HC Deb 05 March 1987 vol 111 cc1072-86
Mr. Home Robertson

I beg to move amendment No. 170, in page 20, line 4, leave out clause 24.

The First Deputy Chairman of Ways and Means (Mr. Ernest Armstrong)

With this we shall take the following : Amendment No. 171, in page 36, line 23, leave out schedule 3.

Government amendments Nos. 139 to 143.

Mr. Home Robertson

The effect of amendment No. 170 is to delete clause 4, which in turn would delete schedule 3. The amendment deals with a mechanism whereby the Secretary of State can claw back grant and effectively take control of the budgets of local authorities in Scotland. At the same time, we are debating Government amendments Nos. 139 to 143, which represent a minor concession to points that were made in Committee. They remove the provisions in the clause which would enable the Secretary of State: for the purposes of giving full effect to this paragraph by order modify any enactment … in its application to the determination, calculation, levy, collection or payment of a community charge. That seems an extraordinary power to put into the hands of the Secretary of State, let alone this Secretary of State. There should not be such open-ended enabling powers in any legislation. I am glad that the Minister is prepared to think again about that point. I suppose that we should be grateful for small mercies.

The intolerable basic principles of schedule 3 remain intact. I refer to powers that were established in the Local Government (Miscellaneous Provisions) (Scotland) Act 1981, which have been made more and more draconian by a series of subsequent Acts, and which are being further refined in the Bill as they will affect the new community charge system.

Those powers strike at the very heart of the principle of local democracy in Scotland. The Secretary of State began by putting Scottish local authorities into a statutory straitjacket of guidelines. He then cut the rate support grant in successive years, up to a total cumulative value of Tory cuts in rate support grant since 1968 of £1,750 million. That is equivalent to more than a full year's rates bill for every ratepayer in Scotland. The Secretary of State left our local councils with an intolerable choice of either forcing up their rates or cutting important services, such as education, support for old people and the disabled and so on. It is humbug for the Government to suggest that they are protecting the ratepayers or the future poll tax payers, while year after year they cut the rate support grant.

6.15 pm

When some local authorities decided that they were not prepared to cut services and therefore had no option other than to increase the rates, the Secretary of State intervened to close that door. He gave himself the power to put orders through Parliament to fix the budgets of individual Scottish local authorities. That raised the rather bizarre prospect of this multinational Parliament turning itself temporarily into a town hall to strike the rates for individual local authorities.

Those ludicrous forays by the Secretary of State in pursuit of his vendetta against local authorities have been played out in this Chamber. Stirling district council was the first authority to catch it. Its rate support grant was cut on 20 July 1982. Then there was the night of the long knives on 21 July 1983, when the Lothian regional councils and the district councils of Stirling, and Kirkcaldy were subjected to collective action and asked to adjust their rates regardless of the wishes of the people who elected them. The Secretary of State has the power to ride roughshod over locally elected councils, and that power is now being transplanted into this poll tax Bill.

The whole selective action machinery turns on an assessment by the Secretary of State of whether a local council's budget is excessive and unreasonable. As the Minister keeps reminding us, those terms originated in the Act introduced by a Labour Government in 1966.

Mr. Ancram

Tell us about it.

Mr. Home Robertson

The Minister challenges me to tell him about it. Section 5 of the 1966 Act allowed the Secretary of State to take action against a local authority when he felt that its expenditure was excessive or unreasonable. The Act has other powers. It states that the Secretary of State could also take action if he was satisfied that a local authority…has failed to achieve or maintain a reasonable standard in the discharge of any of their functions". At least that was even-handed legislation, which is more than can be said for the way that the Government have handled this subject.

Of course, I do not suppose that back in 1966 anybody considered the possibility of there being in office such an excessive, unreasonable and unrepresentive Secretary of State as there is today.

Mr. Ancram

Is the hon. Gentleman saying that his party accepted in 1966—it must have, or it would not have passed the legislation—that there could be occasions when expenditure was excessive and unreasonable, and that therefore the Secretary of State should take action against that authority?

Mr. Home Robertson

That was the case then and that was the principle for which we legislated. Obviously, there is a need for such residual powers. However, I do not think that anyone envisaged that the powers would be exercised in the sort of circumstances in which the Government have exercised them.

I look forward to the day—although I hope that it will not be necessary—when a Labour Secretary of State for Scotland can intervene to ensure that local authorities that are defaulting on the standards of provision for their people come up to scratch. Let us consider all the circumstances—

Mr. Maclennan

I do not understand the logic of the hon. Gentleman's case. He has just criticised the Minister for saying that he would intervene to reduce unreasonable expenditure against the wishes of the local electorate. Is he saying that he would choose to intervene against the wishes of the electorate?

Mr. Home Robertson

I was simply drawing attention to the terms of the 1966 Act. I deplore any intervention, other than in the most extreme circumstances, against locally elected authorities. My party stands for democratic accountability and local democracy in Scotland.

Several Hon. Members


Mr. Home Robertson

This Bill is guillotined and I am determined to continue with my speech in my own way.—[Interruption.] We are having some difficulty. I hope that the hon. Member for Edinburgh, Central (Sir A. Fletcher) will control himself. He is aware that, as the Bill is subject to a guillotine, we do not have as much time as we would like.

Let us consider the circumstances of the selective action taken by the Secretary of State against Glasgow district council in July 1983. It started with the report to the House that led to the reduction of Glasgow district council's budget. Initially, the Secretary of State claimed in his report that in his—possibly biased—opinion Glasgow district council's budget was "excessive and unreasonable". The district council responded and, in due course, both report and response were laid before the House. The debate on the Floor of the House lasted one and a half hours and the outcome was decided by a vote. The Division list for that vote makes very interesting reading.

The debate concerned the internal affairs of Glasgow district council. Not one Glasgow Member voted in favour of the report, and 10 voted against. Only 17 Scottish Members of Parliament voted for it, and 42 voted against. The report exclusively affected Scottish interests—specifically Glasgow interests—yet it was approved by a majority of 45, thanks to the intervention of 203 Tory Members—whose informed interest in Scottish local affairs is well known.

Such action can serve only to undermine the principle of democracy. The Secretary of State for Scotland, who has no mandate in Scotland, is abusing this Parliament to suppress democratic local government in Scotland. That is the sort of irresponsible action that makes it more necessary than ever to establish a democratically accountable and evolved Scottish Assembly to deal with Scottish affairs.

Sir Alex Fletcher (Edinburgh, Central)

I hope that the hon. Gentleman will join it.

Mr. Home Robertson

So do I.

The Secretary of State keeps telling us that the new poll tax will be such a masterpiece of accountability that there will never again be cause for central Government interference in local affairs. Indeed, such is his confidence that he is doing away with the somewhat inappropriately named guidelines that have been built into the system.

We shall have an opportunity later to consider the comments of the Tory Reform Group, which certainly rejects the belief that accountability will be achieved by this legislation. If the Minister really believes that the poll tax will provide such an effective check on the affairs of local government in Scotland, why has he left the clawback machinery in the Bill? Indeed, why has he taken the opportunity to make that machinery even easier to operate?

The right hon. and learned Gentleman has done that in three ways. First, he has removed the right of the targeted local authorities to make their side of the argument known to the hon. Members who will vote on their budgets. Instead, he can take the liberty of summarising local council's representations in his terms. Secondly, in fixing a new level of poll tax for an authority, he can take into account all aspects of that council's finances, rather than simply that expenditure that is alleged to be excessive and unreasonable. Thirdly, the charade of comparing the target authority with other councils will become even more farcical because the Secretary of State is now to relieve himself of the statutory obligation to make the comparison with authorities that are "closely comparable" or as closely comparable as possible with the authority concerned. The important words "closely comparable", which appeared in the Local Government (Miscellaneous Provisions) (Scotland) Act 1981, are now to be removed.

The Government are completely indifferent to public opinion in Scotland. They are dismantling our economy and devaluing our democratic institutions. Even the so-called Tory moderates have a remarkably cavalier attitude towards Scotland. [HON. MEMBERS: "Name them."] They are scuttling at a great rate just now, but there is still the marvellous organisation called the Tory Reform Group, which is to publish an interesting document that comprehensively rubbishes the idea of a poll tax. The concluding paragraph states: In an ideal world Ministers would have canvassed other ideas more comprehensively and studied first the results of the new system being introduced in Scotland. That means, before introducing a poll tax in England and Wales. There we have it: Scotland is being used as a guinea pig for this disgraceful experiment. The introduction of the tax would be bad enough, but the continuation of the clawback mechanism would be intolerable.

I urge my hon. Friends to support the amendment and to remove this abhorrent provision from the Bill

Mr. Henderson

With characteristic candour, the hon. Member for East Lothian (Mr. Home Robertson) made it clear that the phrase "excessive and unreasonable", which is critical to the whole exercise, first appeared in legislation enacted by the Labour party and, I may say, voted for by the hon. Member for Caithness and Sutherland (Mr. Maclennan).

Mr. Dick Douglas (Dunfermline, West)

It appeared in 1929.

Mr. Henderson

Does the hon. Gentleman wish to intervene?

Mr. Douglas

The hon. Gentleman used the word "first". The phrase first appeared in the 1929 Act.

Mr. Henderson

I am grateful to the hon. Gentleman for telling us that the first use of the phrase was in 1929. But that does not mean that we can get away from the fact that it was used again in the 1966 Act, which was introduced by the Labour party and supported by the hon. Member for Caithness and Sutherland, who now seeks to distance himself from it.

The concept has been important in local government as a reserve power for the Secretary of State.

It is interesting that during the speech of the hon. Member for East Lothian the right hon. Member for Glasgow, Govan (Mr. Millan) decided to leave the Chamber. We all understand why he did more to cut local government expenditure by diktat from the Scottish Office than any other right hon. Member. The right hon. Gentleman cut the staff of local government by 6,000 in one year, so it is not surprising that he should have left the Chamber when the hon. Member for East Lothian was suggesting that if the Labour party were in office it would allow all local authorities to spend as much as they liked at any time. The Labour party is out of office, and will remain out of office for a long time because of the double standard enunciated by the hon. Gentleman.

The hon. Gentleman talked about mandate, and I take it that he would apply the same principle to Fife regional council. There is not one Labour councillor in north-east Fife. Should Fife regional council never do anything in north-east Fife that is not approved of by the councillors from north-east Fife? That is the logic—if logic there is—in the hon. Gentleman's comments on mandate, and I hope that he will realise how foolish his argument is. He should not forget that one in six Labour candidates in Scotland lost their deposits at the last election. In my constituency the Labour candidate polled less than half the number of votes polled by the most disappointed Conservative candidate in the area of Glasgow with the strongest Labour support. When Labour Members talk about mandates in Scotland, they should remember that there is gy little of the geography of Scotland where their writ would run.

Mr. Maclennan

The two old political parties rival each other in their commitment to the centralisation of Government. It is hard to pick and choose between the arguments that have been deployed by both Conservative and Labour speakers in this debate. Both parties would seek to intervene in the affairs of local government when it suited their political book to do so.

When I supported the 1966 Act 20 years ago, it never occurred to me that the power written into that Act could be so abused as it has been by the right hon. and hon. Friends of the hon. Member for Fife, North-East (Mr. Henderson). I do not believe that it was abused, to be fair to the Labour party to which I once was proud to belong.

6.30 pm

The reality is that all governments of whatever hue engage in the business of cutting local authority power, imposing their views on people, and erecting a constitutionally obnoxious principle, despite the fact that Parliament has empowered local authorities to carry out the services that it has specified, and has made arrangements for the democratic election of their members. The judgment of local electors must be supplanted by the judgment of the Government.

Mr. McLoughlin (Derbyshire, West)

Will the hon. Gentleman give way?

Mr. Maclennan

If the hon. Gentleman wishes to take up the time of the House, I shall give way.

Mr. McLoughlin

Is it alliance policy to give local government a blank cheque to allow it to raise the rate to any level and to take money from old people without any parliamentary responsibility? That is the impression that the hon. Gentleman gave by saying that the Government should not interfere in local government. It would be dangerous if the hon. Gentleman were to give local government a blank cheque. We have seen what local authorities will do.

Mr. Maclennan

It is the purpose of the alliance to seek to increase local accountability. Throughout the debate the Minister has alleged that that is the purpose of the Bill I am trying to point out that far from achieving that end, by reducing the amount of money available to local authorities by the introduction of the poll tax, which reduces the amount of money available to local government to a mere 13 per cent., the Minister will massively reduce local accountability. By increasing the proportion of grants that local authorities have as a result of the measure and their reliance upon grant, the Minister is taking away local accountability. That is a reversal of proper priorities. The consequence cannot be undone save by moving towards the introduction of a more broadly based, genuinely local tax. That is why the alliance party supports local income tax. Of course we recognise that there will be a need for a grant element to equalise resources; otherwise the system would be unfair.

Although I have some sympathy for the Minister and for the move, the difficulty is that the Bill will reduce finance at the hands of local authorities to such a small proportion of total expenditure that, by the gearing effect, any change in the level of service provisions will require a substantial increase in the tax rate. The Minister has constantly argued that, by a marginal increase or reduction, a local authority will be more responsive to public opinion. We shall have to wait and see whether that is so.

It is quite clear that local authorities will have little control over their own priorities and that real accountability is not about expenditure at the margin. Real local government is about policies, major issues and the provision of important services. It is not about adjustments at the margin, and that is what the Bill will achieve. It will destroy accountability, and that is one of the reasons of principle why we oppose it.

The amendment seeks to make sure that local accountability is not only damaged by a direct reduction in the amount of tax available to a local authority but is further eroded by an additional provision that enables the Secretary of State to intervene at his discretion to axe expenditure if he so chooses. It is a belt-and-braces provision that throws considerable doubt upon the Secretary of State's assertion that he believes that the introduction of the tax will increase local accountability. The truth is that he thinks that some local authorities will be prepared to accept the ratchet effect and accepts the fact that a local authority may wish to increase spending to, say, 10 per cent. above average and will need a tax rate of three times that amount to achieve it. It is perfectly possible that there are such local authorities, but it will be iniquitous if, in the circumstances, the Secretary of State seeks to substitute his judgment for the judgment of a local authority. That kind of action erodes local accountability and brings local authorities into disrepute.

If the Secretary of State is genuinely concerned to bring about a responsible attitude to spending and to curb extremism, he would long ago have thrown his full weight behind the growing movement towards electoral reform. That would, at a stroke, end extremism. That is beyond the scope of the amendment. All I can do is to commend the purpose of the amendment moved by the hon. Member for East Lothian (Mr. Home Robertson) and express the hope that he does not push too hard the idea that such interventions as were encompassed in the 1966 Act are acceptable. There is a balancing power to enable central Government to intervene to require local authorities to do certain things. It should be a matter for their discretion, under the arrangements that Parliament has set down. It is an important amendment that merits careful scrutiny and should be accepted by the Government.

Mr. Allan Stewart (Eastwood)

The hon. Member for Caithness and Sutherland (Mr. Maclennan) started his speech by referring to issues to which the Labour party and the Government are committed. It became clear that all that he is committed to is the continuing production of hot air. When asked a simple question by my hon. Friend the Member for Derbyshire, West (Mr. McLoughlin)—[AN HON. MEMBER : "Where is her?"] My hon. Friend has been called out to see a constituent.

When asked by my hon. Friend what the SDP's position was on whether central Government should have a reserve power in relation to local authority expenditure, the hon. Gentleman ducked. He referred to the fact that the alliance is sometimes in favour of local income tax and that there would have to be a central Government grant.

Mr. Maclennan

I answered the hon. Member for Derbyshire, West (Mr. McLoughlin) at some length. Perhaps I did not go to the point as quickly or as clearly as I should have done. If that is the case, let me now make it clear that my hon. Friends and I do not believe that such a power is necessary.

Mr. Stewart

I am grateful to the hon. Gentleman. He has made the matter absolutely clear. Let people, not only in Scotland but south of the border, be absolutely clear that the Social Democrats do not believe that central Government should have any reserve powers in relation to local authority expenditure, no matter how unreasonable, excessive or irresponsible. That is a principle, but it is not one with which most people would agree.

Mr. Michael Forsyth

I should like to know whether my hon. Friend is as puzzled as I am. We are not hearing about the position that was taken by Liberal councillors in Liverpool who were rescued from the antics of the Labour party.

Mr. Deputy Speaker

Order. The hon. Member for Eastwood (Mr. Stewart) should not be tempted to stray away from the amendment.

Mr. Stewart

I am grateful to my hon. Friend the Member for Stirling (Mr. Forsyth) for his intervention. Liverpool, of course, is south of the border, and we are talking about Scotland. It is not unusual for the Social Democratic and Liberal parties to have different views.

The hon. Member for East Lothian (Mr. Home Robertson) became almost hysterical at times in what has been generally a well considered and moderate debate. However, he advanced the only good argument that I have heard in favour of a Scottish Assembly—his personal commitment to attend such an Assembly instead of this place.

The hon. Member for Lothian missed one of the essential features of schedule 3. It is not proposed that under the community charge central Government would have the same powers as now exist over local authority expenditure. The major power over local authority expenditure in Scotland is the system of guidelines and penalties, but that system will not be necessary after 1 April 1989. I think that the hon. Gentleman accepted the need for some reserve powers in respect of local authority expenditure. At least, that is what I understood him to say. In Committee, he said : There may be circumstances in which there is a need for the Government to take steps to restrict local Government expenditure."—[Official Report, First Scottish Standing Committee; 17 February 1987, c. 1198.] It is surprising, therefore, that the hon. Member for Glasgow, Cathcart (Mr. Maxton) should have made several broadcasts in Scotland clearly stating that the next Labour Government will sweep away all controls on local government expenditure. I am only sorry that the hon. Member for Glasgow, Garscadden (Mr. Dewar) is not in his place. I hope that he will be able to act as mediator to establish precisely what Labour party policy in Scotland is. Either it is in favour of a reserve power or it is not. The Opposition's two leading spokesmen during the passage of the Bill through the House are taking entirely different positions on a central issue.

Mr. Henderson

My hon. Friend may have explained why the hon. Member for Glasgow, Cathcart (Mr. Maxton) is out of the Chamber at the same time as the hon. Member for Glasgow, Garscadden (Mr. Dewar).

Mr. Stewart

Indeed. They may be meeting to try to establish the Opposition's policy.

Under any system—a community charge, the present rating system or a rating system as amended—central Government must have ultimate responsibility for the control of public expenditure. That will be so under any system, but I do not believe that the intention behind schedule 3 is to use the powers within it to the same extent as the present powers. It is clear that the accountability argument would come into force. The policy of succesive Governments has been to maintain a reserve power to take action in exceptional circumstances, and it is sensible that that position should be maintained.

6.45 pm
Mr. Dick Douglas

This has been an interesting debate, and I wish to put only a few questions to the Minister about schedule 3. I accept that in terms of fiscal management there is an argument for some form of Government control over the expenditure of subordinate authorities within a unitary state.

I should tell the hon. Member for Caithness and Sutherland (Mr. Maclennan) that I was somewhat intrigued by a remark made by the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) during a debate in the Scottish Grand Committee. We were discussing the government of Scotland. The right hon. Gentleman suggested—I thought he did so with some merit—that one of the ways of reassuring the public that a Scottish Assembly with tax-raising powers, which is what we desire, would not "abuse" those powers, would be to make it clear to the Assembly that there could be no public sector borrowing requirement. I am not sure whether the right hon. Gentleman wanted that provision .to be placed in legislation or to introduce it by other means. I accept that that would be a means of introducing a form of fiscal discipline.

Nations have a fiscal discipline imposed upon them in the international arena—

Mr. Michael Forsyth

Will the hon. Gentleman give way?

Mr. Douglas

Before the hon. Gentleman intervenes to talk about the International Monetary Fund, I wish only to say that that reflects the fear of pain and the hope of gain that is to be found in the international arena. The Labour Government of 1966 introduced reserve powers, and my recollection is that they were never used.

The first concept that we are considering is the production of a report. It seems that the Secretary of State will receive a report proposing a reduction in the amount of personal community charge determined by the authority". We are told now that there will be criteria for the report, and these will be extremely interesting. Who within the Secretary of State's office will prepare the report? Which civil servants will undertake this task? I suggest that it will be an onerous job. We are told in paragraph 1(3)(a) that the Secretary of State…shall have regard to the financial and other relevant circumstances of the area of the authority".

Mr. Ancram

The provisions in schedule 3, subject to one or two minor variations, are identical to those which now exist for selective action to be taken in respect of rates. That procedure has been examined on a number of occasions in the House. The problems that the hon. Gentleman seems to be envisaging have not emerged.

Mr. Douglas

In this instance it is proposed that a report will be produced. We are being asked to have regard to general economic conditions. Paragraph 1(3)(c) (iii) refers to such other financial, economic, demographic, geographical and like criteria as he"— the Secretary of State— considers appropriate; and (d) may leave out of account such categories of estimates expenses as he thinks fit.

If anywhere in Scotland any body of reasonably objective opinion started to produce a report on any local authority in Scotland, it would provide that, on the basis of any revenue that was to be raised, it could not be expected to be constrained by considerations relating to "general economic conditions". I shall refer to my constituency as an example. I became the Member for Dunfermline, West in 1979, when the Tories came into power. I can tell the House that there are 18-year-olds who were unemployed, and still are, because of the "general economic conditions". We have seen the decimation of the mining industry, which was the result of "general economic conditions". My hon. Friend the Member for Dunfermline, East (Mr. Brown) and I saw the Prime Minister, the Head of the House. It was pleasant meeting her and we had a nice wee cup of tea. What did we get out of our meeting with the the right hon. Lady? We were told that the Scottish Development Association has to have regard to "general economic conditions". I am still waiting for the report that I asked for in November 1986.

If the Minister were objectively to draw up a report and were to consult any body of opinion within the Scottish Office or anywhere else, I submit that, even to Members such as the hon. Member for Stirling (Mr. Forsyth), having regard to "general economic conditions" in Scotland, he could not say that local authorities were spending too little.

The thrust of the argument is that the Secretary of State will ignore economic conditions and the strains on local authorities. Effectively, he is saying that if a local authority exceeds its estimates and revenue-raising powers, the Government will intervene. That undermines all the arguments about accountability, and that is the thrust of the Bill. The lie is in the Government's mouth. Do they believe that this is a measure of accountability?

I accept that there must be certain forms of constraint if overall fiscal management is to be achieved—I am an unreformed Keynesian—but the Government do not accept that. The Government argue that the market will know best and they follow monetary policies. If we judge the Government's argument at face value, they do not require this provision. There may be some room for constraint, but it is not embodied in the schedule that we are being asked to support.

Mr. Ancram

It may help the House if I briefly cover the Government amendments. I do not believe that we need to linger over them. The only two amendments of significance are amendments Nos. 139 and 140. They are exactly the same as amendments tabled by Labour Members in Committee. They remove four subparagraphs which simply translate into community charge terms present legislation concerning rate reductions. The sub-paragraphs were intended to enable the necessary changes to be made to the various procedures in the Bill concerning the community charge so as to implement community charge reductions. At the time, concern was expressed at the constitutional principles involved and I undertook to reconsider whether the amendments were absolutely necessary. I am now satisfied that the Bill as it stands can accommodate community charge redeterminations without further amendment. Therefore, the four subparagraphs are no longer needed.

Amendment No. 141 corrects an error in the wording of the Bill. Amendments Nos. 142 and 143 are intended to require authorities with a redetermined community charge to repay any sum paid to them in response to a liability to pay the original charge. The repayment is subject to procedures that may be prescribed by the Secretary of State. I hope that the amendments will find favour with the House, especially as the main amendments reflect the line taken by the Opposition in Committee.

I believe that we have had an interesting debate. From the hon. Member for Caithness and Sutherland (Mr. Maclennan) we have learnt that a future alliance Government would exert no form of control whatever on local authority expenditure. Whatever the level of expenditure undertaken by a local authority, there would be no form of control. It is also significant that, during the course of the Bill, the hon. Gentleman has made it clear that the proportion of rate support grant, the central taxpayers' contribution, should be maintained against expenditure. Therefore, the hon. Gentleman has given us a picture not only of expenditure going sky high if so desired by authorities, but also—similar to a blank cheque—the central taxpayer will automatically have to put more money into the central grant pot to keep the proportion of grant against expenditure the same.

Mr. Maclennan

I am perfectly happy to stand by what I have said, but the Minister has misrepresented what I said about grant. I made it clear that grants should not remain constant as a proportion of expenditure, but should be related to resources. If we move to a system of local income tax, that will reduce the amount of grant. Instead of money being paid as income tax to the Exchequer and then back to local authorities, it will go straight to the local authorities.

Mr. Ancram

We still have to hear from the hon. Gentleman the details of such a local income tax scheme.

I understood that the hon. Gentleman's remarks about controls did not merely apply to local income tax, but represented a general alliance principle. The hon. Gentleman also raised a previous argument when he referred to the 13 per cent. of expenditure from domestic tax. He asked how there could be accountability when we propose to destroy present accountability. Before the hon. Gentleman makes such statements, he should wait and see precisely what will be destroyed in terms of present local accountability.

Eventually, we shall remove local businesses from the local government tax-raising system. What accountability do such businesses possess? Local businesses have no vote and cannot influence the spending decisions of local authorities. However, the hon. Gentleman has argued that by removing them from this Bill accountability has somehow been lessened. If the hon. Gentleman examined the situation more carefully he would discover that the present lack of accountability lies with those who pay domestic local taxes. Of the total electorate in Scotland, only 39 per cent. pay rates. This Bill will mean that the vast bulk of those who vote in Scotland will pay some contribution towards the spending decisions of their councils. The scheme that we are proposing is far more democratic than any system proposed by the hon. Gentleman.

The new arrangements proposed in the Bill, as discussed in Committee, will improve the accountability of local authorities by widening the net of local taxpayers and hence the degree of oversight exercised by the electorate. The increased pressure for sensible budgeting allows us to abandon the system of grant penalties and tighter guidelines that presently exist. I hope that all hon. Members welcome that, because, although such controls were necessary, they were not something that any of us wished to see operating in an ideal world. We need to be sure that there is adequate pressure to keep local authority spending within reasonable bounds, but we must also ensure that local taxpayers are protected against the risk of unreasonable behaviour by individual authorities.

We have felt able to get rid of the general rate-capping measures that were adopted in legislation two years ago because we believe that they will not be necessary under the new system. At the same time, we believe that there must be some last resort power to enable the Secretary of State to propose a reduction of community charges in cases where an irresponsible authority decides to undertake expenditure in any particular financial year that is "excessive and unreasonable". Effectively, the clauses under discussion will achieve that. We are translating into community charge terms the present powers to effect a reduction in an authority's rate contained in section 5 of the Local Government (Scotland) Act 1966.

Opposition Members have made it clear that they oppose the provisions, but I do not believe that individual local taxpayers will agree, especially those who have been subjected in the past to the consequences of excessive and unreasonable expenditure in various areas of Scotland. It will interest hon. Members to know that one of the points made to me in recent questions about the community charge is that there is a general fear that, because there will he no controls, local taxpayers will be left at the mercy of irresponsible councils especially in the first year of a four-year term. I have been able to say that the Government have recognised that possibility, however remote, and as a responsible Government we believe that a last resort power should be returned.

The provisions in schedule 3 largely mirror the existing provisions for proposing a reduction in rates. First, the test that has to be applied is whether the authority's total estimated expenses are "excessive and unreasonable". That is a strict test and precisely mirrors the provisions in the present legislation. Of course, were the Secretary of State to exceed those criteria he would be subject to a judicial challenge. Secondly, the considerations that the Secretary of State either has to or may have regard to, as set out in paragraph 1, sub-paragraph (3), are again the same as apply at the moment to proposed rate reductions. Thirdly, the procedures are virtually the same as at present. The hon. Member for East Lothian (Mr. Home Robertson) raised a number of points that were altered in Committee and I repeat that they are only cosmetic changes of detail. They do not alter the way in which the provisions will operate. We went into the full details of the provision in Committee. There will always be a need for a full report to Parliament, and in due course, the need for parliamentary approval.

The basis for this schedule is that any Government must make sure that they provide against circumstances, however unlikely those circumstances may be. We believe that a reserve power is required. One of the most interesting things to come out of the debate was the remark of the hon. Member for East Lothian, speaking for the official Opposition, when challenged as to why the 1966 Act had contained these powers. He has said that he believes that there is a "need" for such residual powers. That was the position that he took today and it is the position that we take in the Bill. On that endorsement from him, I am confident that my hon. Friends will reject the amendments.

7 pm

Mr. Home Robertson

With the leave of the House, I shall reply to the debate. The trouble with the so-called residual powers that the Minister keeps talking about is that the Government have used them not as residual powers but far more liberally. I am fed up with hearing the Minister going on about irresponsible local government, when we all know that it is irresponsible and unrepresentative central Government who have been forcing up rates and cutting local authority services in Scotland. The Minister says that this new tax is all about accountability, but he cannot have much confidence in it or he would not leave schedule 3 in the Bill.

The hon. Member for Caithness and Sutherland (Mr. Maclennan) was getting himself into a bit of a lather when I was explaining the background to the powers in the 1966 Act, for which he voted. It was introduced under a Labour Government and it re-enacted powers that had been built into local authority legislation for a long time before. The residual powers were intended to be used only in the most exceptional circumstances, but the Government have been deploying them with monotonous regularity year after year when they are not justified. The Minister knows that he has no mandate to exercise such powers in Scotland.

There was no case for this central interference under the old system, and we know from bitter experience that these powers have been abused. There is even less justification for such powers with a poll tax, so I urge my right hon. and hon. Friends to support amendment No. 170.

Question put, That the amendment be made :—

The House divided: Ayes 149, Noes 205.

Division No. 110] [7.00 pm
Abse, Leo Conlan, Bernard
Alton, David Cook, Robin F. (Livingston)
Anderson, Donald Corbett, Robin
Ashley, Rt Hon Jack Corbyn, Jeremy
Ashton, Joe Craigen, J. M.
Atkinson, N. (Tottenham) Cunliffe, Lawrence
Bagier, Gordon A. T. Dalyell, Tam
Banks, Tony (Newham NW) Davies, Rt Hon Denzil (L'lli)
Beckett, Mrs Margaret Davis, Terry (B'ham, H'ge H'l)
Bell, Stuart Deakins, Eric
Bermingham, Gerald Dewar, Donald
Bidwell, Sydney Dixon, Donald
Boothroyd, Miss Betty Dobson, Frank
Boyes, Roland Dormand, Jack
Bray, Dr Jeremy Douglas, Dick
Brown, Gordon (D'f'mline E) Dubs, Alfred
Brown, Hugh D. (Provan) Duffy, A. E. P.
Brown, N. (N'c'tle-u-Tyne E) Dunwoody, Hon Mrs G.
Brown, Ron (E'burgh, Leith) Eadie, Alex
Buchan, Norman Eastham, Ken
Callaghan, Jim (Heyw'd & M) Faulds, Andrew
Campbell-Savours, Dale Field, Frank (Birkenhead)
Canavan, Dennis Fields, T. (L'pool Broad Gn)
Carter-Jones, Lewis Fisher, Mark
Clay, Robert Flannery, Martin
Clelland, David Gordon Foot, Rt Hon Michael
Cocks, Rt Hon M. (Bristol S) Forrester, John
Coleman, Donald Foster, Derek
Foulkes, George O'Neill, Martin
Fraser, J. (Norwood) Owen, Rt Hon Dr David
Freeson, Rt Hon Reginald Park, George
George, Bruce Parry, Robert
Gilbert, Rt Hon Dr John Patchett, Terry
Golding, Mrs Llin Pavitt, Laurie
Hamilton, W. W. (Fife Central) Pendry, Tom
Hardy, Peter Pike, Peter
Hattersley, Rt Hon Roy Powell, Raymond (Ogmore)
Haynes, Frank Prescott, John
Heffer, Eric S. Radice, Giles
Hogg, N. (C'nauld & Kilsyth) Randall, Stuart
Holland, Stuart (Vauxhall) Raynsford, Nick
Home Robertson, John Redmond, Martin
Howells, Geraint Rees, Rt Hon M. (Leeds S)
Hughes, Robert (Aberdeen N) Richardson, Ms Jo
Hughes, Roy (Newport East) Robinson, G. (Coventry NW)
Janner, Hon Greville Rooker, J. W.
Jones, Barry (Alyn & Deeside) Ross, Ernest (Dundee W)
Kirkwood, Archy Sheerman, Barry
Lambie, David Sheldon, Rt Hon R.
Lamond, James Silkin, Rt Hon J.
Leadbitter, Ted Skinner, Dennis
Leighton, Ronald Smith, C.(Isl'ton S & F'bury)
Litherland, Robert Smith, Rt Hon J. (M'ds E)
Livsey, Richard Snape, Peter
Lloyd, Tony (Stretford) Soley, Clive
Lofthouse, Geoffrey Steel, Rt Hon David
Loyden, Edward Stewart, Rt Hon D. (W Isles)
McDonald, Dr Oonagh Thompson, J. (Wansbeck)
McKay, Allen (Penistone) Tinn, James
Maclennan, Robert Torney, Tom
McNamara, Kevin Wallace, James
McTaggart, Robert Warden, Gareth (Gower)
Madden, Max Wareing, Robert
Marek, Dr John Weetch, Ken
Martin, Michael Welsh, Michael
Maxton, John White, James
Maynard, Miss Joan Wigley, Dafydd
Meacher, Michael Williams, Rt Hon A.
Meadowcroft, Michael Wilson, Gordon
Mikardo, Ian Winnick, David
Millan, Rt Hon Bruce Woodall, Alec
Miller, Dr M. S. (E Kilbride) Young, David (Bolton SE)
Mitchell, Austin (G't Grimsby)
Morris, Rt Hon A. (W'shawe) Tellers for the Ayes:
Morris, Rt Hon J. (Aberavon) Mr. James Hamilton and
Oakes, Rt Hon Gordon Mr. John McWilliam.
O'Brien, William
Adley, Robert Burt, Alistair
Alexander, Richard Butcher, John
Amess, David Butler, Rt Hon Sir Adam
Ancram, Michael Butterfill, John
Arnold, Tom Carlisle, Kenneth (Lincoln)
Ashby, David Carlisle, Rt Hon M. (W'ton S)
Aspinwall, Jack Carttiss, Michael
Atkinson, David (B'm'th E) Cash, William
Banks, Robert (Harrogate) Chope, Christopher
Batiste, Spencer Churchill, W. S.
Bellingham, Henry Clark, Hon A. (Plym'th S'n)
Best, Keith Clark, Sir W. (Croydon S)
Biffen, Rt Hon John Clarke, Rt Hon K. (Rushcliffe)
Biggs-Davison, Sir John Colvin, Michael
Blackburn, John Conway, Derek
Body, Sir Richard Coombs, Simon
Bonsor, Sir Nicholas Cope, John
Bottomley, Peter Couchman, James
Bottomley, Mrs Virginia Cranborne, Viscount
Bowden, A. (Brighton K'to'n) Crouch, David
Bowden, Gerald (Dutwich) Dickens, Geoffrey
Boyson, Dr Rhodes Douglas-Hamilton, Lord J.
Brandon-Bravo, Martin du Cann, Rt Hon Sir Edward
Bright, Graham Dunn, Robert
Brinton, Tim Durant, Tony
Browne, John Dykes, Hugh
Bruinvels, Peter Edwards, Rt Hon N. (P'broke)
Buck, Sir Antony Eggar, Tim
Bulmer, Esmond Fairbairn, Nicholas
Fallon, Michael Norris, Steven
Favell, Anthony Onslow, Cranley
Fenner, Dame Peggy Osborn, Sir John
Finsberg, Sir Geoffrey Page, Sir John (Harrow W)
Fletcher, Sir Alexander Page, Richard (Herts SW)
Forsyth, Michael (Stirling) Percival, Rt Hon Sir Ian
Franks, Cecil Pollock, Alexander
Fraser, Peter (Angus East) Portillo, Michael
Gale, Roger Powell, William (Corby)
Garel-Jones, Tristan Powley, John
Glyn, Dr Alan Price, Sir David
Gorst, John Proctor, K. Harvey
Grant, Sir Anthony Raison, Rt Hon Timothy
Greenway, Harry Ridley, Rt Hon Nicholas
Gregory, Conal Ridsdale, Sir Julian
Grylls, Michael Rifkind, Rt Hon Malcolm
Hamilton, Hon A. (Epsom) Roe, Mrs Marion
Hawkins, Sir Paul (N'folk SW) Rossi, Sir Hugh
Hayward, Robert Rost, Peter
Heddle, John Rumbold, Mrs Angela
Henderson, Barry Ryder, Richard
Hickmet, Richard Sainsbury, Hon Timothy
Higgins, Rt Hon Terence L. Sayeed, Jonathan
Hind, Kenneth Shaw, Sir Michael (Scarb')
Hordern, Sir Peter Shelton, William (Streatham)
Howarth, Alan (Stratf'd-on-A) Shepherd, Colin (Hereford)
Howarth, Gerald (Cannock) Shepherd, Richard (Aldridge)
Hunter, Andrew Shersby, Michael
Jackson, Robert Silvester, Fred
Jessel, Toby Sims, Roger
Joseph, Rt Hon Sir Keith Smith, Sir Dudley (Warwick)
Knowles, Michael Smith, Tim (Beaconsfield)
Knox, David Soames, Hon Nicholas
Lamont, Rt Hon Norman Speed, Keith
Lang, Ian Spencer, Derek
Latham, Michael Spicer, Michael (S Worcs)
Lawler, Geoffrey Stanbrook, Ivor
Lawrence, Ivan Steen, Anthony
Lennox-Boyd, Hon Mark Stern, Michael
Lewis, Sir Kenneth (Stamf'd) Stevens, Lewis (Nuneaton)
Lilley, Peter Stewart, Allan (Eastwood)
Lloyd, Sir Ian (Havant) Stewart, Andrew (Sherwood)
Lloyd, Peter (Fareham) Stokes, John
Lord, Michael Sumberg, David
Luce, Rt Hon Richard Tapsell, Sir Peter
Lyell, Nicholas Taylor, John (Solihull)
McCrindle, Robert Taylor, Teddy (S'end E)
McCurley, Mrs Anna Temple-Morris, Peter
MacGregor, Rt Hon John Terlezki, Stefan
MacKay, Andrew (Berkshire) Thomas, Rt Hon Peter
MacKay, John (Argyll & Bute) Thompson, Patrick (N'ich'N)
Maclean, David John Thorne, Neil (Ilford S)
McLoughlin, Patrick Thornton, Malcolm
McNair-Wilson, M. (N'bury) Thurnham, Peter
Madel, David Townend, John (Bridlington)
Major, John van Straubenzee, Sir W.
Malone, Gerald Waddington, Rt Hon David
Marland, Paul Walden, George
Marlow, Antony Waller, Gary
Marshall, Michael (Arundel) Wardle, C. (Bexhill)
Mather, Sir Carol Warren, Kenneth
Mayhew, Sir Patrick Watts, John
Merchant, Piers Wells, Bowen (Hertford)
Meyer, Sir Anthony Wheeler, John
Mills, Sir Peter (West Devon) Whitfield, John
Moate, Roger Wiggin, Jerry
Monro, Sir Hector Winterton, Mrs Ann
Moore, Rt Hon John Winterton, Nicholas
Morris, M. (N'hampton S) Wolfson, Mark
Morrison, Hon C. (Devizes) Wood, Timothy
Moynihan, Hon C. Yeo, Tim
Murphy, Christopher
Needham, Richard Tellers for the Noes:
Nelson, Anthony Mr. Francis Maude and
Neubert, Michael Mr. David Lightbown.
Nicholls, Patrick

Question accordingly negatived.

Forward to