The Local Elections: Fowler claims victory in council tax bills battle: Labour says grant system is rigged in value-for-money row as Tories attack 'political correctness'

LOCAL election campaigning over the cost of the council tax intensified yesterday with the Tories claiming to have 'won the argument' and Jack Straw, Labour's environment spokesman, denouncing the grant system as 'rigged'.

Sir Norman Fowler, the Tory party chairman, told a Central Office news conference: 'We can claim victory in the battle over council tax levels. Jack Straw has admitted defeat.'

Sir Norman said Mr Straw had made two crucial admissions; first, that a band-for-band comparison was the right basis for comparing Labour and Conservative councils, and second, that Conservative councils cost less.

Labour's local election campaign document, Labour Means Better Value, launched yesterday, adopts the party's preferred measure of average council tax bills, which it says are pounds 40 lower in Labour areas than Conservative areas and pounds 26 lower than in Liberal Democrat ones.

Mr Straw denied Sir Norman's charges. He had pointed out that on the Tories' chosen measure, increases in bills had been half of those of Tory areas, he said.

'A comparison between Labour Liverpool and Tory Westminster shows why band-for-band comparisons are profoundly misleading.

'Westminster's Band D tax, at pounds 245, is under one-third of Liverpool's, at pounds 867. But Westminster is actually spending pounds 78 more per head than Liverpool. Westminster has such a low Band D council tax because the grant system is effectively rigged in its favour.'

Mr Straw's arguments were strongly disputed by David Curry, Minister for Local Government and Planning, who said that the formula for distributing the government grant was based on objective factors.

The fact remains, however, that small variations in spending can lead to large variations in local bills because of the 'gearing' effect caused by the high level, approaching 80 per cent, of central government grant.

The all-party Commons Environment Select Committee found in a report last month that a 1 per cent change in spending typically leads to a 5 per cent change in the local tax, while the Association of Metropolitan Authorities said yesterday that bills could be affected by up to 20 per cent.

The gearing ratio is a key factor in Westminster's ability to spend pounds 194.7m in 1994-95, less than the pounds 220.2m standard spending assessment (spending ceiling) or SSA, allowed by the Government while charging a Band D council tax of only pounds 245.

The SSA fixed for neighbouring Tory-controlled Kensington and Chelsea is pounds 128.8m but it plans to spend pounds 140m. Its Band D council tax is pounds 489.

Even Tory authorities claim that their SSAs fail to fully reflect local needs.

Labour authorities defend higher bills on the ground that they provide more services, while the fact that the Conservatives currently control only one metropolitan authority, one county council and 11 of the 32 London boroughs indicates that electors are prepared to pay.

Margaret Beckett, Labour's deputy leader, said at the campaign launch yesterday: 'Labour now controls more councils and has more council seats than at any time in our history.

'Whatever lies the Tories may tell about Labour councils, the truth is that people prefer what Labour offers and provides.'

In what was termed a 'mini own goal' on the question of whether the contests will be a referendum on John Major and his government, Mr Curry also admitted: 'There has always been a relationship between what happens in local elections and what happens in central government.'

The Tories used yesterday's daily press conference to revisit old 'loony left' and political correctness territory with a Councils of Despair pamphlet culled from newspaper reports. A council's alleged decision to send workmen on a course to cure them of the urge to wolf-whistle is among the examples listed.

Leading article, page 17