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Annual Leave Entitlement (Enforcement)

Miss Anne Begg accordingly presented a Bill to make provision about the enforcement of entitlements to annual leave under the Working Time Regulations 1998 and to amend the National Minimum Wage Act 1998 in that connection; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 20 May; and to be printed [Bill 75].

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Opposition Day

[5th Allotted Day]

Council Tax

Mr. Deputy Speaker (Sir Michael Lord): I advise the House that Mr. Speaker has selected the amendment in the name of the Prime Minister.

1.45 pm

Mrs. Caroline Spelman (Meriden) (Con): I beg to move,

That this House notes that council tax bills have increased by 70 per cent. under the Labour Government, with further above-inflation rises planned in the forthcoming year and after the general election; expresses concern that pensioners have been hit hardest and calls on the Government to implement the Conservative policy of an automatic council tax discount for those aged 65 and over; notes with alarm the Government's plans in any third term for a revaluation which would lead to greater inequities and new higher council tax bands; rejects Liberal Democrat plans for a local income tax, regional income tax and higher national income tax; and calls for less bureaucracy and interference from Whitehall and regional bureaucrats in local government funding and for greater transparency in the allocation of local funding for councils.

I seem to be making a habit of standing before the Chamber to talk about a crisis. Last time, it was the crisis in housing and this time it is the crisis in local government funding. It seems to me that we have a Government who are prone to crises. Where the housing crisis particularly hurts the young, the council tax crisis particularly hurts the elderly—it cannot be said that the Office of the Deputy Prime Minister discriminates on grounds of age. People who have worked hard all their lives and saved for their retirement should live in dignity and security in old age, but today many of them, particularly those on fixed incomes, find it difficult to make ends meet because of the burden of taxation, which the Government have increased by stealth.

The council tax has proved to be the ultimate stealth tax under this Government, as council tax payers have seen their bills soar by 76 per cent. since 1997. That means that more than a third of the increase in the state pension has been swallowed up by council tax hikes.

Mr. Clive Betts (Sheffield, Attercliffe) (Lab): Who brought it in? [Laughter.]

Mrs. Spelman: I do not think that this is funny, Mr.   Deputy Speaker. This is a serious matter of—[Interruption.]

Mr. Deputy Speaker: Order. Let me make it clear from the outset that I want no interventions from a sedentary position. If Members want to intervene, they must stand up and do so in the conventional way.

Mrs. Spelman: As I was saying, more than a third of the state pension increase has been swallowed up by council tax rises. This year, typical council tax bills will top £100 a month for the first time in the history of the council tax. Is it any wonder that people feel so betrayed, when they recall the Prime Minister saying:

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Lembit Öpik (Montgomeryshire) (LD): Is the hon. Lady aware that the position in Wales is even worse, because the rebanding has led to 33 per cent. of properties being allocated to a higher band and only 8 per cent. to a lower one? In effect, 25 per cent. of houses in Wales have been subjected to a further significant tax increase.

Mrs. Spelman: Before responding to his intervention, I would like to congratulate the hon. Gentleman on his 40th birthday. That is the good news, but I have to impart a bit of bad news. What he says about Wales is true—I shall come on to deal with it later in my analysis—but I remind the hon. Gentleman that in July 2003 his party voted in favour of increasing council tax bands.

The fact is that it has been convenient for the Chancellor to shift the burden of taxation on to local government, and we have seen a constant stream of unfunded burdens foisted on to local government, leaving local authorities no choice but to put up council tax.

Mr. Patrick Hall (Bedford) (Lab): On the issue of underfunding, will the hon. Lady tell us how she proposes to fund her party's offer of a council tax discount for pensioners?

Mrs. Spelman: I shall be happy to explain it later in my speech, but for the avoidance of any doubt, it would be worth quickly listing some of the unfunded burdens, which make uncomfortably long reading. The increase in national insurance has added £280 million to local authorities' costs and fuel duty has increased by 25 per cent. since 1997. Councils have been faced with the financial consequences of the landfill tax, the pension tax, numerous EU directives such as the end of life vehicle directive, the waste electrical and electronic equipment directive and so forth. All those have added costs to local government, which has not been granted matched funding from the centre.

The Government defence of those rises has been a master class in dissembling and disinformation, but that has not fooled the taxpayers. When MORI asked voters last year whom they blamed for their council tax increases, 78 per cent. said that they blamed central Government. Of course, they are right to do so, as on average 75 per cent. of what is spent on local services derives from central Government grant.

The Minister is fond of telling the House that every local authority has received an above-inflation increase in formula grant, but that bland statement conceals the fact that the Government have so manipulated the level of the grant to different authorities that there are glaring contrasts in the increases that councils have had to make to council tax to maintain services. The really revealing figure emerges when we look at Government grant per capita to each local authority which, conveniently, I was given in a written answer on 11 January. At the top end, councils such as Nottingham have enjoyed a grant increase of more than 76 per cent. since 1998 and, guess what, Sedgefield is in the top five, with a 68 per cent. increase. Every authority with an per capita grant increase below 20 per cent. has suffered a real-terms cut, and that includes many Conservative-held district
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councils. Sevenoaks is at the bottom of the pile, with a 5.1 per cent. reduction that is, of course, a 30 per cent. cut in real terms.

Mr. Betts: Does the hon. Lady accept that overall local government has done very well from this Government? It has had a 33 per cent. increase in real terms in grant since 1997, compared with a 7 per cent. cut over the previous four years. Of the so-called burdens that have been inflicted on local authorities, which she has just read out, can she tell us which burdens her party will commit itself to removing, should it by some mischance happen to win the general election?

Mrs. Spelman: I shall come on to the removal of burdens. The point is that increases in grant vary from area to area. Perhaps the hon. Gentleman should go back to his constituency and, no doubt through gritted teeth, inform his pensioners that under our proposals a single pensioner living alone would be £456 better off when her council tax is halved.

Mr. Patrick McLoughlin (West Derbyshire) (Con): We continually hear the story of how local government has done very well in the past eight years of Labour Government. If that is the case, can my hon. Friend tell us why we have seen such a record increase in council tax?

Mrs. Spelman: I thank my hon. Friend for that intervention. He has given me the opportunity to reveal the inequity of the grant distribution. The sheer range of the allocations beggars belief, but it helps to explain why so many Conservative authorities have been short-changed since 1997. The Government have now been rumbled, and in the debate on local government finance settlements last month, the Minister fell into his own trap by threatening councils with capping if this year's council tax increases are above 5 per cent. He suddenly realised that he may have bitten the hand that feeds him. The truth is that efficient, well run Conservative councils are the goose that lays the golden egg for this Government.

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