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Lord Rooker: My Lords, I apologise for the confusion at the beginning. The annunciator suggested that the Statement would be at a convenient time after Questions, and no one had informed me that that would be immediately after Questions. I assumed that we were going on to legislation.
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I shall deal with as many of the points as I can, in reverse order. Schools funding was not within the remit of the balance of funding anyway, but ring-fencing will halve the gearing ratio for non-school services. In that sense, it will increase councils' financial flexibility. That is a major issue, obviously, because education is so important.
The members of the inquiry will be absolutely independent, because there will not be any. Sir Michael Lyons will conduct the inquiry at the request of the Chancellor of the Exchequer and the Deputy Prime Minister. He will be fully supported, of course, by officials from across Whitehall and by local government experts, and will have full powers to call for evidence from other stakeholders. He will conduct the review on the same basis as Kate Barker did the review of housing supply. The post was not advertised, but no one will question the independence and probity of Sir Michael Lyons, given his track record and his service to local government.
There is no disagreement within government. We are trying to show that we have learnt the lessons from getting rid of the unpopular rates. We never really had a balance of funding review and discussion before the poll taxthe holy grail. The duke and the dustman were to pay the same; that was the phrase used. Those who proposed that came unstuck. A secret inquiry was conducted within government by the great and the good, saying that the poll tax would be a good idea. I shall not list the names on its front cover, because it is embarrassing for people who are still around. We will think about the matter carefully. We are affecting people's lives in a massive way, because council tax is clearly the most visible tax that people pay, so we have to be very careful about the changes.
There may be a consensus that council tax is unfair, but there is no consensus on an alternative. Whatever people might think about a quick-fix, simple option, there is no consensus on it. I do not think that the noble Baroness, Lady Hanham, indicated that.
The terms of reference have been published today with the press release. I am happy to read them out, but they come to 300 words and that would take an excessive amount of time. I have given a broad summary of what Sir Michael will be asked to do.
The membership of the balance of funding review, in this House as in the other House, was varied. There were people representing local government, such as the chief executive of Luton council, the director of finance of Wigan, the chief executive of Manchester. The group director of corporate affairs of Tesco also attended. The local government trade union, Unison, was also represented, as were academics and, importantly, the leaders of the Liberal Democrat and Conservative groups at the Local Government Association. Let us not run away with the idea that this was a secret government cabal behind closed doors. Three political parties, a trade union, Tesco and Uncle
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Tom Cobley and all in terms of local government and academics were involved in the review. They are all listedthere is no secret about itso it was a report to the Government and not by the Government.
The rise in property values has not been evenly spread across the country. If that were the case, we would not need a revaluation, because the percentage and the ratios would be exactly the same. The revaluation has been legislated for and will proceed. There is the question of the economics versus the politicsat some time those issues have to be in the balance. If we were to farm all that out to officials and academics they would come up with a brilliant system, but it would not be acceptable to the people. That is the role of us grubby politiciansto find a way forward, to raise the taxes and provide community services in a way that is acceptable to as large a majority of people as possible. Our role is also to give local government greater accountability. At present, only 25 per cent of funding on average is raised locally and 75 per cent comes from the general taxpayer. That is partly the result of the nationalisation of business rates.
I have to say the following in response to questions: we have set up an independent inquiry and it ill behoves me to give any answers, because I do not know what it will come up with. However, I hope that it comes up with the holy grail, because that would be helpful to everybody.
Lord Rooker: My Lords, the review may have looked at part of that issue, but the inquiry that Sir Michael Lyons will conduct will look, as I said in my Statement, at a mixture of things such as charges. We pointed out that some small charges do not make a differencewe are talking about billions of pounds. The amount currently raised by the council tax is something like £19 billion, so even small charges are miniscule. Certainly, there are no no-go areas, although we have said that it is a matter of the reform of council tax, which may be added to other taxes or a combination of other taxes. Looking at charges is not ruled out, but it is not a panacea.
Lord Smith of Leigh: My Lords, first, I would like to declare an interest as the leader of a council, Wigan, in fact, whose treasurer was a member of the balance of funding review. I am sure that the Minister would agree that the council tax was accepted largely because it was not the poll tax. If we can agree that there is a need for a property tax, let us consider renaming it, because the council tax was not well designed.
Secondlyand the Minister will remember that I raised this matter during the last Local Government Billwill he agree to refer to the Lyons inquiry the prospect of introducing an annual uplift to a property tax based on house price inflation? That would
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increase the buoyancy of any property tax and would also avoid the political pitfalls of a periodic revaluation.
To that extent, people can put their evidence and Sir Michael will no doubt be swamped with all the schemes that could be helpful. Then he will be required to make recommendations on any changes that are necessary to implement them.
The noble Lord said: My Lords, with this amendment I will speak also to government Amendments Nos. 2, 5 and 12. The amendments have been tabled in response to arguments put forward in both Houses of Parliament. There has been considerable debate about whether local authorities, as well as fire and rescue authorities themselves, should be included in the list of those to be consulted on the making, variation or revocation of combined schemes. To allay concerns expressed, we have stated our aim to allow for the widest possible involvement of all affected stakeholders, including local authorities.
We did not wish, however, to list in the legislation every category of organisation that should be consulted on a scheme on the basis that such a list could never be exhaustive. That said, we recognise that local authorities are in a unique position. That point was made from all sides of the House. We think that the Bill should reflect this. They are democratically elected bodies representing people of the areas involved in any proposed combination scheme, and they are also bodies from which the existing fire and rescue authorities are constituted. The amendments therefore add an explicit requirement for the Secretary of State to consult local authorities on the making, variation or revocation of combination schemes where all or part of an area forms part of the area which would be or is covered by the scheme. I hope that that demonstrates our commitment to an inclusive approach.
Amendment No. 12 adds a new clause in order to define "local authority" for the purposes of the Bill. I therefore respectfully request noble Lords to accept
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the amendments in the spirit in which they are moved. They are born out of experience in this House and in the other place. I beg to move.
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