Council Tax (Hansard, 13 November 2003)

§ 11. Mr. George Osborne (Tatton)
What steps the Government are taking to reduce the council tax burden on pensioners. [137452]

§ The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Phil Hope)
We understand the pressures that some pensioners face with their council tax bills, but we believe that we should target help through the benefits system to those in most need. Council tax benefit is paid to nearly 2.5 million pensioners. With the recent introduction of pension credit, almost 1.9 million pensioner households will qualify for more help, or qualify for help for the first time.

§ Mr. Osborne
I did not really like the Minister's emphasis on the word "some". Many pensioners struggle with council tax bills. Pensioner are often, as the Minister knows, on tight budgets, and a sudden increase affecting one aspect of that budget has a disproportionate impact. Is he aware that some pensioners pay up to 10 per cent. of their income in council tax bills—[HON. MEMBERS: "Some?"]—and many more pay equally substantive amounts of their income? What does the Minister think would be a fair proportion of a pensioner's income to be spent on council tax?

§ Phil Hope
The hon. Gentleman raises a key point, which is causing debate across the country. We are aware of it. The amount of council tax that pensioners have to pay is a matter for local councils. They are responsible for it and for its impact. The grant that local authorities have received has increased in real terms by 25 per cent. since 1997—in contrast with a cut of 7 per cent. in real terms during the last four years of the Conservative Government. When it comes to local councils deciding on tax levels, the Conservative party might like to reflect on its record in office and what it achieved—that 7 per cent. cut—compared with the 25 per cent. increase for authorities around the country under this Government.

§ Mr. Osborne
As I am sure that the Minister knows, the Government's Red Book is already planning for an increase in council taxes of double the rate of inflation; it is not entirely up to local councils to determine the level of council tax. Perhaps I may ask again the question that I put in my first supplementary: what does he think would be a fair proportion of a pensioner's income to be spent on council tax?

§ Phil Hope
I understand the point that the hon. Gentleman is making. My point is that the answer 159WH depends on local authorities' decisions about council tax. Vale Royal authority, in his constituency, had a grant increase of no less than 12.5 per cent. in this financial year, and the county council of Cheshire had a 7.9 per cent. increase in grant from the Government. When local authorities make decisions about the amount of council tax that pensioners will have to pay, they will take into account the increase that they have received from this Government. We support local authorities. We have given them freedoms and flexibilities, starting from 18 November, to make choices about pension discounts and other ways of giving support to pensioners, if they so wish. The hon. Gentleman must take the matter up with his local authorities.

§ Rob Marris (Wolverhampton, South-West)
One aspect of the issue is the take-up of council tax benefit. Some innovative councils, such as Thameside, have fantastic take-up rates for council tax benefit. What sort of encouragement is his Department bringing to bear on local authorities to run innovative council tax benefit take-up campaigns, which would assist further in sorting out some of the issues?

§ Phil Hope
My hon. Friend is absolutely right to point to the importance of take-up. Local authorities have a good record. However, in some areas, particularly those where pensioners own their homes, take-up is not as good as it should be—it can be as low as 40 per cent.—and we could do considerably more.
I am pleased to say that the introduction of the pension credit gives us a good opportunity in that regard. It will go up, and the additional money will not be clawed back. We are going to increase pensioners' savings by as much as £14.79 per week for a single pensioner and £19.20 per week for a couple. The combination of pension credit and council tax benefit will make a real difference—it will reinforce the incomes of pensioners, particularly those in most need.

§ Mr. Deputy Speaker
Order. I am grateful for the co-operation of hon. Members, which has enabled us to be inclusive this afternoon. I shall arrange for more questions to be printed on the Order Paper for the next cross-cutting questions sitting.