Liberal Democrat leader Nick Clegg privately wanted to give councils powers to impose new taxes including road-pricing, workplace parking taxes and local beer and cigarette taxes, it has emerged.
In his role as Deputy Prime Minister he also said councils should be free to impose a tourism tax, such as taxes on visitors staying in hotels, and to scrap existing council tax discounts including the 20% discount for people who live alone.
The proposals were set out in a letter from Mr Clegg to Eric Pickles, the Conservative Local Government Secretary, in 2011 – but were rejected by Mr Pickles.
The latest revelation about the behind-the-scenes debates within the Coalition government comes as Tories and Lib Dems fight a series of pitched battles in marginal seats such as Berwick-upon-Tweed.
While Conservative leader David Cameron and Labour leader Ed Miliband are the only politicians with a chance of becoming Prime Minister after the general election, many of the seats the Conservatives have a realistic chance of gaining on May 7 are held by their Lib Dem Coalition partners.
Mr Clegg wanted councils to have “a much wider range of taxation and charging powers” which they would be free to use.
The aim would have been to ensure councils were “self-funding” rather than depending on funding from central government for most of their income, as they do now.
Specific proposals in the letter to Mr Pickles included giving councils “complete freedom over discounts rather than mandating them to offer specific discounts to single people, empty homes, second homes etc”.
The letter continued:
“There is a set of further tax powers that could warrant further consideration, including, but not limited to: fuel taxes; sales taxes; landfill taxes; workplace parking levies; utility taxes; ‘tourism taxes’; local airport levies; duties on alcohol, tobacco and other substances; and stamp duty”.
> He left out a Fresh Air tax. Pay-to-breathe…
And the Government should consider give councils charging powers covering “parking charges; speeding fines; waste collection; road pricing” and more, the letter said.
Mr Clegg told his Cabinet colleague:
“We should drive to ensure that local authorities have the greatest range of revenue raising powers at their disposal and are as unencumbered from central government restraints as possible.”
The letter was written as the Department for Communities and Local Government considered plans to allow councils to retain some of the business rates they collect.
But it has emerged now as the battle between the Conservatives and Liberal Democrats in marginal seats becomes increasingly bitter, with the two Coalition parties lifting the lid on internal Government discussions from the past five years in an attempt to embarrass each other.
Lib Dems are defending a majority of 2,690 in Berwick.
Both parties have accused the other of secretly backing plans to impose regional pay – which would mean public sector workers such as nurses or teachers were paid less in the north east than those in the south east.
And Danny Alexander, the Liberal Democrat Chief Secretary to the Treasury, has said that in 2012 the Conservative Work and Pensions Secretary, Iain Duncan Smith, distributed ideas for cutting the welfare bill which included limiting child benefit and child tax credit payments to two children – cutting up to £3,500 from a family with three children – and means testing child benefit, which would cut payments by £1,750 for a middle-income family with two children.
Mr Duncan Smith also wanted to remove child benefit from 16 to 19 year olds, a cut of over £1,000 for parents of a single child, according to the Lib Dems.
George Osborne, the Conservative Chancellor, retaliated by claiming the proposals were contained in a policy document “that was commissioned by the Chief Secretary himself”.
In a statement responding to the letter’s publication now, a Liberal Democrat spokesperson said:
“This Tory spin shows their true colours.
“They simply don’t trust local people and want to govern every aspect of people’s lives from Westminster.
“The proposals in this letter could give local authorities the power to LOWER these taxes in response to the wishes of local people.
“Liberal Democrats believe the best decisions are taken by those closest to the people those decisions effect.
Source – Newcastle Evening Chronicle, 30 Apr 2015
But his key statement on the nation’s finances also confirmed that local councils face years of further deep cuts.
And the Chancellor’s big surprise, changes to Stamp Duty leading to lower bills for many buyers, will have limited impact on the North East because low property prices in the region mean many home buyers don’t pay the duty anyway.
The Autumn Statement also confirmed that outdated Pacer trains still in use on some routes in the North East will be replaced.
Mr Osborne told the Commons that his goal was to create “a more balanced national economy” and that meant creating a northern powerhouse “as a complement to the strength of our capital city, where we bring together our great cities of the North.”
He announced £20m for a Ageing Science centre in Newcastle, to “back the brilliant work on ageing being conducted at Newcastle University”.
There was also £28m for a world-class research and development centre, to be called the National Formulation Centre, that will specialise in the development of products such as medicines and chemicals, based in Sedgefield.
And documents published by the Treasury also revealed plans for a Great Exhibition in the north.
But local authorities face at least five more years of further dramatic cuts in spending, the Autumn Statement confirmed. Funding from the Treasury for local services is to be cut by more than a fifth by 2019-20.
The figures are included in forecasts published by the Office for Budget Responsibility, the official Treasury watchdog, as part of the statement. It predicted that the main grant provided to local councils will fall from £60.3bn in 2014-15 to £50.5bn in 2019-20.
Mr Osborne insisted: “I do not hide from the House that in the coming years there are going to have to be very substantial savings in public spending.”
This would mean cuts of £13.6bn in 2015-16, as previously announced, and “two further years where decisions on this scale will be required”.
He added: “We’re going to have to go on controlling spending after those years if we want to have a surplus and keep it.”
Another key announcement was a change to stamp duty, previously charged on homes costing more than £125,000.
Buyers eligible for the tax paid one per cent or more of the purchase price. In future, stamp duty will only be paid on the portion of the price which is above the threshold, leading to significant reductions for some properties.
However, an analysis of house prices shows that average prices in the North East are below the £125,000 threshold anyway, which means many buyers will not be affected as they pay no stamp duty.
Average house prices are £120,545 in Newcastle, £124,338 in North Tyneside, £123,766 in Northumberland, £99,837 in South Tyneside and £85,438 in Sunderland.
Nonetheless, buyers of more expensive homes will make savings as long as the property is worth less than £937,000.
Responding to questions from Conservative MP Guy Opperman, MP for Hexham, and Labour Sedgefield MP Phil Wilson, the Chancellor also said there would be help for airports in the North if they were hit by a potential cut in air passenger duty in Scotland, following the announcement that aviation duty will be devolved to the Scottish government.
Responding to the statement, Newcastle East MP Nick Brown pointed out that the Chancellor had announced Britain was awarded the lead role in the next international effort to explore the planet of Mars, adding:
“The Chancellor spoke more about Mars than he did about the North East of England. His Northern Powerhouse is located over 100 miles to the South of Tyne and Wear.
“His statement contained no commitment to any type of workable regional policy in the context of further Scottish Devolution. This is grotesquely one-sided. Even his stamp duty changes were focussed on London and the South East.”
But Liberal Democrat MP Sir Alan Beith, who represents Berwick, said:
“The Autumn Statement sticks to our strategy to deal with the deficit, enabling us to release funds for key Liberal Democrat priorities that bring fairness and a stronger economy.”
Source – Newcastle Journal, 03 Dec 2014