HC Deb 10 June 1981 vol 6 cc390-2
5. Mr. Knox

asked the Secretary of State for the Environment when the review of the domestic rating system will be completed.

14. Mr. van Straubenzee

asked the Secretary of State for the Environment what progress has been made in considering methods of reforming the rating system in England; and whether he will make a statement.

19. Mr. Michael Morris

asked the Secretary of State for the Environment what progress he has made in considering the financial implications of substituting the domestic rating system with a local income tax.

Mr. Heseltine

I intend to issue a consultation document on the alternatives to domestic rates in the autumn.

Mr. Knox

How long will my right hon. Friend allow for consultation, and when will he introduce legislation to reform or abolish the rating system? Does he realise that the matter is most urgent?

Mr. Heseltine

I take my hon. Friend's point. The matter is becoming increasingly more urgent as rates become higher than can be justified. It would be wrong for me to set a limit on the time for consultation before publishing the consultation document. We wish to ensure that the time is adequate for such an important proposal, so the timing of the legislation will be decided in the light of the consultation process.

Mr. van Straubenzee

My right hon. Friend may fully understand the feelings in the country about the rating system, but will he, nevertheless, be watchful before abolishing a system in which rates are cheap to collect? Will he be careful before moving to another system, as almost all studies show that the cost of collection by alternative methods may be tremendous?

Mr. Heseltine

I have considerable sympathy with my hon. Friend's remark. It is popular to advocate change but not always to announce its consequences. We shall consider the point that he makes.

Mr. Douglas-Mann

Has the Secretary of State considered the recent replies given to my hon. Friend the Member for Blackburn (Mr. Straw) about the consequences of the rating system, which he has related to the arguments that he has presented to the House on many occasions that high rate demands affect employment? Has he noted that there is no positive correlation between high rate increases and jobs, but, on the contrary, there seems to be a negative correlation, and that where local public expenditure is high the number of jobs does not decrease but continues to increase?

Mr. Heseltine

The House will want to weigh the research of the hon. Member for Blackburn (Mr. Straw) against the virtually unanimous advice of industry.

Mr. Bowden

Is my right hon. Friend really aware of the growing anger at the unfair domestic rating system? Is he aware that the country is sick and tired of hearing about consultative documents and consultations, and that his office must be stacked with recommendations, consultation papers and goodness knows what else? Will he, without fail, take action next year?

Mr. Heseltine

I can help my hon. Friend. Few people understand better than I the fury provoked by the domestic rating system. My office is stacked with documents dealing with alternative means to finance local government. The difficulty is choosing the right solution.

Mr. Spearing

Does the Secretary of State agree that, irrespective of the levels of expenditure, the distortions of the rating system are reduced when the proportion of local authorities' expenditure borne by the Consolidated Fund and other forms of taxation is increased? Why does he seek to decrease the amount of such funding when to increase it would reduce the distortions of which his hon. Friend complains?

Mr. Heseltine

The hon. Gentleman's point is probably technically accurate, but that must be weighed against the argument that those who are elected should be elected against a background in which the electors know something of the costs of the services for which they are voting. The more that central Government takes over responsibility for funding local government, the harder it is to justify the view that local government is autonomous.

Sir David Price

Following my right hon. Friend's last reply, does he accept the key recommendation of the Layfield report that whoever is responsible for spending money should also be responsible for raising it, so that the amount of expenditure is subject to democratic control? Will he base his discussion document on that vital recommendation?

Mr. Heseltine

I assure my hon. Friend that the thinking behind that statement must be reflected in the consultative document. There are many ways of dealing with the solutions required, but we shall certainly wish that issue to be thoroughly ventilated in the consultative process.

Mr. Kaufman

Will the right hon. Gentleman give us some information about the draft circular on rate support grant that he is sending out? First, has he now abandoned the disgraceful paragraph under which he would send in auditors to check the inflation assumptions of local authorities—

Mr. Speaker

Order. I honestly believe that the right hon. Gentleman is asking a question that is not related to this one.

Mr. Kaufman

First, Mr. Speaker, it relates to domestic rating. Secondly, it relates to reform of the rating system.

Mr. Speaker

"Review" is the key word here. The subject is the review of the domestic rating system.

Mr. Kaufman

I am asking the Minister to assure us, Mr. Speaker, that in his review of the rating system he will abandon the proposals in the draft circular about which there is such widespread concern. Will the Minister abandon the proposal to send in auditors to check inflation assumptions? Will he also tell us, in his review of the rating system, by what authority that circular is being sent to local authorities threatening to deny them rate support grant unless they send him a return by 31 July for which he has no parliamentary authority?

Mr. Heseltine

As I understand the question, the right hon. Member wishes to know whether in the time scale of the review of the domestic rating system I shall deal with the points that he has put. He may be well assured that in the time scale of that review all of those points will be fully understood.

Mr. Kaufman

That may be satisfactory to the right hon. Gentleman, but it is not satisfactory to hundreds of local authorities who need a reply to those questions. Instead of being so contemptuous of the House of Commons, as he always is, will the right hon. Gentleman now say whether he is abandoning the paragraph to which I referred and whether the rate support applications already made by local authorities will stand as valid applications?

Mr. Heseltine

The right hon. Gentleman, of course, is straying far beyond the question put to me. As my right hon. Friend made clear on the radio at 1 o'clock, the right hon. Gentleman is not only straying but actualy getting the thinking behind our circular quite wrong.

Mr. Kaufman

No, no.

Mr. Heseltine

If the right hon. Gentleman will take the trouble to go back to local government and check carefully he will find that his suggestions are not justified.