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Anne Milton (Guildford) (Con): It has been said that council tax became unpopular only when it started to increase. That is probably true. There is no doubt that it is a fact in my constituency. It is not only the increase that is the problem, but the increasing knowledge among local people of what is happening to that money. Council tax in Guildford has risen by 92 per cent. since 1997–98. That is, without a doubt, mirrored to some extent in Waverley. We heard that the average council tax on a band D home has gone up 76 per cent. in the same period. Now we all face the revaluation. I cannot tell hon. Members how worried residents in Guildford are about that, and the experience in Wales does nothing to reassure them.

We heard a long speech about local income tax from the Liberal Benches, but I must be allowed my two-pennyworth. What about hard-working families? What about the teacher and nurse who live together? What about the pensioners and their savings, from which they derive a much-needed income? It irritates me enormously when the Liberals refer to pensioners. Some pensioners are slightly wealthier than others. Not all are poor. Some have worked hard all their lives and saved hard, but they are going to be taxed on that income. Also, what about students? What about people in residential care homes and nursing homes? All those people would be hit by a local income tax.

I have a list of all the taxes favoured by Liberal Democrats, who love taxes because they think they keep people in their place. They are: VAT on new homes, stealth inheritance tax, speed camera tax, rubbish tax, plastic bag tax, parking taxes to shop, parking taxes on business, land tax, income tax at a new regional rate and a new local rate, hotel taxes, 4x4 taxes. I could go on—

The Minister for Local Government (Mr. Phil Woolas): Keep going.

Anne Milton: I could, but the fact remains that the local income tax would still be collected by central Government. Nothing local is going to happen on local income taxes.

Hon. Members talked about the various ways of raising money for local services. What is talked about less is what happens to the money when we have got it. That is my problem with the Government. The burden of red tape, regulation, the extra services and the hoops that local councils have to jump through increases yearly.

I defy anyone to find me a local government officer who would not say the same thing. Councils have to provide more and more, and jump through all the hoops, but they are not receiving the funding that should come with it. Local government is without doubt enormously complex, but the increased burden of regulation, red tape and all the things that councils have
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to do means that it is getting unbearable. Most local government officers feel that there is a tight rope around their waists.

I have campaigned yearly on the council tax increases in Guildford. I even took to the streets and marched from one end of my constituency to the other. It is a shame that people do not take to the streets more often. I did that because of the 92 per cent. increase in council tax for the people of Guildford. It is unbearable. It cannot go on, and they cannot go on paying for central Government regulations that are passed down, with the burden shouldered by local people.

5.55 pm

Mr. Stephen Crabb (Preseli Pembrokeshire) (Con): I am pleased to participate in this important debate on local taxation, which is probably one of the most pressing subjects that we will consider in the months and years ahead, but is one which, as the Minister said, few people understand fully. I hastily stress that I am with the majority on that. I am certainly not one of those who claim expert knowledge of the intricacies of local government finance.

What I am, I hope, in a position to do is to say a few words about the recent experience of council tax revaluation in Wales, and in particular to draw attention to the resentment and anger felt by many council tax payers in the Principality as a result of what many see as one of the most blatant examples of a stealth tax that we have seen in recent years.

The rebanding in Wales has left a bitter taste in the mouths of many council tax payers who saw their real incomes eroded as they were hit this year by a double whammy of the usual council tax increase and the uplift as a result of rebanding. The rebanding exercise came against a backdrop of a step-change in the burden council tax payers in Wales were being asked to shoulder under the Government.

Between 1998 and 2004, revenue expenditure in Wales increased by 44 per cent. to around £5 billion. That expenditure was funded principally from central Government grants, which increased by 40 per cent. over the period; council tax, which increased by a whopping 78 per cent. over the same period; and the share of non-domestic rates, which increased by only 13 per cent. Council tax payers in Wales are now paying for around 20 per cent. of revenue expenditure compared with 15 per cent. eight years ago. Council tax payers are becoming more important as a source of local government finance and they have been asked to pay more and more. As a consequence, they have every right to ask what they are getting in return for their money.

During the recent election campaign, I lost count of the number of people on the doorstep who made the comment that £1,000 a year is a lot to pay for their rubbish to be collected, that being the only service from which they feel they benefit. Many people in Pembrokeshire do not think that the 70 per cent. increase in council tax over the past eight years has bought them significantly improved local public services.

That is the context under which revaluation took place in Wales. When the Welsh Assembly first announced its plans for revaluation, it was claimed that
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it would not lead to a significant increase in the taxes paid by Welsh households. It would be revenue neutral, to use that horrible piece of Whitehall jargon. The Labour Assembly Minister in September 2003 stated:

The Assembly also pointed out that, as the underlying assumption is that the income from council tax will not change as a result of revaluation, it does not necessarily mean that all those moving up bands will pay increased council tax.

Adam Price (Carmarthen, East and Dinefwr) (PC): It is true in Wales as well as in England that local government is responsible for education, social services and much wider things than just waste collection. Does the hon. Gentleman not think it fair that those core public services should be paid for by an income tax system rather than a property tax?

Mr. Crabb: No, I do not necessarily accept that. Taxation must be transparent and fair. There must certainly be an element that is geared towards ability to pay. My point is about the way revaluation was undertaken in Wales.

So much for the spin from the Welsh Assembly about revaluation. In the event, only 8 per cent. of homes moved down a band, but more than a third moved up. A total of 28 per cent. of homes moved up by one band, 5 per cent. by two bands and almost 1 per cent. by three bands. Nothing breeds resentment and cynicism more than broken promises and misinformation. People in Wales think that council tax revaluation was another stealth tax or a backdoor tax hike. The revaluation process, as proposed by the Welsh Assembly Government, meant that, although there was no change in the headline rate of council tax, local residents faced higher bills. In Cardiff, 64 per cent. of homes went up by at least one band, and Wrexham, Vale of Glamorgan and Powys were particularly hard hit. In my county of Pembrokeshire, 35 per cent. of dwellings moved up at least one band.

Mr. Patrick McLoughlin (West Derbyshire) (Con): Will revaluation not be used by the Government to say that council tax as a percentage has not gone up? Following what happened in Wales, as my hon. Friend rightly demonstrated, many more people will pay far more, but the Government will still argue that the percentage raised by council tax has not gone up very much. In England, the amount of money that councils spend will rise, as will the amount of money that they take from people, but the Government will manage to argue that the percentages have not gone up very much.

Mr. Crabb: My right hon. Friend is right. Welsh Assembly Ministers tried their best to say that the average council tax had increased by only 4 per cent. this year, but were forced to admit that, overall, it had risen by almost 10 per cent. Labour Ministers claimed that there would be as many winners as losers, as if council
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tax were a dodgy fairground lottery, but in the end they had to admit that it had risen by more than 9 per cent. this year.

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