Angela Rayner was challenged over a local government funding shake-up which could see council tax rising by more than five per cent in London.
The Deputy Prime Minister was warned that London town halls already face a £500 million-a-year shortfall.
She was further grilled in the Commons by Sarah Olney, Liberal Democrat MP for Richmond Park, who stressed that the funding allocated in the recent Spending Review was 35 per cent short of what was being demanded by London Councils.
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Ministers unveiled reforms last week to local government funding which leading economists warned would mean less central government funding for “suburban, leafy” council areas in London and the wider South, which could further damage their financial positions.
Ms Olney, Lib-Dem business spokesperson, emphasised: “Under the government’s changes to local authority funding, the two councils in my constituency, Richmond and Kingston, are set to lose out even more, while the cost of funding local services continues to rise.
“Is it the government’s policy that London residents should continue to receive ever-increasing council tax bills while their local authorities have less and less money to spend?”
Ms Rayner, standing in for Sir Keir Starmer at Prime Minister’s Question, responded: “We are fixing the foundations of local government after 14 years of austerity that was inflicted with the aiding and abetting of her party.”
She insisted that the Labour government was making record funding into local government and offering multi-year settlements.
But the Institute for Fiscal Studies has warned that the proposed shake-up of town hall funding will hit better-off areas in London and the wider South, as cash is channelled to more deprived parts of the North and Midlands.
The IFS also raised the prospect of council tax bills going up by more than five per cent, the maximum for most local authorities, in Westminster and Wandsworth given that they could be particularly hard hit by the reforms and currently have low council tax.
Meanwhile, shadow chancellor Sir Mel Stride warned that “tax rises are coming” after the Government’s proposed welfare reforms were threatened from being blocked by a Labour revolt.
During questions to the Deputy Prime Minister, Sir Mel told the Commons: “The Bill will see the number of people on welfare rising for every single year going forward. There is no commitment from (Ms Rayner) to cut the number of people on welfare.
“And even if they manage to deliver these reforms, almost every respected economist now says tax rises are all but inevitable in the autumn. But after the budget, the Chancellor (Rachel Reeves) said, and I quote, ‘I’m not coming back for more taxes’.
“British businesses have been hit again and again by Labour’s economic mismanagement. They are desperate for certainty, so can (the Deputy Prime Minister) give them that certainty now and repeat to the House the Chancellor’s promise not to raise taxes at the budget?”
Ms Rayner replied that the Tories had “no plan, no idea” and added: “This is a bit rich - unbelievable. Inflation above 11%, the biggest tax rises? By their party. I take no lectures and on this issue in particular, they can’t make their minds up.
“First they said our reforms were taking too long, then they say they were rushed, then their front bench said our measures are too tough, and now they say they need to be tougher.”
