Local Government Finance (Hansard, 26 April 1989)

§ 2. Mr. Charles Wardle
To ask the Secretary of State for the Environment what costs would be involved in introducing a system of local government finance based on capital values and a local income tax.

§ The Minister for Local Government (Mr. John Gummer)
The Labour party's two-tax system could cost up to four times as much to administer as the existing rating system.

§ Mr. Wardle
I thank my right hon. Friend for that information. Does he agree that a local income tax system would do very little to improve accountability, would be complex as well as expensive, and would be grossly unfair to all inner-city residents, while a capital value system would be a disaster for many people in London on relatively low incomes whose house values have risen rapidly?

§ Mr. Gummer
The two-tax system proposed by Labour would produce all the worst aspects of all the other systems. It would produce the worst side of the rating system and the worst side of local income tax. Last year a ward sister in my hon. Friend's constituency earning £13,000 per year and living in a flat in Bexhill would have faced a community charge of £196, compared with £425 under the Labour scheme.[Interruption.] It is no wonder that Labour Members are trying to make enough noise to drown out the facts about their scheme.

§ Mr. Wardle
Labour will never win Bexhill now. [Interruption.]

§ Mr. Speaker
Order. I hope that the House will try to settle down.

§ Mr. Mullin
Will the Minister confirm that, quite apart from being immoral, the poll tax will cost a great deal more to collect than the existing rates system?

§ Mr. Gummer
First, the community charge will cost about half as much as the Labour party's scheme would. Secondly, I hope soon to be able to send the hon. Gentleman a pamphlet on the morality of the community charge.

§ Mr. Heddle
Will my right hon. Friend take every opportunity between now and the county elections next Thursday to explain to the 65 per cent. of owner-occupiers in this country that the financing of local government partly by capital valuation would amount to no more than a wealth tax and would hit especially hard pensioners and people on fixed incomes throughout the nation? Will my right hon. Friend also take this opportunity to denounce the campaign of fear and distortion by Labour party headquarters in Walworth road and the issuing of letters by Labour-controlled local authorities provoking fear and concern about the cost of the community charge?

§ Mr. Gummer
The community charge is fairer because everybody pays their bit. It is fairer because those who cannot afford it get help with the cost. It is also fairer because it makes a local council accountable. It is the last reason that the Labour party hates, because for the first time councils will be accountable to the electorate rather than to their local management committees and to Militant.

§ Dr. Cunningham
Why are the Tories running so scared about the poll tax that they have to wrack themselves with dishonesty about the issues? Why are Ministers so terrified that they postponed the canvass to introduce the poll tax until after the county council elections? If the poll tax is so good, why have the Government refused to debate the six poll tax orders currently on the Table before 4 May? If the poll tax is so good, why do the Government keep ducking those issues? In view of the Minister's remark that everyone will pay something, will he explain why at the Tory party local government conference the Prime Minister wrongly and dishonestly said that under the poll tax—[Interruption.] Yes, dishonestly.

§ Mr. Speaker
Order. Not in this Chamber. The hon. Gentleman must withdraw "dishonestly".

§ Dr. Cunningham
The Prime Minister said, wrongly and misleadingly, that 5 million people will pay nothing under the poll tax proposals. How does the Minister explain that? The Minister says that the poll tax is fairer. Perhaps he will also explain—[Interruption.] We have listened to enough drivel from the hon. Members for Pembroke (Mr. Bennett) and for Ealing, North (Mr. Greenway). Perhaps the Minister will also explain why it is that people with incomes as low as £54 per week will receive no poll tax rebate.

§ Mr. Gummer
It is interesting that the hon. Gentleman wants to ask all those questions when he has refused to answer the simplest questions about his own party's proposals. He is afraid that on the doorstep Labour's two-tax scheme will be given the thumbs down by millions of people throughout the country. Five million people will receive 80 per cent. rebates, and they will receive money to cover the other 20 per cent. in their benefits. In effect, therefore, they will not pay the poll tax. They will not pay the poll tax because it is not a poll tax. The Labour party keeps using the term "poll tax" because it wants to confuse the public and make them believe that everybody will pay the same. Nine million people will have a rebate. Labour councils are trying to frighten people by pretending that they will not get help. When the hon. Gentleman comes clean about the worst proposal for local tax since the window tax, we shall begin to answer his silly questions.

Several Hon. Members
rose—

§ Mr. Speaker
Order. I gather that the county council elections are some time next week, but right hon. and hon. Members should keep to the subject of questions to Ministers and deal with them in a responsible way.