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Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 3:49 pm on 20th April 2004.

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Photo of David Laws David Laws Shadow Chief Secretary to the Treasury 3:49 pm, 20th April 2004

It is usual for us to attend our conferences.

My hon. Friend bumped into the Chancellor of the Exchequer's former spin doctor, Mr. Charles Whelan, who was there, in and around the bars and other places. Mr. Whelan gave two pieces of advice to anyone who would listen about how we ought to take on the Government at the next general election. He said that we should focus on only two issues: trust—interestingly enough—and the council tax. Obviously, one questions the commitment of Mr. Whelan and others to supporting the Prime Minister, given that he urged us to focus on those two issues.

We would like to have heard more than we heard in the Budget—we still await this—about how the Government will reform council tax or, better still, abolish it altogether. We are certainly not impressed—I do not think that the country is either—by the sticking-plaster solution in the Budget: the payment to pensioners of only £100, which does not address the pressures that many people, including those who are not pensioners, face from the increases in council tax throughout the country.

In the recent Budget debate, my hon. Friend Mr. Webb quoted figures issued by the Office for National Statistics that show how the tax burden by decile has changed since 1996–97. We should get the latest tax burden figures from the Government in the next couple of weeks, if they are not delayed or mislaid, as they often are. I expect that those figures will continue to show that under Labour the people who have been particularly hit are those in the lowest income deciles. They pay proportionally more of their income in tax than those in the top deciles, largely because of the increase in backdoor taxes—indirect taxes and council tax—over the past few years. The most notable backdoor tax increase has been in council tax, which alone accounts for 12.1 per cent. of the income of the lowest decile, compared with 1.5 per cent. of the income of the top decile. Even after council tax benefit, council tax accounts for almost £1 in every £10 of income of those on lowest incomes. If the Paymaster has not yet picked up on the fact that that is one of the public's biggest concerns and that council tax is the most unpopular tax in Britain, she will do so in a few weeks' time, when she gets out on the election trail for the European elections and any local government elections taking place in her area.