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Mr. Peter Pike (Burnley): The council tax is also a problem in my constituency. Does the hon. Gentleman not accept that the real problem is the gearing of the council tax system, which replaced the old poll tax? As a result, councils are left in the unfortunate position of having to make these increases, or of having to cut the essential services that we are debating today.
Mr. Hendry: Gearing undoubtedly plays a major part: if we lose 1 per cent. of Government funding, the council tax has to go up by nearly 3 per cent. to compensate. But the fundamental problem for East Sussex is that we are £30 million short this year as a result of the extra responsibilities that councils are required to carry out. The amount of money that the Government have provided simply does not make up for that shortfall. That is the biggest reason why we face these difficulties.
Ministers have shown a breathtaking complacency in respect of this issue. Perhaps they simply do not recognise the implications of the decisions that they have taken. Even though it may be too late to think again for this year, I hope that, as a result of speeches such as this, of articles in local newspapers—they are often written by the editors, and not just by people with a particular political perspective—and of petitions such as the one that I shall present this week, which includes the names of more than 1,000 of my constituents who are desperately worried about the council tax, Ministers will be prepared to think again for next year.
Mr. David Watts (St. Helens, North): Can the hon. Gentleman explain to me why council tax levels in areas such as his own are often less than those in some of the most deprived areas—areas that he believes the Government have transferred resources to?
Mr. Hendry: What one finds is that Conservative councils cost people less. What we need to do is to compare band D houses, rather than follow the Minister's spurious argument, and consider average properties. In inner-city areas, which are Labour-run, the average property is in a lower council tax band, so the argument is spurious. On comparing band D with band D, we find that Conservative councils cost people less than Labour ones, and Labour councils cost people less than Liberal Democrat ones. So the solution for those who want a lower council tax, in spite of this year's appalling settlement, is to have a Conservative-controlled local authority.
We in East Sussex have the third lowest gross domestic product in the country. When Labour Members hear that, they often laugh because they find it implausible, and many people say, "East Sussex must be full of rich people because the houses are expensive". However, the reality is that many of them bought their homes 20 or 30 years ago, when prices were much lower.
They own houses of significant value, but they do not necessarily have high incomes. And there are huge problems for people seeking to buy a home in the community in which they have grown up, and for those who need to move to a particular community because their work requires them to be there.This year's Government funding formula for the council tax simply does not take account of the degree of social need in East Sussex, or even of the higher cost of delivering services. Delivering the same services in my constituency as those in the constituency of the hon. Member for St. Helens, North (Mr. Watts) means that people have to be paid more, because their mortgages are higher and the cost of living is higher. To take just one example, the south-east has to pay more for a residential care home worker than in other parts of the country because the cost of living is that much higher, but the council tax formula does not take account of that need. I plead with the Minister to review the system again this year so that we can have a fairer system next year.
The only good fortune for my constituents in East Sussex is that they do not live in Eastbourne. Wealden has had a 5 per cent. increase in council tax, but in Eastbourne, after just one year of Liberal Democrat control and virtually no new services to show for it, council tax is going up by 38 per cent.
Mr. Edward Davey: Can the hon. Gentleman explain why it is the Government's fault in one district council area and the local council's fault in another?
Mr. Hendry: Because the formula for both Eastbourne and Wealden is the same. Conservative-controlled Wealden managed to introduce a council tax increase of 5.1 per cent. and Liberal Democrat-controlled Eastbourne introduced an increase of 38 per cent. It does not take a mathematician to work out where the blame lies because both councils received the same treatment from the Government.
The Government have neglected the south-east not just in respect of council tax. Another example is housing. The current system is crazy because it allows the Deputy Prime Minister, who has never even tried to squeeze his Jaguar down the narrow lanes of East Sussex, to decide how many new houses we will be obliged by law to build in the region. That decision filters down from the region, through the counties to the districts. We simply cannot accommodate the additional number of houses required of us in Wealden without massive damage to our infrastructure.
A town such as Uckfield is to have 500 new houses built, which will change the nature of the town for ever. The only access to the development is by a road in a residential area that is already over-used and over-crowded. Furthermore, no additional primary school is being proposed for that particular development, even though many of the other primary schools are full. No more additional health services are proposed, although doctors' waiting lists are already at capacity. The train service is one of the worst in the country—Uckfield is only 45 minutes from London, but it takes an hour and a half by train. Judged in terms of travelling times, Uckfield is further away from London than Doncaster or Bristol. Despite the appalling lack of investment in our infrastructure, we are being forced to accept the building of many more houses.
I agree with my right hon. Friend the Member for North-West Hampshire (Sir George Young) about the need for additional low-cost housing. I mentioned earlier the urgent problems faced by people moving into the area and those who want to stay in the area where they grew up. That is particularly difficult for people working in education, health, the police and the fire service. Many people simply cannot afford to live near the places where they work, but in the case of the fire service, they clearly have to. Firefighters in my area often live in small flats in the town centre, often above shops, whereas in many other parts of the country they can live much more comfortably on their higher salaries. Although we need additional affordable housing, we certainly do not need thousands and thousands of five-bedroom executive houses. From now on, however, the local authority will be unable to determine what sort of houses should be built. Once again, we are on the receiving end of the Government's damaging decisions.
We should make better use of housing stock that is already available and make greater use of empty properties and of properties where a single elderly person, often on income support, cannot afford to cover the cost of living expenses. We should help them to live in greater comfort by subdividing their homes and providing them with an income. While making better use of existing housing stock, we should at the same time encourage greater regeneration of the north and the midlands, so that it becomes natural for people to look for work in those areas.
Shona McIsaac: What does the hon. Gentleman mean when he talks about subdividing pensioners' homes? Would it be done in the private or the public sector? Chucking grannies out of their homes to subdivide them does not sound much like a popular caring policy.
Mr. Hendry: I shall give the hon. Lady a very clear example. A while ago, I visited an old lady in her 80s, who has since died. She had no mortgage on the home in which she lived for more than 50 years, since she got married. She could not afford to heat her home. She lived on income support, and had no income other than her state pension and additional benefits. She was living in severe hardship.
To me, it made much more sense for a housing association to work in conjunction with that elderly lady to enable her to live in a downstairs flat in her property, and to turn the upstairs into a self-contained flat. A suitable tenant—that is, not someone playing the drums until 3 o'clock in the morning—would have enabled her to continue to live in her family home. She would have derived an income from the person upstairs and been able therefore to live in much greater comfort. With a bit of forward planning and joined-up thinking by the Government, the cost of the scheme could have been regained from the lady's estate when she died.
We are not forcing people out of their homes. We are enabling people to live with greater dignity in their homes in a more appropriate way than is possible for many at the moment.
Shona McIsaac: I am intrigued by the idea, as I still do not see how it can assist elderly people. Of course, it is possible for people with large houses worth a lot of money on which the mortgage has been paid off to
benefit from existing financial schemes. Such schemes realise equity and capital from properties to enable people to live in more comfort. However, I am very concerned that the hon. Gentleman says that the Government should be involved in that. It still sounds to me as though the hon. Gentleman would force elderly people in large properties out of their homes.
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