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David Howarth: The hon. Gentleman says that the council tax is a property tax, and in one sense that is so. However, millions of peoplecouncil tenants and tenants of housing associationsare paying the tax on the value of somebody else's property. Does he agree that there is sometimes confusion between a property-based tax and a wealth tax, and that the council tax is not the latter?
Dr. Whitehead: It is true that council tax as a tax on property does not bear an exact relationship to wealth, but neither does a local income tax, given the way in which it might be collected. On the other hand, a local property tax can define what are the properties in a particular area and collect the funds from them in an easy and straightforward way. The amount of evasion under the poll tax compared with the council tax differs by an enormous order of magnitude.
If we agree in principle that a property tax might be a way forward in collecting taxes for local government, it is inevitable that we have to revalue its basis from time to time. One cannot, as the Conservatives apparently do, support a property tax without accepting that it must reflect the way in which it is likely to be collected over a period of time. The idea that using bands means that one escapes from revaluation was one of the less well advised of those that were floated when council tax was first introduced.
What does one do about it? Despite what the Conservatives say, several things need to be recognised about council tax. It builds inflation into council tax demands by settling the amount of money that local government will have from central Government grant before the decision is taken on raising council tax locally, thereby introducing a gearing effect into local government spending in a way that is not structurally necessary. There is potentially a problem of inflation because revaluation means that people jump between bands, although one can get round that by attempting to organise a revenue-neutral rebanding. Perhaps a council tax that is not based on bands but on points is a more sensible way to proceed.
Business rates are capped at the rate of inflation, whereas council tax is not. Over a period of time, that draws the yield from business rates away from the yield from council tax and places a greater burden on domestic council taxpayers.
It is essential that, if a property tax is to be retained, the breadth of what needs to be done is clearly discussed and understood. Although I have my concerns about the difference between a deferral of revaluation and one that does not take place at all, we must get the detail right in the round, dealing with entitlement to council tax benefits alongside the issue of council tax as such. That is a constructive and responsible way forward for the council tax.
I am afraid that what the Opposition have offered us is a complete abdication of any interest or responsibility in the reality of how local authorities are funded. To use
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another far eastern metaphor, they are like members of the Japanese Socialist party in the 1950s, '60s and '70s, who were so convinced that the Japanese Liberal Democrats were going to win that they gave up even having policy conferences because they knew that their policies were never going to be implemented.
Mr. Peter Bone (Wellingborough) (Con): Thank you, Madam Deputy Speaker, for calling me to speak in the debate, which is of great interest to my constituents. Wellingborough has experienced the largest increasealmost 400 per cent.in council tax since it was introduced, whereas in the same period inflation increased by only a fraction of that. Despite that figure of 400 per cent., the Government want to increase the council tax even more through revaluation.
Incredibly, the Government have wasted £60 million on considering council tax revaluation and, after spending that money, have decided to postpone its introduction. That is typical of them. Their attitude is, "Forget spending money on core services like the fire service, the police or nurses. Let's spend it on bureaucrats and consultants." It would not be so bad if they had decided to scrap the revaluation, but they have postponed, not scrapped it. Revaluation will hit the elderly and the vulnerable hardest. How much more money will be wasted on consultants and advisers before proposals are presented to the House? Pensioners are suffering most through the excessive rises in council tax and pensioners would suffer most from revaluation.
In 2003, Mr. Martin Sterrow, a local pensioner, approached me. He, like many other pensioners in Wellingborough, was fed up with having to fork out year after year for huge increases in council tax while the rise in his state pension was a pittance in comparison. Mr. Sterrow was able to show me that the increase in his council tax was more than that in his state pension.
Some pensioners found it almost impossible to keep up their council tax payments and others were prepared to go to prison rather than pay it. Mr. Sterrow had never previously been involved in politics but felt so strongly about the issue that he wanted to do all he could to highlight the huge problem that Wellingborough pensioners faced in the amount of council tax that they had to pay.
For the past four years, I have run the Listening to Wellingborough and Rushden campaign, which actively seeks the views of local people, listens to their concerns and campaigns for change on their behalf. Before Mr. Sterrow and a group of local pensioners came to see me, I was aware of the big rises in council tax but I did not quite appreciate the extent of the detrimental effect on the lives of the elderly in Wellingborough. They explained to me that they were on fixed incomes and could not therefore keep up with the year-on-year increases in council tax while receiving only a small rise in their state pensions.
The quality of life of pensioners in Wellingborough was declining year after year. They were furious that the Labour Government had not restored the link between earnings and pensions.
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Mr. David Burrowes (Enfield, Southgate) (Con): I am grateful to my hon. Friend for explaining how pensioners are hit the hardest by council tax rises. Will he join me in commending the many pensioners who attended the lobby of the National Pensioners Convention, which raised similar concerns? Does he agree that it is a great shame that we now have a new definition of povertycouncil tax povertyand that 1 million pensioners are in that category as a result of the Government's delays and dreadful treatment of pensioners and their council tax?
Mr. Bone: I agree with my hon. Friend. Although I was talking about Wellingborough, I appreciate that we are considering a country-wide problem. I urge the Minister to give a higher priority to restoring the link between earnings and pensions instead of worrying about council tax revaluation.
Mr. Sterrow organised a petition and he and other pensioners went from door to door, collecting more than 200 signatures. The petition asked the Government to correct the huge discrepancy between council tax increases and state pension rises. Leaflets were delivered and people were asked their opinion on the doorstepall by those who had never done anything like it previously. That shows the depth of feeling in my constituency about the matter.
The Wellingborough pensioners and the listening campaign held two well-attended public meetings on the issue. The second public meeting, which local councillor Malcolm Walters organised, was attended by my hon. Friend the Member for South Suffolk (Mr. Yeo), who is a member of the shadow Cabinet, the leader of Wellingborough council, my hon. Friend the Member for Northampton, South (Mr. Binley), who was then the Cabinet member for finance at the county council and hundreds of local residents.
We presented the petition to my hon. Friend the Member for South Suffolk and asked him to raise the matter with the shadow Cabinet. He did that and I know that the leader of the Conservative party and the shadow Cabinet took our views into account. They adopted the policy of halving council tax for pensioners. That was the 50 per cent. discount that we mentioned in the general election campaign. I urge the Minister to adopt that policy to alleviate the current problems with council tax that pensioners face.
As part of my listening campaign, I regularly send out surveys to the people of Wellingborough and Rushden, asking what issues are most important to them. Council tax consistently appears as one of the biggest problems. After the return of one of the surveys, I had to ask my office to recount the answers because I could not believe the enormous response that we had received from people who said that council tax was their No. 1 concern. I detected through my listening campaign that council tax revaluation was a ticking time bomb, long before it became the national issue that it is today.
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