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Mr. Steen : The Minister mentioned excellent authorities. Is he aware that Torbay council, which is run by the Liberal Democrats and is very poor, had a 10.1 per cent. increase and the Government have capped it? Is he also aware that, in spite of the speech by the hon. Member for Kingston and Surbiton (Mr. Davey), the £100 rebate, which every council tax payer was going to receive if the Liberal Democrats got into office, has gone out of the window? Did he hear the hon. Gentleman mentioning the £100 rebate, which we have all been looking forward to?

Mr. Raynsford: I shall return to the £100 rebate, and I hope that the hon. Gentleman enjoys that passage of my speech. Although I have to say that he is right in saying that Torbay council is not an excellent authority, his party, which was responsible for running it for a long time, was probably as responsible as the Liberal Democrats for its current position.

As the hon. Member for Kingston and Surbiton rightly said, it is local authorities, not the Government, that set the council tax paid by householders. As I told the House on 29 April:

That is less than half the previous year's increase and lower than many people predicted. It is also the lowest in the past nine years.

A large number of authorities have set lower council tax increases than they originally proposed, not least because of the Government's strong messages to local authorities to the effect that high increases were both unnecessary and unacceptable. Nevertheless, some authorities' budgets and council tax increases are still too high and impose unreasonable burdens on council tax payers.

The Government made clear their intention to take action against those authorities whose budget requirements they consider excessive. People who are troubled by the fear of large council tax increases—I am thinking particularly of pensioners living on fixed incomes—will appreciate that this Government have taken action to protect council tax payers from unnecessarily large increases. They will be aware of, and perhaps shocked by, the attitude of the hon. Member for Kingston and Surbiton, who described this action as absurd during the debate on 29 April, at column 1025 of the Official Report. Indeed, I believe he owes council tax
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payers throughout the country an explanation as to why it is apparently not absurd for a Liberal Democrat council to impose a 29 per cent. council tax increase, while it is absurd for the Government to take action to protect council tax payers from such an increase.

The Liberal Democrats have a lot of explaining to do, too, for their councils have an unenviable record of introducing the largest increases in council tax. On average, in a year when Labour councils kept their increases down to 4.7 per cent., Liberal Democrat councils showed average increases of 6 per cent., and Liberal Democrat Shepway district council headed the list of the biggest increases, at 29 per cent.—an interesting warning to electors who are thinking about which way to cast their vote in June.

Mr. Edward Davey: Can the Minister tell the House what the average increase in council tax over the past five years has been in councils controlled by different political parties? He will find that the Conservatives have presided over the highest average annual council tax increases over the past five years, and Liberal Democrat and Labour-controlled councils have had roughly the same increases—about 6.9 per cent. Will he put that on the record?

Mr. Raynsford: I cannot, off the top of my head, give the hon. Gentleman the figures for the last five years, but I can tell him that last year the Conservatives had the highest tax increases of 16 per cent., and Liberal Democrat and Labour councils had increases of around 10 per cent.

This year, the Government said that they expected councils to budget for low single-figure increases. Only Labour councils delivered, with an average increase of 4.7 per cent. Conservative councils averaged 5.4 per cent., and Liberal Democrat councils 6 per cent.—the highest increases of any of the three parties this year.

Rather than trying to pass the blame elsewhere, the hon. Gentleman ought to be talking to his party's councillors and telling them to get a grip, although I appreciate that that is a concept largely unfamiliar to Liberal Democrats. If he did, it would have an influence on one of the other issues raised in the motion, although he did not refer to it, which is the so-called Treasury forecast of next year's council tax rise. As I have frequently explained to hon. Members, that figure is based on average increases in past years, so the fact that there is a large figure this year reflects the very large council tax increases last year. The figure is not, repeat not, an estimate of increased costs, or a target, or the Government's view of what would constitute an acceptable rise in council tax.

The best way to get the figure down, of course, is to get average council tax down. That is where the Liberal Democrats have the greatest opportunity, because they have the largest increases in council tax this year.

Mr. Andrew Turner: The Minister has made a number of sensible remarks about the Liberal Democrats, but is he really saying that the Treasury can forecast what is going to happen next year only by reference to what happened last year?

Mr. Raynsford: As I was saying to the hon. Member for Kingston and Surbiton, this is not actually a
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forecast. It is based on the trends over the past three years. Therefore, if there is a large increase in the previous year, as was the case, that is reflected in the figure. I have explained that repeatedly to the House.

I want to continue by referring to the balance of funding review, and it is probably helpful if I start by providing a little background to it.

David Taylor (North-West Leicestershire) (Lab/Co-op): Let me declare an interest as a member of the Chartered Institute of Public Finance and Accountancy, whose review this is. Is the Minister about to point out the Liberals' suggestion that about 3p on local income tax should be sufficient to fund necessary public services, when the range suggested in the review is between 3.2p and 6.5p? Does that not suggest illiteracy on a grand scale?

Mr. Raynsford: My hon. Friend is right about those figures, but we have set up the review and it is taking evidence from various players, including CIPFA. We have been pleased with the detailed and thoughtful submissions that it has made, but this is not CIPFA's review. My hon. Friend is right about the figures ranging between 3.2p and 6.5p, which is rather at variance with what the Liberal Democrats say in public.

Mr. Edward Davey: Can the Minister confirm that that CIPFA review has an average figure of 3.75 per cent., which is also our average figure? CIPFA has 3. 8 per cent. as the average. [Interruption.] Yes it does. I have that in the report, if the Minister needs it. Will he also confirm that the range that the hon. Member for North-West Leicestershire (David Taylor) mentioned relates to keeping the same grant system, which includes a council tax base within it, which would be absurd? Will the Minister therefore accept, as CIPFA makes clear in its report, that that is a first best guess, not a proper analysis?

Mr. Raynsford: For the benefit of the hon. Gentleman, who finds this difficult, I shall quote the CIPFA report. He will see in paragraph viii on page ii of the introduction and summary that a local income tax

Those are CIPFA's figures. Will he withdraw his remarks and apologise for attacking my hon. Friend the Member for North-West Leicestershire (David Taylor) for giving correct figures from the CIPFA report?

Let me also put to the hon. Gentleman something that he might think about before I give way to him again. Those remarks relate to 2003–04. When updated, the figures will probably increase above even those levels.

Mr. Davey: If the Minister had read on, he would have told us that that paragraph says:

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In other words, the point I was making is that the grant system would change under local income tax, but that was not actually being measured.

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