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Mrs. Theresa May (Maidenhead): First, I thank the Secretary of State for giving me prior sight of his statement. May I also welcome him to the House of Commons? It is very good of him to drop by. I am sure we are all very pleased that the minibus finally found its way off the bridge and down the M1.

Although we might welcome the Secretary of State here today, local authorities and council tax payers will not welcome his statement, and neither will Labour Back Benchers when they realise what it means for local authorities. He tells us that the settlement is generous. He says that there is no reason why we should see large increases in council tax next year, but we have heard that before. Every year, this Labour Government promise a generous settlement for local authorities and every year they say that there is no reason for high council taxes, but every year council tax rises, on average, by three times the rate of inflation. Every year the Labour Government make promises and every year they break them.

Will the Secretary of State confirm that almost a third of the increase in the pension for single pensioners has been taken away by an increase in council tax? Will he confirm that today's settlement will leave many local authorities struggling to maintain services and facing not a 6 or 7 per cent. increase in council tax, but a rise that is well into double figures? Will he also confirm that today's announcement was delayed from last week because of the complaints from local authorities when they saw the figures for money to be top-sliced from their post-16 education budgets?

The Government will claim, of course, that increases in council tax is not their fault, but it is this Government's failure properly to fund social services spending and their imposition of extra burdens every year on local authorities that constantly squeeze council budgets. It is, of course, people who live in Labour or Liberal Democrat-controlled councils who suffer most because those councils have the highest council taxes in England. Will the Secretary of State confirm that 13 of the 20 councils with the highest council tax are Labour controlled? None is Conservative controlled. I understand that the Secretary of State has had other things on his mind recently. The fiasco of his handling of Railtrack meant that he has not—[Interruption.]

Mr. Speaker: Order. We will not dwell on those matters, will we?

Mrs. May: No, Mr. Speaker, indeed not, but the right hon. Gentleman simply has not had the time to fight the cause of local government, so council tax payers and those who depend on council services will suffer as a result.

Let us get rid of some of the myths that surround this Government's spending on local government. Myth No. 1 is that the increase announced by the Secretary of State is what all councils will get. It is not. He announced a 7.4 per cent. increase, but that overall figure includes more than £10 billion of special and specific grants. Will he confirm that councils will have to bid for much of that

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money, with no guarantee of getting anything at the end of the day? Will he also confirm that for many district councils, his announced increase of 4.8 per cent., excluding special grants, is an increase of only 3.5 per cent.?

The right hon. Gentleman says, "I want to reflect the value the Government place on education and social services. I shall introduce a minimum increase in grant of 4 per cent. for all authorities that provide those vital services." Will he confirm that the 4 per cent. increase for education and social services will, on the basis of the past few years, barely cover the teachers' pay award and will leave schools with budget cuts and social services underfunded? Will he also confirm that when Labour came into power it promised a revision of the standard spending assessment and local government finance within a year? Now that revision is promised for 2003–04. Labour is taking six years to do something that it promised to do in one.

Myth No. 2 is that the standard spending assessment reflects what local authorities need to spend; it does not. Councils spend £1 billion more on social services than the Government allow in the SSA. Does the Secretary of State accept that social services are underfunded by £1 billion overall? Does he also accept that money recently announced for the next two years to relieve bed blocking sounds, as one GP told me, like a lot,

Myth No. 3 is that this Government give councils the freedom to spend on local priorities; they do not. More and more money comes to local authorities as specific grants—ring-fenced to be spent on the priorities of the Government, not those of local people. Will the Secretary of State confirm that, on his figures today, almost a quarter of funding now comes from special and specific grants? Will he pledge to reverse that trend and reduce the percentage of funding coming through specific grants?

Myth No. 4 is that the Government deal fairly with local authorities. They do not—just ask the shire counties. Yet again, the settlement will transfer resources from the shire counties to other authorities. Will the right hon. Gentleman confirm that over the lifetime of the last Parliament, under Labour shire counties lost an estimated £700 million in funding? Will he also confirm that, under Labour, London local authorities have lost £450 million in funding?

Myth No. 5 is that the Government fund any new requirement imposed on local authorities; they do not. Over the past four years or so, the Government have steadily loaded yet more regulations, burdens and costs on to local authorities. Best value costs over £200 million; new regulations on fridge recycling will cost over £50 million; concessionary travel fares will cost £50 million; regional transport plans will cost one shire county half a million pounds alone; and the Railtrack fiasco has cost local authority pension funds almost £100 million. Then there are the extra education plans, the abandoned cars directive, recycling targets and the Homelessness Bill, all of which add to local government's costs. When will the Government get off the back of local councils and let them get on with the job of providing the services that local people want?

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The final myth is that it will all get better; it will not. The spectre of revaluation looms, and so does the threat that, if it is around, Labour will use revaluation to increase council tax by stealth yet further in some parts of the country, notably the south-east and London.

The Secretary of State says, "Public services are the clearest symbol of community and solidarity" and that the settlement "shows that we value local government and the services that it provides." It is this Government's attitude to local services that provides the clearest symbol of Labour in power: increased central control, more red tape, freedoms curtailed, and all spin and no substance. Social services will continue to be underfunded and council tax will rise by much more than inflation. This Secretary of State is driving local government, like Railtrack, into the buffers, and council tax payers will pay the price.

Mr. Byers: I think that the hon. Lady wrote those comments before she had the opportunity to see the details of the settlement. If she had seen it, she would have recognised that an increase of £3.3 billion, or 7.4 per cent., is a significant shift in the Government's funding of local government, particularly when compared with the years of Conservative rule and their relationship with local government.

The hon. Lady spoke of shire counties and the difficulties that they will experience as a result of today's settlement, and we wait with interest to see how shire counties respond. However, I shall share with the House some figures that will reveal that the hon. Lady's case comes straight from the Harry Potter school of fiction. Between 1998–99 and 2002–03, the average increase for shire counties is 4.9 per cent. From 1994–95 to 1997–98, under the Tories, it averaged 1.9 per cent. That is the truth of the situation. Shire counties had their services decimated because of the Conservative Government's approach to local government. The situation is the same for London: there were cuts under the Conservatives, but more money is coming from the Labour Government.

The hon. Member for Maidenhead (Mrs. May) said that council tax increases will reach double figures and she sought to scare pensioners. However, she failed to recognise the fact that, under this Government, pensioners do not rely just on the state pension as they would under the Conservatives, who said that they would do away with all the gimmicks. According to the Conservatives, those gimmicks are the £200 a year winter fuel allowance for pensioners and free television licences for the over-75s. Pensioners know that they are getting more income as a result of measures introduced by this Government. The Conservatives also imposed a massive increase in fuel duty through VAT which hit pensioners; we reduced that to 5 per cent. We will take no lessons from the Conservatives about caring for pensioners—they know full well that they are getting a good deal from Labour and that they would not get that from the Conservatives.

On financial support, the hon. Lady is right to say that we are giving targeted grants to support the raising of standards in schools and help reduce bed blocking in our hospitals. Funds are being provided to help local authorities and schools to tackle those very real pressures. The important message of today's statement is that all of that is over and above the 4 per cent. that we have provided as a minimum for all education and social services.

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Opposition Members representing shire counties such as Worcestershire know that we have listened to their concerns—[Interruption.] They may leave the Chamber, but they know that today's settlement and our decisions will be welcomed by parents and head teachers throughout counties like Worcestershire. When people have had the opportunity to digest the statement, they will realise that we have been fair, truthful and honest. The settlement is a real-terms improvement for local authorities, which will make no complaints about it because they will recognise that it is one of the most generous that they have had for years. The additional funding that we are giving local government in today's settlement and the minimum levels for all authorities that we are introducing for the first time mean that there is no reason for large-scale council tax increases, but there is every reason to expect real improvements in local authority services.

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