Rating System (Abolition) (Hansard, 16 June 1981)

§ Mr. Peter Temple-Morris (Leominster)

I beg to move, That leave be given to bring in a Bill to make further provision in connection with the abolition of the rating system, including water and sewerage rates, and for connected purposes. It is right now, and has been for some time, to continue discussion on this important subject in an effort to secure reform. One of my purposes in introducing the Bill is to concentrate the Government's mind and to maintain the impetus and momentum of my right hon. and hon. Friends. I am pleased that my hon. Friend the Under-Secretary of State is in his place. He is used to meeting this momentum which we have kept up by day and night. I assure my hon. Friend that that momentum will continue.

I wish to concentrate the Government's mind because our party has played—particularly in the past six or seven years—a prominent part in giving pledges and promises to the effect that we would carry out rating reform. The governmental mind needs to be concentrated for the simple reason that at the next election we shall no longer be alone in promising rating reform within the greater spectrum of local government reform. Amidst all the problems and travails of the Labour Party—I do not mean this in any sarcastic respect—the right hon. Member for Manchester, Ardwick (Mr. Kaufman) submitted a policy statement in a speech at the last Labour local government conference in February. It contained much that was attractive. Much of what I have to say agrees with the right hon. Gentleman's remarks. I warn the Government that we no longer have the luxury of being alone. Unless we do something about rating reform, we shall let down all those who voted for us, in part, for that reason. In addition, we shall let down our supporters.

My hon. Friends will be relieved to hear that this is not the time—as you, Mr. Speaker, may agree—for a lecture on the rating system. Nevertheless, I have constantly referred to it since making my maiden speech on the topic in March 1974. Local government rates represent an unfair system of taxation. They bear little relation to the means to pay. Not more than half of the electorate pays rates. It is a serious matter that in difficult times and in the context of local government problems the system of local government taxation is contributed to by less than half of the electorate. There are problems of accountability between the electorate and councils and vice versa. In addition, local government rates are based on widely varying rateable values. Those are but some of the many problems that have led us to dislike the rating system so much.

Briefly, water rates bear no relation to consumption. There is far too much variation in charging for water. I appreciate that this problem goes wider than the rates issue. I am sure that my hon. Friend the Under-Secretary of State is listening to every word that I say. If we abolish general rates or any part of the rating system the public will not stand for the continuation of the injustices of that system for water alone. Many of my hon. Friends know that at the moment the problem of water rates causes as much of a constituency difficulty—if not more—than the rating system as a whole.

This is a simple Bill which removes the power to impose rates after a maximum period of five years. Up to 878 a maximum period of five years the Government of the day will be empowered to charge rates, but after that period there will be no more authority to charge them. The reason for this, as you well know, Mr. Speaker, are the rules of the House. Indeed, those rules mean that in this speech I cannot suggest the imposition of taxation. I am entitled—I trust that you will agree with this, Mr. Speaker—to be entirely destructive, because it is not really within the bounds of order for me to go into great detail about alternatives. I hope that you will allow me to be constructively destructive, and, so far as is relevant to the provisions of the Bill and in particular the five-year period, to deal briefly with the alternative that I set before the House and which gives credibility to this Bill.

This five-year period is based on Layfield's estimate of the period necessary to introduce a local income tax. I emphasise to the House that in this vast report local income tax was referred to again and again and the report said quite firmly—indeed it mentioned it in the very last paragraph, as well as in everything before—that local income tax was the only practical additional and, in effect, alternative means of raising revenue to the rating system. At the end of the day income tax will be the only practical alternative. I reject utterly, and I know that not all my hon. Friends agree with me on this, the idea that this should be raised and allocated out of a national tax. I feel most strongly that we should work for and not against local democracy. Local income tax is perfectly possible, and, what is more, I always thought that that was in accordance with Conservative principles.

The five-year period means that we can get started now. The Government may be relieved to hear that politically this five-year period which Layfield lays down as being necessary to introduce local income tax means that we can and should get started now. If we get started now something will be ready on which the Government of the day can take action. Politically speaking, we are not prejudiced as far as our manifesto is concerned when it comes to the priorities of cutting direct taxation on the one hand and installing a reform of the rating system on the other.

There is ample time for water metering and sewerage. As for a local system of corporation tax, which is one of the most complex matters here, it is surely not beyond the wit of man to deal with that problem within five years. It is to be hoped that a suitable local system of local corporation tax can be introduced.

There is a final point on this matter concerning the industrial and commercial ratepayer. It is fatal to abolish domestic rates and expose industry as the main local taxpayer to councils not democratically accountable to them. This is the most important and I say—it is implicit in my Bill—that the Government's consultation, for which we are grateful, which will occur this autumn is seriously at fault in dealing with domestic rates only.

The chronology of the whole matter is in my view deplorable in view of the waste of time that has taken place in proceeding towards this much-needed reform. We have already had an enormous report. We have already had manifesto pledges. We have already had a consultation period of one year. We have already had a Green Paper, under the Labour Government. We have already had two years with this Government and now, in autumn 1981, we are to have consultations on the question of domestic rates.

I say, I hope with the support of all parts of the House, that the purpose of this Bill, which I hope the House will 879 allow me to introduce, is to get some action on this problem. In commending the Bill to the House, I ask it whether it is necessary to vote to accept an obvious and overdue reform.