HC Deb 04 June 1980 vol 985 cc1396-8
3. Mr. Hicks

asked the Secretary of State for the Environment what representations he has received advocating a reform of the domestic rating system; and if he will make a statement.

Mr. Heseltine

I have received about 900 letters this year from individuals and local groups, plus a handful of letters from national organisations. We are reviewing all main options to domestic rates but, as we made clear in the manifesto, reduction of income tax must be a higher priority.

Mr. Hicks

Will my right hon. Friend confirm that the Government intend to introduce legislation to reform the domestic rating system? Will not he agree that at a time of high inflation the iniquities of the present system—which is based on rateable values—are increasingly apparent, and particularly affect those on low or fixed incomes?

Mr. Heseltine

I agree that the incidence of this form of taxation at a time of high inflation primarily harms those who pay domestic rates. I confirm that the long-term abolition of domestic rates remains a priority. However, we should have to substitute £2.7 billion of revenue a year. That could not be done without a thorough review of all the options, which we are now carrying out.

Mr. Park

Does not the Secretary of State agree that it is easier to point to faults in the present rating system than to find a viable alternative?

Mr. Heseltine

I agree that it is easy to point to the faults in the present system. It is difficult to make judgments about a viable alternative. That is one reason why those who have looked at this issue over the years have found it so difficult. We are having another look at all the options. I shall keep the House informed of any conclusions.

Mr. Peter Mills

Will my right hon. Friend bear in mind that the higher the rates the greater the unfairness to many people? Is not the present system extremely unfair, particularly to those who live alone? Will he give us some comfort by saying that progress is being made towards finding an alternative means of raising finance?

Mr. Heseltine

I sympathise with my hon. Friend's points. There are two sources of complaint. One is the level of inflation and the other is the unfairness of the system. The Government's top priority is the battle against the present level of inflation. When that proceeds and when we have achieved our priority of reducing income tax, we can reach conclusions on options to the rating system. No doubt my hon. Friend will understand that those who resent the present system would be just as concerned about any substitute system in many areas. No easy decision is available.

Mr. Dempsey

Does the right hon. Gentleman recall that prior to the last general election the present Prime Minister paraded up and down the country giving an assurance that a Conservative Government would abolish the system of local rating because of its inequities and anomalies? Is he further aware that the right hon. Lady gave the impression that the matter was urgent? Surely, therefore, the Government should give us some idea of when they propose to abolish the system and what they intend to put in its place.

Mr. Heseltine

I appreciate that the facts of history are not among the strongest pionts of the Labour Party and the hon. Member will appreciate that he referred to the wrong general election. My right hon. Friend made a specific pledge before the October 1974 general election, but after that we saw the significant increases in income tax that were the responsibility of the Labour Party. The reduction of those levels is the top priority of the Government.

Mr. Bowden

Is my right hon. Friend aware that for the past 20 years the public have been fed up with hearing politicians talking about the unfairness of the system, yet doing nothing about it? We must do something, not only about the domestic rates, but about rates. I must tell my hon. Friend that if he does not take this matter on board, it will cost us a great deal—

Mr. Speaker

Order. The hon. Gentleman should tell his right hon. Friend after Question Time.

Mr. Heseltine

I accept my hon. Friend's view that there is a great deal of disgruntlement about the domestic rate system. Most of that disgruntlement centres on the levels of inflation. If inflation were proceeding at much lower levels a great deal of the agony about the domestic rating system would not be as evident. My hon. Friend will be as aware as I that any alternatives to domestic rates that suffered from the same levels of inflation as has the rating system would be subject to just as much criticism.

Several Hon. Members rose


Mr. Speaker

Order. I appeal for shorter questions and answers.