§ The Secretary of State for the Environment (Mr. Nicholas Ridley)
I beg to move amendment No. 120, in page 14, line 24, leave out clause 23.
Mr. Deputy Speaker
With this we shall take the following amendments: No. 4, in page 14, line 24, after `(1)' insert`after consultation with local authority representatives, the Child Poverty Action Group and such organisations which appear to him to be concerned.'.
No. 229, in page 14, line 39, at end insert—
`( ) The amendments shall provide that rebates of 100 per cent. of the community charge shall be available to—
No. 230, in page 14, line 39, at end insert—
`No regulations shall be made under this section until the Secretary of State has presented to Parliament a report on the effects of the rebate scheme on elderly, disabled or handicapped people.'.
§ Government new clause 8—Rebates: additional provisions.
§ Government new clause 9—Rebates: Extent of provision.
Government new clause 16—Social security—
`Schedule (Social security) below (which amends the Social Security Act 1986 so as to make provision for benefits in respect of community charges in England and Wales and Scotland) shall have effect.'.
Amendment (a), in line 1, at beginning insert
`After making a report to Parliament on how community charge affects families and those on low incomes, the Secretary of State shall produce a scheme for rebates up to 100 per cent. and'.
Amendment (b), at end add
`providing rebates extending up to 100% of liability to an authority's community charge using an identical system of rebate entitlement assessment for all individuals over 18.'.
§ Government amendments Nos. 123, 233, 236, 234, 121, 122 and 124.
Amendment (a) to Government amendment No. 124, in paragraph 6, at end insert—
'31 (H) A person who is
§ Mr. Ridley
In Committee I said that we would replace with new provisions the provisions of the existing clause 23 which deals with rebates. Perhaps I may quickly explain the technicality of that.
890 Clause 23 provides for regulations amending the Social Security Act 1986 so that a rebate scheme can be made. That scheme will be made in further regulations. The clause 23 system, therefore, envisaged two sets of regulations, the one preparing the way for the other. The amendments which we are now discussing do away with the need for one of those sets of regulations by making on the face of this Bill amendments directly to the Social Security Act.
The details of the scheme will then be set out in regulations made under the amended Act and will be subject, of course, to full consultation with the local authority associations and other interested bodies. The House will also have an opportunity to debate the regulations in due course and to decide on an affirmative resolution.
§ Mr. Douglas
The Secretary of State will be aware that the amendments introduce legislation which will apply to Scotland. There is no Scottish Minister on the Front Bench to answer questions about that. In view of the urgency of finding out exactly what this flagship of Tory Government policy means before the local elections in Scotland, can the Secretary of State tell us when and how the consultations will take place in Scotland before 5 May?
§ Mr. Ridley
Of course, the amendments will apply to Scotland. Under the Social Security Act, when it is amended, regulations will be made affecting Scotland in advance of England, and also affecting England at a later stage when the community charge comes into force. We cannot make regulations in relation to the community charge until the Bill is enacted.
The central amendment is amendment No. 124 which sets out in a new schedule the detailed changes necessary to the Social Security Act to enable a system of community charge benefits to be established. The schedule adds community charge benefit to the other income-related benefits of the Act, and sets out the criteria for entitlement in general terms. These are similar to the entitlement criteria for the other income-related benefits. It sets out, again in general terms, the way in which the amount of benefit is to be calculated, and makes provisions for regulations to cover benefit for people who will be paying residual rates in the transitional period. Provision is made for regulations to set out the way in which couples are to be assessed for benefit.
The new schedule specifies that payment may be in the form either of a reduction in people's community charge bills or of a cash payment, if necessary. Benefit will be administered, as is housing benefit, by local authorities. The new schedule provides for this and for regulations setting out the administrative details. It provides also for a scheme of subsidies to be paid to local authorities in respect of community charge benefit.
Amendments Nos. 233, 236 and 234 are technical amendments designed to ensure that community charge benefit can operate in Scotland—I do not know whether the hon. Member for Dunfermline, West (Mr. Douglas) heard that—on the same basis as the rest of Great Britain when it is introduced.
In short, these amendments pave the way for a detailed scheme of benefits to be paid to people with low incomes. The amendments themselves are technical and do not 891 contain details of the scheme itself. As I have said, that will be for later regulations which will be the subject of full consultation, and debate and vote in the House.
§ Mr. Dalyell
I do not want to be difficult about this, but it is urgent because of what is happening in Scotland. Can the Secretary of State explain exactly what action will be taken by the Scottish Office or by his Department to clarify things north of the border?
§ Mr. Ridley
If the hon. Gentleman will allow me, I am coming to the details of the rebate scheme which will be put forward in due course by the Government. The regulations cannot be made until this Bill has become law because it amends the Social Security Act to enable the regulations to be made. Therefore, until this Bill becomes law, there is no possibility of making the regulations. I hope that the hon. Gentleman understands that.
I was going to explain exactly how the rebate system will work.
§ Mr. Douglas
It is one thing for the right hon. Gentleman to plead in aid that he needs to get this Bill through both Houses, but we have a Scottish Act and we are up against a time scale. If the Secretary of State wants to plead that in aid in relation to England and Wales, I can understand that constitutionally, but the same argument cannot apply to Scotland, where we have an Act of Parliament on the statute book. Why have the Government been so niggardly and laggardly in explaining so that we can understand what the "great" benefits will be for the Scottish people from these measures?
§ Mr. Ridley
If the hon. Gentleman will let me tell him, I am coming to that. He has interrupted twice, asking me for what I have been trying to tell him. I do not know what more I can say than that.
My hon. and learned Friend the Minister for Local Government has sent a letter to the hon. Member for Copeland (Dr. Cunningham), giving the full effects of the new scheme. Of course, the scheme must take account of the changes in the Budget, which were proposed by my right hon. Friend the Chancellor, and the improved rebate scheme, which I announced last week, and which greatly alters the benefits, the figuring and every detail of the rebate scheme. It is not proper, or possible, to give a full account of the true nature of the rebate scheme until those two aspects have been considered.
The Government's scheme, as improved last week, is extremely generous. The hon. Member for Birmingham, Perry Barr (Mr. Rooker) tried to pretend otherwise in his winding-up speech on Monday night, but he grossly misled the House in his figures and missed the main point. The rebates are much more helpful than he alleged. I shall quote from his speech and then put the facts before the House, and the House may judge from what I say. He said:A couple with young children will receive no rebate if they earn over £130 a week".In fact, a couple with net earnings of £130 a week will receive a rebate of 75p on the average community charge of £8.62 a week for two people.
§ Mr. Ridley
I do not have the precise column, but the hon. Gentleman will find it in his speech.
The rebate entitlement for that couple would run out not at £130 but at £131.77. The important point, however, is that the hon. Gentleman was quoting net incomes although he talked about earnings. A net income of £130 for that couple means a gross income of £170, or 81 per cent. of the national average wage. For a community charge of £300, that rebate would run out at £193 a week gross, or £10,036 a year.
§ Mr. Rooker
I have found the reference. The right hon. Gentleman is not very well briefed if he does not have the column numbers. I have found the comments in column 634. I went on to refer to a couple with a net income. Every reference was to net incomes. Why did not the right ho n. Gentleman say the same thing in response to the right hon. Member for Henley (Mr. Heseltine)—it is column 619; I have column reference numbers—on the same point about a childless couple who will pay the full charge if their income is more than £100 a week? Why does not the right hon. Gentleman get his facts right?
§ Mr. Ridley
I did not intervene in the speech of my right hon. Friend the Member for Henley (Mr. Heseltine) or the speech of the hon. Member for Perry Barr because I wanted to check the facts first. The hon. Gentleman said:a couple with no children will receive no rebate if their earnings are over £100 a week.That statement is not true. A childless couple on £100 a week would get a rebate of £1.11 towards the average charge for a couple, which is £8.62 a week.
§ Mr. Rooker
The Secretary of State is misleading the House. Why does he not read the next paragraph?
§ Mr. Ridley
Rebate entitlement would run out at £104.17. Again, the hon. Gentleman was quoting net incomes. A net income of £100 a week would gross up to £123 a week. The hon. Gentleman said:a couple with no children will receive no rebate if their earnings are over £100 a week.The hon. Gentleman spoke not of their net earnings but of their earnings. He should have said net earnings. If the hon. Gentleman means earnings, it is not £100 a week but £123 a week. The hon. Gentleman went on to say:A couple with a net income of £100 per week will be expected to pay £10, that is, 10 per cent. of their net income, in local authority taxes.The hon. Gentleman arrived at £10 by doubling the figure of £5, which he described as "near enough" the community charge per adult in the average area. In fact, the average charge per adult is £4.31, which doubles up to £8.62 for a couple. As explained, that couple would also receive a rebate of £1.11, which would bring their charge down to £7.51, which is 7.5 per cent. of their net income. The hon. Gentleman claimed that it would be 10 per cent. of their net income, which was totally wrong.
The hon. Member for Perry Barr said:the worker under 25 years of age … will receive no rebate once his earned net income goes above £50 a week.The hon. Gentleman got it right that time.
§ Mr. Ridley
The hon. Gentleman was 2.5 per cent. out. He said that that worker'spoll tax will be £5, or 10 per cent. of his income."— [Official Report, 18 April 1988 Vol. 131, c. 634.]893 That was what the hon. Gentleman majored on. In that case, the rebate would be 61p on an average charge of £4.31, leaving a charge of £3.70, or less than 7.5 per cent. of net income. The hon. Gentleman was wrong in both forecasts of 10 per cent. of net income. The answer is 7.5 per cent. of net income and, of course, a very much smaller proportion of gross income. In fact, no one pays more than about 7.5 per cent. for the average community charge. I doubt whether the hon. Members who listened to the hon. Member for Perry Barr that night realised just how generous the Government scheme was and just how much the hon. Gentleman was misleading the House by quoting those statistics.
§ Mr. Rooker
Where I have rounded and used average figures—£5 a week when the amount is under £5—the comment is fair enough. I do not want to mislead anyone, but my point was that the scheme is not very generous. I used rounded figures and on one occasion neglected to use the word "net" in front of the income concerned, and I apologise. Will the right hon. Gentleman correct the figures in the next paragraph when I said that someone earning over £400 a week would pay only 1.6 per cent. of his net income in poll tax? Will the right hon. Gentleman correct me and say where I was wrong there?
§ Mr. Ridley
I never said that the hon. Gentleman was wrong on that point. I said—the hon. Gentleman has now admitted it—that, by shaving, rounding and making a few mistakes, the hon. Gentleman got the figures wrong. He majored on the point that there would be people who would pay 10 per cent. of their net incomes on the standard average community charge, whereas the figure is 7.5 per cent. If I had made such a mistake, the hon. Gentleman, rightly, would have taken me to the cleaners. I hope that he will acknowledge that he has been taken to the cleaners as a result.
I have now introduced the Government measures. I should like to hear what Opposition Members have to say on their measures and I shall reply later.
§ Mr. Taylor
I am not sure whether this is an intervention. I shall not give way to the hon. Gentleman.
Mr. Deputy Speaker
Order. Perhaps I should make it clear to the House that, unless I had got it wrong, the Secretary of State had sat down. I proposed the Question and I paused for some moments before calling the hon. Member for Truro (Mr. Taylor). I see that the hon. Member for Copeland (Dr. Cunningham) wishes to catch my eye and I shall bear that in mind.
§ Mr. Taylor
The Labour Front Bench spokesmen made the specific point yesterday that they wanted a contribution from the official Opposition. I am sure that an official Opposition contribution will come in a few 894 moments, but, for the moment, let us have a contribution from another party. I am sure that the Labour party will have its turn.
The rebate proposals were overshadowed at the start of the debate on the poll tax by the leaking of a Government document regarding rebates which exposed the Government's callous attitude towards the poor. We all know that the Budget, the social security changes and the poll tax will penalise the poor. That has been made clear time after time, not just by Opposition Members but by Conservative Members.
The leaked document put the situation in black and white and revealed that, while giving so generously with one hand, as the Government said they were, they had in fact considered ways of clawing back the money. That was indeed callous and calculating. The document stated:Careful attention should be given to the presentation of the terms of any change to rebates. This would need to be put in positive terms and in easily comprehensible layman's language".
The Prime Minister claims that the document has now been withdrawn, but the truth is that, in clear layman's language, the Government were trying to do a dirty behind the scenes. The Prime Minister and others may now state that there is no possibility of that being introduced; but we must now seriously consider whether there might be other schemes in the Cabinet, proposing other ways of taking back the money from the very people to whom the Government claim to be so generous.
If we consider the Government's supposed generosity in the new rebate scheme, there appears to be a significant failure there too. For 26 million people, the poll tax will still be a flat rate charge, under which a new teacher on a salary of £7,899 a year will pay precisely the same as a company director on £40,000 a year. That is fundamentally wrong and there is nothing in the rebate system that changes that fact.
Ministers may shake their heads vigorously and say, "No, no, no", but, at the same time, Conservative Back-Benchers say, "Yes, yes, yes. You're right. Something should be done about it."
§ Mr. Butterfill
I am a Conservative Back-Bencher and I do not agree with what the hon. Gentleman says. He is wrong to say that teachers will pay the same as a company director because the company director will be contributing far more through national taxation and thereby through the 50 per cent. than the Government subvention to the rate support grant.
§ Mr. Taylor
I have been hoping that somebody would make that point because the Conservative party is sending out a leaflet to constituencies. On one side of that leaflet, there is a standard text from Central Office. One section of that text points out how much more a company manager gives because of the VAT and income tax that he pays, but, in a different part of the page, it claims that poor people have never made any contribution to local government. Where do their VAT payments come in? The leaflet assumes that the poor do not pay VAT. If only the poor did not pay VAT. But they pay it and suffer far more as a consequence in terms of their ability to buy things.
Furthermore, the capital rule that has been introduced in respect of the Social Security Bill will apply to poll tax rebates through the housing benefit rules. People with capital of over £6,000 will receive no help from rebates. They are yet another section of society which is missing out 895 and desperately needs such help. How can one say to an old-age pensioner, "You should not be entitled to help because you have had the good sense and thrift to put aside £6,000 towards your old age"? Those people will get nothing from the rebate scheme, as it was originally proposed or as it is now put forward.
Many pensioners and others will look at the rebate scheme and think that the Government have offered some help to them. They may think that they cannot possibly be expected to pay the full charge, but, when the time comes in 1990 and they start to receive the bills, they will find that that is precisely what they are expected to do.
The change in the taper does not change the 80 per cent. ceiling imposed on rebates and, again, that will affect the poorest. Those who receive the full help of the benefit system will be precisely those to whom any changes in the rebate scheme introduced by the Secretary of State will make no difference. The artificial age barrier that has been written in stone in the Social Security Bill means that those under 25 years of age will not even receive the same help with their poll tax contributions as those over 25.
Those people earn the lowest wages and find it particularly difficult to obtain jobs, particularly if they have missed out after leaving school and have become part of the long-term jobless at an early age. Those people who find the lowest forms of paid employment—there are many of them in such parts of the country as my own, where wages are 20 per cent. below the national average—will be penalised still more strongly than their colleagues.
§ Mr. Leigh
Perhaps the hon. Gentleman will comment on a remark made by my hon. and learned Friend the Minister for Local Government last night. He said:a newly qualified nurse would be likely to pay more local income tax than community charge in every local authority in England. In Camden her bill could be as high as £1,500. in Manchester £375, and in Durham £300."—[Official Report, 19 April 1988; Vol. 131, c. 751.]Will that account for more than 10 per cent. of the nurse's income? What sort of rebate system does the Liberal party propose for a newly qualified nurse?
§ Mr. Taylor
The hon. Gentleman does not listen to the debate at other times when he is in the Chamber. The figures quoted by the Government are based on their system of local income tax. Those figures are not based on our system. We gave those figures to the Minister yesterday and the figures that he quotes are quite simply wrong. Student nurses will do better under our local income tax system. We have given the figures to show that fact and, if the Minister cares to go through them, no doubt he will find this in them.
§ Mr. Simon Hughes
When my hon. Friend was making his point about the scheme that was leaked in the document in the last few days, the Secretary of State was nodding his head and saying, "Shame, shame." The Secretary of State can put the record straight in one of two ways. He can either release the whole of the correspondence, so that we know what was really devised, or he can give a guarantee to the House that, during the lifetime of this Parliament, the scheme will not be altered to anyone's detriment. Would my hon. Friend like to ask the Secretary of State if he is willing to give those assurances?
§ Mr. Taylor
I am sure that the Secretary of State heard my hon. Friend's point.
896 There is one other point worth making. In a proper system of democracy, where the only secrets are those that directly affect the national security interest and not just the interest of the Government, we would be able to look at those documents. We would be able to judge the Government, if not this week, then in the near future, after the immediate decisions have been taken. I hope that the Secretary of State will come forward with the appropriate measure, as he should.
The amendments are designed to meet many of the difficulties that I have mentioned. Above all, the amendments are about giving 100 per cent. rebates to those who need them. The Government have acknowledged the need for people on benefit to have such support. They have said that they will uprate benefits to cover people's 20 per cent. contributions to the poll tax. By making such a commitment, they cannot argue that those who currently do not contribute should contribute from the money that they now have. In one sense, they are accepting that those people should be fully compensated, but they have created the most appallingly complicated way of doing so, which hurts those people most in need of help and those who find it hardest to manage the money that they have and their day-to-day existence.
All hon. Members know through their experience in constituency surgeries and through correspondence that there are people who are simply not able to manage their affairs and who get into trouble. We are loading another difficulty on to them because they will receive a bill that they will not be able to meet. More than that, the rebate will go only to the more fortunate. Whole groups of people will not be fully compensated by an increase in their benefit to meet that 20 per cent. It will be done on an average basis and not on the money that they are asked to pay.
That may be done, as the Government say it is, to increase what they call accountability, but they mean to increase the tendency to vote Conservative because they believe that otherwise people will be penalised. Obviously, it will not work like that because this has a historic basis.
§ Mr. Taylor
In a moment.
The basis of local authority spending has been built up over many years, as has the Government's assessment of what local government should be spending. It is subjective at that. The Government can manipulate the figures according to how they wish to work the grant system, and they do. On that basis people will be penalised, not through any fault of their own, but because of decisions which were taken quite possibly at a time when they were not voting in the local authority. It is inconceivable that Camden, Tower Hamlets or any other authority will suddenly be able to adjust its charges because of the poll tax and because these people will have to pay it. Even if the Government are right about accountability and the rest of it, it will take years to help those people, and that is not fair on them.
§ Mr. Taylor
The hon. Gentleman is jumping up and down like a Jack-in-the-box, so I shall give way to him.
§ Mr. Butterfill
I wanted to intervene before the hon. Gentleman left that point. He suggested that we had the political motive that people would vote Conservative. Was he implying that only Conservative authorities were likely 897 to be prudent and have lower rates, and that authorities controlled by his party and other Opposition parties would always have high rates?
§ Mr. Taylor
Interestingly, in this year's round of rate increases, we managed to have the lowest average of all parties, so the hon. Gentleman does not make a good point. We have fundamental criticisms of the present grant system. I believe that a report today suggested that the gains would be almost exclusively in Tory constituencies, but that is not surprising when the grant system is biased in that way.
Tower Hamlets will be one of the hardest hit by these proposals. It has an acknowledged problem with supplying housing to an immigrant community. The need is not being met under Government financial aid. That is an exact example of the way people will be penalised for reasons that have nothing to do with them as individuals and, indeed, have little to do with any local party. A most draconian party could be determined to cut whatever it wanted, yet still have to spend substantial sums.
Do the Government intend to uprate the benefits as they claim they will, even in so far as this is written into the legislation? Ministers have steadfastly refused to assure us that the uprating of the 20 per cent. will be maintained. We accept that the Government will uprate benefits to meet the 20 per cent. contribution, albeit on national average figures. However, there have been reports that the Government intend to claw that back in coming years by failing to increase benefits as a whole in line with inflation. That appeared in The Guardian on 23 September 1987.
In Committee we asked on more than one occasion for a categorical assurance from the Minister that that would not be so, and we failed to get it. Will the Government give us that absolutely categorical assurance now because it is important that it should be given? In the light of the leaked Cabinet document, they must understand why we believe that it is so important that this assurance should be given.
The amendments relate to the treatment of those under 25. The age barrier written into the social security legislation will penalise the youngest in society—those on the lowest wages. Even with the new tapers, or an average community charge of £224 a year, it has been estimated that people over 25 will lose all help on income of about £58 a week. But for a person under 25 the comparable figure is about £50. I have not heard an explanation or justification for that and I hope that the Government will accept the need to amend that, so that at least these rebates are not based on something already iniquitous that becomes more iniquitous as a result of the introduction of the poll tax.
I hope that the Secretary of State can answer a specific point. Thank goodness, we have gained something from our debates. We appear to have had something of a minor victory on the collective community charge. It was repeatedly said, and the Minister assured us he would respond, that there were problems with the collective charge for people in hostels for the homeless, because they would have to pay the tax in full and then get a rebate, instead of paying only the 20 per cent. charge in the first place. The Minister said that he would look into the problem and, as I understand the regulations, I think that 898 he has met that point. I hope that he can confirm that minor victory because the technicalities make it hard to be absolutely certain.
Those are the reasons why we are not at all happy about the rebate system. It is nothing like as generous as is claimed. These amendments do much to meet the specific problems that we raised.
§ Mr. Taylor
The hon. Gentleman will not find that when his constituents spell out their financial difficulties. In three or four years' time he will be writing letters to Ministers and the Secretary of State, begging them to intervene to help constituents who have got into financial difficulties.
§ Dr. Cunningham
These amendments are about rebates. Government amendment No. 120 rewrites the legal basis in the Bill under which rebate schemes will operate. In other words, the Government are not to rely on the social security legislation, as the Secretary of State said, but will include in the Bill a new schedule, Government amendment No. 124. The Government's need to write that into the Bill contrasts starkly with their refusal to include safeguards on civil liberties and privacy. The fact that they are making that change does nothing to improve the rebate schemes or to change advantageously the circumstances of millions of people who will be adversely affected by the poll tax.
We already know of the total inadequacy of these provisions because we have seen them in the recently implemented social security changes. Are the Government so proud of those new, mean, unfair and divisive social security provisions that they simply want to replicate them in the Bill? The answer is yes. Whatever word the Secretary of State might have used to describe the Government's proposals, he chose "generous" which was most inappropriate. He castigated my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) for misleading the House. No more misleading statement has been made this week in the discussion of these matters than that these proposals are generous.
The replication of the social security provisions means that pensioners with lifetime savings of as little as £6,000 in a bank or building society will receive no rebate of any kind. That cannot possibly be described as generous. Is it generous, for example, to implement proposals which mean that two pensioners living in their own home, whether a flat, bungalow, council flat, council bungalow or sheltered dwelling scheme in Dulwich, will pay more than a millionaire living in a mansion in Dulwich? Could that possibly be described by any reasonable person as generous? Of course not. It is grossly misleading to suggest that the scheme is in any way generous.
The scheme also means that an unemployed person, perhaps someone with a family who has lost his or her job in his or her forties or fifties and has redundancy payments of as little as £6,000, will not receive any rebate. In many cases, that will contrast sharply with the circumstances of the person who may have sacked him. In today's economic climate, a company director could easily be earning as much as £6,000 a week, yet will pay the same poll tax. Is 899 that generous? Would the Secretary of State like to comment and give his view as to whether he thinks that is generous?
Young people under 25 years of age also will be heavily discriminated against because there is no provision for a 100 per cent. rebate. The 3 million households that pay nothing now under the present rate rebate system—or did not do so until the beginning of this month—will now have to pay at least 20 per cent. of the charge. Is it generous to make 3 million households pay 20 per cent. when previously, under the much criticised rating system, they paid nothing? Of course that is not generous and the Secretary of State knows it.
I come to the Minister's much lauded—by him if by no one else—concession of last week. He appeared to be making a concession, but what will it mean in practice? The Secretary of State made great play about the figures. It has taken him and his hon. Friends until today to produce any figures. Those given by my hon. Friend the Member for Perry Barr were provided at a few hours' notice by the House of Commons Library. It has taken the right hon. Gentleman nearly a week to come up with the same figures.
I left the Chamber after Question Time today and received a telephone call from the BBC who said, "The Secretary of State has written you a letter about the rebate scheme." I said, "Oh no he hasn't." They replied, "Oh yes he has—we know all about it."
§ Dr. Cunningham
No, it was not a leak. The letter was deliberately released by the right hon. Gentleman's office before it even arrived in my office. I had to phone the Secretary of State's office to obtain the letter that he was supposed to have sent to me. That is how proud he was of publicising his information about the rebates; he left it until the last possible moment. To cap it all—if that is an appropriate phrase—when the letter did arrive, it did not give the figures. I had to telephone the Secretary of State's office again and ask them to fax that information to me.
What do those figures mean? We know of the Government's intentions because of the leaked correspondence between the Secretary of State's office and the Prime Minister. In case Conservative Members have not yet had an opportunity to read that correspondence, I have brought along some copies, which I table for them to read. I hope that they will do so, because they are very important documents. Yesterday, the Prime Minister said to my right hon. Friend the Leader of the Opposition that he did not understand the full story because he had not seen all the letters.
Today, we asked the Secretary of State's office to give us copies of all the rest. If the Minister wants us to argue on all the facts, why does he not provide copies of the other letters? Not surprisingly, he refuses to do so, because he does not want the House to have all the facts. That is the reality of the situation. Why does he not put all the correspondence on the Table now so that his right hon. and hon. Friends and the Opposition can discuss the matter in the way that the Prime Minister apparently wants? Of course the Minister will not do so, because he wants to keep it all dark and because he knows how disgusting are all the manoeuvrings.
§ Dr. Cunningham
I say that it is disgusting for a Secretary of State in the British Government to make a public announcement that a concession is being made that will cost £130 million, if the House will forgive me for using round numbers, when at the same time the Government are planning to make others liable for the poll tax pay for that concession. The Government are even talking about changing the slope on the housing benefit scheme, to claw back more money from people even before the alleged concession can be implemented. If all that is not disgusting, I do not know what is.
§ Mr. Butterfill
Is the hon. Gentleman suggesting that the Government should just print the money? Surely someone has to pay, and it must be either the general tax payer or the poll tax payer. The money cannot be manufactured out of thin air.
§ Dr. Cunningham
Of course not, but I contrast the hon. Gentleman's comments with the Chancellor of the Exchequer's Budget Statement. He did not seem to have any difficulty finding the money then. Money did not seem to be a very scarce commodity when the Chancellor stood at the Dispatch Box reducing taxes for the very well off in society. I do not recall the hon. Gentleman standing up then and asking his right hon. Friend where the money was to come from; he knew that it was coming from the poor and those on low incomes.
I say to the hon. Gentleman that his questions about where the money is to come from are just a little partial on this occasion. The Government were awash with money a few weeks ago when they wanted to help the very well off in society and reduce upper tax rates to 40 per cent. There was no concern then on the Government Benches about where the money was to come from; there was not a frisson, not a ripple. Conservative Members were waving their Order Papers in the air at the thought of all that lovely money showering down on those who were well off.
The hon. Gentleman is also fond of saying that problems cannot be solved by throwing money at them. The Government have certainly been throwing money at the well off as fast as they can. Money seems to solve their problems quite nicely, thank you very much. I say to the hon. Gentleman that his intervention was rather ill advised.
§ Mr. David Winnick (Walsall, North)
Is it not interesting that, while Ministers were telling their Back Benchers facts that were far from the truth, by the end of the week No. 10 was very busy organising the Sunday newspapers, so that The Observer, The Sunday Telegraph and The Sunday Times all carried identical front page stories saying that the poll tax revolt among Conservative Members was all a plot by the right hon. Member for Henley (Mr. Heseltine) to get into No. 10? Mr. Ingham must have been working overtime.
§ Dr. Cunningham
Indeed, all sorts of stories were put about concerning the revolt by Government supporters over the iniquities of the proposals. It seems that anything was possible or usable in trying to discredit right hon. and hon. Members involved. When I reflect on some of the things said about them, they must flinch that, even now, Government Whips are again approaching them in the Lobbies, touching them on the elbow and saying, "Well, dear boy, you will be in the Division Lobby next Monday 901 night for the Third Reading, won't you?" I hope that they will think long and hard before joining their colleagues in the Lobbies and voting for this appalling legislation.
I return to the nitpicking of the Secretary of State over the rebate scheme. I shall give him some examples of his generosity. It is true that if one takes the average poll tax in England of £224, a single person aged under 25 with take-home pay of £50.75 per week—which is what he has to live on—will enjoy no rebate. To ensure that my figures were right, I asked one of my friends and advisers to make the calculation. It showed that such a person will have to pay a weekly poll tax of £4.30, which is 8.5 per cent. of his take-home pay. A pensioned couple in the same circumstances with a net income of £110.40 will have a weekly poll tax bill of £8.60, or 7.8 per cent. of their income. They also will receive no rebate. In inner London, where the poll tax will be higher, the figures will of course be worse.
The Secretary of State need not try to—I hesitate to use the word—mislead the House about the generosity of the measure. He knows very well what is happening to these people. The now famous exchange of correspondence includes a letter from his private office from one of the civil servants who are of the highest integrity, in this instance Deborah Lamb. The letter points out that the Secretary of State himself expressed concern becausein his view, the marginal tax rate illustrated in that minute of 90.1 per cent. for low earners is already excessive, particularly after the income tax reductions in the Budget".I hope that the hon. Member for Bournemouth, West (Mr. Butterfill) listened to that. Even the Secretary of State recognises, at least in private, the unfairness of the Government's approach following the Budget. That is what the right hon. Gentleman's correspondence says. But then he comes to the House and tries to convince us and the country that he is being generous. Of course he is not.
By definition, because of the averaging on uprating of social benefits, people in areas where 20 per cent. exceeds the national average will be additionally out of pocket. In some cases, especially in inner London, they will be substantially out of pocket. In other areas, without reason, they will be gainers. I do not agree with the hon. Member for Truro (Mr. Taylor) who said, "We accept it." My hon. Friends and I certainly do not accept it, because it does not properly recompense even those people who have to pay 20 per cent. of this appalling tax.
During Question Time today, I asked the Secretary of State what he had to say about his right hon. Friends in the Cabinet at the commemorative service at Westminster abbey this morning. He did not reply. I shall give him a second opportunity. In the responses in the service to launch the Church urban fund the Archbishop of Canterbury asked:What is he sending us to do?The Chancellor of the Duchy of Lancaster—and, for all I know, other Ministers who were there—responded with gusto and alacrity:To share our wealth with those in our cities who are poor, powerless or disadvantaged, and to help them to build a new future for themselves and for us all.Does the Secretary of State really believe that the poll tax will contribute to that aim? Does he agree with that? Of 902 course, we know that the right hon. Gentleman does not agree with it from the many quotations on the record which were referred to in Monday's debate.
Our amendment (a) to new clause 16 introduces the principle of 100 per cent. rebates. It is possible, because of the guillotine, that we will not be able to express our support for the amendment, although I hope that arrangements can be agreed that will enable us to do so. Let me say, however, that we strongly support the principle of 100 per cent. rebates, and I urge all hon. Members to vote for the amendment. If it is not possible for us to record a positive vote, we shall express our disgust at the meanness of the proposals by voting against the Government's amendments.
§ Mr. Peter Temple-Morris (Leominster)
It is a pleasure to follow the speech of the hon. Member for Copeland (Dr. Cunningham) on this issue. We are much closer to agreement on it than on most other issues, as I have made clear in my votes—and non-votes—on this measure.
Although I intend to address my remarks to rebates, it is a pleasure at last to rise to speak on the Bill. I tried gallantly to do so on Second Reading and again in Monday's debate on new clause 1. Let me now briefly say that, while I am very grateful for any concessions that help poorer people, the rebates as offered by my right hon. Friend the Secretary of State are insufficient to change my mind on the Bill.
I do not wish to appear ungrateful. My right hon. Friend knows that I am a nice sort of person. If he were to make a concession that in any way altered the principle of the Bill—as was so ably set out by my hon. Friend the Member for Hampshire, East (Mr. Mates) and those who voted with him—rather than a belated concession that helps the poor but is essentially financial, we might reconsider our position.
My interest in the subject is fairly long-standing. I do not expect hon. Members to remember it, as it may not have been particularly remarkable, but I made my maiden speech on the subject back in March 1974. Then, and in subsequent speeches over the years—for instance, on ten-minute Bills—I have urged the abolition of the rating system. What I have never urged or believed in, rebates or no rebates, is a community charge, let alone a uniform business rate.
Let me explain briefly why the rebates have not changed my mind, in spite of my gratitude to my right hon. Friend the Secretary of State. Essentially, the principle remains as unfair now as it did before the concessions. The ability to pay is crucial. The hon. Member for Copeland has done my job for me with the facts and figures, but I have a list that has been cribbed from hon. Members on both sides of the House—£1 here, £5 there and £10 there. The fact remains that we are dealing with the principle of a poll tax that is fundamentally wrong. As the hon. Member for Truro (Mr. Taylor) said, 26 million people will pay the standard rate of poll tax. It has also been confirmed by my right hon. Friend the Secretary of State—in response to a very able intervention on Monday by my right hon. Friend the Member for Aylesbury (Mr. Raison)—that the £6,000 capital limit applies in this instance.
Another principle that is unaltered by the rebates is that of the nature of the poll tax, which is undisturbed by the fact that it represents only 25 per cent. of overall local government revenue. I hope that I was not alone in being slightly amused yesterday morning when, lo and behold, 903 my right hon. Friend the Secretary of State made one of his earlier broadcasts—after the 7 o'clock news—following the result of the vote on new clause 1. I waited for him to say, with all the eloquence that he has displayed over the past year, that this was not a tax but merely a charge on 25 per cent. and that the remaining 75 per cent. would arrive one way or another through taxation. But, in an able and dazzling interview lasting some four minutes, he referred to the charge as a tax no fewer than eight times—I counted them. I wonder whether that has anything to do with a change of mind on his part, or with the other place, which no doubt will be considering his earlier utterances.
Another fundamental point is that the 25 per cent. leaves 75 per cent. That is another reason why the rebates are insufficient for me: the 75 per cent. will become a matter of Government control, either through grant or through the uniform business rate. The House would be foolish if it consented to such a degree of Government control.
My third reason—rebates or no rebates—is that we cannot govern this country as if it were entirely ruled by extreme Left-wing socialist authorities—it is not. This measure is not the best way to deal with those parts of the country that are so ruled.
Finally, although I am not ungrateful for the concessions—I welcome the rebates—and shall not be voting against the Government on this, I slightly resent aspersions cast against us at the weekend that we are trying to embarrass the Government. I thought that my hon. Friend the Member for Hampshire, East was terribly kind about last weekend. It is perhaps easier for me than for him to say that it was not one of the most angelic political weekends that I can recollect. I say, as one Back-Bench rebel on this matter, that I am not out to embarrass the Government. I am not nature's greatest rebel, but when something is as fundamentally wrong as this, and the decisions on it have been taken in the sequence that they have been, it is the duty of at least some of us to stand up and be counted. The late concession of these rebates serves only to add to the strength of our argument. The necessity for them shows the fundamental weakness of the measure.
§ Mr. Tom Clarke (Monklands, West)
My high regard for the hon. Member for Leominster (Mr. Temple-Morris) was justified the other evening when he voted against the Government, and when, the following day, The Guardian awarded him a knighthood. That was evidence that virtue is its own reward. I agree with many of the things that he said this evening, and he will forgive me if I concentrate on amendment (a) to new clause 16, to which my hon. Friend the Member for Copeland (Dr. Cunningham) referred.
I want to talk about the problems of the disabled, the frail and the elderly, whom the amendments could help. Even if there were a distant prospect of the amendments being carried, the measure that the Government support and the legislation for Scotland that is already on the statute book will do untold damage to the most vulnerable people in society, and their very existence invites urgent repeal.
The Secretary of State said—and my hon. Friend the Member for Copeland was right to mention this—that this was a generous measure. His capacity to use the English language in that inspiring way is not shared by the National Council for Voluntary Organisations, by Mencap, by RADAR, by the Royal National Institute for 904 the Blind, the Royal National Institute for the Deaf, the Spastics Society or any such organisation that I know of, nationally or in my constituency, which has considered the poll tax.
A few weeks ago, during the Easter recess, I visited the constituency of my hon. Friend the Member for Edinburgh, Central (Mr. Darling), where I saw the excellent Edinvar community care project. Because of the interest of the community, of Edinburgh district council, Edinburgh university and the people of Edinburgh, that housing project provides a place to live for six people who have mental handicaps. They live in the community and are helped by others there—people who signed a housing missive knowing that help would be expected from them. I was there because of the consequences of the Government's social security provisions. Because of the reductions in housing benefit, there was a disgraceful question mark over whether the project could continue. Happily, mainly due to the help of Edinburgh district council and the flexibility of civil servants in the DHSS, that problem has been resolved since.
The Secretary of State speaks of generosity, but when those six people come to pay the poll tax the question will arise again. Such payment cannot be a viable proposition. I hope that the project can be saved, but I know that community care in many parts of the country will be challenged openly by this provision, and it is disgraceful that Ministers should utter platitudes and give us statistics when they must know of the damage that their poll tax will do to people who are disabled, mentally handicapped, the elderly and others. Bearing in mind the exemption that the Government deliberately introduced in residential establishments, we shall find that people living in them, whatever their wealth—and many of them are there because of the help that the Government are determined to give to private owners through the DHSS—will benefit from the exemption and so triumph over those still living in the community.
So, despite the fact that the number of places in no way meets the demand, if people in community care do not have the sorts of rebates to which my hon. Friend the Member for Copeland referred, they will naturally look for places in residential establishments. Because of the difficulties of access, many people in residential establishments who might be able to live in the community and would often be encouraged to do so will refuse to do so. This measure, therefore, offers no help to those in residential care or those in the community and is a further sign that the Government have no strategy to deal with community care for the most vulnerable people in society.
I want to refer briefly to two important reports. I do not know whether the Secretary of State has read them, but he and the rest of the Cabinet are obliged to assure the House that there is some co-ordination of policy objectives. That hardly seems to be the case now. The Griffiths report on community care does not coincide with what the Government are proposing. The Government have riot sought to publicise the report, so I remind the right hon. Gentleman of what Sir Roy said:If community care means anything, it is that responsibility is placed as near to the individual and his carers as possible.He also said:It cannot he managed in detail from Whitehall".905 What is the poll tax if not an attempt by Whitehall to manage in detail?
Lady Wagner said:Every adult person entering a residential establishment with a view to an extended stay should be entitled to a trial period during which nothing would be done to dispossess them of their previous accommodation.Does anybody really think that the system of elderly people going into care and having that trial period, during which they will be expected to pay the poll tax, will work? The truth is that the Government are introducing chaos instead of community care.
There are many defects in the so-called community charge. That view is shared by the overwhelming majority of British people. When the time comes to repeal the legislation the people of Great Britain will accept that, at long last, the House will have accepted its responsibilities to the most vulnerable people within our society. Clearly, this measure is a long way from achieving that.
§ Mr. Dafydd Wigley (Caernarfon)
The hon. Member for Monklands, West (Mr. Clarke) is absolutely right. There appears to be a total lack of co-ordination in the Government's policy on disabled people. The amendments in my name and those of my hon. Friends—Nos. 229 and 230—which are combined with this bank of amendments, try to ensure that a rebate of up to 100 per cent. of community charge is available to certain specifically defined groups of disabled people.
The Bill will make disabled people suffer. It takes no account of ability to pay. The organisations to which the hon. Member for Monklands, West referred would have preferred some form of banded system or progressive system of taxation that would take into account the needs of disabled people and their resources. Allowance could also have been made for their additional needs. In the absence of any such progressive system, there needs to be a better provision for rebates.
The advantages of our amendments are, first, that they offer a means of defining disability that is as automatic and unobtrusive as possible. Secondly, the amendments are compatible with the principles of good community care, in that they seek to ensure that there are no financial penalties for people seeking to move into the community or financial disincentives to stay in the community. The hon. Member for Monklands, West made that point. In other contexts, he and I have argued about the need to ensure that policies of other Departments supplement and co-ordinate the community care policies that the Department of Health and Social Security is advocating.
The hon. Gentleman referred to two recent reports. There is also the Audit Commission report. A series of reports go down the same road. We should certainly look for greater recognition of disabled people within major legislation, such as the Bill.
As the Bill stands, disabled people will lose disproportionately. While, to some extent, the present rating system is progressive, the poll tax will be regessive, falling hardest on those who are least able to pay. Disabled people are disproportionately represented among low income groups and will therefore be hit harder by the poll tax. As many as 40 per cent. of long-term sick and disabled people have low incomes, compared with 23.3 per cent. of the non-disabled population, according to the DHSS low income families review.
906 In considering ability to pay, it is important also to bear in mind that an Office of Population Censuses and Surveys showed that half of all employees with disabilities had incomes below 42 per cent. of average earnings, while one quarter had earnings below 32 per cent. of the average. The rebates in the Bill do not provide disabled people with appropriate protection from the consequences of paying the personal community charge.
The compensation for the 20 per cent. contribution, which apparently is built into income support for those who depend on income support, can be argued to be far from adequate for disabled people. It does not take into account the additional costs of living that disabled people have to face. They will undoubtedly suffer as a result, even at the 20 per cent. level, particularly in areas in which the poll tax will be at higher levels. Many inner city areas, with which I am not so conversant from a personal or a constituency point of view, that provide most services for disabled people—some of the boroughs that do most for disabled people—happen also to have a high level of rates and may have a high poll tax. There are instances of disabled people who have moved into such areas because they know that services are available there that are not available in areas which are not willing to raise money to provide services.
The poll tax will also have damaging consequences for the benefits that some disabled people are getting from the present domestic rate concessions. Under the Rating (Disabled Persons) Act 1968, disabled people can receive rebates on housing that has been adapted to their needs. During the passage of the Scottish legislation in another place, Lord Glenarthur for the Government recognised that fact, when he stated:We therefore propose that additional help which could extend up to 100 per cent. of the community charge should be available for a clearly defined group of severely disabled people.—[Official Report, House of Lords, 30 April 1987: Vol. 486, c.1665.]Up to 100 per cent., he said. That commitment appears to have been ignored in the way in which rebates are being calculated.
Under the Rating (Disabled Persons) Act, the cost of rebates was £61 million, benefiting 102,000 disabled people in 1985. Many of them were on low incomes, but not necessarily on income support. As we know, many disabled people want to be in jobs, but they are in jobs that, necessarily, are low paid.
Another unacceptable part of the Bill is the way in which mentally handicapped people are being stigmatised and defined. By inserting our amendments, there would be a way around that, because the same benefits could be defined without categorising mentally disabled people as a group on their own who need to be certified. Despite the changes that have been discussed, the process of exemption remains certification by another name. There is certainly a dilemma facing the parents of mentally handicapped people who are considering applying for exemption. They risk further labelling of their severely mentally handicapped son or daughter or paying tax themselves out of what are often scarce resources. To that extent, the measure is offensive to people with a mental handicap and to their parents who deal with them.
The hon. Member for Monklands, West referred to the effect on community care. There is a real danger that the pressure of the system will be towards keeping people in 907 institutional care. The Government's own social security advisory committee noted that if claimants are expected to pay 20 per cent. of their rates, the result would beincreased hardship, increased debt or both.
The poor levels of rebate under the present proposals will ensure precisely that for disabled people. The prospects for community care will look bleak as disabled people are presented with yet another financial hurdle to overcome if they are to live in the community. Disabled people do not seek or want special treatment under the poll tax legislation because of their disability. What they do need is a system that takes account of their ability to pay and the problems that they face. That is the intention of the amendment. The National Council for Voluntary Organisations has applied itself to that matter. In the context of the amendments, it states:We envisage that disabled people will face major problems should the Government's proposals pass through Parliament unamended. First of all, the proposals for the operation of the community charge will act as a direct disincentive to the community care policies we are all so keen to see extended. With exemption from the community charge for residents of residential care homes, and the failure to compensate adequately disabled people living at home, there will in the first instance be a simple financial disincentive for disabled and elderly people to continue to live in or move hack into the community.
That is the background of my amendment. I realise that, if the Government's amendment is passed and clause 23 is deleted, it may not be possible for me to press the House to a Division on amendment No. 229 as I would otherwise wish to do. Although amendment No. 230 brings in a general point, it is still geared to clause 23. Therefore, it may be in the interests of the House to look for an amendment—possibly Labour's amendment (a)—that broadens the argument which applies to other groups but which could be applicable to the disabled people to whom I have referred. Whichever way, the Government are duty bound to say how they will give disabled people a better deal.
§ Sir George Young (Ealing, Acton)
The hon. Member for Caernarfon (Mr. Wigley) rightly said that the thrust of Government policy for care in the community is not assisted by the introduction of the community charge, which penalises members of families who are removed from hospitals or nursing homes and taken home.
Our deliberations in Committee were greatly assisted by my hon. Friend the Member for Kensington (Sir B. Rhys Williams). Tonight's debate is the poorer for his absence, and I suspect that the Government's majority will be one greater because he is not here. However, he has left us with new clause 8.
It is generally accepted that it is a bad idea to tax the poor. We are now agreed that we are talking about a tax, and I was slightly surprised by the Government's initial proposals, whereby those on benefit would have to pay 20 per cent. of the community charge, but made no provision for increasing their benefit to enable them to pay that amount. However, that matter was put right about a year ago.
It is further agreed that the system of obliging the poor to pay makes no contribution to the funding of local government. Those who are on benefit can get 80 per cent. rebated at source and 20 per cent. back through their 908 supplementary benefit. At the end of the day, a vast sum of money will have changed hands with no net contribution to the funding of local government.
The poll tax is being introduced for one reason only—accountability. It is important to discover whether accountability is achieved by rebates. We have a foretaste of what is likely to happen because this year, for the first time, those who receive benefit have had to pay 20 per cent. of their rates. I shall give an example from my constituency of a man and wife who receive benefit and are out of work. This year, for the first time, they must pay 20 per cent. of their rates and their benefit has been uprated by 20 per cent. of the average poll tax.
However, other things have happened at the same time. Rents in the London borough of Ealing have increased and service charges and underlying rates of benefit have changed. At the end of the day, that man and wife may be £1 or £2 better off, but there is no way in which they discover whether they are in or out of pocket because rates in Ealing are at a specific level. The sums are not disaggregated, so if they are out of pocket they do not know whether to blame the Government or their rent and rates. Already, one is seeing people at one's advice bureau who, as a result of the social security changes, are somewhat perplexed. They are unable to decide whether the London borough of Ealing or anyone else is responsible for what has happened.
At present, that man's wife receives no rate demand. To that extent, she is left out of the equation. He applies for a rebate and pays 20 per cent. of his rates. The purpose of the poll tax is to include his wife. What will happen when the poll tax comes into force? The wife will have to register and will receive a bill. As she will have no income, she will apply for an 80 per cent. rebate, which will be rebated at source. What about the remaining 20 per cent.? She will not receive that sum because it will be added to her husband's benefit. Thus, she is brought into the equation and becomes accountable, but will not have a penny to pay.
The Government say that the husband will go to the post office, draw benefit, find the 20 per cent. of the national average poll tax—which is not his, but his wife's—and give it to his wife, who will then see whether the national average is more or less in the London borough of Ealing. If it is more, she will be out of pocket, and I do not know how she will pay rates. If it is less, she will pocket 4p or 5p a week. She will then go to the post office and pay her bill.
We all know that that scenario is absurd. The husband will pay the bill for both of them out of the joint benefit that he will have received. The notion that his wife will be made more accountable and that the new system will rekindle a long-lost interest in municipal affairs is rubbish. Much bureaucracy will be involved, and those two people will say, "Who on earth invented this new system?". The idea that they may take their anger out on the London borough of Ealing, if they work out that their rates are above average, is misguided. I think that their attention will focus on whoever devised the new scheme.
We have gone beyond the stage at which it would be possible to exempt them from the charade of being marched into the system, being given money, and marched out again. However, we can insulate against any financial loss, which is why, if there is to be a Division, I am minded to vote for amendment (a). Although it would not offer total protection, which would be logical, it would insulate 909 them from the financial consequences of this measure. We are talking about people on low incomes, and I see no reason why we should make their incomes any lower.
§ Mr. Terry Davis (Birmingham, Hodge Hill)
I agree entirely with the hon. Member for Ealing, Acton (Sir G. Young) that people tend rightly to focus their discontent on the Government.
The two terms that will live and be repeated whenever people discuss the poll tax are, first, that used by the right hon. Member for Henley (Mr. Heseltine), who described the poll tax as the "Tory tax", and, secondly, the adjective used by the Secretary of State, who described the rebate scheme as "generous". Those terms will be repeated constantly by Opposition Members and their supporters.
My hon. Friends have already drawn attention to the problems of disabled people. I shall not say anything further about those problems other than to say that I agree entirely with my hon. Friends. My hon. Friends will recognise that many less well-off people deserve to be considered for more generous rebates. I use the phrase "less well-off" because it was used in the famous correspondence that was leaked this week.
The Government tend to assume that people who are less well-off, whether they be disabled or not, have been adequately helped by the improvement in income support of 20 per cent. of the average poll tax rate. The Government forget that many less well-off people do not receive income support from other sources—whether it be as a result of their thrift from wages or private pensions; the pension is deferred remuneration and deferred wages—and because their income is pence above the threshold at which one stops receiving income support, they have not had an increase of 20 per cent. of the average poll tax rate. Those people will particularly suffer, and in the past many of them have voted for the Conservative party. They will describe the Secretary of State's proposals as the Tory tax and will express through the ballot box their resentment of his description of the rebate scheme as generous.
§ Mr. Leigh
I am grateful for the opportunity to make one or two remarks. I was prompted to comment during the speech of the hon. Member for Copeland (Dr. Cunningham). His speech was economically illiterate and politically disingenuous. He is an intelligent man, and I think that he was doing that deliberately. His speech was a pot pourri of traditional Labour party taxonomics—tax the rich, soak the rich and away with enterprise and wealth creation. What he said was quite irrelevant to the debate and wasted our time.
The hon. Member for Copeland repeatedly drew examples out of the air. It is easy to make comparisons between the chairman of a company earning a large salary and somebody who is just above the rebate line and say, "They are paying the same poll tax." The hon. Gentleman gave example after example, ignoring the fact that the top 10 per cent. of income tax payers will be paying 10 times more than the bottom 10 per cent. The hon. Gentleman ignored the fact that when this reform is passed three quarters of the cost of local government will be accounted for by the business rate and the general taxpayer, which is based on ability to pay.
The Labour party continually tries to divert the debate along the line that we shall all be paying the same for local 910 services. By so doing, it is deluding the electorate. The hon. Gentleman did not apologise on behalf of his hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker), who tried to convince the House that some people on low incomes, even after rebates, will be paying 10 per cent. or more of their income. My right hon. Friend said that they could be paying as little as 7.5 per cent.
Whatever system of local taxation we have, whether it is the local income tax favoured by the Liberal party or the system favoured by the Labour party—a local income tax coupled with a property tax—there is bound to be a high marginal rate of income tax at the bottom and it is bound to create some poverty or earnings trap. They know that there is no way out of that.
§ Mr. Leigh
No. I have very little time as my right hon. Friend the Secretary of State wishes to reply to the debate at 8.40 pm.
All systems suffer from that. The hon. Member for Copeland failed to present any system of his own to the House. He knows that any system would result in a relatively high level of taxation on the lower paid. I want my right hon. Friend to know that we on this side of the House think that the rebates that he has brought forward are quite generous enough. We do not feel that he needs to go any further. He has got the equation about right.
§ Mr. Ridley
It is not surprising that Monday's debate spilled over into rebates and that the debate tonight on rebates has spilled back into the principle. That is what my hon. Friend the Member for Leominster (Mr. Temple-Morris) was saying, as many other speakers have tried to get back to the principle that was established in the vote on Monday night. I have every sympathy with my hon. Friend's inability to be called on that occasion, and I am delighted that he was called today, but I do not think that he will expect me to repeat the arguments of Monday.
The hon. Member for Monklands, West (Mr. Clarke) was also speaking on the wrong day, because the incentive to go into residential care or stay at home was debated yesterday and my hon. and learned Friend the Minister for Local Government gave a convincing and comprehensive answer, which the hon. Friend clearly did not hear. I recommend him to read Hansard, and I shall not bore the House by repeating those arguments this evening.
§ Mr. Ridley
No. I have very little time as I have cut my time short so that every hon. Member could get in.
The hon. Member for Caernarfon (Mr. Wigley) repeated the arguments that were made in Committee about rating relief for the disabled. He knows perfectly well that under the present rating system disabled people who had to have extensions to their houses which could have led to a higher rates bill were excused that increase. Of course that will not arise. Whatever the facilities in someone's house, he has to pay the community charge, not on the basis of his housing, but on the basis of his status as an individual. Therefore, it is inappropriate to reintroduce that relief, as the hon. Gentleman knows full well.
The hon. Member for Truro (Mr. Taylor) kept asking for categorical assurances and guarantees, as if the world would never change and no contingencies would be applied. I can tell him, particularly in relation to the 911 maintenance of benefits in real terms, that my right hon. Friend the Secretary of State for Social Services has a statutory obligation to review benefits each year. Decisions are made taking account of all the circumstances at the time. The hon. Gentleman will find that each year the House has the opportunity to debate the uprating of social security benefits. In the same way, community charge rebates will become a benefit and will be within the purview of those arrangements and will be assessed, put to the House, debated and voted upon every year.
The hon. Member for Truro, supported by the hon. Member for Copeland (Dr. Cunningham), returned to the question of a 100 per cent. benefit, as indeed did my hon. Friend the Member for Ealing, Acton (Sir G. Young). He argued again, as those three hon. Members did in Committee, to substitute for the 20 per cent. uprating plus the 80 per cent. rebate arrangements a 100 per cent. rebate. However, as has been pointed out, a 100 per cent. rebate would be nonsense. It would be a pointless process to make someone liable and then give him a 100 per cent. rebate. Therefore, that in itself cannot be the answer.
As has rightly been pointed out, the reason why it is better that everyone should contribute at least 20 per cent. is that everybody would have an interest in the conduct of their local authority and would be able to play a part in forming the decisions of that local authority through their votes. That is the basis of the whole scheme. I know that my hon. Friend the Member for Acton does not like it, but it would be absurd at this stage to return to the point of principle that has been established that everybody will play a part. Therefore, I cannot recommend the House to accept amendment (a).
The hon. Member for Truro also spoke to amendment (b) and referred to the different treatment between single people under 25 and those over 25. The hon. Gentleman will have heard the debate in Committee, when the point was firmly made that this is a part of the social security reforms to which the House assented in what is now the Social Security Act.
The main reason why there is a distinction between the under-25s and the over-25s is that most of those under 25 live at home and do not have household expenses, while the majority of those over 25 are householders and therefore have household expenses. That is not an entirely watertight distinction, but it recognises the special expenses that older single people have when they become householders.
§ Mr. Ridley
I shall not give way, as I have little time and many points to answer.
That means that the structure of the community charge benefit is the same for individuals under and over 25. For net income up to income support level they will receive the 80 per cent. reduction. As income rises above that level, benefit tapers off by 15p for each extra £1 of income. The only difference is that the income support levels themselves are different for individuals above and below 25. As I have already explained, that merely reflects the fact that 80 per cent. of those under 25 are not householders and therefore face lower household expenses than do the majority of those over 25. That view commended itself to the House when it approved the income support level regulations.
912 The hon. Member for Copeland did not receive the letter that I placed on the board at 3 pm, and I apologise to him if the communications between us did not work with their usual immaculate regularity, but I gave him the details of the rebate. I maintain my view that it is a generous rebate.
The hon. Gentleman can attack the rebate only by returning to the argument about ability to pay and by comparing the rebated contributions of various groups with the contributions of people who are very much better off. Of course, by such comparisons the differences will be very marked as they are on gross income and net income and any other way in which we compare the fortunes of the rich and the poor. There will be large differences, but that is not the point. The point of my assertion that the rebate is generous is that the points at which people start to get on to the rebate taper, and that points where they lose rebate altogether are fairly high figures of net income, arid even higher figures of gross income, which compare very favourably with anything that has gone before, arid certainly anything that the Labour party ever achieved when it was arranging such matters.
§ Mr. Ridley
Finally, I want to deal with the question of the leaked letter, which was referred to by two hon. Members. The word "disgusting" was used in that context. I must confess that I think it is disgusting to pick up stolen goods arid then to shred the evidence. It will give great aid arid comfort to criminals to know that the Opposition are prepared to dispose of the evidence.
§ Mr. Ridley
The hon. Member for Copeland does not seem to understand how the system works. The rebates are paid for by the community charge payers, he said, but that cannot be true, because the rebates before I improved them, and the rebates as we now have them, are all part of one thing. The Government's contribution to local authorities covers both the grant to local authorities and the cost of the rebates. If a higher rebate cost is fixed, it will automatically result in higher community charges for a given, limited, fixed grant.
My right hon. Friend the Prime Minister had to tell the House, because the point was not apparently taken, that that flows through into the level of benefits, but that it is corrected, if it is wished to correct it, at the time that the level of grant is fixed. If the total level of grant is increased, there will be no impact on the community charge, but if it is increased it will have an impact on the community charge.
The correspondence made it clear that I believed. long before my hon. Friend the Member for Hampshire, East (Mr. Mates) put down his amendment, and long before Monday's debate, that the taper was a little harsh and not as generous as I should have liked it to be. It is now clear that I thought that a long time ago. If my colleagues had agreed that we should slacken the taper on the community charge rebate, it would have made no sense whatsoever to increase the housing benefit taper in the same year. Naturally, we decided not to do so. It is all very simple, if only the Opposition would listen to what I am saying.
§ Dr. Cunningham
The Secretary of State's return to the Dispatch Box was a bit like the return of Crazy Horse. His speech made a bad situation even worse. He described undiscovered and unnamed civil servants as criminals. That can hardly improve his relationship with them.
I accept the Secretary of State's apology about the delay in receipt of his letter, but it is a little disconcerting to receive letters that we are not supposed to have more quickly than the ones that we are supposed to have.
As for the bucolic and intemperate intervention of the hon. Member for Gainsborough and Horncastle (Mr. Leigh), if anyone was here on the wrong day it was he, because he did not deal with rebates. Apart from being here on the wrong day, he also appears not to be on the same wavelength as the Secretary of State. I remind him of what the Secretary of State said about the matter in Committee on 23 February. As the hon. Member for Gainsborough and Horncastle was an assiduous attender in Committee, I am sure that he heard what the Secretary of State said, which was:With a flat rate charge it must be true that the burden will fall more heavily on those with low incomes than on those with high incomes."—[Official Report, Standing Committee E, 23 February 1988; c. 936.]That is what I said, too. That is why we are opposed to the principle of a flat rate community charge. We believe that the rebates are inadequate. That is why we have tabled amendment (a).
It is Orwellian that something that in Committee was called a rebate has suddenly and miraculously been renamed a benefit. The Secretary of State referred to benefits as though people were being given something. What they are being given, in his terms, is a slightly less onerous Bill. They are not being given anything. To describe it as a benefit is almost as bad as the Secretary of State's use of the word "generous" in this context, a word which will return to haunt the Secretary of State and his right hon. and hon. Friends again and again.
I hope that it can be agreed that Government amendment No. 120 should be taken on the nod and that the amendments from then onwards to new clause 5 should not be moved. We agree that the Government's new clause 16 should be taken on the nod. Amendment (a) should be written into the Bill, because it would provide for the paying of rebates of up to 100 per cent. of the poll tax.
§ Amendment agreed to.