ODPM – COUNCIL TAX – 2 March 2005

Dr Julian Lewis: The Minister [for Local and Regional Government (Nick Raynsford)] referred to fair-minded commentators. Does he accept the objectivity of the Audit Commission and, if so, how does he explain the fact that it has noted that

"grant redistribution – which moved grant from London and the south to the Midlands and the north – led to some councils putting up council tax more than others. We found a clear association between the size of grant increase a council received and their increase in council tax"?

Is the Commission making that up?

[Mr Raynsford: That report from the Audit Commission is a year and a half out of date. [Interruption.] No, it did not reflect accurately the grant distribution at the time and, on that particular issue, it got it wrong.]

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Dr Lewis: The hon. Gentleman (Edward Davey) referred back to what is commonly known as the poll tax. Does he accept that one of the reasons why the poll tax ended up so disastrously was that where there were two or more wage-earners in a household, that household as a whole paid an enormous amount of money in local taxation? Does he accept that under his [Liberal Democrat] system of a Local Income Tax, the amount that a typical two-earner household in my constituency pay for local taxation purposes would increase by £721 per household, and by even more if there were more wage-earners? Surely the answer is to compromise – not to have that burden on the wage-earners but to have targeted help to the pensioners, which is precisely what the Conservatives recommend.

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Dr Lewis: Will the hon. Gentleman give way?

Mr Davey: I shall, because it might help the hon. Gentleman's blood pressure.

Dr Lewis: I am delighted to hear that, but it will not help the blood pressure of my constituents in the New Forest, with which I am pleased that the hon. Gentleman has a connection. The £721 extra was calculated according to Liberal Democrat figures, which appear to mislead everyone. He refers to households of perhaps four people on incomes of £25,000 or less each and asks whether they should contribute more. I have news for him – they all pay Income Tax nationally. Why should they pay Local Income Tax, too? If there is anything wrong with the Income Tax that they pay, let it be adjusted nationally. Liberal Democrats' Local Income Tax proposals will slaughter people on relatively low incomes.