HC Deb 27 March 1990 vol 170 cc391-404 3.59 am
Mr. A. J. Beith (Berwick-upon-Tweed)

The purpose of this debate at almost four o'clock in the morning is not to continue the general argument about the merits and principles of the poll tax—an argument which rages not only between parties but within the ranks of the Conservative party, the party currently governing the country, some of the potential future leaders of which wish to make it clear that they did not support the tax in principle. I am opposed to the poll tax; I believe it to be an unfair tax—perhaps the most unfair in the recent history of this country. Administratively, it is also an unduly expensive tax to collect, which adds to the burden on the taxpayers. I hope that we shall soon see the back of it, and have a local income tax instead.

The purpose of the debate is to plead for something to be done urgently about the position in the parts of Northumberland that I represent, even within the limits of the poll tax in its first year. Clearly, this year we are talking about modifying the applications of the community charge system rather than about being able to remove it at this late stage. However, it is my wish that next year we get rid of the tax completely and replace it with something better.

I shall refer to Northumberland as a whole, and to the Berwick and Alnwick districts. I shall draw special attention to the borough of Castle Morpeth—I have given the Department of the Environment special notice of that intention—because of the particular difficulties that arise there. I shall refer to other specific problems, such as those facing people in sheltered housing, and the questions of second homes, of bed-and-breakfast accommodation and of village shops.

Northumberland is one of the largest counties in England, but one of the smallest in population. Delivery of services to so small a population in so large an area is a great deal more expensive than delivery of services in a compact urban area. Associated with the scattered nature of the area are various other problems. The education system has been built up on a three-tier basis to cater for the particular needs of the area. Whether that was the right way to proceed is a matter of some argument, but it is undoubtedly a costly system to operate and presents specific problems.

Other problems have recently been brought to our notice, such as the large number of timber-framed buildings among the county's schools. That was the subject of a deputation with which I visited the Department of Education and Science. Many costly repair jobs need to be carried out in such schools, a number of which had to be closed for the day during the recent storms because they are unsafe in high winds.

Therefore, we have all sorts of problems, some of which are common to many areas, but many of which apply especially to an area as scattered as Northumberland.

The county council element of the poll tax accounts for over 80 per cent. of the charge, with a further 6.5 per cent. being attributable to the police authority. I submit that it was impossible for the county to peg its spending to the Government's recommended level. Northumberland has lost out badly in the change in the system of central Government support. If the formula had not been changed, the county would have had a standard spending assessment of about £149 million, instead of £142 million. That difference means £30 per head for community charge payers.

The Government seem to be under some misapprehension about the county's finances. The county treasurer tells me that the Government still seem to think that the county has balances of £24 million, earning interest of £4 million, whereas its balances amount to only £11 million, earning interest of £2 million. In setting its budget, the county council had to allow for care in the community and for highway maintenance. The county's roads have been described by the district auditor as having deteriorated relative to the national position and therefore need greater expenditure. It has also had to cater for property maintenance. The Audit Commission said that budget provision for maintenance needed to be increased. So there were several reasons why it had to make additional provision.

Liberal Democrats on the county council argued that it would be possible for the county to set a somewhat smaller budget and, therefore, levy a lower community charge. They put forward proposals which would have reduced the county precept by about £20 a head. Before the Minister gets too excited and says that it is all the fault of the Labour-controlled county council, he must take into account the fact that the Conservatives on the county council did not agree with us. They took the view that the budget should be reduced by only about £60,000, which would have reduced the charge by less than 50p a head. I make that point not to enter into a party-political wrangle, but simply to show that no party believed that there was scope to come anywhere near the Government's recommended level for the community charge. The party that came nearest to it was my own. Even then, it achieved only a £20 reduction, mainly by proposing to withdraw from the budget items that were not likely to be completed in the current financial year, for which budgetary provision was inappropriate.

So much of the community charge is accounted for by the county precept that the boroughs and districts can do little to affect the level of charge in their areas. But they, too, have been affected by changes in the system of calculation. The borough of Berwick-upon-Tweed has complained that its SSA is inexplicable compared with similar authorities. It made the comparison, for example, with Teesdale, which is similar in size and population. The two authorities have among the smallest populations in the country. Both serve large, rural areas with scattered populations. But they have different levels of community charge, which arise almost entirely from different SSAs, for which there is no clear, understandable explanation.

Alnwick district council complains that the real rate of inflation is simply not recognised in the figures. After the county precept, that is the reason why poll tax levels in those two districts are £321 and £342 respectively—each just over £70 above the Government figure. It means that anyone lucky enough to obtain transitional relief does not receive relief on the £70.

In Berwick and Alnwick many people are on wages just above the rebate maximum. Therefore, many families face increases of hundreds of pounds in their liability. I am talking about families whose incomes are just above rebate levels. They are on genuinely low incomes and cannot meet such increases. They do not know where they will find the money to pay. Many couples will be over £5 a week worse off than before the poll tax in the first year, with worse to come in future years as transitional relief and safety net provisions are removed.

Families with a low-earning 18-year-old in the house will, in many cases, face financial disaster. People just do not know where the money will come from. Many live in remote communities with limited services. I have had representations from one family facing a poll tax bill of £1,000, who have never had a dustbin emptied. They have never seen a dustman because they live in a remote cottage way up in the forest, to which it would be difficult to provide regular refuse collection services.

Some communities have greatly increased parish precepts added to their poll tax bills because their villages have lost business rate income. Some villages had particularly good business rate income if there was some industrial undertaking, mine or quarry in the area. Many people in such areas are farm workers who previously lived in rate-free accommodation on low wages. That relief from rates and rent was part of the wage structure. The wages board has not seen fit to make any provision to compensate for the disappearance of the rate-free facility. Some of the large estates, such as that of the Duke of Northumberland, have decided to pay their employees' poll tax. But many farmers, especially small farmers, still have to face that decision. Some do not see how they can manage it in current agricultural conditions. Farm workers do not see how they will be able to manage such hugely increased costs and a level of outgoings for which they do not have the means.

So far I have referred mainly to the Berwick and Alnwick districts of my constituency, but the most dramatic effects of all, about which the Minister will be aware if he has studied the details, are found in the Castle Morpeth borough. Unlike other councils in the north, that council contributes to the safety net system. I believe that it is the only council between Humberside and the Scottish borders to be a contributor. Its neighbours have had their poll tax bills reduced by substantial safety net grants; the charge in neighbouring Wansbeck has been reduced by £127 per head.

Castle Morpeth spends per head about the same as Alnwick and significantly less than Wansbeck district council, but its charge payers will pay £90 more than those in the neighbouring authorities. They will pay substantially more than those under another authority that spends more, which makes complete nonsense of the Government's intention that the system should make councils accountable for the level of services and the cost of them.

The problem has arisen because the average rateable value in Castle Morpeth is boosted by the wealthiest suburbs of Newcastle, such as Ponteland and Darras Hall, and by substantial areas of executive housing in places such as Heddon-on-the-Wall and Lancaster Park. Those areas include many of the gainers under the poll tax system. In the communities that I represent in the northern and eastern parts of Castle Morpeth and in parts of Morpeth in the neighbouring constituency rateable values are low. Those values reflect the lower incomes of the residents of those areas, many of whom live in old colliery houses that they have bought. Some families are in their first home and they struggled to buy such houses because they knew that they had a low rateable value and because they were relatively cheaper to buy. Those houses represent such families' only chance of getting a start in housing.

I plead with the Minister to consider the plight of people living in old colliery houses, some of them unmodernised, in places such as Stobswood, Broomhill, Ellington colliery, Linton and Lynemouth. The Minister should also consider the large areas of council housing such as at Widdrington Station and Hadston and the small rural cottages in areas such as Scots' Gap, Cambo and Middleton. He would discover that people in such places face horrific increases.

Every couple living in Castle Morpeth in a house with a rateable value of less than £155 will pay £408 more than they paid in rates last year. Most of the houses in the areas that I mentioned have rateable values of less than £155. Unless the families concerned are on rebates, they face increases of £408.

The Minister should consider some specific examples. During the debate on the Budget I referred to a couple who wrote to me whose income is just above the rebate limit. The man is a joiner who earns £136.89 a week. His rates were £255 a year, but the poll tax to be paid by that couple after all reliefs will be £672 a year. Where can that couple find another £400 on an income of £136 a week? The Minister should try to tell me how those people can find that money.

In another family the mother and father work and their joint income, after tax, is just under £200 a week. Their eldest son has started work, he brings home £80 and another teenager is still at school. On a three-bedroomed house they paid £440 in rates. However, the total poll tax that the family will have to pay will be more than £1,200 a year, an increase of £840 a year. I cannot see, and they cannot see, from where that extra money will come.

These villages and communities are in uproar. I have 800 petition forms from a village of 1,000 people. Will the Minister look up from his notes to see—if I can engage his attention for a moment—the number of people who have signed the forms not only to show how angry they are, but to say that unless they get a satisfactory explanation, they will seriously consider not paying the community charge. Those are not people engaged in a political demonstration, but people who do not know where they can find such money.

I have another set of papers that were passed to me at one of the packed meetings that I have been attending in my constituency. On them people have listed the hundreds of pounds by which their community charge exceeds the amount they paid in rates. The petition forms are from the village of Widdrington Station and the letters are from the village of north Broomhill. They are all from people in relatively poor communities who are being asked to find huge amounts of additional money.

I do not understand how the people are to find that money. Therefore, will the Minister look seriously at the gross anomaly which has made the position in Castle Morpeth so much worse that it is in other comparable and neighbouring areas? I plead with him to make some provision to ease the terrible plight of people facing such a level of poll tax.

Many of the calculations, not only for Castle Morpeth, but for other areas, assume that people will receive the limited transitional relief up to the poll tax level that the Government said each authority should set. We already know that many people will not receive that relief; for example, people who move after 1 April will lose any entitlement to that relief, and additional household members will not qualify for it. However, few people realised, particularly when the Minister of State made his commitment at the Conservative party conference, that the promise did not apply to pensioners living in flats in sheltered housing schemes such as those provided by Anchor Housing, the Royal British Legion and local housing trusts, where the rates are paid to the housing association which, in turn, pays the local authority.

Such people definitely paid rates. They are well aware of that now, as many of their rents are being reduced by up to £30 a month because the housing association is no longer responsible for paying over rates. The people have become responsible for a personal community charge, and the rates element has been removed from the rent.

However, to their surprise, some local authorities have been told that they cannot pay transitional relief to such people because they were not ratepayers. If they are not classed as ratepayers, as they expected to be, the alternative would seem to be that they were non-ratepayers and were, therefore, entitled to special transitional relief.

One of my local authorities asked the Department of the Environment whether this was the answer to the problem, but was told that such people could not have special transitional relief because they contributed to the rates by the process which I have just described. Therefore, those people cannot win. When I raised this matter during the debate late on Monday night, I asked the Minister of State to have a closer look at the matter. He was unconvinced, to put it mildly, that the position was as I have described it. However, I assure him that local authorities were being given such advice. I sincerely hope that, since then, the Government have devised some fresh advice and found some way of getting transitional relief, or special transitional relief, to many of those pensioners, particularly pensioner couples living in sheltered housing schemes.

Such couples have often taken on more expensive housing to meet their needs in old age. The decision to go into a sheltered housing scheme has usually committed them to quite a high rent. They have come to the conclusion that it is best for them to be in such a scheme where there is a good heating system, they can be kept warm, and there is a warden on the premises. As they become older and perhaps more frail, it will be a secure and sensible place in which to be housed. They have committed themselves to the limit to do so, and have no margins to spare. If they are not given the benefit of transitional relief, the impact on them will be very severe. Some of them would have to give up being in sheltered housing. I hope that the Minister will be able to bring us some better news on that score.

The poll tax brings other pressures and problems. A major feature of my constituency is second homes. There are many of them, and that is not without attendant difficulty. In some areas there is a strong feeling that properties that have become second homes would have been better kept in full-time occupation as homes for families. That has made the councils feel that it is morally justifiable, and in many ways desirable, that second homes should bear the full burden of the double community charge. That is the standard community charge at the normal two-person rate. All local authorities in the area have decided to opt for this system. It seemed to them to be a reasonable response to the growing pressure to create second homes in areas where there is a housing shortage.

Some of the properties faced with the double community charge will be converted to properties that are subject to business rates under regulations that the Government have brought forward. I refer to properties that are let for a minimum number of weeks in the year. That will still leave a number of properties that will be the subject of contention. It is doubtful whether some properties are suitable for long-term human habitation for other than in the summer. Some properties used as holiday cottages would, without substantial improvement, be unsuitable for winter use.

The councils have had to consider some of the special cases and difficulties, and I have drawn their attention to a number of them. I have received quite a few letters from clergy who live in vicarages and plan to retire to homes in my constituency. There seems to be a tremendous number of clergy from Lambeth at this end of the country—not the Archbishop of Canterbury but members of his staff—ranging to the other end of the country who are all hoping to retire to my constituency. Many of them live in vicarages and are buying a house for their retirement. They find that it will be beyond their means to pay the double community charge. For example, there is a missionary couple who are working in Africa for no salary. They are being maintained on a mission station. They are keeping a house—it is only a cottage—for when they return to the United Kingdom. They have no means to pay the double community charge, and they are not entitled to rebates because they are not in the country.

There are difficulties with service personnel who are required to live in married quarters, to pay rent for those quarters and to pay a community charge at the quarters, and who are liable also to the double or standard community charge in my constituency. If the councils were to exempt those who are required to live elsewhere because of their work, as the Government have suggested they could, and levy a nil community charge on their properties, there would be a huge loophole. People could easily say, because they have a second home in my constituency, "We are required to live elsewhere." Many of them would have well-paid jobs which enabled them to own a substantial second home somewhere in my constituency. Many people in that category can well afford the double charge. It is a legitimate charge which they should contribute to the community. The councils have a serious problem, and it has not been satisfactorily resolved, in distinguishing between those who can reasonably be levied the double charge and those who are in real hardship.

A further problem that seems likely to arise is that the provision of bed and breakfast, one of the staple features of the tourist industry, may not prove economical as a result of the introduction of the 100-day limit, which means that those who come within its terms stay on the community charge and are not charged business rates as well. The tourist traffic in the area which I represent is not so great that it ensures that if someone makes rooms available for bed and breakfast for 100 days in the year he can obtain an income that makes it worth while to engage in that activity, bearing in mind the investment that it is necessary to make. There are anxieties among people who provide bed and breakfast.

There are anxieties also among people who have village shops. The families which do so find that they may face business rates plus double or treble poll tax. I know of many instances where a village shop is the home for a family of three. There are the mother and father and the son or daughter who works in and helps to run the shop. His or her only income comes from the shop. People greatly fear that we shall add still further to the spiral of closing village shops that has created such serious problems in our rural areas.

Many of the matters to which I have referred are the subject of recently published regulations which have not been debated in the House. With the introduction of the poll tax only days away, I find it extraordinary that many of the regulations have not been debated, even though prayers have been tabled to enable them to be discussed. The implementation of the poll tax is the most awful shambles. One can make that comment irrespective of whether one is in favour of the poll tax or against it. Even if I were an enthusiastic supporter of the poll tax, I should still think that the present state of affairs was an appalling shambles; as an opponent of the tax, I feel it even more strongly.

I ask the Minister to look again at the specific cases that I have drawn to his attention. First, will he concede that help will be given to tenants of sheltered housing schemes? By help, I am talking not about rebates but about transitional relief or special transitional relief. It was clear to me that the Minister responsible was in some doubt about the position as recently as last Monday evening. Now that there has been time to look at the matter further, it would help if the Minister could clarify the position—if not now, certainly before 1 April.

Secondly, will the Minister look again at the position of Northumberland generally? When will we know whether we are to be capped? I know that the Minister will not make an announcement now, at 4.25 am, about which authorities are to be capped. But it would help if the hon. Gentleman told us when we shall know. Will we know by 1 April, or will all the poll tax notices have to be retrieved and the whole process started again? We need to know not least because if Northumberland is to be capped, there could be severe implications for council services.

Will the Minister re-examine in particular the case of Castle Morpeth and consider giving more transitional relief to the ratepayers and charge payers whom I have described? If, for example, he extended transitional relief in some way, it would help only those living in low-rated properties. The help would not go into the pockets of the gainers in the wealthier part of the area—the rateable values of which have put it into this difficult position. By its very nature, transitional relief goes only to people in low-rated properties. I could certainly suggest ways of easing the position on transitional relief to bring help to those suffering the greatest hardship. At the very least, will the Minister or the Secretary of State agree to meet representatives of the local authorities concerned and of Castle Morpeth, where the problem is most acute, so that they may put their argument to him?

The political atmosphere that the poll tax creates is one in which the opposition parties and the Government's critics can make hay. But that is not my purpose this morning. I can say with the strongest of feeling that in nearly 16 years as a Member of Parliament I have never seen such widespread dismay and distress in my constituency as I have seen over the effects of the poll tax. Ministers and local authorities will find that, if nothing is done, as the year progresses more and more people will come up against the authorities because they have not paid the tax. They will fail to pay not because they are part of a political campaign—although there are those who are trying to organise such a campaign—but because they simply cannot find the money for the charge. The anxiety, distress and upset that such people feel are so great and so widespread that I must plead with the Minister to do something before it is too late.

4.28 am
Mr. Kevin Barron (Rother Valley)

I echo many of the remarks of the hon. Member for Berwick-upon-Tweed (Mr. Beith) about the problems of setting a poll tax and protecting local services in Northumberland and throughout the country. In the northern region as a whole, one of the major problems arises from the loss of money for local authority services in that region as a result of the change.

I have here the results of an analysis that was carried out by my hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett) after he had questioned the Minister for Local Government and Inner Cities about the northern region. The column headed Net change in income to local authority (without safety nets) shows that the northern region lost more than £170 million. The next column shows that, even with safety nets, that region lost more than £38 million. Obviously this is having an effect on all county and district councils in Northumberland.

The Under-Secretary of State for the Environment, who will reply to this part of the debate, is not ignorant of the situation. I understand that, not long ago, a delegation from Wansbeck district council told him about the problems they were encountering in setting the community charge. That council claims that it has lost about £7.9 million in Government grants as a result of the expenditure changes. That means that every person liable to pay has to find an extra £169. As the Minister was aware of the situation, the people of Wansbeck can hardly be blamed for feeling aggrieved and very angry.

I echo the remarks of the hon. Member for Berwick-upon-Tweed about Castle Morpeth borough council. Having spoken to my hon. Friends who represent constituencies in that area, I can say that many many dozens of villages end up contributing to the safety net. It is absolutely ridiculous. This applies to many villages in my constituency, but certainly not to the same extent. The fact that more than half of the ratepayers of Castle Morpeth will pay less under the new system does not minimise the fact that the remainder will have to pay substantially more towards the safety net for other regions. The hon. Member for Berwick-upon-Tweed said that there ought to be some special transitional relief.

Of course, similar situations are to be found in many other regions. What is happening in respect of very low-rated properties in whole mining villages is grossly unfair. It is little wonder that there have been such uprisings against the poll tax, which has been forced on the local authorities. I have spoken to my hon. Friend the Member for Blyth Valley (Mr. Campbell) about this matter. The local authority in his area has received about 20,000 rebate applications. The hon. Member for Berwick-upon-Tweed has said that he does not want to treat this as a party political matter. I can tell him that his friends in Blyth Valley want to treat it as a party political matter. I have here a letter from the leader of the Liberal Democratic group on the council, arguing very strongly indeed the case about the need to cut services and to use savings to keep the poll tax down. Nobody likes having to levy the poll tax.

I say to the hon. Member for Berwick-upon-Tweed and to his friends in that area that transitional relief in Northumberland is very poor and that the safety net, which is also poor and fails to help all those who need help, will be removed at some time in the future. In those circumstances, it is wise not to use reserves immediately but to leave them to help people when other relief has been removed.

I hope that the Minister will try to explain the anomalies that have occurred in Northumberland. The setting of poll tax rates by councils has highlighted what has been demonstrated throughout Britain—that the poll tax is a pernicious tax, which not only fails to take into account people's ability to pay but is unfair as between households and districts.

I could go on all night about how unfair it is, but Northumberland probably highlights many of the problems of the poll tax which should have been taken into consideration months, if not years, before it was levied on the unfortunate people of Northumberland to maintain their present level of local government services.

4.34 am
The Parliamentary Under-Secretary of State for the Environment (Mr. Christopher Chope)

I shall do my best to deal with the points that have been raised in the debate. It is always interesting to see the extent to which authorities that are complaining, particularly about the grant settlements, have helped themselves. Everything that the hon. Member for Berwick-upon-Tweed (Mr. Beith) has said has to be seen against the background that Northumberland county council is spending £102 per adult above its standard spending assessment. That is some 14.9 per cent. above the income that is raised in 1989–90.

It may be said that Northumberland did not do so well as some under the grant settlements, but it cannot be denied that it is spending £102 per adult over the SSA. Saying that it is still £30 per adult worse off as a result of the changes does not explain why it is £102 per adult over its SSA. The accountability in the new system becomes clear when one compares the amounts by which the individual districts of Northumberland are spending above their SSAs with the amounts by which they increased their incomes this year.

The hon. Gentleman referred a great deal to Castle Morpeth, but Castle Morpeth is increasing its income by no less than 59.7 per cent. above its 1989–90 level. It is hardly surprising that the people there are complaining. If I lived there, I should be complaining about the overspending of my local council. Why has that council not done more to control its expenditure and to act in the best interests of its community charge payers?

If we look at other districts in Northumberland, we see that Tynedale has increased its income by 46.7 per cent. above its 1989–90 level, Blyth Valley by 35.3 per cent., Wansbeck by 24.1 per cent., Berwick by 21.8 per cent. and Alnwick by 13.5 per cent. The increases in spending are a predominant element in any explanation of why people in Northumberland are complaining.

It is important to put that on the record at the outset. It is always important that the House should be able to consider the extent to which councils have tried to help themselves. There is plenty of evidence to suggest that the councils in Northumberland have tried to take advantage of the new system to disguise substantial increases in spending.

Mr. Beith

It should also be placed on the record that not only councillors of my party but those of the Conservative party would, to a man, reject the view that the figures that the Minister has quoted describe a process by which their councils have unreasonably overspent by comparison with their previous expenditure or by what would be a reasonable amount of money to provide their services. There is agreement across all the parties about the unreasonable position in which they have been placed.

Mr. Chope

The hon. Gentleman said that at local level his party said that charges could have been reduced by £20 per adult. If people are as hard pressed as he was describing earlier, £20 would be a welcome reduction.

Mr. Beith

The Tories do not agree.

Mr. Chope

There is the continuing problem that a number of people involved in local government see themselves on the side of the producer rather than on the side of the consumer. If more local government councillors identified with the consumer there would be lower levels of expenditure and better value for money.

I think that the hon. Member for Berwick-upon-Tweed and I agree about one thing—that the rating system had to go. Of all the alternatives to the domestic rates, the community charge is by far the fairest system. Many people say that they would like not to have to pay anything towards the cost of local government, but if we have to pay, everybody should contribute and we should have a system which will ensure proper accountability and discretion at local level.

The Government have listened to the representations that have been made because of the change in the system. We have put many transitional arrangements in place to ease the change. That is fair. Most of those arrangements were made in response to representations—for example about capital limits being too low in relation to the cut-off point for community charge rebate entitlement. The Government responded to the representations made and raised the limit.

The Government have also listened to those people who said that, as a result of the change from the rates to the community charge, some people face a significant increase in their bills. That is why we introduced the transitional relief scheme, which limits the increases arising from any structural change to no more than £3 a week. I emphasise the expression "structural change" because increases in bills arise for reasons other than changes in the system. Where community charge bills are higher than the Government's assumptions, it is for local authorities to justify them. It is not for the Government to validate them by compensating individuals for increases that arise from the spending decisions of individual authorities.

We announced last July that total standard spending, in the context of the revenue support grant settlement, would be £32.8 billion in 1990–91. That represents an increase of 11 per cent. over the equivalent amount for 1989–90. It is nonsense to suggest that the Government have not allowed enough for inflation. Total standard spending is about 4 per cent. higher than local authority budgets for last year, but that is because last year local authorities spent almost 7 per cent. more than their grant-related expenditure assessments.

As is the case for transitional relief, the validation of past spending decisions is not the role of Government. The figure that we have announced for total standard spending shows a significant increase over last year's equivalent figure, and Government support for local authorities in the coming year will be 8.5 per cent. higher than in the present year. That is a fair settlement.

Nor is it unrealistic to expect authorities to be able to budget within their standard spending assessments. The Audit Commission has identified £900 million per year in savings which could be achieved by local authorities. Some progress has been made on that front, but there is still plenty of scope for improvement.

At the heart of the revenue support grant is the system of standard spending assessments, which take into account the social, geographic and demographic characteristics of individual authorities and, using a methodology that has been carefully researched and developed, arrives at a figure that represents the amount that it would be appropriate for that authority to spend to provide a standard level of service.

The hon. Member for Berwick-upon-Tweed referred to the different problems in Northumberland. Those differing needs, compared with other areas, are reflected in the standard spending assessments. The criteria that we used were extensively discussed with the local authority associations.

I shall deal with the question of low rateable value grant, as it applies to Castle Morpeth. That grant applies when the average domestic rateable value of a district is less than £150, with the result that the change in domestic rates to the community charge, even taking into account safety net contributions, would have resulted in significant increases for householders. The Government thought that it was right, in such circumstances, to provide some extra protection for charge payers.

The way in which the grant is calculated means that people in one district may benefit from it, while others in a neighbouring district living in identical houses may not. That is inherent in the system. The point is, however, that in administering low-rateable-value grant we are looking at the revenue-raising capacity of an authority as a whole. Within any district council area there will be properties with rateable values below the average and properties with rateable values above it; but it is the average rateable value which is important, because an authority with a higher average than its neighbour will have been able to raise more in domestic rates from a given poundage. There will thus be a correspondingly smaller difference between the revenue base of that authority under rates and its revenue base under community charge. Whatever the rateable value of an individual's home, the position of charge payers will not be affected as significantly in an authority with a higher average as in one with a lower average.

Individuals in Castle Morpeth living in houses with low rateable values have the protection of the transitional relief scheme, which was designed specifically to provide protection at the individual as opposed to the authority level. In Castle Morpeth, any property housing two or more people will benefit from transitional relief if its rateable value is less than £157.45. I am pleased to see that the hon. Member for Berwick-upon-Tweed agrees with that calculation.

As I mentioned earlier, transitional relief is calculated on the basis that an authority's community charge is set in line with the Government's assumptions. In the case of Castle Morpeth, the assumed community charge is £310.96, but the charge actually set—£438.49—exceeds that amount by £127. That means that charge payers in Castle Morpeth will have to pay £2.45 a week extra over and above the threshold for transitional relief, which for most people is £3 a week.

As I have said, Northumberland county council has set a precept substantially above its standard spending assessment, and Castle Morpeth's budget repesents spending of more than 30 per cent. above its SSA and almost 60 per cent. more in income in 1989–90. It is for the individual authorities to justify those increases to their charge payers.

Mr. Beith

Even if Castle Morpeth and Wansbeck had each charged only the Government's recommended target, Castle Morpeth charge payers would still by paying £70 a head more than those in Wansbeck.

Mr. Chope

That may be the case in the first year of the system, because of the operation of the safety grant and the transitional reliefs. That is because of the current differences in rateable values in those areas. Under the existing domestic rating system, ordinary individual householders living in Northumberland cannot tell from their rates bill how efficient their council is compared with an adjoining district council in the same county. Under the new system, everyone will be on a standard basis and one community charge can be compared with another. The higher charge will clearly reflect either inefficiency or extravagance or, in some cases, a higher level of service.

It is inevitable, however, that if the principle of a transitional arrangement is to be accepted—I am sure that the hon. Gentleman does not disagree with it—the problems that he cites will be thrown up. That reflects the fact that average rateable values have been higher in one area than in another.

The hon. Gentleman referred to transitional relief for those living in sheltered accommodation. When the Government announced the transitional relief scheme last October, it was the subject of detailed discussions with local authority practitioners. It was clear from those discussions that local authorities would, in general, be able to adapt their systems to incorporate transitional relief, provided that the scheme was administratively straightforward and based on information readily available in local authorities.

At the heart of the scheme is a comparison between rates and the assumed community charge. It emerged quickly from the discussions that this necessitated using, as the basic unit of the relief scheme, hereditaments with a rateable valuation shown on the valuation list. Most domestic hereditaments have a separate entry on that list, but there are cases where a single entry is shown for a hereditament comprising a number of separate residential units. That can occur in the case of houses in multiple occupation, barracks and bases occupied by service personnel and some sheltered housing developments.

In such cases, the effect is that, although there is no theoretical bar to the grant of relief, it is likely that the rateable value of the hereditament, which is the basic unit of the calculation, will be too high to give a rates bill that is more than £156 a year under either one or two community charges. There is, however, no practical solution. Where there is no rateable value for a particular residential unit, there is no assumed rates bill to form the basis of the comparison.

I hope that the hon. Gentleman understands and accepts that it would not be sensible to ask the valuation office to establish domestic rateable values for individual units within the collective sheltered accommodation box to which he referred. That would be a difficult exercise to perform, just as we near the end of the domestic rateable value system. It means that some people cannot benefit from the transitional relief scheme. However, it does not mean that they are worse off. It simply means that they do not fall within the scope of the scheme, which was designed to provide additional help in specially defined circumstances. Residents in sheltered accommodation who have low incomes and savings—the recently announced increase in the capital limit will benefit many pensioners—will be able to claim community charge rebates which will provide substantial reductions in their community charge bills.

In the discussions leading up to our announcement on the rate support grant settlement for this year we received a good many representations, including representations from Northumberland local authorities, all of which we considered carefully.

Mr. Beith

I hope that the Minister will clarify the other side of the coin. When the point that he has just made was put to the local authority it asked whether it could make special transitional relief payments to these people; as they are not ratepayers it asked whether they could be dealt with under the special transitional relief arrangements for non-ratepayers. However, it was told that it could not do that, either. The Minister ought to open that door, thereby providing some help for those people who, I am sure he agrees, are, in principle, proper beneficiaries, if only those arrangements could be made.

Mr. Chope

I shall look again at that point, but the principle is that residents do not get relief—not because they are not ratepayers but because they do not qualify on the basis of the comparison between rates and the community charge. The special scheme to which the hon. Gentleman referred is for non-ratepayers. However, I understand his point, and with my hon. Friend the Minister for Local Government and Inner Cities I will see whether there is a way round it. Nevertheless, this was all done in the context of the arrangements that we made with local authorities to try to devise a scheme which could be easily implemented. Some people may say that it is unfair that a person who moves house should be disqualified from assistance under the transitional relief scheme, but any transitional relief scheme has to be based upon firm principles. I do not believe that there is any way out of that difficulty.

I hope that the hon. Gentleman recognises that when we considered all the representations, including those from Northumberland local authorities, we did not simply go through the motions of doing so. We were persuaded by the representations that, because of the weather conditions in Northumberland during the winter, authorities there should benefit from changes that we made to the winter maintenance element of the standard spending assessments. Where we are persuaded that adjustments to the system are justified, we are prepared to make them, and we believe that we have set for authorities in Northumberland SSAs that are fair. Our decisions took into account all the relevant factors, including those brought to our attention by the authorities. I am glad to have had this opportunity to make that clear.