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None the less, I am grateful to my hon. Friend for her valid point Madam Deputy Speaker. The local income tax might relieve the pain for some suffering groups but it would do so by transferring it to others who would suffer just as badly and are the very people whom we want to helpthose who are just starting on the property ladder, are not on particularly high salaries and may find it hard to make ends meet.
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The other problem with the local income tax is that of equalisation across the regions. Income levels are very divergent in different parts of the country, and bodies such as the Chartered Institute of Public Finance and Accountancy warn that a local income tax would place greater demands on the need for resources equalisation between areas. One of the big injustices of the current system of local government funding is that Government grants lead to a great deal of reallocation of resources between different parts of the country, and that would have to increase under a local income tax.
David Howarth: It is entirely unclear whether that is true. There are also vast disparities in property values. The question is a relative one between disparities in property values and disparities in incomes. It is not clear that disparities in incomes are much wider.
Mr. Hunt: The hon. Gentleman and I have to accept that neither of us knows the answer to that. The divergence in income levels might be higher than the divergence in property prices, and were that the case there would have to be even more resource equalisation.
Local income tax fails to address the real problem in local taxation, which is that far too high a proportion of the funds spent by local government is not raised locally but distributed from national Government. That leads to all sorts of anomalies in the local taxation system. In the case of my own county council, Surrey, I discovered that a significant amount of its expenditure every year goes towards building cycle lanes, which it has to do on the basis of central Government diktat, not what the voters of Surrey chose as their priorities in electing it. Another significant factor for Surrey county council is that if it gets a bad grant one year, it may find that it has to put its taxes up even though it has been very prudent in managing money.
In dealing with the issue of local taxation, we must ensure that people can vote for a local council that then reflects their choices. We need to reconnect local taxation with the people who pay for those services. In general, councils that tax and spend wisely tend to get voted incoincidentally, they tend to be Conservativeand those that do not tax and spend wisely do not get voted in. People do not feel that local councils do a job that they can relate to directly or that their choices as voters will have a direct impact on the delivery of local services. That is the real issue, not whether we have a council tax or a local income tax.
Mr. Eric Pickles (Brentwood and Ongar) (Con): It is a pleasure to follow my hon. Friend the Member for South-West Surrey (Mr. Hunt), who made an excellent speech in which he spoke with great integrity about the problems that his constituents face.
The Minister of Communities and Local Government said three things with which Conservative Members can agree. He is not in his place, but with his customary kindness and courtesy he has given me a note saying that he regrets that he cannot be here as he has a prior engagement. First, we should like to associate ourselves with his remarks about the right hon. Member for
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Greenwich and Woolwich (Mr. Raynsford). The second matter on which we agree is that those on dual incomes would indeed be disadvantaged through a local income tax. The third point on which we agree is the link between council tax and Government grant and the importance of devolution not only to councils but to citizens. If that is the hallmark of the right hon. Gentleman's approach to local government, he can look to the Conservative Benches for some co-operation.
I was, however, shocked that the Minister did not know that two out of three people who are eligible for council tax rebate fail to claim it. That marks a deterioration; it used to be three out of four people. It must be the only example of deterioration in the take-up of a benefit. I hope that the right hon. Gentleman will examine the matter urgently to encourage those who are entitled to the rebate to take it up.
It was a pleasure to hear the hon. Member for Brent, East (Sarah Teather) speaking from the Front Bench. However, she appears to be in denial about whether the Liberal Democrats voted for revaluation. We have given her the dates and column references for 2003. She has been out of the Chamber for most of the debate, so surely she has been to the Library to check and is in a position to apologise to us for the Liberal Democrats' vote for revaluation.
We voted against revaluation. I confess that there was a time when I believed it was a good idea, but I fear that I was deceived by the emperor's new clothes. Once we realised that the difference between the north and the south and between authorities would remain roughly the same as it was when the council tax was introduced, we did not see the point of spending hundreds of millions of pounds on a revaluation that would get us to precisely the same place. At least we found out that the hon. Member for Brent, East was one of the few remaining true believers in local income tax on the Liberal Democrat Front Bench.
My hon. Friend the Member for Isle of Wight (Mr. Turner) spoke with great passion about the problems caused by local Liberal Democrats on that fine island. He managed to elicit from the Liberal Democrats some discussion of resource equalisation. Under the proposal, there would be more resource equalisation. I therefore look forward to meeting my hon. Friend on the streets of Cheadle, where he will bang on doors and explain that the position in the Isle of Wight and in Durham means that local income tax in Cheadle would have to be a little higher. I was shocked by the accounts of the incompetence of local Liberal Democrats.
The hon. Members for Cambridge (David Howarth), for Brent, East and for Kingston and Surbiton (Mr. Davey) learned a valuable lesson: one should never intervene on my hon. Friend the Member for Bournemouth, West (Sir John Butterfill) unless one is sure of one's facts. One of the pleasures of being here this afternoon was listening to my hon. Friend demolish the local income tax and the interventions.
The right hon. Member for Greenwich and Woolwich appeared to be more robust about revaluation than his successor. The Government, certainly in the press, appear to be wobbling on it, and I look to the Minister for Local Government for a robust statement to the effect that revaluation will go ahead. For our guidance,
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we have some views from Mr. Geoff Mulgan, who is now director of the Institute of Community Studies but was formerly the Prime Minister's head of policy. He told the Chartered Institute of Public Finance and Accountancy, as he doubtless told the Prime Minister, that
and that it was making local government reform "hard to sell". I am sure that he is right and that Ministers have inherited a poisoned chalice. If they have any sense, they will do their best to spit out the poison as soon as possible.
My hon. Friend the Member for Ludlow (Mr. Dunne) spoke of unease about taxation. He spoke especially well about the problems of Stockport. My hon. Friend the Member for Guildford (Anne Milton) considered the problems of hard-working families. She gave us the example of a police officer married to a teacher and provided a long list of Liberal Democrat taxes. If she will forgive me, I should like to quote her predecessor, Sue Doughty, who was defeated at the general election:
My hon. Friends the Members for Preseli Pembrokeshire (Mr. Crabb) and for Clwyd, West (Mr. Jones) spoke with great knowledge of the catastrophe that awaits the people of England following revaluation. On Second Reading of the Local Government Bill in 2003, which legislated for revaluation in England and Wales, the then Local Government Minister pledged that
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