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Howard: Council tax has become another stealth tax under Labour

Speech to the Conservative Councillors' Association Annual Conference in Watford

"I want to start with congratulations, congratulations to all of you whose hard work and dedication have made us once again the largest party in local government. We have almost 8,000 councillors and we run 137 councils in Britain.

These gains we made last May in the local elections owed a great deal to the leadership of Iain Duncan Smith and I take this opportunity to pay tribute to him today.

But the credit goes to you as well, for keeping the Conservative flag flying, for making a reality of our belief that sensible Conservative policies cost you less, and for laying the foundations for our victory at the next election.

When we win the next General Election, as I believe we can, we will never forget that it was your hard work that helped to put us there.

Across the country, there is concern about the high levels of council tax. Since 1997 council tax has soared by 60 per cent in cash terms. Every year the average council tax increase has been almost triple what it was when we were in power. This year alone, council tax rose by almost 13 per cent - its highest ever one-off increase.

The average council tax on Band D properties has now reached four figures - at more than £1100.

Labour thought they could use the council tax as another stealth tax. They slipped through the back door of the council tax what they dared not pass through the front door of income tax.

But the trouble is that people have noticed. When pensioners start to march, you know you're in trouble.

Labour has made the council tax shoulder a burden it was never meant to carry. They have disfigured it. Increases in national insurance and the raid on pension funds have both hit councils directly.

Labour has piled on regulation after regulation, responsibility after responsibility, burden after burden without giving local councils the funding to do the job.

Councils are forced to contend with rampant public sector inflation, a startling increase in litigation, additional responsibilities such as the new Licensing Act, and an ever more complex funding formula. More than half last year's increases are caused by national pay and price inflation.

Something has had to give, and it turns out to be the council taxpayer.

Labour's reaction to this home grown crisis has been one of panic and intimidation. Ministers are now threatening to cap councils the length and breadth of the country. In fact they are threatening to cap more councils in one year than the last Conservative Government capped in 18 years. When it comes to localism Labour's actions speak far louder then their words.

Who was it who said he was "wholly opposed to the capping of a council's budget. It is an abuse of central power, it demeans democracy, it undermines the right of local people to decide what services they are ready and willing to pay for"?

Those aren't my words. They were the words of Jack Straw when Labour were in opposition. But then we know all too well that Labour say one thing and do another.

When Labour are faced with a problem their immediate solution is to create more politicians and another expensive layer of bureaucracy.

Across our nation, there are areas with strong regional identities. People are proud to call themselves Yorkshiremen or Cornishmen. But a Yorkshireman or a Cornishman is proud of his county, not some soulless region drawn up by Whitehall. We salute that. And we do not believe a strong regional identity is boosted by creating another tier of government.

Labour's plans for regional assemblies are unnecessary, expensive and out of date. At a time when more and more people are crying out for power for themselves. Labour is planning to make government even more remote.

The regional assemblies will have vague and undefined powers and a license to meddle in the affairs of local areas. They will take crucial decisions that are much better taken at the local level. Who are they trying to fool when they say that regional assemblies, the abolition of counties, and yet another wholesale upheaval of local government would mean the devolution of power.

People want more policemen, not more politicians; more nurses, not more political nursemaids; more teachers, not more tiers of bureaucracy.

Of course, the Liberal Democrats fully support Labour's plans for regional assemblies - with bells on. As well as being another layer of Government, their Regional Assemblies would be able to levy a regional income tax.

This would come on top of their plans to replace the council tax with a Local Income Tax. It was launched with great fanfare at the local elections last year - although a briefing note left behind at their conference gave the game away.

It said "You might be asked about the rate of local income tax…we don't want to be drawn extensively into this!"

Well, if the Liberal Democrats can't or won't answer your questions, perhaps I can.

A local income tax would hit many more people much harder than the council tax.

Students, currently exempt from council tax, would have their holiday earnings subject to a local income tax.

Young people, in their first jobs but still living at home, would have their earnings subject to a local income tax.

A young couple where both are working would both have their earnings subject to a local income tax - making them more than a £1000 a year worse off.

Pensioners who have saved all their lives to give themselves an income in retirement would have their retirement earnings subject to a local income tax.

Businesses would have to administer the tax - having to adjust their payroll to take account of employees who lived in different areas from each other.

More people would avoid tax. Currently, the council tax is the most efficiently collected tax of all.

The Liberal Democrats' local income tax is a pickpocket's charter, unfair, unnecessary and undemocratic.

I know how frustrating it is to campaign against the Liberal Democrats. They claim credit for any success, and distance themselves from any failure.

They won't tell the public what their policies mean - so we must.

Every one in this hall today must spread the word about the Liberal Democrat Tax.

I recognise that there is an urgent need to find the right way forward for local government.

People want local services locally delivered.

Local government has come to a fork in the road. Either it is to become simply a delivery arm for central Government, or it is to be given back real powers to deliver services and raise money.

Labour has sucked the lifeblood out of local discretion. Of all the world's major economies, the UK government exerts the highest degree of control over local government.

Labour's so-called "new localism" is simply a set of new plans, new legislation, new guidance, new financial controls and bidding systems and new inspectorates. Local government inspectors now receive £1 billion a year in taxpayers' money. The proportion of a council's grant which is ring-fenced by central government has more than doubled since 1997. And much of the rest is hedged around with restrictions, conditions and limitations.

Labour is addicted to targets and regulation. It simply cannot let go.

There's a questionnaire that's been developed by a well known clinic. It's designed to help people face up to their addictions. So here are some helpful questions to find out just how bad the Government's habit really is.

- Do you use regulation to help cope with your problems?

- Is regulation affecting your reputation?

- Have you lost friends since you started regulating?

- Have you ever tried to quit or cut back regulating?

- Do you need to regulate more than you used to in order to get the effect you want?

Sadly I think we all know the answer.

This huge bureaucratic burden wastes money and saps at the very heart of public service, weakening motivation and innovation. Good nurses, care workers and teachers are leaving their jobs because of the weigh of regulation and control.

A Conservative Government will reverse this tide.

We will halt the flood of tax and regulation which is drowning local government.

We remain committed to abolishing the Comprehensive Performance Assessment scheme, the Best Value scheme and a substantial number of the statutory plans.

Local government in this country used to be the engine of innovation. Councils had the power to both succeed and fail. Nearly all the public services we now take for granted were invented locally. Water, sewerage, gas, education, a safety net for the poor - all of these services for local people were pioneered by enterprising local corporations whose leaders were great men of their times and who brought real improvement to life in their cities and communities.

We want to start the journey back to what local government used to be. We announced our review of local government finance at last year's party conference. We will be announcing the results shortly. Our plans will be rooted in the principles of freedom, responsibility and independence. In our belief in local democracy. In our desire to bring about stability and avoid costly upheaval to local government. And in recognising the need to lighten the load of the council taxpayer.

Together we want to deliver a winning formula to help you carry on delivering the best services for local people.

I want to see a more balanced relationship between local and central government.

Most people go into local government to represent their local communities. Councillors do an important job, for little or no money.

It is time to give you back the respect you deserve for the hard work that you do.

We have important local elections in June. And then, in all probability, there will be just 12 months until the general election.

I did not take this job to be a caretaker or to reduce the Government's majority. I took it to win. Not for my sake. Not for our party's sake. Not even for the sake of the people in this room. But for the country's sake.

This week we saw just how urgent it is for us to win the next election when it became clear that the prime minister cannot even be bothered to ask the most basic questions about a matter as vital as our going to war.

Tony Blair's casual approach runs through every action of his government.

It is a Government that is taxing and spending and failing.

It is a Government that has lost the trust of the British people.

It is a Government that breaks its promises to the British people.

It is a Government that is incapable of delivering real reform.

Tony Blair may talk about giving power back to people. But the truth is he cannot deliver. He can't deliver because his Party won't let him deliver; because the trade unions won't let him deliver; and because his Chancellor won't let him deliver.

Sixty tax rises and no real improvements in our public services. Hospital waiting lists are still near the million mark. Truancy rates in our schools are still far too high. Crime is rising, particularly violent crime.

It is a Government which is wasting huge sums of our money. I have asked David James to look at how to root out Government waste. You may remember him. He was the man the Government called in to sort out the Dome. In a backroom of the Dome, a place called Yard 10, he found £80 million of unused equipment.

We believe that the Government has a Yard 10, and we are going to find it.

We are going to look hard at the level of tax in this country. Only last month, at the Chancellor's own enterprise summit, the chief executive of Tesco commented that "the level of taxes seems to be forever rising. The water is now above our waist. National insurance, corporate, property and employment taxes are now over 50% of our profits…What saps our strength are high taxes, excessive regulations, inflexible working practices, and the gold plating of EU directives".

Well, we have heard that cry and we are going to listen to it.

Oliver Letwin, the Shadow Chancellor, has already set out the problems created by an over-complex and opaque tax system. Very soon, he will set out his strategy for dealing with the inexorable rise in Government spending.

But our major focus in Government will be making our schools and hospitals as good as possible. I make no apology for that.

The next Conservative Government will deliver the public services that people want. The reason I came back into front-line politics because I was genuinely shocked, from my own experience in my own constituency, about the decline in our public services.

I want to win the next election to put that right. To give the people who use our public services - the parents and the patients - control.

To allow them to choose where to send their children to school or when and where to have their operation.

To see more policemen on the beat instead of behind a speed gun.

To let people keep more of what they earn to spend on themselves and their families.

To see Britain do better.

We all know that the Conservative party is in good heart. Thanks to all of you here today we are back in business. You have shown that Conservative government at local level across Britain can make people's lives better. That's not theory, that's reality.

Now it is up to those of us in Parliament to show the people of Britain that a Conservative government can do the same at the national level.

Labour have failed the people of Britain. Above all, they have the lost their trust.

I genuinely believe that the Conservative party can bring to government a new approach to Government.

A government that is honest.

A government that is competent.

And most important of all, a government that trusts the people. That is our mission. With your help I know we can achieve it."

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