HC Deb 02 April 2003 vol 402 cc901-3
3. Mr. Hugo Swire (East Devon)

If he will make a statement on the level of council taxes in England for the 2003–04 financial year.[106161]

The Minister for Local Government and the Regions (Mr. Nick Raynsford)

The average council tax in England will increase by 12.9 per cent. in 2003–04. This average conceals very marked differences between councils and we are looking further at those councils whose council tax increase is exceptionally high. Increases on that scale are very difficult to justify in a year when every council received an above-inflation grant increase from Government. Councils must understand that continued year-on-year increases on that scale will not be acceptable.

Mr. Swire

I am grateful to the Minister for that answer. He will know that the council tax for an average band D property in the Deputy Prime Minister's own area of Kingston upon Hull has risen by 10.4 per cent. this year, but that compares with a 17.95 per cent. rise for an equivalent property in Devon. It is clear that there has been a transfer of funding from the shire counties to the Labour heartlands. Devon's population has a high proportion of pensioners, and many of them are on low incomes. They have seen their pension rise by the equivalent of 4.1 per cent. this year. Will the Minister explain clearly, succinctly and shorn of spin why they are being penalised by having to pay to shore up the Labour heartlands in the north?

Mr. Raynsford

There is no truth whatever in the hon. Gentleman's allegation. Devon county council will have to justify the large council tax increase that it is proposing to the pensioners whom he described because they will have great difficulty coping with a large increase. Those people will look at the contrast with councils such as East Devon district council and Labour-controlled Exeter city council, in which there are modest council tax increases despite their receiving relatively modest grant increases, and ask why Devon county council, which received a 4.2 per cent. increase in its Government grant, has increased their council tax by so much.

Martin Linton (Battersea)

Is my right hon. Friend aware that the highest council tax increase is being levied by a Conservative-controlled council? Wandsworth borough council is not only increasing its council tax by 57.3 per cent.—33 per cent. of that is on its own account—but it is underspending on education by £3 million and making petty-minded cuts to funding for a children's zoo and a nature studies centre.

Mr. Raynsford

My hon. Friend is right to point out that his local authority, Wandsworth borough council, has imposed the largest council tax increase of any authority in the country this year. He did not point out, although he might well have done, that the council chose last year—an election year—to cut its council tax by 25 per cent. There was a 25 per cent. cut in an election year and a 57.3 per cent. increase the following year. The people of Wandsworth will see through such a crude attempt to bribe the electorate.

Mr. Edward Davey (Kingston and Surbiton)

Will the Minister confirm that the poorest 20 per cent. of households in England pay more than three times as much council tax, as a proportion of their income, as the richest 20 per cent.? Given that this year's record council tax rises will make that unfair situation even worse, when will this Labour Government act against the most unfair tax in Britain today? Why is the Labour party supporting an unfair Tory tax?

Mr. Raynsford

People who face large council tax rises will have to ask very searching questions of their councils, whether they are Conservative-controlled councils, which have imposed the largest council tax increases of any councils this year, or councils controlled by others. Although the hon. Gentleman might be critical of some aspects of the council tax, alternative proposals, which often come from his party, would have nightmarish consequences. If he favours a local income tax, he will have to explain how poorer areas will survive on substantially less revenue than rich areas in which wealthy people would pay more income tax.

Mr. David Watts (St. Helens, North)

I congratulate my right hon. Friend on introducing a system of local government funding that is much fairer than that of the previous Tory Government. Will he assure me that he will end the system of floors and ceilings as soon as possible so that local authorities such as mine can get the resources to which they are entitled and councils such as Westminster and Wandsworth will not receive millions more than their entitlement under the new system?

Mr. Raynsford

I am grateful for my hon. Friend's thanks for our changes. We are committed to creating a fairer distribution system. His authority, which has received an increase of more than 8 per cent., appreciates that. However, local government welcomes floors and ceilings because they provide an element of certainty. That is especially important when many variables, including changes in population, can unexpectedly result in a significant fall in entitlement to grant. Floors provide protection against that, and we do not intend to withdraw that component in the grant distribution scheme.

Mr. Eric Pickles (Brentwood and Ongar)

In the past few weeks, the right hon. Gentleman has threatened local authorities with capping. In his answer to my hon. Friend the Member for East Devon (Mr. Swire) today, he suggested that he was still considering authorities. Last week, the Department made it clear that it had decided not to cap. Does the Minister's reply to my hon. Friend therefore relate to this year or next year? Will he confirm that councils that are being forced to increase their council tax are doing nothing more than passing on the Labour Government's stealth tax? Is he reluctant to cap because he knows that if he does so, the spotlight will shine on his fiddled and discredited financial settlement?

Mr. Raynsford

I am afraid that the hon. Gentleman is wrong on almost every count. That is not uncommon. Like any prudent Government, we are continuing to examine those authorities that have introduced very large council tax increases. I have made it clear that we shall do that next year, too. It is simply not sustainable for local authorities to impose increases of that order on their electorate. However, our policy is to give local government greater freedom and flexibility and not to intervene in the same way as the Conservative party when it was in power by crudely capping authorities and forcing them to make highly disruptive in-year changes.

The overriding message of this year's council tax increases is that Tory councils cost people more. Tory councils are increasing their council tax by 16 per cent. and have the highest average council tax. The hon. Gentleman should deal with his party.