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Local Income Tax

Volume 451: debated on Tuesday 7 November 2006

4. When he last met the Chancellor to discuss the effects on the Scottish economy of an introduction of a local income tax. (98828)

My right hon. Friend the Secretary of State and I regularly meet Treasury colleagues to discuss a range of issues as they affect Scotland. As my hon. Friend knows, however, local taxes to fund local authority expenditure are devolved to the Scottish Executive.

In his discussions with the Chancellor, will my hon. Friend stress that a large number of hard-working, two-income families in my constituency will be particularly badly hit by any move from a property-based tax to a local income tax, which is, surprisingly, the policy of the Scottish National party and of the Liberal Democrats?

I will certainly ensure that my hon. Friend’s point is made to the Chancellor of the Exchequer in any discussions. The list of council tax band D figures in Scotland shows that her local authority in Aberdeen and mine in Inverclyde are well above the Scottish average; both, of course, are run by the Liberal Democrats, who have not only failed to keep the council tax under control but now want to clobber hard-working families with a huge hike in their income tax. It is no surprise that that policy is shared by the SNP, which simply would not be able to make the figures add up.

Will the Minister promise to remind the hon. Member for Aberdeen, South (Miss Begg) of her words in a few years’ time when she is complaining about the disastrous effect, especially on people of low and fixed income, of the revaluation that is inevitably coming? When he has his discussions with the Chancellor, will he discuss the effects on the Scottish housing market and, consequently, on the Scottish economy, of that revaluation when it comes?

When the hon. Gentleman got to his feet, I thought that he was going to take the opportunity to apologise for the comments made by his colleague who said:

“A fireman and a nurse are not the average family. They are a rich family that can afford to pay more.”

His party’s local income tax policy is predicated on the belief that a nurse and a fireman are a rich family who should get clobbered more. That is why we will have no truck with a local income tax, which will clobber hard-working families. I would like the SNP to distance itself from it as well.

An independent study in Edinburgh showed that the typical two-income household in my constituency would be at least £300 a year worse off through the introduction of local income tax. Does my hon. Friend agree that such a massive hike in income tax would have a damaging effect on the economic success in areas such as Edinburgh, and in the rest of the country, under this Government?

My hon. Friend is absolutely right to draw attention to the economic strength in Scotland, where we have more people in work than ever before, where our employment rate is among the highest in Europe, and where we have steady growth and steady investment in schools, hospitals and other public services. Any attempt to clobber hard-working families with a local income tax, under which they would pay hundreds of pounds more, would be very damaging not only to those families but to the Scottish economy.