Council Tax: Government’s Proposed Increase

Part of the debate – in the House of Commons at 5:07 pm on 25th January 2021.

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Photo of Andrew Gwynne Andrew Gwynne Labour, Denton and Reddish 5:07 pm, 25th January 2021

Council tax is flawed and regressive. It disproportionately impacts on the poorest the hardest, and not just on the poorest people in society, but on the poorest areas of England. Not every area has the same council tax base. The two boroughs that I represent are a case in point. Tameside is predominantly made up of band A and B homes. There is nothing the council can do about that: those are the facts on the ground. Stockport is more mixed, with many more properties in higher council tax bands. That means Stockport can raise more money than Tameside can—it is basic maths—but neither can raise enough from council tax alone to meet basic service standards set by Government. They are both grant-dependent councils. They both need Government top-ups to function.

Some councils are fortunate. They can raise enough from council tax and business rates to meet local needs. They do not need a central Government grant. But all past Governments of all political colours have recognised this in-built unfairness and have redistributed grants to councils with low tax bases and high needs to even things out—until recently. This is the sheer unfairness of what this Government are doing. They have cut grant funding by half across England, but that is an average. In some areas, it is over 60%: 60p in every £1 gone. That is a lot of lost income for Tameside and Stockport. There is smoke and mirrors from Government. Ministers then tell councils they have more flexibility—“You can plug your gap by increasing council tax”—except that it does not work because it brings in nothing like the same amount as the funding cut by Ministers and there is still a gap. So the poorest areas with the highest needs in social care and children’s services still have to cut services.

Then came covid-19. I was the Secretary of State’s shadow this time last year and I was grateful to him for briefing me about local government stepping up to the covid challenge—and, boy, didn’t they do just that? I pay tribute to those councillors, officers and staff for all they did and are continuing to do. But I do not think that I am breaking any confidences, because it has been said in public, too: Ministers guaranteed to me that they would reimburse in full those already cash-strapped councils to do what it takes. That has not happened.

Here we are in the grip of covid still and councils are being told, “If you want to plug your gap, you need to increase your council tax.” Except it does not plug the gap. It does not come close. Residents lose out twice: they pay more, they get less. And the blame is devolved to councillors, not Ministers. That is why I support this motion tonight.