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Mr. Simon Burns (West Chelmsford) (Con): Does my hon. Friend remember that pensioners in Ribble Valley had a significant increase in their council tax in 2002, because of the Government's poor funding of Lancashire county council, yet pensioners received only a 75p per week increase in pension?
Mr. Evans: Pensioners will look at all the issues in the round when it comes to the next general election. We have heard much from Labour Members in this debate about the new Conservative proposals that we will introduce after 5 Mayif that is the date of the election. It is only the date that is uncertain, not the outcome of the election. Many Labour MPs are worried about the election because our proposals are popular, as I know from talking to my constituents. People cannot wait to receive a reduction in their council tax of up to £500. Unlike the hon. Member for Sheffield, Attercliffe (Mr. Betts), they understand the proposals. We will make further proposals to assist pensioners, and the council tax reduction will be the jewel in the crown.
Dr. Alan Whitehead (Southampton, Test) (Lab):
Frankly, the Opposition motion is in essence an appalling confidence trick. I had something of a singalong "Sound of Music" moment during the speech with which the hon. Member for Meriden (Mrs. Spelman) opened the debate, because on consulting the
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Conservative party website this morning I saw that she had already made the speech; quite a lot of it was on the website. Sure enough, when I entered the Chamber later, there she was making it. Perhaps that underlines the relative priorities being adopted in the propaganda at the heart of this initiative, and how much the House appears to matter in the debate.
There are two explanations for the deplorable trick that is being played. Either the hon. Lady knows what local government support the shadow Chancellor proposes, should the Conservatives be elected, in which case she is complicit in that deplorable trick, or she does not know, in which case she should consult what the shadow Chancellor says a few pages down on the website from where she has precipitately published the speech she made this afternoon, to see where the truth lies.
"Last February, we set out our medium term expenditure strategy. The heart of that strategy is a path for public spending that is affordable . . . in this document we set out how we will achieve that affordable spending."
Helpfully, on page 2 of that document is a table that sets out the three-year spending priorities. It is divided, also helpfully, into priority and non-priority areas. What every person who thinks about local government ought to know is that under the heading "non-priority areas" is Conservative future spending on local government. That spending, as last February's announcement by the shadow Chancellor shows, is to be frozen for two years, and is to rise by only 1 per cent. in real terms over three years.
What does that mean? It may not mean a great deal to some people, but it actually means that some £4.2 billion will be sucked out of local government expenditure, with the result that that money will not go to local authorities.
On the financial question, of course local government spending includes the important elements of educationon which we are committed to above-inflation spending increasesthe health budget, with a read-across to social services provision, and police, on which we are committed to increasing spending. All those are elements of local government finance. In the same document, we identify more than £4 billion of savings within local government that could, of course, be used by local authorities, as they choose, to help with front-line services and so on.
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Dr. Whitehead: I am afraid that that will not do. The £4.2 billion loss over the three years would occur after taking account of the increases that the Conservatives have indeed suggested they would make in their education and health expenditure. As everyone knows, in the context of local government and council tax, that £4.2 billion loss can be made up only in one of two ways: either there must be a change to the system whereby the relationship between what is raised locally and what is provided centrally is augmented by other forms of local tax, in which case the gearing ratio is not so harsh; alternatively, if one wants to maintain services at the same level, having lost that amount of money, council tax must be raised, as day follows night. It is quite simple and straightforward.
There are no Conservative proposals, as far as I am aware, for any change to how the council tax works, other than that the Conservatives apparently want rebanding, but not nasty rebanding. The Conservatives have two commitments: first, to keeping the council tax as the main source of raising revenue for local authorities; and, secondly, to reducing radically the amount that central Government put into local government, as set out in their medium-term expenditure plan.
David Taylor: Perhaps my hon. Friend was about to come on to the Conservatives' third commitment: the so-called council tax discount for pensioners. That would cost £1 billion, and although they say that it would be funded by savings, the latest edition of The MJformerly the Municipal Journalshot a hole in the bows of that by saying that such savings are pie in the sky. Does he agree with that assessment?
Even if the Conservatives could make the savings that they claimI agree that they are pie in the skyand told pensioners that they could fund the scheme, what would be the effect of taking such money out of local government? We should compare their proposals with Labour's medium-term expenditure plans, which put it on record, in black and white, that such funding will increase by 17 per cent. over the same time period.
What would be the effect of a 1 per cent. increase rather than a 17 per cent. increase? Owing to the gearing effect, local authorities that wished to keep their services at the same standard would have to increase their council tax by 4 per cent. for every 1 per cent. lost from central Government grant, which explains why, when the Conservatives introduced the council tax, they increased value added tax by 2.5 per cent. They did that so that they could pack the amount given by central Government and thus keep council tax rises lower. They would not be able to say that they were not warned about that effect or that they did not know about it.
What would be the effect of the Conservatives' proposal in Southampton? Council tax would probably rise by about 40 per cent. over two years because of the
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loss of increased grant. That means that the council tax for an average band D property in Southampton would increase by about £600.
The Conservatives tell us that pensioners would receive £440, but they would have to pay an extra 50 per cent. council tax over that period. After taking inflation into account, all the money that the Conservatives would give pensioners under their phoney plan would be taken away from them due to the removal of money from local government, as identified in their medium-term expenditure plan.
The Conservative proposal is a fraud that is unworthy of the people of this country. If the hon. Member for Meriden ever has the misfortune of trying to put the policy into practice, I urge her, before she becomes distressed, to consult the shadow Chancellor to find out whether he will change his policy. If she understands what his policy really means for local government, she should withdraw the proposal that she put before us today.
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