HC Deb 29 January 1986 vol 90 cc949-60 3.32 pm
The Secretary of State for Scotland (Mr. Malcolm Rifkind)

With permission, Mr. Speaker, I hope that it will be helpful to the House if I make a short statement on specifically Scottish issues arising from yesterday's publication of the Green Paper "Paying for Local Government".

The general lines of the proposals were explained by my right hon. Friend the Secretary of State for the Environment. The Government are ready to deal with the manifest defects of the present system of paying for local services, and we plan to introduce legislation which will replace unfair domestic rates by a community charge; will bring reasonable protection to shops and businesses; and will set up a fairer and simpler grant system and remove the need for the present system of penalties against local authorities. We have invited comments on those proposals by 31 July.

In Scotland, experience of the past few years has shown conclusively that existing domestic rates are wholly unacceptable to a very wide range of the population. We recognise that and are therefore at present planning for early legislation in the coming parliamentary Session to abolish the domestic rating system in Scotland. The Green Paper envisages that all domestic rate bills in Scotland would be cut by 40 per cent. with effect from 1 April 1989 and would be finally abolished at the end of March 1992. It will follow that there will be no further revaluation of domestic property in Scotland.

The proposed community charge will, we believe, be fairer than domestic rates. Those who have been used to contributing nothing from their earnings to the revenue raised by domestic rates may regret the new charge, but most will accept that it is not unreasonable that we should discontinue a system that imposes the full burden on a minority of the public, including some of the poorest members of the community.

Shopkeepers and business men who have had taxation without representation will now be protected from the effects of an unfair system. Any increases in their rates will only occur on the basis of a national index. Business in both rural and urban areas will find this far preferable to the present Scottish system.

Scottish local authorities will, we hope, welcome the end of the present system of penalties that has not helped the relationship between central and local government.

For some time the Scottish public and ratepayers in particular have called for effective action. These proposals represent a fair and reasonable response, and I look forward to hearing the views of ratepayers and others affected by them.

Mr. Donald Dewar (Glasgow, Garscadden)

I extend my sympathy to the right hon. and learned Gentleman. He has inherited this rather ramshackle and confused scheme from his predecessor, and, of course, every advocate on occasions gets a rotten brief. I am sure he is doing his best with it.

There is a large number of points in connection with non-domestic rating and the grant system that could be raised, but I want to concentrate on domestic rates. Will the Secretary of State accept that his so-called community charge is no more than a flat-rate poll tax—so much per Scot—which means that a man of modest means would pay the same as the richest in the land? Is the key to the philosophy behind this scheme the admission on page 25 of the Green Paper: Moving from rates to a flat-rate community charge would mark a major change in the direction of local government finance back to the notion of charging for local authority services"? That is a direct repudiation of the redistributive principle which will have woeful consequences for many in our society. The Green Paper concedes that 52 per cent. of Scottish households will be worse off when the community charge is implemented.

Will the Secretary of State accept that the majority of the victims will be ordinary working families, and that those who will largely benefit will be the upper income groups—doctors, lawyers, accountants and Members of Parliament?

Is the right hon. and learned Gentleman seriously asking me to back this scheme, which may well reduce my personal outgoings by £700 a year, when I know that cash will have to be recouped at the expense of families, perhaps in my own constituency, who have a lot less money and many more financial problems? Is the only basis on which I could give my support the principle of self-interest? Whichever way the figures are presented, will not the poorer families with three of four adult members be hit, and hit hard?

I protest about the ram-stam rush to legislate in Scotland. Has the Secretary of State reflected on the contrast with yesterday's statement from the Department of the Environment, which made it clear that the pace of further development would depend on the outcome of consultation? Does the pledge that there will be legislation in the next Session mean that consultation in Scotland is an empty sham?

Will the right hon. and learned Gentleman promise that there will be a White Paper before we legislate, dealing with the many practical problems that will arise? What will be the cost of the special register? Once the Social Security Bill is in operation, does the Secretary of State expect local authorities to sue an unemployed 19-year-old for his poll tax contribution of £40 or £50? If he does, will that money be clawed back out of that person's benefit?

Will the right hon. and learned Gentleman deal with issues raised in the White Paper, such as second homes —who pays and how much? Will he give a guarantee that students in digs and in halls of residence will be adequately compensated, and that this matter will be negotiated and settled in Scotland before Scottish legislation is introduced? We need detailed answers to that and a myriad other questions, and we need the opportunity to have an early and thorough debate.

Does the Secretary of State accept that this is an exercise in political opportunism which will lead to confusion and injustice? Does he recall that in August 1983 the Scottish Office produced a White Paper entitled "Valuation and Rating in Scotland: Proposals for Reform"? Will he confirm that a poll tax was canvassed at that time but the result was not at all conclusive for radical change"? Will he confirm that the Government then decided to reform the basically sound rating system, and concluded: "there is little point in replacing rates with an untried and unfamiliar system having little support from the outset"? Is that not exactly what the right hon. Gentleman now proposes? Is not the scheme which is on the table unfamiliar, unjust and lacking in popular support—all that—and socially divisive? Will the right hon. Gentleman think again?

Mr. Rifkind

The hon. Gentleman gave exactly the predictable and depressing response that I and my colleagues confidently expected. I remind him that, earlier this year, during discussions on these matters, he said that there was a case for reform. We have not heard one indication today of the type of reform that the hon. Gentleman would support. The hon. Gentleman and the Labour party are entirely wedded to the existing system of domestic rates, because it suits their political requirements. If the hon. Gentleman had had the courage to admit that fact, I think that we would all have thanked him for it.

I am happy to respond to the hon. Gentleman's questions. He suggested that this was a poll tax. He knows very well that the phrase "poll tax" normally means that one will not have the right to vote unless there is a right to tax.

Mr. Dewar

So much per skull.

Mr. Rifkind

I am delighted that the Opposition now accept that the right to vote will in no way be affected by these proposals. [Interruption.] I wish that they would make up their minds about exactly what their view is.

Mr. Dewar

So much for Scotland.

Mr. Rifkind

The hon. Gentleman did not need to read the Green Paper to know that. The important point I am making—I think it is accepted by the Opposition—is that the various claims in the past about a poll tax being a tax on the right to vote were always absurd, as is now acknowledged.

The hon. Gentleman suggested that working families will be worse off. Let us be quite clear about this. A household which consists either of a single pensioner or of a single-parent family will undoubtedly be better off. A household which consists of two working adults will be better off, or in the same position; or, if it is worse off, the difference will be relatively minimal. Those who will be most significantly damaged—

Mr. Dewar

Not in Scotland.

Mr. Rifkind

Indeed, in Scotland. I should be grateful if the hon. Gentleman would let me answer his questions.

The most significant loss will be experienced by those single working adults who, until now, have paid nothing whatsoever towards the requirements of domestic rates. I do not believe that the hon. Gentleman, who rightly prides himself on being a fair person, would say that a system that allows many hundreds of thousands of people to earn money not to pay a penny towards the cost of domestic rates does not require change.

In Scotland, 2 million adults, including many spouses, are not householders and are not liable to pay one penny in rates. Even if the number of spouses of existing ratepayers were deducted from that number, there are still hundreds of thousands—probably as many as three quarters of a million—single adults who do not make any contribution to the cost of the rating system. Any tax system that rests on such a narrow base is profoundly unfair. As the Green Paper states, for those on the lowest incomes domestic rates are more regressive than the proposed community charge.

The hon. Gentleman asked me whether households with three or four working adults will be worse off. I accept that the majority of households with three or four working adults would be worse off. The hon. Gentleman may prefer a system in which four working adults in one house pay exactly the same as the single old-age pensioner next door. He may think that that is fair, but I certainly do not and nor do the people of Scotland. It is no use the hon. Gentleman referring to single old-age pensioners who may be on rate rebate or receiving social security benefits, as there are many single old-age pensioners whose income is just above the level required for rate rebate or social security benefits and who pay the same as a household with four adult earners. If that is what the hon. Gentleman believes to be a fair system, he has changed his definition of fairness.

The hon. Gentleman had the sheer nerve to criticise me and the Government for contemplating legislation in this Parliament. Only yesterday, the hon. Member for Copeland (Dr. Cunningham), the shadow Secretary of State for the Environment, criticised my right hon. Friend the Secretary of State for the Environment for not abolishing domestic rates in this Parliament. The Opposition cannot have it both ways. The fact is, as the people of Scotland well know, that the Labour party is so wedded to the system of domestic rates that, whatever alternative the Government came up with, it would have been condemned by the hon. Gentleman.

Sir Hector Monro (Dumfries)

I congratulate my right hon. and learned Friend the Secretary of State and my hon. Friend the Member for Edinburgh, South (Mr. Ancram) on bringing forward this progressive measure. Does my right hon. and learned Friend agree that the Opposition's reaction shows that they would do much better to read Green Papers before they criticised them?

Does my right hon. and learned Friend agree that many households comprise only one wage earner or one retired person, who will be manifestly much better off under these proposals? Does he agree that, under the community charge scheme, ratepayers in Dumfries and Galloway who might be on a charge of only £155 would be considerably better off than they are under the existing arrangements?

Mr. Rifkind

My hon. Friend is right. Many people, especially single people, will be considerably better off. When people are evaluating the proposals, they should not look simply at the immediate effect—the community charge that their household would pay as compared with domestic rates. Existing domestic ratepayers should also be aware that any future increases in local authority spending, instead of being paid for by the minority of Scottish people who are ratepayers, will be paid for by all Scottish adults who benefit from local services. That is a much fairer system and one which will bring not only short-term but long-term benefit to ratepayers.

Sir Russell Johnston (Inverness, Nairn and Lochaber)

Has the right hon. and learned Gentleman's attention been drawn to the far-seeing editorial in the Glasgow Herald—not a trendy Lefty or wishy-washy Liberal paper—which, on 27 November 1985, commenting on the rumours of that time concerning the Government 's proposals, said: It will mean the laird in the castle pays the same as the gardener in the cottage. Is the Secretary of State aware that this sums up perfectly the alliance view about the so-called community charge which, as the hon. Member for Glasgow, Garscadden (Mr. Dewar) has said, is a poll tax which does not differentiate between how much someone who is well off and someone who is not well off pays? How can the Secretary of State genuinely justify such a stride back into the middle ages?

Does the right hon. and learned Gentleman agree that if the long campaign to replace the repressive, regressive and unjust rating system is to succeed it is important that the new system is not unfair? Can he promise us that, in inviting comments by 31 July, he will open mindedly and fairly examine them all? From the alliance he will get a cogent case in favour of a local income tax.

Mr. Rifkind

If the local laird moved out of his castle and into a permanent suite at Gleneagles, he would not be liable for one penny of domestic rates, irrespective of his income. I am sure that the hon. Gentleman agrees that domestic rates are not an agreeable option, either, from the point of view of the objective that he seeks.

As for the Liberal attraction to local income tax, if it were introduced, it would result in an increase in the standard rate of income tax of between 2p and a maximum of 11p. Moreover, the least prosperous parts of Scotland would be liable to attract the largest increase. I am sure that the hon. Gentleman agrees that it would be manifestly absurd if, instead of one level of income tax in Scotland, we ended up with 56 different levels, one for each of the local district councils. I am sure that most people would not want that.

Several Hon. Members


Mr. Speaker

Order. I remind the House that we are dealing with a Green Paper which will no doubt occupy much of the House's time this Session.

Mr. Gregor MacKenzie (Glasgow, Rutherglen)

Is the Secretary of State aware that most of us feel that these ill-considered proposals have much more to do with the peasants' revolt at Perth last year than with the one in medieval times? Is he further aware that his proposals will result in a considerable shift of the burden of local government finance to the poorer section of the community? If he wanted any proof of that, he needed only listen to the cheers that came from his Back Benchers when he made his statement. Is this really a Green Paper? Does the Secretary of State still have a receptive mind? Is he really willing to listen and make changes on the basis of comments from right hon. and hon. Members and others?

Mr. Rifkind

We are anxious to hear any ideas and responses. Is the right hon. Gentleman asking us to say that he is comfortable with the system which requires single pensioners and single-parent families in his constituency to pay the same as households of four adults, all of whom are bringing good money into the home? Does he believe that that is a fair and defensible system? If not, what does he propose as an alternative?

Mrs. Anna McCurley (Renfrew, West and Inverclyde)

Does my right hon. and learned Friend agree that one of the most interesting and pleasant by-products of the new system is the possibility of a truce between central and local government?

Mr. Rifkind

It ought to be an added attraction of our proposals that the system of penalties will no longer be necessary, primarily because local authorities will be genuinely accountable to the whole of their electorate rather than just theoretically so. As long as we have a system in which only a minority of the electorate has to pay for excessive expenditure, some local authorities will be attracted to exploit such an arrangement. Because that opportunity will not be available to them in future, the system of penalties such as we have had will no longer be necessary.

Mr. Willie W. Hamilton (Fife, Central)

I ask a very simple question: who will come off best, the rich or the poor?

Mr. Rifkind

I have told the House before, and I shall say it again, that the people who will be least well off as a result of these proposals are single earning adults who until now have paid nothing. Wealthy people will not be alone in benefiting, as is suggested by the Opposition, as the beneficiaries will include large numbers of people on modest incomes living in heavily rated properties, single pensioners and single-parent families—people whom the hon. Gentleman would like to pretend that he champions.

Mr. Alexander Pollock (Moray)

Does my right hon. and learned Friend agree that one of the advantages of the new system is that business in Scotland will now be able to look forward to a period of stability? It will be able to plan without worrying about rapidly changing levels of spending by local authorities? Does he agree that a uniform national rate confined to Scotland might be good for the business sector in cities but would not be helpful to the hard-pressed business sector in rural areas?

Mr. Rifkind

My hon. Friend is correct. A uniform business rate in Scotland would create major increases in the rates burden for many businesses in rural areas. Those who argue for that proposition would not find favour among small businesses and industries in those areas.

The chambers of commerce and others who have spoken to me have always said that they most need predictability to enable them to plan what the extra burden on their business, shop or industry is likely to be. If any future rate increase is tied to a national index, they will have that predictability. That is why I believe that the business sector will welcome the proposals.

Mr. Roy Jenkins (Glasgow, Hillhead)

As the right hon. and learned Gentleman rightly refuses to stick to the present domestic rating system, and wrongly dismisses local income tax, can he tell us in what important respect his mind is open to consultation between now and 31 July?

Mr. Rifkind

We have said that the Green Paper is subject to consultation. We wish to hear proposals from local authorities, ratepayers and all interested parties. As the House would expect, we have shown that we have proposals. This is not a new debate; it has been going on for a long time. We will be happy and willing to consider constructively any reasonable ideas that are put to us.

Mr. Norman Buchan (Paisley, South)

Surely the Minister will accept that the question posed by my hon. Friend the Member for Fife, Central (Mr. Hamilton) is the heart of the matter. Is it not the case that the rich will benefit and the poor will suffer? Would anything other than a Thatcherite Government have dreamt of replacing a reactionary, repressive, unfair tax like rating with something even worse?

Mr. Rifkind

I understand why the Opposition do not like the proposals. They interfere with the cosy arrangement that has suited them for so many years.

On the basis of the Green Paper, 48 per cent. of Scottish households will benefit. If the hon. Gentleman's definition of the rich extends to 48 per cent., it is a curious definition. As a significant proportion of the remainder are single adults who at present pay nothing, he might like to reflect on the equity of that.

Mr. Barry Henderson (Fife, North East)

Does my right hon. and learned Friend accept that the proposals for non-domestic ratepayers would be of immense significance and benefit to the business community in Scotland and would be recognised as such if it were not for the even more dramatic proposals for domestic ratepayers? Does he agree that the alliance party's proposals on non-domestic rates could help hypermarkets and city centre department stores but would do nothing for small businesses in rural areas?

Mr. Rifkind

My hon. Friend has put his finger on it. Perhaps the Alliance is more interested in hypermarkets and supermarkets than in small businesses. In Scotland, small businesses want certainty and predictability. For years they have said that, if there is to be an increase in the rating burden, a rate linked to national changes in the cost of living is fairer and more sensible.

Mr. Dick Douglas (Dunfermline, West)

Does the Secretary of State accept that his concept of a Green Paper would have more veracity if he stopped behaving as if everything were cut and dried? People consider the burden of taxation as a whole. Does he accept, therefore, that the poll tax increases the regressive nature of taxation as a whole?

The real problem is the imbalance of rating and valuation on both sides of the border. What peculiar alchemy does the right hon. and learned Gentleman and the Secretary of State for the Environment propose to deploy to harmonise the rating system on both sides of the border?

Mr. Rifkind

On the hon. Gentleman's first point, may I say without fear of contradiction, and as the Green Paper demonstrates, that those on the lowest incomes are better off with a community charge than they are under domestic rates. As a significant proportion of the poorest households in Scotland are single pensioners and single-parent families, the community charge should be welcomed by the Opposition if they are genuinely interested in the welfare of those people. Their reluctance casts doubt on whether their position has been considered or whether it is a knee-jerk reaction to the Government's proposals. I ask the hon. Gentleman to study the Green Paper before he comes to any firm conclusions.

A different time scale may be suggested by my colleagues in England and Wales. If the hon. Gentleman reads the Green Paper, he will see that it suggests that there should be a revaluation of non-domestic property throughout the United Kingdom in 1990. Scottish business has always emphasised that that is important and that if there is to be a revaluation it should take place throughout the United Kingdom and not be concentrated in one area.

Mr. Michael Forsyth (Stirling)

Does my right hon. and learned Friend agree that there is outrage on the Opposition Benches because the game is finally up—the game in which they bribe the electorate with extravagant proposals in the sure knowledge that only a minority will have to pay? Under the new proposals, everyone who casts a vote in an election will do so in the knowledge that he is electing an administration to carry out programmes to which he will have to contribute. That is surely a great victory for the local democracy for which the Opposition have been crying out.

Mr. Rifkind

Yes, indeed. The Opposition know well that if all the people of Scotland had to pay for the consequences of excessive expenditure, its attraction as supported by the Labour party, might seem much less attractive that it has seemed in some areas. Remarks about a charge to vote are absurd. Foreigners, for example, will be liable to the community charge, although they have no right to vote. Students in halls of residence will not be liable to register, although they have a right to vote. The link being drawn between the two is manifestly absurd.

Mr. Gordon Wilson (Dundee, East)

Does the Secretary of State realise that, despite all his verbal facility and bluster this afternoon, he cannot disguise the fact that the new scheme is not related to an ability to pay, and that it will be expensive to implement and difficult to enforce? In the consultations, will he say whether he will make adjustments to the scheme so that it is related to an ability to pay? Will he say that in no circumstances will he use the scheme as a smokescreen under which the central Government contribution to local government funding will be allowed to decrease?

Mr. Rifkind

I remind the hon. Gentleman that 60 per cent. of all that local authorities spend is provided under the rate support grant paid for by the taxpayer. The bulk of local authority expenditure is provided on a progressive basis. We are dealing with the 13 per cent. provided currently under domestic rates, not the other 87 per cent. The question is not whether a community charge is a progressive system but whether it is less or more regressive than domestic rates and whether it is fairer than domestic rates. I have not the slightest doubt that it is fairer than domestic rates.

Mr. Martin J. O'Neill (Clackmannan)

Does the Secretary of State remember that when this proposal was last discussed he was the Minister for the Environment for Scotland and was opposed to a poll tax? In his new-found enthusiasm for revaluation, will he remember that he delayed a revaluation in Scotland and precipitated the crisis and chaos which resulted in a revolt in Perth a year after the revaluation?

Mr. Rifkind

I thank the hon. Gentleman for his rather selective reminiscences which I am delighted to hear. The statutory requirements for a revaluation were, as he will recall, introduced by a Labour Government.

Mr. Michael Hirst (Strathkelvin and Bearsden)

Is my right hon. and learned Friend aware that the proposals will be widely welcomed by my constituents who have the invidious distinction of being the highest average rated constituents in the land? Does he agree that the test of the acceptability of the proposals is not the number of gainers or losers but whether the proposals are intrinsically fair? Does he find it deplorable that the Opposition cling to a terribly unfair system which favours their supporters when the major part of the funding of local government expenditure comes from taxation, which is paid according to an ability to pay?

Mr. Rifkind

My hon. Friend is correct. The Labour party's desperate desire to defend the present system has been most noticeable today. It has not provided one proposal as to how single parents, pensioners and others who are unfairly treated under the domestic rating system would benefit from any Labour party proposals. It is wedded to a corrupt and out-of-date system. [Interruption.] It is wedded to a corrupt and out-of-date system. Any system of finance that requires a minority to fund services that will be provided for the whole community and produces a system where many will not pay one penny towards the services that they receive is worthy of that description.

Mr. Tom Clarke (Monklands, West)

Does the Secretary of State accept that the proposals are taking him perilously near the Irish experience that turned out to be disastrous? Does he accept that working people, especially working families, will be paying much more under the proposals, and that that fact cannot be disguised? Does he agree that no new rating system that is deliberately devised to reduce the Exchequer contribution to local services can ultimately succeed?

Mr. Rifkind

As I understand the Irish system, the rates were abolished and replaced by 100 per cent. central Government funding. I do not think that that is what the hon. Gentleman wants or what the Government propose. I do not see that that point is terribly relevant.

Our proposals will increase local accountability because they will create a more meaningful connection between a local authority and the electorate it is meant to represent. I believe that that is a system which stems from the old principle of no taxation without representation. The reverse should also apply. If someone is to benefit from local services, it is not unreasonable for him to make a contribution to them.

I emphasise the fact that the Government intend to provide income support comparable to the present rate rebate system for all those on low incomes. That is another factor which Opposition Members have chosen to ignore.

Mr. Bill Walker (Tayside, North)

Does my right hon. and learned Friend agree that one of the reasons why the Opposition are so upset is that they have been rumbled and the people of Scotland will begin to see that they have been rumbled? Does he also agree that when one considers a local income tax there is not just the fact that there would be 56 different varieties of tax; there is the problem that the people of Scotland would not take kindly to having those employed by local authorities knowing what their income was.

Mr. Rifkind

Yes, my hon. Friend is correct. Confidentiality is important. I do not believe that many people in Scotland would welcome the Liberal party proposal that a local authority should have access to details of their income.

Several Hon. Members


Mr. Speaker

Order. I repeat that this matter is likely to be the subject of debate for a considerable time. I shall endeavour to call those hon. Members who have been rising provided that we can get through by 4.15 pm.

Mr. George Foulkes (Carrick, Cumnock and Doon Valley)

Will the Secretary of State confirm that it is almost impossible to evade rates but that this tax will be relatively easy to evade? What method does he propose to use to deal with evasion?

Mr. Rifkind

No tax system is 100 per cent. effective or this country and many others would not have a black economy.

Mr. Foulkes

Answer the question.

Mr. Rifkind

That is exactly what I am doing. I believe that the system proposed by the Government will be effective and that the vast majority of those liable to register will be registered. Details have been given in the Green Paper. I shall be happy to write to the hon. Gentleman to explain in greater length than I can today the various proposals that will produce that effect.

Mr. Ron Brown (Edinburgh, Leith)

Is the Secretary of State aware that the people of Scotland pay into two kitties—one for the rate support grant and the other for rates? Someone who does not pay rates certainly pays into the overall contribution. Does he accept that the crisis in rating was deliberately and cynically caused by the Government who clawed back over £1.5 billion from the Scottish people? Is that not the answer—the rating system is not so bad; it has simply been made to look bad?

Mr. Rifkind

It has not been made to look bad. I suggest that the hon. Gentleman has a few more discussions with pensioners and single parents in his constituency. He will find that they will give a warm welcome to the Government's proposals and will not like what he has to offer.

Mr. David Lambie (Cunninghame, South)

If the new proposals are so good for Scotland and the Scottish people, why is the Secretary of State for the Environment not immediately introducing the same proposals for the English and England? Is this not another case of Scotland being used as a guinea pig and of the ratepayers being discriminated against?

Mr. Rifkind

The hon. Gentleman is one of those people who cannot be satisfied in any circumstances. He knows well that if I were saying that we cannot achieve anything in Scotland until the same happens in England and Wales he would be accusing me of all sorts of terrible tendencies and saying that it shows that I do not have the slightest ability to meet Scottish requirements when they are different from those of England and Wales. Under this Government, if Scotland has requirements that justify quicker implementation of policies, the Government recognise that fact, even if the hon. Gentleman does not.

Mr. John Home Robertson (East Lothian)

At one time the Secretary of State would have said that these matters should be dealt with in an elected Scottish Assembly. He would not have got away with this sort of rubbish there. How on earth did he manage to come up with a poll tax, a system of local revenue raising which is even more unfair and, to use his terminology, corrupt than the present rating system?

Mr. Rifkind

If the hon. Gentleman believes that the present domestic rating system is unfair and corrupt—

Mr. Home Robertson

The Secretary of State's words.

Mr. Rifkind

The hon. Gentleman described the rating system as "even more corrupt". If he believes that, I look forward to hearing what he would replace it with.

Mr. Jim Craigen (Glasgow, Maryhill)

The Secretary of State expressed concern for shopkeepers and business men. Will he confirm that assessors in Scotland will carry out the 1990 revaluation but that the Inland Revenue will carry out the revaluation in England and Wales? Will he consider the fact that Scottish ratepayers will be paying for their revaluation? Will he confirm today that the allocation of the rating burden between non-domestic and domestic ratepayers will be the same north and south of the border after the revaluation?

Mr. Rifkind

Under the proposals the ratio between non-domestic and domestic ratepayers will not change for Scotland. The hon. Gentleman is correct in saying that under existing rules assessors carry out revaluation in Scotland, while the Inland Revenue does so in England. We shall have to consider that for the future.

Mr. David Marshall (Glasgow, Shettleston)

If the proposals are so good, will the Secretary of State tell the 2 million victims by how much they can expect prices to fall as a result of them? Why is it necessary to have a 10-year transitional phasing-in period for England but no such period for Scotland?

Mr. Rifkind

The hon. Gentleman will have worked out for himself that Scotland is a slightly smaller country than England. The range of rates bills at present is far wider in England than in Scotland, and it is too wide in Scotland. If it is practical to implement proposals in three rather than 10 years, it is surely in everyone's interest. I noted that the Confederation of British Industry in Scotland seemed to be under the impression that a 10-year transitional period was required in Scotland, and that it wanted quicker implementation. I am sure that it will be delighted.

Mr. James Wallace (Orkney and Shetland)

While I share the views of my hon. Friend the Member for Inverness, Nairn and Lochaber (Sir R. Johnston) on the community charge, I am grateful to the Secretary of State for acknowledging the special position of Orkney and Shetland as a result of oil developments. Will he be more specific about what is meant by "special consideration", which the Government will give to the islands councils? During the consultation period will the councils, if they so wish, have direct access to the Secretary of State or his junior Ministers to discuss these matters, rather than through the usual channels of COSLA?

Mr. Rifkind

It is not for me to intervene on the delicate question whether COSLA or individual local authorities should approach us. We shall consider with interest any proposals from the convention and individual local authorities. I thank the hon. Gentleman for acknowledging that the Government accept that special requirements will be necessary for Orkney and Shetland. I assure him that during the consultations we shall seek to achieve a system which is fair, and recognises the special position of the northern islands.

Mr. John Maxton (Glasgow, Cathcart)

Will the Secretary of State explain to the House how four adults in a household make four times the use of local government services as a single person? That is what he implied. Does he recognise the following quote about rates: They are highly perceptible to ratepayers and they promote accountability. They are well understood, cheap to collect and very difficult to evade … The Government have concluded… that rates should remain for the foreseeable future the main source of local revenue for local government. That comes from the Government's White Paper of August 1983. What has changed since then is Government support in Scotland, which has slumped to an all-time low.

Mr. Rifkind

If the hon. Gentleman believes that four adults who are all earning should pay the same contribution towards local rates as a single person—

Mr. Foulkes

That is not the question.

Mr. Rifkind

The question is not whether they use four times as much. They will certainly use local services much more than one person. They will use public transport, water services, refuse disposal, and perhaps education services. To suggest that a single pensioner makes greater use of local services than four adults is absurd.

The hon. Gentleman appreciates that within his constituency and elsewhere in Scotland there is a deep belief that the domestic rating system is grossly unfair. Our proposals will abolish and replace it. I still wait to hear what Opposition Members will do to meet the deep sense of grievance at the existing rating system. Until they produce some alternative, their criticisms will be seen to be bogus, and more concerned with their political objectives than with serving the needs of the Scottish people.

Mr. Harry Ewing (Falkirk, East)

On a point of order, Mr. Speaker. My father served for 40 years in Scottish local government, and many of my hon. Friends and, indeed, the Secretary of State for Scotland have served in it. While the Secretary of State is entitled to describe a system as grossly unfair, he is not entitled to impugn the character of people who have served on Scottish local authorities by describing the system as corrupt. Knowing the Secretary of State as I do, I am sure that he said that in the heat of the moment, and that he will wish to withdraw the word "corrupt" because it impugns the memory and character of all who have served in Scottish local government at any time during the existence of the rating system.

Mr. Rifkind

Further to that point of order, Mr. Speaker. Anyone who was listening to what I said will be in no doubt that I was referring to the rating system, not to either local authorities or individual members of local authorities.