HC Deb 18 November 1997 vol 301 c139
7 Mr. Townend

What assessment he has made of the estimates made by local authorities of the costs to them in 1998–99 from the changes to advance corporation tax.[14847]

The Minister for London and Construction (Mr. Nick Raynsford)

The Local Government Association, with the assistance of the United Kingdom steering committee on local authority pensions and my Department, is conducting a survey of local government pension scheme administering authorities to assess the impact of Budget tax changes on their pension funds, both for the current financial year and at 1 April 1999. The results will be available shortly.

Mr. Townend

Would the Minister be interested to learn that I have a letter from the director of finance of East Riding council, which says that in 1998–99 the additional contribution required will be £2.55 million? If that contribution is delayed until the following year, a further £75,000 will be needed every year. How does the Minister expect my council to find the cash? Are the Government going to increase the revenue support grant by £2.55 million, or will they expect the poor council tax payer to shoulder the burden of the first Labour Budget and another Labour tax increase?

Mr. Raynsford

When the figures are analysed in detail, the hon. Gentleman will find that he has referred to the gross costs—no account has been taken of any off-setting savings. A net figure will be necessary before an informed conclusion can be reached. The contribution of local government employers was fixed in 1995 for the four-year period to 1999. There are no powers to change contributions during that period. The impact of the changes, to which I referred earlier, and offsetting savings will be taken fully into account by the Government when we have received the full response to the survey from the Local Government Association. As my hon. Friend the Minister for Local Government and Housing said, we have already made it clear that we will take full account of that when assessing financial contributions for 1999–2000 and years beyond.