Local Government Finance — 17 May 2004 at 21:49

I beg to move,

That this House notes that council tax has risen by 70 per cent. since Labour came to power and that the Budget Red Book forecasts a rise in council tax receipts next year of over 7 per cent; further notes that these rises are hitting particularly hard those on low and modest incomes because of the way council tax was designed by the last Conservative Government; is concerned that this manifest unfairness of council tax now means that the poorest 10 per cent. of people pay over four times more of their income in council tax than the richest 10 per cent; notes that the whole system of local government finance needs major reform owing to the problems caused by the dependency of councils on central government grants that produces the gearing effect whereby on average councils must raise council tax by 4 per cent. to offset a grant reduction of one per cent; believes that the Labour Government have made the bad situation they inherited from the Conservative Government even worse by their excessive reliance on ring-fencing, passporting and centrally-imposed targets and regulations; and therefore calls on the Government's Balance of Funding Review to make far-reaching proposals for reform when it reports shortly, including the introduction of a local income tax to replace council tax, the return of business rates to local authorities, reformed in line with land values, and a radical reduction in central government interference.

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:

"welcomes the Government support for local government with its 30 per cent. real terms increase in grant since 1997; notes that the average increase in council tax in 2004–05 is the lowest for nine years; supports the Government's proposals to take action against a number of authorities which have set excessive budgets and council tax increases in 2004–05; and looks forward to the report of the Balance of Funding Review of how local government in England is funded which is due in summer 2004."

Question put accordingly, That the original words stand part of the Question:-

The House divided: Ayes 48, Noes 437.

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