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Last Updated: Sunday, 11 January, 2004, 13:46 GMT
Pensioner protest
Jeremy Vine interviewed the Local Government Minister, Nick Raynsford MP on Sunday 18 January 2004

Please note BBC Politics Show must be credited if any part of this transcript is used.

Local Government Minister, Nick Raynsford MP
Local Government Minister, Nick Raynsford MP

Jeremy Vine: We're joined now by the Local Government Minister, Nick Raynsford. Welcome to you.

Nick Raynsford: Good morning.

Jeremy Vine: He's right to be annoyed isn't he, Ken. His pension goes up a 100 a year, his council tax goes up 154 pounds a year.

Nick Raynsford: I've a lot of sympathy with people like that. Many other pensioners on fixed incomes, who've seen disproportionately large increases in council tax, particularly last year. And we expect to see real efforts made by councils in the coming year, to keep the council tax down.

It's simply not sustainable or acceptable for further large increases, particularly at a time when the government has been giving very generous increases in grant to local authorities. There's been a huge increase from the time when David Curry was minister, when councils were actually seeing their grants cut.

Over the last six years there's been 25% real terms increase in the grant. There's a further real terms increase in grant coming in the coming year, and we expect councils to use that money, budget prudently and keep their council tax levels down.

Jeremy Vine: But those are sweeping generalisations you're giving us on the figures, that's the whole country, that's no good to Ken.

Nick Raynsford: It is actually because it applies everywhere. Every council in England had an above inflation grant increase last year. Every council in England will have an above inflation grant increase this year.

Jeremy Vine: But it's not enough is it because the government wants councils to spend more on certain things, and the money you're giving the councils isn't taking account of that.

Nick Raynsford: Two points on that. One is we'd look very carefully at additional spending pressures. I operate what is called a new burdens principle, which expect any government department that puts additional demands on councils to fund fully the cost of that. But secondly, and this is something that hasn't come in to the debate so far, we really do need to improve efficiency. There is enormous scope for savings through more efficient delivery service and if local authorities apply themselves to doing that, most of them can find it perfectly possible to cope with the pressures on them, to deliver services efficiently, and to keep their council tax down.

Jeremy Vine: All right. Back to your first point though about new burdens. North Somerset, Ken's council, are having to now take account of a new policy from David Blunkett, Community Policing. It's making policing more expensive for them they say, they haven't got money from you to cope with that.

Nick Raynsford: North Somerset had a 7.9, 8% increase last year. They've got a similar increase this year.

Jeremy Vine: (overlaps so inaudible) ..... account of that.

Nick Raynsford: Three times, three times the rate of inflation. Very large increases. And if you look at surrounding counties, you saw a number of other authorities with similar (interjection) .... no, authorities with similar needs, similar grant levels, coming in with much lower council tax increases last year. That's the test. Can the council budget prudently and keep its council tax down. (interjects) Some can, some haven't, and those that haven't and North Somerset was one of them, I think should be looking at how they can make savings.

Jeremy Vine: But are you recompensing them for example for the extra cost of additional national insurance contributions, for the extra cost of landfill tax, which means that throwing away their own residents rubbish is more expensive.

Nick Raynsford: No we are, we are putting extra (interjects), we are putting extra money for the new burdens that I've described. Just let me just take North Somerset. North Somerset got almost exactly the same grant increase last year as the surrounding unitary authorities that have similar responsibilities of Bristol, South Gloucestershire, and Bath and North East Somerset. All those other three managed substantially lower council tax increases than, than North Somerset. Doesn't that suggest that North Somerset should be looking at the way it budgets and how it runs its services and how efficient it is, rather than asking for more money.

Jeremy Vine: You are telling us that you are fully funding all these extra burdens are you.

Nick Raynsford: We have a policy that says we fully fund any additional burdens on local government. Now obviously there is always a debate. Currently there is a debate about licensing fees, it's a very difficult one because the DCMS, the Department of Culture, Media and Sport, will set figures designed to ensure that local authorities can cover all their costs, and there's a debate going on. But costs vary from area to area and some councils says the fees won't be enough.

Jeremy Vine: All right.

Nick Raynsford: Now the question is, is that because the council isn't efficient, or is it because there are genuine pressures that it needs to meet. But we aim, if I can stress this, to ensure a system is in place to ensure that any efficiently run council can cover its costs through additional grant.

Jeremy Vine: (overlaps) Okay let's pause there. This is not just a problem with the South, it's not necessarily a problem caused by reckless councils. We're joined from Newcastle now by Richard Moss, our political editor there.

INTO Hartlepool section

Jeremy Vine: Richard Moss thank you very much indeed. What do they do, they've done everything by the book.

Nick Raynsford: Well Hartlepool has got a 4.5% increase in grant for this year, which again is significantly above inflation. They have been well managed in the past, but I'm afraid that one of the consequences of the rather extraordinary election result when they elected the football mascot as mayor.

Jeremy Vine: He's wearing a suit now.

Nick Raynsford: Well, maybe, but there's been a serious loss of the senior executives from Hartlepool, who are responsible for the excellent delivery of service. And I think you'll see if you go to Middlesbrough, that they're benefiting from a shift of staff who were previously in Hartlepool.

Jeremy Vine: That's a little bit unfair isn't it because the bottom line is, you've told them they've got to be efficient. You send the audit commission round and they say well done to Hartlepool, they are efficient.

Nick Raynsford: Yeah.

Jeremy Vine: You say the more efficient you are, the more autonomy we give you, and low and behold now you're thinking of capping them.

Nick Raynsford: No. What we're saying is we expect them to budget prudently. They've had an above inflation increase in grant. We expect them to do well, as they did last year, keeping the council tax down and we will only use our capping powers if councils impose unreasonably large increases, because it's simply not right for pensioners like Ken and others, to be faced with very large council tax increases, at a time when they're trying to live on fixed incomes.

Jeremy Vine: But they could in their eyes be behaving very efficiently, while having to now raise the council tax. That's where you and the council don't see eye to eye isn't it.

Nick Raynsford: Well, at this stage we're waiting to see what Hartlepool do, but I sincerely hope that they won't try and impose an unreasonably large increase. I hope they will look carefully at their budget, ensure that they're delivering value for money services, and keep the council tax down.

Jeremy Vine: Well we heard our man up there who's a bit closer than both of us, saying that they seem to be doing pretty well.

Nick Raynsford: Well as I say they were, they were an excellent authority. They got a very high rating. There has been a change in the management team in the last year or so. I hope that that won't adversely affect their performance, but I think they need to be looking very carefully, not resting on their laurels.

Jeremy Vine: Well some councillors and councils are starting to say enough is enough. What about other options like a local income tax for example. Amanda Parr, from the Politics Show in the West of England joins me now.

INTO Bristol section

Jeremy Vine: Amanda thanks very much indeed. You've got a review going on Nick Raynsford haven't you.

Nick Raynsford: We do indeed.

Jeremy Vine: (overlaps) .... options open.

Nick Raynsford: We're looking very carefully at a range of options including the possibility of a greater focus on income, but I have to say the idea of a local income tax may sound nice and may sound fair when it's put over, but when you begin to look at the detail of how it would be administered, and what the implications are, there are all sorts of problems.

For example, properties don't move but people do. If you are trying to trace people and their movement and attribute a part of their income tax to different councils, that is an extra administrative complication. Further more, there is a very obvious problem that quite a lot of people don't pay income tax.

Is it really serious to suggest they should make no contribution at all towards local services. Obviously, where they're on very low incomes they shouldn't because they should be supported.

But there are others who would be simply left out of any contribution, including some very very well off people, who actually aren't paid through income. Company directors, who are paid through the corporation system.

They pay corporation tax but they're not subject to income tax. Is it really seriously suggested that some half a million, some of the wealthiest people in the country should be exempt from making an contribution towards local services.

Jeremy Vine: Well you will have been watching the pensioners on their march yesterday and they had a sign, we saw it in the film saying, don't cap it scrap it. So they're thinking quite radically aren't they.

Nick Raynsford: Well it's always very easy to say scrap things. The problem is, what you put in their place. The Tories, fifteen years ago, were very worried about the rates and because of that they scrapped the rates and they replaced it without thinking through the implications and the result was the disaster of the poll tax.

We're not going to do that. We are looking very carefully at alternatives, we're analysing them, looking at the ups and the downs, the difficulties and the advantages of different systems.

Jeremy Vine: Could you scrap it though.

Nick Raynsford: I think it's unlikely that we would wholly do away with a property based tax. It would leave this as one of the very few countries in the world which didn't have a tax on property, so I think it's likely that there will be a continuing element of council tax, but whether there should be additional revenue sources for local government, whether there should be some changes in the balance between the different elements that contribute to the cost of local spending, those are the key issues we're looking at.

NB: this transcript was typed from a recording and not copied from an original script.

Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, the BBC cannot vouch for its accuracy.

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