HC Deb 23 April 1991 vol 189 cc901-17 3.32 pm
The Secretary of State for the Environment (Mr. Michael Heseltine)

With permission, Mr. Speaker, I will make a statement about two consultation papers that the Government are publishing today—on the structure of local government in England, and on our proposal for a new council tax to replace the community charge.

The consultation paper on local government structure builds upon the announcement that I made on 21 March. As I made clear then, the Government intend no significant changes in the structure of local government in London or the metropolitan areas. In the remainder of England today, services are provided both by county councils and by district councils.

The Government believe that this structure of two tiers needs to be re-examined for the following reasons. First, unitary authorities are more clearly responsible for the delivery of services, and more clearly accountable for the bill local people are expected to pay. Secondly, two tiers may lead to excessive bureaucracy and duplication of effort. Thirdly, the Government are committed to developing the concept of enabling authorities. Councils will increasingly be able to take advantage of competition between those seeking to provide a service. It is therefore less important today to insist on councils of a particular size. Fourthly, the Government intend to increase the momentum of their existing policies to enable decision-making and responsibility to be more directly in the hands of the people. Fifthly, the present structures of local government do not win universal favour with local people, who have their own ideas about what sort of structure would best reflect local loyalties and communities.

We therefore propose to establish a body to draw up recommendations——

Hon. Members

A quango.

Mr. Speaker

Order. The House and the country have been waiting for this statement. Let us hear it in silence.

Mr. Heseltine

We therefore propose to establish a body to draw up recommendations for improving the structure of local government area by area, taking account of local views and the costs and benefits of the change. The proposed local government commission would consult on its recommendations and submit them to the Secretary of State. Final decisions would rest with Parliament.

The Government do not intend that either county or district councils should be abolished wholesale. In some places, it may be best for existing authorities to be merged; in others, the best approach may be to create or re-create quite different authorities. In some areas, there may continue to be two tiers. In all cases, the Government will expect a proper regard for economy and effectiveness of service delivery to feature in any new arrangements. The consultation paper maps out how this process would work and invites views.

The second paper sets out the details of the council tax with which the Government intend to replace the community charge. Subject to consultations, that will be in 1993. The House will know that the Chancellor of the Exchequer in his Budget announced a significant reduction in the amount of local tax revenue, to a level that the Government believed should be maintained in the longer term. In consequence, the new tax will need to raise less than either the rates during their last years or the community charge during its first. So average bills can be substantially lower than the last average rates bills or the average community charges paid last year.

The council tax will have a property and a personal element. Each household will receive a single bill on the assumption that it consists of two people. Households with only one adult will be entitled to a 25 per cent. personal discount. This means that 90 per cent. of all adults will be taken into account in household bills. It is therefore not the Government's intention to provide for supplements for households with more than two adults. There will be no need for a register of council tax payers.

As each household will receive only one bill, the tax will be easy to administer. The amount of council tax payable will vary according to the value of the property but will vary only within a limited range. Properties in England will each be allocated to one of seven bands. There will be no need for precise valuations of every house or flat, nor need there be regular general revaluations. People in the lowest property band of property will pay about two thirds of those in a property in the middle band in the area. Those in a highest band property will pay about two thirds more than those in the middle band in the area. This means that a household in a highest band property will pay about two and half times as much as those in the lowest band. We shall avoid the very high bills which discredited the rates.

Each year the Government will announce for each band the amount of council tax necessary for a council to provide a reasonable level of service. The grant mechanism will remain broadly unchanged. This year, a council that spent reasonably would have charged a household of two or more people in a top band property no more than £668, and such a household in a lowest band home no more than £267. This year, households with one adult would have paid no more than £501 in the top band and no more than £200 in the lowest band.

People on low incomes will receive rebates in addition to any discount to which they are entitled. there will be no minimum contribution to the council tax. The maximum rebate for those at the income support level will be 100 per cent. Students, student nurses, apprentices and youth training trainees will be automatically entitled to personal discounts.

The council tax payable will relate to how much the council spends. Where councils spend more, all households will have to pay more. The same percentage increase will apply to all household bills. Similarly, the benefit of low spending will be passed through to all council tax payers.

The Government will restrain increases in local authority spending through capping. The threat of capping has been effective this year and we shall ensure that we have the powers appropriate to the new tax.

We shall ensure that no one faces an unreasonable increase in their bill between one year and the next as we change to the new system by the use of appropriate transitional relief.

Following the conclusion of our consultations in mid-June it is the Government's intention to introduce legislation to give effect to their conclusions in the next Session of Parliament.

Copies of the consultation documents and examples of council tax bills are available in the Vote Office and are being sent to all local authorities and their associations today.

The council tax will be simple and cheap to collect. It will require less of single adults than larger households. It will not impose excessive demands on any household. It will make a clear connection between what councils spend and what people pay. It will be seen to be fair.

I commend these proposals to the House and the country.

Mr. Bryan Gould (Dagenham)

It still seems that the hardest word for the Government to say is "Sorry". Is it not remarkable that we have still not had a single word of apology from the Government for the billions of pounds that they have wasted, the chaos and confusion that they have inflicted, and the misery that they have caused to millions of people?

The Secretary of State's statement is, of course, an implicit admission that a disastrous mistake has been made. The pity of it is that the Government have not the guts to make a proper job of correcting that mistake. The party that brought us the head tax now offers us what it wants us to believe is a "stand on your head" tax. Whether it is heads or tails, the people remain the losers.

Some lessons have been learnt. On structure, the Government appear to be offering genuine consultation in contrast to the gimmickry that they offered on poll tax replacement. Provided that we are satisfied that there will be no political gerrymandering, that the appointments to the commission will be free from political bias and that no new attempts at undermining local government will be made, we intend to make a positive response to the Government's proposals on the subject.

Unfortunately, the lessons of the poll tax have not been learnt. The new proposals may have flown the poll tax nest, but they are still the product of a disreputable union between the poll tax and political panic—a sort of mongrel tax which inherits the worst features of both its parents. Is it not clear that the people will want to know whether the proposal will be as fast, as fair or as simple as the fair rates proposal which we have put forward and which every opinion poll shows to be at least twice as popular as any other proposal?

Is not today's announcement a guarantee that, with a Tory Government, the poll tax will stay until at least 1993 and until well beyond that date, according to the Institute of Revenues, Rating and Valuation and the Royal Institution of Chartered Surveyors? Is not the Secretary of State telling us in other words not that the poll tax will go but that it will stay? Why did not the Government take up our offer of co-operation on a short Bill, the Poll Tax (Abolition) Bill, which would ensure—[Laughter.]

Mr. Speaker

Order. We have a very busy day ahead of us.

Mr. Gould

Why did not the Government take up our offer of a Poll Tax (Abolition) Bill which would ensure that this year's poll tax bills will be the last? Why should people, for at least another two or three years, have to put up with all the unfairness and unworkability of the poll tax and with a local tax which, according to Chartered Institute of Public Finance and Accountancy, is £140 per household higher than it need be?

Why has not the Prime Minister learned that the unfairness of the poll tax made it so hated? Why are the Government at it again, skewing their new proposals so that the richest are protected from paying their fair share? Do not they realise that every pound that the rich do not pay will be added to someone else's bill—the bills of precisely the same people who were so hard hit by the poll tax? Why does the remaining element of a head tax, which counts for much of the total bill, still bear no relation to the ability to pay? It is the discredited poll tax principle all over again.

Why should a single millionaire get 25 per cent. off his bill while families or pensioner couples struggling on a low income must pay the full whack? How will the number of people in a household be confirmed if not by reference to the electoral register? Will not that mean an invitation to many people to trade their vote for the sake of a 25 per cent. reduction in their bill? What will be done about the "John Major problem"—the person who registers at one address but lives at another, perhaps more highly valued, property?

Why have the Government opted for an untried and excessively complicated new scheme based, I assume, on capital values? Incidentally, will the Secretary of State confirm that we are talking about capital values? If not, what is he talking about? What reliance can be placed on the Government's figures which, as no new capital valuation has been carried out anywhere, are totally invented and therefore arbitrary and misleading? Do the figures come from the same computers that assured us, less than two years ago, that the poll tax would average only £176? Will not the seven bands—no doubt reflecting the seven strands of opinion in the Cabinet—mean endless appeals and a disincentive to home improvement?

Does the Secretary of State recall the scorn that was poured on a property tax based on capital values by virtually all his Cabinet colleagues? How many of them does he now expect to resign? Does he recollect his predecessor, now the Tory chairman, describing his proposal as "a rottweiler's breakfast"? Were his colleagues being honest then, or are they being honest now? Does he remember saying that the more the Government considered a single person discount, the more we became convinced that it helps significantly the better-off"? Does he still hold that view, or is this another example of the celebrated Heseltine flip—or should it be flop? How long can he expect such flip-flopping to carry credibility?

How many of his colleagues does the Secretary of State expect to support the new tax in the Division Lobbies? How many of them will claim that this is the end of the poll tax and applaud it, and how many will condemn it on the same grounds? How many will claim, with equal vehemence—especially in Scotland—that the essentials of the poll tax have been retained? Which way does he expect the Prime Minister to jump on that issue—not so much the Heseltine flop as the John Major straddle?

Have not the Government, once again, failed to disentangle themselves from the poll tax? Are we not still paying the price of a Government who are too weak and too divided to summon enough nerve to kill it off? Even now, after 12 years and £14 billion, with a poll tax that costs the taxpayer £18 million per day, all we are offered is a consultation paper.

The consultation that will really matter will take place on 2 May and at the general election, when voters will express their determination to kill off this Tory tax once and for all by electing a Labour Government.

Mr. Heseltine

Yesterday, the deputy leader of the Labour party, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), said that the Labour Government would repeal our proposals. Today we have been told by the Opposition's Front Bench spokesman, the hon. Member for Dagenham (Mr. Gould), that they will adopt a constructive approach to them. If we have heard the constructive approach, I would rather have the old-fashioned opposition. When I listened to the hon. Gentleman suggest that the Government should apologise for our new proposals, when he speaks on behalf of a party that is committed to returning to the rates, which were described by the Leader of the Opposition as the "most unjust" of all taxes, I found it mind-blowing.

The hon. Gentleman suggests that the issue of capital values has been invented. In fact, it came from the valuation officers. They are the people who would be involved with any revaluation of any sort, whether under the hon. Gentleman's proposals or under ours. The hon. Gentleman—[Interruption.] These valuations were provided to my Department by the valuation office of the Inland Revenue, and that is the only basis upon which any Government could carry out a proper assessment. I am asked by the hon. Gentleman whether they would be working to capital values in relation to the property element, and the answer is yes. That is a simple answer.

It was suggested by the hon. Gentleman that our system was complicated. If the House refers to the Labour party's document entitled "Fair Rates", it will discover that its method of valuing properties is based on building costs, repair costs, rental values and capital values. And then there are personal discounts. That is precisely a formula for complication.

When we consider the certainty of the proposals that we are putting to the House, the Opposition fail by that test. They are not offering us an alternative. Instead, they are offering us an alternative next year of a return to the rates. That will be followed by another upheaval by moving to another tax in the following year. They cannot give any indication whatsover of what that tax will be. If anyone had any doubts about the wisdom of what the Government are doing, they will have none after listening to the hon. Gentleman.

Several Hon. Members


Mr. Speaker

Order. The whole House heard the Secretary of State for the Environment say that he has announced a consultation document, and I have no doubt that we shall have plenty of opportunity to discuss it between now and June—[Interruption.] Order. I must take into account the fact that there are two more statements to be made before we consider the Ports Bill, to which 18 groups of amendments have been tabled, which will be followed by consideration of a training levy order. I shall allow questions on this statement to continue until 4.30 pm. We shall then move on to the Welsh statement, and after that the Scottish statement.

Sir Norman Fowler (Sutton Coldfield)

May I first congratulate my right hon. Friend on his statement? Is he aware that the reaction from the Labour party demonstrates that its fox has been shot? Will he remember that one of the things that helped to ditch the community charge was the level at which that charge was introduced? Therefore, the public will welcome his assurance that the charges will be introduced at the level that he has set out to the House.

Mr. Heseltine

I am most grateful to my right hon. Friend. The House will understand that the figures that I have introduced are based upon this year's budgets, as adjusted for the different costs of collection, and percentage of collection, to bring us into line broadly with the sort of calculations that the Labour party has been parading. I believe our figures to be accurate and consistent with CIPFA, whereas the Labour party's figures are not. Indeed, they have been disowned significantly by CIPFA during the past few days.

We are determined that levels of expenditure are kept under control by tight capping regimes. Right hon. and hon. Members will want to view with suspicion any calculations of the Labour party, because the Labour party will remove any constraints on the expenditure and conditions of local government.

Mr. A. J. Beith (Berwick-upon-Tweeed)

Is it not clear that what the Secretary of State has produced is not son of poll tax but son of rates, preserving many of the faults of the rating system while not being based firmly on ability to pay, as a local income tax would have been? Does the right hon. Gentleman agree that a relatively low earning couple will find themselves paying the same as a four-earner family next door? Why has he tilted the system to ensure that the very rich pay very little more than those on low incomes? Will people be able to appeal if they believe that their property has been placed in the wrong band, and how many appeals does the right hon. Gentleman expect? Does the right hon. Gentleman agree that the poll tax will be with us until at least March 1993? What will next year's poll tax bills be like?

Mr. Heseltine

The hon. Gentleman will know that when we brought about the substantial reductions in the headline charge and introduced the community charge reduction scheme, the Chancellor said that we intended to preserve the new balance broadly struck between what was raised locally and financed centrally. I do not expect there to be a significant number of appeals—although, of course, the procedures will provide for appeals—because we shall be talking about a banding system, and I do not think that many people will wish to query the bands in which they find themselves—[Interruption.] The hon. Gentleman is as aware as I am that our system has been designed to constrain the level of charges at the upper end.

We must take into account the fact that in the present circumstances, where certain authorities in this country are quite uninterested in any concepts of fairness, the Government have a responsibility to be sure that no one is expected to pay a disproportionate charge as a result of high-spending authorities.

Mr. Cranley Onslow (Woking)

I thank my right hon. Friend warmly for confirming the Government's commitment to a system of financing local councils that people will recognise as being simple to administer, easy to understand and fair in its application, in contrast to a Liberal policy that would cost at least 3p on everyone's income tax and a Labour policy the cost of which the Leader of the Opposition either does not know or dare not reveal.

Mr. Heseltine

My right hon. Friend is absolutely right. Under the proposals of the Liberal party, across the country on average, for every £10,000 of taxable income, the taxed person would pay £330 towards the local services, and that would be extremely punitive at certain levels of income.

Mr. John Fraser (Norwood)

Since the element in the expenditure of local authorities which is paid for by central Government and the uniform business rate will remain the same, will not the new system mean that there will be vast variations in the council tax between one local authority area and another, the multiplier effect meaning, in effect, that if local government expenditure is increased by about 1 per cent., the rates bill—or whatever one might care to call it—will then go up by about 6 per cent.?

Mr. Heseltine

There will, of course, be variations, because it is the Government's intention that, where local authorities indulge in high spending, the consequences of the excess spending fall on the local council tax payers. Equally, where local authorities spend reasonably, or underspend, the benefits will flow through to their local council taxpayers.

When right hon. and hon. Members have had an opportunity to examine the exemplifications, they will see that that principle is followed through and that in certain areas—for example, Wandsworth and Westminster—very low charges are possible as a result of the arrangements that we have made, whereas, on the other hand, in certain authorities, significantly higher charges flow from the decisions of the local authority.

Miss Emma Nicholson (Torridge and Devon, West)

I congratulate the Secretary of State warmly on retaining the keynote features of the community charge in the new council tax— fairness and accountability—and I am confident that the new tax will be widely honoured. 'Will he remind the public that, while he is accepting consultation with members of Her Majesty's Opposition, so far they have been able to offer the electorate only a pot of fool's gold?

Mr. Heseltine

I strongly support my hon. Friend's view. The incidence of people to homes in this country show that a very high proportion of people come within a local tax, assuming two persons per household. About 38 million out of 42 million will broadly come within the incidence of our proposals, and many of the people in the remaining category will have been left out as a result of the arrangements that we have announced.

Mr. Gerry Steinberg (City of Durham)

Is the right hon. Gentleman aware that the reaction of his hon. Friends today is similar to their reaction when the poll tax was introduced? It will be interesting to note the situation in a year from now.

A terraced house on the periphery of my constituency is worth, say £40,000. A similar property in the city centre is worth £130,000 or £140,000. Will both be in the same band?

Mr. Heseltine

They would not: they would be in bands some way apart to reflect those figures, because it is to be presumed that people living in a property worth £40,000 are likely to have a lower income than people living in a property worth £120,000.

Mr. Nigel Lawson (Blaby)

While agreeing with my right hon. Friend—[Interruption.]

Mr. Speaker

Order. Mr. Lawson.

Mr. Lawson

Thank you, Mr. Speaker.

I agree with my right hon. Friend that, if there is to be a local tax at all, it should be a property tax based on capital values—that is clearly the right answer—but is he aware of the widespread relief that there will be throughout the country both that the Government have had the courage and common sense to consign the poll tax to oblivion, and that they have come to a firm decision as to the nature of its replacement?

Mr. Heseltine

I am extremely grateful to my right hon. Friend, whose views on this matter are very close to my own.

Mr. Alfred Morris (Manchester, Wythenshawe)

The right hon. Gentleman said not a word about the special problems and needs of people with severe disabilities. Will he be restoring to them the benefits of the Rating (Disabled Persons) Act 1978 so that they will no longer be penalised if they require a larger house or an extra room?

Mr. Heseltine

Yes, I can confirm that.

Mr. Robin Maxwell-Hyslop (Tiverton)

Will my right hon. Friend ensure that the boundaries of the economic regions are reviewed, because they are the basis on which housing investment programme payments and transport supplementary grants are made initially, and they have never been set by the Boundary Commission for England or pursuant to any criterion laid down in any Act of Parliament—or even in a statutory instrument?

Mr. Heseltine

I am interested in what my hon. Friend has to say. When he looks at the exemplifications of our figures he will find that the concept of a national band works perfectly acceptably. I shall look into the matter of the boundaries of economic regions and write to my hon. Friend about it, although I do not think that it relates to this matter.

Mr. William Ross (Londonderry, East)

I listened carefully to the right hon. Gentleman and I thought that I heard him talk about structure and finance, but not a single word did he utter about the functions of local government or about how major functions such as the police and education will be funded. Will they be covered in the review?

Mr. Heseltine

Yes, I am grateful to the hon. Gentleman. The consultation document lists the existing functions in the various tiers of local government and states that we are working on the assumption of those functions being as they now are, or of changes clearly envisaged in Government plans. I also referred in my statement to the idea of the enabling authority which has significant implications for function delivery; but it is for my various colleagues in the Government to announce any changes relating to their functions from time to time.

Mr. Paul Channon (Southend, West)

Apart from the welcome announcement that my right hon. Friend has made about the council tax, and in particular about its level, which will be most acceptable, will he say a little more about proposals for changes in local government structure, which will be widely welcomed? When does he think that changes in the area,s about which there is not a great deal of controversy will take place on the ground?

Mr. Heseltine

The Government are going to proceed area by area. I hope that the first of the new authorities will come into existence in April 1994. I very much welcome what my right hon. Friend has said. We shall be looking at the matter area by area, and we expect a disparate pattern to emerge in the light of local circumstances.

Mr. Dave Nellist (Coventry, South-East)

Given that the Secretary of State has said today that the poll tax is dead, but not until 1993, how will he answer those with suspicious minds who will say that this has more to do with the pre-election strategy of the Tory party than with serious policy? He introduced a Bill to reduce this year's poll tax bills by £140 and his colleagues brought in the School Teachers' Pay and Conditions Bill, so why does not he bring in a Bill today to abolish the poll tax?

What is the right hon. Gentleman going to do about the fact that, by all estimates, 18 million people have not paid all last year's poll tax and many of them have not paid any of it? Why has he said nothing today about the court cases, the bailiffs and the prison sentences? If he thinks that the poll tax battle is over, he ain't seen nothing yet.

Mr. Heseltine

The hon. Gentleman is a living example of why his party has thrived so long in opposition and will continue to do so. It is precisely that sort of attitude which reflects so clearly in the judgments that we have to make about the way in which Labour authorities behave. The hon. Gentleman asks about pre-election announcements. The Conservative party is quite keen on winning elections. I know that the Labour party does not expect to.

Mr. David Wilshire (Spelthorne)

Will my right hon. Friend confirm that his new proposals contain a transitional relief scheme to help the introduction of the new system, discounts for single people living alone and a capping mechanism to stop the worst excesses of the loony left? Is he aware that none of those advantages figures in the Labour party's proposals, which shows that it still does not understand how to finance local government?

Mr. Heseltine

I am most grateful to my hon. Friend. We shall have discounts and exemptions to deal with those people whom I have listed. We are determined to intensify the capping regimes to bring down local expenditure and, therefore, local council taxes. We certainly will have a transitional relief scheme, but I am in something of a difficulty, when it comes to the Labour party's proposals, because its published documents say that it will have a transitional relief scheme, but its chief spokesman says that it will not.

Mr. John Cartwright (Woolwich)

Does the Secretary of State accept that banding simplifies administration but it involves an element of rough justice because the amount to be paid depends on the property band in which one's home is placed? Will he therefore reconsider his suggestion that not many people would seek to appeal against the banding, particularly if there is to be no individual valuation of properties?

Mr. Heseltine

No, I think that, when hon. Members have had a chance to look, they will find that the difference between the bands means that people will be unlikely in large measure to seek to take advantage of an appeal procedure. But I do not wish to make an issue of that. The procedure will be there, and people will be fully entitled to make use of it.

Mr. Michael Jopling (Westmorland and Lonsdale)

Is my right hon. Friend aware that his new proposals, on which he and the Government should be congratulated, will immediately produce a situation that will be broadly seen as fairer than the community charge and the rating system, and levels of payment which are broadly acceptable? Can he confirm that future house values will be based on current values rather than on rebuilding costs? If so, is he aware that that will ensure that older, traditionally built houses will not be clobbered merely because they have immense rebuilding costs?

Mr. Heseltine

I am most grateful to my right hon. Friend. I agree that the tax will be seen as fair and acceptable. I can confirm that under our announcements there will be no reflection of the rebuilding costs in the valuations. The property element will be based on capital values. At the same time, it must be made clear that one of the complications of the Labour party's scheme, as I understand it—I confess to a certain rudimentary knowledge of that—is that it will have rebuilding and repair costs and property and rental values all in one package, if that can be believed.

Mr. Joseph Ashton (Bassetlaw)

Will the Secretary of State give an assurance that we will now see an end to the nonsense of Westminster and Wandsworth receiving massive bribes and handouts while Bassetlaw district council in my constituency never received one penny in rate support grant for 10 years and, morever, lost the high rates that it used to get from the pits and power stations? Will we now see an end to that unfair system, so that all councils have handouts that bear some relation to their needs?

Mr. Heseltine

The hon. Gentleman only has to look at the disposition of grants to inner-London authorities to realise that neighbouring Labour councils receive significantly more than Wandsworth. The result is that Wandsworth and Westminster, by prudent housekeeping——

Mr. Ashton

What does that have to do with it?

Mr. Heseltine

Because I was asked about the distribution of grant, as though that is something which is totally reflected within the level of charges—it is not. The hon. Gentleman will discover that it is not just grant distribution that influences charges but local authority spending decisions. That will be seen in exemplifications across the country. I confess that I do not have before me the figures for Bassetlaw, but I shall be surprised if the situation is as the hon. Gentleman suggests. Nevertheless, I will write to him.

Mr. Anthony Steen (South Hams)

I congratulate my right hon. Friend the Secretary of State on his welcome statement. For most people, the important thing will be the bottom line. Will my right hon. Friend confirm that, in rural areas such as Devon, the majority of households will pay less under his new scheme than they would under the old rating scheme, if it had been uprated from 1973 to 1993?

Mr. Heseltine

My hon. Friend, of course, is right in realising that the big switch made by my right hon. Friend the Chancellor of the Exchequer in his recent Budget brings about a result broadly on the lines that he suggests. Council taxpayers in Devon, for example will benefit significantly from the fact that their county council is within 0.1 per cent. of the level of reasonable spend.

Mr. Greville Janner (Leicester, West)

Does the Secretary of State acknowledge the very real problems confronting excellent city councils such as Leicester, which are struggling desperately to provide worthy services to their citizens under the weight of the chaos caused by the poll tax? Does he accept that that chaos will inevitably continue for at least two more years? What transitional relief does he propose, if any, to allow councils to do their job of serving their citizens in their areas?

Mr. Heseltine

Leicester would probably do better if it had kept down its community charge, and went on to keep its local tax down.

Mr. Janner

But there would be no services.

Mr. Heseltine

It is no use the hon. and learned Gentleman making that argument, because Conservative authorities all over the country are providing services that are more than adequate, at very much lower levels of cost.

Mr. James Cran (Beverley)

I am sure that my right hon. Friend will be aware that my constituents are delighted at the opportunity that he is giving them to get rid of Humberside county council. As it has, in a sense, already been got rid of by a Boundary Commission report, should not that consideration be put at the top of the list to be drawn up by my right hon. Friend's new commission? My right hon. Friend will be aware also that my council is concerned about revenue support grant. Will he confirm that it is not set in ferroconcrete, and that he is prepared to consider further representations?

Mr. Heseltine

As to the grant distribution system, broadly speaking, we do not intend to change it—but we always listen carefully to representations about standard spending assessments. Switching SSAs in the direction of one authority invariably means that other authorities lose out, with consequent complaints. The Humberside issue has been proceeding along its own track and the Government have no intention of intervening to change the process that is at work.

Several Hon. Members


Mr. Speaker

Order. In the interests of all right hon. and hon. Members, I ask for single questions, as that will be fairer.

Mr. Harry Cohen (Leyton)

The Secretary of State is contrite about the 20 per cent. minimum community charge, and says that it will go under his new council tax. Why has he failed to bring a measure before the House to abolish that charge from this year's poll tax, and from last year's and next year's poll tax? Unless he does so, people will continue to run up huge debts.

Mr. Heseltine

My right hon. Friend the Prime Minister referred to that aspect. The hon. Gentleman will he Cully aware that the changes announced by my right hon. Friend the Chancellor of the Exchequer in his Budget, and by myself in later statements, are of significant help to people on lower incomes.

Mr. Richard Tracey (Surbiton)

My right hon. Friend will be well aware of the appalling record of the London borough of Lambeth, which never collected all its rates or community charge. Yesterday, my right hon. Friend's Department published figures showing that £30 million of Lambeth's community charge remains uncollected this year. Does my right hon. Friend believe that his new council tax will be collected by Lambeth, or is it a Labour council out of control?

Mr. Heseltine

My hon. Friend has raised a most interesting question, because it so happened that my hon. Friend the Member for Salisbury (Mr. Key) revealed the inadequacy of Lambeth's delivery in the matter of collecting its bills, and made it absolutely clear that it has nothing to do with the community charge. What it was about was the inadequate management of that authority. The fact of the matter is that Lambeth is owed £28.9 million in respect of rents, £28 million in domestic rates and £13.7 million in business rates. Anyone who wants to understand why Lambeth is responsible for charging people what is inevitably a high community charge, should have regard to its inability to collect the revenue to which it is entitled. Perhaps it is a chilling example of the concern that we have about Labour authorities that the Labour party has now been driven to the point where it has sacked the significant leaders of Lambeth council.

Ms. Dawn Primarolo (Bristol, South)

When the Government introduced the poll tax, they told us that it was done to extend democracy and introduce accountability, that it would be based on fairness and that it would be easy to collect. It was introduced with a chorus of support from the Government Benches. Now they tell us, after a £14 billion mistake and waste of money, that they will introduce another tax that will be fair, accountable, democratic and simple. Why should the electorate believe in the judgment of the Government? They know that this is an election ploy for a Government who will be defeated.

Mr. Heseltine

I was extremely interested in the hon. Lady's references to extending democracy, as she speaks for a party that has sacked the Labour deputy of Wirral council, and Labour councillors in Liverpool and Lambeth. If that is not curtailing democracy, I do not know what is.

Dame Elaine Kellett-Bowman (Lancaster)

Will my right hon. Friend accept thanks from my constituents who live in low-rated houses and, because many of them are single households, also thanks from those who will be relieved about the 25 per cent. reduction on single households? Will he also accept our grateful relief that he is capping Lancashire?

Mr. Speaker

One question please, Dame Elaine.

Dame Elaine Kellett-Bowman

I missed one earlier.

Mr. Speaker

Bad luck, but only one question now please.

Dame Elaine Kellett-Bowman

Will the county council——

Mr. Speaker

Order. I must say to the hon. Lady that this is hardly fair to her colleagues.

Dame Elaine Kellett-Bowman

Will the county council be capped?

Mr. Heseltine

My hon. Friend has drawn my attention today and earlier to the overspending practices of Lancashire county council, which must be of considerable concern to her and to many people who live in her constituency. I appreciate her comments about the help that we have brought to people who live in low-rated houses. Certainly, we have introduced a community charge reduction scheme which will be of considerable benefit this year and we very much welcome the opportunity to extend the principle that people should be personally involved in this process by introducing the 25 per cent. discount.

Mr. Kevin Barron (Rother Valley)

Does the Secretary of State agree that the public humiliation that the Government have suffered over poll tax is well deserved, in view of the fact that the Conservative party allowed common sense to be overridden by party political ideology? More important, many thousands of people in my constituency are having to pay 20 per cent. of the poll tax or more, although they are very poor and can ill afford to do so. In view of that, why does not he introduce legislation to stop it now, before we have another two years of asking people for money that they do not have?

Mr. Heseltine

I should have thought that the hon. Gentleman would recognise that we are now discussing arrangements for the new tax for 1993, and I should have thought that he would welcome the fact that we have removed the minimum contribution.

Mr. Robin Squire (Hornchurch)

My right hon. Friend deserves the widespread congratulations that he has received this afternoon and that he will undoubtedly get during the next few weeks. Can I ask him to be on his guard lest the country at large considers that it has broadly two property taxes with no difference? Will he underline the three threats to widows, spelt out by my hon. Friend the Member for Spelthorne (Mr. Wilshire) and the fact that the valuation basis of the Labour party's proposals means there will have to be four separate values every year?

Mr. Heseltine

I very much welcome my hon. Friend's question and I hope that the Labour party will now take the trouble to spell out the implications of the figures involved in its new tax—not the one-year resting point on the old rates, but what it intends in the longer term.

Mr. Allen McKay (Barnsley, West and Penistone)

Will the Secretary of State, when deciding the terms of reference for the reconstruction of local government, including the financing of services, take into consideration the fact that the standard spending assessment has worked unfairly against some authorities? Will he consider whether there should be equalisation in the future?

On the tax itself——

Hon. Members


Mr. Speaker

Just that one question, please, in fairness to other Members.

Mr. Heseltine

The hon. Member will read with interest what the consultative document says about parishes, and we shall undoubtedly hear his views, along with those of everybody else. I cannot add to what I said a few moments ago about standard spending assessments. We look at these matters constantly. In any system of distributing Government grants, SSAs have always given rise to controversy.

Mrs. Maureen Hicks (Wolverhampton, North-East)

Does my right hon. Friend agree that, according to our interpretation, the word "fair" implies the protection of people from the excesses of high-spending councils? In contrast, the Labour party, with its so-called fair rates, would go back to the bad old days of no protection, when councils could spend exactly what they liked, with no control whatsoever and no protection for single people.

Mr. Heseltine

My hon. Friend is absolutely right. Perhaps the most worrying aspect of the Labour party's proposals is that the party cannot give any details whatsoever about them. Even worse, the Opposition would incite local authorities to continue the upward spiral of expenditure, with devastating consequences for some of the least privileged people in our society.

Mr. Jim Cousins (Newcastle upon Tyne, Central)

Can the Secretary of State give the House an assurance that finance from national taxes will be made available in sufficient quantities to hold local taxation permanently at the new level he proposes?

Mr. Heseltine

I am grateful for the chance to repeat that, when my right hon. Friend the Chancellor of the Exchequer brought about a new balance between local taxation and central taxation, he made it clear that the Government intended to maintain that balance.

Mr. Nicholas Winterton (Macclesfield)

I am sure that the majority of the residents of the borough of Macclesfield will warmly welcome a majority of the proposals that have been announced by my right hon. Friend today. I say so as those people live in a borough whose authority underspent SSA by 11.3 per cent. My question is a direct one, and concerns the future structure of local government. Does my right hon. Friend think it fair that Cheshire county council, which produced a figure that only just prevented it from being capped, and which is controlled by Labour with support from the Liberal Democrats, should be allowed to allocate £100,000 of hard-pressed ratepayers' and community charge payers' money for the purpose of defending itself against what the people may wish to do in the future with regard to a unitary or all-purpose authority at district or borough level?

Mr. Heseltine

Obviously I cannot prejudge any decisions about the way in which unitary authorities might operate in Cheshire. However, the commission is unlikely to be influenced by public relations campaigns involving high expenditure. It will want to give people a much fairer chance against the big battalions and bureaucracy.

Mr. Max Madden (Bradford, West)

As the poll tax is now universally seen as one of the most expensive political fiascos in British political history, as well as being divisive and unpopular, will the Secretary of State do something to help the poorest this year and next year by bringing forward his proposals to cancel the minimum charge, by cancelling the 20 per cent., and by introducing a more generous rebate system? Does he realise that there would be Opposition support for an arrangement to rush legislation through the House to give real help now to the poorest people?

Mr. Heseltine

The hon. Gentleman is fully aware that the minimum contribution by the poorest people carries with it an uprating of social security benefits to enable them to make payments broadly in line with the 20 per cent. We are talking today about the system that is to be introduced in 1993—not about arrangements for the years between now and then.

Mr. Martin M. Brandon-Bravo (Nottingham, South)

Given that my right hon. Friend is dealing with valuations in broad classifications, may I ask him whether he addressed the problem of the injustice of tax on home improvements, which was a feature of the old rating system, and would presumably be a feature of the Labour party's proposed system? Can I give my constituents an assurance that anyone who installs central heating or double glazing will not have to pay an extra tax, as under the old system?

Mr. Heseltine

I am grateful to my hon. Friend. We do not envisage that to improve or change one's home would cause a house to move from one band to another.

Mr. D. N. Campbell-Savours (Workington)

Can I say to the Secretary of State that, just like the lettered number plate, this approach is very divisive and invites the worst form of coarse and vulgar consumerism? Can he imagine what will happen in two or three years' time when there are band A, band B and band G properties, with people wanting to indicate their social mobility by moving up bands? Does he not think that that is divisive?

Mr. Heseltine

I understand the hon. Gentleman's concern, but it is fair to say that the Labour party's "Fair Rates" document also referred to a banding concept. We have not suddenly introduced a new concept. The hon. Gentleman grossly exaggerates the effects of adopting the simple system that we have proposed.

Mr. James Couchman (Gillingham)

Is my right hon. Friend aware that his announcement will come as very good news to the many thousands of my constituents who live in small, old terraced properties, who formerly paid low rates and who were very badly hurt by the community charge?

Mr. Heseltine

I am most grateful to my hon. Friend. When people have considered and understand the exemptions, I believe that those who feel that in recent times they have paid more than they ought to pay will be reassured.

Mr. Eric Illsley (Barnsley, Central)

The Secretary of State's powers of capping will affect local authority budgets, which are based on standard spending assessments. Last year, in the coming year and in years to come, they will be based on 1981 census data. Will he confirm that the standard spending assessments are to be retained under the new system, and that therefore all the charge-capping problems will remain? Authorities such as mine will therefore not receive adequate grant support to reflect their social and economic needs.

Mr. Heseltine

I do not think that the hon. Gentleman's authority has been capped. The standard spending assessment system will be part of any mechanism for distributing central Government grant. Whether it is called the grant-related expenditure assessment, the standard spending assessment or the needs element, it will be there and will always create controversy. Each local authority will want more. The problem is that it will not be prepared to recognise that that is the position of every local authority.

Mr. Andrew Hargreaves (Birmingham, Hall Green)

I give a warm welcome to my right hon. Friend's statement, but can he assure my constituents who, under the old rating system, suffered increases under a Labour-controlled council of up to 42 per cent. in one year, that that will be impossible under his proposals?

Mr. Heseltine

I shall look closely every year at the Government's proposals for capping arrangements. We intend to bear down on high-spending authorities. I hope that my hon. Friend will be content with a general answer today, since we have not yet begun to consider the rules that will apply next year.

Mr. Eddie Loyden (Liverpool, Garston)

The Secretary of State will be aware that his statement will meet with the disapproval of the vast majority of the people of this country, since it does not address the problem that has been raised by a number of my hon. Friends: the fact that local authorities ought to receive what they require to meet their needs. Poverty, high unemployment and poor services in many of our cities will not be remedied by his statement. He will not con the people.

Mr. Heseltine

By and large, people have come to understand that Liverpool's problems were not created by the grant distribution mechanism. If that statement needs any reinforcement, the Opposition would not have needed to sack councillors standing in the name of the Labour party and to replace them with councillors who can do the job better.

Mr. Harry Greenway (Ealing, North)

Is my right hon. Friend aware of the extreme suffering of the people of Ealing, including students, nurses and others, in 1987 when the then Labour council increased the rates by 65 per cent? Will my right hon. Friend's proposals lead to discounts for student nurses and apprentices? Will they pay something, or will they pay nothing?

Mr. Heseltine

I am sure that the transfer of control of Ealing to a Conservative administration was like a great light coming over the horizon and I am grateful to have the opportunity to pay tribute to that. I can also confirm to my hon. Friend that, under the new arrangements, students, YT trainees, apprentices and student nurses will qualify for personal discounts.

Mr. Michael Carr (Ribble Valley)

Although we welcome the right hon. Gentleman's consultation proposals on the structure of local government, can he give an assurance that any local authority structure that emerges will not ignore the special needs of rural areas?

Mr. Heseltine

That is a very interesting point, and it is one of the reasons why we have referred in the consultative document to the possibility of different patterns of authorities emerging. It is also one of the reasons why we have referred to the potential role of parishes.

Mr. Richard Holt (Langbaurgh)

Will my right hon. Friend accept that his speech today—the content, the delivery and everything about it—in comparison with that of the hon. Member for Dagenham (Mr. Gould), which was poor, lacking in content and did not hold the attention of the House, will be widely respected throughout the country, not least in Cleveland? My right hon. Friend may like to learn at this stage that the Labour leaders of Middlesbrough, of Stockton and of Hartlepool councils have joined the Conservative leader of Langbaurgh council in asking for the abolition of Cleveland county council, as did the hon. Member for Hartlepool (Mr. Leadbitter) on Radio Cleveland yesterday, when he also warned his party against regional government.

Mr. Heseltine

I am most grateful to my hon. Friend for his praise, although he qualified it towards the end of his remarks. He would not expect me to be drawn on the relative merits of yes or no to Cleveland, although I know what a formidable advocate he will be on one side of the argument.

Mr. David Blunkett (Sheffield, Brightside)

I was going to ask the Secretary of State about the chip shop factor, which is when there is a chip shop on one side and a disco on the other. Without individual valuation, a person ends up paying just as much as the person who overlooks the local park. However, as I am confined to one question, may I ask him this? The question is simple. Taking the average amount that a two-person household would pay under Labour's scheme as £333 and using like with like, is it not a fact that, under the scheme announced this afternoon, the con tax would cost the same two-person household £400?

Mr. Heseltine

I think that the hon. Gentleman really asked two questions. First, he raised the issue of a chip shop on one side of the road and something else on the other. There is an appeals procedure which is perfectly open to anyone who thinks that he has been adversely affected. Doubtless that will now be seen as an incitement to every chip shop owner in the country to march towards Whitehall to appeal against what we are doing. We will treat them as fairly as chip shop owners deserve.

To go back to the hon. Gentleman's arithmetic, the fact is that if one has a similar sum to collect, the same number of people and the same number of properties, the average under any scheme must be the same.

Several Hon. Members


Mr. Speaker

Order. May I remind hon. Members whom I have unfortunately been unable to call that, if they table questions tomorrow to the Department of the Environment, they will be answered in a fortnight's time.