Local Government Finance (Hansard, 19 July 1989)

§ Mr. Speaker
I am informed that adequate copies of the illustrative community charges are now available in the Vote Office. I think that we should proceed with the statement.

§ Dr. Cunningham
On a point of order, Mr. Speaker. Before the Secretary of State resumes answering questions, I hope that he can clarify what appears to be a difference between his statement and the document that has now been issued to Members from the Vote Office.
In his statement, the Secretary of State said: the maximum amount of gain deferred will be £75 per adult. As hon. Members can see, the following statement is made at the top of the tables: Safety net allows losses of up to £23 per adult and 47 per cent. of gains subject to maximum of £70 per adult". The statement does not accord with the information on the tables. They show examples of over £70 per adult. Which is right?

§ Mr. James Lamond (Oldham, Central and Royton)
On a point of order, Mr. Speaker.

§ Mr. Speaker
I shall take the point of order because I was given notice of it.

§ Mr. Lamond
Earlier today, while the Secretary of State was making his statement at the Dispatch Box, I thought that I saw the civil servants in the Box to your right, Sir, hand out a number of copies of the paper to Conservative Back Benchers. I say that I thought I saw that happen—I was not sure. I would not raise the matter with you, Mr. Speaker, if I had been assured by the civil servants that that was not the case.
Naturally, I went to ask the civil servants. When I did so, the Secretary of State and the Minister intervened to say that on no account were those civil servants to answer my question and that the only answer that I could have was from them. I am sorry to say that I am not prepared to accept any reply from the Secretary of State or the Minister. I prefer to have the truth, if possible, from the civil servants.

§ Mr. Speaker
I hope that the hon. Member will accept this response from me. Since he raised the matter with me privately, I have looked into it and I can assure him that that did not happen.

§ Mr. Ridley
With regard to the point of order that the hon. Member for Copeland (Dr. Cunningham) raised, if he looks at the tables he will see that they are for 1989–90, whereas the arrangements that I announced for the safety net are for 1990–91, a year later. The figure of £75 which is the maximum contribution in 1990–91 should be reduced, because of the effects of inflation this year and next year, to a comparable figure. The hon Gentleman will therefore understand why we have used the figure of £70 as the cut-off point in exemplifying the system for the current year as opposed to next year.
The hon. Gentleman asked for details of the national non-domestic rate. The Inland Revenue has not yet completed its revaluation and given the details that we 367 need before we can give the hon. Gentleman those figures. They will be made available as soon as possible, and certainly in the autumn.
The hon. Gentleman asked also about the standard spending assessment. He is right—that is the variable in this package which we have not yet given the House and which is essential before any authority can calculate what its community charge may be next year. The authorities do not know what assessment we will choose. There is good reason for that, as the hon. Gentleman should know. We have been discussing the standard spending assessment with local authority associations since Christmas. We have been exemplifying all sorts of suggestions that the associations have put forward and asked us to exemplify, some of which the hon. Gentleman quoted. No choice has yet been made, because we should like, if possible, to carry the associations with us on what is the correct assessment from their point of view as well as ours. We cannot be firm until those decisions are taken.
The hon. Gentleman described this settlement as a "cut", which surprises me. It is an 11 per cent. increase in the provision that we made for the current year. I do not think that the hon. Gentleman is right to base his opinions on the budgets for this year, because the current year was a strange year in the history of rate support grant. It was the last year of the system and a number of authorities increased their spending, partly to unwind creative accounting, partly because they were not subject to grant penalties for so increasing their spending and partly for other reasons. It is, therefore, the worst year that the hon. Gentleman could possibly use to base his calculations on the budgets.
The hon. Gentleman asked in what way local authorities could achieve this settlement as the Government suggest. There can be enormous efficiency savings, some of which I mentioned in my statement. The tendering-out process, which has started, is beginning to show ever-greater opportunities for savings, and I think that that is the right answer.
The hon. Gentleman moved on to his constituency and said: the … likely poll tax in Copeland in the next financial year will be about £350 per person. I have very good news for the hon. Gentleman. The safety-netted charge in Copeland is £196 this year, not £350. The hon. Gentleman is therefore totally wrong—almost by a factor of two—in making that claim. His council has an opportunity to get the amount even lower if it will look at its spending. The hon. Gentleman is a great beneficiary of the safety net that we have produced.
The hon. Gentleman may like to cheer up his constituents by telling them that there will be a 17.1 per cent. reduction in the business rate. He may not want it, but his constituents do.

Several Hon. Members
rose ——

§ Mr. Speaker
Order. I appreciate the great importance of the statement, but the House knows that it will involve legislation. I therefore hope that hon. Members will put pointed and brief questions and not go into great detail at this stage.

§ Mr. John Heddle (Mid-Staffordshire)
Does my right hon. Friend accept that if non-domestic ratepayers receive 368 transitional relief while we transfer from an unfair rating system to a much fairer one in the longer term, it is obvious that householders in prudently run authorities should also do so, and to that extent the House will welcome his statement? Will my right hon. Friend reflect that not many prudently run local authorities have an average rateable value as low as £150? When discussing the matter with the local authority associations later in this summer, will he consider extending that?

§ Mr. Ridley
I agree with my hon. Friend. We have provided transitional relief for non-domestic ratepayers and for community charge payers. The systems will be different in each case because their circumstances are different. The careful, gentle transitions that we are providing will greatly ease the introduction of the new system. My hon. Friend was right in his comments on well-run councils. One council in his constituency, Cannock Chase, will make a small contribution to the safety net and will have a reasonably low community charge.

§ Mr. Matthew Taylor (Truro)
I am sure that the Secretary of State agrees that he originally brought forward his original safety net proposals to protect those that might otherwise suffer financially under the financial changes associated with the poll tax. It appears that he has decided that, to buy votes for Conservative Members, it is worth sacrificing some of those needs that he previously identified. The problem is that he has not even satisfied Conservative Members, because he is not prepared to spend Government money to do so but simply tries to transfer money between the poor old ratepayers and poll tax payers in their areas. The right hon. Gentleman's successor will come under great pressure to make changes. The proposal does nothing to meet the needs of those areas where bills will increase or of other areas, including those Conservative Members who have been worrying about them, that are asked to finance his policies.
Does the right hon. Gentleman also accept that although those areas may be able to wait until the new Secretary of State takes office in the autumn, the people who will suffer most from the announcement are business ratepayers who, as he has made clear in his answer to the hon. Member for Copeland (Dr. Cunningham), will not be given an idea of how they will suffer until the autumn? They are already trying to draw up budgets for their businesses. Will the Secretary of State respond to that before the recess?

§ Mr. Ridley
Most of that was in the nature of statement rather than question. The hon. Gentleman is wrong in suggesting that we are reshuffling the money to provide interim protection. All we are doing is providing a sufficient grant for the safety net. It is better that that should be shown to the customer—each community charge payer—on his own bill so that he is aware whether he is contributing directly to or getting benefit from the safety net, rather than having it lost in the whole grant structure, which is the alternative.

Several Hon. Members
rose——

§ Mr. Dennis Skinner (Bolsover)
Call Rhodes Boyson.

§ Mr. Speaker
Order. Will the hon. Member for Bolsover (Mr. Skinner) try to contain himself now? I think that we have all had enough of it.

§ Sir William Shelton (Streatham)
My constituents will warmly welcome the announcement by my right hon. Friend of a transitional grant for inner London to cushion the costs of the change from the Inner London education authority to local councils as education authorities. Will my right hon. Friend tell us how long the transitional grant will last? Will it be tapered? Will the educational content of the Government grant to inner London be more or less the same level as the £950 million that ILEA is spending currently each year in inner London?

§ Mr. Ridley
I am grateful to my hon. Friend. I shall answer his later questions first. The new grant for the authorities that receive educational responsibilities in London will he tapered over a five-year period. That is extra to any grant that comes through the standard spending assessment, the details of which, as I said earlier, have not yet been finally decided. However, I doubt whether it will come to the full amount of the current overspend of ILEA of £183 per adult. He will he glad to know that for his constituency this year, the community charge, if we had had it in place, would have been £297 in Lambeth. He might equally like to know that if we had a system of combined local income tax and capital value rates in place, the burden on the average man in his constituency would be £1,218.

§ Mr. Rees
Will the Secretary of State turn his mind to the page of the statement headed "1989/90 Illustrative capital value rates and local income tax" and the six pages that follow? Surely the Department of the Environment cannot possibly know what the position will be after the next general election, about the rate of local income tax declared or about the nature of capital values. Were those figures drawn up by the Civil Service? Do those figures come out of the statistical department of the Department of the Environment? If anyone had suggested that such political matter should be provided under any Government under whom I served, the permanent under-secretary would have said very firmly that it was not a matter for the Civil Service.

§ Mr. Ridley
rose——

§ Mr. Rees
I have not finished. Surely those seven pages should come from Conservative Central Office at the time of the next general election, when it sees what is in our manifesto. The Secretary of State is being too clever by half in cloaking a bad tax and that should not be done in a document such as this.

§ Mr. Ridley
I am extremely sorry that the right hon. Gentleman does not like having his own party's policy put to him. It seems extraordinary that he should have blundered into drawing attention to the fact that this is the adopted policy of his own party. [Interrruption.]

§ Mr. Speaker
Order. The Secretary of State must have a chance to answer the question put to him.

§ Mr. Ridley
rose——

§ Mr. Jeff Rooker (Birmingham, Perry Barr)
It is a lie.

§ Mr. Campbell-Savours
That is a lie.

§ Mr. Speaker
Order. The Secretary of State must not be accused of lying. He must answer the question that was put to him.

§ Mr. Ridley
I have received parliamentary questions asking me to exemplify certain systems of local authority finance. That is the question I have answered and, as far as I know, this is the system that the Labour party has adopted as its policy. If Labour Members want to alter any of the assumptions on which it is based, the hon. Member for Copeland has only to let me know and I shall alter the assumptions. However, on the assumptions clearly stated here and in answer to a parliamentary question, the right hon. Member for Morley and Leeds, South (Mr. Rees) will find that his constituents would have had to pay £252 in the first year of the community charge, if it had been this year, and £460 under the scheme of local authority finance that he supports.

§ Dame Elaine Kellett-Bowman (Lancaster)
My right hon. Friend knows that at present the county councils pay to the district councils a certain percentage of the collection of the rates and a certain percentage of any losses incurred from non-collection. As I understand it, there is no allowance under the new proposals for the county council to pay anything to the district councils. Lancashire has 17 district councils, which means that Lancashire county council will make a substantial profit on the collection to spend on the harebrained schemes thought up by the Labour-controlled council.

§ Mr. Ridley
The question of shortfall in the yield of the charge which arises either through evasion of paying or through the costs of collection is still under discussion with the local authority associations.

§ Mr. Peter L. Pike (Burnley)
Although I welcome the fact that Burnley will receive one of the biggest reductions, of £107 per head, as a result of having low-rated property, will the Secretary of State accept that we made that point when the Bill was going through Parliament? Will he also realise that the people of north-east Lancashire will recognise that these measures are being taken more with a view to saving the Tory marginal seats in that area? People with this concession will still be paying more than they are under the present rates system. This is only a transitional arrangement. The poll tax is grossly unfair because of its failure to take into account ability to pay.

§ Mr. Ridley
I take it that the hon. Gentleman now regards his seat as a Tory marginal, which may be underestimating the extent of our majority there after the next election. I was also glad that he recognised the help I have offered to seats such as his, which have a low average rateable value per household. The people of Burnley will like to know that the first year community charge, if it had been applied this year, would have been £173, but if they had had local income tax and capital value rates, they would have had to pay £499. What does he think is fair about that?

§ Sir Fergus Montgomery (Altrincham and Sale)
Can my right hon. Friend explain why, if the purpose of the community charge is to make councils more accountable to electors, community charge payers in my constituency will have to pay an extra £49 a year to bail out extravagant Socialist councils such as Manchester, which have overspent like mad? What encouragement is there in the arrangements for councils that have followed prudent policies over the years?

§ Mr. Ridley
My hon. Friend's constituents are already paying quite a lot to other areas under the resource equalisation mechanism in the rating system. Under the present arrangements they are paying £62 a head, whereas for the new community charge, we have been able to reduce the figure to £44. I think that my hon. Friend will find that that is a considerable improvement.

Mr. Eric S. Heifer (Liverpool, Walton)
Will the right hon. Gentleman explain why, even with the safety net, in Liverpool each individual will have to pay £338, whereas in areas such as Tewkesbury, where there is a slight increase, individuals will have to pay £239? That will place a greater burden on the mass of ordinary working people in an area with high unemployment and serious problems and under great stress. Is it not clear that the Government are putting the burden on to the shoulders of those who can ill afford to pay, whereas those who can afford to pay—the right hon. Gentleman's friends in his constituency—will get away with paying much less?

§ Mr. Ridley
I am grateful to the hon. Gentleman for his tribute to Tewkesbury council, which is, indeed, a very well-run authority, which is more than one can say for Liverpool. That is why Liverpool faces such a high community charge. The hon. Gentleman should address his question to Liverpool city council and not to me. He ought to ask the hon. Member for Copeland how he justifies a system of local authority finance which, in his own constituency, would make the average man pay £640 in local income tax and capital value rates.

§ Mr. Steve Norris (Epping Forest)
Does my right hon. Friend agree that under the present ludicrous and iniquitous system of block grant redistribution, the poor in rich areas have been subsidising the rich in poor areas for many years? Does he further agree that the great advantage of the present system of identifying the safety net is that the Government have identified it in order to eliminate it?

§ Mr. Ridley
My hon. Friend is exactly right. The present arrangements result in many very poor people having to pay over the odds to subsidise those in other areas who could well afford to pay the full amount. We are removing the inequity from the system—in one step next year, to be followed by other steps.

§ Mr. Jeff Rooker (Birmingham, Perry Barr)
May I ask the Secretary of State about Birmingham? Why should Birmingham poll tax payers pay a surcharge on the Tory tax of £67? It is one of only five local authorities on the whole list with a net overspend of zero. Why should my constituents pay £67 to subsidise overspending Tory local authorities such as Blackpool and Lancaster?

§ Mr. Ridley
I welcome the hon. Gentleman to the support of the new system. He may not know it, but for many years his constituents have been paying more than what the city of Birmingham requires to subsidise those authorities. That has happened under the system of resource equalisation. We have started his constituency on the road towards reducing that excess and winding it out altogether, but the large increase in rate support grant that Birmingham received this year has altered the figures for this year, as compared with last year.

§ Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)
Will my right hon. Friend forgive me for saying that 372 we seem to swap one unfair system—which it certainly is—for another unfair system and that the people of Birmingham will not understand his assertion that we got too much last year and that is why the figure is getting worse this year or why the financial prudence of Birmingham city council is now being thrown in its face? However my right hon. Friend cares to explain it, the £67 is £67 that we should not have to spend. My right hon. Friend has uttered fine words about new Elysian fields of fairness in local government. Why is it that this year the system in operation is possibly the most unfair system that we have ever had and that all the great overspenders in London are laughing at the fact that Tory common sense has become a Tory folly?

§ Mr. Ridley
I understand my hon. Friend's impatience to reach the end of the transitional period and to have the full community charge in place in Birmingham. I can understand why he wants us to cease having to impose on the citizens of Birmingham the burden of having to contribute through the resource equalisation mechanism to other citizens elsewhere. We all share that objective, including the hon. Member for Birmingham, Perry Barr (Mr. Rooker). The question is how soon and how quickly we should phase the arrangements out. I believe that it is generally accepted in the House that it is right to have a four-year transitional period over which to phase them out rather than putting an immediate end to all relief.

§ Mr. John Fraser (Norwood)
Given that the average rate burden per head of the population in Lambeth is £250, will the Secretary of State confirm that the non-safety netted poll tax will be substantially more than twice the present burden? Can he say whether the figures that he has published today are widely welcome among Conservative business men in Croydon, Bromley, Westminster, Wandsworth, Kensington and the City of London?

§ Mr. Ridley
With current spending rates, the full community charge in Lambeth this year would have been £543. The hon. Gentleman must take that up with Lambeth council because it is entirely due to that council and to ILEA that the figures are so extremely high. We have granted Lambeth relief under the safety net for four years, so the hon. Gentleman has four years in which to persuade its council to put its house in order.

§ Sir Rhodes Boyson (Brent, North)
Does my right hon. Friend agree that to transfer community charge money from provident to improvident authorities under the safety net arrangements is to undermine the very basis of the community charge which, in the beginning, was that one paid only for what one voted for?

§ Mr. Ridley
My right hon. Friend has heard the argument about whether there should be a transitional period. Many hon. Members are grateful, and have said so today, for the transitional help that we have given to their constituents so that they will not have to move up to the full level immediately. That help must be paid for at the expense of those who have gains to come.

§ Mr. George Howarth (Knowsley, North)
Ministers always refer to Knowsley as a well-run borough, although it has tremendous problems of deprivation none the less. Can the Secretary of State explain why Knowsley has turned out to be a net contributor to the safety net, given the extent of our problem as compared with those of 373 councils in constituencies represented by Conservative Members? Can the Secretary of State explain why in Merseyside—a fairly deprived area by any standards—three out of five local authorities, including those covering Bootle and Birkenhead, are net contributors to the safety net? Has the right hon. Gentleman any justification that would be in the least bit convincing?

§ Mr. Ridley
I have to tell the hon. Gentleman the disappointing news that those three boroughs are currently contributing to the permanent safety net that has existed in the form of resource equalisation. It is only by getting rid of that element in the present system that the full charge can be applied. We have agreed that there should he a transitional period before the full charge comes in. The fact that we have moved his constituents slightly in that direction is the result of my announcement today that all those losers will he asked to contribute £25 a head.

§ Mrs. Elizabeth Peacock (Batley and Spen)
I know that my right hon. Friend has had many representations today and in previous weeks from many hon. Members who object to their constituents paying towards the safety net. My authority is a receiver of the safety net, but even though we receive some £89 from it, can he help me explain to two pensioners in my constituency, whose current rates payable are £267, why they will have to pay £624 under the new system? It will be difficult to explain to them that the new system is fairer and that they will be better off.

§ Mr. Ridley
What I have announced today will be of considerable help to my hon. Friend as she rightly pointed out. She would fare far worse under the Labour proposals. Were her constituents subject to capital value rates and local income tax they would be asked, on average, to find £554 this year. That is what someone on the average rate would have to pay.

§ Mr. James Lamond (Oldham, Central and Royton)
Will the Secretary of State confirm that the figures that he caused his civil servants to work out for party-political purposes and which he has tried to represent as Labour party policy, are incorrect? Column 8, from which he has quoted several times, gives the tax bill resulting from local income tax rates when expenditure in the domestic sector is raised 100 per cent. from that source. The example he gives is not, as he suggested, based on the average man, but on a single adult on average male earnings and in receipt of the single persons's tax allowance. If there were another column that showed a married adult whose wife was not earning anything, her contribution would not be what he has said, but would be nothing.

§ Mr. Ridley
If the hon. Gentleman would like to put down a question I will, of course, give him the full exemplifications for any system, any combination of systems or any types of people that he wants. I am longing to have any correction from the Labour party to the data upon which the figures of its twin-tax nightmare are based because it is time that the Opposition realised what a considerable problem they have if they persist with such an absurd scheme.

§ Sir Philip Goodhart (Beckenham)
Does my right hon. Friend recognise that his Department's new proposals for calculating local authorities needs and assessments will substantially penalise authorities such as Bromley, that 374 have a good record of economic administration? Does he recognise that his Department's proposals could push the community charge for Bromley far higher than the £209 calculated in my right hon. Friend's paper?

§ Mr. Ridley
There is no decision on this. We have based the figures on what we believe is about the best type of standard spending assessment that we can devise. If that is the one that is finally adopted, the figures given would be very nearly correct. It is something that we must get right with the local authority associations and I do not believe that my hon. Friend need be worried by the extremes quoted by the hon. Member for Copeland because they are responses, in the main, to suggestions from various classes of authorities as to how the grant might he divided. Clearly those suggestions are designed to be in the interests of that particular class of authority. There is nothing wrong with that, but I doubt whether that would be acceptable to the generality of the associations.

§ Mr. Chris Smith (Islington, South and Finsbury)
How can the Secretary of State possibly justify a system that produces results of such massive discrepancy between different authorities? The London borough of Barnet, which contains the Tory marginal constituency of Finchley, currently has an average rate bill per household of £708. The indicative first year safety-netted community charge will be £290 per person. Yet the London borough of Islington, whose constituents I represent, currently has an average rate bill of £776, which is not dissimilar to the one for Barnet, but its first year safety-netted community charge is £496 per head. That is twice as much as the Prime Minister's constituents must pay.

§ Mr. Ridley
Of course the hon. Gentleman must realise why: it is because the London borough of Barnet conducts its affairs frugally and efficiently, which can hardly be said of the London borough of Islington. He might like to know that the situation would be very much worse if his solution to the problem were adopted in Islington.

§ Mr. Patrick McLoughlin (Derbyshire, West)
I want to draw my right hon. Friend's attention to the position in Derbyshire and to the full community charge as outlined in column 3. It shows that, overall, Derbyshire has one of the highest sets of community charge in the country. That is not because of anything that central Government have done, but is largely due to the high-spending county council. Column 4 gives us a few of the transitional periods of payment. Will my right hon. Friend confirm that the place that does best in Derbyshire is no marginal Tory seat, but that held by the hon. Member for Bolsover (Mr. Skinner)? That area will receive a plus of £88, which is far better than that for any Tory authority or Tory constituency in Derbyshire.

§ Mr. Ridley
I apologise to my hon. Friend if I got it wrong.

§ Ms. Dawn Primarolo (Bristol, South)
Will the Secretary of State please explain why his statement, which was presented as a safety net to cushion the full effects of the community charge, means that in Avon, where there are six district authorities—only one of which is Labour—the safety netted community charge is, without fail, higher than his own estimate for the community charge this year? Why is the Secretary of State increasing the community charge for the county of Avon?

§ Mr. Ridley
I do not follow what the hon. Lady is saying. Spending in Bristol is high and, as a result, it has a high community charge in the short and long term.

§ Mr. Nicholas Winterton (Macclesfield)
Will my right hon. Friend explain to me why Macclesfield borough council, one of the most prudently and responsibly managed in the country, which has a record of underspend and not overspend, should have to pay out for those authorities, particularly in inner cities, that have been irresponsibly and badly run? How can I explain to my pensioners who live on the retirement pension with perhaps a little additional private income, and to those who are unfortunately on income support, that they must bail out people in areas that have been badly run?

§ Mr. Ridley
I am sure that my hon. Friend has already explained to his constituents that they have been paying heavily towards other areas that benefit. What we are doing is unwinding the unfair system whereby his constituents and those of many other hon. Members must pay to areas of low rateable value for no other reason than that. I am glad to tell my hon. Friend that in the new system that I announced today I have managed to reduce what his constituents must pay from £75, if it were for this year, to £51. That is some relief.

§ Mr. Jim Cousins (Newcastle upon Tyne, Central)
Will the Secretary of State give some thought to the people who live in a unique domestic architecture known as the Tyneside flats, with which I am sure he is familiar, as his ancestors built several thousand of them? Those Tyneside flats have a low rateable value, but, as a result of the withdrawal of the safety net from Newcastle, its underpinning, and the fact that Newcastle will now contribute to the safety net rather than benefit from it, those people in the Tyneside flats in my constituency, most of them elderly, will suffer. Will the Secretary of State give some consideration to that particular form of low rateable value housing and advance some concession to bring benefit from the disbenefits that his statement creates?

§ Mr. Ridley
The hon. Gentleman's constituents will not benefit from or contribute to the safety net under the arrangements that I have put forward. This is only a device to equalise authorities, not a device to equalise different types of property or people within an authority. That function is carried out by the rebate system and 9 million people will be given help in the form of community charge rebates.

§ Mr. Michael Shersby (Uxbridge)
The first year safety net and community charge for the London borough of Hillingdon is shown as £342 compared with the community charge of standard spending of £240. That is due to overspending of £97 per head by that borough. In his statement, my right hon. Friend referred to the opportunities for savings which exist for local authorities arising from their payroll. Has my right hon. Friend's Department accumulated figures over the past three years to show by how much London local authorities have increased their payrolls, so that ratepayers can be given some idea of the increase that has resulted in that overspending?

§ Mr. Ridley
I cannot here and now give my hon. Friend the information that he seeks, but I shall see whether there is anything that we can give him to help him explain an 376 overspend in his borough of £97 per head this year compared with an underspend in some similar boroughs in outer London. There must be some reason to do with the efficiency of a council for such a situation.

Several Hon. Members
rose——

§ Mr. Speaker
Order. Hon. Members know that we have a heavy day ahead of us. I am conscious of the fact that virtually every constituency is affected, although I think not in Scotland, but I shall do my best to call those hon. Members who are standing, provided that they ask brief questions.

§ Mr. Campbell-Savours
Will the Secretary of State confirm that Allerdale is a beneficiary of the safety netting arrangements but that in subsequent years will have some of the highest poll tax increases, first because of inflation and, secondly, because of the need to close the safety net from which it is now a beneficiary? Before the right hon. Gentleman quotes me the local income tax figure, let me say that any person who goes to the Dispatch Box and says that Allerdale's people will have to pay £775 in income tax under a Labour Government will be telling a lie to the House of Commons.

§ Mr. Ridley
I must tell the hon. Gentleman the correct figure. A single man on average wages in Allerdale would pay £491 under the Labour party's system. The hon. Gentleman should tell his constituents that, because I will tell them if he does not.

§ Mr. Campbell-Savours
That is rubbish and a lie.

§ Mr. Ridley
If it is a lie, and it is wrong, will the hon. Gentleman please tell me on what he would like the exemplifications based? We only need the assumptions to be corrected and we shall give him the exemplifications.

Hon. Members
Withdraw.

§ Mr. Speaker
Order. We should not use the word "lie". If hon. Members feel that something is untrue, they may say that it is wrong, but we must not break the traditions of the House by accusing each other of lying.

§ Mr. Richard Page (Hertfordshire, South-West)
I support the principle of the community charge, but does my right hon. Friend accept that with a full community charge in my constituency of £285, and a first year safety net of £360, my constituents in presently low-rated accommodation will find the impact of the community charge severe enough without the extra £75 that they will have to pay under the safety net? They will ask me why they have to pay that £75 to bail out profligate councils and I will have great difficulty in giving them an answer. Will my right hon. Friend examine low-rated property and bring forward measures when the House reassembles after the recess before the matter becomes enshrined in law?

§ Mr. Ridley
This year, the average rate bill per household in the Three Rivers council in my hon. Friend's constituency was £827—one of the highest there is. That impost is already being levied on my hon. Friend's constituents. We are seeking to phase that out and he will find that his constituents gain considerably in the first year under the system that I have just announced.

§ Mr. David Clelland (Tyne Bridge)
Let me take the Secretary of State back to a point raised by my right hon. Friend the Member for Morley and Leeds, South (Mr. 377 Rees). It is undoubtedly legitimate for Tory party Central Office to criticise Labour party policies, but under what moral, if not legal, authority does the Secretary of State issue the document "Illustrative capital value rates and local income tax"? Is that not a blatant example of political propaganda at public expense, a practice that he has deprecated in local authorities? Is that not the height of hypocrisy and as near as can be to political corruption?

§ Mr. Ridley
The answer is simple. If the hon. Gentleman looks at the Order Paper he will find that I was asked to set that out, and if a Minister is asked a question, he should, if it is possible, give the answer, which in this case I did very fully. The trouble is that the hon. Gentleman does not like it. That is all that is wrong.

§ Mr. W. Benyon (Milton Keynes)
I did not vote for the community charge, but I understood that its principal object was to make local authorities truly accountable. In the circumstances, would not it have been more sensible and fair to make the Exchequer pay for the transitional arrangements?

§ Mr. Ridley
As I have explained, in a sense that is what is happening. We have two alternatives. We can either not show the contribution to the safety net on the rate bill, or we can do so. I hope that my hon. Friend will agree that it is much easier to tell his constituents which part of the bill relates to the community charge and which part relates to the safety net, rather than the other way around.

§ Mr. Allen McKay (Barnsley, West and Penistone)
I accept that the system will give Barnsley some protection in the first year, but when we come to the full poll tax, 95 per cent. of my constituents' households will pay more. Will the Secretary of State take into consideration the needs element, which could, if the right hon. Gentleman is not careful, withdraw £24 million from that authority which it cannot afford?

§ Mr. Ridley
I understand that there is a particular problem in the hon. Gentleman's constituency and that he is coming to see my right hon. Friend the Minister for Local Government. We shall do our best to try to find a solution to the particular problem in his constituency.

§ Mr. Ian Bruce (Dorset, South)
Will my right hon. Friend confirm that his announcement today of an additional £200 million in grants for 1991 would, if applied to the figures that we have been given for 1989–90, have had the effect of reducing each person's community charge by £5 across the board? Is that not an excellent point to make to the country? Are we not hiding our light under a bushel by not giving such illustrative figures?

§ Mr. Ridley
My hon. Friend is quite right. I should explain a rather technical matter in answer to his question. The £200 million made available next year will go to the inner-London authorities and to the low rateable value authorities which I described. In order to make the exemplifications for this year comparable—we have, of course, no means of adding grant to the figures for this year—we have had to make the figures for the exemplifications for 1989–90 £5 per head higher than they would have been if we had been able to add the extra grant. These figures would have been rather lower if we had. It is rather tortuous logic, but I am afraid that that is the way it is.

§ Mr. Elliot Morley (Glanford and Scunthorpe)
Is it fair that in these notional overspending figures a town such as Scunthorpe, which has been dominated for many years by one large industry, should be crippled because of the loss to the local council of the business rate? Can the Secretary of State explain why, on his own figures, Boothferry council is deemed to be spending more than Glanford, yet in the first year of the change will pay £60 more per head than Boothferry? Is the answer that the Secretary of State's figures are as nonsensical as his arguments?

§ Mr. Ridley
I did not quite follow what the hon. Gentleman said, but I think that he was talking about the difference in the rateable values between two councils, which, of course, will show up as soon as we move to the safety net, because the safety net is based on the present contribution.

§ Dr. Keith Hampson (Leeds, North-West)
Is my right hon. Friend aware that one item in his statement is particularly welcome? It is the recognition at last of the need for special relief for those areas in the north that historically have averaged lower rateable values. However, will he look again at the way that that system will work? Sunderland and Leeds currently have approximately the same average rateable values. Sunderland is overspending by twice as much as Leeds, but instead of paying £21 more, people in Sunderland will, as a result of the relief, pay £27 less. It would be a much better solution to the problem, given its scale, if at long last we recognised that education is primarily a national service which should be funded by national and not local taxpayers.

§ Mr. Ridley
I am glad that my hon. Friend acknowledges the help that the rateable value specific grant will bring to areas in the north. There does not seem to be quite the same gratitude from the Opposition, but at least my hon. Friend sees the point. This is not the time for me to speculate on whether education should or should not be paid for out of local authority finance. Such debates were held in Committee and, given the statement on the assessments, I do not think that we can do it.

§ Mr. Tony Banks (Newham, North-West)
The Secretary of State said that he was unwinding the rate system. What he is unwinding this afternoon is his political career. It is quite magical to hear words from a political corpse. I hope that the Secretary of State will not be shuffled off in October. I hope that he stays at the Dispatch Box and suffers right up to the general election defeat that the poll tax will bring about. How come that a borough such as Newham——

§ Mr. Speaker
Order. The hon. Gentleman had his chance.

§ Mr. Banks
How come that a borough such as Newham, which has the 11th highest rate in London, will end up with the sixth highest poll tax in London? Does the right hon. Gentleman not realise that Newham is the second most deprived local authority area in the whole of England and Wales? We have social problems that the Secretary of State does not even know about, never mind experienced.

§ Mr. Ridley
I agree with the hon. Gentleman on one matter; I hope that there will not be a reshuffle of the Opposition Front Bench because the hon. Member for Copeland (Dr. Cunningham), who has not been here for 379 the last hour, is the greatest asset we have. He can tell his constituents from me that if they ever have the system of capital value rates and local income tax the average man on average earnings in Copeland will pay £1,116 to his high-spending Labour council.

§ Mr. Richard Holt (Langbaurgh)
Would my right hon. Friend care to examine the situation in two neighbouring authorities, both of which I have the honour to represent in the House—Middlesbrough and Langbaurgh? Both authorities have approximately the same number of people, but there are two variants in terms of grant. Middlesbrough has a large ethnic minority and Langbaurgh has a large area of wasteland as a result of dereliction. Consequently, the ratepayers of Langbaurgh have the highest rate in the country to pay and endure. We have taken five separate delegations every year to see Ministers and each year we have been told, "Next year it will be different." Even when we came last week we were told that under the new system it would be different. But it is not different, and as a consequence I must tell my right hon. Friend that there will be outrage in Langbaurgh at the failure to recognise its special needs because it is not on the list, and will remain the highest rated in this northern area.

§ Mr. Ridley
My hon. Friend's constituency is another with a special problem like that of the hon. Member for Barnsley, West and Penistone (Mr. McKay). My hon. Friend has seen my right hon. Friend the Minister for Local Government and it is better for us to try to sort out the problem in the best way that we can. My hon. Friend will be pleased to know that this year we have seen a 28.4 per cent. reduction in the business rate in Langbaurgh.

§ Mr. Harry Barnes (Derbyshire, North-East)
It has taken a long time for common sense to come to some hon. Members, as the question by the hon. Member for Langbaurgh (Mr. Holt) has shown. Is the Minister aware that fairness cannot be introduced to a system that is inherently unfair? In attempting to introduce some fairness to some areas, the transitional arrangements will lead to a comparative loss in high rateable areas while in low rateable areas there will be a comparative gain. As my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins) said, problems arise in that some people will lose in low rateable value areas within constituencies that have a high rateable value, while people in high rateable value property in low rateable areas will gain. My constituency is directly affected by that, because some of the benefits that might transitionally come to other constituencies will not come to mine, as it is a mixed district area with different rateable values.

§ Mr. Ridley
Every constituency has different problems and different distributions of people and rateable values. There is nothing unique about that. We are seeking to phase out resource equalisation in the transitional safety net while at the same time providing protection for individuals through the very extensive system of rebates which should take care of anybody in an especially bad position.

Several Hon. Members
rose ——

§ Mr. Speaker
Order. This statement refers to England. I therefore propose to call two for one because, of course, this is a United Kingdom Parliament and I shall then give Scottish Members an opportunity to put their point of view.

§ Mr. Edward Leigh (Gainsborough and Horncastle)
Can my right hon. Friend confirm that it is only fair and equitable to help areas such as mine which have traditionally enjoyed low rateable values? Is it right that in Copeland, for example, the average rateable value per hereditament is £121 and therefore Copeland will benefit considerably from the statement? Does my right hon. Friend agree that that underlines that it is vital not to look at these matters in isolation, but to consider the alternatives? That is why my right hon. Friend was wise to warn people in Copeland on salaries of just £11,000 a year that they could end up paying £1,000 if the scheme of the hon. Member for Copeland (Dr. Cunningham) is implemented.

§ Mr. Ridley
I entirely agree with my hon. Friend. I hope that he will visit Copeland, as I hope to do, in order to make sure that the people there are made aware of that fact.

§ Sir Hugh Rossi (Hornsey and Wood Green)
My constituents enjoy the unenviable distinction of having to pay the highest community charge in the country—£642 per adult. No doubt that is due to the fact that the local authority is overspending by nearly £400 per adult, and no doubt the electors will take account of that next May. Will my right hon. Friend tell me why a constituency in that situation should he making a contribution to the safety net? Will he introduce powers to rate-cap, and will he apply them vigorously to boroughs such as Haringey?

§ Mr. Ridley
Haringey is both a high-spending authority and a high rateable value authority, so its ratepayers currently contribute to other councils as well as having to pay a great deal to their own council.
I assure my hon. Friend that capping powers are in the Local Government Finance Act 1988 and, if it is felt correct and necessary, we will not hesitate to use them.

§ Mr. Harry Ewing (Falkirk, East)
The Secretary of State referred to what he called Labour party policy in relation to these seven pages. Can he tell the House the total cost of producing them—a cost borne by the United Kingdom taxpayer? Is the Secretary of State aware that, by producing these pages, he, personally has called into question the impartiality of the Civil Service? The head of the Civil Service ought to look at the damage that the Secretary of State has done to that service. Is the right hon. Gentleman aware that if Labour councils produced that kind of political propaganda the Secretary of State would impose a surcharge? We will be glad to see the back of him and of his double standards.

§ Mr. Ridley
I cannot understand why Opposition Members keep returning to this subject. It would be far wiser to try to forget it. [HON. MEMBERS: "Ah!"] I do not want to forget it. I am delighted for the hon. Gentleman to raise it. Opposition Members seem to be so extremely sensitive about their proposals being mentioned. That surprises me very much.
381 I have received a parliamentary question. Am I not supposed to answer it? Should I answer parliamentary questions from the Opposition but not from this side?

§ Mr. Tony Baldry (Banbury)
Is the reason that we are having to spend so much time this afternoon discussing safety nets, the consistent and persistent overspending by a large number of local authorities, almost all of which are Labour-controlled, such as the London borough of Lambeth which, on average, spends £303 per adult more than it needs to each and every year? Despite that, the council still has hundreds of council units of accommodation empty and hundreds that are full of squatters and it is spending thousands of pounds on the wages of former Labour Members of Parliament who have been defeated in an election and now act as its special advisers. Is it not necessary to introduce the community charge to protect the community as a whole from this consistent and persistent overspending?

§ Mr. Ridley
My hon. Friend is exactly right. Whether the new director general of Lambeth will succeed in putting up the community charge still further remains to be seen, but I would not be surprised if he did.

§ Mr. Julian Brazier (Canterbury)
Can my right hon. Friend confirm two things? First, are all the swings that we are so exercised about very modest compared with those that would have resulted from rate revaluation? Secondly, would not areas such as Canterbury, where there have been enormous movements in house prices for reasons that have had nothing to do with local prosperity and a great deal to do with second home owners and other outside factors, lose very heavily if we retained the existing system?

§ Mr. Ridley
I agree entirely with my hon. Friend. The high house prices in some parts of the south-east, particularly his constituency, are the worst possible reason for the people who live there to be asked to pay more towards local government even when their council is a low-spending one. It is absolute nonsense at present. To bring it back in the form of an annual valuation—we must consider the expense of administering it—to clobber people who happen to live in areas where there are high house prices, is the most suicidal policy I have ever heard of.

§ Mr. Alex Salmond (Banff and Buchan)
What is the total additional funding that the right hon. Gentleman feels that he has to provide to meet the anxieties of English Tory Members now that the poll tax chickens have come home to roost? Does he realise that the maximum contribution change from £70 to £75 for 1990–91, implies an inflation rate for that year of 7.5 per cent.? Is that a forecast? If so, has he told the Chancellor?

§ Mr. Ridley
If the hon. Gentleman has listened to the statement, he would know that the aggregate external finance for England is £1.8 billion higher than the current year, which is an 8.5 per cent. increase. Those are the figures. The fact that they are higher than what we firmly believe the rate of inflation will be shows that this is quite a generous grant settlement.

§ Mr. Alistair Burt (Bury, North)
On behalf of non-domestic ratepayers in the metropolitan borough of Bury, I welcome the anticipated 20 per cent. drop in their rate bills. Will my right hon. Friend reassure domestic ratepayers—[Interruption.]

§ Mr. Speaker
Order. Give the hon. Member a chance.

§ Mr. Burt
Thank you, Mr. Speaker. Can my right hon. Friend reassure domestic ratepayers as soon as possible that the main determinant of the community charge will be local authority expenditure rather than Government expenditure policy?

§ Mr. Ridley
I have no doubt that the very large reduction in business rate poundages which will reach the north with the introduction of the new system will make an immense difference to the prosperity of those areas and to their ability to maintain high levels of employment. I am grateful to my hon. Friend for his recognition of that.
We hope that the full community charge will begin to take effect as quickly as possible so that we get full accountability of councils to their electors. There will be two elements for a few years—the charge and the safety net—but that should not divert people from the essential task of looking at their community charge as a ready reckoner to assess the efficiency of their council.

§ Mr. Timothy Wood (Stevenage)
I welcome the expected reduction in the business rate in Stevenage, which means that local businesses will be free from the high-spending local authority in that respect. The statement about safety nets clearly demonstrates the iniquities of the present system. I only wish that we were able to get rid of some of those iniquities rather more sharply.

§ Mr. Ridley
My hon. Friend is right on both points. This statement begins to get rid of the iniquities of resource equalisation rather more quickly than was originally expected.

§ Mr. Brian Wilson (Cunninghame, North)
Does the Secretary of State agree that the silence that greeted his statement before the unnatural break and the disarray that we have since heard from Conservative Members shows that the headless chickens are coming home to roost?
The attitude of those of us who are already suffering the poll tax and those of us who served on the Standing Committee on the Local Government Finance Bill who warned exactly what would happen to Tory Members who are now finding out about it is one of hell mend them, because they will find out a great deal more before it takes effect. Instead of spending money on bogus statistics, will the Secretary of State consider spending a little to set up a helpline for Tory Members who lose their seats because of the poll tax? There are plenty of counsellors available among former Tory Members in Scotland who lost their seats because of the poll tax.

§ Mr. Ridley
There are not nearly as many former hon. Members as there would be if there were a local income tax and capital value rates. In Cunninghame, North the Labour party would lose every seat if it brought that in.

§ Mr. Kenneth Hind (Lancashire, West)
Will my right hon. Friend accept the thanks of the voters of Lancashire, West who, as a consequence of his listening to the arguments about a safety net, will now benefit by £25 a head? Will my right hon. Friend look at the figures in front of him for the Labour councils which surround Tory-controlled West Lancashire? He will know that every one of them—Knowsley, Wigan, St. Helens and Liverpool—will pay at least £40 or £50 a head, despite the fact that West Lancashire will contribute towards the safety net.

§ Mr. Ridley
It is a curious fact that the vast majority of authorities which can spend below their GREs are Tory-controlled and the vast majority which spend above their GREs are Labour-controlled. The reason for high community charges is high spending by inefficient Labour councils, and nothing else.

§ Mr. David Gilroy Bevan (Birmingham, Yardley)
Will my right hon. Friend accept my thanks for seeing me and other delegates prior to this announcement, when we asked for a fairer system? Will he please record my bitter disappointment on behalf of the Birmingham ratepayers at the fact that this so-called juster technical system which he has found is one which increases even more the injustice faced by Birmingham poll tax payers? Will he think of a transfer to national taxation in line with the suggestion of my hon. Friend the Member for Milton Keynes (Mr. Benyon)? That would mean that after the summer recess, we could, once and for all, do away with this iniquitous system which disprivileges the good housekeepers and is to the benefit of the bad.

§ Mr. Ridley
I must refer my hon. Friend to the fact that Birmingham currently contributes towards resource equalisation. The new system will phase that out. That is what we are doing, and that will be the beginning of the end of the rating system to which he objects so greatly.

§ Mr. John Marshall (Hendon, South)
Will my right hon. Friend accept that many believe that the safety net provisions place a premium upon extravagance and a penalty on prudence? Will he confirm that the community charge payers of Barnet will be asked to pay £55, while the community charge payers of Islington will receive £173? In view of the lack of gratitude on the part of the recipients, will he consider ending this compulsory tax on Barnet's community charge payers? Will he confirm that the cost savings under competitive tendering can be as high as 20 per cent.? What would be the cost to the community of a local income tax?

§ Mr. Speaker
Briefly, please.

§ Mr. Ridley
My hon. Friend is quite right—massive savings are available under the new competitive tendering, which authorities can take much further than they are required to do by the law. That is one way, among others, in which they can reduce their community charges. I think that my hon. Friend the Member for Hendon, South (Mr. Marshall), who sat through the statement today, would agree that there are at least as many people who are grateful for the safety net as there are who resent having to contribute to it. It is obviously difficult to get the balance right, but I believe that in this case we have.

§ Mr. Tony Banks
On a point of order, Mr. Speaker. It is well known that as you are Mr. Speaker, and stand as Mr. Speaker, you clearly cannot ask a question of a Minister, but you must have a constituency interest. I wonder whether I could assist you, Mr. Speaker, by asking the Secretary of State why, in Croydon——

§ Mr. Speaker
Order. The hon. Gentleman could best assist me by keeping his mouth shut.