HC Deb 28 May 1970 vol 801 cc2095-107

5.22 p.m.

The Minister of Housing and Local Government (Mr. Anthony Greenwood)

I beg to move,

That the Rate Rebates (Limits of Income) Order 1970, a draft of which was laid before this House on 15th May, be approved.

The purpose of this draft Order, which I commend to the House, is to maintain broadly the coverage of the rent rebate scheme which was first introduced in the Rating Act, 1966, in provisions now consolidated in the General Rate Act, 1967. The House has already approved in February this year the corresponding Order for Scotland. This Order is being debated in another place today.

As the House knows, the object of the rate rebate scheme is to cushion the impact of domestic rates on those householders with low incomes who are not already being fully helped with their rate bills by way of supplementary benefits. I know that the whole House will agree with me that the rate rebate scheme is of the very greatest social importance. For example, in the financial year 1968–69 the number of rate rebate recipients in Herne Bay as a proportion of the domestic ratepayers in the area was 15.9 per cent. with an average rebate of nearly £19; in Morecambe and Heysham, it was 14.9 per cent., with an average rebate of £26; in Thornton Cleveleys, it was 13.4 per cent., with an average rebate of £18; in Margate, it was 1..6 per cent., with an average rebate of £20; and in Chepstow, it was 13.7 per cent., with an average rebate of nearly £16. In all, in 1968–69 nearly 850,000 ratepayers benefited and the average rate rebate was just over £16.

The scheme provides for rebate of two-thirds of the amount by which the applicant's half-yearly rates exceed £3 15s., provided that the ratepayer's income is within certain limits. It is with the income limits that we are concerned in this Order.

At present the income within which the rebate is payable is £11 a week for a married couple and £9 a week for a single person, with additions of £2 a week for each dependent child in the household.The Order proposes that the qualifying limits should be raised to £12 5s. a week for a married couple and £10 for a single person. There is no change in the addition for a child. In the Order the revised income limits are expressed in terms of the six-monthly rebate period.

The reasons for raising the income limits are that over the last two years money incomes have been rising and, in particular, last November the State retirement pensions were increased. About 80 per cent. of those who are entitled to rebate are pensioners. Although the income limits of the scheme are well above the amount of pension, more and more people who are retiring will have a little income in addition to the State pension—perhaps as a result of savings, perhaps as a result of a pension from their previous job.

It is these people, who may be on or near the present qualifying limits, who would stand to lose part of the benefit of the increase in pensions if the limits were not raised. Two years ago, after the 1967 increase in retirement pensions, we took steps to increase the qualifying limits for rate rebates. We think it right to increase them again.

The increases will also benefit some householders with low earnings which may have risen so that they have found themselves temporarily above the qualifying limits and also a few householders whose incomes have hitherto been just a little above the limits and who will benefit for the first time.

When the new limits come into effect it will mean that a married couple with, say, three children will still he eligible for full rebate if their income, including family allowances, is around £18 5s. a week, or £20 5s. a week if they have four children. Benefit does not, of course, cease suddenly at these limits. Some rebate is payable even if income is a little above the limit, but it is on a reducing scale.

The Order, if approved, will come into effect in time for the next rebate period which begins on 1st October. The date from which applications may be made for that period is 1st August. That explains why the Order is to come into operation on that date.

It is very difficult to estimate exactly how many people are likely to have the particular combinations of income, family circumstances and rate bills which entitle them to benefit. Almost 900,000 households in England and Wales benefited from rebate in the first full year in which the scheme operated—1966–67. The numbers fell in the following year, but rose again to a figure just short of 850,000 after the income limits were raised in October, 1968.

For the last year, 1969–70, the returns are only now being received, but they suggest that the number in the second half of the year was about 800,000. If the Order is approved, the effect, by and large, will be to restore the number of recipients of rebate in England and Wales to round about the 850,000 mark.

In financial terms, rebates have totalled £12 million to £14 million a year. I expect this sum to increase slightly in the coming year, not so much because of increased numbers of recipients—since the purpose of the Order, as I said, is to maintain the coverage of the Scheme—but because of somewhat higher rate bills. A total of 75 per cent. of the cost to the local authorities is met by Government grant.

In asking the House to approve the Order, I hope that I may be allowed to say how much I appreciated the kind references which were made to me by the hon. Members for Ormskirk (Sir D. Glover) and Poole (Mr. Murton), two days ago. In saying goodbye to the House, for which I have great affection and respect, it is only right that I should place on record the sense of privilege which I have that I should have been a member for so a long a period and should say, too, how greatly I value the many friendships which I have enjoyed—and which, I hope, I shall continue to enjoy—with hon. Members on both sides of the House.

5.29 p.m.

Mr. James Allason (Hemel Hempstead)

The rate rebate scheme was intended as a temporary measure pending the reform of the whole system of local government finance which was suggested in the Labour election manifesto in 1964. After waiting for six years, we are as far from seeing the end of this horrid system of rates as ever we have been.

This scheme, although intended as temporary, seems to have become a per- manent fixture. It is a notable example of a means test—a means test introduced by a Labour Government who say that they do not like means tests. But I congratulate them on this scheme because it has selectively benefited a large number of people. The Minister told us about the cases particularly at seaside towns where there is a serious rate problem because of the number of elderly people who live there. My hon. Friends support the scheme and are glad that it is operating as well as it is. I remind the Minister that when it was originally introduced it was said that it would benefit about 2 million people. We learn that it is benefiting only 800,000 people this year.

The Minister claimed that the reason for this change is rising money incomes. It was right for him to use the phrase " money incomes ", because this is a relative matter. The true reason for this change is, of course, rising prices. The £ in one's pocket is being constantly devalued. Under Labour we have found the poor getting poorer; and this Order is one means of helping those who are in considerable distress.

The retirement pension buys less now than it did five years ago and once again we have before us a chance of giving those concerned a little help. The rates burden is particularly heavy on those with small incomes. Indeed, a great objection to rates is that it is a regressive form of taxation which bears most heavily on those who can least afford to pay, who are those just above the supplementary benefit level.

The Minister mentioned that those at the supplementary benefit level had had their rates taken care of, so that the rates were not a serious matter for them. But rising rates represent an extremely serious problem for those on small incomes and particularly for those on small fixed incomes.

Dame Irene Ward (Tynemouth)

Hear, hear.

Mr. Allason

When this scheme was introduced the average sum paid by a householder in rates was £36. I should be interested to know what it is today. Two years ago it was just on £42 and I suspect that today it is £44, which means that the average sum paid in rates continues to rise.

I pay tribute to the other schemes which the Minister has introduced and which have had some effect in helping to stabilise to some extent the appalling increases in rates which householders have had to bear. This burden cannot be measured by the ordinary cost of living index, because it falls particularly heavily on those with small incomes. These are the people who need special generosity.

Let us consider the generosity of this scheme by comparing it with the position relative to the cost of living. When the scheme was first introduced in 1966, the cost of living index stood at one figure. Today it is up by 20 per cent. on that figure. It is 10 per cent. higher than it was in October, 1968, when the current figures of the scheme were made known. We are not really interested in the cost of living index figure today but rather in the figure at which it will stand on 1st October of this year; and here we want to know what price rises are likely to take place in the next few months.

The cost of living index increased by 1½ per cent. in the last month. We hope that that was just a flash in the pan, but we fear that the cost of living will go up this year by at least 7 per cent., which means that if we calculate the remainder of the months of this year until October at that 7 per cent. figure, we see that the cost of living will be 25 per cent. higher than it was in April, 1966, or 14 per cent. higher than it was in October, 1968.

Let us consider the benefits of the scheme, remembering that the cost of living figure is 25 per cent. higher than what it was when the scheme was introduced. For the married couple the figure is 22½per cent. better and for the single person it is 25 per cent. better, so that there is certainly no improvement in the scheme compared with when it was first introduced.

What is the improvement over October, 1968, when the figures relating to the scheme were last increased? In this event the single person must look at the figures with a jaundiced eye because on the basis that the cost of living will have risen by 14 per cent. since October, 1968, the single man will, under this Order, receive an increase of only 11 per cent. He will not feel particularly generously treated. The married man is slightly better treated, but not sufficiently to corn- pensate for the likely increase in the cost of living between October, 1968, and the time when this increase comes into force.

We must then consider the child allowance, and here some surprising facts are revealed. There is no increase at all on the October, 1968, figures, although these are the very children who need help; the under-privileged quarter-of-amillion children whose families are living at below the supplementary benefit level. In consequence, these children are below the poverty line. The children comprising this group should be helped.

Mr. Edwin Brooks (Bebington)

The House appreciates the concern of the hon. Gentleman for these children. Has he any statistics to indicate what proportion of children in poverty whom he is describing are the children of persons who own their own houses and pay their own rates?

Mr. Allason

One does not need to own a house to pay rates. Indeed, virtually everybody pays rates. Many people pay rent with a rate element. I cannot think of anybody who can escape paying rates, except perhaps those who live in institutions. I am not aware of the precise position in their cases.

Mr. Brooks

I was thinking of those who are tenants of private landlords, in respect of whom there are all sorts of formulae for working out the weekly rental payments.

Mr. Allason

Rates are, nevertheless, paid, even if it is the landlord who signs the cheque for the rates. In the end, the rates are paid by the tenants and there is no escaping rates.

The vast majority of these quarter-ofa-million children are, by definition, within this scheme. The Government have been searching for methods to help these children, but they have not succeeded. They tried by increasing family allowances and drawbacks. By these means they succeeded in dealing with a substantial number of children in difficulty, but this quarter-of-a-million were left. I find it surprising that this opportunity is not being taken to help these children through this scheme.

We must then consider the question whether the scheme reaches the proper beneficiaries. The total income of the householder is calculated and there is no system of disregards, particularly for the disabled, and this seems extremely harsh.

Mr. Deputy Speaker (Mr. Harry Gourlay)

Order. The hon. Gentleman cannot, in discussing this Order, go into the merits of the rebate scheme. He may only discuss the increases proposed in the Order.

Mr. Allason

It would have been possible for the Government to have made this scheme variable.

Mr. Deputy Speaker

Yes. The Government could have done anything they wished, as long as the House approved, but we are discussing only what is in the Order, and not what might have been in the Order.

Mr. Allason

Surely we must be able to criticise the Order for what it omits as well as for what it contains.

Mr. Deputy Speaker

When an Order such as this is before the House one can only discuss that which is in the Order, because the Order cannot be amended.

Mr. Allason

I agree, with respect, but on the last occasion, when this very question arose, the Government spokesman undertook to look into the case. We have not heard what he did about it. It would be most valuable if we could be told why the Government did not go ahead with a variable scheme, which is perfectly feasible.

Mr. Deputy Speaker

It would not be in order even for the Minister to discuss that which is not in the Order. We can only discuss the increases recommended in the Order. We cannot discuss the general rebate scheme at all.

Mr. Allason

Then, Mr. Deputy Speaker, I am grateful to you for allowing me the latitude to refer to the children who have been omitted from the Order.

I should like to pay a tribute from this Front Bench to the constant courtesy and good humour displayed by the Minister. Over the years during which he has been Minister of Housing we on this side have had a very great deal to complain of, and we have complained, but he has always put an extraordinarily cheerful face on things, even though it must have been very galling for him to see so many of his hopes fail. We wish him a very well earned retirement as Minister and great enjoyment in his new post as Chairman of the Commonwealth Development Corporation. We hope that we shall see a good deal of him in that position, as we have done over the years when he has been a Minister.

5.42 p.m.

Mr. Roy Roebuck (Harrow, East)

I warmly welcome the Order, which raises the income limits governing entitlement from £11 a week to £12½5 for married couples and from £9 to £10 for single persons. This further increase in the entitlement levels is part of the Government's plans to cushion those of our citizens who, because of their low incomes, face a heavy rate burden unless something is done for them.

I thought it very odd that the hon. Member for Hemel Hempstead (Mr. Allason) should have spoken as he did. He first of all assailed my right hon. Friend on the whole rating system. He complained bitterly that it had not been reorganised. But it was my right hon. Friends who set up a Royal Commission to investigate the whole subject. That Commission has since reported. We have recently had right hon. and hon. Members opposite complaining about the speed of government. Only the other day the Leader of the Opposition was complaining that the Government were proceeding at too fast a pace.

On the other hand, we have had the Report of the Royal Commission for only a few months, yet now we have the hon. Gentleman pressing for immediate action—

Mr. Deputy Speaker

Order. I have given the hon. Gentleman a fair amount of latitude, but he seems to be starting to stray very wide of the Order.

Mr. Roebuck

We great respect, Mr. Deputy Speaker, the hon. Member for Hemel Hempstead was given enough rope to hang himself. All I ask is enough time to pull the lever to hang him. I am dealing with the precise points he raised. I certainly would not dream of introducing anything that was outside the rules of order, or reply to anything that had not already been said in the debate. I believe that what I am saying is very relevant.

As I understood him, the hon. Gentleman's reason for opposing these increases was that something should be done about the rating system. All I ask is that he be patient and wait until we are returned after the General Election, when we shall certainly reform the rating system.

Mr. Allason

The hon. Gentleman did not listen sufficiently carefully to what I said. I did not oppose the increases, but welcomed them as far as they went. As to the Royal Commission he mentioned, the reform of local government taxation was outside its terms of reference.

Mr. Roebuck

I am delighted to know that the hon. Gentleman supports my right hon. Friend's proposals. It is astonishing to note how the ice of indifference which is among hon. Members opposite about the old, the sick and the pensioners is broken at election time. They have suddenly discovered compassion. The hon. Member speaking for his party, has suddenly discovered compassion. I suspect that after 18th June he will quickly forget all about it again.

Sir Douglas Glover (Ormskirk)

Do I understand that the hon. Gentleman has been converted like Saul on the Road to Tarsus, and is in favour of selective capital punishment? He has already said that he wished to use the rope to hang my hon. Friend the Member for Hemel Hempstead (Mr. Allason).

Mr. Roebuck

The hon. Gentleman is historically inaccurate. The form of capital punishment at the time of the conversion of Saul was crucifixion. I appreciate that it may have been some time since the hon. Gentleman consulted the proper work on the subject, but if he will care to join a little class that I should like to start I am prepared to give him instruction on the matter.

What is the alternative to supporting these present proposals? The alternative is to go back to the system introduced by the party opposite, which resulted in the citizens of the Borough of Harrow getting not one brass farthing out of that rebate scheme. My right hon. Friend gave us a catalogue of areas which had benefited considerably from the different Measures he had introduced, and quite clearly those areas will benefit from this Order. My right hon. Friend did not mention the London Borough of Harrow — he is very modest—but perhaps he will write to me to let me know how many citizens of the London Borough of Harrow, and particularly how many of my East Harrow constituents, have benefited so far, with an estimate of how much better they will be as a result of the Order.

The hon. Member made all sorts of comparisons, but it is quite clear that the only people who benefited under a system which he must clearly have supported were those in Worthing, and such places; not those in Harrow, in Paddington, in East Ham, or West Ham, or Bebington—only a few people in a few selected areas which always return Conservative Members. That system was nothing more nor less than an extramural donation from the Conservative Central Office. In contrast, the Order will benefit all sections of the community equally, and that is a good reason for supporting it.

My right hon. Friend gave a number of reasons for the change. One reason is the increase in pensions and in supplementary benefits. This is a continuing thing. The hon. Member said a good deal about pensions and the cost of living, and indicated that the pension was now worth less than it was in 1964. That is nonsense. In real terms, the pension is worth 20 per cent. more now than when this adventurous Government took office—

Mr. Allason

I spoke of five years ago. I do wish that hon. Gentleman would be accurate.

Mr. Roebuck

I do not see that that makes any difference at all to my argument. I understood him to say 1964, when we came into office. Since then, taking account of the increase in the cost of living, the pension has gone up in real terms by 20 per cent. That is one reason for bringing in the Order.

I observe that the Order does not come into force until 1st August, and the hon. Gentleman was quite rightly concerned about what is to happen between now and then, and possibly during the rest of 1970. He is worried, as he ought to be, about the cost of living. Quite clearly, whether or not we support that Order depends on various possibilities, which are very important. For instance, I have heard a story, I do not know whether it is true, that hon. Members opposite want to introduce a value-added tax. If that were to come about, the effect on the pensioner, on the sort of person who is benefiting under the Order, would be absolutely disastrous. That would increase the cost of living straight away by 7 per cent. Then clearly this Order would be inadequate.

I wonder whether we could have some indication from hon. Members opposite whether, should there be some aberration through the happening of a thunder-clap which caused sensible people to stay at home on 18th June and hon. Members opposite got back to office, they would increase the provision made in this Order by 7 per cent.? That is a question which my hon. Friends may wish to put in other places, but if the hon. Member for Hemel Hempstead would like to give an answer now, I will give way. He will not do so, however, because V.A.T. is under wraps and hon. Members opposite are afraid to reveal their plans. We cannot therefore come to a proper appreciation and determination on this issue.

Another factor to be taken into consideration when considering this Order, is the possibility of entry into the European Economic Community, talks on which I understand are likely to go on within the next few days. I do not know whether when compiling this Order my right hon. Friend gave any attention to that possibility. He told us that he took into account various factors when drawing up the Order, but he did not tell us whether he had taken into account the possibility of V.A.T. He perhaps thinks that not worth considering, because hon. Members opposite will not be returned to office, but he also did not tell us about the effect of entry to the Common Market. Some of us may think it a little otiose to enter into the negotiations, because it is a foregone conclusion that the terms will not be acceptable.

Sir Douglas Glover (Ormskirk)

On a point of order, Mr. Deputy Speaker. What has the Common Market to do with a rating Order?

Mr. Deputy Speaker

Order. The hon. Member for Harrow, East (Mr. Roebuck) is, I hope, making only an incidental reference. I am just about on the point of pulling him up.

Mr. Roebuck

I thank you, Mr. Deputy Speaker, for your perception, which, as always, is much more acute than that of the hon. Member for Ormskirk (Sir D. Glover). I was about to draw to the end of that parenthesis. If the hon. Member thinks that I have not explained the point to his satisfaction, I am prepared to go over it again. The point was that, whereas my hon. Friends possibly want to negotiate very toughly on this matter, hon. Members opposite would not negotiate so toughly but, as they are not likely to be returned, there is a reasonable excuse for my right hon. Friend not to take that matter into his consideration.

I turn to a point raised in an intervention by my hon. Friend the Member for Bebington (Mr. Brooks) with reference to tenants. It is true that tenants are as entitled to claim rate rebate as are owner-occupiers, but this fact is not sufficiently well known. I have come across many cases in my constituency in which people have been in rather tough circumstances and I have said to them, " Have you applied for a rate rebate? " They say, " We cannot do so because we are tenants and do not own a house." It takes some time to explain that although they are now owner-occupiers they are still entitled to the rebate. One also finds council tenants who do not understand that they pay rates. On this matter great responsibility must rest with hon. Members opposite and their friends who are Conservative councillors.

Mr. Deputy Speaker

The hon. Member's right hon. Friend would be out of order to answer that query.

Mr. Roebuck

With respect, I am seeking to know what my right hon. Friend is prepared to do to give appropriate publicity to the terms of this Order.

Mr. Deputy Speaker

The Minister would be out of order to answer the hon. Member's query.

Mr. Roebuck

It may be out of order, but I hope that my right hon. Friend has taken appropriate note of the question.

Mr. Arthur Lewis (West Ham, North)

My hon. Friend the Member for Harrow, East (Mr. Roebuck) could explain to my right hon. Friend a number of points in the Order which are not clear to him and ask my right hon. Friend to write to him to explain so that he can explain them to tenants in his constituency.

Mr. Roebuck

As always, my hon. Friend the Member for West Ham, North (Mr. Arthur Lewis) is most helpful and I am grateful to him.

For all these reasons I reject entirely the unworthy and unfounded criticisms made by the hon. Member for Hemel Hempstead, who clearly is in an electioneering mood this evening. I entirely support the terms of this Order, by which my right hon. Friend has done one more great service to the people of this country.

Question put and agreed to


That the Rate Rebates (Limits of Income) Order, 1970, a draft of which was laid before this House on 15th May, be approved.