Local Government Finance

John Healey Excerpts

Wednesday 8th February 2012 Commons Chamber

[Grant Shapps]

My hon. Friend is absolutely right to point out that where there is a will, there is a way. Where there is transparency, the sharing of services and smarter procurement, there is a way. Not a single authority is suffering a reduction of more than 8.8%, and the average is 3.3%. There is no reason for them to be increasing council tax.

[John Healey (Wentworth and Dearne) (Lab)]

Can the Secretary of State confirm that a statement put out by his spokesman last night for the Local Government Chronicle is wrong? It states:

“For a local authority, a council tax referendum is triggered only if its basic amount of council tax increases by more than 3.5%”.

Will he confirm that the Localism Act, which he has just cited, mentions the “relevant” basic amount of council tax, which excludes levies? That means that local authorities with large levies are at a disadvantage in the system and are likely to face a referendum trigger amounting to significantly less than a 3.5% increase.

[Grant Shapps]

The right hon. Gentleman is my predecessor and has tremendous expertise and knowledge in this subject. I saw his letter to the Secretary of State in which he raises exactly that concern, but I must tell him that this once, unusually, he has got his facts in a twist—he has got them the wrong way round. It is the case that the referendum is triggered on the precepting authority’s increase only, not by taking into account the addition of levies from other organisations such as police and fire authorities. I hope that satisfies him. In fact, there should be a letter back in his office that explains in some detail precisely how that operates.

[John Healey]

rose—

[Grant Shapps]

I would rather not continue the dispute on the ballot point, if only because we will descend into incredible amounts of detail. The right hon. Gentleman has got his facts wrong, and I have written him a three-page letter detailing exactly why. He is welcome to come back to me, but I fear that the complexity of his argument—

[John Healey]

rose—

[Grant Shapps]

I will give him one more try.

[John Healey]

The Minister’s letter is in fact a one-page letter. It confirms that the statement made by his spokesman in last night’s Local Government Chronicle is wrong in fact because it is not consistent with the terms of the Localism Act 2011, which the Minister cites as the basis for the council tax referendum.

[Grant Shapps]

I have not seen the Local Government Chronicle, but I have seen the letter. It was certainly more than a page when I signed it. Perhaps it was printed in a very small font or e-mailed in a strange way. It was a detailed letter that makes the point absolutely clearly, but I want to reiterate the point now so that no Member leaves the Chamber uncertain—there is no uncertainty.

The referendum is triggered when an increase of more than 3.5%, brought about by the principal billing authority, takes place. That is based, therefore, on a district, county or borough implementing an increase of more than 3.5%. It does not include the fact that a fire or police authority, or a parish, might decide to increase its amount by more. They are not covered by the trigger point. As I have said, I have gone into quite considerable detail and I want to make sure that the House is clear that the principle is based on those authorities and those authorities only.

[John Healey]

Will the Minister give way?

[Grant Shapps]

I would like to make a little progress.

I do not think there is any need for council tax increases or referendums at all this year. While council tax more than doubled under the previous Government, and although a Labour Government would have hiked council taxes even more in a fourth term, this—

[John Healey]

On a point of order, Mr Deputy Speaker. The Minister has tried to help the House and said he wanted to be clear, but he has just made the fundamental mistake, which I think he needs to correct, of citing precepts and not levies in the examples he gave. He therefore underlines rather than undermines my point.

[Mr Deputy Speaker (Mr Nigel Evans)]

The right hon. Gentleman has got his point across.

--- Later in debate ---

[Grant Shapps]

The hon. Gentleman asks a timely question, so I am grateful for his intervention. The answer is that I cannot confirm that, as we have not described from where we will take the base. It is therefore a mistake for local authorities, based on today, to think that if they ramp up their council tax, that will automatically be taken into account on transition to the new system. We have not made a decision or an announcement on that, so if councils want to go ahead and take the risk, they should first listen to the warning from this Dispatch Box. With such a big change in the way that local government finance operates coming down the line in 2013, they cannot, right now, factor in their base by putting up council tax. I cannot confirm that today, and they should think not once, not twice, but three times before putting up council tax this year.

I have to say that there are some interesting things going on out there. Some councils are going to the very limit of how much they can raise council tax by without triggering a referendum. Isn’t it surprising? I have seen increases of 3.4%, 3.49% and 3.5%—on the nose—but there they stop. Doubtless those councils will say that those figures have been reached after expert, high-minded advice from apolitical finance directors and that they have been determined as the absolute minimum required to maintain vital services. What a coincidence that such rigorous objectivity comes up with such precise numbers, rather than 3.51%, 3.52% or 3.6%. Funny that—a referendum would be triggered if it did come up with those figures. It is almost as if those councils do not think that a bigger council tax rise would win the support of their local voters.

Then it struck me. Those councils have been inspired by the bicentenary, as so many of us have: they have been reading their Dickens. And which character have they taken as their role model, dipping into their residents’ pockets with a twinkle in the eye? I think we all recognise an Artful Dodger when we see one, and if those councils will not give people a say now, woe betide them at the next local elections.

As I have mentioned, we are not proposing this year to impose a particular level for town and parish councils for a referendum. However, we are concerned at reports that some councils—just a few in the sector, but none the less enough to trigger concerns—are proposing large increases. As with the point about the base, as we move to the new system, we will seriously consider whether to make excessive parish increases part of referendums in future.

[John Healey]

On the new system that will be introduced under the Local Government Finance Bill, will the Minister confirm that it is a carry-over Bill and that page 640 of “Erskine May”—which says that

“the procedure should be used in respect of bills which had not yet left the first House”—

therefore applies? With the Government having forced the Bill through Committee of the whole House in three days, which means that outside organisations cannot give evidence and have not had time to get to grips with the Bill, will the Minister confirm that “Erskine May” means that this House will not have the Report stage of the Bill until after the Queen’s Speech?

[Grant Shapps]

The right hon. Gentleman is aware that every Opposition normally spend their time arguing that Bills should not be tucked away in some Committee Room, up on the lower or upper corridor, but debated on the Floor of the House. That means that every Member of the House has the opportunity to take part in the debate and that nobody is excluded. I would have thought that that was a thoroughly good thing, so I am proud that we took such important business in Committee on the Floor of the House. It genuinely gave the opportunity to Members, as the people’s representatives, to come and make their points, and it is a good approach that should be followed.

Just as we did last year, we have pushed the system as far as we can to reach a settlement that is sustainable, fair and progressive, and that allows councils to freeze their council tax.