Council Tax: Government’s Proposed Increase

Lindsay Hoyle Excerpts

Monday 25th January 2021 Commons Chamber

[Mr Speaker]

I have selected the amendment in the name of the Prime Minister.

--- Later in debate ---

[Robert Jenrick]

rose—

[Mr Speaker]

Mr Jenrick, you moved the amendment. I presume that you did not wish to. Could you withdraw the moving of the amendment?

[Robert Jenrick]

Yes, I am happy to withdraw it, Mr Speaker.

I will come on to the remarks of the LGA in a few minutes, if I may, but the hon. Gentleman cannot have it both ways: he cannot say that he is unhappy that we have imposed a cap that provides limited flexibility for local councils to decide of their own volition whether to increase council tax or not, and that he wants the cap lifted altogether so councils can increase it without limit, which seems to be the consensus among his own local government leaders.

Perhaps the hon. Gentleman could check in with his own council in Croydon, a council that in its consultation response to the Department on last year’s finance settlement said:

“we are disappointed that the ability to increase locally determined Council Tax has been reduced and that”

it

“can…only be increased by 2%”—

directly contradicting the hon. Gentleman.

How are these councils actually performing?  Croydon is a council that has found itself in £1.5 billion of debt, the only council to go bust in 2020, following the collapse of its housebuilding company, Brick by Brick, which may not have proved to be very good at building, but did prove to be extremely good at owing people a lot of money. The problem is that Labour in local government today is a catalogue of failure, dysfunction and waste.

In Nottingham, the party opposite blew £38 million on a failed energy company and made 230 of its employees redundant over Skype, before rewarding themselves with a backdated pay rise. Robin Hood Energy, they described it. Well, Robin Hood stole from the rich, but Labour’s Robin Hood just stole from everyone.

Up in Durham, the council, at the height of the pandemic, approved a new 3,500 square feet roof terrace on its £50 million county hall. Merton Council reportedly set up a building company with a £2 million investment, only not to deliver a single home. The council leader said it was designed to make money, but he had built in—I kid you not—jumping off points. It turns out that there was no parachute for local residents. Labour Warrington has debts of least £1.6 billion. After Bristol City Council’s socialist energy company went bust, Warrington’s own version, Together Energy, decided it would be a good idea to buy it and then, of course, got into financial difficulties itself. Hackney Council planted thousands of trees, only for them to die due to neglect—literally, Labour dead wood.

Even the Labour Local Government Front Bench keeps up the tradition, inexplicably taking two shadow Secretaries of State to do the job of one actual one. The shadow Housing Secretary freely admits to reporters that she has no policies. The shadow Local Government Secretary reportedly rebuked a colleague in the shadow Cabinet for trying to develop some. From what we have heard today, perhaps it would have been better if he had taken his own advice. His first attempt after nine months has fallen apart at the slightest interrogation. Labour councils themselves want to raise taxes locally at or above the flexibility we are proposing. Labour and Liberal Democrat councils consistently have higher council taxes than Conservative councils. Labour councils consistently underperform Conservative councils. Whether it is Croydon or Nottingham, they are consistently letting down their local residents.

[Robert Jenrick]

There are many examples I could cite from Birmingham City Council, but I do not think time allows me to do that.

Let us contrast this Government’s approach to protecting the interests of local tax payers with that of Labour. In one year alone, the last Labour Administration oversaw an increase in council tax by a staggering 12.9%. In comparison, as we have said, since 2010 this Government have implemented five years of council tax freezes, under which the great majority of councils did not increase council tax at all. In retail price index terms, council tax is lower than it was in 2010. We have introduced legislation to end crude and universal top-down capping, ensuring significant council tax increases can be implemented only through a referendum, giving local tax payers a right to veto excessive tax increases.

Across the country, Conservatives charge the lowest taxes. We see this on the ground wherever we look. In the Leader of the Opposition’s constituency, in Labour-run Camden, council tax is three times as high as in neighbouring Conservative-run Westminster. As I am sure the hon. Member for Croydon North (Steve Reed) can testify, residents in Labour Merton and Lambeth pay almost twice the council tax of residents living just one or two roads away in Wandsworth. The Mayor of London has presided over a rise in council tax every year he was elected. To put that in perspective, when the Prime Minister was Mayor, he reduced the amount of council tax he charged Londoners by almost 11% during his tenure. In his last year alone, band D households in the 32 London boroughs saw their Greater London Authority council tax charges fall by 6.4%. Across the country, Conservative Mayors, whether Andy Street in the west midlands or Ben Houchen in Teesside, are continuing that tradition: low on taxes; high on leadership and delivery.

The provisional local finance settlement, which I announced to the House on 17 December, set out our proposals to increase the core spending power available to councils by 4.5%, a significant and real-terms increase. That comes on top of a 4.5% real-terms increase this year—a settlement the Labour party considered so good that, for the first time in living memory, it did not even oppose it. In total, we expect core spending power for English councils to increase from £49 billion this year to £51.2 billion next year, in line with last year’s increases and recognising the resources that councils need to meet extraordinary pressures while maintaining the essential services they provide.

The measures I proposed will provide an additional £1 billion of funding for adult and children’s social care. We have also confirmed that we intend to roll forward last year’s £1.4 billion of social care grant and continue the 2020-21 improved better care funding at £2.1 billion. We are considering responses to the settlement consultation and will return to the House to set out the final funding package for local government in the very near future.

The shadow Secretary of State has suggested to the House today that this Government have not delivered on our commitment to communities during the pandemic. This past year has seen the largest ever injection of in-year cash to the local government sector. Taken together, we have provided over £36 billion of support to and through local government in response to the pandemic. To put that in context, in 2019-20 the entire council tax take for the whole of England was £31.6 billion—less than we have provided in year to and through local councils this year alone. Local authorities have received £8 billion in direct funding, with a further £3 billion extra already announced for 2021-22, and we forecast adding an additional £1.2 billion to that from schemes to compensate for lost council income from sales, fees and charges.

That takes the total additional funding provided to local authorities to over £12 billion, £2 billion more than the sum the Local Government Association called for at the start of the pandemic—the sum the shadow Secretary of State himself estimated to be the cost to councils of covid at the time. We know today that we have provided £1 billion more than local government has self-reported to my Department as covid-related costs throughout that period—£1 billion more than even councils have told us they have spent and need. Let us be clear that when the Prime Minister, the Chancellor and I promised to support local councils and the communities that rely on them, we meant that promise, and we have delivered on that promise.

Since the start of the pandemic, we have mobilised our welfare system like never before, with generous income support schemes, mortgage holidays, support for renters, a £500 million local authority hardship fund, a £170 million covid winter grant scheme and much-needed help with utilities. To support local economies, we have provided £12 billion in grants to thousands of businesses the length and breadth of the country, and a business rates holiday worth around £10 billion to local retail, hospitality and leisure sectors. We have operated a major reimbursement scheme for lost council income, recovering billions of pounds from car parks, leisure centres, theatres and tourist attractions—money that will go to help councils move forward and recover.

That is not even to mention £4.6 billion of un-ring-fenced grant support to councils, £1 billion through the infection control fund, £1 billion through the contain outbreak management grant and £300 million via the test and trace service support grant. I could go on and on: 5 million food boxes delivered; 2 million shielded people protected through councils; and, of course, 33,000 rough sleepers brought in off the streets under the world-class Everyone In programme, and given the chance to rebuild their lives. That is central Government and local government working together through a unique pandemic to support millions of people across the country.

Local government has been—and remains—at the forefront of our response to covid-19. This Government are proud to stand shoulder to shoulder with local government in its hour of greatest need: with the officers, the teachers, the refuse collectors, the care workers, and the environmental health officers enforcing our regulations. For all that they have done, we salute them and thank them on behalf of our communities and our country. We owe them the stability, certainty and flexibility to plan for a brighter future ahead, and that is exactly what we have done, what we will do and what we will always do for them.

Our communities have never needed good council leadership more than they do today. Whether it is in Croydon or in Nottingham, across the country the reputation of too many Labour councils is, frankly, rotten. We take no lectures from the Labour party, which presided over eye-watering increases in council tax throughout its time in office, and whose economic mismanagement in local government has been laid painfully bare for all to see. The reports of those councils—Croydon and Nottingham—spell it out: mismanagement; waste; poor public services; and, yes, higher council taxes. There is a toxic legacy of debt and dysfunction, not just for today but for future generations. And where, frankly, was the shadow Secretary of State? Where was his denunciation of Croydon and Nottingham? He was silent. He was invisible. His famous Twitter account was as uncharacteristically quiet as that of Donald Trump—no leadership when the country needed it.

While we have reduced council tax in real terms under our watch, Labour has increased it time and again. While we have been clear that we have a plan to protect local councils and that we care about local council taxpayers, Labour has perfected the art of saying nothing at all. Frankly, council taxpayers across the country deserve better than this absurd and hypocritical debate from the Labour party, and they will have the opportunity to say so in May.

[Mr Speaker]

For the avoidance of doubt, the Secretary of State has not moved the selected amendment. The Question before the House remains that already proposed, as on the Order Paper. I remind hon. Members that a time limit is in effect for Back Benchers. The countdown clock will be visible on the screens of hon. Members participating virtually and on the screens in the Chamber. For hon. Members participating physically in the Chamber, the usual clock in the Chamber will operate. I am going to start with a four-minute limit. I call Peter Dowd, up in Liverpool.

--- Later in debate ---

[Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con) [V]]

Greetings from the land of King Alfred. We are doing well down here, and I am delighted to be able to join this debate. Very few people in Somerset will burst into song when their council tax bills arrive. I will say that the tax collectors on our four district councils spend their share of the money with commendable efficiency; they have shown that over the last year with covid. However, the bulk of the cash goes straight into the coffers of Somerset County Council, and that is where the trouble starts. This lumbering dinosaur of a local authority has an appalling record of mismanagement and financial jiggery-pokery dating back decades. Far too often, we hear it pleading poverty and begging for extra grants from Government, and it has been doing that recently. The whole idea of the unitary is to save the council from bankruptcy, we were told, and I am sure that that will not bypass the Secretary of State. For every bleeding heart story, there are shocking examples of bad decisions, blind leadership and sloppy practice. Somerset County Council, I am sorry to say, is a lost cause. Turning it into a unitary, which is what the council is after, will make it an even bigger failure, and I hope the Secretary of State ponders on that.

Let me give you an example, Mr Speaker. In common with many councils, the road network under Somerset County Council is an expensive failure and has been a complete disaster. The council signed a contract with Skanska, a worldwide enterprise with a pretty good reputation, three years ago. Skanska would fill the potholes, lay the tarmac and smooth out the wrinkles of the incompetence in county hall, all for £30 million a year. Common sense says that you get precisely what you pay for—not in Somerset. Believe it or not, the council has not checked the Skanska invoices. At the moment, the council has overpaid by more than £300,000 and probably a great deal more; the guess down here is that it runs into millions. When the regional auditors spotted the error, Somerset County Council deliberately hid the report, but it will emerge, I am glad to say, on Thursday.

Secrecy goes hand in hand with incompetence. Somerset County Council received around £43 million to ease the burden of the pandemic. We have all been trying to discover where that grant has gone on, including our council tax money. The council offered assurances but no proof. Tens of millions went into a reserve fund, which can be used for anything. We have all asked—not just me—for a precise breakdown, but we have yet to get it. How can we trust anybody who does not tell us the whole truth?

That is why I will not support the Opposition motion for any reason whatsoever. Labour wants to freeze local government taxes and ease the burden of fighting covid by offering a bottomless pit of money for councillors. It is not going to work; we know that. My district councils have spent the money wisely. Three of them are not of my persuasion, and I am impressed. They have done the work they are meant to do without compromising their ethics or concentrating on becoming a unitary. None of them has complained. They have used the money wisely, and they have done a lot of good. Somerset County Council was given shedloads more but will not reveal where the money went, so why on earth should we pile money into the manhole of Somerset County Council when we do not even know which way it is floating? On behalf of the people of Somerset—and you know how feisty they can be, Mr Speaker—may I say that we do not trust it?

[Mr Speaker]

I am glad that the hon. Gentleman is on the fence.