Spending Review 2020

Lord Shipley Excerpts

Thursday 3rd December 2020 Grand Committee

[Lord Shipley (LD) [V]]

My Lords, I first remind the Grand Committee that I am a vice-president of the Local Government Association. I want to talk about council tax and the deliberate government policy over the past five years to force it up well above the rate of inflation. These increases have been caused in part by the introduction of the adult social care precept in 2016, because central government decided to divest itself of carrying all the responsibility for rising social care costs. At the general election last year, the Conservative Party manifesto guaranteed not to increase income tax, national insurance or VAT across the next Parliament. It was a bold and, undoubtedly, a popular step. This was intended to,

“protect the incomes of hard-working families across the next Parliament.”

These three taxes bring in almost two-thirds of UK tax revenue. The decision not to increase them means that the Government intend other taxes to bear the burden through this Parliament. Council tax is one of them, and in the spending review last week, the Chancellor continued government policy towards council tax for a sixth year: that is, increasing council tax well above the rate of inflation. An increase of up to 5% is permitted next year, of which a maximum 3% increase is for the adult social care precept and 2% is for general service provision. This constant rise in council tax forced on councils impacts most of all on poorer families.

The pandemic is impacting most on poorer families. The freeze on public sector pay will impact most on poorer people. The failure to increase the living wage by more will impact most on poorer people. I understand the reason for wanting to avoid tax rises at a national level, to enable the economy to grow again, but why does this policy not apply to council tax?