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Baroness Hanham: My Lords, I thank the Minister for repeating the Statement. I declare an interest as an elected member of the Royal Borough of Kensington and Chelsea. In 1997, when this Government came to power, council tax, as introduced by the Conservative administration, had been widely seen as being fair and reasonable and was set at an affordable level across the bands. That can hardly be said now.

Since that time, the Government have presided over an increase in council tax of nearly 90 per cent, while raising the level of grant towards it by just 39 per cent, which has been made clear in the Statement. There has been a significant shift between the amount which is now borne by the tax payers and the grant provided by the Government, which is not made up of government revenues alone, but includes a major contribution from the non-domestic rate payers.

It is ironic that one of the Government's own number—Sedgefield—which has a Labour district and county council and a fairly well known Labour MP, now has the dubious honour of having the highest council tax in the country—£1,490 at band D. Wandsworth, which is a good Conservative council and is consistently well managed, despite the insatiable demand of the Mayor for London, has, at £648, the lowest charge, which is less than half that of Sedgefield.

The levy for the Mayor amounts to £289 of Wandsworth's charge, which is within a hair's breadth of being half of the total amount. Most Londoners would say that the Mayor is proving to be very bad value for that sort of money. He has insatiable ambitions for the future, some of which are shared by the Government. I must ask the Minister whether there will be any limit on the amount of precept that he will be allowed to levy.

Others who will be concerned by the 4 to 5 per cent rises this year are pensioners. On average, they are worse off by £250, and that is without the cushion of the Chancellor's £200 election bung of last year. Could it be that these gifts get handed out only in election years? After that, those who are demonstrably the poorest off under his regime are made worse off. The Chancellor's contempt for pensioners, whether on state or private pensions, is becoming only too apparent. This omission this year is just one more example of that. It seems that the older one gets, the
 
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less the Chancellor thinks one needs to have security of income. Perhaps the Minister could tell us why this "one year only" contribution has been dropped.

The Minister in the other place also reminded us that there is a council tax element of the funding package for the 2012 Olympic Games, which adds about 0.3 per cent to the council tax average increase of 4.2 per cent. Will the Minister explain what the totality of the Olympic Games' burden is to the council tax payer, whether it is capped, and for how long it is envisaged that it will last? Will it last beyond 2012?

While speaking about averages, the Government insist on issuing figures for average council tax per dwelling. Does the Minister accept that independent commentators, which include the House of Commons Library notes, have denounced that terminology as being inaccurate and unsuitable? They point out that the only fair way to compare council tax, like for like, is to contrast a band D tax with a band D tax. By doing that, it becomes clear that, on average, Conservative councils charge—excluding precepts from fire, police and, where appropriate, the GLA—£81 less a year than Labour councils and £88 less than Liberal Democrat councils. Will the Minister explain why it is that the Government should insist on making comparisons on this dubious basis? Does she not accept that in different local authority areas the mix of dwellings by value may be significantly different, one from another?

It is remarkable that 50 per cent of the Statement has been on capping just two hapless councils which have fallen under the Government's capping procedures. By how much have they breached the limit? How much is that in monetary terms? It seems clear that with the Government's withdrawal of the revaluation process this year, their commitment to increasing the number of council tax bands and the reviews that are now being undertaken by Sir Michael Lyons and the Miliband team, any lessening of the burden of council tax is improbable. Sadly, property is becoming the milch cow of this Government.

It is time that the Government looked to decrease the burden on council tax payers, stopped redistributing grant from one area of the country to the other, lessened the burden on income-restricted pensioners, abandoned their excessive folly of regionalisation and started to put the council tax payer first.

6.17 pm

Baroness Scott of Needham Market: My Lords, the one fact on which I have seen general agreement today is that council tax is set this year to rise by twice the level of inflation to 4.5 per cent, with average council tax now more than £1,056 per year. All afternoon I have watched e-mail traffic as press releases fly around. Each of the political parties interprets the figures in a slightly different way and uses a different way of measuring in order to make its case.

I thought that perhaps I would engage in a non-party political point. This year, if you take all local authorities which are in single-party control and look
 
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at this year's increase, you will see a difference of 0.3 per cent in the increases proposed by the three parties. The higher increases are in coalitions where there are large numbers of independent councillors. That is an interesting argument in view of the claims that everyone is making for their political party. There are two fundamental problems. We have a system of local government finance which is now virtually impossible to understand, is subject to the worse kind of government micromanagement and interference, and is unresponsive to local needs and situations.

Today, I spoke to people involved in local government in York. By all the external verification and assessment available, York is a highly efficient council. Last year, it saved £4.7 million in efficiencies. It has the lowest council tax level outside the south-east and the lowest expenditure per head of any council. In the new grant formula, created by the Government this year, it was agreed that York city should receive an extra £1.4 million. There was agreement from the Government that it needed that money. However, because of the technical damping mechanism, York has not received that money, and because it has not received it, it is now over the Government's capping limit. This Government were opposed to crude capping of this sort, and then they brought it back. Will the Minister tell the House today that if the Lyons review states that this mechanism must be scrapped, the Government will do as he says and return to a more sensible and equitable system?

The second problem is that council tax is unfair and unrelated to ability to pay. The poorest 10 per cent of pensioners are now paying one-tenth of their income in council tax. All people on low and fixed incomes are facing the same problem. It is all right for the Government to talk about benefits, but we all know that the take-up rate on benefits is poor, particularly with pensioners, and benefits are unnecessarily bureaucratic. Would it not make sense to have a tax related to ability to pay in the first place? Fiddling around with capping on small percentage increases will do nothing to help pensioners in this position. Also, this year they will not be getting the £200 pre-election bribe—or rebate, as it was called.

Once again, we are seeing government intervention in areas where the percentage may be large, but the amounts are small. I am pleased that the Government have learnt the lesson of last year and have decided not to cap the tiny increases in Aylesbury Vale and Wellingborough. However, can the Minister say by how much council tax bills will be reduced in other areas after the enormous cost of rebilling is taken into account? I also ask the same question as the noble Baroness, Lady Hanham, about costs.

Five out of the seven candidates for capping this year are emergency services. It is extraordinary to us that this Government believe that it is right to spend millions of pounds on ID cards and that emergency services on the ground should be restricted in this way. I am sorry that this year we are once again in this position. This is a rotten tax. We should scrap it, not cap it.
 
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6.22 pm

Baroness Andrews: My Lords, it was interesting to have those responses from the noble Baronesses. They gave clear accounts of how they feel we have managed this year's council tax increases. I am sorry that they were not more welcoming considering that a negotiation has been successfully worked through in a mature fashion with the Local Government Association, with which we work closely, not least to understand, analyse and respond to the inevitable demographic pressures that local councils are facing. We understand that there are serious pressures. We arrived at what has been regarded as a successful settlement. The 39 per cent increase over funding is after inflation since 1997, and we are proud that we have been able to do that.

I turn to the specific questions raised. I shall take the issue of pensioners first. That is one of the most important points raised this afternoon. I take very seriously the points that the noble Baronesses made. Nothing would give us more pleasure than if there were a 100 per cent take-up of council tax benefit. Fourteen per cent of council tax is funded through council tax benefit. We are conscious that the take-up is not good enough and that we need to do everything that we can to simplify access and the system. We are doing that with the Pension Service. It is going to great lengths to ring people who, it thinks, are not claiming benefits to which they are entitled and is inviting them to come forward so that it can help them access that benefit. We can go further than that, and I think we must. However, I dispute the idea that we have shown contempt for pensioners. That is very strong language. We offered £200 last year, for good reasons. We did not make any claim that we would be able to repeat that. It has to be put into the context of what else we have done for pensioners. I tell the noble Baronesses that the average pensioner household will be around £1,350 per year better off—£26 per week—in 2006–07 because of the tax and benefit changes than they would have been in 1997. I shall not list all the things that we have done—from fuel payments to free television licences and free eye tests—but the Budget Statement prefigured what more we will do; that is, free transport from 2008. It has been a serious commitment and it will continue to be so.

Another question raised by the noble Baroness, Lady Hanham, concerned London, the precept and the bill for the Olympics. The precept was 13.3 per cent, but the point about the GLA is that it did not breach the principle of having a budget requirement of more than 6 per cent, which is why it has not been capped. The noble Baroness will know that that works out at about £20 per year in London for the Olympics. Her questions were about where the boundaries for council tax payers will be, whether the costs will overrun and how much more taxpayers will have to pay. The total estimated funding already includes a contingency of about £500 million. We are determined
 
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to ensure that the calls on public funding remain within the overall agreed funding package. We have set £625 million as the figure for the London council tax payer to contribute, and it could be less. Any further call on the council would need to be agreed between the Government and the Mayor of London at the time and, in turn, by the London Assembly. We have sent a firm message that we will take action against excessive increases in council tax on that point.

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