Council Tax

The hon. Gentleman's assumption—those on his Front Bench might think that this is the way to operate, although I am not sure—would effectively mean that authorities that had set a notional budget, therefore allowing them a higher budget, would be able to continue to do that year on year, which would not be fair on other authorities. The alternative would be to return to the crude capping system that applied under the previous Administration. I shall return to some of the background issues later in my speech. During the debate on the provisional local government finance settlement on 26 November 2008, my predecessor as Minister for Local Government, my right hon. Friend the Member for Wentworth (John Healey), said that we expected to see an average council tax increase in 2009-10 substantially below 5 per cent. He also made it clear that the Government were prepared to act against excessive increases made by any authority, including requiring them to re-bill if necessary. Three-quarters of authorities set increases below 4 per cent., almost 40 per cent. set increases below 3 per cent. and a further 23 authorities either set no increase or are reducing their bills. However, two authorities did set excessive increases this year. On 26 March, my predecessor announced to the House that the Government were "designating" Surrey and Derbyshire police authorities. He proposed maximum budget requirements for the two authorities at levels that would bring them within the capping principles that were determined by the Secretary of State for 2009-10. In his written statement to the House on 13 May, my predecessor said that both designated authorities had challenged their proposed maximum budget requirements. He and the former Minister responsible for policing, my hon. Friend the Member for Gedling (Mr. Coaker), met both police authorities to hear their cases in person. Having carefully considered the representations made by the authorities, and having taken into account all relevant information, the Government decided to take the following action: to cancel the designation of Derbyshire police authority and to nominate it instead, with a notional budget requirement for 2009-10 that will be used in any future capping comparisons; and to proceed with the designation of Surrey police authority with a maximum budget requirement at the level proposed on 26 March—£197,206,000. The draft order therefore covers Surrey police authority only. We believe that the proposed action in the draft order, and the separate action that we are taking in respect of Derbyshire, represent a measured and proportionate response to those authorities' excessive increases.