Goldsworthy on Council Tax

6.00.17pm BST (GMT +0100) Thu 3rd Apr 2008

Julia Goldsworthy (Falmouth & Camborne, Liberal Democrat): I, too, thank the Minister for advance sight of the statement and for letting the "Today" programme know this morning, which gave me considerably more notice.

The Minister spoke about the generosity of the funding settlement for local government. Will he acknowledge that, as I think he said, this year's settlement is the tightest for a decade and that it will leave millions of pensioners and families facing inflation-busting council tax increases, which they will struggle to pay? Below 5 per cent. is still above inflation, and there are still problems with the uptake of council tax benefit.

Will the Minister also acknowledge that today's statement will leave millions of households, as well as the affected authorities, in confusion? Bills are already on doormats, direct debits have already been set up and it is probably too late to change them, and we still do not know what the end result of the process that he has initiated today will be, yet we are now just a week away from the new financial year.

Does the Minister accept that the statement represents an above-inflation increase in the costs that local government faces, at a time when it is taking on additional responsibilities that the Government have imposed without sufficient resources? The experience of Portsmouth, which was named in the statement, is a case in point. The Secretary of State promised a rise in Government support of 1 per cent. above inflation. The reality was a 1 per cent. cash-terms-that is, below inflation-increase, or a real-terms cut. Will he acknowledge that?

In addition, 2 per cent. of the 5 per cent. rise that Portsmouth city council has proposed will be spent on bailing the Government out of the concessionary bus fare scheme that they are imposing, which we discussed earlier this week. Will the Government accept that that is their responsibility? The city council set a zero precept, which reduced council tax to 4.8 per cent. The council has been responsible not because of the Government's actions, but in spite of them?

The other named authorities are all police authorities. Will the Minister acknowledge that after this statement police authorities will remain underfunded? The tight police funding settlement has left police authorities with little choice. I notice that rural authorities, rather than metropolitan authorities, consistently face such difficulties. This year's and next year's settlements represent a real-terms freeze rather than a real-terms increase. That highlights the fundamental flaw in the funding formula. Rural areas are having to make up the shortfall through council tax.

There is a need for more democratic accountability, but as well as the measures that the Minister has announced in the statement, will he commit to undertake a fundamental review of the funding formula, which might turn out to be the problem at the heart of the announcements that the named police authorities have made? Does he accept that there is a need for investment in those areas, including Cheshire, where Garry Newlove was murdered outside his home? The council tax rise was earmarked to provide £1.6 million for neighbourhood policing and £2.6 million to recruit additional officers. Is the Minister saying that that additional investment is not required in those areas? Will he confirm that a total of about £20 million of funding will be cut from the named authorities?

The decision announced today, at the last possible moment, is an attempt to claim that the council tax system, which the Conservatives support, is a success. Does the Minister accept that the decision will create administrative chaos? The Department is denying the inescapable fact, which the Lyons report pointed out but which the Government are ignoring, that council tax is not fit for purpose and never was, not even when the previous Conservative Government created it. Will the Minister accept that it is pointless tinkering with a broken system? Capping is misleading and it conceals the truth about rising bills, many of which exceed 5 per cent. when precepts are included.

Will the Minister acknowledge that it is time that the council tax was abolished and replaced with a fairer system of local income tax, which would be based on the ability of pensioners and those on fixed incomes to pay? Would it not be better to give local authorities responsibility and do the right thing by axing the unfair council tax?

John Healey (Minister of State (Local Government), Department for Communities and Local Government): As the Minister previously responsible for the Office for National Statistics and legislation to reinforce and protect the integrity of national statistics, I and my Department respect absolutely the fact that the deadline for the publication of our council tax increases was 9.30 this morning, whatever the "Today" programme may have run.

Secondly, every authority knows that it must take into account the risk and potential cost of re-billing if it chooses to set budget or council tax rises that may be excessive. I encourage local authorities to examine and explain that over the next three weeks, if they choose to make a general case to us, as I hope they will.

Thirdly, the hon. Lady put in some special pleading-getting in early, I guess-for Portsmouth. She would probably be best advised to let Portsmouth city council do that for itself. Indeed, the council leader will receive a letter from me inviting it to do just that.

The new right to free travel, which will be available to more than 11 million pensioners and disabled people from next week, will be funded in full by the Government, through an extra £212 million next year.

In December, the Home Secretary guaranteed every police authority an increase of at least 2.5 per cent. in each of the next three years, with more money going to those areas that need it most.

Finally, on local policing, I would have thought that the hon. Lady welcomes the fact that there will be a greater front-line policing presence in every neighbourhood in the country, with a dedicated local team in each one from next week.