Local Government Finance (Hansard, 15 May 1985)

§ 5. Mr. MacKenzie
asked the Secretary of State for Scotland how many representations he has received on the raising of local government finance; and if he will make a statement.

§ The Parliamentary Under-Secretary of State for Scotland (Mr. Michael Ancram)
My right hon. Friend has received some 15,000 representions on the linked subjects of rates, revaluation and local taxation. Many of these suggest changes in the method of financing local government.

§ Mr. MacKenzie
Is the Minister aware that although many of us gave a guarded welcome to the proposals announced yesterday, we feel that they were hastily conceived? Many of us believe them to be a temporary, patch-up job. Is the Minister aware that we want the Secretary of State to go back to his office and take plenty of time to talk to local authority people and those who know about these matters, and return to the House with proposals on rating, valuation and rate support grant that will he fair, equitable and lasting for the future of Scotland?

§ Mr. Ancram
I thank the right hon. Gentleman for his welcome — even though a little grudging — for the package announced yesterday. That is in line with the welcome given to it by ratepayers in Scotland. I find it difficult to understand how he could suggest that the scheme was hastily conceived when, for the past five weeks, others in this House have accused the Government 314 of not coming forward with a scheme soon enough. We waited until we had the information we required to prepare a scheme that could work. When we had that information, we announced the scheme. The right hon. Gentleman knows that there is a current Government review, of which I am a part, looking at the whole system of financing local government. We hope to come forward with proposals this year.

§ Mrs. McCurley
While I congratulate my right hon. Friend the Secretary of State on his supreme efforts during the past few days to alleviate the problems of ratepayers in Scotland, may I suggest that before we make any radical alterations to the rating system we do not go from the frying pan into the fire, that we halt the decline in rate support grant and that we stop hooking the local government line with a sharp stick and reach a conciliatory point with it? That is absolutely necessary if we are to treat with local government over the next few years, which, after all, we must do, and which our supporters want us to do.

§ Mr. Ancram
I agree with my hon. Friend that the proposals that the Government bring forward with regard to the system of financing local government must be workable. It is for that reason that we are taking time in considering them. I believe that we will be able to come forward with something that meets that requirement. I further agree with my hon. Friend that we want to have good relations with local government. Last year, when there was a gap of some £200 million between that which it wished to spend and the level at which we believe it should be spending, we came halfway to meet it by enhancing the provision made by £98 million. We looked to it then, and we look to it now, to play its part. If it sticks within the reasonable spending guidelines set by the Government, there is no reason why we should lot have the sort of relationship that my hon. Friend seeks.

§ Mr. Roy Jenkins
Can the hon. Gentleman confirm that in his right hon. Friend's scheme announced yesterday there is no tapering provision and that, therefore, for somebody short of a threefold increase in valuation with, say, a factor of 2.8 per cent., which probably means an increase in the actual bill of 80 to 100 per cent., there is no benefit at all, whether domestic or commercial: In view of the fact that this has to be seen in circumstances in which the Secretary of State has taken unprecedented steps to interfere with local government finance, and in which there is an alleged Government achievement of an inflation target of 4.5 to 6 per cent., this cannot be regarded as a matter for congratulation of the Secretary of State's administration of the Scottish Office.

§ Mr. Ancram
I do not know whether the right hon. Gentleman was present yesterday when my right hon. Friend made his statement, but, if he was, I do not think that he has understood the scheme that has been proposed. The scheme is quite simply to ensure that nobody suffers rate increases as a result of having a revaluation of over three times the valuation he had previously, so that those who benefit will benefit down to that extent only I think that that is a fair way of doing it. If I may say so, it is somewhat in line with the proposals that were put forward by the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) in his ten-minute Bill. The only difference—and I fear that this seems to be part of the alliance's way 315 of calculating things—is that he got his calculations on what it would cost wrong by a factor of 10. That seems to be endemic in the Liberal party at present.

§ Mr. Dewar
First, I congratulate the hon. Member for Renfrew, West and Inverclyde (Mrs. McCurley) on what she said, which was certainly welcome. May I suggest to the Minister that, if he wants to make peace with local government, one contribution might be to refrain from financing the package announced yesterday from a general abatement clawed back out of the already inadequate spending allowed to local authorities? Can he confirm—because we want to avoid doubt and know exactly where we stand—the views of the Secretary of State that a manifesto commitment at the next election to rating reform will not do, and that the Scottish Office will therefore be in a position not only to produce a scheme but to legislate on rating reform in this Parliament?

§ Mr. Ancram
The hon. Gentleman has quoted, I think accurately, what my right hon. Friend said at the conference, and that is of course the position. I think that many of us would be interested to know the views of the Labour party on rate reform. Opposition Members critise easily and give only grudging acceptance to the scheme that we put forward yesterday, but we hear nothing from them as to whether they wish to see the present rating system reformed or replaced. We look forward to hearing that in the future. As to the penalties, the hon. Gentleman knows full well that last August, a long time before revaluation took place, we were warning authorities that if they spent over the guidelines they would face penalties far more severe than those which were imposed last year. That has been the case, they made their spending decisions in the light of that knowledge, and we hope very soon to be able to announce the details of the penalties.