§ 'All public authorities concerned with the employment of employees in tied accommodation, including statutory wages councils, shall increase the minimum rate of wages for employees who live in tied accommodation in 1989 and in subsequent years by an amount that is sufficient to compensate the average employee's household for their liability for the average level of community charge in Scotland for the year in question, in addition to any other increase that the Board may determine:.—[Mr. Home Robertson]
§ Brought up, and read the First time.
§ Mr. Speaker
With this it will be convenient to take new clause 8—Community Charge exemption or reduction for special cases—
'No one in any of the following categories shall be obliged to pay more to any local authority under the Community Charge System than what they would have to pay under the rating system in force immediately prior to the enactment of this Act.
- (1) Recipients of supplementary benefit or supplementary pension.
- (2) Recipients of family income supplement.
- (3) Full time students, including student nurses.'.
§ Mr. Home Robertson
We did not have an opportunity to debate this new clause in Committee because of the guillotine, so I welcome the fact that I can say something about this important issue.
A substantial number of people will be made worse off by the introduction of this poll tax. As my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) pointed out at the conclusion of the last debate, a significant number, of people will be better off—many of whom are in the same circumstances as some hon. Members— but it is worth highlighting the fact that a significant number of people will be penalised by this tax. It is important to dwell on the categories of people who might fall into this trap.
This new clause is designed to highlight the extra impact of the tax on people who live in various forms of tied housing. I shall concentrate, initially, on agricultural tied houses, which are now almost unique to Scotland. The agricultural tied housing system was effectively dismantled for England and Wales by the last Labour Government, and it will be a high priority for the next Labour Administration to undertake a similar reform of this pernicious system in Scotland.
The Parliamentary Under-Secretary of State for Scotland, the hon. Member for Argyll and Bute (Mr. MacKay), who has responsibility for agriculture—who was muttering under his breath just now—told me on 13 January, in a written reply, that it is estimated that out of 21,000 regular hired workers in Scottish agriculture about 14,000 occupied tied cottages, of whom 11,000 have their rates paid by the farmers.
There are therefore 11,000 households scattered through rural Scotland whose rates are paid as a business expense by the employer. The Bill would transform that property tax into a personal tax relating to the occupiers of those houses. Farm workers and their families will have to cope with a cost which they have not experienced before. It might be £500 for a couple and £1,000 or more for a couple with children over 18.
We are talking about some of the lower-paid people in Scotland. The average earnings of farm workers in the United Kingdom during 1986, according to the current annual review of agriculture, was estimated to he only £139.70 for a 46.3 hour week. That average conceals a significant number of even more lowly paid people. The current Scottish Agricultural Wages Board Wages Order says that the minimum wage for a tractor man can be as low as £104.65 for an employee over the age of 20—and only £84.92 for an employee aged 18 — for a 40-hour week. The order also says that up to 93p per week can be deducted from those basic rates when a tied house is provided.
People on very low incomes who live in rural areas where the cost of living tends to be high could not afford to pay this extra tax unless their wages were increased accordingly. The new clause would require the Scottish Agricultural Wages Board to increase the basic wages of people concerned to compensate workers for the effect of the tax. We believe that that is the right approach.
The hon. Member for Cunninghame, North (Mr. Corrie) who, like me, is a farmer said in Committee that he would pay his employees' poll tax for them. I read a report in a fascinating newspaper called Big Farm Weekly of 19 February which implied that farmers would be expected to pay their employees' poll tax directly, just as 915 they now pay their rates. That raises several questions. How many of the household would be covered? If an employee has several people aged over 18 living in a tied house, would the employer be required to pay for all of them? Would the arrangement take account of eligibility for rebates?
The Scottish Office is quoted in the same article as having told the National Farmers Union of Scotland that the employer would become the responsible person, presumably under clause 19, but that clause makes the farmer responsible for furnishing information to the registration officer rather than for paying the tax. The same report conveys the alarm of farmers in Scotland at the prospect of having to pay £16 million for employees' poll tax instead £4.6 million which is what they are paying now for rates on farm cottages.
I fear that some unscrupulous employers will accept the abolition of domestic rates as a windfall, reduce their costs accordingly and leave their employees to pay the new tax. It is possible with the poll tax that employees on relatively low wages and who have grown up children living with them could pay more tax to the local authority than their employers.
The change will have a bearing on many long-standing employment contracts and no less a body than the Scottish Landowners' Federation has raised another interesting facet of the problem. It says in its submission :The present Bill has important implications for occupiers of tied housing and their employers. Currently it is normal practice for employers to pay the rates for tied houses occupied by their employees. Such people will become personally liable for the proposed Community Charge, but, so that their financial position will not be prejudiced, they will expect their employers to pay the Charge.So far, so good. The federation continues :The danger here would be that this payment, if made by the employer, might be treated as a benefit in kind by the Inland Revenue and therefore taxable. Rates now paid by employers in such situations are not so treated by virtue of Section 33(4) of the Finance Act, 1977. Ministers must be urged to give the necessary assurances that similar tax arrangements will be applied in respect of the Community Charge.I am a litle less concerned about the liability of landowners to tax than I am about the effect of these proposals on farm workers' incomes. The Government ought to respond to that.
I invite the Minister to explain the Government's intentions with regard to farm workers and employees in other industries or services which still have the tied housing system. We are considering a wide range of activities, including school caretakers, ministers of religion, lighthouse keepers, coast guards and a host of others. It has, unfortunately, not been possible to deal on Report with the Bill's effect on crofters" but we know that 13,600 crofters are to lose long-standing tax relief. We deplore that.
Another group of people will find themselves brought into the new poll tax net although they have not previously paid local taxation. I refer to personnel in the armed forces resident in barracks and other military premises in Scotland. The Under-Secretary of State for the Armed Forces gave me an interesting written reply yesterday in which he said :Contributions in lieu of rates are made in respect of property deemed to be in the occupation of the Crown. Such payments are the responsibility of the rating of Government 916 Property department. Approximately 14,550 service and 500 Ministry of Defence civilian personnel are living in such property in Scotland."—[Official Report, 3 March 1987.]It emerges that 15,050 service men, excluding the Americans at Holy loch—who also will have to pay—will find that they have to pay poll tax of £250 a year. This raises the interesting prospect of the community charge registration officer having to locate, register and publish a rolling register of every service man in every military base in Scotland. Such a public register is likely to contain some interesting classified material which might well be of interest to foreign powers. I wonder whether the Minister has had an opportunity to think about that aspect of this curious Bill.
What about compensating service men for the extra cost, which will apply only to those who are serving in Scotland? In reply to a question which I tabled on Monday 23 February, the Under-Secretary of State for the Armed Forces said :The implications of the proposed community charge for service personnel in Scotland are currently under consideration by my Department. I will write to the hon. Member as soon as we have reached a conclusion."—[Official Report, 23 February 1987; Vol. 111, c. 150.]I suspect that 15,050 service men will be interested to know what will happen.
The examples that I have given reveal the lack of thought and preparation that characterises the Bill. It is essential to recognise the special effect of the poll tax on people who live in tied accommodation.
§ Sir Hector Monro
This is an important issue. I should have thought that service men would be covered by some form of block arrangement for each military establishment.
§ Sir Hector Monro
I am entitled to my view and I think that I am right.
The more important part of new clause 2 concerns tied cottages. There are swings and roundabouts. Most modernised cottages — I hope that most are now modernised—will pay between £200 and £400 in rates. In Dumfries and Galloway, we anticipate a community charge of about £175. The present level of rates is therefore not so far removed from two community charges. I should have thought that most farmers would anticipate paying two community charges for a tied house and that a working third or more person should pay the community charge himself. We will have the rebate system for people who are not working.
The hon. Member for East Lothian (Mr. Home Robertson) will, I suspect, find that most farmhouses pay less under the present scheme than they would in two community charges, and that charges on farmhouses and farm cottages balance out. I appreciate that some people, perhaps those in Berwickshire, will be vastly better off, but others who have more humble farmhouses in my part of the country will find that the charge for the farmhouse and that for each farm cottage on two community charges will about balance out. If the tax arrangement can be clarified, by and large agricultural communities should have no great worries over the introduction of a community charge.
§ Mr. Dennis Canavan (Falkirk, West)
I support new clause 2 but wish to concentrate my remarks on new clause 8, standing in my name on the Notice Paper. I am absolutely opposed to this poll tax nonsense because it is an unfair tax. It is an unfair tax because it is a regressive tax.
A poor widow living in a council house, for example, could find herself having to pay as much as a millionaire living in his castle. That is unfair by anyone's standards.
§ Mr. Canavan
It is about time that the Government started admitting that the majority of people in Scotland will be worse off. Even the Government admit that the majority of households—52 per cent.—will be worse off. If we translate that into numbers of people, the percentage who will be worse off is considerably more than 52 per cent. Among that 52 per cent. of households will be the special categories that were mentioned specifically in my new clause such as people on low incomes, pensioners on supplementary pension and other people who receive a supplementary benefit, such as the long-term unemployed and students and student nurses, who are on very low grants, or who, in some cases, receive no grant from the Government. At present many of those people pay no local tax. They pay no rates to any local authority, either because they are not the owners or tenants of any eligible properties, such as many students and student nurses, or because, in other cases, they recieve 100 per cent. rate rebate.
The Government will apparently eventually come out with some rebate scheme under this poll tax system, but they are being secretive about it. The details of the rebate scheme seem to be as big a secret as Zircon. I understand that the Department of Health and Social Security will be responsible for laying the appropriate statutory instrument, or whatever, to give full details of the rebate scheme.
However, whatever scheme the Government have up their sleeves, it seems that everyone will have to pay something and that no one will receive 100 per cent. poll tax rebate. The minimum percentage payment will be 20 per cent. I would be grateful if the Minister would confirm that. In other words, the maximum rebate that anyone can get from paying poll tax would amount to 80 per cent.
The Scottish Office figures — which some hon. Members may believe and some may not—state what the poll tax would be in various areas. I notice that in Falkirk district, part of which I represent, the proposed poll tax would be £190 per year, according to the Government figures. That means that a full-time student, for example, at Falkirk college of technology or a student nurse at Falkirk royal infirmary or a pensioner on supplementary pension eking out a living, who perhaps at present receives 100 per cent. rate rebate, will find himself or herself having to pay at least £38 per year. I suppose that that is not much to the heir to the Marquis of Lothian, but to a poor student or to a poor pensioner £38 per year is a considerable sum.
Is it fair to levy that additional tax on people such as pensioners, the long-term unemployed on supplementary benefit and students? We have seen a 20 per cent. reduction in real terms in student grants since the Government took power, and the abolition of the minimum grant means that many students receive no grant. Therefore, they will have 918 to pay at least £38 per year if they happen to he resident in Falkirk district. In many other areas they will pay considerably more.
I ask the House to support my new clause. The poll tax is an attack on the living standards of many people on low incomes, including those in the special categories that are mentioned in my new clause. It is unfair to levy this additional tax burden on low income groups to assist the Government to give what, in effect, is a tax handout to rich people living in big houses.
My amendment will give some protection to those low income groups. What my new clause boils down to is that, under the new system of poll tax, the people in those special categories would not have to pay any more than what they are at present paying under the rating system. In other words, if they receive 100 per cent. rate rebate, they will pay nothing. If they pay no rates because they do not own or lease property., people in these special categories will continue to pay nothing under the poll tax system. If at present they receive a 50 per cent. rate rebate, they will simply pay the equivalent amount in poll tax. Therefore, my new clause would at least be a damage limitation exercise in that it would be of considerable benefit to many people on low incomes.
§ Dr. Norman A. Godman (Greenock and Port Glasgow)
My hon. Friend is talking about a considerable number of people. In my constituency alone about 17,000 people are receiving supplementary benefit. Therefore, he is talking about a massive number of people, is he not?
§ Mr. Canavan
My hon. Friend is quite right. Perhaps the Government statisticians could give us a fairly accurate estimate of the number of people who would be affected, but many people in Scotland will be affected. The high unemployment caused by this Government means that there is a high number of people on supplementary benefit. There is also a large number of pensioners on supplementary pension. The Government are always boasting that there are more students in full-time education than there have ever been in Scotland's history, but that is a fat lot of good if the Government are taking more money out of their pockets, and that is precisely what they are proposing to do under the Bill. Therefore, my new clause would be of considerable benefit to old-age pensioners, to the long-term unemployed and their families and also to students. I ask the House to support me.
§ Mr. Bill Walker (Tayside, North)
The hon. Member for Falkirk, West, (Mr. Canavan) chooses to ignore the fact that provision will be made for all of those whom he has listed in his new clause. On first examination his new clause is tempting. It makes one think that perhaps no provision has been made in the legislation, but of course he knows that that is not so. However, there is also the aspect that perhaps people in all of those categories should become much more aware, in some way or other, of what is happening at local government level and take some real interest in it. Perhaps this measure will have some impact on the numbers who vote at local elections.
If we can encourage an increase in the present ghastly low turnout, by whatever means, even if it is simply by a tax, it will mean that a change in the system is making those individuals begin to take note of what is happening in local government. Perhaps that will be the positive side to this.
§ Mr. Canavan
The hon. Gentleman is being insulting to many people, such as old-age pensioners on supplementary benefit, who take an active interest in what is happening in local government and who do turn out at the ballot box. Thankfully, very few of them will vote for the hon. Gentleman when they do.
§ Mr. Walker
The hon. Gentleman, as ever, is jumping in with his feet in a manner that shows that he was not listening to what I was saying. I never specifically sorted out any particular group to suggest that they did not vote. I said that the derisory turnout at local government elections was such that anything that made individuals take at least more note of what was happening at local government level and take a real interest in it must benefit democracy. The hon. Gentleman will please not put into my mouth words that were not there.
§ Mr. Michael Forsyth
The hon. Member for Falkirk, West (Mr. Canavan) said that £38 was a great deal of money to many people, and he was right. Will my hon. Friend comment on the fact that the difference between the community charge for Falkirk and that for Stirling would be rather more than £38 because of the high-spending policies of Stirling district council?
§ Mr. Walker
I thank my hon. Friend for that helpful intervention. If one has no money, £38 is a fortune. If one has £38, one wants to hold on to it and not give it away. Unfortunately, some local authorities are determined to take away £38, or a lot more. I hope that that will change because, for the first time in a long time, local government finance is being carefully considered.
New clause 2 is about workers in tied accommodation. It is right that that aspect should be considered in relation to local authority finance. Of course, one would be worried if all people were to be substantially worse off, but my hon. Friend the Member for Dumfries (Sir H. Monro) explained that there would be swings and roundabouts. Most of the people concerned would be living in modernised accommodation. I certainly hope that farm workers in tied cottages live in modernised premises, given the substantial public funds which have been poured into bringing those cottages up to date. I hope that everyone will take advantage of that. I have not found one cottage for farmworkers in my constituency that has not been modernised, although they may exist somewhere. There will be a benefit to some from this measure and a substantial benefit to those in high rates areas.
The hon. Member for East Lothian (Mr. Home Robertson) said that about 16,000 people in the services in Scotland are affected by the legislation. If the hon. Gentleman had ever attempted to study what goes on in the services, he would know that they are accustomed to local compensation being provided wherever people are posted. It used to be called the local overseas allowance and other names, depending on where the posting was. [Interruption.] One can always tell those individuals who have never been in the services because they laugh at things that make no sense to them. I assure them that it was never funny if one was living in a part of the world where costs were high. The services have always taken those costs into account.
§ Dr. Godman
Speaking as a former service man, I ask the hon. Gentleman whether he would expect service men who were transferred to Scotland from a base in, say, the 920 south of England to receive from the Army, Navy or Royal Air Force a supplementary allowance to pay the community charge.
§ Mr. Walker
I should not wish to pre-judge that issue. [Interruption.] I should not. It may be done on a block basis. That is the only reason why I should not like to prejudge it. This is always amusing to some hon. Members, but the service men are a large proportion of the voting electorate.
§ Mr. Walker
I am coming to the answer. But I am referring also to some of the rather amusing asides by the hon. Gentleman's colleagues. The services could use allowances as one means of compensating service men. The hon. Member for Greenock and Port Glasgow (Dr. Godman) will be pleased to know that there are precedents for that. The services are accustomed to dealing with these matters. They have the machinery and the methods to deal with them, and I am confident that they will find the right answers.
If service men, whoever they are and wherever they are, are using local facilities, it is right that they should be aware that it is paid for, however that is done. That assists with accountability., For that reason, I hope that service men will all vote in local elections.
The two new clauses are unnecessary because provision has already been made in the Bill to take care of these matters. I am confident that they will not be accepted by the Government.
§ Mr. Ancram
This has been a short but useful debate. I listened carefully to the arguments in support of some form of special arrangement to meet the position whereby workers living in tied houses, who at present have their accommodation provided rent and rates free, will be faced with liability for the personal community charge. I remind the House that the personal community charge is, as we have debated at some length in Committee, a personal liability rather than a liability tied to the occupation of a particular property. Each individual will therefore be expected to meet his or her personal community charge bill. Of course, there is nothing in the system to prevent anyone from paying another person's personal community charge liability on his or her behalf, but that is in no sense part of the formal system as we envisage it, and we propose that, in the interests of perceptibility of personal community charge payments, individual demand notices should be sent to all those liable.
It will therefore be for employers, as my hon. Friend the Member for Dumfries (Sir H. Monro) pointed out, to decide whether to take any account of the personal community charge liability of workers in tied houses in considering the minimum wage that they set for 1989–90 and subsequent years. I should, however, point out that any such arrangements would by no means be straightforward. If an argument is to be developed that employers should thus meet the personal community charge liability of their employees living in tied accommodation, I can only envisage that they may also come under pressure to make similar arrangements in relation to employees who do not live in tied accommodation but who will nevertheless equally find themselves with a new personal community charge 921 liability. Furthermore, it is difficult to see how far any such compensation would go. The new clause suggests that "the average employee's household" should be compensated, but does that include adult children who may have jobs entirely unconnected with their parents' work? That is a valid question.
Service men were mentioned in this debate and in Committee. If registration would cause a security risk—this point was raised by the hon. Member for East Lothian (Mr. Home Robertson)—service men could be exempted under clause 30. We debated this at some length during the latter stages of the Committee deliberations, and I am sure that the hon. Gentleman has happy recollections of that. Clause 30(2) says that persons who arewithin such class or classes of person as may be prescribedshall be exempt from liability. Obviously, that power would be available if a security risk were involved.
§ Mr. Home Robertson
The Minister says that there is scope under subsection (2) for certain categories of people to be left out of the tax altogether. That is a rather curious principle. If it were used for service men, 15,000 people could be lifted out of liability. On the security point, would it not make more sense simply to ensure that these people are left off the public register but are still charged the tax?
§ Mr. Ancram
The hon. Gentleman must decide what his line is. He suggested earlier that registration of service men and the fact that service men would become liable to pay the community charge could, in certain circumstances, create a security risk. If that were the case, there is provision in the legislation to exempt such service men for what I presume would be a very good reason under the terms which the hon. Gentleman has described. I know that we are not in Committee now, but the hon. Gentleman must decide, on certain occasions at least, when he gets the answer which he appears to be seeking, to appear gracious rather than to change direction immediately and to avoid the argument that he originally put.
As for service men in general, the extension of the new burden will depend on what service men pay for accommodation now. The Ministry of Defence will have to look at this as it considers the new scheme's implications.
§ Mr. Douglas
The Minister is trying to be helpful. Will he clarify the position as to representations by the Scottish Office to the Ministry of Defence on, for instance, accommodation in the Dunfermline area, where there are many married quarters? The hon. Member for Tayside, North (Mr. Walker) made the point that the Ministry of Defence is well used to paying local overseas allowances and so on. The passage of the Bill is well advanced. It is important to district councils such as Dunfermline and regional councils such as Fife to ascertain what is likely to be done. At present, personnel quite rightly use the available education services and so on in their areas. How are local authorities and service men to be compensated?
§ Mr. Ancram
At the risk of going into some of the more detailed parts of the Bill, I shall explain the procedures as they might be likely to operate. First, the registration officer must decide who is solely or mainly resident at an address. In the case of service men, that decision may not always be straightforward. By the nature of their jobs, service men tend to move around. That will always be a matter of fact and circumstance. The extent of liability 922 cannot be judged at this distance. It will be a matter of the judgment of the registration officer, subject, obviously, to appeal to the sheriff about who is solely or mainly resident and therefore should be liable to a community charge.
I cannot answer the hon. Gentleman's second point for the Ministry of Defence. It is for the Ministry of Defence to decide, in the light of all the circumstances, what it wishes to do about its payments to service men. Again, the Ministry of Defence will wish to consider that matter.
§ Mr. Ancram
If the hon. Gentleman will allow me to continue, the Ministry of Defence will wish to consider that matter in the light of the circumstances at the time. Obviously, one matter that it will wish to take into account is its payments to local authorities in lieu of rates. The extent of that payment and how much it will be in future will depend on what parts of the services' property remain in the non-domestic area rather than the domestic area, which will fall out of the argument. It is impossible to give the hon. Gentleman a definite answer until the circumstances of each case have been examined.
§ Mr. Douglas
I ask the Minister to consider the example of someone engaged in the Polaris fleet, who is out on patrol for 18 months but is still resident in Rosyth. Such complications should have been analysed by the Scottish Office and the Ministry of Defence. How far have they gone? The Minister has said that nothing has been done.
§ Mr. Ancram
The hon. Gentleman must accept that the fairest way in which liability to pay a charge that depends on residence is to consider the circumstances in each case. I argued in Committee — I believe that it is a correct argument—that it would be totally wrong for us to set down hard and fast rules about who should be regarded as solely or mainly resident. It will be for the registration officer to examine the position of the hon. Gentleman's submariner constituent and to decide whether the length of time that he is away effectively means that he cannot be called solely or mainly resident at his postal address. The registration officer will wish to consider that matter. It is not a matter on which I wish to pre-empt his judgment.
§ Mr. Ancram
I hope the hon. Gentleman will allow me to continue. Many points have been raised. I have already given way to the hon. Gentleman, but I shall give way to him one more time.
§ Dr. Godman
The Minister referred to clause 30 and to service men's possible exemption from the charge. Do I take it that service men, but not members of their families, will be exempt from the tax?
§ Mr. Ancram
If the hon. Gentleman reads clause 30, he will note that it refers to persons solely or mainly resident on Crown land. He must accept that the provision for exemption will obviously depend on the facts and circumstances at the time. That point was raised by the hon. Member for East Lothian, not by myself. I merely said that the circumstances that he raised could find an answer in subsection (2) of clause 30. I hope that the hon. Gentleman is reassured.
§ Mr. Home Robertson
So far, so good. It is interesting to hear the Minister suggest that it may be the Government's intention to get around the problem by 923 exempting people under that subsection. If that exception were to be used, will the Government compensate local authorities for the loss of revenue?
§ Mr. Ancram
As I said earlier, at the moment there is a payment in lieu of rates on Crown properties. The extent of that payment will depend, obviously, on an adjustment between the part which, in a sense, now holds the community charge payers within it and the parts which do not. Obviously, if an exemption of that kind is made, it will be taken into account in terms of payment in lieu.
I now refer to agricultural workers. This matter is the basis of the hon. Gentleman's new clause. It was certainly the basis of the one that he tabled in Committee, but it was not reached. He knows the background to the farm workers' position—in fact, he gave some figures. About 6,000 workers in the category of farm workers do not live in tied houses. About 14,000 live in tied houses, of whom about 3,000 pay their own rates. If wages were upped right across the board, about 9,000 workers would stand to benefit for no justifiable reason—effectively, a windfall. However, a great majority of farm workers—about 90 per cent.—receive wages in excess of the minimum. The average premium for all workers is £12.62 over the minimum. If the adjustment is made only to the minimum, the figures suggest that only about 1,400 workers—7 per cent.—will be directly affected in the wages determination that the amendment seeks to provide.
Again, the hon. Gentleman perhaps has not thought through the full effect of his amendment. I am sure that, were he to do so, he would be as concerned about windfall benefits going to those who do not need them as is Brian Wilson, whom I suspect is a friend of the hon. Gentleman. He writes for West Highland Free Press. On 27 February, with reference to the crofters amendment — it was discussed in Committee, but the principle is the same as that which I now bring forward — and, having congratulated the hon. Member for Glasgow, Provan (Mr. Brown) on the arguments that he put forward, Mr. Wilson stated :It is simply not on to introduce in 1987 a new scheme which gives the well-paid school teacher with crofting status a 25 per cent. rebate while the pensioner next door in a non-crofting house is hit for the full whack.Obviously, if we are not careful in the circumstances of the amendment, the same situation could be created and the same objection could rightly be taken to it.
§ Mr. Ancram
I shall not give way. I am watching the time. Other hon. Members wish to raise matters, and I do not wish to prevent them if I can help it.
Therefore, if public bodies such as the Scottish Agricultural Wages Board, whose position was raised in the debate on an earlier clause, wish to go down this route, many practical details of the arrangement will have to be established. It will not be sensible for the Bill to lay a duty on such bodies in advance of their consideration of the matter.
Under the national taxation system, the position of payments made by employers to employees, whatever the circumstances, is a matter for my right hon. Friend the Chancellor of the Exchequer. I doubt, given the present reasons for benefits for tied cottages, that they would naturally carry over to the community charge. It is 924 therefore highly unlikely that my right hon. Friend the Chancellor of the Exchequer would be willing to consider a tax concession of the kind mentioned by my hon. Friend the Member for Dumfries. Of course, I shall draw to his attention the arguments put forward by my hon. Friends.
New clause 8 which was tabled by the hon. Member for Falkirk, West (Mr. Canavan) would have the perverse effect of limiting the community charge liability of certain individuals to the amount that they paid in rates before the new system was introduced. That produces a series of glaring anomalies, For instance, some people who pay no rates now would be exempt from paying a community charge if they fell into the categories covered by the new clause, whereas others who are not in those categories would not be exempt. That would indeed extend the local tax base, which is one of the objectives of the Bill, but it would extend it in the most arbitrary and unfair way possible.
Similarly, the clause makes no provision for people's circumstances changing after the Bill is enacted. What happens, for instance, in the case of a student whose liability is restricted, or who is exempted by this clause, but who subsequently graduates and obtains a well-paid job? Again, as the clause is framed, that would freeze the payments made by the groups it covers at the point when the Bill is enacted, making no provision for subsequent changes in local authority spending or other circumstances.
I am sure that the hon. Member for Falkirk, West did not intend to say that if a student happens to be exempt and is not paying rates today he should never be required to pay the community charge in perpetuity, even if he became the chairman of a major international or multinational company. However, that is the effect of the hon. Gentleman's new clause. That is why his original suggestion that it is a good clause may lead him, on reflection, to realise that that is not entirely so.
It can be argued that the hon. Gentleman's intention was to explore the position of certain particularly deserving groups under the community charge system. I should explain quite clearly, as we explained again and again in Committee and as my hon. Friend the Member for Tayside, North (Mr. Walker) made clear in his valuable contribution, that the system we propose will make adequate provision for people on low incomes who would find it difficult to meet their full personal community charge liability. Those who at present qualify for social security benefits will be eligible for consideration for rebates under the scheme that we propose to bring in under clause 26. Contrary to the impression that the hon. Gentleman tried to give, that was fully explained in Committee. We admitted that the final figures could not be included because we do not know what the levels of expenditure will be when the scheme comes into operation in 1989.
Equally, there is the question of the minimum contribution. That will be in line with what is to be proposed under the housing benefits system, which will be made known shortly. It is right to try to keep the two schemes running along the same lines so that people will be able to understand them. We shall return to the rebate scheme tomorrow. However, the figures that we have produced are fairly detailed as to what, according to current assumptions, the actual rebate will be for various 925 categories of persons. Like the housing benefit scheme that will be brought into force in 1988, our proposed scheme will provide for all those who are liable for local taxation payments to make a minimum contribution towards their liability.
The position of students is slightly different. The Government intend that in the longer term they should be removed from entitlement to social security benefits and that they should return to the position whereby they depend on the students awards system, parental contributions and their own vacation earnings. The argument of the hon. Member for Falkirk, West seemed to be based on the assumption that at the moment students pay nothing towards local government services. There are large numbers of students in my constituency, many of whom are living in accommodation for which they have to make a contribution to the rating system, often without support.
§ Mr. Ancram
The hon. Gentleman says that only a minority contribute. If he were to look at the breakdown of student numbers, I think he would find that if students are living in rented accommodation they are paying an element of rates through the amount of rent that they pay to their landlords.
§ Mr. Ancram
No, it does not.
However, we accept that students will require help to enable them to meet the charge. Therefore, we propose that students who are eligible for grant—including those who, because of parental income, receive no grant payments at present—should receive a flat rate each year towards their personal community charge liability. It will be based on the average level of personal community charge in Scotland each year and it will have regard to the level of assistance that is available under the rebate system. The detailed arrangements will he worked out well before the introduction of the charge in two years' time.
I believe that the new clause of the hon. Member for Falkirk, West is unnecessary. The protection for those whom he is seeking to protect is already there. It is included in the rebate system. Therefore, I hope that he will withdraw his new clause. If he does not, I shall ask my hon. Friends to resist it.
I hope that the hon. Member for East Lothian appreciates that his new clause would be likely to make things more difficult rather than easier for those whom he is trying to help, and I ask him to withdraw it. If he does not, again I shall ask my hon. Friends to resist it.
§ Mr. Deputy Speaker (Sir Paul Dean)
Order. The hon. Gentleman has already spoken. Does he have the leave of the House to speak again? Mr. Canavan.
§ Mr. Canavan
The Minister cannot have it both ways. He cannot complain that under the existing system most people do not pay rates and say that that is undemocratic and then say that many students who do not pay rates directly pay them nevertheless, indirectly as a proportion of the rent that they are charged by their landlord. It makes nonsense of the Minister's argument.
The Minister has either misread or deliberately misinterpreted my new clause 8. If somebody ceases to be 926 a full-time student, he ceases to qualify for the rebate under the terms of my new clause. I am dissatisfied with the Minister's reply. He ought to accept the principle of the new clause and ask his father to move an appropriate amendment in the other place.
§ Mr. Home Robertson
The Minister's reply is far from satisfactory. This debate will be regarded as very bad news indeed by all occupiers of tied housing in Scotland, regardless of the service or industry for which they work. There appears to be some hope for the armed forces, but neither this Minister nor any other has given a specific undertaking. All we have had is the undertaking of the hon. Member for Tayside, North (Mr. Walker)—with all the authority that he carries — that service men in Rosyth and Lossiemouth might be classified as people in overseas postings. That seems to be a curious new approach.
As for farm workers, the Minister has confirmed that this is a deliberate transfer from a property tax on farmers to a personal tax on farm workers. In many cases that will be seen as a nice windfall for employers and as very hard luck for a number of very low-paid people. The Minister tried to fudge the issue, but he knows as well as I do that farm workers in Scotland are among the lowest paid people in Scotland. He is seeking deliberately to impose an additional tax on them. All he is offering is a pie in the sky rebate scheme, but he will give no details.
In view of the hon. Gentleman's unsatisfactory answer, I do not intend to withdraw the new clause.
§ Question put and negatived.