Council Tax (Hansard, 10 July 1991)

§ 15. Mr. Burns
To ask the Secretary of State for the Environment what recent representations he has received on the proposed council tax; and if he will make a statement.

§ Mr. Portillo
The Department has received some 750 responses to the recent consultation paper on the council tax, most of which welcome the new tax in principle. These responses are now being considered.

§ Mr. Burns
I am grateful to my hon. Friend. Does he agree that the overwhelming response, made not only to his Department but made as he travels around the country, is in support of the proposed council tax? Has my hon. Friend been overwhelmed by any clamour for a return to the discredited old rating system, which is what the Labour party proposes?

§ Mr. Portillo
Most certainly I am not aware of anyone except the Labour party who wants to go back to the rating system. It would be bad enough if the Labour party merely proposed a return to the rating system, but it proposes a bureaucratic nightmare in which each property would have to be revalued four times over. What little chance people had of understanding the rating system would be blown apart by an even more complicated system. One suspects that the Labour party has struggiled to design a system that the public cannot possibly understand because it hopes in that way to avoid the electoral consequences of proposing such an absurd tax.

§ Mr. Gould
What calculation has the Minister made of the impact on the likely level of the council tax and, indeed, the level of the poll tax in the intervening period, of the failure of the Bank of Credit and Commerce International? Does not the fact that many local authorities now face the prospect of serious loss mean that millions of poll tax payers will suffer as a consequence of the regulatory failure over which the Government have presided? Is not it typical that the Government should now be trying to blame local authorities when they have done no more than act in accordance with the list prepared by the Bank of England and sent out by the Minister's Department to every local authority? That revised list was published and sent out on 21 June and it clearly includes the name of BCCI. Why will not the Minister face up to the part that he has played and the responsibility that his Department must bear in this whole unhappy episode?

§ Mr. Portillo
First, it is not possible to make any estimate of what anybody has lost, because we do not know. We have no idea of the outcome of this particular bank crash for any local authority. On the question of responsibility, I must say that it might be reasonable to argue that an average person might not realise that an authorised institution, which is accredited under the Banking Act 1987, might crash. However, for local authority treasurers to say that they did not understand the difference between some sort of guarantee—that is now being claimed—and the fact that BCCI happened to be an authorised institution under the Banking Act 1987 is astounding.
The Government are not avoiding any of their responsibilities in this regard, but I fear that some local authority treasurers are trying to imply that the fact that an institution is authorised under the Banking Act gives them some escape from their duty to take due care as to where they invest their funds.

§ Mr. Anthony Coombs
Can my hon. Friend confirm that the new council tax will, rightly, have reserve rate-capping powers? In that context will he bear in mind the appalling position of the Labour-controlled Wyre Forest district council, which at present is not only spending 58 per cent. above its standard spending assessment, but has such a bloated recreation programme that one museum is subsidised to the extent of £7 per visit? 949 Given that that council is proposing this year to increase its expenditure again by 18 per cent. will my hon. Friend invoke his rate-capping powers against that council as quickly as possible?

§ Mr. Portillo
What my hon. Friend tells me appals and worries me very much. What I think will worry my hon. Friend's constituents when the election comes around is that the Labour party will campaign on there being no restraint whatever on local authority spending or on the bills that will be charged to local people. I believe that that Labour party proposal will be deeply unpopular with the electorate.

§ 16. Mr. Eastham
To ask the Secretary of State for the Environment how he intends to distribute the income from the non-domestic rates under the new council tax; and if he will make a statement.

§ Mr. Portillo
We are currently considering the options, and will make clear our conclusions in due course.

§ Mr. Eastham
Is it not a fact that the whole position regarding local taxes is becoming a complete dog's dinner? Will the Minister apply himself to the question of non-domestic ratepayers, who could account for between 25 and 26 per cent. of the bill of local authorities?
What provision will the Minister make for the hundreds of millions of pounds that may be collected from those who may not be on a local authority register but who are still subject to that authority acting responsibly to make provision for their businesses?

§ Mr. Portillo
I hope that I can be helpful to the hon. Gentleman. We are not proposing changes to the national non-domestic rate system in general and we have made that perfectly clear in our consultation document. The hon. Gentleman asked about the means by which the income from non-domestic rates would he distributed between local authorities. That is a complicated and technical matter and it would be worth while to spend some time thinking the implications through before making any announcement.

§ Mr. Ian Bruce
Will my hon. Friend think again about the way in which non-domestic rates' income is no longer 950 linked to the local authority area. Many of my local business men, particularly in the hotel sector and the leisure industry, would like to think that their business rates will pay the high costs that their local authority must face to subsidise and supply the facilities for people coming on holiday to the wonderful beaches of Weymouth, Swanage and other resorts in Dorset.

§ Mr. Portillo
I understand that some business men would like a strong linkage between themselves and local authorities, and that might be provided by the tax base. Business in general welcomes enormously the fact that business rates increase from year to year by only the rate of inflation and not by the rate at which local authorities increase their spending. That means that, in the first year of the uniform business rate, business paid £1 billion less than it would have done under the old system.