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I am dismayed that the Government’s attitude is to portray a 5 per cent. tax increase as an achievement. That tells me that there is real poverty of ambition on the Government’s part. An increase of what the Government would term a “mere” 5 per cent. is still a massive hike when we consider that the overall level of council tax has virtually doubled since 1997. Ministers’ constant refrain is that it is all the fault of local government, but nobody believes that. If Ministers honestly believe that 92 per cent. rises are simply the
result of profligate town halls, they must be in cloud cuckoo land. However, some councils are more prudent than others, and the statistics show that Conservative councils cost people less. On an average band D property, they cost £55 less than Labour councils, and £84 less than Liberal Democrat councils.
The council tax has been abused, wasted and used to fill the Treasury’s coffers. This year’s Budget confirmed that receipts to the Treasury have risen by 114 per cent. since 1997, bringing the total tax take to £23.5 billion for 2007-08.
Tom Brake (Carshalton and Wallington) (LD): Will the hon. Lady confirm that, before she finishes speaking, she will set out the Conservative alternative to the council tax?
Mrs. Spelman: I had rather hoped that we might get an intelligent defence of Liberal Democrat tax plans from the hon. Gentleman. He clearly was not present on the occasions when we debated council tax and the aspects of it that need to be reformed. If he bides his time, he will find that I make a number of constructive suggestions later in my speech.
The remaining council tax that is not drawn into the Treasury is used to fund the Deputy Prime Minister’s largesse towards the unwanted regional agenda, to bankroll an inspection regime that has grown like Topsy since 1997 and to make up the shortfalls from NHS cuts. Is it any surprise that Sir Michael Lyons commented at the launch of his report that
“council tax is not ‘broken’, but...has been put under too much pressure”?
Against that backdrop, the House will understand why we want to debate the matter.
Mrs. Spelman: I accepted an intervention from the hon. Lady at the beginning of my speech and, if she will bide her time, I shall come on to the question of refuse collection.
The report contains a series of additional ways of taxing people that the Government have refused to rule out. The only option ruled out so far is the bed tax on British holiday makers, which will certainly please my hon. Friends the Members for Brentwood and Ongar (Mr. Pickles) and for East Devon (Mr. Swire), who campaigned against the proposal in our seaside resorts. That brings me on to the proposals that the Government have not ruled out, including the call for additional tax bands at the upper end and for changes to the ratio between the bands. In particular, appendix C models changes from the present 3:1 ratio to 5:1 and even 10:1. To put that in layman’s terms, on a band D property, the bill would go up by as much as £119. That is the tip of the iceberg. Rebanding cannot take place without revaluation, and revaluation will mean that bills go up. That is exactly what happened in Wales. Despite assurances from Ministers that the revaluation would be revenue-neutral, four times as many homes moved up a band as went down, and the average bill went up by 10 per cent. in the first year.
We fear that that would happen in England. No one is under any illusion about how expensive and intrusive revaluation is. [ Interruption. ] Regardless of whether people own their home or rent it, they will be taxed on home improvements and the quality of their neighbourhood. [ Interruption. ]
Mr. Deputy Speaker: Order. May I tell the Minister for Local Government that his turn will come?
Mrs. Spelman: Thank you, Mr. Deputy Speaker. To make the situation worse, Sir Michael Lyons has recommended not just one revaluation but regular revaluations, so I wonder how many harassed husbands will have the perfect excuse never to do any DIY again. Every detail of people’s homes is at risk of being photographed, catalogued and taxed. Anyone not complying with the inspections will face a fine of £500, which is totally unacceptable.
People are left asking where all the money is going. I hear the constant refrain, “How can it cost so much to empty my bins?” The irony is that the Government are heavy-handing local authorities into cutting rubbish collections. Let us be quite clear: the Government have created a situation in which council tax bills have doubled and rubbish collection services have halved. The reality is that council tax pays for a great deal more than refuse collection, but it is illustrative of people’s sense of unfairness. Crucially, council tax helps, too, to pay for social care, but it is in social care that the biggest and most frightening crisis is under way.
John Dixon, vice-president of the Association of Directors of Adult Social Services told Caring Times earlier this month:
“This isn’t a crisis waiting to happen, this is a crisis already here”.
The shortfall in social care this year is £1.8 billion. The impact of that shortfall is felt acutely by families caught between meeting the costs of bringing up children and paying the top-up fees for their parents’ care. What a cruel position to put people in.
Chris Mole (Ipswich) (Lab): The hon. Lady has described a rising demand for local government services, which have been met in recent years partly by the increased grant from central Government and partly by council tax, which explains some of the numbers to which she referred. How would she meet the costs of additional demand for social care, given that the shadow Chancellor has talked about cutting funding for a range of services and sharing the proceeds of growth?
Mrs. Spelman: Apart from the fact that that shows a remarkable lack of understanding of the way in which many prudent Conservative councils have striven hard to maintain front-line services, notwithstanding central Government grant settlements which, in many cases, are inferior to those of councils controlled by other parties, the hon. Gentleman shows a marked lack of understanding about the kind of moral judgment that I have tried to make. I genuinely believe that the amount of money wasted on the whole unelected regional empire created by the Deputy Prime Minister would be much better spent on front-line services, particularly in adult social care.
In the face of the crisis in local government funding, I used to think that the Government were guilty of standing idly by, but in fact, that is not true. The Government are actively making the situation worse. Two in three councils report that NHS cuts have had a direct impact on social care provision. While councils strain every sinew to make efficiency savings at the
Government’s request, to the tune of £220 million last year, the Government simply load them with more cost burdens, form filling and money-draining bureaucracy. The latest example is the Government’s decision to embark on a round of costly and unpopular restructuring. Have the Government become so detached from reality that they think that restructuring should be a priority? If that is the case, frankly, Ministers ought to get out a bit more. Sir Michael Lyons was right to say:
“Reorganisation is not, in most cases, likely to provide either a theoretical or practical solution to the challenges we face.”
That is the view of the man whom the Government commissioned to look into the future of local government. When I was canvassing for the local elections, no one spontaneously asked me for the restructuring of their local council.
Robert Key (Salisbury) (Con): Is my hon. Friend aware that my constituents hope that the Government’s crazy proposals to go for a unitary structure of Wiltshire will be proved illegal? What really makes them angry, however, is the fact that there has been no consultation, no referendum, and no boundary review, given that the Boundary Commission did not request the change. It is, in fact, taking democracy away from local people, which is exactly the opposite of our localisation agenda.
Mrs. Spelman: My hon. Friend makes a very good point indeed. He was a Member of Parliament when the Conservatives were in government, so he will remember that in marked contrast, there was a public consultation involving every household, which has not happened under the Government’s proposals.
The Secretary of State proposes to restructure local councils, and where that has taken place, I see very few attempts at genuine consultation. Should the Secretary of State not hold referendums? Is that not the most effective way of gauging public opinion, as was demonstrated by the referendums held in Shropshire? May I ask her whether she is confident of the legality of abolishing those councils? If the restructuring is found to be legal, which is a big “if”, given the pending legal challenge in Shropshire, has she given any thought to the cost implications for council tax payers? Based on research by leading academics, the additional cost of restructuring could be as much as £345 per council tax-paying household.
Sir Peter Soulsby (Leicester, South) (Lab): The hon. Lady is making a case against the restructuring of local government. If it is indeed as mistaken as she suggests, will she explain why almost half the councils seeking restructuring are Conservative-controlled?
Mrs. Spelman: The hon. Gentleman ignores the point that three years after beginning a review of local government finance, the reviewer concluded that restructuring was an impractical way of dealing with the challenges faced by local government. I suggest that the hon. Gentleman wait for the Secretary of State to respond on the question of why she is at odds with the view of Sir Michael Lyons in his review of the future of local government finance.
Mr. Philip Dunne (Ludlow) (Con): My hon. Friend kindly referred to Shropshire and our pioneering efforts to resist the imposition of a unitary authority on an unwilling people who voted against it.
The Minister for Local Government (Mr. Phil Woolas): It is Conservative councils that are making the proposals.
Mr. Dunne: The Minister may argue that the measure was taken at the request of Conservative councils, but he fails to point out that if those councils do not comply with Government proposals, they have been threatened that they will have to find savings, which will be imposed on them by the Government. Does my hon. Friend agree that Government Ministers will not have any power to single out individual councils to make the cuts that they have identified in that process?
Mrs. Spelman: My hon. Friend is owed an answer by the Government. On previous occasions we have had no answer to the question of where in legislation there is the power to enable the Government to force the recovery of costs on councils that refuse to comply with the Government’s model of restructuring.
Even more astonishing to all of us watching the way in which the Government have imposed their will on local authorities is the fact that in Shropshire, of all places, the referendum produced a quantifiable result showing that there was no broad measure of support for restructuring, yet flying in the face of that opposition to restructuring, the Government allowed the unitary bid to proceed. That is difficult for us to understand and accept.
People are being asked to pay more in taxation for less representation, without being properly consulted in the first place. Making that sound appealing must be the ultimate in political alchemy. How on earth does that square with localism? If we are serious about getting decision making closer to the people, surely we should be strengthening local councils, rather than abolishing them. Restructuring is about taking decision-making further away from local communities, just like that other great folly in local government, regionalism.
Is the Secretary of State content with her Department’s legacy being one of forcing unwanted and unelected regional government on people against their will, abolishing people’s local council against their will, and then charging them a 92 per cent. premium on their council tax bill for the pleasure?
Labour has played fast and loose with local government. The Deputy Prime Minister sold it down the river for the sake of his unelected regional empire, the Environment Secretary spent his time entreating chief executives to join him in abolishing one another’s councils, and the Chancellor has spent a decade reducing councils to mere tax collection agencies, rather like a latter-day sheriff of Nottingham. I do not want our country to be governed like that.
Anne Milton (Guildford) (Con):
Does my hon. Friend accept that in my constituency, Guildford, the thing that makes people most angry is not only the exorbitant council taxes that they are now paying, but the feeling that they have no impact on what happens in local
communities, that decision making is being taken further and further away, and that the Government are dictating to local councils and neatly hiding behind local decision-making when they choose to?
Mrs. Spelman: My hon. Friend is right to highlight the fact that the Government have made the council tax the ultimate stealth tax and they are reaping the result of that decision. Shortly, at the local elections, we shall see the very strong public response to that.
Sir Nicholas Winterton (Macclesfield) (Con): I am in an odd seat tonight, but none the less I am on the Conservative Benches, and I hope that after my intervention my hon. Friend will still think I am a Conservative. Will she indicate whether our party will be prepared to return to individual local authorities the total income from the business rate? Local authorities have a huge responsibility to respond to the needs of local commerce and industry. At present the distribution of the business rate is anything but transparent, and Sir Michael Lyons believes it should be more transparent.
Mrs. Spelman: My hon. Friend has a longer political history than I do, so he will well remember the original reasons why the Conservative Government took the business rate to the centre. Businesses were exposed to increases in rates which made it virtually impossible for them to carry on their businesses. The relationship of trust was damaged by profligate, often Labour, councils. For that reason, a decision was taken to introduce a uniform business rate. The relationship of trust between local government, central Government and the business community still needs to be rebuilt.
That subject was addressed in the Lyons review, but the Government have already made it clear that at present they have no intention of repatriating the business rate to local government. That was their response to their own review. Rebuilding that relationship of trust between local government and business is of the utmost importance, because the business community is one group in our society that faces the dilemma of having taxation levied at the centre without one-for-one representation.
Mr. John Redwood (Wokingham) (Con): I am grateful to my hon. Friend, who is making a powerful case against the waste and unnecessary spending forced on local government by central Government. Will she confirm that there is over £1 billion a year of unnecessary expenditure on conforming with the performance targets and monitoring requirements of central Government, which shows how little they trust their own councils, let alone good Conservative ones? Would not one way of restoring trust be to strip that away so that the money can be returned to taxpayers or put into services? If people have a badly performing Liberal or Labour council, they can get rid of it on 3 May.
Mrs. Spelman:
I thank my right hon. Friend for his intervention. He points out clearly that a whole industry of inspection that did not exist before 1997 has been imposed on local government from the centre and has cost council tax payers £1 billion in hard- earned money. That money would be much better spent, as I suggested earlier when the question of social care came up, by being returned to the front line, where
it is much needed. For the avoidance of doubt, we have said on many occasions, and I will repeat it again, that we would scrap the comprehensive performance assessment and best value, because we believe that that money could be better used elsewhere.
I want local government to be the real engine room of local decision making, not a mere agent of Whitehall. I want town halls to have freedom and discretion to spend taxpayers’ money in a way that reflects the needs of local communities. That is why we have proposed the Sustainable Communities Bill, a Bill which the Government rather complacently see as unnecessary. Giving local communities the right to decide the spending priorities for their area is necessary. It is also necessary to give planning decisions back to town halls, rather than regional quangos and Whitehall Departments. Crucially, it is necessary to get council tax back down to sustainable levels. When it was first introduced, people were not protesting on the streets and pensioners were not going to prison.
Through their abuse, the Government have made the council tax a stealth tax that is extremely unpopular. It is not an unreasonable aspiration to return the council tax to sustainable levels, and there are significant savings in wasteful bureaucracy that could be directed to the front line. What we need is a change in the culture of government, from one that sees local government as an obstacle to one that sees local government as a solution.
Richard Younger-Ross (Teignbridge) (LD): Will the hon. Lady give way?
Mrs. Spelman: I fear we may have an intervention from a party that does not understand how local government, rather than regional government, is a solution offering the localism that is much needed in this country.
Richard Younger-Ross: I know all about local government. My Teignbridge district council, led by the Liberal Democrats, has managed only a 2 per cent. council tax rise during the past four years compared with the Tory’s 32 per cent. over the previous years. The hon. Lady has just said that she wants to see the council tax cut to a reasonable level. We would all agree with that. Where will the money come from?
Mrs. Spelman: The hon. Gentleman clearly has not been listening to the debate because I have explained that on at least three occasions, and most explicitly I quantified the savings that would accrue from scrapping the comprehensive performance assessment and best value. That currently costs taxpayers £1 billion a year—£1 billion that could be used much more effectively and is urgently needed in areas such as adult social care.
It is clear to me that after 10 years of the Government eroding local decision making and fleecing council tax payers, the only way of creating that change in local government is through a change in national Government. That is why I invite voters to use 3 May to send precisely that signal.
7.51 pm
The Secretary of State for Communities and Local Government (Ruth Kelly): I beg to move, To leave out from “House” to the end of the Question, and to add instead thereof:
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