HC Deb 29 January 1986 vol 90 cc933-5
3. Mr. Kirkwood

asked the Secretary of State for Scotland when he expects to publish Her Majesty's Government's proposals for reform of local government finance.

The Secretary of State for Scotland (Mr. Malcolm Rifkind)

I did so yesterday.

Mr. Kirkwood

I am deeply touched by the Government's response to this question, which I tabled a fortnight ago. Concerning commercial and non-domestic rates, I understand that there will be an interim transitional period and that there will be a revaluation. When the day dawns that a national business rate is set, what system of litigation will there be for regions such as mine which are traditionally low-rated? Any level of national rate must militate against the south-east of Scotland and the borders and lead to further closures of small businesses there.

Mr. Rifkind

Any question of a national rate is a good number of years ahead. We have proposed that, in the first years of the new system, there should be an effective freeze on the level of existing non-domestic rates, any increase being accorded to some national index, such as the cost of living or the rate of inflation. I do not have the slightest doubt that that will be a significant improvement for small businesses, including those in the hon. Gentleman's constituency.

Mr. Speaker

Order. There is to be a statement on this matter, but we shall have a short run on it.

Mr. Forth

Is my right hon. and learned Friend aware that English ratepayers are looking with envy at the speed with which he and his hon. Friends are proceeding with the excellent reform of local government finance? We hope that England will follow the initiative taking place north of the border at the earliest possible date.

Mr. Rifkind

I am grateful to my hon. Friend.

Mr. Craigen

When the Secretary of State came round to the idea of a penal poll tax on the domestic sector in Scotland, was it because he had forgotten about the two Green Papers published by previous Conservative Governments which rejected the idea? Was he simply so busy with foreign affairs in recent years that he forgot the history of England? The poll tax of 1380 led to the peasants' revolt.

Mr. Rifkind

If the hon. Gentleman has read the Green Paper, he must realise that such a selective reference is misleading, because the Green Paper states that the proposal of the kind that the Government have put forward will strengthen the accountability of authorities to their electorates and that it would have a very broad base and would be suitable for all tiers of local government. Perhaps the hon. Gentleman will take that into account.

Mr. Michael Forsyth

Does my right hon. and learned Friend agree that if the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) were truly worried about small businesses in his constituency he would drop his party's absurd view that we should have a local income tax? That would have the effect of small businesses having to find an extra 11p in the pound under the PAYE and almost certainly mean their sacking staff and going out of business.

Mr. Rifkind

My hon Friend is quite right. The standard rate of local income tax would be increased by between 2p and 11p in the pound. The least prosperous areas would attract the higher increase in the standard rate of income tax. If the Liberal party believes in that policy, it will take some time to convince the people of Scotland of its desirability.