HC Deb 17 January 1991 vol 183 cc1005-24 4.58 pm
The Secretary of State for the Environment (Mr. Michael Heseltine)

With permission, Mr. Speaker, 1 should like to make a statement about the local government finance settlement for 1991–92.

On 31 October, my right hon. Friend the Member for Bath (Mr. Patten) announced the Government's proposals for next year's finance settlement. As the House will know, since then I announced that the Government are undertaking a fundamental review of the structure and finance of local government. We are looking both at longer-term changes and at changes that we might implement in the short term. My statement today deals with the changes that we can make for next year, but announces first our decisions following consultation on the finance settlement for 1991–92.

I have considered carefully all the representations that we received on the proposed finance settlement from the associations and from individual authorities. My hon. Friends the Minister for Local Government and Inner Cities and the Parliamentary Under-Secretary responsible have reported to me on the meetings that they held with a number of authorities.

My predecessor's proposals envisaged that it would be appropriate for local authorities to spend £39 billion in aggregate. That is an increase of 19 per cent. over the corresponding figure for 1990–91—a very substantial increase. It follows an increase of 10 per cent. for this year over last year, and takes account of the fact that local authority spending has grown substantially in the last three years. I am satisfied that £39 billion is fully sufficient for local authorities' services, taking account of all the pressures that local authorities face, as well as the scope for saving and what the country can afford.

I considered the representations that were made about the methodology for calculating standard spending assessments. My right hon. Friend had proposed a number of improvements for 1991–92, and with those improvements in place, I am satisfied with the method for calculating SSAs for 1991–92.

My right hon. Friend proposed that aggregate external finance—that is, central support from grants and from business rates—should be set at £26.05 billion—an increase of 12.8 per cent. on this year's settlement. I considered very carefully the argument for providing a greater level of support from national taxation to reduce the burden on community charge payers generally, but I concluded that in the present circumstances—notably those in the middle east—no further increase can be afforded in the amount of AEF beyond the increase of nearly £3 billion already proposed. So I confirm today that figure for the increase in aggregate external finance.

I am therefore fixing AEF and its distribution on the basis described in the consultation paper that was issued on 31 October. I have placed in the Vote Office, and have sent to local authorities, exemplifications showing the final standard spending assessments and grant entitlements for each authority that will follow from the settlement. The formal reports will be laid before the House shortly and debated in the normal way.

When we moved from rates to the community charge, the Government were concerned to protect many of those whose bills rose significantly as a result of the changes. We therefore introduced some transitional relief to protect those former rate payers, and elderly or disabled people even if they did not pay rates.

My predecessor announced in July improvements to the transitional relief arrangements that would take effect in April. The Government have reviewed the impact of those arrangements, and we have decided that they are no longer adequate for the present circumstances. We intend to replace them from April with a community charge reduction scheme that will reflect the improvements already announced but provide considerably more help.

The new scheme is designed to help those whose bills have increased significantly over what they paid in rates. It will continue to limit increases over rates. This year, the limit is £3 a week. The limit next year will be £2 a week, as previously proposed—but unlike the transitional relief scheme, the new scheme will be based not on notional charges but on actual community charges after allowing for the unwinding of the safety net. Sadly, in many areas local authorities increased their spending by much more than we had provided for in the settlement, and almost all actual charges were higher than those notional charges.

As I shall explain, the new scheme will provide help for many of those in sheltered housing who largely did not qualify for transitional relief. The new scheme will reduce the amount paid in charges by £1.7 billion—of which £1.2 billion is new money—compared with £350 million of transitional relief this year. The number of people receiving help will go up from about 7 million this year to more than 18 million next year, which, as the House will realise, represents more than half of all those liable to pay the community charge.

The House will be aware that many people who lived in sheltered accommodation were ill-served by the old scheme. No matter how many people live in a sheltered housing scheme, in many cases they shared an entitlement to transitional relief as if there were only two people living there. Under my new scheme, most individuals or couples in such accommodation will be able to qualify for a reduction in their own right. Within the new scheme, that will provide about £150 million of help for these people. I know that that change will be warmly welcomed.

I also propose that my new scheme will give more help to people who previously benefited from charitable rate relief. It will require local authorities to take account of charitable relief granted under the General Rate Act 1967 when calculating the assumed rates bill. Among those who will benefit will be clergymen who live in church accommodation and elderly people who live in almshouses or other accommodation provided by a charity. Further details have been sent to local authorities today. Copies of the letter are in the Vote Office.

My right hon. Friend the Chancellor of the Exchequer is making a separate announcement on the wider public expenditure and financing implications of the new scheme.

By adding the new scheme to the increase in AEF announced by my predecessor, the Government will be providing more than £4.25 billion extra support for England alone towards community charges next year than has been given this year. In addition, there is help from community charge benefit, which is paid to about 10 million people and is running at nearly £2 billion this year.

Given the extensive help available from relief and benefits, it is not surprising that the community charge that people actually pay on average is much less than the figures that local authorities have announced as their charges. This year, although the headline average charge was £357, the average amount payable was only about £280. Next year, provided that local authorities budget in line with the realistic provision that we have made, it is within their power to ensure that the average amount actually paid is less than £300.

It is of the utmost importance that that additional Government help should go to the benefit of charge payers, not to finance higher spending. In October, my right hon. Friend announced the criteria that he was minded to adopt in using his powers to cap excessive budgets, or excessive increases in budgets between years. I should make it clear to the House and to local authorities that I stand firmly by the intentions that he then announced. Let nobody think that the additional support means that authorities can relax their efforts to control spending.

The finance settlement I have announced and the new community charge reduction scheme reflect the Government's commitment to financing local government. It will now be for local authorities to provide the services that their charge payers want, at a price that their charge payers can afford.

Mr. Bryan Gould (Dagenham)

Does the Secretary of State accept that his statement leaves the fundamentals of the poll tax completely unchanged, and ensures that the average poll tax fixed for the coming year will be not the £380 that he and his predecessors specified but well over £400 per person? It is presumably because that is so that his statement has been made so late on a day that has been dominated by momentous events elsewhere.

Does the Secretary of State accept that disappointment at his statement will be felt all the more keenly because of the expectations that he aroused? During the Tory leadership contest, he gave the impression that he would act immediately to relieve local government and poll tax payers alike of the burdens of the poll tax. His statement today shows that, while he may have laboured mightly, when he came to deliver, it turned out to be just a phantom pregnancy.

Does the right hon. Gentleman understand that his statement will come as a special blow to local government? Surely, from the Secretary of State's earlier statements, local government had a right to expect that he would tackle the obvious flaws in calculating standard spending assessments, and the basic inadequacy of the revenue support grant, which unfortunately he has now confirmed will rise by only £183 million, or 1.9 per cent., over the figure for the current year. It is the inadequacy of that figure which lies at the heart of the poll tax catastrophe.

Does the right hon. Gentleman not accept that, when he talks about £3 billion of new money, £2 billion of it comes from business rate payers, and only a tiny proportion from the revenue support grants? That is the battle that he should have fought and won; that is the battle that he has apparently ducked. What can he say to local authorities which are caught between inadequate revenue support grant and the threat of capping, with budgets which are now in deep disarray and which must now inflict deep and damaging cuts in services already stretched to breaking point? Does he recognise that those problems have been made more difficult, from an administrative point of view, by the delay in confirming the level of revenue support grant?

How can he adhere to the ridiculous assumption that 100 per cent. of the poll tax will be collected, when low levels of collection are now widely admitted and alone will add large sums to poll tax bills this year?

The additional money for transitional relief is welcome, notwithstanding the fact that it is a further admission that the poll tax is basically flawed and unworkable. It is the third such scheme to be announced in 15 months and, if the Secretary of State persists in asserting that the original scheme benefited 7 million people, he must not be surprised if we are sceptical about the figures which he produces today.

Welcome though the extent of the scheme may be, does the right hon. Gentleman recognise—and how many of his hon. Friends recognise—that it retains many of the flaws of the original scheme? What use is it to those people who move house, or who live in large households, as both categories are excluded? Why has nothing been done to help student nurses or non-working wives? When it comes to paying for the new scheme, what bad news does the Chancellor have up his sleeve when he makes his statement on the subject?

How does the Secretary of State expect local authorities to cope administratively with the change in the rules, which will require the liability of every potential taxpayer to be recalculated, in the few weeks available to them?

If the statement is disappointing in dealing with short-term issues, it is equally depressing in respect of long-term solutions. Quite contrary to the easy assumptions about getting rid of the poll tax, it is now clear that no solution to the problem of poll tax is in sight. If the Secretary of State were Archimedes, he would still be wallowing in his bath.

The truth is that no real relief from the poll tax is on offer, either now or in the future. What we need now is not a community charge reduction scheme but a community charge abolition scheme. If we are to be rescued from the poll tax nightmare, we shall need a Labour Government to do the job.

Mr. Heseltine

I am sure that, on reflection, the hon. Member for Dagenham (Mr. Gould) will realise that the fact that my statement has been delayed is in no way of my making. It is the consequence of the important statement that the Prime Minister made today, and I am sure that everyone in the House fully understands that.

The hon. Gentleman has missed the essence and the mood of what we have been saying on this matter, and in a wider context, recently. He knows perfectly well that there are steps one can take in the short term, but that others require legislation and can only be taken in the long term. He would have shown a great deal more confidence in his alternatives to the community charge if he had been prepared to come and talk about them, as opposed to cowering behind the anonymity of his proposals. We have already begun an interesting consultative process with other political parties, which have the courage of their convictions and are prepared to talk about the issue.

It is characteristic of the Labour party that it is prepared to make a lot of noise without any substance whatsoever in what it has to say. Nothing shows more clearly the reality of the hon. Gentleman's position than his dismissal of my announcement today as though it was of no consequence. The fact that £1.2 billion of extra money was made available to deal with these problems is apparently a matter of no consequence for the Opposition. The whole House, and a wider constituency outside it, will have regard to that profligate attitude to public expenditure from the Opposition.

When he considers the fundamental issue of whether we have been concerned to help or not, the hon. Gentleman should realise that total Government additional support has risen by 12.8 per cent. over the announcements that we have made. It is perfectly true that that figure is a composite of Government support and the unified business rate, but both are within the gift of Government to determine, and it is quite right that they should be regarded as part of a package in the overall settlement.

The standard spending assessments of local authorities are up by 19.4 per cent. for England, so the idea that we have had no regard to the requirements and needs of local authorities simply stands up to no examination whatsoever.

The hon. Member for Dagenham has revealed his own lack of confidence in his proposals and, by his failure to produce any criticisms, proved how right we are in what we have said today.

Several Hon. Members


Mr. Speaker

Order. 1 draw the attention of the House to the fact that there are two more statements after this and that the Secretary of State specifically said in his statement that the formal reports will be laid before the House shortly and will be debatable. I ask Members to ask questions on matters of substance, and not on general matters appertaining to this important issue.

Several Hon. Members


Mr. Dick Douglas (Dunfermline, West)

On a point of order, Mr.Speaker—[Interruption.]

Mr. Speaker

Order. I have to hear the point before I can rule.

Mr. Douglas

We know that you are under a lot of pressure, Mr. Speaker, but it would be very helpful if you could give us some idea of the time that you are likely to allot to the statements. I do not think that this is an unfair suggestion.

Mr. Speaker

Since the hon. Member has asked me, I imagine that it will be about half an hour each.

Sir Hugh Rossi (Hornsey and Wood Green)

May I assure my right hon. Friend that, irrespective of what the Opposition Front Bench spokesman has just said, his statement will be warmly welcomed by the hard-pressed and the oppressed charge payers of the London borough of Haringey, especially the statement that additional relief will be attached to actual, rather than notional, charge.

However, without wishing to diminish the Government's generosity in making £1.2 billion available, the Government's subvention is not enough. More than anything else, financial discipline is required from the local authorities concerned. Therefore, why has the London borough of Haringey been allowed not to produce its accounts for audit for the past five years, when an Act of Parliament requires it to do so within six months if it is not to act illegally? Why has no action been taken to assert financial discipline upon that local authority and other similar local authorities?

Mr. Heseltine

I am most grateful to my hon. Friend. He will realise that the Government's capping powers have protected his borough from the worst ravages of increasing expenditure. However, as he says, in many circumstances that can never be enough to meet the ambitions of some of the charge payers concerned. He raises a most serious matter by drawing our attention to the fact that there is a lacuna in the accounting arrangements. In the Department, we treat that extremely seriously, and my hon. Friend the Minister, the hon. Member for Enfield, South (Mr. Portillo), will be writing to my hon. Friend tomorrow.

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

Does the Secretary of State recognise that, now that he has admitted that about 18 million people need some help to pay a flat rate charge, he has shown up the inadequacy of the poll tax as a basic tax for local government? While we welcome some of the changes that he has made, some of which reflect upon him and his predecessors—the changes to help people in sheltered housing schemes and affecting churches, for example —why did he reject the abolition of the 20 per cent. minimum collection, which the Audit Commission has backed within the past few days?

We shall continue to try to persuade the Secretary of State that a local income tax would be much fairer. Will he now admit, however, that the misery of income tax—I mean the misery of poll tax—[Laughter.] I can tell hon. Members that the misery of income tax is nowhere near as bad as the misery of poll tax. Will the Secretary of State admit that that misery will be with the people of this country until after the next general election?

Mr. Heseltine

I had the privilege of listening to the hon. Gentleman expound at length on the miseries of local income tax when he came to see me earlier this week: it was one of the helpful parts of the consultation process that is now under way.

Let me answer the hon. Gentleman's question about the 20 per cent. element. It is necessary to make a judgment in such circumstances. Primary legislation would have been required to deal with the matter, which would have taken considerable time, pre-empted the review on which we have embarked and denied the principle of general universality on which the community charge is based. Moreover, it would not, in our view, have addressed the most urgent need—the need to protect those whose payments were affected the most adversely by the community charge proposals. That had arisen because Labour and, sadly, some Liberal authorities had such profligate expenditure patterns.

Mr. Robin Squire (Hornchurch)

Given the rumours of a cut in the previously announced figure, my right hon. Friend deserves sincere congratulations not only on producing an increase of over £1,000 million, but on directing it especially towards those whose payments under the old rating system have risen the most—and, of course, those in sheltered housing. Will he redouble his efforts—particularly in the light of today's world news, which obviously overshadows his statement—to make it crystal clear to any local authority contemplating large increases that such increases will flow directly from that authority's decisions, and are in no way a result of the generous settlement that he announced today?

Mr. Heseltine

Anyone who studies the figures will realise that there is a political alternative. It is plain that, by and large, on average, Labour authorities charge a great deal more than do Conservative authorities. Under pressure from my hon. Friend, I will make it my business to reveal the political impact of the community charge, depending on which party is in control.

Mr. Jeff Rooker (Birmingham, Perry Barr)

May I remind the Secretary of State that one reason for that is the fact that it is easier to get a child under pre-school age admitted to a nursery in a Labour authority than it is in any Tory authority in the country? That has to be paid for.

Can the right hon. Gentleman name a single problem or anomaly among those that he claims to have corrected today—or claims that his predecessor corrected—that was not raised during the passage of the Local Government Finance Act 1988? There can be none, because the Government were warned of them all. The Secretary of State knows that; will he admit it?

Will the right hon. Gentleman also tell us how the measures announced today will increase local government accountability, which is supposed to be at the heart of the poll tax? Where is the element of accountability in the maintaining of a flat-rate tax controlled by central Government, irrespective of ability to pay?

Mr. Heseltine

If the hon. Gentleman had followed what I said carefully enough, he would have realised that the new community charge reduction scheme does not affect the difference between this year's charge and next year's. If local authorities increase their charges, that will flow through to the charge payer, maintaining the principle of accountability.

I return to the hon. Gentleman's earlier point about the provision of education justifying increased expenditure in Labour authorities. What the hon. Gentleman must consider is whether the standards of service in inner-city schools and on inner-city housing estates justify the levels of expenditure with which they are often associated.

Miss Emma Nicholson (Torridge and Devon, West)

The speech of the hon. Member for Dagenham (Mr. Gould) rested on the central platform that there would have to be a recalculation of each person's payment, and that the system was therefore inoperable. Will my right hon. Friend remind Opposition Members that such calculations are undertaken with the use of enormously sophisticated computer software and hardware, and that district councils have already invested in that equipment —which will more than cope, in nanoseconds, with the modest extra calculation that will be needed?

Mr. Heseltine

I am grateful to my hon. Friend. We tried to have regard to local government computer software programmes and to confine the changes that we have made to those likely to have the least effect on, in particular, the costs that will result. It is not always possible to guarantee that 100 per cent., but we have borne it very much in mind.

Mr. Allen McKay (Barnsley, West and Penistone)

Is the Secretary of State aware that my constituents need an adequate police force and an adequate fire service, manned to Home Office standards, but cannot have them? Will the money be provided for those standards to be reached? Is he aware that my constituents need nursery schools—and are asking for them—and that they need more home helps and meals on wheels? Judging by the pre-run budget that it has just been given, my local authority will have to impose a massive increase in poll tax, and it still has to find £6 million to pay for cuts made last year and the year before.

Mr. Heseltine

If the standard spending assessment for the hon. Gentleman's local authority has risen by 20 per cent. in a year, that must reflect the fact that the Government anticipate a wider range of services. There is always a limit to the extra money that can be provided within the constraints of public expenditure.

The police authorities are subject to the same rules as other authorities; when their budgets have been fixed, it will be a question of discussing the effect of the capping regimes in the light of those budgets. It is for the police —as it is for every body that provides a public service—to ensure that they are providing value for money within the limits of the cash made available to them. Not all police expenditure is about bobbies on the beat; as the Audit Commission revealed, there are areas of potential economy in many of the services that the police provide, and it is in the interests of good policing as much as in those of the taxpayer for those economies to be pursued.

Sir Rhodes Boyson (Brent, North)

Undoubtedly, the measures announced by my right hon. Friend will be welcomed everywhere by the millions who will gain from them. Let me, however, raise an anomaly which is not merely financial but moral—the position of those who must pay the charge from the wages of their spouses. To my knowledge, those are the only people with no incomes who have to pay 100 per cent. This is not just a question of money; it is a moral issue, especially as our party—and, I trust, the whole House—is pro-family.

I hope that, in the long term, we shall be able to separate local and national finance-raising and local and national powers, and that we can end the continual battle between local and national Government. It is doing nothing for democracy.

Mr. Heseltine

My right hon. Friend, who is a considerable authority on the subject, will know that the more acute problems will be dealt with by the safety net of the community welfare programmes, which will help couples on lower incomes. Dealing with the principle of payment by the spouse with no individual income, however, would have required the introduction of a relief that could have benefited the spouses of extremely wealthy people. We therefore felt that it was not a priority.

Mr. William Ross (Londonderry, East)

I hesitate to intervene on what seems, on the face of it, to be solely an English debate. The right hon. Gentleman will know, however, that although Northern Ireland retains the rating system, it bears a relationship to the rateable valuation of an area in the north of England. What will be the basis for future local government finance in Northern Ireland, now that the old basis has disappeared? Can we look forward to a common system of local government finance throughout the United Kingdom in the long term?

Mr. Heseltine

It will come as no surprise to the hon. Gentleman to hear that I am not in a position to answer that question, but I know that my right hon. Friend the Secretary of State for Northern Ireland will attend to it with expedition.

Dr. Keith Hampson (Leeds, North-West)

Does my right hon. Friend realise just how dramatic an effect the help that he is providing will have on many people in high-charging Labour authorities, especially in the north, now that charges are to become actual rather than notional? I welcome the fact that the community charge is becoming even less of a flat-rate system.

Does my right hon. Friend accept, however, that many Conservative Members would like his long-term review to reduce bills dramatically—if not by half—through the transfer of the costs of the bulk of education?

Mr. Heseltine

My hon. Friend will be fully aware that I have heard his views on this subject before, but that in no way discounts the value of his contributions. His suggestion must be seen in the context of the review that we are conducting.

Mr. David Clelland (Tyne Bridge)

The Secretary of State must be aware that it will be widely recognised throughout the country that his announcement is a further vain attempt to buy votes for the Tory party using public money. It appears from his statement that he does not want to buy any votes from Newcastle upon Tyne. Contrary to his final comments, the people of Newcastle will not be able to enjoy the services that charge payers want and are faced with a £12.5 million reduction in budget as a result of his financial regime. That means the closure of homes and schools and cuts in services for which people are crying out. Will he confirm that the assumed personal community charge of £411.52 quoted in his document ignores the £1 million reduction in SSA which the document also announces, and that that means a further £5 increase in the community charge? Will he also confirm that it ignores the increase that will be necessary to allow for non-payment which could take the community charge in Newcastle to as much as £435 with an attendant reduction in services? How can that possibly be fair or even sensible?

Mr. Heseltine

There is always a demand for more services, but there is also a demand for people to pay lower bills to the central or local authority and a balance must be struck. The balance cannot be struck by licensing people not to pay the legitimate bills sent to them. I cannot accept the implication in what the hon. Gentleman said that somehow we must budget to assume that we will not collect the bills.

Mr. Richard Holt (Langbaurgh)

Will my right hon. Friend accept from one who maintains close liaison with local government throughout the country that the additional £1.2 billion that he announced today will be more than welcome? I am gratified that he has listened to my representations on behalf of those who live in low-rated accommodation, many of whom in my constituency and throughout the north of England will have substantial reductions of £100 or £150 in their community charge bills next year.

While I welcome all that my right hon. Friend has said, may I ask him to do nothing to encourage the profligate Cleveland county council to go on spending money in the way that it does, such as repainting its red fire engines with a new colour? Will my right hon. Friend encourage Cleveland county council to take on board the proposal that I put to it earlier this week—that it engages Sir John Harvey-Jones to do a management audit and save the people of Cleveland the millions of pounds that are being wasted now?

Mr. Heseltine

I know of my hon. Friend's interest and knowledge in the subject and I listened carefully to what he said. I greatly regret the fact that the community charge in Cleveland is £421; its citizens would have been better served if it had been lower. I should be the first to recognise that my hon. Friend is right that the scheme that we have announced today will lead to a significant reduction in the bills of some charge payers. I am thinking of people living in areas where the rateable values and the sums paid under the rates were low, but where there have been significant increases as a result of the change to the community charge. In many cases, such people can expect significant reductions in their bills.

Mr. John Fraser (Norwood)

Is the Secretary of State aware that my hon. Friend the Member for Vauxhall (Miss Hoey) and I are perplexed by his generosity as it affects Lambeth? A year ago the average rate per head in Lambeth was £275. This year, the poll tax, as capped, is £522 per head and next year, under his forecast, it will be £546 per head. Does he realise that we would be twice as well off if we returned to the rates?

Mr. Heseltine

The London borough of Lambeth would be twice as well off it if turned itself into a Conservative-controlled authority.

Mrs. Elizabeth Peacock (Batley and Spen)

I thank my right hon. Friend for his statement and welcome much of what he had to say. I shall go away and read the small print. Is he aware that many local authorities such as mine—Kirklees—are increasing their community charge by huge amounts and blaming it on the Government for lack of funds and grants? Will he please emphasise today to the House and the people outside the increase in money that they are to receive?

Mr. Heseltine

I know that my hon. Friend will join me and my colleagues in putting over that important case. The SSAs of Kirklees have been increased by 19 per cent. during the year which is a dramatic increase. It shows that there is an ability to provide an attractive range of services at the sort of figures that the Government have suggested will flow from the community charge. It must be an important part of my responsibility—I hope that my right hon. and hon. Friends will join me—to make much of the fact that the Government are now providing some £4 billion more in support of local government and its services than they did last year.

Mr. Andrew F. Bennett (Denton and Reddish)

Does the Secretary of State recall that many of his hon. Friends campaigned for the poll tax on the basis that it simplified local government expenditure and made it easier to understand? Does he believe that they were correct? How far do his proposals today make it simpler, and does he accept that the only thing that is simpler for my constituents to understand is the widespread hardship that has been caused, particularly to the married woman who has no income of her own and to young people on low incomes, many of whom are having to move from one set of accommodation to another fairly frequently and need their poll tax registration done regularly and their rebates varied? That is causing a major administrative burden for local authorities.

Mr. Heseltine

If the hon. Gentleman tells many of his constituents that their bills will go down next year, he will find that they understand, even if he does not.

Mr. Colin Shepherd (Hereford)

Is my right hon. Friend aware that many people will welcome the changes made to the transitional relief? In the light of their wish to be able to reach for their calculators to find out how it will affect them, when and how will he make available simple exemplifications? Hereford and Worcester county council is one of the lowest recipients of grant. Is he aware that there is a grievance in respect of the funding of its police authority, which is in the vanguard of obeying Home Office instructions to civilianise and, as a consequence, finds itself penalised on its SSA and therefore further deprived of grant? Will he reconsider that anomaly?

Mr. Heseltine

My hon. Friend should know that we will look at all these matters in the context of the budget-setting arrangements that must take place before we can reach reasonable judgments about the questions that he is putting to me. That applies particularly to the capping of authorities. The best that I can do to help my hon. Friend on the first part of his question is to say that, although we cannot produce examples of the consequences of our scheme until we know the budgets that have been set by the local authorities, we can produce examples in hypothetical circumstances from which I am sure my hon. Friend will be able to draw his own conclusions.

Mr. Geoffrey Lofthouse (Pontefract and Castleford)

I am sure that the Secretary of State is aware that the size of the fire service and police service is set by the Home Office. Is he aware that recently the chief constable of West Yorkshire said that next year there will be 500 fewer bobbies on the beat because of the lack of funds? Given his answer a short time ago about the efficiency of police authorities, is he saying that the chief constable of West Yorkshire is running an inefficient force? Does he still consider this to be a Tory tax?

Mr. Heseltine

I would make no such suggestion to the chief constable of any of the police authorities. However, as I said, police authorities have a responsibility to use their money effectively like all others—

Mr. William O'Brien (Normanton)

On police officers.

Mr. Heseltine

Yes, the hon. Gentleman has made my point. It is incumbent on the authorities to look at their other expenditure to see what economies there can be. When they have set their budgets, all those factors will be taken into account in any discussions that we have.

Mr. Richard Tracey (Surbiton)

I believe that my right hon. Friend's statement today will be read across London with interest and, no doubt when it is digested, it will be approved because of its basic fairness. Will my right hon. Friend take note of the fact that it is essential for local government finance to retain the principles of accountability and that everyone of adult age should pay a share of the cost? When he goes into his wider review, he may find that he will not need to make too many more changes to gain approval from the British public.

Mr. Heseltine

I am tempted to agree with my hon. Friend, but the substance of the advice that I get on this matter is—how can I put it?—confused.

Mr. Nigel Spearing (Newham, South)

Does the Secretary of State realise that his statement that the scheme will continue to support charges that are higher than they were under the rates is questionable? Charges in parts of London are two or three times as high as the rates. As his party is the party of the family, will he take into account the disruptive effects of the poll tax on family life and get rid of this unjust and unworkable tax?

Mr. Heseltine

I wish that the Labour party would come and talk to me about its ideas for a workable alternative. I am sure that they are as coherent and viable as the Liberal party's. If it can do so, why cannot the Labour party? The essence of the hon. Gentleman's complaint is that the community charge is significantly higher than the rates. I have introduced this scheme precisely to address that issue.

Mr. Graham Riddick (Colne Valley)

My right hon. Friend's new community charge reduction scheme will receive a warm welcome from thousands, if not millions, of people who live in low rateable value houses in the north of England. It will help many pensioners as well as other people. Will he join me in condemning my local Labour council, Kirklees, which is failing local residents by trying to levy as high a community charge as possible to score party political points against the Government?

Mr. Heseltine

I am glad that my hon. Friend has seen the virtues of the scheme so clearly and quickly. I strongly commend it. It appears that Kirklees is causing more trouble in the north than even I had realised. I am sure that he will join my hon. Friend the Member for Batley and Spen (Mrs. Peacock) in launching a formidable attack on it.

Mr. John Evans (St. Helens, North)

I wish to raise several issues about the settlement for St. Helens, but in view of your strictures, Mr. Speaker, I shall concentrate on only one. Is the Secretary of State aware that the regional burns unit at Whiston hospital in St. Helens and Knowsley health authority has been designated to receive casualties from the Gulf? Is he aware that it could cause the social services and housing departments of St. Helens authority —a capped authority—considerable problems if it is required to provide housing for the families of service men who are incarcerated in that hospital? Will he give an undertaking that if such a situation arises he will ensure that the authority's additional costs will be met in full by the Department?

Mr. Heseltine

The hon. Gentleman will know that none of us wants to see the circumstances that he described. He knows full well that if emergencies arise, they will be dealt with properly and that we shall consider their consequences. It would be wrong to hypothesise such consequences today.

Dame Elaine Kellett-Bowman (Lancaster)

My local authority believes that the all-ages social index gives far too much to profligate authorities such as Blackburn, Burnley and Preston. Nevertheless, my constituents will be delighted that the extra money will go not to spendthrift local authorities such as Lancashire county council, but directly to charge payers, helping especially those in sheltered housing and in previously low-rated authorities. It will apply to the actual charge rather than the notional charge, which took a dickens of a lot of explaining to anybody.

Mr. Heseltine

I congratulate my hon. Friend on moving with the speed of light to the heart of the matter. I hope that she will repeat her comments loudly, clearly and often in Lancashire, because the message will then be widely understood and welcomed.

Mr. Dennis Skinner (Bolsover)

Is not there something radically wrong when on 12 successive occasions Ministers have had to come to the House of Commons to announce major changes to the poll tax? Is not there something wrong when the two constituencies that I represent, wholly or in part—Bolsover and North-East Derbyshire—[Interruption.] Is not there something wrong when the two local authorities that I represent—Bolsover and North- East Derbyshire—have total revenue support grant of £66 million compared with £188 million for Westminster? If we had the same standard spending assessment as Westminster, calculated on the same basis, we would not have the poll tax and we would be giving people money back.

Mr. Heseltine

The hon. Gentleman will know that Bolsover receives £133 of safety netting. I hope that he explains to his constituents the benefits that the Government have bestowed on them, not in any way as a result of the articulate representations of their Member of Parliament.

Mr. Jim Lester (Broxtowe)

I commend my right hon. Friend for listening carefully to all the representations that have been made and for making help available where it is most needed. Many councils resent the carrying over of debts from the current year. I have considerable sympathy for those who cannot pay, who could be helped if councils were given more freedom to arrange methods of payment for them, but I condemn those who will not pay.

Mr. Heseltine

I have joined my hon. Friend many times in condemning members of local authorities or charge payers who refuse to pay. I deplore, without reservation, hon. Members who encourage non-payment, which can only have the effect of increasing the charges of those who keep within the law. I very much support my hon. Friend's comments on that. The debts of the previous period must be collected. If people continue to delay payment, there must never come a time when councils stop pursuing payment.

Mr. Harry Barnes (Derbyshire, North-East)

As the representative of the other half of North-East Derbyshire—the bigger half—may I point out to the Minister that pages 1 to 13 of the document show the standard spending assessment broken down into revenue support, poll tax and the business rate? It would help hon. Members to compare the grants for authorities if the figures were shown as percentages, for which I asked in a parliamentary question on last year's figures. It was produced, but placed in the Library. Could the figures be made readily available, perhaps in Hansard or in some document that could be collected from the Letter Board? We could than see that some of the figures that we have been given are not as precise or exact as is suggested.

Mr. Heseltine

The hon. Gentleman was obviously able to obtain the information that he required. I do not know whether other hon. Members wished to obtain the same information, but doubtless he could have made it available to them if they did. As it is apparent that the information is available, we appear to be being as helpful as is necessary in the circumstances. As part of a deal, perhaps the hon. Gentleman could be helpful by paying his poll tax.

Mr. Keith Mans (Wyre)

I welcome my right hon. Friend's statement, but to encourage accountability between different councils, particularly shire county councils, will he urgently—I have twice asked for this in the House and have been assured that it will be produced —publish a table of the full-time equivalent staff of different shire counties to enable us to know which are employing too many staff and, as a result, setting bills that are too high?

Mr. Heseltine

My hon. Friend makes an important point. When I was last in the Department, we had a joint manpower watch report which gave us detailed information. I have not checked on how it is proceeding, but, spurred on by my hon. Friend, I shall do so with dispatch.

Mr. Tony Banks (Newham, North-West)

Why does not the Secretary of State concede that, with the latest change, the Government have made a complete pig's ear of local authority finance? At successive stages, we warned the Government that that would be so. Were it not for the ghoulish shadow of Finchley lady, I am sure that the Government would abolish the poll tax altogether.

It is nonsense for the right hon. Gentleman to work on calculations that local authorities will achieve 100 per cent. collection. The borough of Newham has managed to achieve about 58 per cent. and hopes to achieve about 75 per cent. Thousands of poor Newham people are being taken through the courts by Newham borough council —people who need pay only 20 per cent.—because the Secretary of State says that debts should be collected. Is he aware of the extreme hardship that the poll tax is causing in inner-city areas of London? Does he feel any shame or place any responsibility on his own head for the misery of people being dragged through the courts in Newham and elsewhere?

Mr. Heseltine

I am tired of being lectured about the problems of the poor by a party that consists of many members who refused to pay the poll tax in the first place. If I may be frank, everyone understands that the poorest people were protected by the changes in the community charge, either by the direct benefit or by the uprating of their benefits. There were difficulties because certain local authorities—usually Labour controlled—set the community charge above the level that the Government had deemed necessary. It was that increase that the poor found difficult to pay.

Mrs. Maureen Hicks (Wolverhampton, North-East)

May I give credit where credit is due and thank my right hon. Friend for acting to protect 18 million people. Does he agree that, if local authorities—many of which, I am afraid, are Labour controlled—followed his inspiration, they could start by protecting many of our constituents? I have no doubt that many of our constituents still do not fully appreciate that they are suffering at the hands of local authorities. Those local authorities use the Government as an excuse. My right hon. Friend's action today has demonstrated otherwise. As long as local authorities such as mine continue to contribute £5,000 to funding Labour women's conferences in towns, there is no excuse for an excessive community charge.

Mr. Heseltine

My hon. Friend gave a classic example of just how profligate local Labour authorities can be in their disregard of those who pay the bills. As the figures in front of me show, by and large Labour authorities cause higher community charges. That unfailing generalisation flows out of their actions. It is fundamentally important that, rather than just clamouring for endless extra expenditure, the Labour party should try to get that deal to their charge payers.

Mr. James Pawsey (Rugby and Kenilworth)

I congratulate my right hon. Friend on announcing substantial added funding, which will be widely welcomed by community charge payers in Warwickshire. But—this is an important but—the SSA mechanism continues to be blunt, despite the ingenious ideas from my right hon. Friend's officials. Will he therefore give an undertaking that, where real injustice has been faced by a local authority, additional funding will be made available to it to underwrite that injustice?

Mr. Heseltine

I appreciate the fact that my hon. Friend has given attention to the SSAs. I have today announced the closing of the options for the settlement which we are discussing. I am the first to recognise that all these matters include an element of judgment. If my hon. Friend wishes to continue discussions with us about the SSAs for the following year, of course we will listen with the same care as we did this year.

Several Hon. Members


Mr. Speaker

Order. I shall have to draw questions to a halt and close the exchanges at 6 o'clock. I ask hon. Members to ask brief questions.

Mr. Peter Thurnham (Bolton, North-East)

Will my right hon. Friend confirm that his welcome statement gives the most benefit to those in the lowest rated properties, including pensioners and those who are disabled and on benefit? Will he have another look at the categories of disabled people to include the most severely disabled who are registered with the Department of Employment?

Mr. Heseltine

I appreciate my hon. Friend's comments. The help which we have given has been targeted as best we can within the confines of the legislation and the powers available to us. Many people in the categories that my hon. Friend defined will be helped, but I should be irresponsible if I were to promise to go further in this settlement.

Mr. John Greenway (Ryedale)

My right hon. Friend is to be congratulated on the extra money that he makes available. He is entirely right to direct it at those who have had the largest increase in their payments to local government. However, I wish that I could be so congratulatory about his announcement about the SSAs. I understand the difficulty that he faces for the current year. Does he accept, however, that the present formula creates considerable injustices and discrepancies between authorities? It cannot be right that there is a difference of over 25 per cent. in the SSAs for the Hambleton and Ryedale districts in my constituency, yet, by any practical judgment, their needs are precisely the same.

Mr. Heseltine

I know how my hon. Friend feels on this matter. He has talked at length to my colleagues in the Department of the Environment. If I represented his constituents, I should probably argue his case. If he sat in my seat, he would know that the one characteristic of all SSAs is that all local authorities feel that SSAs disadvantage them and they believe that they should be adjusted, usually to give more benefit to the local authority arguing the case.

Mr. James Couchman (Gillingham)

My right hon. Friend's statement will be welcomed by the thousands of people who live in small terraced houses in my constituency and who feel that they were cheated by the previous transitional arrangements. My question concerns the payment of aggregate external finance funding. My right hon. Friend's Department recently produced a scheme to end-load rather than front-load the payment of this money to councils. Although it has been modified, it still has a distinct disadvantage, particularly for those efficient councils that collect their community charge. Will my right hon. Friend look again at that point?

Mr. Heseltine

I cannot look at that matter again in the year to come. I recognise that there has been a change which local authorities will not find as comfortable as they would have liked because the scheme that we introduced for the present year was more generous, to reflect the fact that this was a transitional year. We have now reverted to a more orthodox distribution pattern. Of course, local authorities or my hon. Friend and other colleagues may make representations, and we can look at the matter in the longer term, but I should be irresponsible if I suggested that I can reopen it for the next settlement.

Mr. James Paice (Cambridgeshire, South-East)

Will my right hon. Friend confirm that the proposed changes to the standard charges announced by his predecessor will remain? That will end the blatant exploitation of the standard charge system by many local authorities. Will he look again at the de minimis rule for the smaller authorities with regard to charge capping? Many have been among the worst in terms of increasing their expenditure but, because their expenditure is less than £15 million, they are escaping his capping powers.

Mr. Heseltine

I am afraid that I must disappoint my hon. Friend on his latter point about the de minimis rule. I cannot keep open the settlement with which we are now dealing. I am fully aware of this flexibility in the present arrangements, but expenditure by the authorities concerned amounts to only 15 per cent. of total local government expenditure. We decided that we would leave that outside the rigours of the capping regime. Many of the councillors concerned are up for election this year. I hope that those who want to deliver the best value for money will have a clear regard for those people on whose votes their re-election is determined. I can confirm that the SSA arrangements which we have made will be those that are in place for this settlement.

Mr. David Nicholson (Taunton)

Does my right hon. Friend agree that his statement does not release local authorities from their duty to restrain their spending and ensure that this year's community charge is collected? In both respects, the local authorities in my constituency have a sound record. Should not my right hon. Friend be congratulated on the way in which he has sensibly targeted the extra money which he obtained for this year, but is he aware from questions asked by several of my hon. Friends that there is ample scope for further reform in the SSA system and in the structure and incidence of the community charge?

Mr. Heseltine

I very much agree with my hon. Friend that there is scope for reform in the system of local government finance. I have never known a period in British history when there was not scope for reform. It exists as much today as in the past. I entirely agree with my hon. Friend about the duty to collect and the duty to contain expenditure.

I referred to the 18 million people who will receive benefit under the new regime. It is fair to say that a significant number of people will not receive benefit and therefore will have to face any unnecessarily large increases in the community charge that authorities decide to impose. I dare say that those people will decide to react with whatever force they can in the circumstances.

Sir Hal Miller (Bromsgrove)

Will my right hon. Friend accept my thanks for the assistance that he has targeted towards those on transitional relief, putting it on a factual basis? Does he accept that there is a continuing feeling among shire districts that the settlement has been skewed against them once more? For example, in Bromsgrove, the settlement reduction this year offsets the reduction in the safety net contribution. The position is made worse for Conservative council candidates by the publication, yet again, of a purely notional figure in annexe B which cannot be achieved.

Mr. Heseltine

In his observations, my hon. Friend may want to take into account the fact that the shire districts have the highest increase in standard spending assessment as a result of these proposals. If one introduces a safety net temporarily and then phases it out, there will be consequences. The alternative is to leave it there and, therefore, to leave in place an anomaly in the system which was never intended.

Mr. Ken Hargreaves (Hyndburn)

I am one of the few hon. Members of this House who do not have a GCE in mathematics, so I ask my hon. Friend for help. Can he confirm that my figures are right? Will a couple in Hyndburn, who paid rates of £180 two years ago and have this year paid £630 in community charge, pay next year under the settlement £404 in total, even if the county council does as it has threatened and increases the community charge to £400 a head? If that is so, that is good news and will be welcomed by the people in Hyndburn.

Mr. Heseltine

My hon. Friend will forgive me if I do not put my signature to his calculations. However, in using a broad brush, he must be in the right ball-park.

Mr. Jacques Arnold (Gravesham)

In briefing himself on the facts of the community charges levied this year, has my right hon. Friend noted that if one strips out the pluses and minuses of the safety net, and the levies and contributions that individuals have paid, which distort the relative community charges between councils, one will find that there is a difference of £107 between the community charge levied by the average Labour council and that levied by the average Conservative council?

Mr. Heseltine

As so often, my hon. Friend is ahead of the field. He seems to be striking a chord that is not far away from the figures that I should expect to hear. It is one of those curiosities that I have in front of me the figure for Conservative counties and districts, and for those with a combination of control, which, after taking away the safety net, is £317 on average. The equivalent figure for Labour is £408.

Mr. Anthony Coombs (Wyre Forest)

I welcome the improved community charge scheme which will give assistance to those who live in houses with a low rateable value, especially in areas such as mine in which the district council insists on spending 35 per cent. above its SSA. However, may I raise the problem of people who live in permanent caravans on what are primarily non-residential caravan sites, where it is difficult to calculate the rateable value? Under the present scheme, they do not receive transitional allowance. They are entitled to the allowance by virtue of their income, but the problem is that they live in a primarily non-residential caravan scheme and do not, therefore, receive the transitional allowance.

Mr. Heseltine

Frankly, I do not have the answer to my hon. Friend's question, but I will write to him with the details.

Sir Peter Emery (Honiton)


Mr. Speaker

Order. This is the second time today on which the hon. Member for Honiton (Sir P. Emery) has risen at the end. If he has a question, I will call him, although I said that I would bring the questions to an end at 6 pm. I do not know whether he heard me.

Sir Peter Emery

Thank you, Mr. Speaker. I am quite willing to sit to the end and not to rise every time so that others may get in first. I see nothing wrong with that.

Does my right hon. Friend realise that there are few Ministers who could take office and, within seven weeks, get £1.2 billion out of the Treasury? That is a remarkable achievement. How can my right hon. Friend ensure that local authorities will not use the extra benefit—which will go, supposedly, to the poll tax payer—to increase their own spending? That is the great worry and I am not reassured by what my right hon. Friend said that that will not happen.

Mr. Heseltine

I am grateful for my hon. Friend's first observations, although I am not sure that they will be welcomed in all parts of the Government. If we think about our announcement today, we realise that the money is going to individuals and is not directed to helping levels of expenditure. For far and away the bulk of authorities, the levels of expenditure are subject to the capping regimes which will not be affected by the new grants that we have described today.

Mr. David Blunkett (Sheffield, Brightside)

If a Labour Secretary of State had made the announcement that the right hon. Gentleman has made this afternoon, which involves gerrymandering poll tax bills to save seats, there would have been an outcry from the press and from the Tory party. The money, which is welcome, should be used to meet need and to protect services.

I hope that the Secretary of State can confirm that total standard spending will be up by only 7.1 per cent.—TSS is crucial for the year-on-year comparison. From where is the new money coming? Is it coming from inside the Department and from cuts elsewhere, in the light of the statement by the Chancellor of the Exchequer a week last Sunday about public expenditure curtailment, or is it coming from other departmental cuts in other budgets? In the statement, it was said that the revenue support grant will remain at 1.9 per cent. up. The statement is not about revenue support; it is a smokescreen for the failure of the poll tax.

I have two simple questions for the Secretary of State. First, would not it be cheaper to bring back the rates rather than to try to compare poll tax bills with the rates and then to find extra money to try to bring them into a comparative position? Secondly, will the right hon. Gentleman explain the scheme announced this afternoon? What is the basis of the new scheme? Will he confirm that his statement about 18 million beneficiaries may turn out to be nonsense, not simply because anyone who moves—the Audit Commission says that 40 per cent. of people in inner-city areas move in any one year—will no longer be entitled to the relief, but because we need to know whether the Secretary of State has invented a new notional poll tax? Is he inventing a new notional figure by which he will compare the old rates with his new figure? Is not it a fact that if authorities exceed that new notional figure—which we have yet to see—individuals will be disqualified from entitlement to the full relief that has been announced today?

Mr. Heseltine

There is no point in trying to argue with the hon. Gentleman about whether we substitute a wholly different system for the community charge this year. He and I know that those options are not within the wildest dreams of parliamentary possibility. The only issue is what we should do about the settlement this year, which we have explained.

The House will have understood clearly what I announced in my new regime. It is clear that people who live in houses that were of low rateable value will take the figures that they paid under the last year of the rates as the base point. They will receive a relief which will limit their maximum payment to £104—£2 a week more. They will then add the difference between this year's community charge and next year's community charge, which will be the maximum that they can pay. In other words, the basis of the relief scheme focuses on the actual level of the community charge in the current year.

Mr. Gould

The notional level.

Mr. Heseltine

No, it focuses on the actual charge this year—not on the charge that will be set—when compared with the last year of the rates as adjusted for the safety net. In that case, one will find that a significant number of people will get a grant to reduce the level of community charge that they pay next year as a consequence of what we have introduced. The best advice that is available to me is that something in the ball-park of 18 million people will be beneficiaries from what I have announced today.