The purpose of the new clause is to probe the Government's intention for funding the various regional bodies that they are introducing. The Under-Secretary has already funded the shadow regional assemblies—the so-called regional chambers—out of central Government funds. If he can tell me that no provision in part 6 seeks to fund any regional bodies, I shall withdraw the new clause now. Unless he can give me that assurance, I shall continue to press the matter. Will the Under-Secretary give way?
I shall intervene. Part 6 has no tax-raising mechanisms save for revenues from forgone discounts or changes to valuation bands at some point in the future. There are no direct mechanisms whereby regional bodies could gain. However, part 6 affects revenue and such mechanisms cannot therefore be ruled out for the future.
"Such mechanisms cannot be ruled out for the future." We must therefore assume that the Government have a gleam in their eye and council tax will be used in future as a mechanism for funding various regional bodies. We already know from the Planning and Compulsory Purchase Bill that eight shadow assemblies or chambers will be set up by the late spring. All eight regions will have those so-called indirectly elected bodies. They are likely to constitute the regional planning body, which will have substantial powers to draw up regional spatial strategy. It presumably needs substantial funding to operate them. We will have regionalisation to that extent, whether we like it or not.
We know from the Deputy Prime Minister's community statement that a regional housing body will be established to draw up a regional housing strategy. Another stratum of regional bodies will therefore require funding. Furthermore, the Regional Assemblies (Preparations) Bill, which is in another place, will provide for the possibility not only, God forbid, of regional referendums, but of directly elected regional assemblies, if people vote for them. Those regional bodies will require considerable funds, and that is what the new clause probes. It would be interesting if the Minister could indicate the sums that the Government are already providing to fund these shadow regional assemblies, chambers—call them what you will—in the north-east, for example, where the concept is most advanced.
Amendment No. 3 would reverse the thrust of clause 120 so that, although the Secretary of State will be able to provide powers to designate different local authorities for different purposes, he will not be able to do it purely on a regional basis. It seems grossly unfair that a whole class of local authority should be singled out on a regional basis for different treatment in relation to council tax.
Will the Minister clarify the stage that funding for the regional bodies has reached, the size of the budget that is set aside for the next year or two, and whether it is intended that there should be a regional council tax or any separate precept to pay for them?
We support the new clause, although for an entirely different reason—namely, that council tax should be scrapped. It is a completely inappropriate means of raising revenue for councils or for regional bodies. When the regional bodies finally emerge from the weak state that the Government propose into the fully-fledged system of regional government that we hope for, they will need tax-varying powers. Scotland has the ability to raise extra tax or, indeed, to lower it; Wales does not, but should have. One of the oddities involved is that it may turn out that all the English regions, Scotland and London have the power to raise money in one way or another—although the London system is inappropriate—while Wales is left as the only part of the country that cannot. The Government may find themselves in difficulties with their Welsh MPs in that regard.
Overall, council tax is an iniquitous, inappropriate and non-progressive form of taxation that should be abolished and replaced with levels of local income tax. I am sure that that system will increasingly develop in the future.
I seek clarification of the Liberal Democrats' policy. Are they saying that they would have a local income tax to raise money for local authorities as well as a regional income tax to raise money for the regions? Have they undertaken any proper costings as to how much those two taxes would put on the average taxpayer's bill?
The money would only replace money that is currently raised by council tax, so overall it would not add any extra burden of taxation. Such a tax would be based on ability to pay rather than on a fixed asset. Council tax is a particular burden on pensioners, for example, who are on fixed low incomes but have to pay more each year. Council tax has no buoyancy. It has to be raised every year, unlike income tax; with the latter, if the economy goes up there is a general shift up in revenues. Council tax is completely non-progressive. We have proposed that in the forthcoming Budget the Chancellor could introduce a 50p band for income tax across the country and use that to knock £100 off every council tax bill.
Thank you for bringing me back on course, Madam Deputy Speaker. I was getting rather too enthused about our alternative Budget. However, the reality is that the money that would be raised through a local income tax, or through a regional form of income tax, would merely replace money that is currently raised through council tax.
I should point out to the Conservatives that such a system works in America, where several different tiers of income tax are raised at state, county and national levels. Indeed, such a system is also used in parts of Europe. This is not rocket science, and my understanding is—
I thank you for your guidance, Madam Deputy Speaker, but in a way they are directly related. In supporting the Conservatives, we are seeking to ensure that the council tax is not the mechanism used to fund regional bodies. I am explaining what should be used instead, so I hoped that, on that ground, it was in order to go down that route for a while.
Our support for the Conservatives' new clause is based on an entirely different reason from theirs; it is clear that they would not want to establish the ability to raise, or to vary, taxation at a regional level. In our view, the council tax definitely should not be used as the vehicle to raise such funding; in fact, it should be scrapped at a local level as well.
The hon. Gentleman is being very generous in giving way. Does he not accept that there will be an increase in the overall burden of taxation? His party strongly supports regional bodies, but we say that they are an unnecessary tier of bureaucracy. In any event, they are expensive and will have to be paid for. Does he accept that there will be an increase in the burden of taxation to pay for them?
Regional bodies exist, and they are currently paid for out of central Government funds through the passing down of national taxation. We want such decisions to be taken at a regional level by democratically elected regional assemblies. The hon. Gentleman assumes that if a new tax exists, it has to be higher; however, it can be simply a replacement for another form of taxation, and that is what we want to see.
In conclusion, we will support the Conservatives' new clause, and on amendment No. 3, we are in broad sympathy with their reasons for probing the Government. We are happy for central Government to make regulations applying to individual councils in order to vary matters, but we do not want them to take blanket decisions that apply to entire regions. For that reason, we are happy to support the Conservatives' amendment. Overall, and perhaps for entirely different reasons—particularly in respect of new clause 8—we lend them our support.
I rise to support new clause 8. My hon. Friend Mr. Clifton-Brown has been clever in tabling it to tease out the Government's position; indeed, the Minister's intervention was very interesting in that regard. In talking about regional government and its architecture, the Government, whenever they propose such a case, have always said that it should involve moving powers downward from central Government, rather than upwards from local government. If there is a case for financing regional government, I doubt whether the council tax should be used. I hope that the Minister will be a little more explicit on that issue in winding up the debate.
The Government have been honest in the sense that, before we get to regional referendums, there will be a boundary review to examine the structure of local government, so that people know what form of local government they will have. Before we have such referendums, it would be equally fair of the Government to set out in explicit terms how the funding of these regional bodies will be covered. Regardless of the different opinions that exist on both sides of the House, once such bodies come into existence, there will come a point when they will need some form of independent finance. However, the Government have not said a lot about that. In setting up another tier of Government, costs are inevitable, even if one is trying to get rid of the county councils, as is the Government's will. We therefore need a little more clarity about what the Government hope to do in this regard.
Council tax is appropriate for local government, although I will not stray into that argument, Madam Deputy Speaker. As Matthew Green has said, a number of models exist in other parts of the world such as the United States and Germany. Those models may be more appropriate for this kind of funding.
This shortened debate is important. The Minister will understand that, on this side of the House, we are not great enthusiasts for regional government. We are concerned that the Government have a stealth policy towards local government: they keep pushing powers to the regions and employing more people there, but without there being any great demand for that, from my constituents anyway. The Government ought to be more explicit about the sort of deal that people will get. Financing will be critical in whether or not people will support regional bodies.
I am glad that Mr. Syms found my earlier intervention interesting. Let me elaborate on it, because I am concerned about new clause 8 and amendment No. 3. Let us be clear about what the new clause will do. It would make it impossible for anything in part 6 of the Bill to allow the raising of revenue for any regional body. However, part 6 does not contain foundation revenue-generating instruments; it simply contains a number of measures that amend existing council tax provisions. The effects of new clause 8 would not be straightforward. For example, the new clause would mean that any revenues that were generated or changed because of alterations to the revaluation cycle would not be able to go towards regional bodies. However, other parts of council tax revenue would be able to go towards regional bodies, which is rather curious. Highlighting technical flaws in a new clause is sometimes a Minister's last refuge, but there are more substantive issues that I would like to raise.
I am sure that the Minister is just about to raise those substantive issues, but this may be a good time for him to let us know what the Government's thinking is on the possible future need to raise money regionally. Without making any commitments, can he tell us what the likely mechanism will be, so that people can have some preparation time?
The hon. Gentleman will recall from his late-night reading of the White Paper, "Your Region, Your Choice: Revitalising the English Regions", that funding and decision-making powers will not be taken away from local government but from Whitehall. I commend the White Paper to all hon. Members; it will make that point clear, even to Mr. Clifton-Brown. Funding and decision-making powers will be devolved to elected regional assemblies, should they be set up. Funding for programme expenditure would come from revenues that had already been determined and decided by central Government, rather than being raised wholly from local council tax payers. In that respect, hon. Members on the Conservative Benches have set a hare running in the wrong direction. I hope that what I have said usefully corrects their view.
My hon. Friend Mr. Syms raised an important point. If the Government are setting up a mechanism to discover whether people want referendums on elected regional assemblies—with all that that would involve in sorting out the different tiers of local government—people are entitled to know what those regional assemblies are likely to cost, and whether council tax, or something else, is to be the mechanism for that. I hope that the Minister will be able to answer those points in the best possible spirit.
We have not yet passed legislation to create regional assemblies. A Bill is going through the House that will enable referendums to be held on the establishment of elected regional assemblies. However, legislation on how those assemblies would operate and the programmes that they would undertake has yet to come.
The White Paper suggests that a precept on council tax could be levied for the administrative running costs of elected regional assemblies, but not for the programmed expenditure. We anticipate that about 5p a week would be the typical levy on a band D council tax payer. That small amount would go towards the administrative running costs of an elected regional assembly. However, we should not rule out other possible precepting capabilities for a regional assembly. If local people choose in a referendum to have a regional assembly, and if they wish to see revenue generated for regional expenditure, who are we to stop them?
The Minister has just said something very significant. On top of the new council tax band D bills of more than £1,000 that will be imposed, he has just said that he expects a regional council tax precept to be around 5p a week. Is he saying that £25 a year will be added to those huge increases—[Interruption.] If my maths is right, 5p a week is £25 a year—
I got the decimal point in the wrong place. Even so, the principle would be established that a precept could be put on the council tax to pay for the running costs of regional bodies. Could the Minister confirm that?
Of course I can confirm that. It is in the White Paper and has therefore been in the public domain for some time. If the Conservative party has only just noticed that, I congratulate it. It would be only £2.50 a year, and I cannot see that as too onerous. We should also remember that there are already many precepting authorities for the council tax, many of which are regional bodies. That brings me to the point that the new clause could stop longstanding regional bodies operating. For example, regional flood defence committees levy a precept on local councils. Under the new clause, they would be bereft of funding, because they would no longer be able to precept local authorities to raise revenue. Other regional environmental, planning, arts and tourism bodies would be affected, even those on which Conservatives serve. I challenge Mr. Clifton-Brown to confirm that he intends that the new clause should deprive regional flood defence committees and coastal defence committees of the revenue that they need to stave off potential natural disasters that could affect many people. That expenditure is extremely important and those constituents who have been afflicted by floods and disasters would be most surprised at the import of the new clause.
In any case, regional chambers already exist, many of them with Conservative members. For example, 41 Conservatives sit in regional chambers in the south-east and 30 in the south-west. Those chambers derive some of their revenue from local authorities, but the new clause would prevent that. It would mean that it was Conservative policy to put an end to those voluntary regional chambers, and would be a significant constraint on the freedom of local government to contribute to them.
The hon. Gentleman is nodding and it seems to be his deliberate intention to restrict the ability of local authorities to contribute to voluntary regional chambers, even though they perform useful functions. We also hope that they will embark on the scrutiny process for regional development agencies, before elected regional assemblies are set up. That will be important work.
The Minister is being disingenuous if he thinks that just because Conservatives serve on regional bodies, we think that they are the most appropriate way to serve our constituents. Conservative representatives will serve on whatever bodies currently exist, but that is not to say that we think that they are the most appropriate.
That may well be the case. Conservative members do serve in regional chambers, but I was seeking to establish whether that was official Conservative party policy. We know that the Conservatives are opposed to elected regional assemblies and that they would not give people the choice in a referendum to establish them. However, are Conservatives opposed even to the establishment by local authorities of voluntary regional chambers? The hon. Member for Cotswold was nodding about something before. Will he confirm that the Conservatives oppose regional chambers?
I look forward to that.
I believe that new clause 8 would place a significant constraint on local government, but it is not untypical of the general policies pursued by the Conservative party when in government. In any case, part 6 of the Bill contains no specific provisions relating to precepting, apart from discounts on council tax banding. It is clear that the new clause would have a detrimental effect.
The Minister challenges me to say whether the Opposition are in favour of funding the voluntary regional chambers, but it would be helpful if he estimated the costs being incurred by those bodies—in the north-east, for example—and said where the funding comes from. Is any council tax precept being levied to fund those bodies at present?
There is no precept as such, but local authorities are free to contribute whatever they like towards regional chambers. New clause 8 would prevent, constrain, inhibit and stop authorities from being able to contribute freely to the perfectly reasonable activities of regional chambers. Local authorities would not be able to use council tax to raise resources for regional bodies. I challenged the hon. Member for Cotswold to say whether or not Opposition policy is to scrap regional chambers, but his refusal to answer speaks for itself.
New clause 8 has a number of drafting deficiencies. It is not for me to point them all out. The word "tax" could well mean precept, but it could also mean revenue for those regional bodies. If the hon. Gentleman has a different opinion, perhaps the new clause should have been drafted more precisely. However, the vagaries of the new clause are precisely what caused me to try to gauge from the hon. Member for Cotswold's remarks whether the Opposition were opposed to regional chambers. Again, answer came there none.
Matthew Green supported new clause 8 for entirely different reasons. I hope that the clarifications that I have given will cause him to reconsider.
That is very alarming. If the Liberal Democrats are also saying that council tax revenues should not be used to support regional bodies, they may find themselves in the same pickle as the hon. Member for Cotswold, who said that he would not allow council tax revenues to be used for regional bodies such as flood defence committees. I know that the hon. Member for Ludlow does not like the concept of council tax, but we have no alternative to it at present. The new clause would have a very significant effect, and I urge the hon. Gentleman to reconsider his position.
We shall not change our minds on this matter because we believe that council tax should not be used to raise revenue for any bodies, even local councils. Instead, there should be a local income tax.
Presumably, therefore, the extension of that rather dubious logic is that the hon. Gentleman will oppose any changes to council tax because he disagrees with the tax in principle.
Will he also refuse to countenance the use of council tax in any local government revenue plans in the future? Will he shun that appalling mechanism for raising revenue? I do not think that that is the position of the Liberal Democrat party. Surely there must be some strand of pragmatism among its members? The party will need it if, God forbid, there is ever a Liberal Democrat Government, at some indeterminate point in the future, who want to change the system. The hon. Gentleman must work in the system as it exists at present.
I am most concerned about the love and enthusiasm for local income tax exhibited by the hon. Member for Ludlow. I would not want to pre-empt the Government's funding review because we accept that there are significant issues around how local government should raise revenue and around making sure that it is tied to local accountability and principles. While not ruling out options which that review might examine, I caution against the hon. Gentleman's enthusiasm for local income tax. There may be a lot of income in Kingston and Surbiton that could be taxed, but there is less in other Liberal Democrat authorities such as Liverpool—which may find raising revenue through a local income tax extremely difficult. I only speculate because it would not be right to address that particular issue, which is for debate another day.
Council tax does relate to wealth, albeit capital wealth, and, as many hon. Members will remember, it is more progressive than the poll tax. There are certainly ways in which it could be improved. The Bill makes provision for banding and revaluation, which we believe are the mechanisms that should be used to make sure that council tax is more relevant and up to date—and that it relates more to ability to pay. New clause 8 is wrong in its conception, design and drafting and would have a significantly detrimental effect on some regional bodies—some of which do extremely important work. We need to know whether the movers of the new clause propose to scrap regional chambers and to stop funding regional and coastal flood defence from council tax.
Occasionally when one moves a probing amendment or new clause, one strikes gold. On this occasion, it is clear that we have exposed a huge new revenue-raising power for emerging regional bodies. The part of the Bill to which the new clauses apply is anyway far-reaching. It provides for a mandatory revaluation cycle, and gives the power to change the number of council tax valuation bands and introduce transitional arrangements. There was a lengthy debate in Committee about how to enforce the payment of council tax by some of the poorest people in this country by distress of their assets. Where their assets are insufficient to cover the costs of that distress, the outstanding debt can be the subject of an attachment to earnings order.
We have suddenly discovered that all the new powers in the Bill can be used to raise money for emerging regional bodies.
My hon. Friend is absolutely right. That purpose is not in itself shocking but it is not transparent. I pressed the Minister several times to state the costs being incurred by the transitional regional bodies but he did not give me one example. I pressed him in respect of the north-east but still he did not give me one example. I have given examples of regional planning and housing bodies—all of which will have staff, expensive buildings and a budget. How will they be funded?
I suspect that the hon. Member for New Forest, West was describing the hon. Gentleman's contribution. The hon. Gentleman is well aware of the millions of pounds raised from council tax precepts towards perfectly reasonable expenditure on regional flood and coastal defence committees, which the new clause would prevent. Does the hon. Gentleman really intend that those regional bodies should be bereft of that funding? Does he say that existing regional chambers should also be wound up and be bereft of funding?
With great respect to the Minister, who is a pretty straightforward man, he is equivocating. He will still not give us a clear answer as to how much money is likely to be raised through those mechanisms, and for what regional bodies. He has now introduced to the argument the fact that we might have regional arts bodies, regional tourism bodies or regional flooding bodies. How many more regional bodies are we to have? That council tax could be used as a mechanism to fund all those regional bodies in performing functions that are currently paid for from general taxation. We can thus conclude only that there will be an additional tax-raising power for all the functions that those regional bodies will have and which do not currently exist. The Minister has still told us nothing about that.
We have still not had straightforwardness as to how much of that regional council tax will fund the elected regional assemblies to be set up under the Regional Assemblies (Preparations) Bill that is currently in another place. It is all very well for the Government to say that the Bill does not give the detail for each region; I realise that that information will be separate from the Bill. Nevertheless, the Bill is the paving measure that will give rise to those elected regional assemblies, if we ever get as far as a referendum and a positive vote in favour of them.
I repeat that we envisage that elected regional assemblies might levy a precept of about 5p a week from a band D taxpayer. To aid the hon. Gentleman, that amounts to £2.50 a year, not £25. However, before we even get to elected regional assemblies there are existing regional bodies that receive revenue from precepts. Is the hon. Gentleman saying that the new clause will stop that, or not? I have asked him about four times and I should appreciate an answer.
When will the Government be straightforward about their proposals? They are making the decisions; the job of the Opposition is merely to probe them as to their intentions, not to state our policy. We want to know something about the costs of those regional bodies and how they will be funded. Will they be funded from council tax?
I shall give the Minister some figures so that we can see whether we are in the same ballpark. We already know about the costs for the new Parliament building in Edinburgh and the Assembly building in Wales, and that when public sector buildings are needed for the new regional bodies, significant costs will be involved. The abolition of Humberside alone cost £80 million. Extrapolate from that the cost of abolishing all county councils and the sum would run into billions.
As we advance towards elected regional assemblies, we are entitled to know what sort of sums the Government have in mind and how those bodies are to be funded. Will they be funded in full by the regional council tax or will there be other tax-raising powers?
We could continue to press the Government and embarrass them further. Suffice it to say that very large sums are involved and it is not clear that the functions taken over by those regional bodies will cease to be undertaken by somebody else—for example, the Minister's Department. Would the departmental budget then be reduced? It would have been useful had the Minister told us about that. Perhaps he will intervene again. If he plans to raise all that money for regional bodies through the regional council tax, will his departmental budget be reduced in lieu? As taxpayers, we are entitled to answers. The Minister shakes his head, but we, as taxpayers in general, are entitled to answers to those questions.
How many more regional bodies will be set up? The Minister has already referred to regional arts boards, regional tourism boards and regional flooding boards. How many more? Regional planning bodies and regional housing bodies do not yet exist. How much will they cost? How many buildings will be needed to house all those functions? We have not heard a single word from the Minister about the costs of those regional bodies. Council tax payers throughout the land who are likely to have to fund the cost of those bodies are entitled to some answers.
There has been a singular paucity, indeed a complete lack, of answers from the Government. Taxpayers can only conclude the worst. We may have been told that the amount will be only 25p a week in the first instance, but, by golly, in a year or two that amount will escalate many, many times.
The Minister laughs, but council taxpayers up and down the land will not laugh when they begin to get increased council tax bills of well over £1,000 for a band D house this year. They will not be laughing; they will be pointing an accusing finger at the Government because those increases are very significant.
We have heard no answers from the Government this afternoon. I respect the Minister, but it is fairly typical of the Government that they have failed to give us any answers. The only mechanism that we can use to protest vigorously is to press this matter to a vote, and I ask the House to accept new clause 8.