Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Minutes of Evidence

Examination of Witnesses (Questions 500-514)


18 MAY 2004

  Q500 Mr O'Brien: It is a question of raising taxes and different taxes provide all kinds of services. What you are saying is that you would agree to charges being made provided it was ring-fenced, but you would not agree to the government ring-fencing moneys for education and social services. You cannot have it both ways!

  Mr Sugden: We did not quite say that.

  Q501 Mr O'Brien: Well, we will read the transcript when we get it back!

  Mr Sugden: There is a high degree of rigidity around local government revenue, and additional flexibility does not necessarily mean no ring-fencing at all.

  Q502 Mr O'Brien: Would you support a local income tax as an alternative to council tax?

  Mr Sugden: We would see that as an overly complex means of raising revenue.

  Q503 Mr O'Brien: So you would not support it?

  Mr Sugden: We do not particularly influence one means of raising revenue from the population compared to another. Our representation is for the business community.

  Q504 Mr Brady: Do you see a particular concern with local income tax in a region that has a relatively low number of people in work? Might you see the burden too heavily falling on those people, and might that lead to a flight of people from your region to an area where there are more people to share the burden of a local income tax?

  Mr James: I think we would need to see the detail.

  Mr Sugden: Absolutely, and our perspective on a local income tax is the burden it would place on businesses in terms of administration, rather than necessarily how it might work in terms of a charging mechanism on the citizen.

  Q505 Sir Paul Beresford: What do you think will happen from the point of view of collecting through PAYE and the effect on your business and the difficulties of the variation, depending on where the PAYE employee is living?

  Mr James: We have a lot of Inland Revenue staff work living in our region and I am sure they would welcome the additional jobs!

  Q506 Sir Paul Beresford: But your private businesses would have to collect through PAYE, and that would add to your costs.

  Mr James: It may do.

  Q507 Mr O'Brien: But we are talking of funding services and the fact that the council tax is not very favourable so the government is looking at other alternatives and consulting on this, and one of the issues that is raised by our colleague, Adrian Sanders, who is no longer with us, is the introduction of a local income tax, and this is a serious matter being raised by the Liberal Democrats. I would have expected that the people in the north east would have been examining research in this issue as to its effect on local business. Is that not being done?

  Mr Sugden: It is being done by the organisations of which we are a national member, the British Chamber of Commerce, and their view is that the additional burden on businesses would be of major concern.

  Q508 Mr O'Brien: Would the abolition of council tax have an influence on house prices in the north east?

  Mr Sugden: Again it is not something we have studied

  Q509 Mr O'Brien: Do you not cover the estate agents and builders?

  Mr James: We do indeed.

  Q510 Mr O'Brien: So you do not have a view, if the council tax was abolished, as some are saying should happen, on the impact that would have on housing in the north east?

  Mr James: I think stamp duty might be more of an issue than the abolition of council tax.

  Q511 Mr O'Brien: So you think council tax does not have an influence on the price of houses in the north east?

  Mr Shakeshaft: It may have a marginal influence but the patterns of house price rises in the north east are fairly set in relation to the way they rise across the country.

  Mr James: Most of our housing stock fits in the middle bands. We do not have too many Gs and Hs, but we have lots at the lower end and lots in the middle.

  Q512 Mr O'Brien: How many deprived local government wards are there in the north east?

  Mr Shakeshaft: I cannot tell you the absolute number. I can tell you it is the highest proportion for any area.

  Mr James: In Newcastle I am sure we have early teens.

  Q513 Mr O'Brien: And the stamp duty is relaxed in those areas. Does it have an impact on the houses?

  Mr James: We have started to see some growth in house prices in areas like the west end of Newcastle, but until we know what houses are staying and what houses are going it is very difficult.

  Q514 Mr O'Brien: Is that where the stamp duty is relaxed at the present time?

  Mr James: It is very helpful in those areas.

  Mr Betts: On that point perhaps we can thank you for your evidence, and for coming today. Thank you.

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