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Council Tax

Volume 670: debated on Monday 14 March 2005

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2.58 p.m.

Whether they intend to reduce or review the level of council tax paid by households consisting of persons over 65.

My Lords, the policy of the Government is to provide council tax benefit for people on low incomes, whether or not they are aged 65 or over. The independent inquiry into local government funding headed by Sir Michael Lyons is due to report by the end of 2005 and is considering how best to reform council tax to make it fairer and more sustainable.

My Lords, I thank the Minister for that reply. Is he aware that since 1997, when this Government came to power, council tax has risen by more than 76 per cent? Does he agree that the effect on pensioners is that 25 per cent of their state pension is now absorbed by the council tax, and is he not aggrieved that they have been particularly badly hit by this disastrous increase? Will the Minister say whether the Government intend to adopt or, indeed, purloin the Conservative Party's promise to provide a discount of up to £500 to all households consisting of persons over the age of 65?

My Lords, this is a very political Question, if I might say so. It is typical of the Conservatives—the very poorest pensioners in the country, who have received tremendous benefits from the Government, would not gain a penny piece from this Conservative Party plan. They would not receive a penny piece because they do not pay council tax. Let us make that clear. Of course, the one thing that we must do is ensure that more pensioners claim council tax benefit. We accept that there is an issue of people missing out, but pensioners are much better off than they were eight years ago. I accept that council tax has increased, but so has government grant to councils. I can say with the full authority of the Treasury that large council tax increases are a thing of the past.

My Lords, does the Minister agree that one of the other disadvantages of the proposal advanced by the noble Baroness, Lady Hanham, is that poor people of different ages, young poor people, would still be paying the full level of tax? Can he assure us that when the inquiry comes to report, the question of fairness of taxation and the association of the level of taxes with the income of the householder will have been thoroughly considered?

My Lords, I can tell the noble Baroness that Sir Michael Lyons's inquiry is open-ended in that respect; it will consider all aspects of council tax and other possible revenue sources for local government that could be more related to income than council tax. We fully accept that that is an issue but, as I said, we have done other things for pensioners, including providing the lump sum of £150 for the past two years to assist with council tax, although it can be spent on other things, and the winter fuel allowance. We are not even certain whether those would be abolished by an incoming Tory government, if there was one.

My Lords, will my noble friend take the opportunity to remind the House who introduced the council tax in the first place, in replacement of the poll tax? Secondly, does he agree that it would be totally immoral for the vast majority of Members of this House to receive £500 as a subsidy from any government?

My Lords, I was not going so to upset the House as to request that it might be a good idea for most Members to declare an interest in this Question. I do not have one myself at present. Grey power is important. as everyone found out last week, as exercised by your Lordships' House. But the fact is that we must find ways to raise local revenue. We all understood why the rates were unpopular. The poll tax was even more unpopular. The interaction of the council tax is now such that it justifies a good look from a clean sheet and that is what Sir Michael Lyons is doing.

My Lords, is the Minister aware that many of us feel that the nice handouts to councils this year to keep council tax at a reasonable level have a certain relationship with the forthcoming general election? I know that the noble Lord can never speak for the Treasury and says that it is impossible to deal with, but I would like him at least to pass on to the Treasury the feeling that it is all very well to be helping the poorest people now but, after the general election, if council taxes have to go up quite a lot, middle-class people will be very adversely affected. Will the Government then change the criteria for determining who would be helped if Labour is in government?

My Lords, let us be clear. Since 1997, spending on pensioners has risen by £10 billion, £7 billion of which is more than if the basic state pension had increased in line with earnings. So we are way ahead in what we have done. We have concentrated a lot on poorer pensioners. As for doing things and then claiming credit at the general election, I fully accept that I think that the winter fuel payment was a good idea and I have no doubt that we may claim some credit for that at the general election. Reducing value added tax on fuel from 8 per cent to 5 per cent was a good idea. Free eye tests for the over-60s was a good idea and I think we might claim some credit for that at the general election. Free TV licences for the over-75s was a good idea and we may well claim credit for it at the general election.