Council Tax: Government’s Proposed Increase

Luke Hall Excerpts

Monday 25th January 2021 Commons Chamber

[The Minister for Regional Growth and Local Government (Luke Hall)]

I appreciate that this has been a contentious debate, but may I start by expressing my huge appreciation for the incredible work that councils across the country have been doing to help lead the response to the pandemic? They have been at the frontline of the response in areas such as social care, testing and ensuring public safety, and they have continued to do an outstanding job in delivering the day-to-day services that we all rely on so much, including waste collection, highways maintenance, park management and so much more. May I also join my hon. Friend the Member for St Austell and Newquay (Steve Double) in praising parish and town councils, which have worked so hard over the course of this year to deliver their services?

Unfortunately, what we have heard today is an Opposition who completely misunderstand some of the basic rules of local government finance. The premise of their argument seems to be that the Government are somehow forcing councils to increase council tax by failing to provide adequate support in response to the pandemic. However, if we step back and look at the basic facts, we will see that nothing could be further from the truth.

If Members look at councils’ self-reported figures to our Department, which project that cost pressures for covid total £6.9 billion, and compare that with the £8 billion that we have already provided to councils since March, they will see that we have provided them with £1 billion more than they are spending in response to this pandemic. On top of that, we have provided a business rates holiday worth about £10 billion to retail, hospitality and leisure industries. We have also given councils over £17 billion to provide grants to thousands of businesses across the country, and we have seen some incredible work from councils in getting those grants directly to affected businesses. We have also introduced a sales, fees and charges scheme, supported leisure centres and supported councils with local tax losses. Councils will continue to receive funding through the contain outbreak management fund, to tackle the spread of the virus. That is worth over £225 million a month. We are backing local government all the way with the necessary funding now and into the future.

[Sara Britcliffe (Hyndburn) (Con)]

Does my hon. Friend agree that it is welcome that today Hyndburn Borough Council received an extra £492,000 to help with the community response? Does he also agree that it is important that our residents get the bang for their buck and that the basics get done, such as streets being cleaned, bins emptied and empty buildings on our high streets restored to their former glory?

[Luke Hall]

My hon. Friend is absolutely right that councils should be delivering efficient services with the settlement that they have received from this Government.

If we look at the provisional settlement that the Secretary of State published on 17 December, we see a 4.5% cash-terms increase in core spending power—a real-terms increase for the next financial year. We have also committed at least £3 billion of additional help to councils for next year. That includes the extension of the sales, fees and charges guarantee scheme, which we know has been a lifeline to so many councils during this pandemic. Our commitment to support councils is stronger than ever, and we will ensure that they have the resources they need to deliver first-class public services.

May I thank Members from both sides of the House for their contributions to this debate? I appreciate that it has been hotly contested and contentions, but some important points have been raised. I was surprised, however, to see numerous Opposition Members stand up and say how much they disagreed with the Government’s proposal, given that so many of their councils have not even bothered to respond to our consultation. The hon. Member for West Ham (Ms Brown) said how much she and her council disagreed with it, but Labour-run Newham Council has not responded to our consultation on council tax. The hon. Member for Slough (Mr Dhesi) told us how strongly he and his council feel about this issue, but it has not responded to our consultation, either. Perhaps that is because it welcomes fully the 3.9% increase in core spending power that it will receive next year. The hon. Member for Westmorland and Lonsdale (Tim Farron) told us how much he and his local Lib Dem council did not support it, but it has also not bothered to respond to the consultation. It is typical of a Lib Dem administration that it stands up, shouts from the sidelines and fails to do the necessary work.

[Mr Kevan Jones]

It might be because the Government completely ignore them. Durham County Council has lost 40% of its budget—£232 million—in the past 10 years. Under the proposed council tax rises, its limited council tax base will limit what it can raise compared with southern councils. How can that be right, in terms of moving money from the north to the south?

[Luke Hall]

I do not see how it is right for the right hon. Gentleman’s local council to spend millions of pounds on doing up an office building and installing a roof terrace during the middle of the covid pandemic. I shall come to his point about council tax redistribution in a moment.

The hon. Member for Garston and Halewood (Maria Eagle) talked about Liverpool City Council being forced to raise council tax. That is not the case; councils have a choice. Liverpool has been campaigning to have a higher council tax—

[Mr Jones]

On a point of order, Madam Deputy Speaker.

--- Later in debate ---

[Madam Deputy Speaker]

Order. This is a debate; there are, therefore, differing points of view on either side of the House—[Interruption.] Do not shout at me in the Chair.

[Luke Hall]

The Opposition motion calls on the Government to drop

“plans to force local councils to increase council tax”—

another complete misunderstanding of the system of local government finance. Decisions on council tax levels are, of course, for local councils themselves. We are allowing councils the flexibility to raise council tax up to the ceiling that we have set, with a 2% council tax referendum limit—a ceiling that many Labour councils have been asking us to raise—and an additional 3% for adult social care responsibilities.

We are also giving councils the flexibility to defer rises in the adult social care precept for next year, if that is what councils locally decide and if local circumstances require that. Vitally, we are also providing councils with £670 million of new funding to enable them to continue to reduce council tax bills next year for those least able to pay—a point that was made so well by my hon. Friend the Member for East Surrey (Claire Coutinho).

We on the Government side of the House trust councils to make the right decisions on council tax; the Labour party cannot even persuade its own councils, which have been writing to us to ask for greater flexibility so that they can raise council tax even more. The Labour party cannot even persuade the Labour group on the LGA, which would see the cap on council tax rises scrapped altogether, as my hon. Friend the Member for Dudley South (Mike Wood) pointed out.

Several Members made points about the Government’s record on council tax. My hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) put it very well: under the Labour Government, council tax doubled, it has trebled in Wales and the Labour Mayor of London wants to raise it by 10%, whereas under the Conservatives it has fallen in real terms since 2010. We have introduced council tax referendums, which put an end to the crude universal capping system of the past; we put in place voluntary council tax freeze schemes for five years, which helped to deliver the lowest average increases across England since council tax was introduced; we have introduced local council tax support schemes, requiring councils to set up schemes to help those least able to pay; and we have given councils flexibility over discounts and exemptions and helped them to better manage local housing markets through the introduction of the empty homes premium.

A number of Members raised the issue of social care and were absolutely right to do so. We are funding councils for social care into the future, as my hon. Friend the Member for Dudley South pointed out. The provisional local government finance settlement for next year will provide councils with more than £1 billion of additional funding for social care next year, including £300 million of new grant funding. That is in addition to the £790 million that can be raised through the adult social care precept, if councils decide to. That is, of course, on top of the £1 billion social care grant announced last year, which is being maintained in line with our manifesto commitment.

I was surprised to hear the hon. Members for Nottingham South (Lilian Greenwood), for Worsley and Eccles South (Barbara Keeley) and for Denton and Reddish (Andrew Gwynne)—the former shadow Secretary of State, for whom I have huge respect—all talk about the social care precept raising money in the wrong places. They obviously have not studied the detail of the settlement, which says clearly that we have put aside £240 million to equalise the differences in adult social care precepts. I am afraid they just have not read the detail of the settlement. My hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke) pointed out the pressures on household budgets, which are exactly why we have introduced the £670 million scheme.

The Opposition misunderstand and misunderstood the local government finance system. They cannot grasp the fact that it allocated over £1 billion more to local government than councils are spending in response to the pandemic. We take no lectures from a party that doubled council tax when in office and have trebled it in Wales. We are ensuring that councils have the resources they need to come out of this pandemic stronger, and that is why we are supporting councils with a £2.2 billion rise in core spending power and £1.5 billion of extra support to help with covid costs.

We are giving councils the flexibility to defer any increases next year if they believe it is right for their community. We are protecting residents from the sort of outrageous tax hikes that were so commonplace under the last Labour Government. Councils have done an incredible job of responding throughout the pandemic, and we are standing behind them.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I should point out that in current circumstances, when hardly anyone is here, there is no question of my being able to decide this Division on the voices, as there are so few representative voices present. Therefore, I call a Division.

Question put.