Council Tax: Government’s Proposed Increase

Part of the debate – in the House of Commons at 5:16 pm on 25th January 2021.

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Photo of Robert Largan Robert Largan Conservative, High Peak 5:16 pm, 25th January 2021

The national effort against coronavirus has relied heavily on the hard work of council employees, and I thank all the dedicated staff delivering local services in High Peak. There is no doubt that councils have been under incredible pressure throughout the pandemic, and I am pleased that the Government have done as much as possible to back them up, ensuring that vital services can continue to help the most vulnerable. Over £10 billion has already been provided.

I am grateful to the Opposition for the opportunity to debate council tax, although I am slightly surprised that they chose this topic, given the shambolic record of so many Labour councils across the country. It is important to point out that, despite the cleverly worded motion in front of the House today, no council is being forced by the Government to increase council tax. I can only assume that the Opposition are against giving voters local control of how their council raises revenue and balances local budgets. Nevertheless, this is a good opportunity to debate how we can fundamentally reshape the tax system after covid to the benefit of the whole country.

I encourage Members to read the report “Levelling up the tax system” recently published by the levelling-up taskforce and the think-tank Onward. So much of the debate around levelling up is focused on Government spending, and understandably so—places such as High Peak are crying out for more investment in our infrastructure—but that is only half of the levelling-up equation. We also have to think seriously about how we raise money for services and the impact that that has on different parts of the country. Nowhere is that more obvious than with the council tax.

Average council tax per head in London is the lowest in England, at £481 per person. That is a fifth lower than in more deprived regions, such as the east of England and the south-west, and as a share of post-tax income, Londoners pay half of what households in Yorkshire and the north-east typically pay. That difference is getting even starker. London has seen its share of total council tax revenue decline steadily despite average house prices more than doubling in the capital, yet councils in London typically get a much higher central Government grant, despite the fact that they are able to benefit from much greater revenue-raising opportunities such as parking and that services are typically cheaper to deliver given the population density. While it is true that London generates £1 in every £5 of tax receipts, we must remember that London generates less tax than any other region as a share of GDP.

London is a great city, and I am certainly not here to pull it down; I just want to see places such as High Peak levelled up. I strongly urge the Government to think carefully about how we can make the tax system, including council tax, fairer. There is a real opportunity to be bold and deliver lasting reform. A good place to start would be requiring a regional impact assessment of different tax measures as standard practice as part of the Budget process.

While the end of the pandemic is finally in sight, there is still a long way to go. Getting the vaccine rolled out and helping the most vulnerable during lockdown requires action from every level of government, including our councils. Instead of tying their hands, like this motion sets out to do, let us figure out new ways of making the tax system fairer for everyone.