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Mr. Cameron: Time is limited and I have probably left out many things. I am trying to give a sense of the enormous range of burdens that councils are expected to meet without extra funding. They must be starting to feel like Elton John's hairdresser: each year, they are asked to do more and more with less and less.
Mr. Neil Turner (Wigan) (Lab): The hon. Gentleman read out an interesting list. What is Conservative policy on all those measures? Would the Conservatives scrap all those local authority responsibilities, or would they give the authorities extra money to pay for them?
Mr. Cameron: That is a reasonable question[Hon. Members: "What is the answer."] The first thing to do is to stop making things worse. We have to stop adding burdens to local councils without giving them the funding. We could do one or two things straight away to improve the situation. I have already mentioned comprehensive performance assessments and best value; my constituents are paying an extra £14 for those two bits of red tape, which everyone says are worth nothing.
The third cause, which was mentioned by the hon. Member for Kingston and Surbiton, is the Government's obsession with two nouns that they have turned into verbs: to ring-fence and to passport throughI hope you can see that I am trying to get the hang of the jargon, Madam Deputy Speaker. As the hon. Gentleman said, the more that one ring-fences and the more one insists that a certain amount of money is passported through, the more one restricts local freedom of manoeuvre and the more likely it is that any increase in local spending will lead to a significant increase in taxes. Combined with the gearing effect of local government finance, that has led to the huge increases. As the hon. Gentleman said, a 1 per cent. increase in spending typically means a 4 per cent. increase in bills. Add all that togetherthe burdens, the legislation, the unfunded liabilities, the plans and the restrictionsand the rest, as they say, is history. Tax rises of 70 per cent: nobody was warned, but everyone paysit has been the biggest stealth tax of them all.
With respect, I do not think that the hon. Gentleman quite heard what I said. I said that the measures included many worthwhile objectives, but we must try to have honest government. We should tell people what we plan to introduce and how much it will cost, and provide the funding for it. The Prime Minister said in the manifesto on which Labour Members stood for election that there would be no excessive council tax
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increases, yet that list of measuresmany of them worth whilewas bound to lead to large council tax increases. The Government have a problem with stealth taxes. The biggest stealth tax of all is council tax. That is the cause of the problem.
Mr. Raynsford: I welcome the hon. Gentleman to the Dispatch Box and look forward to many further interesting debates. He has mentioned his local authority, which originally proposed a council tax increase in excess of 30 per cent. yet has now managed to get it down to low single figures. Would he like to reflect on why that happened? Was it because the Government said that we would get tough if authorities went for unreasonably large increases? I do not think the reduction had much to do with the legislation to which my hon. Friends have referred.
Mr. Cameron: I reflect often on that point and I think Labour Members might like to reflect on it, too. In West Oxfordshire, council tax is £63. I suspect that Labour Membersor at least their constituentsgo to bed at night dreaming of council tax of £63. The reason the council considered increasing the tax from £60 to £80, which is still a good £60 short of the average figure, was the waste recycling issue. A new waste recycling contract had been signed to meet the Government's very worthwhile targets, and the cost of that alone means that the council will have serious liabilities this year, for which it has not been funded. However, council tax of £63 in West Oxfordshire, compared with the average of £140 for a band D property in a shire district, is staggeringly good value. The council is of course Conservative controlled, and has been for several years.
Mr. Betts : The hon. Gentleman rightly drew attention to the problems of gearing, which all local authorities facesome to a greater extent than others. To deal with that problem, local authorities will, ultimately, have the right to raise a larger amount of their resources locally. What is current Conservative thinking about how that could be achieved, bearing in mind especially the fact that the Conservative party was responsible for two measures that gave rise to the current situationthe nationalisation of business rates and the increase in VAT to keep poll taxes down?
Mr. Cameron: Like the Government, we are holding a balance of funding review. All parties are considering the subject. The speech of the hon. Member for Kingston and Surbiton was all about the fact that we had to consider such things. There is common ground on both sides of the House. We all think that local authorities need to be able to raise a greater proportion of what they spend, but there are different ways of addressing thatsome of them are covered by the balance of funding review but some go beyond it. We are committed to looking into the matter.
I welcome the hon. Gentleman to his new position. It is generous of him to admit that I was
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making a serious contribution to the balance of funding review and putting forward some ideas. Will he now put forward some ideas from the Conservatives?
Mr. Cameron: When I read the Order Paper, I thought it said that this was a Liberal Democrat Opposition day, so I thought that it would be chiefly about Liberal Democrat policy. I do not think that we have had a proper airing of local income tax. The Minister had a pretty good stab at it, but I thought I would say a few words about it, too.
The problem is not just the amount of council tax, but how councils deal with Government requests to reduce it. Is my hon. Friend aware of what has happened in Torbay, where a by-election for a council seat is to be held on Thursday? The first cut to its £130 million budget has involved a reduction in the number of public lavatories available to tourists all over the bay.
Before I come on to local income tax, I cannot go on without mentioning the commitment to £100 off every council tax bill and the mystery of what happened to that. I have the leaflet from Brent, East in which the hon. Member for Kingston and Surbiton is pictured holding a very attractive cheque for £100. I am not sure what happened to the cheque. Perhaps we have been paid it or it did not arrive in the post. If the council tax had gone down, he would not need it any more. However, the most likely explanation is that the Liberal Democrats decided that, because they won that by-election, they would not need the cheque any more.
Local income tax is no more credible than the £100 bribe. It is a workable soundbite, but that is as far as it goes. That is why we did not hear any detail today. The Liberals have taken two things that sound very good. They have taken the word "local"we all want to be localand the phrase "income tax", because they want to sound fair. They have put the two together but, as soon as one considers the detail, it is clear that the result is neither fair nor local. Liberal Democrats do not care about the detail; they want to be able to say, "Axe the tax." That is what this is all about.
The hon. Gentleman is very kind, but he need not worry; I just wish to be helpful in pointing out where the £100 may have gone. The website of the hon. Member for Kingston and Surbiton (Mr. Davey) is a useful source of information. It claims that the £1.7
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billion allocated from the proposed top rate of income tax for those earning £100,000 would not be an additional source of local government tax, but would go to keeping the rate of local income tax down to 3.75 per cent. As my hon. Friend the Member for North-West Leicestershire (David Taylor) suggested, the Liberal Democrats realised that their estimates were towards the top end of the Chartered Institute of Public Finance and Accountancy's estimates and have had to put the money that would have previously constituted a £100 saving into keeping the rate down. They have had to make the £100 vanish in that process.
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