§ 12. Mr. MansTo ask the Secretary of State for the Environment whether he has any intention of limiting the liability for paying directly towards the cost of local government to heads of households only.
§ Mr. PortilloThe community charge is based on the principle that it is only fair that nearly every adult should be liable to contribute to the cost of local authority spending. I believe that that principle is increasingly widely accepted.
§ Mr. MansI thank my hon. Friend for that reply. Does he agree that one way to ensure that everyone's liability is reduced is to encourage high-spending councils such as mine in Lancashire to cut their costs, and more specifically their overheads? Is my hon. Friend aware that my council has held back no less than 32 per cent. of the money granted from central Government for the administrative costs of education?
§ Mr. PortilloI have found it very disappointing that a number of local authorities have used the introduction of the community charge to boost their spending considerably. I am afraid that a large number of county councils that are not facing election this year have taken advantage of the transition to the new system and the confusion that there may have been in some voters' minds to boost their spending substantially, knowing that the district councils were sending out the bills. If my hon. Friend's constituents have suffered in that way, I regret it.
§ Mr. Tony BanksIs not there something absolutely grotesque in a system of taxation under which the Prime Minister and her husband in Dulwich will pay exactly the same poll tax as a couple round the corner living in a damp private flat? Is the Minister aware that during the summer, as councils struggle to collect the money from millions of people around the country who simply cannot afford to 456 pay, there will be a great deal of social upheaval as bailiffs move in to try to seize people's property to pay a tax which those people know is unfair and which they cannot afford to pay?
§ Mr. PortilloThe hon. Gentleman has considerable experience of local authorities. He should know that the community charge provides only a minority proportion of the total spending of local authorities. Because of that, a lot of the taxes that people pay are then recycled in the form of Government grant back to local authorities. The House will have heard my right hon. Friend the Secretary of State for the Environment announce that the external finance to local authorities next year is to increase by 12.8 per cent. That means, for example. that a barrister earning £100,000 is likely to make a contribution of about £7,300 to the cost of local authority services. That is a very substantial amount indeed.
§ Mr. Nicholas BennettDoes my hon. Friend agree that the most grotesque thing would be for half the population to receive the services and have a vote in the election, but make no contribution to the cost of the services? Is not it even more grotesque that the Labour party, having promised to abolish the rates in 1987, is now prepared to stand on its head and support that unfair tax?
§ Mr. PortilloI believe that I saw it reported that the Leader of the Opposition had described the rates as a leap into the frying pan. I do not pretend entirely to understand what he meant by that, but I think that it must mean that at one time the Labour party thought that the rates were a very bad idea. There is a very good reason for thinking that. The rates are an unfair system. There is no relation between property ownership and income, and with only half the population paying, that is a fundamentally unfair system.
§ Mr. GouldWill the Minister define those whom he described a moment ago as "freeloaders"? Are they the people who traditionally have made their own contributions towards household liability for the rates by virtue of arrangements made within the household—exactly the people whom we regard as valuable citizens and voters with full civil rights?
§ Mr. PortilloI think that I can give a couple of examples of freeloaders. My first example, under the old system of rates—I gather that this would also be true under the system to which the Labour party wishes to return—would be the large number of wage earners in one house who pay a single rate bill between them, in comparison with the widow next door who has to pay the same amount or possibly more. My second example of freeloaders is those Labour Members who at the moment are choosing not to pay the community charge.
§ Mr. FavellNo doubt my hon. Friend has studied carefully the Labour party's proposals to reintroduce the rates. If those proposals were adopted, what would happen to the family of five earners, to the widow and to the deserted wife who is struggling to go out to work instead of living off the state?
§ Mr. PortilloMy hon. Friend flatters me in saying that I might have studied the proposals carefully. So far, I have not seen any detail worthy of study. I am afraid that my hon. Friend puts his finger on the point that returning to a property-based system such as the rates would recreate 457 all the problems of those people clustered in households who may have high incomes but participate in only one rates bill. I know of no way in which the Labour party could get out of that problem. That is the basic unfairness of the rating system and I am amazed that after 11 years the Labour party wants to return to it.
§ 13. Mr. BeithTo ask the Secretary of State for the Environment what plans he has to reduce the poll tax liability of people on low incomes whose poll tax bills have not been significantly reduced either by transitional relief or by rebates.
§ Mr. PortilloMy right hon. Friend announced on 19 July that extra help would go next year to 7.5 million people receiving transitional relief and that 4 million more people would be brought into the transitional relief scheme.
§ Mr. BeithWhat does the Minister intend to do about those elderly people who have struggled to pay their own way and who are in sheltered housing schemes where they previously paid their rates to the housing association and therefore did not get transitional relief? They now find that they are paying much more than they paid in rates but their income from limited capital puts them over the rebate limit.
§ Mr. PortilloAs the hon. Gentleman knows, transitional relief is available to those in sheltered accommodation on the same basis as to other former ratepayers. The only defensible basis for a transitional relief scheme is an actual rates bill. In a large housing scheme, just as in a large house, there will be the difficulty that the rates bill is too large and divided between too few people. However, the calculation for those people is carried out on the same basis and, of course, if they are in need those charge payers will qualify for community charge rebate.
Mr. Robert G. HughesWill my hon. Friend confirm that the people to whom the question refers, namely those on low or moderate incomes, would pay considerably more if they had to pay a local income tax, which is the plan proposed by the Liberal party?
§ Mr. PortilloYes, indeed. On previous occasions we have carried out exemplifications of that scheme, and the SLD party did not like the results. Of course, people on low incomes were treated worse under the old rating system because now, for every pound of income that a person on a low income may have, a 15p deduction is made from their benefit, whereas under the old rating system a 20p per pound deduction was made.
§ Mr. MaddenWill the Minister take this opportunity to withdraw and apologise for his description a few moments ago of pensioners, the disabled, those on low wages and others in receipt of rebates under the rating system? If he does not do so, his description of such people as freeloaders will go down as one of the worst slurs by any Minister on the most vulnerable people in our society.
§ Mr. PortilloWe are very fortunate that our words are recorded in Hansard. The official record will bear me out;I was asked by the hon. Member for Dagenham (Mr. Gould) to define whom I meant, and I spoke of those income earners who were clustered together paying only one rates bill. The second group of people was those 458 Labour Members of Parliament refusing to pay the community charge. I endorse both those definitions which arise from Labour party policy.