Local Government Finance (Hansard, 28 June 1989)

§ 5. Mr. Hind
To ask the Secretary of State for the Environment what representations he has had from tenant groups in favour of a system of local government finance based on capital value rates.

§ 10. Mr. Burt
To ask the Secretary of State for the Environment what representations he has had from tenant groups in favour of a system of local government finance based on capital value rates and local income tax.

§ Mr. Ridley
Not surprisingly, I have received hardly any representations in favour of a system of local government finance based on capital value rates or a local income tax.

§ Mr. Hind
Does my right hon. Friend agree that it would be monstrous for tenants to have capital value rates based on the value of their properties? Does he agree that about 20,000 people living in council houses in my constituency would consider it a major injustice if they had to pay rates based on the price of a house in which they have no financial interest?

§ Mr. Ridley
It is impossible to contemplate basing local authority payments, of whatever description, on the capital value of the houses of those who rent them. It is inexplicably unfair. Council property in central London will be up to four or five times more valuable than council property in, say, my hon. Friend's constituency. Why should those council tenants be expected to pay four or five times more for the same services? Our system is based on the cost of the services that are provided, and is infinitely fairer. The community charge in Lancashire, West, if it had been in place last year, would have been £230 in total. But if there had been a system of local income tax, a single person earning £11,000 a year—about the national average wage—would have paid a tax bill of £495.

§ Mr. Burt
Does my right hon. Friend agree that he has received no representations from tenant groups because they have been working out—as they have been in my constituency—how badly stung they would be by a system of double taxation, not only in the extra burden of the ridiculous administration costs needed to run two tax systems, but in their failure to control their local authority spending, because local income tax would make the local authorities less accountable? Is that not why they have not been pestering him with demands to bring in that outrageous system?

§ Mr. Ridley
To be fair, my hon. Friend should admit that they never dreamt that it could happen because they could not contemplate the nightmare of a Labour Government. Just in case they should have that nightmare, I should reinforce what my hon. Friend has said. A system based on capital value rates and local income tax would cost up to four times as much to administer as the present rating system. In my hon. Friend's constituency the local income tax rate alone, if that was the system adopted, 961 would be 6.4p in the pound, which is about as much as my right hon. Friend the Chancellor of the Exchequer has knocked off national income tax.

§ Mr. Rooker
Does the Secretary of State appreciate that he cannot back up with factual background analytical material a single figure that he has quoted from the Dispatch Box today? Will he explain to the House how it is that, up to now, he has defended the idea that, among domestic ratepayers, owner-occupiers should pay a tax on occupancy based on rental values, and that it will continue for business men as a tax on the rental value of the property that they own as a means of collecting local authority rates? The right hon. Gentleman has mixed those two up, and the way in which he has answered the question is disgraceful. Capital value taxes or rental value taxes are a tax on occupancy, not a tax on ownership. It is simply a means of raising the revenue. Does not the Secretary of State appreciate that? The revenue should be raised in a fairer way than through a flat-rate poll tax.

§ Mr. Ridley
I know that it hurts the hon. Gentleman, but I am going to rub his nose in it. The other day he was talking about the iniquities of capital value rents. Why does he support a party that advocates capital value taxes for local authorities based on the capital value of a tenant's house? By advocating that policy rather than the community charge he is selling his constituents down the river.

§ Mr. Campbell-Savours
Why will not the Secretary of State stop misrepresenting Labour policy? Why does he not look at what it says as against what he wants to believe it says? Does he understand that that policy is eminently more sensible than the poll tax? The simple truth is that the right hon. Gentleman is on his backside with the poll tax. The Cabinet is considering paying an extra subsidy to local authorities so that they can reduce the poll tax by £30 per man and woman because the Cabinet knows that it is unpopular. Is that not the truth?

§ Mr. Ridley
I say to the hon. Gentleman in all humility —[Interruption.]—that if I have made any false assumption in working out the figures that I have given this afternoon it is because I have written three times to the hon. Member for Copeland (Dr. Cunningham) asking for full details of what the Labour party proposes, but on none of those occasions have I had an acknowledgement, let alone a reply. If the hon. Gentleman would like to write to me to tell me on what assumptions he bases his twin-tax horror regime—his twin-tax nightmare—I will rework the examples and take the hon. Gentleman through them so that he is satisfied about the enormous havoc that his party's policy would wreak on his constituents. I will not hesitate to tell his constituents on every possible occasion the horrors of the policy that he has advocated.

§ Mr. Norris
Does my right hon. Friend agree that it is appalling that the Labour party should make such outrageous suggestions when it is well known that one of the groups most likely to benefit under the community charge arrangements is the single elderly who live on their own? Are not the people who live in that poverty trap among those to whom any party pledged to care for the less fortunate should pay attention?

§ Mr. Ridley
My hon. Friend is right. When opposition for opposition's sake is at an end, our system will be seen to be far fairer to people who deserve help and relief than anything that has come from the Labour party.

§ Dr. Cunningham
Humility is a facet of the right hon. Gentleman's character which he has hitherto kept well disguised. I fear that its sudden emergence is rather late to save his skin. If he checks the records of his correspondence he will find that he has received a reply to his letters. Since he appears to be so concerned about the financial well-being of council house tenants, perhaps he should explain to them and to the House why he and his right hon. Friend the Minister for Local Government plan to increase tenants' rents to make them pay the rents of those who do not pay. Why is he planning to increase council house tenants' rents to make them subsidise the poll tax of those who are much better off? Since, as a scientist, the right hon. Gentleman says that he is always interested in evidence, why does he not consult the records and studies of the Institute for Fiscal Studies and the Rating and Valuation Association, both of which show that a system of capital values will not only be more efficient, but fairer.

§ Mr. Ridley
Openness is not a facet of the hon. Gentleman's character which he has ever failed to disguise. Please may we be told what proportion of new local authority revenue will come from capital revenue rates and how much from local income tax? Does the hon. Gentleman plan resource equalisation and is there any system of rebates? Will he answer any of the questions about the Labour party's system? I shall not desist from exposing the figures implied by his system until he gives the proper data to change the figures, and when he does so I will change the figures, and he will not like them either.—[Interruption.]

§ Mr. Speaker
Order. Perhaps we can now settle down to question No. 6.