local electorate continued to return Labour councils, what did the Tories do? They abolished them. That was their response to local democracy.

The White Paper represents a fundamental shift in the way in which central Government relates to local government. The hon. Lady said that the centralising tendencies are still there. She prayed in aid the fact that there is to be a single list of priorities and suggested that it was somehow being imposed from the centre. When she has time to read the White Paper, she will see that that list of priorities will be agreed between Government and the LGA. This proposal, which she criticises as centralising and as not taking into account the views of local government, was suggested by the LGA itself, including Conservative members as well as Labour ones, and Liberal Democrat members as well as independent ones. We can see where the divisions are. The hon. Lady does not speak for Conservatives in local government, because the proposal was theirs and we were prepared to sign up to it—but there we go.

The hon. Lady spoke about the bureaucratic burden on local councils. Plans are to be cut by more than a third and we will abolish 50 consents—changes that will make a real difference. We are reviewing the best value regime because we believe that it has become bureaucratic and can be improved. I remind the House that we created best value so that we could abolish compulsory competitive tendering, which was another Conservative party creation. It had nothing to do with quality of service; the cheapest provider and privatisation drove the policy. We removed it and put best value in its place because we believe that the quality of the services count.

The hon. Lady disapproves of the fact that we will have four categories of council. She would prefer it if local electorates could not compare their council with neighbouring councils. It is time for effective quality assurance. It is important to have a balanced scorecard and to examine a range of performance indicators for local councils. However, the Audit Commission, not politicians, will have that responsibility.

The hon. Lady asked about funding for schools. The White Paper makes it clear that schools are in a special position and that we need to safeguard their funding. There is no Government policy to abolish county councils or to impose regional government on parts of the country. That is for local people to decide.

The hon. Lady did not even provide a hint about Conservative party thinking on local government. That is no surprise, because she knows that her policy does not celebrate local government but denigrates it. Conservative Members have no time for local government. Consequently, thousands of Conservative councillors throughout the country have lost their seats.

The White Paper marks a fundamental shift in direction. It celebrates local councils. When Opposition Members have had a chance to digest the proposals, they will realise that they mean a new beginning—a renaissance—for local government. I hope that when they have the opportunity of discussing it with their local government friends, they will be able to support it.

Andrew Bennett (Denton and Reddish)

I congratulate my right hon. Friend on his statement and on starting on the long road back from local administration to proper local government. What is the timetable for the proposals? Will there be a bonfire of regulations in the next few weeks and a pause until legislation can be introduced? How soon does my right hon. Friend believe that we can revert to the position whereby local government has the same sort of powers that he enjoyed when he was first elected to a local authority on Tyneside?

Mr. Byers

My hon. Friend makes an important point in not perceiving the White Paper as the one and only act to change the relationship between central Government and local government. It is the beginning of celebrating all that is good in local government, and much is good. However, we also need to ensure that we are prepared to intervene to help people who live in areas that have poorly performing councils.

We can introduce some of the White Paper proposals immediately. They include the reduction in the numbers of plans and consents. We do not need to delay the abolition of the council tax benefit subsidy limitation, which can be introduced from April next year. Other changes require primary legislation, and we shall make them as soon as parliamentary time is available.

My hon. Friend made another important point. When I took up my post in June this year, I realised that the constraints on the powers and responsibilities of local councils are dramatic now compared with 1980, when I was first elected as a local councillor. Local councils do not have the opportunity to respond to the needs and demands of local people. I hope that the White Paper will contribute significantly towards changing that. As my hon. Friend said, we are at the start of the process, not the end.

Mr. Don Foster (Bath)

Taken at face value, the White Paper represents a sea change in the Government's attitude towards local government. That is welcome, if long overdue. I also welcome the clear commitment to change the obscure, out-of-date and unfair funding system for local government. I especially welcome the announcement on the abolition of the council tax benefit subsidy limitation, which was a backdoor capping scheme.

However, given that this is a Government White Paper, will the Secretary of State assure the House that all Ministers support it? In particular, does the Secretary of State for Education and Skills back it? On 4 December, she announced very clearly that she was tightening the strings on local education authorities. She said that the Government were putting even more pressure on local authorities to delegate more money to schools. In addition, the right hon. Lady recently introduced a new Education Bill that will strip more powers away from LEAs.

I welcome the commitment to reduce the number of ring-fenced grants, but the Secretary of State proposes to do so in part by introducing targeted grants, which the White Paper states may have eligibility conditions attached. Is not that simply another form of ring fencing?

I also welcome the long-overdue proposals to reform the capital funding regime. However, many people will be disappointed that the White Paper contains only one sentence about the abolition of the standard spending assessment. That states: We shall announce in due course the principles we are applying in conducting this formula grant review. When will we hear what those principles will be?

More generally, does not the right hon. Gentleman accept that, unless local councils themselves are able to raise more of the money spent locally, the Government will still control local government purse strings? Has the time not come for local government to be able to put its own money where its mouth is?

The Secretary of State was right to speak in his statement about giving further powers to local councils, but I fail to understand why he continues to say that they must earn their additional freedoms. Should not local councils' autonomy be theirs as of right, and not something that they must earn?

Why does not the White Paper mention proportional representation in local government elections? The Secretary of State would be disappointed if I did not ask that question.

Finally, we all know that crude targets have led to the distortion of clinical priorities in the NHS, and that the Department for Education and Skills has acknowledged serious deficiencies in school league tables. Why, then, does the Secretary of State feel that the time is now right to introduce crude league tables for local government?

The White Paper contains some welcome measures. However, actions speak louder than words, and we look forward to the actions.

Mr. Byers

I thank the hon. Gentleman for his support for certain parts of the White Paper. I can assure him that it is a Government White Paper, and that it is supported by all Ministers, including my right hon. Friend the Secretary of State for Education and Skills. When he has had time to look at both the White Paper and the Education Bill, the hon. Gentleman will see that there is no contradiction between them.

The hon. Gentleman asked about ring fencing. The House will know that the Government have just begun our spending review for 2002, the outcome of which will be announced later next year. In that context, the question of ring-fenced grants to local authorities will be one of the matters for consideration. Our objective, during the process of the review, is to have an outcome that will reduce the amount of ring-fenced grants going to local authorities. It would be a mistake to try to move more quickly, as that would have a detrimental impact on services that are provided at present.

The proposals regarding targeted grants and eligibility are not the same as ring fencing. I shall give an example of what would amount to a targeted grant. Recently, my Department and the Department of Health have provided an extra £100 million to support local government initiatives on bed blocking. That money has been targeted on certain authorities facing particular pressures in the sense that those authorities become eligible for those grants.

I welcome what the hon. Member for Bath said with regard to capital. We want to move as quickly as we can, but the changes are so fundamental that they will require primary legislation, and will have to wait until a suitable slot is available.

It is not true that I announced last week that we would abolish the standard spending assessment. What I said was that we would change the formula, although I did not give an indication of the sort of changes that we would introduce. Today, I am able to say that the new formula will not be based on a standard spending assessment. Relatively early in the new year—I cannot give a precise time yet—I would like to find ways of sharing with hon. Members the various options that we are considering in relation to that new formula.

There is an issue about the balance of funding between central and local government, to which the Government are giving close consideration. All authorities will benefit from the deregulation and the cutting back of bureaucracy proposed in the White Paper, but we felt it appropriate that there should be greater freedoms and flexibility for high-performing authorities. I do not think that people will see the four categories that we are proposing as crude league tables. This is a scorecard for individual authorities, and I think that most people will see it that way.

The hon. Gentleman asked why there was no mention in the White Paper of proportional representation for local government elections. It is not in there because it is a daft idea.

Mr. Dennis Skinner (Bolsover)

It was pretty good, that last remark. We, on this Bench, have spent the last few minutes assessing the Secretary of State's performance indicators, and they have come out reasonably high for the last month. I think we have been in a Byers market. He gets pretty high marks for taking Railtrack back into public ownership. The same applies to his abandoning the public-private partnership on the London underground—I think that is what he said last week. He was also pretty good to take power from the quangos and hand it back to democratically elected local authorities. Very good! We will measure him on that later, and if he comes up with more money for Derbyshire and Bolsover than Westminster, his rating will be 10 out of 10.

Mr. Byers

In everything we do, we will be fair in ensuring that finances are allocated on a needs-based approach, which may well benefit Bolsover and Derbyshire. Decisions will be taken over the next few days in relation to the single capital pot that my right hon. Friend the Minister for Local Government will announce later this week, and also in relation to the local transport plans, which will be published, I think, on Thursday or Friday. Many authorities will benefit from those proposals.

I hope that, when the House has had the opportunity to look at the White Paper, it will see that what we are trying to do is to get a settled position with regard to central-local government relations. Local government does not want constant chopping and changing, and it is important to establish a system that all political parties feel is, on balance, right. I happen to believe that the White Paper achieves that. It proposes a shift in direction, and recognises that many issues are best dealt with not in Westminster or Whitehall but locally, by people who are elected locally and who know the demands and priorities of local people. I hope that that is reflected in the White Paper.

Michael Fabricant (Lichfield)

Will the Secretary of State expand on the issue of performance profiles that he mentioned in his statement? He said that he would classify councils into the categories of high performing, striving, coasting and poor performing". He then said that he would "intervene decisively". What precisely did he mean by that? How will he intervene? Will he intervene both on coasting councils and on poor-performing councils? Will that involve putting them into administration?

Mr. Byers

When the hon. Gentleman has the chance, he will see that, of the four categories, coasting councils are those that are not at the top of the performance spectrum and with limited or no proven capacity to improve", while poor-performing councils are those consistently near the bottom of the performance spectrum and with limited or no proven capacity to improve. In the latter category, there may well be grounds on which intervention is appropriate. However, that intervention would not be unilaterally decided by Ministers. Such action would be taken in the light of recommendations by the Audit Commission, which is the appropriate way to ensure that there is no question of party political manipulation or of certain types of council being attacked because of some political prejudice. It will be the Audit Commission that makes those recommendations.

An intervention could take a variety of forms. It could involve a new provider coming in, or it could involve taking a council into administration, then taking it out again, perhaps with a different form of leadership. That is certainly one of the options in the White Paper.

As for coasting authorities, there will be opportunities to try and help them improve their performance—less through intervention than by working with them by means of local agreements. It is a question not of standing aside, but of working co-operatively through local government itself to support authorities with particular difficulties.

Mr. Clive Betts (Sheffield, Attercliffe)

I warmly welcome my right hon. Friend's commitment to changing the capital control rules. The present rules are nonsense: they are completely out of step with arrangements in the rest of the European Union. Some of us with backgrounds in local government have been fighting for this for many years.

My right hon. Friend did not mention one issue that I regard as a real problem for local government. Until we change the current system whereby 75 per cent. of its funds come from central Government and only 25 per cent. from voters, have we any chance of achieving true local accountability and reinvigorating local democracy—and local government itself? Does my right hon. Friend envisage a solution in the longer term, involving returning more responsibility for raising money to local authorities?

Mr. Byers

My hon. Friend makes an important point about capital controls, which do not fit in with any prudential regime of local authority spending. The present arrangement, in which credit approvals in minute detail are given by central Government is unacceptable: it restricts the innovation that we, certainly, would like to see.

As my hon. Friend says, 75 per cent. of funds currently come from central Government while 25 per cent. is raised locally. It is worth reminding the House how we ended up with that balance. In a rather shoddy, sordid quick fix to escape the difficulties caused by the poll tax, the Conservative Government shifted money into increasing VAT.

The Government are considering the issue seriously. A review of the balance of funding is currently under way to establish whether changes should be made, and what sort of changes would be appropriate. It would be premature to forecast the outcome, but the fact that we have set up a group to look at the matter carefully is an indication of the Government's concern about the balance between central and local contributions.

Sir George Young (North-West Hampshire)

If, as the Secretary of State just asserted, his White Paper marks a step away from centralisation and is truly about local government, can he assure us that no services currently provided by county councils will be transferred to more remote regional assemblies?

Mr. Byers

That is not an issue for the White Paper. As the right hon. Gentleman probably knows, a White Paper on the question of regional government will be produced in the new year. No doubt it will consider, among other issues, functions and responsibilities that might apply at regional level. Without giving away too much of its content, let me reassure the right hon. Gentleman by reiterating that there will be no imposition of elected regional government on regions. It will be for local people to vote for it if they want to: this will be a local decision.

Most important, the effectiveness of regional government is not about taking powers from local authorities—county, district or unitary. It must be about Secretaries of State and others in Westminster and Whitehall giving up their powers. It is about devolving down, not taking up powers from any kind of local authority.

Mr. David Clelland (Tyne Bridge)

Does my right hon. Friend agree that all that was missing from the comments of the hon. Member for Maidenhead (Mrs. May) was a candid recognition that the need to restore local government is due entirely to the damage done to it by her party during its too many years in office?

I welcome my right hon. Friend's statement, and his commitment to re-empower local authorities. I look forward to further debate on the detail in due course. Does my right hon. Friend accept that there are many examples of good local government throughout the country, not least on Tyneside? The Gateshead and Newcastle authorities have jointly launched a Newcastle-Gateshead initiative, which will work for the revitalisation of the area to the benefit—and with the support—of local people. Following the completion of his duties here, will my right hon. Friend join me downstairs in Terrace Dining Room B, where the two authorities are launching their joint bid to become European capital of culture in 2008?

Mr. Byers

I receive a number of attractive invitations from my hon. Friend, of which that is one, but I cannot say too much about the European capital of culture, as I will be involved in deciding who might be successful. My hon. Friend makes an important point. We have spoken about local councils' limited freedoms, but Members should consider what has been achieved not only on Tyneside, particularly in Gateshead, but by Gateshead and Newcastle working closely together.

The massive improvements along the river have been achieved because we have a good example of local authorities supporting innovation, being adventurous and being ambitious for their communities. What has been achieved on the banks of the Tyne, particularly, if I may say so, in recent times on the south bank and in Gateshead, has made a real difference, and the authorities are to be congratulated on what they have been able to do.

Through the White Paper, I want greater freedoms to be given to good local councils such as Newcastle, Gateshead and many others up and down the country, so that the improvements taking place on Tyneside can be reflected in many other parts of the country.

Mr. Charles Hendry (Wealden)

The Secretary of State is aware that Wealden district council runs the most effective waste recycling scheme in the country, which involves up to 48 per cent. of waste collected in the district. [Interruption.] Labour Members should be aware that the Secretary of State has a personal interest in recycling rubbish, given the way his career is going.

Is the Secretary of State aware that that scheme is on hold because of the settlement announced last week? Figures from his Department show that council tax in Wealden will have to rise by 8 per cent. simply to stand still. He says that the burden of a high council tax increase falls on the councils, but is he not aware that his Department's decisions force them to choose between delivering good services and imposing whacking great council tax increases?

Mr. Byers

I do not accept that position, but we are in a consultation period, which will last six weeks or so, and if Wealden council has particular concerns—I know that those exist among some district councils—they can be considered. We shall do precisely that, because the consultation is genuine. This period always throws up difficulties—it was the same under the Conservative Government—but we shall use it genuinely to reflect on the consequences of individual decisions by authorities. There is the possibility of change in the final outcome.

Jim Knight (South Dorset)

I congratulate my right hon. Friend on his statement, particularly his long-term commitment to abolish capping. Parish and town councils are not subject to the cap, so I wonder what place they have in his White Paper. On Monday, I was at Swanage town council, which costs the local council tax payer £50 a year, although it has a budget of more than £500,000. It is clearly an important part of local government, yet my right hon. Friend's Department has no jurisdiction over town and parish councils. How do they fit into the statement?

Mr. Byers

When my hon. Friend has the opportunity to study the White Paper, he will see that the role of parish and town councils is genuinely valued, probably for the first time in a Government document. We shall provide about £30,000 for each parish and town council to support democracy and any proposals that they might have to develop best value in their area. That is a good initiative. The document identifies how real improvements and benefits for each tier of authority will flow from the proposals, and no tier, whether it be the county or the parish or town council, has been left out of the proposals.

Angela Watkinson (Upminster)

What assistance can the Secretary of State offer this year to local authorities such as the London borough of Havering, which receive a perversely low settlement under the current system? What help can he offer the council tax payers who suffered the third highest increase in the country last year—12.5 per cent.—and who face a possible increase this year of more than 20 per cent? Why is he not receiving any delegations this year?

Mr. Byers

As for Havering, on any judgment the settlement announced last week is obviously generous. The local council in Havering will have to explain why it is even considering a council tax increase at the suggested level. Given the funding that is being made available and, indeed, the additional funds that may be made available as a result of the abolition of the council tax benefit subsidy limitation scheme—which will benefit a number of local councils—the council needs to consider the level of council tax increase that it should be setting. There is no good reason for that proposed increase, as we have made clear.

On receiving representations, we are adopting the same policies as successive Governments—Conservative as well as Labour.

Mr. Eric Illsley (Barnsley, Central)

I warmly welcome my right hon. Friend's statement and the White Paper. My right hon. Friend is aware that, back in 1990 with the introduction of the poll tax, my local authority was one of those that were capped—mainly owing to the standard spending assessments. Can he confirm that a new formula will be in place for next year to do away with the SSAs, which have been the blight of local government since 1990? Can he also give some indication of what will be in the new formula to take into account the needs of local authorities?

Mr. Byers

My hon. Friend has been a powerful advocate for change in the SSA regime. From his experience in his local authority, he knows of the regime's detrimental effect. The mechanism was not designed to reflect the needs of local communities or the degree of service being provided; it had nothing whatever to do with those objectives.

I can confirm that the SSA regime will be abolished—this will be the final year in which it will be used. A new formula will be in place to take effect from April 2003. It will be my intention that the new grant mechanism will reflect service needs and also the level of provision in local authority areas. I hope that, as a result of pressure from authorities such as that of my hon. Friend, there will be real benefits from the changes that might be introduced.

However, I have to give a few words of caution. My worry is that everybody seems to believe that their local authority will be a winner as a result of the formula changes. That will not be the case. The nature of any change of system means that some people will gain while some do not. We shall have to wait to see what the position is for individual authorities, but I am sure that we shall be able to target funds to areas that need them most.

Mr. Andrew Robathan (Blaby)

I doubt that the Secretary of State has yet had an opportunity to read yesterday's Leicester Mercury. If he had done so, he would have read in the political commentary, under the headline "An idea that's best forgotten": There may be lots of brilliant reasons for regional government but the public has not heard of any. Perhaps, like that old fondue set from the 1970s, the Government should put regional assemblies back in the cupboard. Will the Secretary of State clarify the answer that he gave my right hon. Friend the Member for North-West Hampshire (Sir G. Young)? What is the Government's policy on regional assemblies, which were so proudly trumpeted four years ago in a White Paper issued in 1997?

Mr. Byers

I am afraid that I shall have to repeat the comment that I made earlier: there will be a White Paper in the new year on the whole question of elected regional assemblies. I reaffirm the point that there will be no imposition of regional assemblies on any region that does not want them—it will be left for local people to decide.

We are giving local people the choice as to whether they want an elected regional assembly. That will be welcomed by many people.

We should not be scared to hold the debate about elected regional assemblies. Certainly, there may be people in the east midlands—including those on the Leicester Mercury—who do not support such assemblies. Good, let us hold the debate. In most parts of the world, there is strong regional government and we should think about whether that is right for England. At least let us hold the debate—we should not be scared of that—and let local people decide. That is how it should be done. There will be a White Paper in the new year, and people can then make up their own minds.

Kali Mountford (Colne Valley)

I congratulate my hon. Friend on his extraordinary announcement this afternoon. However, it is difficult to engage our constituents in debate about local democracy when they are trying to unpick the funding formula—never a debating point on the doorstep. When my right hon. Friend replaces the SSAs and is looking for areas of genuine need, will he ensure that his assessment is open, transparent and fair, and that it measures poverty according to genuine poverty indicators—unlike some of the nonsense that we experienced during the 18 Tory years? Will he also ensure that it is fluid enough for genuine local democracy to reflect the needs of rural areas where there are isolated pockets of poverty, so that we can really address those needs? Perhaps then people will have some confidence in the outcomes of local government.

Mr. Byers

We all know the way in which the SSA formula was manipulated by Conservative Members when they were in government to reward some of their favourite councils—[HON. MEMBERS: "No."] We all know that that is what happened; the figures are there for everyone to see. Conservative Members know that that is the case. My hon. Friend is absolutely right that we have to ensure that the replacement for the SSA regime is fair, open, just and transparent. We shall do precisely that. Most important, the replacement will need to reflect the demands that are made on a local authority service. If there are high levels of poverty and unemployment, or sparsity issues in rural areas, those matters will have to be taken into account when we consider the new formula that will take effect from April 2003.

I assure the House that we shall consult widely on the replacement formula. Above everything else, we shall ensure that people can understand it, and that they know that the system is not fixed in any way, but responds to the needs of a local authority area and reflects the service level being provided.

Mr. Nicholas Winterton (Macclesfield)

As one of those on the Conservative Benches who spent some time in local government before being elected to this place, I ask the Secretary of State to accept that many Opposition Members appreciate the valuable democratic role played by local government whether it is at the parish, town, district or county level. Local government, to be successful, needs to be local. Does the right hon. Gentleman accept that, to meet the criteria that he has rightly set out in his statement today, funding will—as the hon. Member for Colne Valley (Kali Mountford) said—have to be fair? Although the Government did not expect It, my own Macclesfield borough council has been disadvantaged because of the formula change. Will the right hon. Gentleman therefore be prepared to meet me and the chief executive of my council to discuss the problem? Funding is clearly critical to local government's success in meeting the Government standards that he has rightly announced today.

Mr. Byers

The hon. Gentleman is absolutely right that a fair funding regime is the crux of the matter. As I said earlier in relation to Wealden, the settlement raises a particular issue in relation to district councils. We are aware of that issue, and I should be more than happy to receive the information on Macclesfield.

Mr. Winterton

At a meeting?

Mr. Byers

I think that the issue goes wider than just Macclesfield, but—

Mr. Winterton

Indeed, it affects a number of other councils.

Mr. Byers

The point that I am trying to make, if I may do so without being interrupted, is that there is a specific issue to do with Macclesfield. I should of course be more than willing to receive that detailed information. However, there is also a wider issue to do with borough councils which we have to address and we are considering it. I hope that we shall be able to give the hon. Member for Macclesfield (Mr. Winterton) some reassurance about our intentions on that matter.

David Taylor (North-West Leicestershire)

Having spent my adult life in local government, I ask the Secretary of State to forgive me for not waving my Order Paper when he finished his statement. Does he acknowledge that, behind the smokescreen of past bonfires of controls, previous Governments were frantically fabricating further controls on local authorities? Is he confident that this is indeed a bright new dawn for local government? Will he consider the position in shire districts—particularly as that position is spelled out in my own early-day motion 351—whose funding regimes, as announced last week, have actually experienced a move backwards? Is he confident that the new scheme will, as the hon. Member for Macclesfield (Mr. Winterton) questioned, provide more generously? I share the hon. Gentleman's concerns.

Mr. Byers

My hon. Friend makes an important point about the need to be eternally vigilant on controls. We have to do that. Today's announcement will make possible a big improvement by reducing the number of plans by more than a third, reducing the number of consents by more than 50 and reviewing another 30 of the consents. However, there will always be further pressure to add new plans and new regulations. As I said, we have to be vigilant to ensure that we do not give in to those particular pressures.

As I acknowledged, we are aware from the consultation process that an issue has arisen from the settlement. We are considering how we can overcome the difficulties that have been caused to a number of shire districts. I am confident that, as a result of consultation and current discussions, we shall be able to make proposals that will ensure that councils do not go backwards, but benefit from the improvements.

David Taylor

Some have gone backwards.

Mr. Byers

Let us be clear that we are now in consultation. The announcement last week was not the final one but part of the consultation process, and many people are expressing their views. If consultation exposes difficulties, we can reflect on them and have a different outcome if we feel it appropriate to do so. In this case, we are likely to be able to respond positively to the concerns expressed.

Mr. David Heath (Somerton and Frome)

Does the right hon. Gentleman appreciate that there will be a warm welcome for the removal of capital controls, but some disappointment that he cannot be more explicit about what he intends to do to replace the standard spending assessment? In that respect, can he give a commitment that the iniquitous area cost adjustment is as dead as the standard spending assessment?

Secondly, will he reduce the gross disparities in funding between areas? For example, the funding per pupil in our schools cannot be based on any sensible assessment at the moment.

Finally, can the right hon. Gentleman confirm that the new system, whatever it may be, will reflect the real expenditure within local authorities, and take into account the fact that some, like my own in Somerset, have spent massively above the education and social services SSA year after year because of their belief that those services are important and need adequate funding?

Mr. Byers

It would be foolish to rule out particular aspects of the formula. It is too soon to say whether there will be something like the area cost adjustment. There is a genuine issue about levels of pupil funding. My right hon. Friend the Secretary of State for Education and Skills is looking carefully at how we can improve the position. There has been a dramatic increase in the amount of funding per pupil that we have put in over recent years, and I have no doubt that she will want to continue that.

In terms of the new formula, it is important to consider the level of service provided by the local authority. I do not like the sort of system that we have at present, under which the standard spending assessment bears no relation to the level of spend on particular services in an individual authority such as Somerset. If we are allocating money, we should do so on the basis of the level of service provided by an individual local authority. I am confident that that will be part of the make-up of the new grant regime.

Mr. David Borrow (South Ribble)

Does my right hon. Friend agree that it is crucial that the locally raised portion of local government finance is seen to be fair and adequate? Will he look again at whether the business rate should be determined locally rather than nationally? Does he agree that, in the absence of regular revaluations, the council tax will be seen as increasingly unfair and that, because of the multiplier, many people see it as unfair in any case? There are not enough bands to ensure that people in very low-value properties feel that they are paying a fair whack through the council tax. Will my right hon. Friend consider that issue as well?

Mr. Byers

We have no proposals to change the existing business rate arrangements. The White Paper outlines the proposition of business improvement districts, which the House has been informed of before, and goes into some detail about how we want to carry forward that initiative.

We have announced that there will be a revaluation, and the aim is to introduce it with effect from 2007. There is a genuine issue about low-value properties and the extent to which the system is seen as unfair. We indicate in the White Paper that there may be opportunities to look in detail at ways of dealing with that. As my hon. Friend knows, there are a number of properties of lower value in the north-west of England. People believe that it is unfair that there is no distinction between the levels in band A, and we may wish to consider that. I accept my hon. Friend's points; we need to ensure that people regard the council tax as fair, and I know that there are reservations about that.

Miss Julie Kirkbride (Bromsgrove)

May I tell the Secretary of State that today's announcement of the reform of local government financing will be welcome in Worcestershire, so long as he takes into account the statements about fairness, about which we have heard so much this afternoon? He will be aware that last week's local government settlement did not go down well in Worcestershire because, once again, the gap between the funding for children in Worcestershire's schools and the English local authority average increased even further. At the moment, about £250 less is spent on the schooling of children in Worcestershire than the average for all English local authorities, and that gap grew again by £17 in the secondary school sector. The right hon. Gentleman will also be aware that the head teachers forum is proposing to take the Government to the European court on the issue of fairness, so can I take a message back to the forum to the effect that, far from growing wider, the gap will at the very least start to diminish under his new arrangements?

Mr. Byers

The local government settlement announced last week shows that Worcestershire received an increase well above the rate of inflation. Many people would regard that as a reasonable settlement in the circumstances, but, obviously, the head teachers there will need to take whatever steps they feel are appropriate. I hope that, beyond 2003, the new funding formula will be fair, just and transparent and that the head teachers and parents of Worcestershire will be able to see that such a scheme is put in place. I have to tell the hon. Lady that one of the reasons why they have been discriminated against over the years is that the Conservative funding formula in place since 1990 has led to an appalling settlement for Worcestershire. I am pleased that Worcestershire has had an increase well above the rate of inflation this year.

Mr. Neil Turner (Wigan)

I congratulate my right hon. Friend and the whole team on this afternoon's statement, which represents a fundamental shift in the relationship between local and central Government, dismantling the command system that the Conservative party built up, year on year, during its time in office. It does not simply represent a bonfire of regulations; it represents a bonfire of the vanities—the vanity which says that Westminster knows best and that Whitehall can devise one system that fits all. Will my right hon. Friend confirm that the White Paper builds on the Local Government Act 2000, under which local authorities are allowed to serve their communities better? I particularly welcome the abolition of the council tax benefit subsidy limitation scheme, which hits poorer communities such as mine disproportionately. Will my right hon. Friend confirm that that scheme will be abolished in 2002–03?

Mr. Byers

The White Paper builds on the steps that were taken in the previous Parliament, during which we considered the constitution of local authorities. In the current White Paper, we consider the level of service and the relationship between local and central Government, and we shall try to put it on a totally new footing which respects the important role that local government can play. I knew that my proposals on the abolition of the council tax benefit subsidy limitation scheme would be welcomed in Wigan, because I attended a meeting there about six weeks ago at which I was told in the clearest possible terms that one of the positive things that we could do in the White Paper was to propose the abolition of the scheme. My hon. Friend strongly supported that proposal. I am delighted that we have been able to deliver on the Wigan recommendations. Yes, I can confirm that that proposal will be introduced with effect from April 2002.

Mr. Mark Francois (Rayleigh)

The Secretary of State mentioned that there were particular problems and issues relating to shire district councils, and he was certainly correct in that respect. He also prayed the Local Government Association in aid in support of his proposals. Will he therefore explain to the House why the LGA is in serious dispute with his Department about the way in which it expressed the funding increases for shire district councils in his related statement only last week?

Mr. Byers

The position is very clear. I was specifically referring to the joint partnership approach whereby the priorities for local government are identified jointly between central and local government. There is no big dispute about the presentation of the figures in the settlement announced last week. An issue has arisen through the consultation process and, as I have mentioned before, the situation is clear. We are considering the issue in the light of representations that have been made and I hope to be able to respond positively. That is what happens during consultation. There would have been a real issue if we had just announced the final settlement last week, but we did not do that. We said, "Here are the figures, and now we will consult." An issue has arisen in relation to the districts and it is one to which I hope to be able to respond positively.

Roger Casale (Wimbledon)

I welcome the Secretary of State's statement, especially the reforms that he is introducing to capital funding. Will he confirm that under the changes he has announced local authorities such as the London borough of Merton will be better placed to examine the contribution they can make to the financing of major community projects, such as the search in my constituency for a new home for Wimbledon football club or the need to rebuild the civic hall? That hall had to be sold off when the Tories were in office; Merton had a Tory council and the hon. Member for Maidenhead (Mrs. May), who leads for the Opposition on this issue, was a Tory councillor in Wimbledon Park ward.

Mr. Byers

Most of us know that the approach that the Conservatives took to local councils, as in many other areas, was to sell everything off. I was not aware that the hon. Member for Maidenhead (Mrs. May) was a member of Merton council at the time when it sold off its assets, but that is the nature of Conservatives in local as well as central government. Many of our crucial utilities were similarly sold off. Local councils will now have the scope to support community projects. The new capital freedoms that we intend to give will allow Merton to develop a site, perhaps in partnership with Wimbledon football club, or to make provision for a civic hall. Those flexibilities and freedoms will be available as a result of the changes that we have introduced, which did not exist under the Conservatives in government.

Several hon. Members


Mr. Speaker

Order. We must move on.