HC Deb 23 April 1991 vol 189 cc918-26 4.35 pm
The Secretary of State for Wales (Mr. David Hunt)

With permission, Mr. Speaker, I should like to make a statement about local government finance in Wales, and in particular about the Government's proposals for the new council tax to replace the community charge.

I will be consulting widely in Wales on the basis of the paper that we have published today. As right hon. and hon. Members will see from the consultation document, the new council tax provides for a single bill for each household based on the value of the property, with a discount for single-person households. There are provisions for transitional relief, rebates for the most needy and discounts for student nurses, and so on, as well as for single occupiers, and there will be no register for adults. I believe that the system will be fair, equitable and simple to administer.

The House is already aware of the substantial benefits for Welsh community chargepayers which I have recently been able to announce. The generous local government finance settlement for 1991–92 enabled local authorities to set community charges some £130 less than elsewhere in the United Kingdom. I was also able to make available a total of £62 million for the community charge reduction scheme. Finally, and most important, the Government have provided £300 million to reduce by £140 the community charges set by authorities throughout Wales. The upshot of all this is that the average community charge in Wales before the award of community charge benefit will not exceed £95.

The proposals announced today must be seen in that context. The new arrangements that we are proposing will provide for a fair and durable system of local taxation in Wales. I am placing in the Library exemplifications of the consequences of the new scheme. These are based on 1991–92 expenditure by Welsh local authorities and the current level of central Government support, to which I have already referred. The Government's intention is that the balance between central and local taxation established in my right hon. Friend the Chancellor's Budget statement should be broadly maintained in the longer term.

As I have said, I want to consult widely on the basis of the paper published today. There may be areas where Welsh circumstances are different from those elsewhere, and so the detailed arrangements for Wales may need to differ. I am asking local authorities and others to put to me their suggestions for the particular matters on which separate Welsh arrangements would be appropriate. I trust that Labour Members may now at last be willing to contribute to that debate and consultation, and I would also welcome further contributions from those who have already been willing to participate in the consultation process and have given me the benefit of their views.

I should just say a further word about local government structure and functions. I told the House on 21 March that I wished to consult further with local authority associations before taking matters forward. I met the associations on 11 April and am pleased to tell the House that we had a very positive and constructive exchange of views. I now propose to reflect on what was said to me and then, in the early summer, to publish a consultation paper which, among other issues, will identify the facts which need to be borne in mind in considering any reorganisation.

Our review of local government finance functions and structure is making considerable progress. The Government intend to establish for Wales, as for Britain as a whole, a system of local government which can serve us well for many years to come. The consultation paper issued today is a major step forward in that process, and I commend it to the House.

Mr. Barry Jones (Alyn and Deeside)

On structure, does the right hon. Gentleman agree that any commission in Wales must be able to generate cross-party support? Will he guarantee that the commission will not be packed with an anti-Labour membership? Will he now accept that Labour's policy principle in Wales of a single tier of most-purpose local authorities is already backed by the districts and counties of Wales?

Does the right hon. Gentleman realise that Labour's plans for changing the structure of local government were published several years ago, following extensive consultation? The right hon. Gentleman is riding on Labour's coat-tails here. He is engaged on a policy clothes-stealing exercise, is he not?

The right hon. Gentleman now gives weight to the consultative process, as he must. May I remind him that, in the 1980s, the consultations on the poll tax were nothing less than a sham—a bitter farce? When the representatives of the Welsh councils tell him that they want to return to the rates, with enhanced rebates, will he accept their advice?

Is it not true that, under the council tax, rich people in Wales will get special treatment from the Government? The banding exercise is not equitable. Will the Secretary of State admit that the hated poll tax will remain for a further two or even three years in Wales? That will be resented throughout Wales. Why does the Secretary of State not accept our offer of a Poll Tax (Abolition) Bill, which would speedily end a tax that is hated and rejected by all our people throughout the Principality?

Some houses in well-heeled areas of Wales are worth a quarter of a million pounds or more. The average price of a mid-Glamorgan house is but £31,600. Does the Secretary of State seriously recommend a tax under which the occupant of a mansion will pay only two and a half times the tax paid by someone in a humble home in the bottom band of the Government assessment? Are not the Government protecting the rich and the super-rich?

The Secretary of State, in his former office, played a special role in perfecting the poll tax. Now the central tenet of Government policy is to dump the poll tax. Has not the right hon. Gentleman repeatedly trumpeted the merits of that tax? Does he not carry special responsibility for the hardship, distress and anger that it has generated throughout Wales? Will he now apologise to the people of Wales for his special role in establishing the hated tax? He lacked credibility as he made his statement today.

Finally, does the right hon. Gentleman realise that, whatever panic-stricken stratagems he is prepared to adopt, the parliamentary skins of his colleagues will not be saved in Wales? The people of Wales will make their judgment on 2 May and in the general election that is soon to come.

Mr. Hunt

The hon. Member for Alyn and Deeside (Mr. Jones) did not know which way to jump, and he finished by jumping in all directions at once. First, he said that we had stolen his proposals. Then he said that the new tax was still the poll tax. I was totally confused, as were most hon. Members.

The hon. Gentleman's first question did not relate to anything that I said or to anything in the consultation document. He must have thought that I had announced a commission today, but I did not do so. I know that some of his friends in local government would like to have an independent commission to tell us in Wales what to do, but I believe that we can decide that for ourselves. I am not minded to set up a commission, and that decision has the strong support of all the district councils.

Secondly, the hon. Gentleman said that local authorities in Wales had agreed on their preferred form of local government. It is true that, when local authority representatives came to see me, they said that we should move towards single-tier local government, but when they were asked about the size and number of the single tiers, they did not agree among themselves. We must not let the hon. Gentleman pretend that the councils agree. The Government believe in facing up to the disagreements as well as to what is agreed, so that we can produce a solution that will last for many years.

I have read the Labour party's proposals for local government, and I asked a reasonably random selection of people in Wales whether they understood what the proposals meant. I did not find anyone who understood them. The hon. Member for Alyn and Deeside said that I had stolen the Labour party's clothes. The hon. Gentleman may be better dressed than I am, but his proposals have been covered in a cloak. I have simply snatched away the cloak so that people can see his proposals. He is right to recognise that some elements in our announcement today were in the Labour party's proposals, too, but they were subsquently denied.

Banding is one example. On 1 July, the hon. Member for Dagenham (Mr. Gould) prepared a confidential discussion document advocating a tax based on five bands of property values. Today, it was educational to hear the hon. Member for Dagenham attacking a proposal based on seven bands, having already accepted the nature of our proposal.

The hon. Member for Alyn and Deeside then said that the Government were merely returning to the rates. We are doing no such thing. The Labour party proposes to return to the rates, or rather, to something called a graduated rateable value. [HON. MEMBERS: "Oh."] Hon. Members cannot have read the document "Fair Rates". Rebuilding, maintenance and repair costs, and private rents, would be taken into account in calculating graduated rateable values. That would not happen immediately, however. First, it was suggested, we should return quickly to a register based on 1973 valuations. The spectacle that the Labour party offers, with its idea of a Poll Tax (Abolition) Bill, is that we should return immediately to the rates.

I remind the hon. Member for Alyn and Deeside that, in Gwent, where a contest is looming for a parliamentary seat, the Leader of the Opposition spoke about rates. He was in Pontllanfraith—[HON. MEMBERS: "What?"]. I am merely using the pronunciation used by the right hon. Member for Islwyn (Mr. Kinnock). He described all rates —[Interruption.] Labour Members should listen to the words of their leader. They do not like what I am saying, but this is the system to which they propose to return. The right hon. Member for Islwyn referred to the most unjust of all taxes—local rates. Yet that is what the Labour party now proposes.

Yes, the voters will make a choice on 2 May. They know that to vote Conservative will be to vote for councils that cost them less and give better services, whereas to vote Labour would mean voting for higher spending and higher bills.

Several Hon. Members


Mr. Speaker

Order. I repeat what I said on the previous statement. I shall ask for single questions——

Mr. John Maxton (Glasgow, Cathcart)

And short answers.

Mr. Speaker

—and I hope that the answers will be short, too. That would enable me to call all the hon. Members who have been rising. In any event we shall have to move on to the Scottish statement by 5.15 pm.

Sir Anthony Meyer (Clwyd, North-West)

Can my right hon. Friend the Secretary of State reconcile what is left of the view of the hon. Member for Alyn and Deeside (Mr. Jones) with the football hooliganism of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), who said that he would repeal the new tax before he even knew what it would be? The new tax is a huge improvement. Will my right hon. Friend tell us who will conduct the banding operation, and on what principles?

Mr. Hunt

We have been guided by the Inland Revenue valuation office in reaching the statistics in the exemplifications. We are now consulting on the way in which we shall deal with valuations, but in the consultation paper we rely on the Inland Revenue valuation office. We have included a provision, which we believe local authorities will welcome, to enable them to buy in local professional expertise and experience where they consider that to be necessary.

On the first point, I would ask the hon. Member for Alyn and Deeside (Mr. Jones) to consult not only the hon. Member for Dagenham (Mr. Gould) but the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). Either they intend to repeal their proposals, or they will have positive consultations. As I have said, my door is always open. Why will not the hon. Gentleman follow the example of the Conservatives, Plaid Cymru and the Liberal Democrats, and come in and consult properly?

Mr. Richard Livsey (Brecon and Radnor)

Does the Secretary of State agree that today he has announced the introduction of another property tax? Does he also agree that he said on 3 March 1990: How much more abominable than a tax on widows? But this is what the rating system is."? Surely what the Secretary of State has announced is very similar to the rating system. Surely widows living alone in houses will be adversely affected. What about second homes? I gather that there will be a special dispensation for second homes, and that it will be far cheaper for second-home owners than for the people who live there permanently to live in Wales. What does the Secretary of State intend to do about that?

Mr. Hunt

On the question of second homes, I make it absolutely clear that I intend to consult. That is one element where, if people follow the lead that I wish to give, in Wales we may decide to introduce different provisions from those which will apply in England and elsewhere. The proposal in the consultation paper for. England does not meet the special problem of second homes in Wales.

Secondly, it is precisely to meet the problems of single-parent families and widows that we are introducing a special discount for single-person households.

Mr. Ian Grist (Cardiff, Central)

Does my right hon. Friend accept that no local authority tax will be popular and that the new tax replaces one which was uniquely unpopular because, uniquely, it asked every adult to pay? That was the underlying reason for the unpopularity of the community charge. In the new banding system, will the figures be absolute, based on valuation, or will a house be placed within a particular band between an upper and lower limit, without being identified by precise pricing? Does he also understand—

Mr. Speaker

Order. The hon. Gentleman has asked three questions. That is enough, thank you.

Mr. Hunt

The value of the banding system—originally advocated, I concede, by the hon. Member for Dagenham —is that it removes the need to have properties individually valued. The hon. Member for Alyn and Deeside (Mr. Jones) proposes not merely a return to the rates, with all their injustice, but revaluation within two years of every property in Wales. The banding proposal gives us an opportunity to move away from revaluations and to place properties within a band which everyone can see to be fair and equitable.

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

May I ask the Secretary of State to remind the people of Wales that the poll tax will be maintained in 1991–92 and 1992–93? Even with transitional relief and the community charge reduction scheme, how much more will householders in my constituency have to pay for the perpetuation of the poll tax, even compared to his so-called fair system?

Mr. Hunt

Let me make it absolutely clear to the hon. Gentleman that I am willing to consult local authorities on the best and quickest way to move from the community charge to the new system. The first responses that I have had from them are that the date that I have announced is the earliest possible time at which the new system can be put in place. But the hon. Gentleman's constituents were paying £248 actual rates on average in Merthyr Tydfil. Under the same system and with the same proportion of local government expenditure raised locally, that would have risen to £291 this year. Under the proposals that I have announced today, in the hon. Gentleman's area the average bill per household in 1991–92 would be £112.

Mr. Dafydd Wigley (Caernarfon)

In welcoming the burial of the poll tax, may I ask whether the Secretary of State is aware that thousands of people are in difficulties this year? Can he ensure that such people are given some help to overcome the debts that they have built up? I have one specific question for the Secretary of State. Will he address the question of water rates? The consultation paper refers to the domestic water charges in Scotland and the possibility of bringing them into the orbit of the new structure. Does that mean that there could also be a rebate system in Wales to help the much-beleaguered Welsh water rate payers?

Mr. Hunt

Nothing in the consultation paper deals with the water rates. On the hon. Gentleman's first point, we have a generous rebate system under the community charge. As he knows, under that rebate system, those who have to meet the 20 per cent. payment are allowed far more in income support than the amount that they actually have to pay. That is reflected in the latest figures for Wales, which show that not 90 per cent.—the figure used by the hon. Member for Alyn and Deeside in his calculations—but 96 per cent. of the community charge has been collected and that 98 per cent. of what local authorites expected to receive has been collected.

Mr. Ray Powell (Ogmore)

We all know that the reason we are discussing a new proposal to replace the poll tax is the result of the Ribble Valley by-election. I do not want to go on for long, but a great deal should be said and many questions should be put to the Secretary of State about his statement today. Does he accept that the best way of consulting—I have listened to him mention the word "consultation" 20 times since he began his statement—is probably the by-election that will take place in Monmouth? If a Labour Member of Parliament is elected there, will the Secretary of State scrap the proposal that he has offered us today?

Mr. Hunt

The hon. Gentleman has his own views on why the proposals have been made. I believe that they represent a fair and equitable way to proceed. On consultation, I ask again why the Labour party has decided to throw a cloak over its own proposals and refused even to discuss them with me. Plaid Cymru, the Liberal Democrats, my colleagues in the Conservative party and the local authority associations have come to consult me. The only people who were absent front the consultations were the shadow Secretary of State and his colleagues. I repeat that my door is open and I am willing to consider and consult with the hon. Gentleman, as and when he is ready at last to come in and see me.

The hon. Member for Ogmore (Mr. Powell) should study the figures for Ogwr. If he does so, he will see that our proposal is a good deal for not only the people of Ogwr but the people of Monmouth.

Mr. Alan Williams (Swansea, West)

Does the Secretary of State realise that he has put on the most brazen performance today? He came to that Dispatch Box over the dead body of his sacred principle that everyone must pay. It is the most humiliating about-turn that I have ever seen from a Secretary of State for Wales. Does he accept that it is particularly worrying that he has said with pride that we are to have no commission to give independent advice in Wales? Instead, a man of past evangelical single-mindedness will impose a system by diktat.

Mr. Hunt

I do not think that the right hon. Gentleman listened. If he had done so and if he had also listened to the voices of the district councils in Wales, including those being raised in his local council election campaigns, he would realise that all parties alike would like to see us resolve the matter within Wales. Why does the right hon. Gentleman want a commission? Who does the right hon. Gentleman think could sit on some great independent commission to tell us in Wales how to conduct our affairs? As far as I am concerned, we can do that in Wales with no help from a commission.

Mr. Geraint Howells (Ceredigion and Pembroke, North)

I am sure that the Secretary of State is aware that thousands of university students live in my constituency. Can he clarify the position of four students sharing the same rented house?

Mr. Hunt

They will all be covered by the personal discount. Unless there are two adults in the household, the students will get the maximum personal discount. I refer the hon. Gentleman to the consultation paper, which sets out the position clearly.

Mr. Win Griffiths (Bridgend)

Does the Secretary of State regret not consulting widely about the introduction of the poll tax? Who does he believe was more correct a year ago in the Ogwr borough council chamber—he referred to that council earlier—was it a leading Labour councillor, Dick Power, who said of the poll tax: This is ill thought out and a nightmare to administer"? Or was it the leader of the Conservative group on Ogwr borough council, Councillor David Unwin, who said: Next year, when we are deciding the poll tax for 1991–92, we will be wondering what all the fuss was about. What does the Secretary of State think the former Prime Minister would have thought of that?

Mr. Hunt

I do not know what the hon. Gentleman is trying to do; does he want to go back and rehearse past battles? Ogwr will get a very good deal out of the proposals. Whereas the rates paid in Ogwr in 1989–90 were £332, the average bill per household in 1991–92 under the proposed system would be £108. I work very closely with David Unwin, and I look forward to his joining us in the House after the next general election.

Mr. Gareth Wardell (Gower)

Since the community charge was introduced after hon. Members spent a great deal of time in Standing Committee considering the legislation, and since not one amendment was accepted by the Government, will the Secretary of State now put forward in a consultation paper to the Cabinet the proposal that the work that we do in Standing Committee is reformed to ensure that the Government do not remain intransigent to every good amendment?

Mr. Hunt

What I will rehearse again to the House is the fact that, whenever we discuss local government finance, we all should reflect that the actual level of every local bill depends on the spending plans of every local authority. That is true under any system. The clear message for everyone in Wales on 2 May is that, if they have Conservative councils, they cost them less and they get better services.

Mr. Alan W. Williams (Carmarthen)

On banding, will the Secretary of State confirm that people in the most expensive houses will have to pay only two and a half times what people in ordinary houses will pay? There is a much greater disparity in house prices, with the largest houses being 10 times as valuable as smaller ones. Would not a linear relationship between liability and house values be fairer? Is not the purpose of banding to protect people in very large houses and to protect the rich?

Mr. Hunt

No. When the hon. Gentleman has an opportunity to look at the documents which I have placed in the Library, he will see that the vast majority of properties in Wales fall into the middle and lower bands; 5 per cent. of all properties in Wales fall into band G, which covers properties valued at over 200 per cent. of the average property. Those householders will pay two and a half times as much as those in lower bands. I believe that that is an adequate reflection of the fairness of the new system.

Mr. Peter Hain (Neath)

Does not the Secretary of State agree that the logical flaw in his proposals for the reorganisation of local government is the absence of any strategic authority for the whole of Wales? Will he stop dithering on the subject and agree to set up an elected assembly for Wales here and now?

Mr. Hunt

Despite the hon. Gentleman's attempt to move from the Prime Minister to myself the "dithering" appellation, which failed as much with the Prime Minister as it will with me, I am not persuaded by the case that has been put to me on an assembly. [Interruption.] Yes, I have said this before and I will say it again and again and again. I still await an adequate explanation of how the work of such an assembly could sensibly interact with that of the Secretary of State. There was a noticeable lack of interest in the idea shown by the local authority associations that I met recently. District councils were very fully represented and many speakers put forward the same view as one from west Wales, who said that he did not think that we should even begin to think about setting up an assembly until we had resolved the whole question of the structure of local government.

Mr. Paul Flynn (Newport, West)

Does the Secretary of State recall that I have written to him and asked him oral and written questions on the loony feature of the poll tax as it is administered in Newport? What will he say to the lady from Bassaleg and Rhiwderin who last night in The Argus asked why she should be paying £50 more in poll tax than people are paying a few yards away in Wentlooge? Is it not likely that the crazy system of the charge reduction scheme will be repeated in the new poll tax, which will be equally irrational, absurd and unjust?

Mr. Hunt

I do not know whether the hon. Gentleman was in the House when the shadow Secretary of State for Wales asked me a question, and also when questions were asked earlier by the shadow Secretary of State for the Environment. They both conceded that there was now an end to the poll tax. For the hon. Gentleman to continue to perpetuate this nonsense that the proposal is still the poll tax is an absurdity.

As to Newport, the hon. Gentleman will know that the community charge reduction scheme was based on the average rates paid in a community. That is the basis on which the calculation is made; it is very simple and easy to understand. In Newport, the average rates paid in 1989–90 were £381; in 1991–92 the average council tax per household will be £199. The people of Newport will be able to see how much they will benefit through the action taken by the Government both in resources and under the new system.

Mr. Alex Carlile (Montgomery)

Will the Secretary of State remember that many farmhouses in Wales, for historical reasons which no longer apply, are substantial buildings, much larger in proportion than the income of those who occupy them and work from them? Will he advise the Inland Revenue of that to ensure that, when the district valuer has to band farmhouses, farmers do not find their homes put in an unfairly high band?

Mr. Hunt

Yes, I hope that hon. Members have understood that the proposal that I have brought forward looks at Wales as a country in itself. There is no transposition to Wales of values in England. We will adjudicate on our own values through the help of the Inland Revenue valuation office. That is clear.

Mr. Paul Murphy (Torfaen)

Since the Secretary of State, more than any other member of the Cabinet, personally imposed the poll tax upon an unwilling Wales, since he personally presided over the squandering of over £100 million on administering the tax in Wales, and since, in trying to get out of the mess, he has plunged Welsh councils into financial and administrative chaos, how can he in all honesty remain in his job?

Mr. Hunt

It is quite disgraceful of the hon. Gentleman to say that his colleagues and my colleagues in local government have moved into administrative chaos. I have met the local authority associations many times. The one thing that I have said to them consistently and with great pride is that I believe that the way in which they dealt with the community charge system was an example to every other local authority in the United Kingdom. The way in which they have collected the community charge is an example to everybody else in the United Kingdom—viz. the fact that they have been able to collect 98 per cent. of what they calculated they would raise through the community charge system.

I take as much pleasure in abolishing the poll tax or community charge as I did in abolishing the unjust domestic rating system to which the hon. Gentleman's party plans to return Wales after the next election, if it were to come to office.