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Mr. Osborne: My hon. Friend is right. The only reason that the Minister for Housing and Planning is in the Chamber is that he hopes to get on to the next piece of parliamentary business, which deals with the Planning and Compulsory Purchase Bill. Thankfully, however, we still have plenty of time to consider this important Second Reading.
My hon. Friend the Member for Mole Valley (Sir Paul Beresford) is right to say that the problems that the measure is designed to address—although I shall argue that it does so very poorly—are, first, rising council tax bills, brought about by the Office of the Deputy Prime Minister, as we must now call it, and, secondly, fixed pensioner incomes, which mean that people cannot pay for rising council tax bills that are several times the rate of inflation. That is the story that has driven the legislation. As my hon. Friend the Member for Eastbourne and several of my hon. Friends pointed out, council tax bills have risen by 69 per cent. since 1997—equivalent to 3p on the basic rate of income tax. They rose 12.9 per cent. last year and are set to rise 5.9 per cent. this year. In Macclesfield borough council in my constituency, they will rise by 8.4 per cent. this year—[Interruption.]
The Minister for Housing and Planning says, "Shame." My hon. Friend the Member for Macclesfield (Sir Nicholas Winterton) and I are leading a delegation—of two—to see his colleague, the Minister for Local and Regional Government, to make the point that Macclesfield borough council, like many other Conservative-run councils, is well managed, does its job effectively and is debt-free, yet it is having to put up council tax by 8.4 per cent.
The reasons for that rise were set out by Councillor Wesley Fitzgerald, who represents a ward in my constituency and is a member of the cabinet of Macclesfield council. He gives a clue as to the underlying
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causes for the Government's introduction of the measure. I am sure that his comments would be true of many borough and other councils. He says that the rate support grant for this year went up by only 0.94 per cent., even though inflation is 2.5 per cent., which resulted in a gearing effect of 4 per cent. on Macclesfield council's bottom line. He says that the council has to pay increases on nationally agreed wage settlements: 70 per cent. of council expenditure is on staff salaries. The community corporate plan will apparently cost the council £80,000 a year. There are targets to be met, such as those set by the Department for Environment, Food and Rural Affairs on waste recycling. Such targets may be a good thing, but they are set nationally and no provision is made to help local councils to meet them.
Such costs have forced Macclesfield and other councils to increase their council tax by several times the rate of inflation. After listening to the arguments that have been made in the debate, we can all agree that the band D rate is the correct way to measure the impact of council tax rises and council performance. The average council tax on a band D property is £478 more than it was in 1997. Unfortunately, I did not bring a copy of the 1997 Labour manifesto to the debate but I seem to remember that it made an explicit promise to avoid excessive council tax increases. If an increase of 69 per cent. since the publication of that manifesto is not excessive, I am not sure what is.
My hon. Friend the Member for Mole Valley lucidly set out some of the pressures on councils. They have also been noted by the Audit Commission, as several hon. Members pointed out. "Council tax increases 2003/04—Why were they so high?" is the title of the Audit Commission pamphlet. Even if Members cannot read the entire document, I recommend the summary, which is only two and a half pages. The Audit Commission, a wholly independent organisation, makes it clear that the main reasons for council tax rises are due to pressures from central Government.
Sir Paul Beresford: I am no fan of Torbay council, which is renowned as a not especially competent Liberal authority, but it is one of the councils that have been capped. Indeed, not only have the Government capped the council but they have loaded it with 24 comprehensive performance assessments next year, which will cost Torbay about £2.5 million. If gearing is the same—at one for four—that is £10 million extra on the council tax of Torbay residents.
Mr. Osborne: My hon. Friend gives a powerful local illustration of the general problem. I suspect that all Members—even though Labour Members would not admit it—are aware of examples of the red tape and centrally directed targets that are being imposed on their local councils and that have led to huge increases in people's council tax bills. People on fixed incomes or on incomes that are inflation-linked are struggling to pay those huge bills. That includes not only those aged over 70 but anyone whose income is inflation-linked, for example, people working in the public or private sector whose salaries rise only by inflation.
We heard an interesting exchange about the alternative proposed by the Liberal Democrats and it is fair to say that the hon. Member for Northavon struggled to explain the fairness of an average couple
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paying £630 a year more under his proposal—not the super-rich, as he implied, but the kind of people that the Liberal Democrat leader was referring to when he said on Radio 4's "Today" programme that the middle classes should pay more as well. Those are the people at whom he is directing the proposal.
The hon. Gentleman also struggled to explain what had happened to the Liberal Democrat promise to take £100 off people's council tax bills. For the greater information of the House, I have one of the leaflets that the Liberal Democrats distributed during the Brent, East by-election, which makes it absolutely clear that, as a first step,
"Every Council Tax payer in the"
"would see their bills cut by £100 in the first stage of the Liberal Democrats plans for a fairer tax system."
The hon. Gentleman, whom I have some time for, made a better stab at defending the fact that the Liberal Democrats have abandoned his policy than did his party leader—
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The umbilical cord connecting what the hon. Gentleman is saying to the terms of the Bill is stretching very thin indeed, and there may be other occasions when it would be more appropriate to develop the argument on which he is now embarked.
Mr. Osborne: I will, of course, take your advice, Mr. Deputy Speaker, and not explore alternative ways of alleviating the pressure on council tax payers, although I hope that you will allow me to say that the poor old hon. Member for Brent, East (Sarah Teather) still has that proposal on her website, so no one has told her that the Liberal Democrats have changed their policy.
The hon. Member for Northavon made one decent point in his speech: the Bill is not a solution to the problem of high council taxes, however it is billed; nor does it have any direct connection, as he properly pointed out, with council tax—hence its rather anonymous name, the Age-Related Payments Bill, which tells everything about the fact that it is not linked to the problem that it is designed to solve.
Of course, the second issue that the Chancellor had in mind was the problem of low pensioner incomes and the proportion of those low incomes that is now swallowed up by the council tax. It is interesting to look at the figures. I am not sure whether these figures were quoted by other hon. Members, so it is worth mentioning them now. Since 1997, 40 per cent. of the increase in the basic state pension for a typical single pensioner and a third of the increase in the basic state pension for a typical pensioner couple have been taken up in higher council tax bills. A huge proportion of pensioners' incomes is involved, but the Bill does not tackle the root problems.
The Minister and other hon. Members mentioned council tax benefit and it is worth reminding ourselves that we have a benefit that is supposed to tackle the problem of people unable to pay their council tax bills. The Government should not need to introduce new primary legislation to provide payments to help people with council tax bills because such a benefit already exists.
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The Government cannot rely on council tax benefit to help poorer pensioners because fewer than two in three of eligible pensioners claim that benefit. It is interesting to note that that represents quite a fall on the figure in 1998, when more than 75 per cent. of eligible pensioners claimed their council tax benefit. I have never seen a Government explanation of that fall. There has been a drop in the take-up of council tax benefit and plenty of evidence suggests that that low take-up is particularly skewed towards the poorest and older pensioners. Instead of trying to tackle the problem with council tax benefit, the Government have introduced this sticking-plaster solution to give all older pensioners a universal payment.
One should note in passing that it is good that the Government now have enthusiasm for universalism and believe in non-means-tested, universal benefits. Perhaps, when the Pensions Bill is debated on the Floor of the House next week, the Government will make a policy U-turn—they have made lots of U-turns recently—to support an increase in the basic state pension by linking it to earnings. [Interruption.] I am sorry, would the hon. Member for Harwich (Mr. Henderson) like to intervene?
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