HC Deb 01 April 1981 vol 2 cc271-2
1. Mr. Chapman

asked the Secretary of State for the Environment if, as a means of implementing the policy of proper consultation on replacement of the existing rating system referred to in his answer of 4 February, Official Report, col. 271, he will publish a consultation paper on the possible alternatives.

14. Mr. Michael McNair-Wilson

asked the Secretary of State for the Environment if he will outline the possible alternatives to the present rating system currently under consideration by his Department.

The Secretary of State for the Environment (Mr. Michael Heseltine)

As I told my hon. Friend the Member for Leek (Mr. Knox) on 4 February, we are currently examining all potential alternatives to the domestic rating system. I cannot yet say when the review will be complete, but I can assure my hon. Friend that there will be public consultation on the outcome, and I will certainly bear in mind the idea of issuing a consultation document on the possible alternatives.

Mr. Chapman

I am sure that my right hon. Friend recognises that the present rating system is unfair, illogical, undemocratic, inadequate and out of date and that almost any alternative is preferable to the present iniquitous impost. Will he bring forward a consultation paper, giving perhaps his initial comments on each of the various options to try to encourage a national debate so as to ascertain whether a consensus can be reached?

Mr. Heseltine

I am grateful to my hon. Friend for producing some of the arguments against the domestic rating system. I am sure that he will understand that there are others. I shall want to ensure that there is the widest consultation on the Government's conclusions. The difficulty that I face is that many of the adjectives that my hon. Friend has used to describe domestic rates apply with equal force to many of the alternatives.

Mr. McNair-Wilson

Does my right hon. Friend give credence to the concept of a local tax to be levied on all adults living within a county council or district council?

Mr. Heseltine

The recommendation of the Layfield committee was a local income tax, a concept to which I think the right hon. Member for Manchester, Ardwick (Mr. Kaufman) has committed the Labour Party. That system has some attractions. The difficulty is to countenance all the work of my right hon. and learned Friend the Chancellor of the Exchequer in lowering national income tax levels being put at the mercy of overspending Labour authorities, which would increase them again.

Mr. R. C. Mitchell

Until the Government have considered their new proposals, will the Minister consider extending the rate rebate scheme to cover water rates? Much of the criticism is directed to high water rates, which bear heavily on poorer people.

Mr. Heseltine

I am interested that the hon. Gentleman has come to that conclusion, since the previous Government of his party presided over such wide increases in water rates and had every opportunity to apply systems of the sort that he suggests. The House will recognise that the initiative of my right hon. Friend and myself in lowering water rates from 19 per cent. to 13½ per cent. this year was a real demonstration of our concern.

Sir Brandon Rhys Williams

Is my right hon. Friend aware that more than 70 Conservative Members have already signed my early-day motion calling for the Government to produce a Green Paper on reform of local authority finance? Does he accept that something must be done urgently while the production of a Green Paper is in process? Will he consider the advantages of taking the entire cost of education, or at the very least teachers' salaries, off local authorities, as an immediate measure of relief?

Mr. Heseltine

I am well aware of the interest of my hon. Friend and of many other hon. Members in this subject. If we transfer a substantial part of local government expenditure to central Government expenditure, it will be necessary to raise finance centrally to pay for it. We return to the dilemma: do we lower levels of expenditure or raise additional taxes? That will be the subject of the wide consultation process that I think will be necessary.

Mr. Stoddart

Although it is universally thought that rates are a regressive tax, is the right hon. Gentleman aware that some of the alternatives might be a damned sight worse? Can he estimate the additional cost of a local income tax following the Layfield report, which estimated that the additional cost would be £100 million?

Mr. Heseltine

The figure would have to be part of the consultation process. It would be wrong to try to anticipate the options which the Government may want to put forward or to outline their conclusions in a piecemeal way. We should wait until the initial studies have been concluded.