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House of Lords

Wednesday, 22 June 2005.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers—Read by the Lord Bishop of Coventry.

Lord Howarth of Newport

The Right Honourable Alan Thomas Howarth, CBE, having been created Baron Howarth of Newport, of Newport in the County of Gwent, for life—Was, in his robes, introduced between the Baroness Hollis of Heigham and the Lord Ashley of Stoke.

Lord Foster of Bishop Auckland

The Right Honourable Derek Foster, having been created Baron Foster of Bishop Auckland, of Bishop Auckland in the County of Durham, for life—Was, in his robes, introduced between the Lord Burlison and the Lord Sawyer.

The Lord Bishop of Truro—took the Oath.

Local Government Funding

2.50 pm

Lord Steinberg asked Her Majesty's Government:

Lord McKenzie of Luton: My Lords, the Government are committed to retaining but reforming council tax. The independent inquiry into local government funding, led by Sir Michael Lyons, is considering the case for both reforms to council tax and options other than council tax for local authorities to raise supplementary revenue. The inquiry will report by the end of the year.

Lord Steinberg: My Lords, I am grateful for that reply. Will the Minister give me the same short reply and say that the Government will not increase national insurance contributions? Will the Government also give an assurance about road taxes, 4 x 4 four vehicles, second homes and a council tax on improvements to homes? Over 70 stealth taxes have appeared, and I think that the Government are now scraping the barrel.

Lord McKenzie of Luton: My Lords, I thought that the Question was about a local income tax. I ask the noble Lord in that regard to await the outcome of the Lyons report and the Government's response to it. On the other issues about taxation that he raised, I am sure he will be aware that nobody would make any commitment in respect of what will happen to future taxation in advance of budgets. But I remind the noble Lord that the Government have introduced a lower rate
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of income tax—we inherited a basic rate and a starting rate from the Conservative Government—the lowest rate of corporation tax since that tax was introduced, a lower effective capital gains rate for businesses than at any time in the tax's history and some other substantial tax benefits as well.

Lord Campbell-Savours: My Lords, is it true that one of the main beneficiaries under the local income tax is the self-employed, and for all the wrong reasons?

Lord McKenzie of Luton: My Lords, I thank my noble friend for the supplementary question. We are dealing with hypotheticals here. We do not know whether Sir Michael Lyons will recommend that a local income tax should be part of the system, and, if so, what the Government's response to that would be. I ask noble Lords to be a little patient because we will get those results in fairly short order.

Baroness Noakes: My Lords, the Minister said that the Government would retain council tax. My noble friend Lord Steinberg asked about the issue of home improvements and their impact on council tax. Will the Minister give an assurance that home improvements carried out will not result in people having to pay a higher rate of council tax?

Lord McKenzie of Luton: My Lords, council tax does not always increase as a result of home improvements; it depends on the nature of those improvements. Clearly home improvements can give rise to an increase in the value of a property which would be taken into account in due course. Things like summer houses and sheds would not be included, but if the noble Lord is thinking of swimming pools and stables or workshops, that may be a different matter.

Lord Hogg of Cumbernauld: My Lords, does my noble friend agree with me that a good tax, if there is such a thing, is likely to be an old tax and that an old tax is likely to be a good tax? That is the case here. Property cannot run away. The ownership of property is a matter of record. Someone always owns up to owning property and therefore the tax is collectable. In any event, this idea was tested in the general election and the party which advocated it was soundly defeated.

Lord McKenzie of Luton: My Lords, I certainly agree with my noble friend that the rationale for retaining the council tax on a reformed basis is that it is easy to collect and predict. I would not agree with him that all old taxes are good taxes. We endured the poll tax for a number of years and I do not recommend a return to it.

Lord Newby: My Lords, the Minister has already said that the Lyons review is looking at local income tax as a possible component of a revised local taxation base and that the Government will look at the conclusions of the report. Can he go one step further
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and say that the Government have not ruled out a local income tax and, if Lyons were to recommend it, they would look at it seriously?

Lord McKenzie of Luton: My Lords, the noble Lord presses me on a matter that I thought I had dealt with. There are a number of "ifs" in his question and we have to wait to see what Sir Michael Lyons says in his report. When we know what the recommendations are, we can give the Government's response.

Baroness Hanham: My Lords, in view of the review of council tax, the possible rebanding and the certain revaluations, will the Government say whether there is any upper limit on the proportion of a person's income on which he or she would have to pay council tax?

Lord McKenzie of Luton: My Lords, the Government are committed to proceeding with revaluation, which was a commitment in the White Paper in 2001 and in the subsequent legislation. As to the impact of revaluation, the Government have made it clear that we will not raise more in council tax overall because of revaluation. The distribution within the revaluation remains to be seen.

Baroness Hanham: My Lords—

Noble Lords: Order!

Lord Stoddart of Swindon: My Lords, does the Minister agree that a local income tax could be very expensive to collect? Does he agree that the noble Lord, Lord Hogg, is absolutely right that a property tax for local taxation is a perfectly respectable and decent way of raising local income? Does he also agree that one of the ways of ensuring that it remains a proper, dynamic base is to relate it to the housing cost of living on a regional or area basis?

Lord McKenzie of Luton: My Lords, so far as a property-based tax is concerned, I agree, which is why the Government have concluded that they want to retain a council tax on a reformed basis. As the noble Lord said, a property-based tax is perfectly respectable. As regards the impact of banding, that is something that the Lyons report will look at. I ask the noble Lord to await the outcome of the report.

Lord Strathclyde: My Lords, will the Minister have another go at answering my noble friend's question? Will the Government set an upper limit on the proportion of a householder's income that he would pay in local taxation?

Lord McKenzie of Luton: My Lords, I do not think that the noble Lord can reasonably expect me to construct an income tax regime from the Dispatch Box. We have to see what is recommended for the structure of local income tax in due course and what the consequences of that are. The Government are committed in all things to a fair system of taxation.
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Museums and Art Galleries: Security

2.57 pm

Lord Harrison asked Her Majesty's Government:

Lord Evans of Temple Guiting: My Lords, the low level of theft from public art galleries and museums in the UK reflects the strong emphasis placed on security and suggests that the funding available is sufficient to minimise the risk. In 2003–04, 15 thefts were reported to the national security advisers. In 2004–05, there were just eight thefts at DCMS-sponsored museums and galleries. DCMS-sponsored museums spent £36.5 million on security in 2004–05, which is 13 per cent of their total grant-in-aid from government. These figures do not include the loss of two live guinea pigs from the Horniman Museum last year. Whether that was a theft or an elaborate escape plan remains unclear.

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