§ Mr. Etherington
To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on his capping principles for 1998–99 and the list of authorities which he intends to designate; and if he will make a statement. 
§ Mr. Prescott
Derbyshire County Council is the only authority (out of 433) for which I am proposing a cap limit, which would require it to reduce its budget requirement. Other authorities have set budgets and council taxes within the provisional limits which I set.
I have proposed a cap for the Council which I consider, on the basis of all the information available so far, to be reasonable, appropriate and achievable in all the circumstances of the authority.
The capping principles for 1998/99 are set out in the Limitation of Council Tax and Precepts 1998/99 (2 February 1998). They are subject to a general proviso that no authority is to be designated if its budget requirement is no more than £15,000 above the limit 146W implied by these principles. I have placed copies of this document in the Library of the House. The main points are:
- (i) The City of London, Inner London boroughs, and Shire Districts are able to increase their budget requirements by 1.5 per cent. or the increase in their SSAs for all non-police services, whichever is the greater;
- (ii) Outer London Boroughs, Metropolitan Districts, Unitary authorities and the Isles of Scilly and Shire Counties are able to increase their budget requirements by 3 per cent. or the increase in their SSAs for all non-police services, whichever is the greater;
- (iii) Fire and Civil Defence Authorities are able to increase their budget requirements by 4.5 per cent.;
- (iv) Police Authorities are able to increase their budgets by 3.2 per cent.
Authorities budgeting more than 12.5 per cent. above SSA are subject to a cash freeze.
In accordance with section 54 and 56 of the Local Government Finance Act 1992, 1 have therefore decided to designate Derbyshire County Council. The amount that I am proposing should be the maximum amount calculated by that authority as its budget requirement for 1998/99 is £468.757 million.
This decision demonstrates that we are taking our commitments on spending very seriously. The authority now has 28 days, starting today, in which to inform us whether or not it accepts its proposed cap. If it accepts, the cap will be confirmed by notice and the authority can set a revised lower budget. The budget we are proposing means £3.9 million reduced expenditure for Derbyshire so Band D council tax bills will be cut by around £17 million.
If the authority challenges, it must propose an alternative amount together with its reasons for doing so and will have the opportunity to meet with Ministers to explain its case.
Once we have considered all the available information we shall propose a final cap which will be included in an Order, a draft of which will be debated by the House of Commons. If the draft Order is approved, a final cap is set by notice and a revised budget and council tax must then be set by the authority.