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Local Taxation

Part of the debate – in the House of Commons at 6:48 pm on 4th July 2005.

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Photo of Phil Woolas Phil Woolas Minister of State (Local Government), Office of the Deputy Prime Minister 6:48 pm, 4th July 2005

I am sorry, but I shall not be able to do justice to the many intelligent points that have been made if I give way.

My hon. Friend Alison Seabeck made a brief but very well informed speech, and I look forward to her being able to use the platform of her membership of the House to give us the benefit of her vast experience and knowledge of local government finance. She has found her voice now, and we look forward very much to benefiting from her advice.

Mr. Dunne made some important points on his constituents' behalf about the fact that some people in his area are on lower incomes. He asked how that could be taken into account if the Lib Dem policy were to be introduced. That was precisely the question asked by the hon. Member for Bournemouth, West and others: how would greater resource equalisation take place if the local income tax were to be genuinely local? That is the paradox that was teased out of the Liberal Democrats' policy.

Jo Swinson got mixed up when she said that her constituency was the most middle class in Scotland, yet incomes there were under £25,000. I take her point, but she must acknowledge that a couple on average incomes, not on average household earnings, as was suggested, would experience average council tax increases of £600. It is all very well the hon. Lady shaking her head, but if the tax base were based on income rather than property, it would be narrowed, a greater burden would fall on those people paying income tax, who are on the whole members of hard-working families. The Lyons review's remit is to consider whether an element of income tax could be used in balance with the existing property element—[Hon. Members: "Ah!"] This is not news. If hon. Members had read the Municipal Journal—or, indeed, the answers to the parliamentary questions that someone has been writing for them—they would know about this.

We have requested the Lyons review to consider the balance of funding, building on the work that my right hon. Friend the Member for Greenwich and Woolwich has done, and to make recommendations on how best to reform the tax, taking into account the possible impact of revaluation. It will also assess the case both for providing local authorities with increased flexibility to raise additional revenue and for making the shift in the balance of funding that I have just mentioned, and conduct a thorough analysis of options other than council tax for local authorities to raise supplementary revenue.

This has been an interesting debate, if only because it has teased out the differences between the two Opposition parties, both of which are clearly concentrating on what is going on in Cheadle rather than on the Lyons review.

This Government's record in providing a 33 per cent. real-terms increase in resources to local authorities since 1997, providing incentives to councils such as those in Surrey and giving better freedoms to improve services—as the Audit Commission is reporting sustained increases in local services—is one of which we should be proud. We look forward to Sir Michael Lyons's recommendations, and to further debates on this matter.