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Several hon. Members rose—

Madam Deputy Speaker (Sylvia Heal): Order. We have other business before the House later today, so may I ask Members to be brief in their questions and responses?

Mr. Edward Davey (Kingston and Surbiton) (LD): I thank the Minister for the statement, but I hope that his answers now will shed rather more light on what is actually planned. He suggested that there was new money for councils and for police and fire authorities, so that they can keep council tax down, but is it not true that, far from there being significant new money from the Treasury, most of this cash is coming from cuts elsewhere? Will he now list the cuts being made to fund this attempt to massage council tax downwards before the election?

Is it not true that Departments from education to environment are the losers? For example, is it not true that cash has been found by reducing recycling? Every year we see a last-minute attempt by Ministers to patch the council tax problem. Does that not show a Government in permanent crisis over the unfair council tax? When will they act for the long term, scrap council tax and stop resorting to short-term panic measures?

The Minister will doubtless claim that the extra money is not a pre-election fix. If so, can he confirm that it is permanent and not a repeat of last year's one-off grant? Does he accept that, even if Ministers succeed in manipulating council tax rises lower than last year's, such rises are likely to be higher than inflation? Can he confirm that an average council tax increase of 5 per cent. will be nearly four times the inflation rate used today by the Chancellor? If so, what will he say to pensioners on fixed incomes whose pensions go up only by the rate of inflation? Can he confirm that all pensioners' council tax bills will rise by £50 a year at the very least? Will he also admit that by forcing councils into one-off raids of reserves and into putting off resolving issues such as pension liabilities, Ministers are merely scheduling a massive council tax rise for after the election? Is this not the calm before the storm?

The Government know that the council tax system is in a mess; they wasted 15 months on the balance of funding review just to confirm that fact. Now, they have asked Sir Michael Lyons to sort out that mess, but by December next year—after the election. Why, then, will the Minister not admit that this statement and the Lyons review are simply stop-gap holding measures to get Ministers through the election before they tell us what they really think—if they win?

We have heard today that the Government plan to reform council tax benefit to increase take-up, but do they really expect the House to believe that an
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advertising campaign will make any significant difference? Some 40 per cent. of pensioners fail to claim the Government's pension credit, even though many millions have been spent on advertising it. Does the Minister really believe that council tax benefit take-up will be any better than that for the pension credit?

Will the Minister also explain why county councils in particular are being hit by this settlement? Why did he take the perverse decision to use 1991 census data for the 2005–06 grant? He knows that using 13-year-old data cost the counties more than £100 million, thereby adding 2 per cent. to their council tax bills. Why has he done that?

On the police settlement, of which we do not know the full details, does the Minister realise that pressure on police authorities from the rising pension bill is likely to make that settlement at best a standstill, and for authorities on the floor, a recipe for front-line cuts? Given the priority of law and order, can he not ensure that police authorities know his capping criteria in advance?

Can the Minister also explain why he continues to favour businesses over pensioners? He has given businesses certainty in respect of the revaluation of non-domestic rates by capping increases. Why has he made no such commitment to fairness in the forthcoming council tax revaluation? Is it not true that lurking behind this statement is the huge threat of council tax revaluation? Why do the Government refuse to say how such revaluation will work before the election? Does the Welsh experience not show that millions of taxpayers will experience massive rises in their council tax bills if revaluation goes ahead?

This is a pay now, pay more later settlement. Ministers have put off difficult decisions and are hoping for calm before a post-election storm, yet the council tax is so unfair that the storm is closing fast.

Mr. Raynsford: I have to laugh at the Liberal Democrats' efforts to present this as a bad settlement.

The hon. Gentleman asked a perfectly fair question about the extra money. Some £637 million of additional money has been secured through discussion with the relevant Departments, all of which have an interest in good local government delivering services, be they health or education services, as my right hon. Friend the Chancellor rightly emphasised. There has been a cross-Government response to ensure that local government has the means to deliver the services that are needed, without an adverse impact on council tax. I would have expected him to welcome the additional money—totalling approximately £1 billion—and measures to ease pressures on local government.

The hon. Gentleman asked a number of specific questions. He said that the council tax is unfair and asked why we are not scrapping it. The Liberal Democrats are extraordinary on council tax. Their proposal would inevitably produce a massive increase in bureaucracy. They want separate local income tax rates for each local authority in the country, which would entail not only a huge increase in bureaucracy but huge pressure on the Inland Revenue. The document in which they announced that proposal also states that in order to make savings,

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Their own left hand does not know what the right is doing. That shows the attention that we should give to their entirely unconvincing approach to local income tax.

The hon. Gentleman clearly did not listen to what I said about measures to ensure that pensioners receive the help to which they are entitled. My colleagues in the Department for Work and Pensions are looking at specific ways of simplifying the process through which pensioners receive the benefit, in order to avoid the need for duplicate claims.

The hon. Gentleman says that the county councils will be hit, but he clearly has not looked at the figures. How is it, therefore, that Cambridgeshire is receiving an increase of more than 11 per cent., and Wiltshire a 9.4 per cent. increase? Such huge increases would have been unthinkable when the Conservatives were in government. Why does he not talk to his colleagues in Milton Keynes? Its Liberal Democrat-controlled authority is receiving a grant increase of more than 11 per cent. because of this Labour Government. He ought to give some credit where credit is due.

The hon. Gentleman asked about the settlement for police authorities. He will know that, as always on these occasions, it is announced separately by my colleagues in the Home Office.

On capping, we made it clear that we will apply capping principles across all groups of authorities and that there will be no exceptions.

The hon. Gentleman's final point was about revaluation and I must tell him that he should not draw any conclusions from the Welsh example, because it was decided in Wales to add an additional band at the top, but not at the bottom. Inevitably, that influenced the outcome in respect of the revaluation. There is no question of any commitment to a revaluation on that basis in England, so the hon. Gentleman should draw no conclusions whatever from what happened in Wales.

Andrew Bennett (Denton and Reddish) (Lab): I congratulate my right hon. Friend on securing a very good settlement indeed. I also congratulate him on the £50 for pensioners and on the take-up campaign that will be run. Will he recognise, however, that many pensioners had difficulty paying this year's bills, as they are cash-poor while being capital-rich? Is it not time that we put in place in this country an equity release scheme to enable pensioners, who in many cases have seen huge increases in the value of their properties, to free up some of that money to pay their council tax bills?

Mr. Raynsford: First, I thank my hon. Friend, the well known and experienced Chairman of the Select Committee who knows a great deal about these issues, for his kind comments on the settlement. He has better experience of what a good, as against a bad, settlement is. He will be pleased to know that his own authorities, Stockport and Tameside, are receiving grants increases of 5 and 4.9 per cent. respectively.

My hon. Friend asked about the position of pensioners who are capital-rich but asset-poor. He raises an important issue, which I know is being looked into carefully by the Lyons review. Sir Michael Lyons is an expert in this field and we believe that it is right for the complex issues of local government finance to be
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considered very carefully before decisions are taken. I have the utmost confidence in Sir Michael Lyons and his ability to produce sensible suggestions to tackle the real problem that my hon. Friend has identified.

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