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Mr. Edward Davey: Is the hon. Gentleman in favour of localising business rates, or is he not?

Mr. Turner: I shall come to that later.

Cliff-edge problems were another difficulty that was not mentioned. Local income tax cannot be levied in Scotland and Wales, as such revenue-raising powers are devolved. What will happen on the cliff edge dividing Cumbria and Northumberland from Scotland, or Wales from the adjacent English counties? What happens to people who work in Wales or Scotland but live in England, and vice versa? My right hon. Friend the Minister and the hon. Member for Witney spoke about the costly problem of collecting revenue in two-tier authorities, which has not been addressed by the Liberal Democrats. The hon. Member for Kingston and Surbiton glossed over the difficulty of collecting money in 9,000 parishes.

The whole idea of a local income tax is crackpot policy from a tin-pot party.

Let me address some of the problems with the council tax. All hon. Members understand that the council tax raises difficulties. It is far from perfect, having been cobbled together almost overnight to dig the Conservatives out of the poll tax hole into which they had got themselves. Gearing is a huge problem. We recognise that the 25:75 per cent. local to central Government ratio does not produce good Government. It leads to a lack of transparency, as local people see large rises in council tax but almost minimal increases in the service that they receive.

The bands are certainly not wide enough at either the bottom or the top ends. That needs to be addressed dramatically. Certainly the three times ratio, 6/9ths to 18/9ths—in other words, the ratio of the very poorest household to the very richest household—is not a way to deal properly with those differences in income. Revaluation has been mentioned already by my right hon. Friend the Minister. Of course revaluation needs to take place, but we also need to ensure that we allow local councils to revalue much more regularly than 10 year intervals. I suggest five years, so that some buoyancy is built into the council tax base.

Hon. Members have rightly raised the problem of benefits, which we need to address. Research carried out for the Select Committee on the Office of the Deputy Prime Minister seemed to indicate that between bands B or C up to about bands F or G, and given 100 per cent. take-up of benefits, the council tax was quite fair. Hon.
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Members on both sides of the House must address how we ensure that benefits are taken up on a realistic and full basis.

Let me throw in my pennyworth to my right hon. Friend the Minister. I hope that he will take on board the idea of that we might want to consider allowing people to self-assess their benefits. We could get rid of the stigma by allowing everyone to send in a self-assessment. All local authorities would then determine whether someone was entitled to council tax benefit, rather than leaving that to 60 per cent. or so of people who apply for that benefit now. In other words, everyone should apply and most would say that they are not entitled, but at least everyone could to get their forms to the local council, which would assess eligibility for benefit.

If we address those issues and consider the balance of funding review, revaluation, the ratios and the bandings, we will be able to put local government finance on a much better footing. Clearly, we must also widen the base from a single council tax to include the other elements that are being considered in the balance of funding review. I hope that my right hon. Friend the Minister will take on board those issues in a realistic way in reaching his assessment, so that the council tax base is not the only way that councils raise their money.

9.2 pm

Mr. Malcolm Moss (North-East Cambridgeshire) (Con): I congratulate my hon. Friend the Member for Witney (Mr. Cameron) on a truly outstanding contribution at his first outing in his new brief this evening. He achieved something unusual on the Floor of House: he carried both major parties with him in his argument. The only Members who seemed a little upset by his comments were Liberal Democrats, who, in his own words, seem to have missed a great opportunity this evening to put their case for local income tax. Those on both Front Benches have demolished that proposal quite superbly.

The debate has focused on various other types of local government finance, but there are not many alternatives. There is the status quo or a rejigged version of it; a fully fledged property tax; some form of local tax, either on sales or income; or a combination of some of those. There is nothing fundamentally wrong with the current council tax that a good dose of adequate Government grant and reduced Government directives could not put right.

Why has the council tax, as my hon. Friend told us earlier, gone up for a band D property by 70 per cent. since Labour came to office? Why has council tax soared by three times the rate of inflation? Why are council tax receipts up from £8.7 billion in 1997–98 to more than £19.7 billion in the current year? That is a massive hike of some 80 per cent.

Such is the increase that, for the typical pensioner and pensioner couple, a third of the increase in pensions has been taken up in council tax.

It is not just in my own constituency in Cambridgeshire that we have seen a massive increase in council tax. There have been increases across the board throughout England. The reason is primarily that the
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Government grant has not kept pace with mandatory service provision. As with many Government Departments, centralisation has not produced the efficiency savings and value for money that were promised and which the Government thought would be delivered.

Who, then, is to blame for the current state of affairs? According to the Audit Commission, it is the Government who are to blame. The Audit Commission report "Council Tax Increases 2003–04", published last December, states:

The report goes on to say:

we have had comments on both those issues from the Floor of the House this evening. The report continues:

In conclusion the Audit Commission states:

Council taxes, as we well know, have been spiralling, some would say out of control, for some years. In the past few months, the Government have belatedly decided to wield the big stick. That brings me to capping. In the Minister's recent statement on capping only a few weeks ago, he said:

He repeated some of those phrases tonight. He also said in his statement:

Finally, he said:

There are three key statements there that I should like to test against the proposal to cap one of my own local authorities, Fenland district council. Those key statements concern, first, "unreasonable burdens", secondly, "local accountability" and thirdly, "an authority's budget requirement is excessive".

Is the council tax in Fenland district council an unreasonable burden? One of the essential problems in the area is the low tax base. That was a point ably made by the hon. Member for Wigan (Mr. Turner). Some 85 per cent. of our dwellings in Fenland fall into the first three bands of council tax—that is, band A, band B and band C. The average council tax band in Fenland is band B, not band C as in the case of councils in Cambridgeshire as a whole, the English shire districts and the east of England as a whole. In terms of the average bill per dwelling, therefore, Fenland is £54 cheaper than Huntingdonshire district council. It is £63
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cheaper than councils in England as a whole. It is £73 cheaper than East Cambridgeshire district council. It is £83 cheaper than the average of councils in Cambridgeshire as a whole.

It is £132 cheaper than the English shire districts, and it is a monumental £183 a year cheaper than the neighbouring South Cambridgeshire district council.

If one compares the average council tax bands, the differences are similar. I remind the House that in Fenland the average band is B, whereas in Cambridgeshire as a whole it is C. It is £33 cheaper in Fenland each year than in Huntingdonshire, £49 cheaper than in Cambridgeshire as a whole, and £115 cheaper than in the English shire districts.

Where, then, is this unreasonable burden by which the Minister and the Government have set such great store? Would the Minister take some time to explain to the House what the Government mean by this unreasonable burden? Is it to be expressed in terms of the finite or actual amount that people physically have to pay in their council tax, or is it based on a percentage increase in any given year?

We had the example from my hon. Friend the Member for Witney of West Oxfordshire, which had an extremely low council tax of some £63. When it sought to increase that towards the level of—though not as high as that of—other district councils in the area, it was threatened with capping because the percentage increase was deemed too high.

The Government must come clean and tell my constituents in Fenland, and indeed people in Oxfordshire, that what they really mean by an unreasonable burden is just the percentage increase, not the finite amount in the bill that people have to pay.

However, because of the relatively low tax base, which is reflected by the number and the value of properties, council tax increases in Fenland have to be much higher than in neighbouring councils to raise the same amount of income. The gearing effect is much exaggerated. For example, in Huntingdonshire and South Cambridgeshire, a £1 increase in council tax raises £56,000 and £55,000 respectively, whereas in Fenland it would raise only £28,000—100 per cent. less. To put it another way, Fenland has to increase its council tax by double the rate of its neighbouring councils to raise the same amount of money. Is that really fair? Is that not the real burden for the council tax payers of Fenland?

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