Teather quizzes Healey on Council Tax

• Sarah Teather (Brent East, Liberal Democrat): ' . . DOES he also recognise that council tax is felt more keenly than any other tax, because it is paid straight out of people's disposable income?'

[Mar 26]: I thank the Minister for giving me advance notice of his statement. He lauds the 3 per cent. rise in council tax as a success, but does he recognise that it is still higher than inflation-as it has been every year? Does he also recognise that council tax is felt more keenly than any other tax, because it is paid straight out of people's disposable income? As he acknowledged, many families are finding it very difficult to make ends meet at the moment. If both partners lose their job, they receive council tax benefit to meet the cost of the tax, but does he accept that the family will get landed with a large and unaffordable bill if just one partner becomes unemployed?

Does the Minister also recognise that what is happening in many families is that, although people are not necessarily losing their jobs, their employers are cutting back on their hours because of the recession? In that situation, of course, there is no safety net. Does he then accept that it is time that we completely reformed the system and introduced a fair tax based on people's ability to pay?

Does the Minister also recognise that, in a recession, councils face both falling incomes and rising demand for their services? Their income streams from planning and leisure services, and even interest rates from investments are all drying up, yet more and more vulnerable families, desperate for help, are arriving at their doors. In the light of that, will he commit to a moratorium on unfunded Government mandates to local authorities? Does he recognise that they will only make things worse?

I was aghast to hear the final sentence in the Minister's statement. If he were really serious about wanting to keep council tax low for British families, he would set out the principles for capping-if capping is what he has to do-well in advance, so that councils can plan before they set their budgets. Instead, we go through the same macho charade every year: the Government threaten councils with draconian action but will not tell them what they need to do to avoid the penalty, and the inevitable result is that council tax payers pick up the bill for the cost of rebilling local residents. Worse, that approach destroys any constructive relationship between central Government and local government. It is high time that the Minister stopped behaving like a playground bully in that regard, and started behaving like a responsible partner.

John Healey (Minister of State (Local Government), Department for Communities and Local Government; Wentworth, Labour): I have not been accused of being a playground bully before, but I am glad to welcome the hon. Lady to the Liberal Front Bench for the first time in our dealings on local government.

I am not clear whether she is against council tax capping-

• Sarah Teather (Brent East, Liberal Democrat): I am.

John Healey (Minister of State (Local Government), Department for Communities and Local Government; Wentworth, Labour): The hon. Lady confirms that she is against council tax capping but, combined with the increases in Government funding for local government funding, it is part of the reason why we have seen the lowest council tax rises ever in five out of the past six years.

The hon. Lady is against council tax capping, but she also wants us to declare well in advance what the level of cap will be. The effect of that would be that many councils would set their council tax up to that level. That is not a good way of dealing with the issue or of protecting council tax payers.

The hon. Lady is right about the pressures on local authorities. Like the Government, local government faces a demand for services as well as a reduction in some of its income streams. Most local councils have coped well over the last year, but it is clear that all local councils will have to do more this year to step up their drive to deliver their services more efficiently, as well as bringing in what may be necessary to support people through this difficult time.

On council tax and housing benefit, the hon. Lady is right that part of the consequence of the economic downturn is a bigger demand on front-line service staff who are trying to deal with and support people through the claims process. That is why we have allocated local councils an extra £45 million for that purpose.

Finally, for some time there has been a system in central Government such that if any Department places an extra responsibility or burden on local authorities to deliver services or to carry out functions they have not previously undertaken, it is the responsibility of that Department fully to fund them. It is my job as Minister for Local Government-whether or not I act as a playground bully-to ensure that other Departments fully fund any extra responsibilities they place on councils. That is precisely what we do at the moment.

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