Council Tax: Government’s Proposed Increase

Part of the debate – in the House of Commons at 6:43 pm on 25th January 2021.

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Photo of Kate Hollern Kate Hollern Shadow Minister (Housing, Communities and Local Government) 6:43 pm, 25th January 2021

I pay tribute to everyone who has taken part in today’s debate. There have been excellent contributions from Labour Members, who understand the devasting impact of broken promises from this Government on the communities they serve.

It is worth repeating that in March the Local Government Secretary told local leaders that the Government would do “whatever it takes” to support councils during this pandemic. Come May, he broke that promise and said that councils would not be fully reimbursed. We have heard of the huge package that the Government have put into local councils. What the Government fail to mention is the cross-party letters that the Secretary of State has received from leaders telling him that that is not enough and that he should honour his promise. Government Members talk about business support, but not the businesses they fail to support; they talk about the discretionary support for those who have to self-isolate, but not about the thousands they did not support.

As we have heard today, the Government want to present their council tax hike as a choice, but it is not. We do not have to be economists to realise that this is the wrong time to force councils to raise council tax and ask hard-pressed families to pay for Government failures. The Secretary of State knows full well that his broken promise to do whatever is necessary to support councils will force local leaders to raise council tax to protect vital services. Councils of all political stripes across the country will raise council tax to keep services running and get their communities through this pandemic. They are being punished for this Government’s broken promises—punished for doing right by their communities and punished for Government failures.

Local authorities are still reeling from the £15 billion of cuts over the last decade. We have heard a lot of Tory Members blame Labour councils for raising council tax. As we have heard from many Labour Members, council budgets have been cut by over 50% in the last decade. Councils will have no choice, but the Government had a choice—they had a choice, and they took the decision to cut council budgets. That left councils less financially resilient going into this pandemic, precisely because it left them more reliant on business rates and council tax. As we know, those revenues vanished during lockdown. The Secretary of State ought to have known that before he made a promise to compensate councils—a promise he has continually failed to keep.

It need not have been this way. This is a Conservative Government who have wasted tens of billions of pounds of public money on a test and trace system that does not work—a Conservative Government who handed out crony contracts to their friends for PPE that did not work. It will be families picking up the tab for those broken promises and stuck with a regressive tax rise through the back door at the worst possible time.

As my hon. Friend Steve Reed told us, the Government’s council tax hike will increase regional inequality and do precisely the opposite of uniting and levelling up our country. The Conservative Government are dividing communities when they should be bringing communities together. This rise will hit families in all areas, but it will hit the north-west and the north-east particularly hard. A 5% increase in Surrey raises £38 million, while a 5% increase in Blackburn raises only £2.8 million. I pay tribute to my hon. Friends the Members for Sheffield, Brightside and Hillsborough (Gill Furniss), for Denton and Reddish (Andrew Gwynne), for Manchester, Withington (Jeff Smith) and for Hartlepool (Mike Hill) for raising that point—something that was missed by James Daly. In marked contrast, we heard contributions from lots of new Conservative Members from those regions, including the hon. Member, who sought to defend the hike. I am sure their constituents will demand to know why they are prepared to defend and vote for these rises.

Happily, though, there is still time for those Members to do what is right and oppose these hikes, just as there is still time for the Government to think again, scrap the planned rise and stand by their pledge to stand behind councils. A tax rise now will see families up and down the country worrying about paying the bills and keeping food on the table. Businesses will worry about how they will keep their doors open with fewer customers. Councils will worry about protecting their services. I urge the Government to change course now so we can secure our economy, protect our NHS and begin to rebuild our country.