'There are profound differences between Labour and Conservative councils but capping makes it far more difficult to distinguish between these', he said.
'It makes it more difficult for Conservative parties in local government to make headway. In most places they are in opposition and capping makes it that much harder for them to show how they would be different from Labour'.
He believed the stagnation caused by capping was feeding the public's growing disillusionment with local and national politics.
Mr Straw ridiculed the Tories for seizing power from local government while claiming to be rolling back the frontiers of the state.
'The greatest single paradox of the last 14 years is that a Conservative government elected on an anti big government ticket has created the most centralised system of government in Europe', he told delegates.