Council Tax 2006–07

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 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.