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Simon Hughes: Ahead of the Lyons announcement, as a matter of philosophy, does the hon. Gentleman personally as a new Cabinet Minister—and does his party—believe in giving more power to local councils? Do they believe that more of the money spent locally should be raised locally?

Mr. Miliband: The balance of funding review concluded that there was a strong case for more money to be raised locally. In respect of devolution, I believe that it is a good principle that power should be exercised as close to the people as possible, and I tell the hon. Gentleman in all seriousness that that is not just about power for the town hall; it must be about moving power from the town hall to the citizens as well. In that sense, this is not just a devolution deal between local and central Government—it must engage people beyond the town hall. That is important.

The property base of local taxation provides an efficient and workable foundation for taxation. For groups on low income, the council tax is, of course, reduced—for single people, by 25 per cent; for poor families, by council tax benefit, which is received by 4.9 million family units a year and is worth £13 a week on average, although we would all like take-up to be higher. Of course, there is a welcome boost for pensioners, pioneered by my right hon. Friend the Chancellor of the Exchequer.

Mr. Nick Hurd (Ruislip-Northwood) (Con) rose—

Mr. Miliband: Will the hon. Gentleman just let me make this point?

The Government's help in the form of a £200 contribution to the cost of council tax goes to 6.2 million pensioner households, nearly twice as many as would be covered by the Opposition's proposal, which excludes many pensioners because they do not live with other over-65s. Less than one quarter of
 
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pensioners would get the £500 of which the Opposition boast. In fact, the majority would get less than the £200 that is delivered under our proposals.

Mrs. Spelman: What about next year?

Mr. Miliband: Tempted as I am to make Budget statements in advance of the Chancellor, it would probably be audacious for a new Cabinet Minister to do so.

Mr. Hurd: I should like to bring the Minister back to the take-up of council tax benefits, which he skirted over. The unsettling fact is that about a third of pensioners who are eligible for council tax benefit do not take it up, apparently owing to the complexity of the process. What will the Government do about that, apart from just stating an aspiration that take-up will increase?

Mr. Miliband: I agree that take-up is an issue. I will write to the hon. Gentleman, though, because he is somewhat mistaken about the number. My understanding is that the figure is actually 53 per cent., but I will check that for him. However, neither 53 per cent. nor 33 per cent. is anything to be proud of. Take-up is certainly an issue to be considered, but it is not just a matter of publicity, however important that is, and a range of other issues is associated with it. It is certainly something that my right hon. Friend the Secretary of State for Work and Pensions is considering, because it is a long-term issue.

Anne Main (St. Albans) (Con): The Minister compared the Government's £200 contribution with the £500 that the Conservatives would have delivered but ours was a year-on-year contribution, not a one-off, so I do not know how he can compare the figures.

Mr. Miliband: I am sorry, but any of us can promise any amount of money if we do not have to say where it will be paid from. I can magic commitments out of the air, but, frankly, in the scheme of things, when the Conservative party proposes a £35 billion reduction in Government spending by 2011, for the hon. Lady to suggest that there is a sudden outburst of generosity in respect of pensioners strikes me as fanciful to say the least.

Mrs. Spelman: I thank the Minister for allowing me to reply to that point. The Institute for Fiscal Studies confirmed that our proposal was fully costed and fully funded, and among the savings was the scrapping of the best value comprehensive performance system, which costs £1 billion a year.

Mr. Miliband: I am sorry, but this £1 billion cost for inspection is completely erroneous. As I said to the hon. Lady, the figure is based on a local government information unit study that ascribed £400 million of savings to increased morale. I am happy to pursue the point, but I think that I should bring my remarks to a close. [Hon. Members: "Yes."] I am sorry that Conservative Members have not been able to enjoy the past 20 minutes, but there is more to come.
 
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The Government are determined to balance the commitments to spending on front-line services, a strong efficiency drive and a prudent council tax policy as part of a balanced package to support local government. The balance of funding review, which reported last July and included senior figures from central and local government, the academic world, business and professional bodies, found a strong case for shifting the balance towards more local funding. But that case depended on the feasibility and desirability of any measures to achieve it. It concluded that a variable local income tax might increase local accountability, but that a more complex funding system might be harder for taxpayers to understand, and there were potentially serious risks and disadvantages that would need to be considered in great detail, including the additional costs and burdens that the system would impose and the complexities of administration. That is notwithstanding the further point that, for dual-earner households, a local income tax presents, by any stretch of the imagination, a significant tax rise. Opposition Members must explain that.

David Howarth (Cambridge) (LD): Will the Minister give way?

Mr. Miliband: I will not have a big go at the hon. Gentleman but let him speak for himself. The hon. Member for Brent, East (Sarah Teather) will no doubt cover this point in a moment.

The balance of funding review reached consensus on a broad range of issues. It concluded that council tax had important advantages as a local tax and should be retained but reformed to help people on low incomes and to reduce the impact of revaluation. In the context of that, the House will be interested to compare the remarks of the hon. Member for Meriden today with her comment, as recently as 2 March 2005, that

"a property-based tax must take account of changes in the value of the property".

[Interruption.] The hon. Lady says that it is not true, but it is written here in Hansard.

Mr. Pickles: My hon. Friend did not say that.

Mr. Miliband: I am sorry but I have the full quote here. If the hon. Gentleman will contain himself, he will hear that the hon. Lady said:

"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."—[Official Report, 2 March 2005; Vol. 431, c. 983.]

She said that. I hope that the hon. Gentleman will accept that the quotation is accurate.

Mrs. Spelman: All I said from a sedentary position was that I had already covered that point in response to the intervention of the right hon. Member for Greenwich and Woolwich (Mr. Raynsford). The point was that the revaluation exercise is to tackle the disparities in property prices, but the fact is that the gap is narrowing. That takes away the need to act now and in the way that the Government intend.

Mr. Miliband: The watching millions can draw their own conclusions from that.
 
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To follow up the work of the balance of funding review, we invited Sir Michael Lyons to undertake his inquiry into local government funding. We asked him to consider the detailed case for changes to the system of funding and make recommendations on any changes that are necessary and how to implement them.

Mr. Clifton-Brown: Will the Minister give way on that point?

Mr. Miliband: I have been extremely generous in giving way, and I hope the hon. Gentleman will now allow me to finish my speech.

In particular, we asked Sir Michael how best to reform and revalue council tax and to look at the case for supplementary revenue raising by local authorities and options for reforming business rates and other local taxes and charges. Since starting work, he has visited each of the English regions and Wales to take evidence from stakeholders. He has met groups and individuals with a wide range of interests, and key stakeholders have been encouraged to submit written evidence. I look forward to his report.

I have a sneaking feeling that the minds of the drafters of both Opposition motions may be less on the finer points of the Lyons inquiry and more on their intense political rivalry for the vacant Cheadle seat. When the hon. Member for Meriden started talking about "Bash the rat"—[Interruption.] I am sorry but "splat the rat" is known as "Bash the rat" in the more refined parts of the north-east. However, when she started talking about "splat the rat", I thought she was talking about us. It turns out that we on this side are the drainpipe in this competition and the rat is sitting on the Liberal Democrat Bench. Be that as it may, the Government are fully focused on promoting serious engagement with the difficult choices raised by the pressure for more local spending in an acceptable way. It is to that end that I welcome this debate and look forward to its conclusions.

4.24 pm

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