Localism Bill

Debate between Graham P Jones and Mark Reckless

Monday 7th November 2011 Commons Chamber

[Mark Reckless (Rochester and Strood) (Con)]

I shall address my remarks to the amendments relating to referendums—Lords amendment 112 and the excellent counter-amendment tabled by my hon. Friend the Member for Richmond Park (Zac Goldsmith)—and to the Minister’s remarks about council tax referendums.

It occurs to me to wonder how our counterparts in the United States Congress or the German Bundestag might look at our debate. It is about the Localism Bill, yet we seek to prescribe almost every last detail of how and when a locality might consult its people on an issue—whether that consultation should be binding or non-binding, how far it extends, and what exactly should be the trigger of signatures or the turn-out required. An alternative way of doing this, even if there were certain minimums, would be to allow localities themselves to experiment on what works best for them and to consult their residents as they wish.

I agree with the Government that the Bill introduces an improvement—at least a small one—in relation to a council tax referendum, in that when a local council comes up with a proposal for a level of council tax, it is somewhat better that central Government might require a referendum on that level rather than merely disagreeing with it and putting in place one that central Government happen to prefer. The local authority is the single body that is setting the council tax, then central Government come in with a successiveness tax test, and then there has to be a referendum.

I am concerned about how the Bill interacts with the Police Reform and Social Responsibility Act 2011. The way in which the police precept is set has some very special aspects relative to other local government precepts. The first of these is that the police precept is a pretty small proportion of the overall council tax, so setting a percentage increase above which it is required to have a local referendum acts as a far greater disincentive to placing a precept above that than it does for local government, because the proportionate cost of having a referendum for the police precept is far higher—perhaps up to 2% of the police budget. That makes it extraordinarily difficult for a police body to attempt to go beyond what central Government have set as that trigger.

Overall, I am concerned that setting these referendum requirements undermines the incentive to vote for local politicians who want to stand on a lower-tax basis. If central Government are in any case providing an automatic safeguard so that even if there is an enormously left-wing council that wants to push up the council tax by a huge amount, that reduces the incentive to vote for politicians who believe in lower taxes.

[Graham Jones]

I remind the hon. Gentleman that my left-wing Labour council is setting a 0% council tax level for the forthcoming year.

[Mark Reckless]

The hon. Gentleman’s Labour council, like every other council in the country, has set a 0% council tax level because this Government, who believe in localism, have come in with an offer they cannot refuse.

I was a councillor for four years, and I am afraid that such measures do not just reduce the incentive to vote for parties of the centre right: it sometimes leads to good Conservatives taking offsetting measures to give themselves greater scope for freedom from central Government. My own council of Medway had virtually the lowest unitary tax in the country outside the Scilly Isles, yet when we attempted to put in a tax increase that was very slightly above the standard percentage cap that was set, we were not designated but put under the process whereby action would be taken against us the following year if we did not pull our socks up. In fact, our increase was far lower, in absolute terms, than increases of similarly sized councils elsewhere.

The problem is the fear of being capped—of not knowing what the level will be next year—and possibly even the fear of being forced to have very expensive referendums with very embarrassing results for the local politicians, particularly if they do not succeed, and for which their locality has to pay for in any event. That may lead some councils, even good Conservative ones, to put up council tax by more than they otherwise would in a particular year so that they have a higher base and there is less concern that they might get capped in a future year in needing to put through a substantive increase.