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Mr. Francois: I shall give way to my right hon. Friend first.
Mr. Gummer: Will my hon. Friend consider the other side of the argument? If the people who live near the new development feel that they are unfairly taxed because of the change, would not revaluation on a local basis have the opposite effect to that which he adduces? The revaluation would make them happier because it would be fairer not only to the new people but to them.
Mr. Francois: I understand my right hon. Friend's point, but if one considers, for example, the experience in Wales, revaluation has been relatively unpopular. If one could guarantee that the bulk of the people in a growth area would be pleased to be revalued, his argument would carry more weight. However, I believe that they would be happy to be revalued in isolation when people who lived nearby did not have to accept the additional houses and the attendant pressures or revaluation. I hope that I can deal with that matter in more detail if I am lucky enough to catch your eye on Third Reading, Madam Deputy Speaker. I understand the constraints on the current debate.
The overall problem is with the inequitable nature of the funding formula whereby so much local government money derives from the Treasury. I shall not go further
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but changing the formula and making it more equitable, not accepting the amendment, is the way to deal with that.
Does my hon. Friend the Member for Northampton, South want to intervene now?
Mr. Binley: No, my hon. Friend has now covered the point that I wanted to make and I thank him.
Mr. Francois: In that case, I shall conclude my remarks.
Mr. Clifton-Brown: My hon. Friend is an expert on the matters that we are considering. He served on the Committee that considered the Local Government Act 2003. He knows that, when tax is raised by revaluation, the system already provides for redistribution to transfer money from higher-based to lower-based authorities. Would not accepting the amendment create a genuine incentive for that to happen?
Mr. Francois: My hon. Friend and I both served on that Committee and I greatly enjoyed the debates. I genuinely understand the aim of my hon. Friend the Member for Mole Valley in amendment No. 3, but the way to tackle the problem is by dealing with the inequity of the funding formula in the round. That is the nub of the problem. I hope that we shall take that on instead of accepting the amendment, which simply tweaks a much larger problem.
I understand what the amendment tries to achieve. If two separate amendments along the lines of the subsections in new clause 1 had been tabled, I might have been tempted to vote for one but not the other. Unfortunately, I am worried about supporting the amendment as drafted because the power is too broad and the Secretary of State could abuse it in certain circumstances.
Mr. Christopher Chope (Christchurch) (Con): I support amendment No. 3, which was tabled by my former colleague on Wandsworth council, my hon. Friend the Member for Mole Valley (Sir Paul Beresford). It is an ingenious amendment, which introduces flexibility and could go a long way towards dealing with the problem of perceived and actual unfairness in specific local authority areas.
I should like to show what the amendment could do in the case of the two billing authorities in my constituency, Christchurch and East Dorset. Those local authorities have experienced much higher than average increases in council tax per dwelling since 1993. A much higher than average percentage of people who are 65 and over live there. There is therefore probably a strong case for considering revaluation to get a fairer distribution of the burden within those local authority areas without affecting the overall grant distribution mechanism.
Mr. Forth:
Before my hon. Friend becomes too enthusiastic, does he agree that the original wording in the Bill makes it clear that the Secretary of State will take the action? Sadly, all the amendment would do is allow the Secretary of State to use his discretion in determining whether action should be taken locally or
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regionally. Why does my hon. Friend, even in the early stages of his remarks, appear to imply that we should be hopeful that the anomalies, which he is about to describe in some detail, could be corrected by the Secretary of State, of all people?
2 pm
Mr. Chope: I think that the anomalies could be corrected by a Secretary of State of a Conservative hue. That is why I think that there is some merit in the amendment. I accept the reservation articulated by my right hon. Friend and others who think that such a power given to the current Secretary of State would indeed be abused. There is some evidence that the Secretary of State's capping powers have been abused and used to bear down unfairly on small Conservative-run local authorities.
Mr. Francois: To drive the point home again, the reservations of some of us, to draw another parallel, are based on some of the planning decisions made by the First Secretary of Sate. I know that we are not debating planning this afternoon, Madam Deputy Speaker, but on a number of occasions local inquiries have found one way and the First Secretary of State has overruled the decision of the local inspector. Real practical examples therefore exist of the Secretary of State going beyond the merits of his powers. Those are additional reasons for our concerns.
Mr. Chope: My hon. Friend makes an excellent point. Of course, the First Secretary of State talks a lot about localism, but in reality he is in favour of centralisation. The amendment tabled by my hon. Friend the Member for Mole Valley would introduce a degree of localism into the process, and it would be useful for that reason.
I am not sure whether Members realise the extent to which average council tax per dwelling has increased since 1993–94. The Halifax has done some useful work on the subject, and the average council tax per dwelling in 1993–94 was £456, whereas this year it is £1,009. That is an increase of £553, or 121 per cent., when average net income has gone up by 82 per cent. That is an increase of about 50 per cent. more than the increase in average net incomes.
The Minister for Local Government (Mr. Phil Woolas): Does the hon. Gentleman accept that the Halifax survey, by its own admission, did not take into account the effect of council tax benefit and age-related payments?
Mr. Chope: Certainly. That does not undermine my argument, however, that the overall average council tax bill has increased by 121 per cent. since 1993–94, when the national average net income has increased by 82 per cent.
Mr. Gummer:
Does my hon. Friend agree that we knew that that would happen because it became clear from the Red Book that the Government intended to move a greater weight of local authorities' costs to the council tax, and then to blame the local council for the increase in tax?
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Madam Deputy Speaker: Order. We are not discussing the clarity of local government finance.
Mr. Chope: My right hon. Friend is right.
Beyond the Government's overall policy to increase the national burden of council tax faster than the rate at which national incomes have increased, the situation is much worse in some local authority areas and the amendment might address that. For example, in my constituency, under the Christchurch borough council billing authority, in 1993–94, the average council tax per dwelling was below the national average at £441 per dwelling. This year, however, it is £1,193 per dwelling—an increase in the average bill of 171 per cent., which is 50 per cent. more than the England average. To take up the Minister's point that that does not take account of council tax benefit, the amount of council tax benefit in Christchurch is very small, with only 16.2 per cent. of households receiving it. We know, however, that more than 30 per cent. of the population are aged 65 and over. It is a privilege to be one of the younger people living in Christchurch. I am conscious of the burden faced by pensioners and those on fixed incomes.
The situation is similar under East Dorset district council billing authority, which covers another part of my constituency. There, in 1993–94, the average council tax per dwelling was £516, significantly above the then national average, but it has continued to increase, going up by 163 per cent. since then, and is now no less than £1,356 per dwelling. That is about £350 more per dwelling than the national average. It is not surprising, therefore, that my constituents come to see me frequently to complain about the actual and perceived unfairness of the council.
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