Council Tax> (Hansard, 8 February 1996)

The Minister of State, Department of the Environment (Earl Ferrers)
My Lords, my right honourable friend the Secretary of State for the Environment restated his intentions for capping local authority budgets on Wednesday 31st January. Basically, these limit the increases which local authorities may make in the council tax. My right honourable friends the Secretaries of State for Scotland and Wales have made separate arrangements.

§ Lord Boyd-Carpenter
My Lords, I thank my noble friend for that reply. Is he satisfied that what is now proposed will restrain a certain minority of local authorities from imposing excessive charges which will be extremely harmful to householders?

Earl Ferrers
My Lords, I am not certain to which local authorities my noble friend refers. Local authorities will be allowed to increase their council tax rates only by the amount by which the allowance for fire, education and other services has been increased in the rate support grant.

§ Lord Merlyn-Rees
My Lords, can the Minister explain why in the borough of Southwark my council tax has doubled? The Minister removed the transitional allowance; therefore, whatever the council does the council tax will be doubled. That is a fine way of controlling increases.

Earl Ferrers
My Lords, the answer is perfectly simple. The Government said that they would give a transitional allowance for two years. They actually gave it for three years but are not going to give it any more.

§ Baroness Gardner of Parkes
My Lords, what provision will the Government make to assist those authorities whose costs will be greatly increased by the changes in legislation relating to asylum? Many 330 boroughs envisage problems. The burden imposed by the special obligations and duties relating to asylum seekers falls on different boroughs every year.

Earl Ferrers
My Lords, all these matters are taken into account in the standard spending assessment.

§ Lord Archer of Weston-super-Mare
My Lords, can the Minister explain why the council tax will rise in London in particular? Can he say whether the system will also apply to the new unitary authorities?

Earl Ferrers
My Lords, it is a fact that some council taxes in London may rise. Given that the total standard support, commonly known as the TSS, has increased by more than the AEF and that SSAs in inner London are falling due to changes in the ACA brought about by changes in the NES, with consequent reductions in RSG and NDR, it is not surprising that council taxes in London may rise.

§ Lord Stallard
My Lords, I nearly said that the Minister's replies so far were NBG. Certainly his reply to his noble friend Lady Gardner on the question of asylum seekers is apposite. Is the Minister aware that in one London borough I know well the implementation of that Bill, if it comes into effect, will place an extra burden of between £4 million and £5 million in 1996–97 for that one item alone, to say nothing of the effect of all the other Bills that have gone through introducing housing benefit and welfare changes. They all affect homelessness and social services in every borough. No allowance is made for those increases in any of the schemes whose initials the noble Earl mentioned. Council tax will go up because of government policy. That is clear.

Earl Ferrers
My Lords, it is a complicated subject. I feel sympathy with the noble Lord if he finds difficulty in following it. I am in a similar position. That is why I thought it desirable to explain to your Lordships exactly what happens. The fact is that certain local authorities have additional expenditure. That all has to be covered under the standard spending assessment regime. Of course some council taxes may rise where councils have budgeted to remain under an SSA but are now allowed to increase their council tax and to go above it.

§ Lord Williams of Elvel
My Lords, is it not the case that it is government policy to force council tax increases? Has the noble Earl read what two outgoing senior civil servants in the Department of the Environment have said? Mr. Paul Britton said: That represents a view by ministers that the council tax can take more of the strain of paying for local services. It is not a huge change, but nevertheless it is a trend that present ministers want to see. The downside is your taxes go up". That is an increase from 21 per cent. to 26 per cent. in the proportion of local government funding provided by council tax by 1998–99. If that is ministerial policy there is no alternative: council taxes will go up. What is the justification for that policy?

Earl Ferrers
My Lords, it is fairly elementary. The Government wish to see a curtailment of public 331 expenditure by both local government and central government. The Government can curtail their own expenditure and it is up to local authorities to curtail theirs. We have given an increase in the SSA to account for various items such as fire, education, police services and so forth. That will enable the capping regime to rise by that amount. However, it is up to local authorities to run their own businesses as cost effectively as possible. There arc ways of making their own savings.

§ Lord Williams of Elvel
My Lords, the noble Earl does not seem to have read what the Chief Secretary to the Treasury said to the Treasury Select Committee in another place. He said that it was provided in the Government's budget strategy for council tax to go up by 8 per cent. in the next year. That is not controlling increases. It is a higher rate of increase than last year.

Earl Ferrers
My Lords, now the noble Lord seems to be arguing against himself. One moment he says we are forcing expenditure up; the next minute he says we are trying to keep it down.

Noble Lords
No!

Earl Ferrers
The noble Lord has just said that the Government are trying to raise expenditure. I have endeavoured to explain to your Lordships that one has to try to curtail expenditure of all kinds, whether by central government or local government. We have permitted a certain increase. The purpose of the capping regime is to prevent local authorities from going over the top. There are possibilities of making savings by efficiency gains.

§ Viscount Mountgarret
My Lords, what is the difficulty —I am a seeker after knowledge —of transferring the funding of local education to central government? It would have the effect of lowering the council tax, but the funding would have to be found elsewhere. That question might also apply to the police and fire brigade.

Earl Ferrers
My Lords, to answer the question would be a major philosophical exercise. If the funding were to he removed from the local authority it would go to central government and taxes would go up.

§ Baroness Hamwee
My Lords, will the Government accept that constraining the decision-making powers of local authorities by continuing the capping regime means they are also constraining participation by local people in decisions on tax and services? In doing so they are attacking the accountability and the very workings of democracy.

Earl Ferrers
My Lords, the noble Baroness has got it a little wrong. She would like local authorities to have virtual carte blanche in providing the services they think fit. That is wholly meritorious. The only trouble is that it provides no constraint over public or local authority expenditure. It is part of the philosophy of government to curtail public expenditure. That can only 332 happen by saying that central and local government cannot spend as much as we all wish. That is the purpose of the constraints on public expenditure.

§ Baroness Hamwee
My Lords, do the Government not accept the workings of the ballot box?

Earl Ferrers
My Lords, of course. That is why we look forward to the next general election when the noble Baroness will find that the same party comes back as did the last time.