Council Tax 2006–07

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 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.