HC Deb 26 April 1989 vol 151 cc946-7
9. Mr. Nicholas Bennett

To ask the Secretary of State for the Environment what representations he has received about the case for a system of local government finance based on capital value rates and local income tax; and whether he will make a statement.

Mr. Gummer

Not surprisingly, I have received scarcely any representations in favour of Labour's two-tax system, which would be cripplingly expensive, would do virtually nothing to restore local accountability, and would replicate the unfairnesses of existing domestic rates.

Mr. Bennett

Is it not the case that two of the many disadvantages of Labour's twin-tax policy would be that under a local income tax Labour councils could bleed their residents dry and under the capital value tax residents would have to pay increases every time house prices rose, irrespective of increases in income? Does my right hon. Friend agree that the silence of the hon. Member for Copeland (Dr. Cunningham) on the issue is due to the realisation that Labour has shot itself in the foot again?

Mr. Gummer

There is a serious problem about a capital value tax because four out of 10 people who live in more expensive houses have less than average incomes and, therefore, would not have the means to pay the tax. The truth is that Labour Members no longer wish to talk about their tax system because they found it so unpopular on the doorstep.

Mr. James Lamond

Does the Minister realise that the electors whom he is trying to reach with his statements today will treat his remarks about the Labour party's proposal with disdain because they recall that it is not so long ago that he, other Ministers and Conservative Back Benchers were dismissing the poll tax with equal disdain and saying that it was iniquitous and would never be brought in? Now they have changed their minds.

Mr. Gummer

I am happy to say that I have been a supporter of the community charge, not just since the Government proposed it. The reason that I am a supporter is that it is fairer first, because everbody pays his bit, secondly, because everybody who needs help gets it, and thirdly, because it means that the local community has control over what the local council spends on its behalf. None of those three things applies to the two-tax Labour scheme.

Mr. Brandon-Bravo

My right hon. Friend will know that Clifton estate in my constituency of Nottingham, South consists of 9,000 properties; it is the second largest in England. Nearly half of those properties have been purchased by the tenants under the Government's right to buy. All of them have poured their life savings into what are now their homes. Is there any moral basis for charging those people a higher local tax merely because they have improved their homes?

Mr. Gummer

No, there is not, but it would be worse than that under Labour's proposals. My hon. Friend must remember that all the tenants who have not bought their homes would be charged the capital value of the houses of which they were tenants. So neither they nor their children could even look forward to realising that capital value. Not only would they not have the means whereby to pay the tax, but they would be hit as tenants on the capital value of the houses. It is a scandalously immoral proposal.

Mr. Blunkett

Will the Minister accept that his last answer is such gobbledeygook that it is not even worth commenting on? When people register and find out what the poll tax means, the 21 million people who will lose and everyone else who has a sense of decency and believes in a tax based on the ability to pay—whether in Northumbria, Cumbria, Lancashire or Avon—will cast their votes on 4 May for a fair tax system that takes from people with the ability to pay and distributes grants in a sensible fashion.

Mr. Gummer

A system that takes from people according to their ability to pay cannot be fair if it is based on the value of a house. If one accepts that, how does one explain to the four out of 10 people who have less than average earnings, but live in houses which would have above—

Dr. Cunningham

Rebate.

Mr. Gummer

So it would be done by rebate. What is wrong with the rebate on the community charge? The hon. Member for Copeland (Dr. Cunningham) has again shot himself in the foot. The hon. Member refuses to give the information upon which his tax proposal could be commented, because he is afraid of doing so. He then misleads the public by refusing to point out the rebates which we have in our system.