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Ms Armstrong: I thought that the hon. Gentleman was interested in the plain truth. The plain truth is that if we had continued with the Tories' figures, all authorities would have lost substantially more. What the hon. Gentleman means is that by changing methodology, we achieved a fairer system of distribution. All authorities have gained by substantially more than the figures that he has quoted, including London and the shire counties.

Mr. Waterson: Somebody who does not agree that we have a fairer system is the Mayor of London, the hon. Member for Brent, East (Mr. Livingstone). He said

"the faceless bureaucrats normally hidden in the bowels of John Prescott's super ministry deserve a good kicking because of the Government's whacking cuts to the poorest London councils."

Ever since the statement on the provisional settlement, the ground has shifted again. The Times reported that there were crisis talks between the Secretary of State and the Chancellor. It said:

"the package was agreed on after crisis talks between Mr. Prescott and Gordon Brown, the Chancellor. There had been fears that the impact of projected increases of up to three times the rate of inflation would cost Labour dozens of seats at the election."

I see that some of those seats are represented in the Chamber tonight.

Lo and behold, Ministers rushed out an announcement of a £100 million emergency package--money diverted from the neighbourhood renewal fund--to keep down council tax increases in a large number of marginal Labour seats such as Enfield, which has a majority of 1,433, Bristol, West, where the majority is 1,493 and Hastings, where it is just over 2,500.

Mrs. Gilroy: I am following the hon. Gentleman's argument with interest. Is he saying that the Tory- controlled Plymouth city council should not have been given the £2 million that it received as a floor for the area cost adjustment, and that we should not have the neighbourhood renewal fund?

Mr. Waterson: No, of course I am not saying that. I am simply saying that it is curious how a significant number of Labour marginal seats seem suddenly to have benefited from this largesse.

Another £25 million popped up so that some councils could tackle homelessness. It is interesting that the problems caused by asylum seekers featured prominently in the relevant press release, despite the Government's dismal failure on this aspect of their policy.

Another £11.6 million was suddenly found to help councils that have suffered particularly badly in the recent flooding. Similarly, a sum of £52 million has been found for education. There are concerns as to whether that is all new money or merely recycled or reheated announcements of old money.

We all know about the problems faced across the country, including in my area, with regard to bed blocking and the crisis in social services. That is addressed only partly by recent extra funding in some areas for the national health service.

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This all amounts to what some commentators have called a pattern of behaviour in the context of the resignation of the right hon. Member for Hartlepool. As The Times put it, this brings to £189 million the amount of cash the Cabinet has rushed together since the Government unveiled their initial local government settlement in November.

Mr. Geraint Davies (Croydon, Central): Is the hon. Gentleman saying that under a Conservative Government, that money would not have been provided to those areas where it is clearly urgently needed?

Mr. Waterson: I think that the answer is clear: we need to look at the settlement in the round and see the unfairnesses that are being created across the country.

Sir Paul Beresford: Does my hon. Friend agree that the muddle between the floors and ceilings has enabled the Government to have more money to distribute by selection rather than by an assessment of needs?

Mr. Waterson: My hon. Friend is absolutely right.

Mr. David Taylor rose--

Mr. Waterson: No, I will not give way any more at the moment.

What comments have come forth on this extra largesse? Sir Jeremy Beecham, the Labour head of the Local Government Association, said:

"we do regret the increase of expenditure being passed through specific grants, which are too tightly controlled by Whitehall, and therefore limit the degree of choice in assessing particular local needs."

The hon. Member for Stafford (Mr. Kidney), who I see is in the Chamber, is one of a number of Labour Back Benchers who feel that their areas have been treated unfairly. He said in a recent letter:

"Outrageously, the data benefits those authorities already gaining from Area Cost Adjustment . . . To deflect criticism of this further injustice, DETR has put forward the 'floor and ceiling' proposals."

The hon. Gentleman makes the obvious point, made by my hon. Friend the Member for Mole Valley (Sir P. Beresford) a moment ago, that as a result of bringing in the ceilings and floors, all other authorities must receive less grant to pay for the difference. This means that the 103 authorities between the floor and the ceiling lose about 4 per cent. of grant that they would have received under the old system. [Interruption.] The Minister says no, but she must sort out her differences with the hon. Member for Stafford in some other place.

The hon. Gentleman talks about making representations to the Minister. He said:

"It was evident that the DETR has a block of money to distribute. The Minister can slice the block one way or another way".

Clearly, a decision has been taken to slice it in a way that might help electorally.

The hon. Gentleman talks about meetings with the Secretary of State and the Chancellor and ends on a forlorn note:

"I doubt that we will persuade them to meet us in person".

Mr. David Kidney (Stafford): In areas such as Staffordshire, the great anger is that the area cost

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adjustment has nothing to do with need--it is not a proven figure on which to rely. Will the hon. Gentleman say on behalf of the official Opposition whether he will stand by the area cost adjustment as a legitimate way to dispose of money to local authorities?

Mr. Waterson: The hon. Gentleman makes a reasonable point. When we find out what situation we have inherited, with all these floors and ceilings, we will take a view on the matter.

Mr. Kidney rose--

Mr. Waterson: I will not give way again.

Of course, some areas benefit substantially from the area cost adjustment, as the hon. Gentleman knows.

Those are the verdicts of some people who ought to know about the figures. Why are Ministers and Labour Back Benchers panicking so much in the run-up to the election? It is because we are talking about yet another broken election promise. When the Prime Minister said,

"we have no plans to increase tax at all",

he clearly hoped that people would assume that he was not talking about council tax. The fact is that the average band D council tax increased this year from £689 in 1997-78 to £847, or by 23 per cent. On average, it has soared by three times the rate of inflation. By the time of the next election, the average British family could be paying an extra £200 in council tax alone.

This year, the Minister for Local Government and the Regions is being coy, but last year she predicted that council tax would rise by an average of 4.8 per cent. It rose by 6.1 per cent. Have we any reason to believe that her predictions this year would be any more reliable? The Department talks about a 5 per cent. increase in the coming year. The Minister declines the opportunity to predict the rise, talking about "fruitless speculation".

Incidentally, the Minister trots out the old chestnut, trying to suggest that comparing band D bills is not appropriate. Peter Kellner--not exactly a Conservative commentator--said:

"Homes in Labour areas tended to fall into lower council tax bands and this was why average council tax was lower . . . The proper way to judge the figures was to compare like with like . . . Band D figures, council by council".

He went on to point out that Labour's

"claim is as misleading as it ever was . . . On this issue, Labour is wrong and Tories are right."

Mr. Geraint Davies: Will the hon. Gentleman give way on tax increases?

Mr. Waterson: No.

Mr. Davies: I thought not.

Mr. Waterson: The hon. Gentleman can try to catch the Deputy Speaker's eye.

The Minister will not engage in what she calls "fruitless speculation", so we have been doing some research of our own. We have done a sample survey of councils throughout England. Our survey reveals--it is early days,

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as councils are still setting their budgets--that council tax could increase by 9 per cent. this year, putting £77 on the average band D council tax bill.

What is particularly worrying--it may worry the hon. Member for Croydon, Central (Mr. Davies) as much as anyone--is that council tax has risen by 25 per cent. in the past three years in Labour's top 25 marginal constituencies. The projected percentage change in council tax in those seats, from 1997-98 to 2001-02, is a staggering 33 per cent. That is a staggering extra stealth tax on the British people. For all the hon. Members whose names are on that list of marginal seats, it is a worrying development.

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