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Angela Watkinson (Upminster) (Con): This has been an interesting and revealing debate. All Opposition Members are only too well aware of the worry that has been felt by our constituents while the revaluation of their homes has been hanging over their heads. The main concern every year when councils set their budgets is how much the council tax will go up. In particular, retired people on modest fixed incomes have seen their disposable income reduce year on year. Many of them have been living in the same homes for decades: homes where they have brought up their families, homes that hold a lifetime of memories, homes that have increased in value beyond their wildest dreams and because of that fact—one that is outside their control, incidentally—homes that attract such high council tax bills that they can scarcely afford to continue living in them.

What of young families, with all the attendant expense of bringing up children, whose clothes seem to either wear out or be grown out of before they even reach the washing machine, mortgages with creeping interest rates and the increased costs of running the family car and buying season tickets to work— all the normal nuts-and-bolts expenses of everyday life? A huge hike in council tax that results from property revaluation and goes up one or more bands, as the Welsh experience indicates, could have been the straw that broke the camel's back for some family budgets.

The knowledge that the Government were planning to revalue all properties has caused enormous concern and people are oh so relieved at the Government's recent policy U-turn—at least for the time being. But, for how long will the revaluation be postponed? We have heard that Sir Michael Lyons recommended that it should not be postponed for longer than a year. We know that a Bill is coming up soon. So the revaluation has not been cancelled; it is still hanging there like the sword of Damocles—it has not gone away. The Council Tax (New Valuation Lists for England) Bill will allow the Government to determine the date of the revaluation of properties in England by secondary legislation. The Government will be able to slip it through with little debate in Parliament.

Mr. Betts: Let us be absolutely clear what the Opposition's policy is on this matter. The hon. Lady is speaking to a motion that refers to cancelling the revaluation. Does that mean permanently cancelling it? In other words, there would never be a revaluation, according to Conservative party policy.

Angela Watkinson: The hon. Gentleman will know that, in politics, we never say never, but our policy is to cancel the revaluation. If he will bear with me for a moment, he will learn more of our policy.
 
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The Minister, in his opening remarks, apologised for making the announcement in the recess, but we were refused an urgent question when this Parliament began and he could have made a statement. The Government are being called to account today only because there is an Opposition debate on the subject.

The Lyons report refers to the complexity of local government funding, the strategic and expanding role and functions of local government, devolution, decentralisation and more accountability. We now have communities that are far more diverse, with much higher expectations of what their councils can provide for them. Local government needs to foster partnerships with the local community, the police, health authorities and all the other statutory bodies and the private sector in local area agreements. That will happen by 2007. There are already several highly successful strategic partnerships, and my council of Havering has the successful Havering strategic partnership. All its partners have an enormous amount of good will and wish to contribute in whatever way they can to try to improve services for the benefit of local people.

My hon. Friend the Member for South-West Bedfordshire (Andrew Selous), who is not in the Chamber, referred to the need for the health service and educational services to work together to help special needs children. It is difficult to meet the growing needs of the ever-increasing numbers of children with special educational needs, many of which arise from medical conditions. Speech therapy, especially, has been under-provided for many decades. I examined the matter a year or so ago to determine how many colleges provided courses for speech therapists, whether those courses were fully attended and whether there was an unusually high drop-out rate. I did not find any problems with the training, but there is no tracking of what happens to qualified speech therapists after they have finished their courses. Where do they go? They do not go into education—certainly not the state sector—or the national health service, so where all the qualified speech therapists go is a mystery. Overcoming such a problem is an example of the way in which councils, health services and other partners could work together.

The Minister said that a process of revaluing to align property values with council tax was fair, but how often would properties have to be revalued to make the system continuously fair? What will happen if property values flatline for several years, as they have in Westminster? How would local government funding be adjusted to take account of a fall in property prices?

The Minister blamed councils for high council tax, which gave the impression that councils have the freedom to set their council tax at a level of their choice. However, we all know that central Government funding comes with many strings—or statutory duties—attached and with so much ring-fencing that only a small proportion of councils' funding represents disposable income. Their freedom to set their budgets is thus severely restricted. They have of course received extra money, but the cost of their additional statutory duties, which are unfunded, has greatly outstripped that increase.
 
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Children's services, especially, have been affected enormously. For example, my local authority has somehow to find extra money when families with children with complex and costly needs move to it because that is its statutory duty. Councils thus have little leeway to provide additional services. Services such as Streetcare get squeezed because of the demands of statutory services.

Mark Tami (Alyn and Deeside) (Lab): The hon. Lady is making a good case for spending more, but I thought that she wanted to tax less. How does she square that position?

Angela Watkinson: That is a very good point. I am glad that the hon. Gentleman makes it because local government funding cannot be considered in isolation. It must be examined in tandem with what local government does and how it does it. Local government needs more freedom to decide what it does without diktat from central Government.

In 1997 Labour inherited a system that was working. Most people understood and accepted it, so what did Labour do? It seized on council tax payers and made them the milch cows of the nation. Council tax has gone up 76 per cent. in England and 86 per cent. in Wales. The Government who promised not to increase income tax have put up council tax by the equivalent of 3 per cent. on income tax. More people are now eligible for council tax benefit, but the complexity of the forms means that fewer than two in three eligible pensioners claim it.

We call on the Government to cancel revaluation in England, to face the music over the problems of the flawed Welsh revaluation and to admit that business rate revaluation increased costs for medium and large businesses, irrespective of the take-up of rate relief by small businesses. We call on them to be transparent about their intentions for reform in Northern Ireland and the effect that that will have on future funding for England, and about local government restructuring. The Government's policies are mired in confusion, but council tax payers are not confused—they know that they are about to be mugged again.

3.50 pm

The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Jim Fitzpatrick): My hon. Friend the Minister for Local Government opened his speech by saying that he was genuinely excited at the prospect of today's debate. Some of our colleagues suggested that perhaps he should get out more, but I know what he meant. The tone and the content of the debate prove that this has been a useful opportunity.

Before I respond to specific issues raised by hon. Members, I feel obliged to emphasise what my hon. Friend said about council tax. He stressed three aspects that I wish to address: how the Government are already helping many people, not least pensioners, with their council tax bills; how we are taking firm action to ensure that council tax levels stay low; and how we are taking forward reform of the system through the inquiry by Sir Michael Lyons. Our aim is to ensure that high-quality services can be funded in a way that is both fair and sustainable in the long term.

First, let me remind the House how much the Government are already doing to help people to pay their council tax bills. Help with those bills is available
 
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to those who are least well off through council tax benefit—an important part of the picture. In 2005–06, of the total council tax requirement of £21.3 billion, about £3 billion, or 14 per cent., is being met through council tax benefit. The operation of the council tax benefit scheme is the responsibility of my right hon. and hon. Friends at the Department for Work and Pensions; however, both they and we at the Office of the Deputy Prime Minister are concerned that many people, especially pensioners, are not taking up their entitlement. Help is being offered to pensioners to try to resolve that. The focus in the short term is, rightly, on getting better take-up of council tax benefit, but for the longer term the DWP aims to make the council tax benefit system as automatic as possible.

In addition to council tax benefit, the Government are giving pensioners extra money specifically to help with council tax bills. We gave £100 to households with someone aged 70 or over in 2004–05, and in 2005–06, households with someone aged over 65 will receive £200—unless, of course, they are already entitled to a 100 per cent. rebate. We are giving a lot of additional help to pensioners generally, spending almost £11 billion more on pensioners in 2005–06 than in 1997 as a result of measures introduced since then. The help we are giving includes the £200 winter fuel payment for everyone aged over 60, which benefits more than 11 million pensioners; there will be free local area off-peak bus travel for pensioners from April 2006; television licences are free for anyone aged over 75, which benefits more than 4 million people; value added tax on fuel has been reduced from 8 per cent. to 5 per cent.; the over-60s receive free eye tests; and women aged 50 to 70 receive free breast screening. There have been record increases in the basic state pension, and pension credit, which guarantees at least £109 a week for single pensioners and £167 a week for couples from April this year, is set to rise in line with average earnings until 2008.

Secondly, we are working hard to keep council tax down. We delivered another good settlement for local government in 2005–06—one that ensures that councils can provide a high level of service. We have provided an extra £3.5 billion—6.3 per cent. more than in 2004–05. In total, local government has had a 33 per cent. real-terms increase in funding since 1997.

Thirdly, we are working to reform the system. The Government acknowledge that the current system is not perfect. As we said in response to the balance of funding review, our position is that council tax should be retained, but reformed. Sir Michael Lyons is already examining how the council tax system might be reformed and he is aware of the issues that have been raised by pensioner groups and individual pensioners. It is, however, entirely right that before giving us his recommendations on council tax, he take a step back to consider the current and emerging strategic role of local government in the context of national and local priorities for local services. Any proposals for reform of the funding system should be set firmly and explicitly in the wider context of a clear shared understanding of the role of local government and of councils' accountability to service users, residents and taxpayers.

Turning to the debate itself, the hon. Member for Brent, East (Sarah Teather), the Liberal Democrat spokesperson, has an amazing talent for causing
 
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outrage among Conservative Members, almost regardless of what she says. However, she appeased them somewhat by announcing that she has persuaded her colleagues to vote with the Conservative party today. She announced that the poorest pensioners must pay 10 per cent. of their income as council tax. My right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford) pointed out that that was inaccurate, and it was not the case. The hon. Lady said that a local income tax would be simpler to operate, but the balance of funding review chaired by my right hon. Friend the Member for Greenwich and Woolwich concluded that local income tax should be introduced only as a supplement to council tax to shift the balance of funding. We have therefore asked Sir Michael Lyons to look into a supplementary local income tax as part of his inquiry into local government funding. The balance of funding report flagged up the fact that considerable further work would be required to address substantial technical and administrative issues and costs associated with local income tax as well as the impact on individuals and employers before firm conclusions could be reached on its feasibility or desirability.

My hon. Friend the Member for Southampton, Test (Dr. Whitehead) skilfully outlined the weakness of the position adopted by the official Opposition, and made some astute points, a number of which will be taken into consideration by Sir Michael Lyons.

The hon. Member for Wellingborough (Mr. Bone) told us about his listening campaign, but he clearly did not listen to the intervention of my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts), which he curtly dismissed as spin rather than a point of information. However, I acknowledge the genuine appeal that he made on behalf of local government. His suggestion that revaluation could provide a vehicle for local authorities to push up council tax was countered by my hon. Friend the Minister for Local Government, who outlined the capping powers that the Government have at their disposal and which they have used, and will use again in the event that councils breach expected limits.

My hon. Friend the Member for Sheffield, Attercliffe challenged the fairness of the Liberal Democrats' flagship policy, outlined its weaknesses and made a number of interesting and thoughtful points. My hon. Friend the Minister for Local Government has read the Local Government Information Unit pamphlet, and the key question of the lower income threshold raised by my hon. Friend the Member for Sheffield, Attercliffe is being examined by Sir Michael Lyons.

In his inimitable style, the hon. Member for Northampton, South (Mr. Binley) challenged the Government to respond to concerns about his local council tax rates. I am sorry, but we do not recognise the figure that he cited of 0.9 per cent. If he writes to me, we can examine what Northampton received, whether at the level of the shire, the district or Northampton, South itself. He sought an expression of humility from the Government. While there is genuine humility on the part of the Government its manifestation is not always apparent and it is not always reported.
 
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My right hon. Friend the Member for Greenwich and Woolwich spoke, as ever, with the authority that becomes someone with his experience. I acknowledge his strong feelings on the issue and his disagreement with the Government's position although, naturally, that is disappointing. The hon. Member for Leominster (Bill Wiggin) took us back to Wales. If he will forgive me, I will not go there as time is against me and Welsh issues were fully aired at the beginning of our debate in a series of interventions. I am not sure if he deliberately used the word "rebranding" as opposed to "rebanding", but I understood his point.

The hon. Member for Cambridge (David Howarth) delivered his own winding-up speech, the point of which was entirely valid. There are political choices to be made and we will have to make them, but after we have taken advice.

In conclusion, today's debate has been a good opportunity for the Government to state their position. There will be further opportunities when the House debates the Council Tax (New Valuation Lists for England) Bill in due course. The future of local government is crucial for the future well-being of the country and the Government are determined to create a strong and sustainable role for it. We are convinced that we have the right approach for the reform of local government funding.

We need a clear and complete picture of what we want from local government—only then can we tackle the question of how it should be funded. We are confident that Sir Michael Lyons's extended work will provide an opportunity for fundamental and lasting reform. I invite the House to give him its full support in his endeavour, to vote to oppose the motion tabled by the Opposition and to support the amendment in my name and that of my right hon. and hon. Friends.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 247, Noes 300.

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