HL Deb 15 December 1988 vol 502 cc1119-20WA
Lord Campbell of Alloway

asked Her Majesty's Government:

What are their latest estimates of the number of gainers and losers of the community charge on household finances.

The Earl of Caithness

We have today placed in the Library a note updating figures for the impact on household finances of the community charge. The new figures show that:

  • —when fully implented 58 per cent. of households (11.1 million) will gain from the introduction of the community charge;
  • —83 per cent. of single pensioner households and 75 per cent. of other single adult households will gain from these proposals;
  • —percentage gains in net income are largest for the lowest income households;
  • —community charges on average would be less than domestic rates in all income bands up to £200 per week.

The community charge will reduce the burden on the poorest. The lowest group will pay less for local government. On average, their rates after rebates account for 3.9 per cent. of net income, whereas the community charge accounts for 3.0 per cent. Of course there will be gainers and losers in any change but these figures show that the community charge with its rebate system cuts the direct cost of local government on the poorest (those households with less than £50 a week) by nearly 25 per cent.

Many poorer people pay more in rates than those who are better off, even in the same local authority, because there is no necessary connection between rateable value and ability to pay. Generally, people buy their homes while they are working, when their incomes are at their highest, but remain in the home and have to continue paying the same rates when they retire with reduced incomes. So it is no surprise that 41 per cent. of households living in homes with above average rateable values have below average incomes.

These figures demonstrate that the majority of households will in fact gain from the community charge; that the poorest households stand to gain; and that domestic rates do not reflect ability to pay.

The revised figures take account of amendments made during the passage of the Local Government Finance Act 1988, local authorities budgeted spending levels in 1988–89 and the 15 per cent. community charge rebate taper announced on 14th April and incorporate the uprating of social security benefits announced for 1989–90.