Local Government Finance

The first thing to say about this settlement is that it takes place under the iron hand of capping. Capping works, because local authorities do not have to rewrite their budgets, and, as this is a three-year settlement, the next three years will be governed by capping—that is as plain as a pikestaff. Secondly, the reason why that is happening is that the Government's finances are in a mess. Years of profligate and ill targeted public spending increases have led to the current difficult prospects. The Government say that the settlement is tough but fair, which is a very British formulation. In a sense, council tax is atrophying because of capping. The most interesting background to this matter is the report by the Audit Commission, ““Positively charged””, which shows that £11 billion now comes from fees and services. I did not realise that car parking would emerge as one of the great functions of local government, although it is certainly one of the major functions of Network Rail. That is an important development that can have a disproportionate impact. Some councils are in a position to benefit substantially from charges while others are much less so. The Government have picked at the Lyons report, and Sir Michael has moved on to grander things. He must be disappointed at the small amounts that have been picked out of his report. I have to say to my own Front Benchers that to the extent that Tory policy is represented by Salome, she is very largely still clothed, and I look forward to having greater revelations than just the ankle, which appears to be the proposal to threaten councils with local referendums so that local people impose the capping instead of the Government, with precisely the same effect as far as councils are concerned. Meanwhile, the Liberal Democrats recite the case for local income tax rather like old believers in a remote monastery hoping that somebody will eventually attend the services. It has very little to commend it other than the fact that it exists as a policy, which is somewhat distinctive for that party. On business rates, a total silence has descended right around the Chamber—it is a subject that does not speak its name any more. Three-year settlements are even more subject to things going wrong than annual settlements, and the problems that are faced could get worse. We see rising commodity prices, most particularly in energy, but I also draw the Minister's attention to what has been happening to food prices and the impact that that could have on the costs of local government. We see the relentless demographic pressures. Care of the elderly is the most obvious example, and the cuts there are the easiest to make because they are the least visible. Cuts in education are pretty visible because an articulate group of people has an interest in fighting them. In social services, the impact is much more scattered and so the ability to resist is much reduced. We could see more abnormal weather phenomena, as the Environment Agency calls them. One need only drive on any road that is not a main road to see its deteriorated, rutted, pot-holed condition. The move to single status has a major impact on many local authorities. Let us hope that in seeking to deal with this settlement at least some councils will have the courage to remove some of the surplus school places, which are a major problem. However romantic it might be to save village schools from closure, the fact is that we cannot afford to maintain in the education system capacity that is not needed. The Government make great play of what they have done about devolving power—there is supposedly a great devolution agenda. However, as in the case of Lyons, there is precious little real substance. It is desirable, but it does not deal with the issues of financial resources and autonomy, or redress the essential balance of power and competence. It remains a sort of constitutional alms-giving, handed down by Government to a grateful and supplicant local authority. I want to raise one local issue. On concessionary bus fares, the Government have not got it right, and I hope that for the next two years of the scheme they will look again at the formula. This is bad government. Places such as Harrogate and Scarborough are in exactly the same position as Cambridge; a huge shortfall is projected from any reasonable forecast. The Minister is not going to alter that now, but I hope that he will consider it for future years. He should realise that for district councils, which have a budget of £20 million to £25 million, little pressures such as damping arrangements costing £200,000 or increases in Audit Commission fees accumulate into a significant hit. Huge issues remain to be addressed in local government: how accountability can be achieved in the important public services of policing and health, one of which has no level of accountability at all; the assertion of representative democracy, rather than the irresponsible empowerment of national quangos or small local boards; and how agendas based on choice can be made manageable and affordable. The settlement does not address those crucial issues and, in effect, the devolution proposals do nothing else. Meanwhile, we drift. The Government will not take decisions. The Opposition are by and large happy to impale the Government on the unpopularity of council tax increases and coo as far as devolution is concerned, and the Secretary of State is a cheerful cooer. Concordats get us nowhere. I leave the Minister with the thought that there have been two famous concordats in history: one between the Pope and Napoleon, and one between the Pope and Mussolini. I hope that this one has a better fate than those two did.