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Andrew Bennett: How does this proposal differ from the uprating orders that we have each year?

Mr. Webb: The uprating orders have traditionally been debated on the Floor of the House, often taking a whole day of parliamentary time rather than 90 minutes in an upstairs Committee Room. Indeed, on the occasions when we have felt that an uprating order was unacceptable—for example, the one that related to the 75p pension rise that the Government do not mention very often—we have voted it down, in an attempt to make the Government bring in a better one. A far better way of scrutinising these matters would be to present them in an amendable form, and for the Government to be required to come to the House with something that could be scrutinised not only in principle but in detail. I do not know whether the hon. Gentleman thinks that a commitment to spend £500 million next time round, given without virtually any examination, is an acceptable example of the way in which the House scrutinises the Government, but I certainly do not.

Mr. Weir: Is not another difference between this proposal and the uprating orders the fact that the orders
 
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deal with existing benefits? We know what those benefits are, whereas clause 7 of the Bill could conceivably be used to introduce any sort of payment.

Mr. Webb: I was about to make that excellent point. The hon. Gentleman is quite right. Every year, we use the uprating orders to roll on an existing system that we understand well, but the Bill is about something completely new. It will introduce a new set of rules, which is why it requires even more proper scrutiny than the annual uprating process.

If we are concerned—as we are—about the burden of council tax on people on low or modest fixed incomes, we must ask ourselves whether this Bill presents the right strategy to deal with that issue. There are better ways to approach the problem, namely, to provide people with a decent pension. It seems undignified for pensioners to have to hang on every word of the Chancellor's speech, having remembered to switch it on five minutes before the end, which is when they get given the cash—the goodies that the Chancellor had to spare because an election was coming up. Is not that an undignified way to treat pensioners? Should they not know at the start of each financial year what money they will have coming in, and should not that money be adequate to meet bills of this sort so that they do not need such one-off special payments? I have similar feelings about other ad hoc payments that the Government have introduced.

Mr. McLoughlin: The hon. Gentleman has just accused the Government of offering an election bribe, which this proposal clearly is. If my memory is correct, in the last by-election that the Liberal Democrats fought, they put a "cheque" for £100 on the bottom of their leaflets, offering voters that amount off their council tax. They have now abolished that proposal. Was that not an election bribe that they subsequently decided was a bad idea?

Mr. Webb: We are proposing to abolish the council tax. Indeed, my right hon. Friend the leader of the party has over-performed, as he does so often, by proposing not only to cut £100 from people's council tax but to abolish the whole thing. If I am accused of breaking a promise to the electors to cut £100 of their council tax, when we are replacing that with a policy to scrap £1,000 of their council tax, I stand condemned.

Mr. Wilshire: Can we be absolutely clear about this? Is the hon. Gentleman pledging that his party, should we have the misfortune to see it form a Government, would scrap the council tax and replace it with a local income tax? If he will give us that pledge, my constituents would then understand why the average male in my constituency would end up with a bill of £700 a year more than he pays at the moment. They would be delighted to hear confirmation of that.

Mr. Webb: The hon. Gentleman should not believe his central office briefings. He should know that by now. In answer to the first part of his intervention: yes, our pledge is unequivocally and absolutely to replace the unfair council tax with a fair local income tax of the kind used in many European countries, which will not reassure the hon. Gentleman. Such taxes are also used in many American states, however, which perhaps will reassure him.
 
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In answer to the second part of the hon. Gentleman's question, the local income tax will replace the council tax, but we envisage one tax rise, on those earning more than £100,000 a year. Part of the proceeds of that tax rise—£1.7 billion, to be precise—will be used to ease the burden of the transition from council tax to local income tax. The amount raised under our local income tax will actually be less than that raised under the council tax. Given that it will raise less money, the notion that the average family could be hundreds of pounds worse off does not make sense. The average outcome must be a gain, because we shall be raising less money overall. In fact, because the tax will be charged according to the ability to pay, the vast majority of pensioners, for example, will benefit from our proposal.

That is precisely the focus of the Bill. That is what it is trying to do, in a very inadequate way. We believe, however, that a system in which pensioners who do not pay national income tax would not pay council tax either would be fairer than giving everyone £100 across the board, as that will fail to discriminate between those who pay no council tax and those who are well able to afford to do so.

Mr. Wilshire: I am sure that I heard the hon. Gentleman say that his plans included some extra tax to ease the transition, so he is not actually denying that my constituents will face another £700 a year in tax. What he is saying is that he has a wheeze to put that off for a little while in the hope that people will forget about it, vote for his party, and subsequently pay the extra £700. Is that what the hon. Gentleman is saying?

Mr. Deputy Speaker: Order. I appreciate that the hon. Member for Northavon (Mr. Webb) is now being seduced off the straight and narrow, but I would be grateful if he would avoid being seduced.

Mr. Webb: I shall not find that too difficult in the present context, Mr. Deputy Speaker. As the hon. Gentleman's question has been placed on record, I shall simply say that a tax that raises less money—namely the replacement local income tax—could not possibly create an average loss, let alone one on the scale that he envisages. In fact, there will be average gains under our proposals.

Andrew Bennett: Will the hon. Gentleman give way?

Mr. Webb: Yes, although I recognise your strictures, Mr. Deputy Speaker.

Andrew Bennett: If the hon. Gentleman's proposals would bring in less money, does that mean that councils would have to cut services, particularly services to the elderly? Or would income tax have to go up to meet the shortfall?

Mr. Webb: For the benefit of the record, if the hon. Gentleman had been listening a few moments ago, he would have heard me point out that, of the £5 billion or so that our proposal for a 50p income tax rate will raise, £1.7 billion will go towards easing the transition between council tax and local income tax. That would mean that councils would get the same amount of money. I would have thought that the hon. Gentleman,
 
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as a socialist—if I dare use that term—would favour higher taxation for those earning more than £100,000 a year.

Mr. Nigel Jones (Cheltenham) (LD): To keep strictly in order, Mr. Deputy Speaker, may I say that I welcome the £100 proposal? Will my hon. Friend confirm, however, that under the local income tax, 74 per cent. of my constituents in Cheltenham would be better off?

Mr. Webb: I am sure that my hon. Friend has read a more reliable briefing on that subject than the hon. Member for Spelthorne (Mr. Wilshire), and I am sure that he is correct.

The focus of our debate is pensioners. The Bill is about doing something because the council tax hits pensioners, but the proposal to pay everyone a uniform amount, when some pay no council tax at all and others can afford to pay it, is very poorly targeted.

Far better than an unfair tax system and a rebates system designed to try to redress that—and because that does not work, another lump sum payment—would be a fair local tax system in the first place. That must be the key. The problem at the moment is, first, that we have an unfair and rapidly increasing local tax bill, and secondly, a hopelessly ineffective rebates system—if it worked, pensioners would not feel the pain of the council tax. Because 1 million or more pensioners are missing out on the rebates and are paying the full council tax, the Government's policy has had political consequences. A sticking plaster of £100 to remedy the fact that the rebates fail to address an unfair council tax system is a crazy solution. The House should be aware that the bureaucracy to run a rebates system, which is one way of trying to make council tax fairer, and to levy council tax, costs £600 million. That money should be going on pensions and pensioners. That is another reason why there are better strategies to adopt than that in the Bill.

The alternative strategy, as well as making the local tax system fairer, offers a better system of support for pensioners. Clearly, one of the reasons why many pensioners over 70, who are the subject of the Bill, are so poor is that they do not get the means-tested benefits to which they are entitled. The Government's view is that with one more heave, another publicity campaign and another leaflet, all will be well with the world. The Minister knows, however, that for years to come a structural feature of the Government's mass means-testing strategy is that vast numbers of older people will simply not get the money to which they are entitled. The Government will then recognise that as a political problem, and will have to find a system that people do take up. I accept that winter fuel payments are generally taken up, with men aged between 60 and 64 as the main exception. The Government must use a system that they know works to get money to people, because the other systems, such as mass means-testing, do not work. The Government have an unfair local tax system and a rebates system that does not work, so they have had to patch it up. On top of that, they provide an inadequate pension and conduct means-testing to deal with that inadequacy, and because that does not work, they need another sticking plaster.


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