Council Tax (Hansard, 22 October 2003)

§ 1. John Barrett (Edinburgh, West)
What estimates he has made of the cost to local authorities of administration of (a) council tax and (b) council tax benefit for 2002–03. [133433]

§ The Minister for Local Government, Regional Governance and Fire (Mr. Nick Raynsford)
In 2002–03, budgeted council tax benefit administration costs in England totalled £205 million. Council tax collection costs totalled £318 million.

§ John Barrett
I thank the Minister for that answer. Given the costs of the administration of council tax, which remains one of the most unjust, unfair and regressive taxes, will the Minister, in the balance of funding review, follow the leader of the Scottish Executive and consider scrapping the council tax and replacing it with a tax based on ability to pay?

§ Mr. Raynsford
Yesterday, there was a meeting of the balance of funding review at which we agreed to look at a number of options. The hon. Gentleman will no doubt be pleased to know that the issue of a local income tax is one that we have thought worthy of the consideration. He and his party, however, should not be so optimistic about the potential savings that they have trumpeted—some £500 million. The letter that I have received from the Liberal Democrat spokesman confirms that on virtually every point that I raised they are considering options for the administration of a local income tax. They have not worked it out. It is the usual Liberal 624 Democrat story—their talk is good but they have not done their figures. I suspect that they will be in for a nasty shock.

§ Mr. Jon Owen Jones (Cardiff, Central)
I hope that the Minister will not be beguiled by the seeming attractions of local income tax. Is it not true that some of my constituents who live in mansions worth millions of pounds would find themselves not paying anything to the local council, whereas hard-working families in much more modest accommodation would find themselves paying thousands of pounds more?

§ Mr. Raynsford
My hon. Friend makes an extremely good point. That is why we are approaching this whole issue in an extremely open-minded and thorough way. We are not going to come out with glib promises of quick improvements. We want to look at this closely, because it is a serious issue, and my hon. Friend rightly highlights one of the obvious anomalies that would flow from the abolition of the only property tax that currently exists in this country. One of the bizarre features of the Liberal Democrat proposals—

§ Mr. Speaker
Order. The Minister can tell that to the hon. Gentleman privately.

§ Mr. Eric Pickles (Brentwood and Ongar)
Capping would have an effect on the costs of collection. I would like to commend and endorse the views of the right hon. Gentleman on capping. I am sure that he spoke for many in the House when referred in this Chamber on 24 June 1992 to the unfairness and unsatisfactory…process of capping. He concluded: We see a sad and sorry picture of the imposition of centralised diktats by Ministers who cannot possible understand the intricacies and the detailed implications for local communities".—[Official Report, 24 June 1992; Vol. 210, c. 344–46.] That is in stark contrast to his present views, expressed in his letter to The Daily Telegraph today. He now threatens to break his promise of no capping for excellent councils. With pensioners on strike and chief constables warning of a breakdown in law and order, is that U-turn evidence that the Government are now panicking because their stealth tax has finally been rumbled by the public?

§ Mr. Raynsford
I find that somewhat rich coming from a party that capped, capped and capped again when in power. What the Government are doing is rightly focusing on the real concerns that are felt by many people throughout the country at the unreasonably large council tax increases that have been imposed, interestingly, predominantly by Conservative councils—councils such as Wandsworth, which cut its council tax by 25 per cent. in election year, and put it up by 45 per cent. lastyear—[Interruption.]

§ Mr. Speaker
Order. The hon. Member for Brentwood and Ongar (Mr. Pickles) should hear the Minister's reply.

§ Mr. Peter Pike (Burnley)
Does my right hon. Friend agree that for many people who are just above council tax benefit level, the council tax increases are becoming increasingly unacceptable? That is why I welcome the type of statement that he made a few moments ago—that the Government are looking at the matter in a positive way. In the meantime, will he recognise that councils should look more positively at people who are struggling to pay and not incur a cost by summonsing them if they clearly show that they are going to pay by 31 March? Being late with one or two instalments should be accepted if people are struggling to pay.

§ Mr. Raynsford
My hon. Friend is absolutely right to say that people are increasingly concerned about the council tax increases that have been imposed by some councils. As I said, it was predominantly Conservative councils that had an average increase in council tax this year of 16 per cent., which is by far and away the highest and should cause concern.
It is right that people should pay council tax, but it is equally right that those responsible for administering it should be sensitive in its collection and accept the fact that some people have difficulties. A firm but sensitive approach is obviously correct.

§ Mr. Edward Davey (Kingston and Surbiton)
Will the Minister confirm that the total administration costs of council tax—the figures that he has announced today and other related figures such as the valuation appeals costs—amounted to a massive £569 million last year? Will he also confirm that that means that 4 per cent. of council tax revenue goes on bureaucracy alone? That compares with 1 per cent. for income tax administration costs. Will he therefore say that, in the balance of funding review, the Government will not only get rid of this unfair tax, but make sure that hundreds of millions of pounds of savings can be given back to hard-pressed council tax payers?

§ Mr. Raynsford
The hon. Gentleman has not done his figures right, and this is the usual story with the Liberal Democrats. The figures that I have just given show that expenditure on council tax collection and council tax benefit administration is £520 million. I put it to the hon. Gentleman that it is a pretty fantastic proposition to put to the public that the Liberal Democrats expect to save £500 million and that their whole scheme for local income tax could be administered for a mere £20 million. He admits in his letter that he has not yet worked out what administration system he will use, so he is telling us something that is totally non-credible.