Previous SectionIndexHome Page

5.45 pm

As I have said before, council tax benefit subsidy limitation is not capping through the back door. Authorities can set budgets above the guidelines if they wish, provided that they do not set budgets that are considered excessive and would require the use of the reserve power. In fact, four out of five councils in this budgetary round have set increases that are different from their guidelines. I believe that they should be able to continue to do that. The confusion of Opposition Members about capping and council tax benefit subsidy limitation is not helpful to councils when they are seeking to set their budgets. I believe that the restrictions that are identified in the amendments are unnecessary and I hope that the Opposition will not press them.

Amendment No. 1 would put a time limit on the use of the new reserve powers to limit council tax increases, ending their use after 1 April 2005. Official Opposition Members made it clear in Committee that they would re-table their amendment so that it might be debated on the Floor of the House. Liberal Democrat Members made it clear in Committee that they opposed any capping of local authorities' budgets. The official Opposition are still somewhat unsure about where they are going in this instance. However, I welcome the confessional conservatism on the Opposition Benches. I often feel that we should be here as members of the cloth taking the real confessions of Conservative Members. I have a deep respect for confession.

Sir Paul Beresford: On confessions, I would like the Minister to be selective and subjective.

Ms Armstrong: I accept that the hon. Gentleman does not want to see the end of capping and is not one of the confessional Conservatives.

The Liberal Democrats made it clear this week that they think the Government have no role to play in protecting local taxpayers from irresponsible increases in taxes.

24 Mar 1999 : Column 432

I happen to disagree. The Government disagree, and we made that clear in the Labour party's manifesto. We are putting our money where our mouth is on the basis of that manifesto. The Government have a role to play and we cannot shirk our responsibilities. I made it clear in Committee--I think Opposition Members listened but did not agree--that these are reserve powers and we will hold them in reserve.

As I have been at pains to emphasise, we are working in partnership with local government to improve and modernise it. We therefore hope and expect that we will use the reserve powers increasingly rarely, and not at all by the year 2005, if not earlier. However, we cannot rule out the possibility that some local authorities may decide to act irresponsibly. If they do, we need to be able to protect their local taxpayers. For that, we need to retain the reserve powers. I ask Opposition Members to withdraw the amendment.

Amendments No. 101, 102, 105 and 106 would provide that the factors referred to by the criteria used to decide whether the budget requirement is excessive for the council tax benefit limitation scheme must apply to categories of authorities and not to different authorities. I acknowledge that the hon. Member for Mole Valley (Sir P. Beresford) is rather frightened that we would be partisan. I hope that that is not because of his experience of exercising powers in the past. I can assure him that we wish to be anything but partisan. Indeed, the list that was read out by the hon. Member for Eastbourne (Mr. Waterson) demonstrated clearly that we are not partisan. I would say to Opposition Members that the subsidy limitation kicks in only as a result of a local council's decision, not a Government decision. Many of the councils that the hon. Member for Eastbourne identified have taken decisions that bring them in well below the guideline. They have taken that decision and, therefore, their council tax payers will not suffer in the way that he mentioned because they have taken decisions that keep them outside the guideline.

Mr. Waterson: The right hon. Lady correctly makes the point that councils can make individual decisions to try to protect themselves from those provisions, but that is a separate matter. Given that we are all in confessional mode, is she now admitting that the 10 councils whose names I read out, most of which are Labour controlled, are most likely to be affected on the basis of the calculations?

Ms Armstrong: We are getting into difficult territory. I am not of the Catholic faith and confession is not part of my good Methodist tradition. I am trying to tell the truth, which is that it is up to the council to decide its council tax levels. If it exceeds a guideline level, we expect it to share with national taxpayers the burden of council tax benefit. The councils in the list that the hon. Gentleman read out have overwhelmingly decided not to exceed the guideline.

Sir Paul Beresford: The Minister is carefully glossing over the fact that a council's decision on the level of its council tax for a particular year may be related to its SSA and revenue support grant, which are in the Government's hands.

Ms Armstrong: Of course I acknowledge that. However, given that this year, all councils received at

24 Mar 1999 : Column 433

least as much as they did last year, and that the increase in the overall Government grant to local authorities through RSG and the uniform business rate was higher than the hon. Gentleman was ever able to deliver, his point is a little bogus.

We used the same criteria and factors for all authorities. However, some authorities thought that we should have used different criteria and factors for different authorities, and they made representations to us to that effect. Some district authorities, for example, thought that they should be treated differently from counties because districts are responsible for collecting arrears of community charge, and that affects the level of council tax set in districts but not in counties. Other authorities argued that particular individual circumstances applied to them and that those should be taken into account.

It is possible that in future years there might be good reasons for differentiating. There may be an argument for treating an individual authority differently because of its particular circumstances. We discussed that in Committee. In accordance with normal principles, the Secretary of State would be required to act fairly, but fairness may require different treatment. That is one of the problems with the working of the current law. We need to have the ability to act accordingly and respond to particular needs in exceptional cases. We would not be able to do that if we accepted the amendments, so I ask hon. Members not to press them.

Amendment No. 103 seeks to give local authorities that budget below SSA protection from the council tax benefit subsidy limitation scheme, where the criteria refer, as they do for 1999-2000, to the budget for the year beginning in 1998. Conservative Members seem to have forgotten the principle underlying that scheme. Perhaps I should remind them of it.

When council tax rises, so do the costs of council tax benefit, and that cost is borne by the local taxpayer. Where there is a large increase in council tax, we do not believe that the national taxpayer should pay for the costs arising from those local decisions, and that is the aim of the scheme. The national taxpayer will continue to bear significant costs, but the scheme would limit them.

Mr. Burstow: That provokes a significant question about the application of that principle. The Secretary of State for Education and Employment has been writing to local authorities, urging them fully to spend their education SSAs. In doing so, some authorities, at least in principle, could exceed the guideline and, as a consequence, face the Minister's wrath and have benefit clawed back. Surely that is wrong because it sends the wrong signal to councils that the Government want to spend on education.

Ms Armstrong: I am afraid that the hon. Gentleman is wrong. This year's criteria allow an increase of either 4.5 per cent. or an amount commensurate with the increase in SSA. An increase in SSA that is higher than 4.5 per cent. is accounted for.

Sir Paul Beresford: Will the right hon. Lady give way?

Ms Armstrong: No. The hon. Gentleman is just enjoying himself again.

24 Mar 1999 : Column 434

I assume that the purpose of amendments Nos. 84 and 85 is to prevent the scheme applying for 1999-2000. As I have already explained several times, the clause simply provides for regulations that will require major participating authorities exceeding the guideline to make payments to billing authorities. It does not affect the establishment of the scheme as a whole.

We have already made regulations to change the tax-setting equation so that the local authority contribution to council tax benefit costs is raised from council tax. Councils took that into account when setting their council tax for 1999-2000. The amendments would therefore have little effect, and I ask that hon. Members not to press them.

Amendment No. 42 seeks to exempt from capping councils that budget below their standard spending assessment. We made it clear in the White Paper that we would be taking reserve powers that allowed us to cap in those circumstances.

The new reserve capping powers in the Bill are designed to enable the Government to step in and protect council tax payers if a local authority increases its council tax unreasonably. Standard spending assessments are a simple measure that the Government use as a basis for distributing the revenue support grant. They have no more significance than that. It follows that the relationship between a council's budget and its standard spending assessment has no bearing on whether a particular year's increase is deemed to be excessive.

We need only consider some councils' behaviour in setting council tax rates for 1999-2000 to realise that. South Cambridgeshire has increased its council tax by 175 per cent.; Tewkesbury's increase is 49 per cent.;and Wandsworth, which Conservative Members have mentioned, has made a 21.5 per cent. increase. All those councils are budgeting below SSA, but making large increases in council tax.

Next Section

IndexHome Page