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Mr. Patrick Hall: On the future of the council tax, does my hon. Friend agree that there is a serious case for looking at regional variations in the bandings?

Mr. Betts: When revaluation is done, we will certainly have to consider at a regional level the way in which assistance is given. Indeed, I think that my right hon. Friend the Minister mentioned that issue, and the Government will come back to it.

My right hon. Friend did an excellent demolition job on the pie-in-the-sky proposals from the Conservatives that he identified. The reality is that in costing the
 
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Conservatives' scheme, the Institute for Fiscal Studies did not confirm that the necessary funding would be available. That is a crucial difference and we have to get it on the record. If the Conservatives are serious—should they come to power—about preserving education and health services and the police, the massive weight of their cuts would fall on local government. They would fall on maintenance of the roads, which they claim to be interested in. They would fall on litter collection and the maintenance of open spaces, and on libraries, leisure services and the fire service. Those services are at the top of the list of people's priorities, and we need to emphasise time and again that they would be cut substantially under the Conservatives' proposals. The environment in which people live and the services that they receive are crucial to the way in which they feel about local government.

David Taylor: Will my hon. Friend give way?

Mr. Betts: I am afraid that I will have to decline as I am on a strict time limit. I want to make progress so that I can allow others who have been present throughout the debate to get in.

The worst criticism that I can offer of the Conservatives' proposals is that they are worthy of the Liberal Democrats' unfunded and uncosted proposals at their worst. During his response, my right hon. Friend made a point that I particularly welcomed. There was some concern in local government circles that the £1 billion would be a one-off sum and that next year, local government would be left to deal with the mess. I am pleased that he dealt with that issue, and local government will be somewhat reassured by what he had to say.

I have two final points to make about the Opposition parties' proposals. The Liberal Democrats say that they have done the research and the costings and that local income tax will achieve various things. However, during his speech the hon. Member for Kingston and Surbiton (Mr. Davey) gave away something that also emerged when the Liberal Democrat leader of Somerset county council appeared before our Select Committee. The hon. Gentleman said that any form of taxation needs its own form of grant distribution. When challenged, the leader of Somerset council had to admit that, on a like-for-like basis and without any change to the grant regime, local income tax in Somerset would not be affordable for many families. She said that the council would need a substantial increase in grant.

Frankly, if the hon. Member for Kingston and Surbiton has not calculated how he would distribute grant, he cannot say precisely how much people would have to pay in local income tax, compared with council tax. [Interruption.] He is mouthing silently that the Liberal Democrats have made those calculations, but I certainly have not seen them on his website. It will be interesting to see them in due course.

The hon. Member for Meriden put a great deal of emphasis on the fact that she opposes means-testing, but let us consider the Conservatives' proposed council tax discount for pensioners, according to my understanding of it. Those pensioners who currently pay no council tax because they get a full discount would get no discount from her. Those whose council tax is partly covered by
 
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council tax benefit would get only part of her discount. However, those who would get the full discount include some of the richest, who live in some of the largest houses.

Mrs. Spelman: Let me make the position clear. Somebody who receives 100 per cent. council tax relief is obviously not in need of any discount. For somebody who receives benefit providing partial council tax relief, the full discount would apply to the residue. They would get the full 50 per cent.

Mr. Betts: The full 50 per cent. of what? Is it 50 per cent. of the council tax that they are paying or 50 per cent. of what they would be paying if they did not get any council tax benefit? It is completely unclear.

Mrs. Spelman: To make it perfectly clear, let me explain the order in which the benefits stack. First, council tax benefit applies if someone is eligible for it; after the application of the benefit, a residual sum may remain. That residual sum is the one to which the council tax discount of 50 per cent. applies. If, in addition, the person concerned is eligible for the single person's discount, the full 25 per cent. is applicable. The benefits stack in that order: council tax benefit; single person's discount, if eligible; and, if there is any residue, the full 50 per cent. discount would apply.

Mr. Betts: That is not perfectly clear. If people do not pay council tax because they receive the full benefit, they do not get the discount; if they pay part of their council tax, they will get part of the discount according to some rather unclear form of calculation. Some of the richest people living in some of the most valuable houses will receive the full amount of discount—[Interruption.] The hon. Member for Meriden says that this is not means-testing, but her discount is linked to a means-tested benefit—the council tax benefit—so the resulting discount must itself be means-tested, but means-tested in a wholly perverse way. It is, in fact, means-testing stood on its head. That is the charge that I level at the Conservative proposals. It is stood on its head, because the biggest discount goes to the people who have the most money and who live in the biggest houses. That is the reality.

3.56 pm

Mr. Nigel Evans (Ribble Valley) (Con): I am grateful for the opportunity to make a short contribution to the debate. I agree with only one thing that the hon. Member for Reading, West (Mr. Salter) said—we should keep our contributions short in order to allow other Back Benchers to speak. I have to say that the Minister for Local and Regional Government spoke for 43 minutes, but he said absolutely nothing and made no contribution of value to the debate.

Speaking as a former county councillor, I pay tribute to the many councillors up and down the country who do tremendous work under great pressure, frankly, as a result of the extra demands put on them. My patch includes the Lancashire county council, which is Labour controlled and Ribble Valley, which is Conservative controlled. Of course, the people of Ribble Valley will
 
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not have to wait very long—we know the date at least of the county council elections—before they have a Conservative-controlled Lancashire county council that will be able to deliver effective policies on a much lower council tax than they currently pay.

One matter on which we can all agree, irrespective of whether we have had experience on a council, is that the vast majority of people in this country simply do not understand local government finance. It is incredibly complex, yet so much of what the Government say these days depends on it. The Government are trying to use smoke and mirrors in order to confuse people, but funnily enough, one thing that does not confuse people is the demand that they receive through the letterbox. When they open up the letter, they see how much council tax they have to pay. On that matter, there is no confusion.

For a band E property in Ribble Valley in 1997, people had to pay £746; today, they have to pay £1,206. There is no confusion there at all—[Interruption.] The Minister knows perfectly well that biggest costs that people living in Ribble Valley will have to face will come from the Labour-controlled Lancashire county council. We hear a lot about the wonderful settlement that councils have had this year, but does not the Minister find it significant that, if we look back to the previous occasion on which a general election and county council elections were held virtually together, the council tax increase was pretty small, too? Subsequently, of course, council tax went up to a much higher level, but, lo and behold, what are we being told now? We hear that the deal this year is wonderful and that all the increases should be kept to a minimum. We are encouraged to rejoice that the increases in Ribble Valley may be only twice the rate of inflation. This is, as everyone knows, a general election year. People in Ribble Valley are pretty canny. They know that if a Labour Government are returned after the next general election, the increases in council tax will rise dramatically, just as they have done—by 70 per cent.—since the Government came to power in 1997.

I want to concentrate mainly on pensioners, but they are not the only ones to suffer. First-time buyers are also being clobbered one way or another. They are getting clobbered now because they have to pay stamp duty, which has not kept pace with inflation. Many people buying their first homes are truly being clobbered by it—[Interruption.] Before the hon. Member for Kingston and Surbiton (Mr. Davey) even tries to intervene, I do not agree with any of the Liberal Democrat policies. As I say, people are clobbered at one level, and then the council tax comes in on top, and they are clobbered again.

What the Government are attempting to do with their revaluations and rebanding is to introduce a very crude wealth tax. The Government should be far more intelligent about that.

Part of the problem is that councils face so many extra demands. My hon. Friend the Member for Cotswold (Mr. Clifton-Brown) listed the various extra demands that have been put on councils, and my local council complains most about the pensions claw back. That has had a huge impact on Ribble Valley council, as expressed at a meeting last night about employee pension funds. The council has to find £120,000 for that next year. The year after it will be £190,000 and the year
 
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after that £260,000. Those sums will have a huge impact on the level of the council tax in Ribble Valley. I pay tribute to Councillor Richard Sherras, who proposed the motion last night to bring the issue to the Government's attention. It is not only Ribble Valley that will suffer, because all councils will have to find similar extra sums.

Pensioners are a vulnerable group of people because many of them have to exist on fixed incomes. That is incredibly difficult, because they have to try to budget on the money that they know is coming in. However, from year to year, they do not have the faintest idea of the full impact of the council tax.

Ribble Valley has seen a vast increase in the number of people aged over 65. In 1991, there were 15,578 and in 2001—the latest year for which figures are available—there were 18,801. As those people get older, they rely increasingly on the services that the county and borough councils provide for them. Some of the care homes in Lancashire have been closed recently and the care packages for elderly people have been reduced, at a time when demand has increased. Older people find that very worrying.

Some of my constituents have lived in Ribble Valley for many years, they have brought up a family of three or four children, they have moved house two or three times and they now live in a big house. Although the children may have moved away, leaving one or two pensioners living there, that house holds the memories of their family, and it is appalling that they may be forced to sell that family home simply because the council tax has gone up 70 per cent. since 1997. Who can say how much further it will increase? If the Government win the election, such a property may even be rebanded.

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