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Andrew Bennett (Denton and Reddish) (Lab): While we are on the question of equity, I should perhaps thank the hon. Lady for her proposal to reduce my council tax bill by £500 a year. Is that really sensible, however, given that people on very small pensions will get no benefit at all? Is not it logical to provide help for all council tax payers, rather than just the better-off?

Mrs. Spelman: With respect, I suggest that the full detail of our proposal is not completely clear to the hon. Gentleman. There is a cap of £500 and I shall explain that in more detail. I remind him, however, that it was his party that committed itself to stop means-testing. If he is in any doubt about what pensioners feel about means-testing, he should go and ask them, because they find it offensive to be means-tested in later life. That is why our discount would be universally available to the over-65s.

Mrs. Anne Campbell (Cambridge) (Lab): How does the hon. Lady explain the record council tax increases we have had in Cambridgeshire? Recent grant increases
 
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include 11.2 per cent. from April this year, 8 per cent. for the current year and 11 per cent. for last year. Despite those record increases in grant from a Labour Government, we have had record increases in council tax from a Conservative county council.

Mrs. Spelman: The hon. Lady seems not to have got the essential point at this stage of the debate, which is that the grants distributed to various parts of the country are very inequitable. Cambridgeshire has been in receipt of a below-average Government grant, and one of the consequences has been that the local authority has been forced to recover more of what it costs to fund local services from local taxation.

The Minister for Local and Regional Government (Mr. Nick Raynsford): Will the hon. Lady please correct the record? Cambridgeshire has not received below-average grant increases: it has received above-average grant increases in each of the past three years. For the sake of accuracy, will she please now confirm that?

Mrs. Spelman: The Minister is very knowledgeable about local government finance and he knows the answer to his own question. It is because Cambridgeshire is an education authority. The unitary authorities have fared better under his grant system and the district councils have fared poorly.

It is small wonder that Runnymede council, which was rated "excellent" by the Government's watchdog, has had to double its council tax since 1997 to make up for its 20 per cent. decrease in real terms grant. One council leader rang me up this week saying that he will have to risk capping with a 5.9 per cent. increase because he is just not prepared to cut services. As a unitary authority, his council received a poor settlement of a 4.4 per cent. increase, compared to an average of 6.1 per cent. for comparable authorities. It just goes to show how unfair the system is.

Eight years ago, the Government started with a policy of deliberately forcing up council tax in what they perceived as affluent areas, then they panicked and capped, and they are now forcing service cuts on the same areas. Would the Minister like to tell me which services he wants councils such as Southend to cut?

We could spend a great deal longer than a single Opposition day discussing the smoke and mirrors deployed by this Administration in local government finance, but the fact is that the people to whom we are accountable—the tax-paying public—know that since 1997 council tax has gone through the roof.

Mr. Peter Luff (Mid-Worcestershire) (Con): Does my hon. Friend share my deep misgivings about the behaviour of the Government in relation to the West Mercia constabulary? Some 300 additional officers were paid for entirely out of increases in the council tax. The Government's reaction has been to nominate the authority and threaten to cap it. On top of that, they try to take credit for the additional police officers. The Government cannot have it both ways.

Mrs. Spelman: I thank my hon. Friend for that intervention. In another helpful written answer on 28 February, it was revealed that the per capita funding for the police also shows incredible inequity in its distribution.
 
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The pain of the crisis in local government finance has fallen disproportionately on our pensioners, exchanging their dignity and security for anxiety and penury. We must not forget that under this Prime Minister 2 million pensioners still live in poverty. And there is worse to come. If Labour should get a third term in office and council tax inflation continues on the same trajectory that it has followed since 1997, band D bills will hit £1,836 by the end of that third term. Moreover, under Government plans to introduce new, higher bands—a measure that has met support from both Labour and, as I mentioned, the Liberal Democrats—a typical household bill will be taken to well over £2,000.

Kali Mountford (Colne Valley) (Lab): The hon. Lady was talking earlier about universality as a panacea to the problems, but has she considered the question in the round? What would happen to pensioners whose payment of council tax was entirely discounted? Has she considered how the Conservative proposal could be paid for, given that there are, I believe, proposals to end other universal benefits, such as winter fuel payments, TV licences and tax relief for pensioners?

Mrs. Spelman: Of course the proposal has been carefully thought out. It is, as the Institute for Fiscal Studies pointed out, fully costed and fully funded. I reassure the hon. Lady that the discount for pensioners, which I am about to deal with in more detail, would come on top of the existing council tax benefit, single person's discount and, as my hon. Friend the Member for Havant (Mr. Willetts) confirmed, winter fuel payments. [Interruption.] If Labour Members will hold on while I discuss in more detail what our proposal will consist of—perhaps when they see its merits they will join me in challenging the Government to match it—many of their questions will be answered.

The Government have committed themselves to the revaluation of property, which is already being undertaken in Wales, where four times as many homes have moved up one or more bands as have moved down. If that were repeated in England, 7 million homes would go up a band. How else should that exercise be described but as rigged revaluation? It is a ticking tax time bomb, primed to explode on the doorsteps if Labour wins the next general election.

Mr. David Borrow (South Ribble) (Lab): Does the hon. Lady agree that the effect of the revaluation is not an increase in the total amount of council tax revenues but redistribution in collection to reflect more accurately the value of properties? If more properties end up in a higher band, that reflects the fact that more properties in that area have gone up in value, but bands will go down in other areas and people will pay less.

Mrs. Spelman: I am concerned about the hon. Gentleman's naivety in this matter. Although I agree that the objective should not be to increase the total amount of money raised because it is a completely disconnected fact that property prices have risen, the fact is that the revaluation is being used in Wales as a redistributive tool. Therefore, we conclude that its extrapolation to England would have a redistributive
 
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effect and, in fact, aggravate the inequity that I have been describing in distribution of central Government grant.

Mr. Edward Davey (Kingston and Surbiton) (LD): Will the hon. Lady clarify her position on council tax, given that the hon. Member for Brentwood and Ongar (Mr. Pickles), who is in her own team, told the House on 2 February,

"Any council tax system inevitably requires some form of revaluation"?—[Official Report, 2 February 2005; Vol. 430, c. 929.]

Would they keep council tax or not?

Mrs. Spelman: I think that I have made it perfectly clear that we are proposing corrections to problems in the council tax system that have been vastly aggravated by the Government.

Mr. Davey: Wriggling!

Mrs. Spelman: I am not wriggling. The answer to the question about revaluation is that, of course, a property-based tax must take account of changes in the value of the property, but it does not have to be used to fill the Chancellor's coffers with extra money by stealth or to redistribute grant inequitably between different parts of the country.

The Conservative solution to the problem facing our pensioners is simple. It is to cut the council tax in half for those aged 65. In our first year in office that would mean that more than 5 million pensioners or 3.8 million pensioner households would see their council tax bills halved. Such a discount would not be means-tested because we recognise how much pensioners dislike the intrusion of means-testing in their lives, but it would be capped at £500 to allow the resources to be targeted on those who most need it. It will be given on top of council tax benefit if a pensioner is in receipt of that and in addition to the single person's discount of 25 per cent. if the pensioner lives alone.

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