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IRRV CONFERENCE: ENVIRONMENT MINISTER DEFENDS PLANS TO LIMIT COUNCIL TAX BENEFIT SUBSIDY

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Environment minister Nick Raynsford today issued a robust defence of unpopular government plans to limit council ta...
Environment minister Nick Raynsford today issued a robust defence of unpopular government plans to limit council tax benefit subsidy - in direct contrast to IRRV president Roger Young's scathing criticism of the proposals.

Mr Raynsford, addressing the IRRV's annual conference in Blackpool, insisted that councils seeking to set high levels of council tax would be forced to be made responsible for the costs of the subsidy: 'This will have no effect on people's entitlement to council tax benefit... But across the country, a fifth of council tax is actually met by the exchequer by means of council tax benefit subsidy. Where councils choose to set high levels of council tax, they should not be able to rely on the national taxpayer to pick up the full cost of their decisions.'

He added: 'We will therefore change the council tax benefit subsidy rules so that more of the cost of local decisions falls locally. That will safeguard one of the government's interests in local taxation - the consequences for its own expenditure of decisions in which it has no voice.'

On Tuesday, Mr Young accused the government of using the plans 'reintroduce capping by the back door'. Ministers intend to cut subsidy to councils which set council tax by more than a guideline figure.

Mr Raynsford pledged that the new system would include 'safeguards to ensure that areas with higher than average numbers of claimants do not lose more than the average. And arrangements will ensure that where the upper tier authority is responsible for the excessive tax rise, it is also responsible for the resultant loss in subsidy'.

He also defended the government's refusal to undertake a revaluation of properties for council tax purposes: 'It would lead to a major disruption to the system which the majority of households would find difficult to understand. It would be a major expense at a time when both government and local authorities have higher priorities. It cannot be justified.'

On plans to allow councils to levy a 'modest' supplementary business rate - 1% of the national rate, rising to 5% over five years - Mr Raynsford confirmed that the additional rate would be linked by statute to council tax levels.

But he did suggest more flexibility could be won, given the support of ratepayers: 'We could... envisage the link being broken with the agreement of local business.'

The government already intends to allow beacon councils to levy an extra 5% rate which will not be linked to council tax levels.

Taking questions after his address to conference, the minister said he thought it was 'inevitable' that there would be more discussions about councils providing services across boundaries. But he indicated that he felt pooling services might be preferable to formal cross-boundary tendering services, which could breed 'animosity' between councils.

- full copies of Mr Raynsford's speech are available on request from LGCnet. Tel 0171 833 7324/5.

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