HC Deb 07 June 1989 vol 154 cc218-20
9. Mr. Harry Greenway

To ask the Secretary of State for Scotland what proportion of Scottish local authority income comes from (a) central Government funds. (b) the non-domestic rate and (c) the community charge: and if he will make a statement.

Mr. Rifkind

A total of 52 per cent. of Scottish local authority income in the current year will come from central Government funds, 27 per cent. from non-domestic rates and 21 per cent. from community charges. The proportion to be raised from community charges is higher that it need have been because many authorities have budgeted to increase their spending by well over the rate of inflation.

Mr. Greenway

Community charge payers will note that answer. Does my right hon. and learned Friend agree that the recent announcement that Scottish business ratepayers will achieve level playing fields with their English counterparts is good news for Scottish industry, for Scottish jobs and for everyone who cares for Scotland?

Mr. Rifkind

Yes, indeed, it has been a feature for many years of the Scottish business and industrial community that it has had a higher non-domestic rates burden than that south of the border, primarily because of higher local authority spending. Despite the cause of the problem, this Government are the first to ensure that that will cease and that in the United Kingdom we will have a common level of non-domestic rate poundage, thereby bringing the equivalent of £250 million of reduced rates burden to business and industry throughout Scotland.

Mr. Ernie Ross

Does the Secretary of State concede that his control of non-domestic rates will mean that if local government is to respond to the needs of the local business community, the cost of the expectation of increased services by non-domestic ratepayers will fall directly on domestic poll tax payers? How does he intend to help local authorities because of that?

Mr. Rifkind

I have to remind the hon. Gentleman that, as I understand it, local authorities have welcomed our plan to reduce the burden on the industrial and business community in Scotland because they appreciate, even if the hon. Gentleman does not, that that not only will be of benefit to industry but will have consequential benefits for jobs and the overall prosperity and competitiveness of the Scottish economy.

Mr. Wallace

The Secretary of State will recall that when the Green Paper was published he said that there would be special arrangements for Orkney and Shetland because of the high proportion of non-domestic rates from the oil terminals and, in Shetland's case, because of the debt repayment policy that would mean lower non-domestic rates at a time when oil revenues were going down. In the light of his recent announcement, what steps does he propose to take to flesh out the proposals for special arrangements?

Mr. Rifkind

Yes, we said in our announcement on business rates that there would have to be special arrangements for Orkney and Shetland because of the facts to which the hon. Gentleman referred. We are currently considering what those might be and there will be discussions with officials from the two island authorities to identify the most appropriate course of action.

Mr. Favell

Is it not a fact that following revaluation, the rating system in Scotland was highly unpopular and that it was only this Government who had the guts to do anything about it, unlike the gaggle of frustrated Socialists on the Opposition Benches, who have nothing to offer but wrecking tactics?

Mr. Rifkind

My hon. Friend is right, except in one respect. Labour Members are not offering simply wrecking tactics; they are offering in exchange for the community charge a property tax and a local income tax. They seem to believe—[Interruption.]—that two unpopular taxes will somehow be more acceptable to the people of Scotland than one form of rates or community charge. I notice that they are now trying to deny that, but the evidence is in their own policy documents, so we are entitled to refer to it.

Mr. Maxton

Does the Secretary of State accept that there has been a massive reduction in the level of Government grant given to local authorities in percentage terms, from 68.5 per cent. in 1979 to the present 55 per cent.? That would realise £589 million at present, which would mean £151 per poll taxpayer in Scotland, if it were distributed in that way. Does he agree that it was that reduction in grant that put pressure on the rating system and which led the Government to introduce the absurd and unfair poll tax, which is now putting the burden directly on the very poorest in our community?

Mr. Rifkind

I remind the hon. Gentleman that it was the last Labour Government who were responsible for the single biggest reduction in what was then called the rate support grant. I notice also that although speaking from the Opposition Front Bench, the hon. Gentleman did not contradict my remarks about the Labour party proposing to replace the community charge with two separate taxes—a property tax and a local income tax.