Mr. Malcolm Moss (North-East Cambridgeshire) (Con): It is always a pleasure to follow the hon. Member for Nottingham, South (Alan Simpson). He made an excellent speech in which he exposed the illogicality of the Government's position and their complete lack of principle in what they seek to achieve through the order. I speak on behalf of the district of Fenland in my constituency, and I have to say that, initially, I thought that we had been badly done by until I heard the stories this evening, particularly the story from Nottingham that defies all logic and description.

The Minister said only in April:

"The Government therefore intend to take action against those authorities whose budget requirements they consider to be excessive."—[Official Report, 29 April 2004; Vol. 420, c. 1019.]

The key word is "excessive" but nobody, not least the Minister or the Government, have actually defined what they mean by it. It can mean one thing in Nottingham and another in Fenland, Shepway or Torbay. No one to whom I have talked in the Local Government Association or who has any experience of local government finance can find a common thread of logic in what the Government are trying to do. I have concluded, like the hon. Member for Nottingham, South, that they decided that they had to make an example of some councils and that they needed a spread of councils. When the Wrekin dropped out, they had to find a scapegoat Labour council, so Nottingham entered the frame. I think that Fenland is the scapegoat Conservative council.

Let us consider what "excessive" might mean, to try to understand why the councils have suddenly been caught in the net. Perhaps the percentage increase was thought to be excessive—I thought that the Minister indicated earlier that that was his main criterion. However, Huntingdonshire district council, which is also in Cambridgeshire, had a larger percentage increase in its council tax this year than Fenland, so that cannot be the criterion. Perhaps the Government considered whether there was an excessive increase in band D council tax levels, but the evidence shows that Fenland does not meet that criterion either. Perhaps it was thought that the spending per head in Fenland was out of control or too high, but it has the lowest such spending in Cambridgeshire and one of the lowest of any shire district in the country. A further factor considered might have been the finite size of the budget, but as we can see from the order, Fenland's budget of £12.22 million is the lowest of any council in the list. Fenland does not meet any of those criteria, so we must find another explanation for the situation.

It has been obvious for some time, as my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles) said, that the Government have used council tax over the past five, six or seven years as a stealth tax to draw more money out of tax payers to fund other things. They have kept grants low, and although they boast of a year-on-year increase, they do not explain that something like 15 per cent. of the total grant money is kept on one side and ring-fenced for specific grants. The Government and the Minister decide where to spend that money and—surprise, surprise—it is not targeted at my constituency, that of the hon. Member for Torbay (Mr. Sanders) or even those of Nottingham Members, but elsewhere. However, the top-slicing of 15 per cent. of the money for those specific grants means that there is less available to fund the basic services that we all want in our constituencies.

Statistics show that the average total council tax bill in Fenland is the lowest in Cambridgeshire. The total bill is an average of £83 a year per dwelling lower than the county average. The bill in Fenland is £60 lower than the average English bill and more than £130 lower than the shire district average. Fenland has a low tax base, with 85 per cent. of our properties in bands A, B and C. That will come as a major surprise to many hon. Members in the Chamber because although those statistics smack of inner-city property values, my seat has been held by the Conservatives for the past 17 years—it was Liberal for a brief period before that. That means that every pound that Fenland adds to its council tax raises only £28,000, but every pound that neighbouring Huntingdonshire puts on its council tax bill raises double that amount—£56,000. An equalising measure should be built into any sensible formula calculation to compensate the parts of the country—mine is not the only one—with low tax bases because of their low property values. Fenland is penalised principally by its low tax base. It must increase its council tax at double the rate of its neighbouring council to provide the services that the Government demand of it, but that cannot be right.

Mr. Bill Wiggin (Leominster) (Con): I agree with my hon. Friend and I am fascinated by his speech because, as he will know, Herefordshire suffers a similar social distribution and has received equally unfair treatment from the Government. Perhaps I am being cynical, but does he agree that the measure has been exclusively designed to score political points and that it has nothing to do with any impact on local people?

Mr. Moss: I agree entirely with my hon. Friend. I tried to make that point earlier in my speech and concurred with the hon. Member for Nottingham, South that that was what the Government were attempting to do. They needed scapegoats and decided that they had to give the impression of being tough by bearing down on councils in which council tax was increasing above a certain level. However, they are being dishonest because council taxes throughout the country have been going up by double the rate of inflation or more over the past six or seven years. Everyone's council tax has gone up because the Government have depressed the level of grant as a proportion of what they expect councils to do.

Mr. Raynsford indicated dissent.

Mr. Moss: The Minister shakes his head, but my point is true. The fact that 15 per cent. of the total money is taken out for specific grants means that there is less money to go around for the provision of basic services.

The situation gets worse for Fenland. For as long as I can remember—certainly this was true when I was a councillor 17 years ago—we have been asking for the same area cost adjustment for Cambridgeshire as that enjoyed by Essex, Hertfordshire and the south-east planning region as a whole. We had the incongruous situation of a school in Royston, Hertfordshire, getting almost double the per capita spend for education as a commensurate school just over the border in Cambridgeshire. That made no sense, so we tried for some 20 years to get fairness and equalisation in the system. To give the Government credit, they finally examined the formula about two years ago and decided to revamp the system by giving a form of area cost adjustment, albeit probably with a different name, to councils throughout the country. The county of Cambridgeshire and its shire districts were included in the revaluation of the amount of grant needed to deliver the right level of services.

Instead of getting the money, however, we now find that the crazy policy of floors and ceilings has come into play. Last year, Fenland was short-changed by more than £500,000, while £420,000 was not given in grant this year, despite the fact that it was calculated under the new formula. Fenland is supposed to find £300,000 under the capping arrangement, but that is less money than we should be getting under the new formula. Where is the logic in that? I wish that the Minister would intervene to put me right because I cannot understand the situation at all.

Mr. Ronnie Campbell (Blyth Valley) (Lab): Nor can anyone else.

Mr. Moss: I thank the hon. Member for Blyth Valley (Mr. Campbell) for his interjection.

Some £420,000 has been withheld from Fenland this year to provide the level of services that it wants, but the Government have also come in with a pincer movement. They have set up the comprehensive performance assessment, but it probably costs our councils a large amount to pay for that because people come in and take up officer time for weeks on end, and councils have to jump through hoops set by the Government to get a comprehensive performance assessment grading. There are four grades: failing, poor, good and excellent.

What does my poor Conservative council do? Foolishly, in my opinion, it decides to strive for excellence. I do not know why, but it decided to do that. It was a poor council two years ago, so the incoming Conservative group, under fairly able and aggressive leadership, cleaned out the old guard and brought in new ideas. Within two years it is two half-points away from being assessed as "good". On a different day it would have scored those half-points, got 41 instead of 40 and been categorised as a good council. Why are the Government setting up these systems for councils to measure themselves and then kicking them where it hurts most for other sorts of reasons? Here is a council striving to measure up to the Government's standards, almost getting into the "good" category, and being carved up by an illogical decision by the Government.

I do not think the Minister is responsible for that. I have clashed with him on many occasions and I have always had him down as an extremely sensible, practical, pragmatic Minister, but not for one minute can he justify what he is proposing tonight.

Mr. Pickles: I did not want to let my hon. Friend's speech to go by without confirming what he said about floors and ceilings. Fenland, according to the Government, should be spending more. It has moved to a position where the Government say it should pay and it is being penalised for following Government guidelines.

Mr. Moss: That is right. If one adds the £300,000 that the council now has to save to the £420,000 that it did not get, that is £720,000 out of a budget of £12 million. It is an enormous amount of money.

The council has attempted to jump through the Government's hoops. It has even started on the Government's pet projects, such as recycling. That is not yet mandatory but it will be eventually, and we all agree that it is probably a good thing. So what is Fenland doing? It is spending £204,000 setting up a recycling scheme. The Government are also keen on e-government. The council is spending £100,000 on that. That is £300,000 on those two features alone, in which the Government are encouraging councils to become involved. That sum matches the saving that the council must produce.

I am not usually spiteful, but I have said to my council, "Ditch at a stroke all these Government requirements. Just ditch them. Why should we play the Government's game and then find that we get knee-capped for doing it? It is ridiculous."

The hon. Member for Nottingham, South made three proposals to the Minister. I am not sure I could endorse the third option. It comes more powerful from the Government Benches than from ours. We ask for it all the time and get nowhere. However, the two other options are important. What is proposed is illogical. It makes no sense to anybody. It is a spiteful action. The case has not been made tonight or on a previous occasion, and no one to whom I speak who has any understanding of these matters understands why the Government are doing it.

If the Government want to set a few councils apart and appear to be disciplining them, fine, but we will be two thirds of the way through the year when the new bills go out. There is only a 10-month direct debit system and the bills cannot be prepared and sent out until October, which will be about the sixth month of the 10. People will already have paid, so what is the point? Figures have been mentioned tonight—in the case of Nottingham, £250,000—for the re-billing. We think that in Fenland the figure will be about £80,000. That is an extra cost that the council tax payer will have to bear.

Why penalise people in low-value properties? We should be looking to support them, rather than adding further burdens to their council tax payments. If the Minister wants to make his point and rap a few knuckles, that is fine, but instead of going through the irresponsible and stupid procedure of re-billing, why do we not say to the councils, "Next year you will rebate the amount we calculate that you should save, or just have a zero rate increase in your council tax." That is not a problem. While he is at it, why does the Minister not pay Fenland the money that his Government, by their own formula, deem that it needs to deliver a standard service?