Council Tax: Government’s Proposed Increase

Debate between Steve Reed and Felicity Buchan

Monday 25th January 2021 Commons Chamber

[Steve Reed (Croydon North) (Lab/Co-op)]

I beg to move,

That this House calls on the Prime Minister to drop the Government’s plans to force local councils to increase council tax in the middle of a pandemic by providing councils with funding to meet the Government’s promise to do whatever is necessary to support councils in the fight against covid-19.

Right at the heart of the local government funding settlement, there lurks a rather nasty little surprise. What the Chancellor and the Secretary of State for Housing, Communities and Local Government trumpeted as an increase in funding for councils was nothing of the sort. Instead of the promised “end to austerity”, we got a Conservative council tax bombshell.

The Government made a choice to clobber hard-pressed families with a 5% council tax rise, after the Government’s mistakes led our country into the worst recession of any major economy. There are two big problems with that: it is economically illiterate to push up taxes while the economy is in crisis; and it is dishonest to trumpet the end of austerity when most councils will still be forced to cut services even after they impose the Conservative tax hike, because the rising costs of social care outstrip any increase in revenue, and the Government have done nothing about that crisis.

[Felicity Buchan (Kensington) (Con)]

Will the hon. Gentleman please explain, if he does not think that councils should be increasing taxes, why the Mayor of London is proposing to increase his precept by 10%?

[Steve Reed]

It was actually the Secretary of State for Transport who told the Mayor of London that he had to increase council tax. [Interruption.] Oh yes, it was. The reason there is a funding gap in London is that Londoners have done the right thing and followed the Government advice to keep covid-safe by keeping off public transport as much as they can. Transport for London’s revenues have therefore collapsed, but the Government have refused to provide the financial support to cover that problem. I imagine the Government thought they were punishing the Mayor of London ahead of the London mayoral elections; what they have actually done is punish Londoners, and that is wrong.

The Government’s message to council tax payers is: “Pay more but get less under the Conservatives.” Last March, as the country went into lockdown, the Secretary of State made a commitment to fund councils to do what was necessary to get communities through the crisis. He was right to say that—I give him credit for doing so—but just two months later, he broke that promise.

The Conservative-led Local Government Association estimates that councils face a £2.5 billion funding gap as a result of the lost income and additional costs of supporting communities through these unprecedented circumstances over the past year. The Government’s planned council tax increase will raise just under £2 billion next year. If the Government had not broken their promise on funding, councils would already have that amount available to them. Of course, the Government threw away £10 billion on crony contracts for companies with links to senior Conservative politicians. Just a proportion of that money would have plugged councils’ funding gap entirely.

The Government’s failure over the past year has left Britain with the worst recession of any major economy and one of the highest death rates in the world. Now, with their inflation-busting tax hikes, the Government are making hard-working families pay the price for Conservative failure, and the timing really could not be worse. The Tory tax hike will land on people’s door mats in the same month that over 2 million people come off the furlough scheme. Many of those people are worried sick about their future job security. Millions more are worried about their income falling. This is no time to clobber them with a tax hike.