HC Deb 18 December 2003 vol 415 cc1712-4
11. Mr. Paul Tyler (North Cornwall) (LD)

What the average proportion of income paid in council tax by low-income households is in England in 2003–04; and if he will make a statement. [144726]

The Paymaster General (Dawn Primarolo)

Information for 2003–04 is not available. The latest available information, for 2001–02, shows that the bottom 20 per cent. of households paid 4.8 per cent. of their income in council tax, after allowing for council tax benefit.

Mr. Tyler

The Minister will know that in Cornwall, and in the south-west generally, many households fall into that category while others are just above that level, and do not benefit from the council tax benefit concessions. Will she now give us a straightforward answer to a straightforward question? Has that proportion risen or fallen since the Government came to power?

Dawn Primarolo

I am sure that the hon. Gentleman will congratulate the Government, as will his constituents, on the extra £340 million announced on Wednesday 10 December. That shows that the Government recognise the particular pressures on local authorities in terms of the environment and social services for children. That money is on top of the extra £420 million announced in the provisional statement in November. We should make the comparison with previous years. By next year, local authorities will have received a real-terms increase of some 30 per cent. since 1997, as against a fall of 7 per cent. in the last years of the previous Government.

I note that the hon. Gentleman's party is not suggesting that it would vary expenditure levels from the Government's current position, so perhaps he would like to tell us what the magic answer is that the Government's proposals do not provide.

Mr. Barry Gardiner (Brent, North) (Lab)

Given the effect of the council tax on low-income families, does my right hon. Friend agree that it is unsurprising to find that council taxes in Labour areas are, on average, the lowest, while those in Conservative areas are the highest, and those in Liberal Democrat areas are the second highest?

Dawn Primarolo

What is important is that the Government and local authorities work together to improve the quality of services, and that the decisions that local authorities take for their council tax payers are reflected in the quality of the services then provided. As the Government made clear as recently as last week in the pre-Budget statement, we stand ready to play our part; the question now is whether local authorities will continue to play theirs.

Sir Patrick Cormack (South Staffordshire) (Con)

Does the right hon. Lady accept that the last question was somewhat loaded, and will she also assure the House that however much the Liberal Democrats might rabbit on about local income tax, this Government will never introduce it?

Dawn Primarolo

The Prime Minister has made it clear that we do not favour that particular proposal, but for such any such proposal to be taken seriously, the Liberal Democrats would need to move beyond generalisations and tell us exactly how it would be achieved, how much it would cost and what extra bureaucracy would be entailed, particularly in respect of employers, who currently collect pay-as-you-earn. How would they deal with such a highly complex system, and how much would it cost them?

Mr. Stephen McCabe (Birmingham, Hall Green) (Lab)

Does my right hon. Friend agree that replacing the council tax with local income tax would entrench regional disparities, and result in the poorest people in the poorest regions bearing a far greater proportion of the cost?

Dawn Primarolo

As you, Mr. Speaker, often say to Ministers at the Dispatch Box, it is not possible for us to speculate on the details of Liberal Democrat proposals. As always, the Liberal Democrats provide no detail and simply make win, win generalisations. Even superficial scrutiny of these proposals would reveal the problems of local disparities, the complexity of the system and the burdens on employers. As a result, the security of finance to local authorities could be seriously undermined.

Mr. Andrew Tyrie (Chichester) (Con)

A moment ago, the Paymaster General referred to the £340 million that has been given to help contain the massive council tax rises resulting from Labour's burdening of local authorities with huge demands to supply more services. Is she aware that, either through incompetence—as I suspect—or design, the distribution formula means that each council tax payer in East Sussex and West Sussex will receive precisely tuppence of that £340 million? Does she not realise that those who are worst hit by these policies are poor people and pensioners in constituencies such as mine? How can she possibly justify a figure of tuppence a head?

Dawn Primarolo

I welcome the hon. Gentleman to the Dispatch Box—this is the first time he has asked a question in Treasury orals. If he cares to look at the tax and benefit reform undertaken by this Government and opposed by his party, he will see, for example, the massive increases in respect of families with children in the poorest fifth of the population. On average, they will be £2,900 a year better off by September 2004. The poorest one third of pensioner households have gained £1,600 a year in real terms. We have given £3.6 billion extra in resources and, as the hon. Gentleman well knows, the targeting of those resources at the very poorest in our community is the Government's priority, but his party has failed to commit itself to that strategy.