Local Government Finance and Valuation Bill

HC Deb 03 June 1991 vol 192 cc54-119

Order for Second Reading read.

Mr. Speaker

In view of the late start, I appeal to Front and Back-Bench Members to make brief contributions.

5.32 pm

The Secretary of State for the Environment (Mr. Michael Heseltine)

I beg to move, That the Bill be now read a Second time.

I ask for the indulgence of the House to excuse me from my place during the wind-up debate for reasons that I have conveyed to the official Opposition spokesman.

This is a short Bill, but it has two important intentions. First, it is designed to strengthen our capping powers for 1992–93 so that we can ensure that all charge payers have the protection that they rightly expect against excessive local authority budgeting in the run-up to the new council tax. Secondly, the Bill provides the powers needed for the banding of domestic properties, which is the first essential step towards our objective of introducing the council tax from 1 April 1993.

The House will know that the Government already have powers to cap the expenditure of individual authorities where the budget of an authority exceeds £15 million. The original proposals assumed that a de minimis exemption of that sort would be appropriate.

There are two issues involved, and I intend to confront them at once. The first concerns the desirability of capping at all. The second raises the need to extend the provisions to all authorities. We are addressing only the second of these issues this afternoon, but it is worth rehearsing the arguments for the wider restraint as well as the narrower and new proposals.

I make no secret of my view that the most desirable arrangements would be those that relied on unfettered local accountability—I have said so many times—but such a system must be compatible with the responsibility of the Government for the overall management of the economy. Indeed, it must also be compatible with the Government's duty to protect citizens from the consequences of high spending authorities.

Mr. Robert Adley (Christchurch)

I am sorry to intervene so early in my right hon. Friend's speech, but I am sure that he will understand why. Since 1972, I have had the gravest reservations about a Conservative Government introducing legislation that begins with the words "local government". Is he aware that East Dorset district council in my constituency, with which I discussed the Bill on Friday afternoon, is a small, well run local authority which does not qualify for any of the criticisms which have rightly been made against other authorities? The council's problem is the standard spending assessment. Will my right hon. Friend assure me that, before we get to the figures for next year, he will at least allow me the opportunity to discuss with him the SSA as it affects East Dorset?

Mr. Heseltine

I am grateful to my hon. Friend. I appreciate his strictures about local government finance legislation. I hope that there is nothing personal in his observation, because I think that I have been personally associated with every one of the measures about which he is so concerned. I know how ardently he represents his constituents' interests, and I would always be prepared to talk to him about any matters that he wished to raise. The issue of SSAs is always a matter of controversy, because almost every authority feels that it does not get the most advantageous arrangements to suit it. However, whenever changes are made, someone wins and someone loses. It is our responsibility to consider these issues every year in the light of whatever information is available to us. My hon. Friend has my assurance that I shall talk to him about his concerns.

As I said, the ideal arrangement would be to leave accountability in the hands of local authorities, but that would have to be under a regime where the system was compatible with the Government's responsibility for the overall management of the economy. I learned those lessons when I listened to the right hon. Member for Bethnal Green and Stepney (Mr. Shore)—my predecessor in the 1970s—to take firm action to limit the expenditure of local authorities on current account for the first time since the war. There is no dispute in practice between the Government and the Opposition except when the Labour party finds itself in opposition.

Mr. David Blunkett (Sheffield, Brightside)

The Secretary of State will recall that the actions taken in the late 1970s related to the ceiling placed on the amount of central Government revenue at the disposal of local government, not to the raising and spending of local revenue within a local community. I should be grateful if he would tell me which macro-economic law or which economist—Friedmanite or otherwise—has ever suggested that the raising of revenue locally and the expenditure incurred locally has any macro-economic impact on central Government overall fiscal policy.

Mr. Heseltine

It is interesting that the hon. Gentleman should raise such profound questions, as they did not seem to preoccupy his party when it was in office. Although, as he said, it certainly took powers to restrain the overall level of current account spending, where it had more specific powers on the capital programmes for housing and for water, it took direct decisions to reduce those capital programmes year after year.

The conditions to which both parties are attracted when in power can be met only if authorities budget within the broad guidelines set by national Government. The facts, unfortunately, speak for themselves. The Government had the highest hopes that increased accountability would lead to sensible and prudent budgeting by all local authorities. It is a disappointment that, in the event, that has not proved to be the case. It is a disappointment that some authorities have not chosen to budget responsibly. We are prepared to face the facts, however unpalatable. It gives me no pleasure to say that on the evidence, I am satisfied that strong capping powers are an essential aspect of any local government finance system.

What is the evidence? In England in 1990–91, authorities used the change to the new system as a smokescreen to hide vastly increased expenditure. In that year, spending rose by 13.5 per cent. and over the two-year period to April 1991, spending rose by more than one quarter. Such massive and unjustifiable increases could not be allowed to continue.

Mr. Christopher Gill (Ludlow)

Will my right hon. Friend accept that, as long as we perpetuate the system by which central Government effectively subsidise local government to such an extent, the means by which local government will become prudent are eroded? One will have true economy and thrift in local government only when local councillors have to raise locally £1 for every 100p they spend. The further that one gets away from that concept, the more remote is the prospect of true economy and thrift in local authorities.

Mr. Heseltine

My hon. Friend makes an interesting suggestion. However, if one were to examine the resources of some of the more hard-pressed authorities and their undeniable needs, it would be difficult to see how to square 100 per cent. of expenditure with 100 per cent. of local revenue. The Government take the view that there is a balance to be struck. We have changed the incidence of the balance very much for the better through my right hon. Friend the Chancellor's Budget, but it is very much the Government's view that it is appropriate that local authorities should have some revenue-raising capacity of their own.

We saw substantial increases. Expenditure rose by more than one quarter in the two-year period to April 1991. For 1991–92, we acted and used our capping powers to achieve as much as possible by deterrence and as little as possible by capping. We told the authorities the capping criteria that we intended to use before they made their budget judgments and the results speak for themselves. In contrast to the previous year, English local authorities' spending is within 0.5 per cent. above the amount that we provided in our settlement. Of 39 county councils, 37 budgeted below the intended criteria. Of the 36 metropolitan districts, 35 budgeted below the intended criteria. Of the 33 London boroughs, 31 budgeted below the intended criteria. It is for those reasons that we have made it clear that we do not intend to be caught again. We intend under the new council tax to have strong and effective capping powers appropriate to the new system.

As the whole House knows, in the circumstances that I have described, our capping powers were not comprehensive. We could not cap authorities budgeting below £15 million however excessively such authorities might be budgeting. We were unable, for example, to protect the charge payers of Derwentside, a council whose overspending added £95 to the local community charge. We could not protect the charge payers of Harlow, where the council's excessive budgeting added £83 to the charge.

Ms. Hilary Armstrong (Durham, North-West)

Does the Secretary of State remember the words of other Ministers about the good work of Derwentside in ensuring that it contributed to the regeneration of the area following the closure of the steelworks at Consett 10 years ago? Without the substantial contribution of the local authority, no money from Europe, from central Government or from the private sector would have been available.

Mr. Heseltine

The hon. Lady misses the point. Many authorities with SSAs broadly in line with that of Derwentside are perfectly able to come either below or very close to the level of the SSA. All local authorities have individual cases to plead. The fact is that varying circumstances can be used to generalise in each case to show that it is perfectly possible for local authorities prudently to deliver an adequate service at the SSA levels set by the Government.

Sir Geoffrey Johnson Smith (Wealden)

My right hon. Friend referred to small spending authorities. Wealden district council is a small and prudent spending authority. Does my right hon. Friend agree that there is some concern among such authorities about the effect of the Government's capping proposals? A small spending authority, such as Wealden, can find that, for reasons completely beyond its control—one-off spending, for example, because of Government legislation which imposes considerable public spending increases and may only be for a year or two—it is included, because of the percentage increase, in the capping arrangements. That is unfair for councils that have a prudent record and which are capped because of a one-off item of expenditure.

Mr. Heseltine

I fully understand the point that my hon. Friend makes so eloquently. However, he will know that the capping mechanism is immensely sensitive. First, authorities know in advance the standards that the Government have laid down. Secondly, they can make representations and thirdly, they have an appeal to the Secretary of State. Exceptional circumstances are very much considered in any Government action— —

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

Including Wandsworth?

Mr. Heseltine

Wandsworth does not need exceptional circumstances consideration. It is a thoroughly well-run authority.

As I have made clear, the existence of the £15 million de minimis rule left a number of authorities able to add significantly to the community charge level in their area without the Government being able to protect charge payers. Indeed, almost 40 authorities in England with budgets below £15 million this year overspent their SSA by £26 per adult and more, which translates directly into an extra £26 or more on the charge. Yet we could do nothing under current statute. We could not step in to protect local people from the consequences of that excessive spending.

There were clear examples of authorities deliberately setting the budget at a point marginally below £15 million to keep out of the capping regime. Thurrock and Maidstone are examples. It may have been a coincidence —although I find that difficult to believe—that put £50 on the bills of the people of Thurrock and £32 on the bills of local people in Maidstone.

As my hon. Friends the Members for Christchurch (Mr. Adley) and for Wealden (Sir G. Johnson Smith) have pointed out, many small authorities are economical and prudent, and I do not have the slightest doubt that they will remain so. They have nothing to fear from the Bill. Authorities that keep to prudent levels of expenditure will enjoy the full benefit of adequate service delivery with reasonable charges. However, the House will realise that the two new and related arguments that we now have give anurgency to the actions that we propose.

Mr. Tam Dalyell (Linlithgow)

Although I recognise that this matter is the responsibility not of the Secretary of State, but of the Scottish Office, may I ask for an explanation from the hon. Member for Eastwood (Mr. Stewart), the Parliamentary Under-Secretary of State for Scotland, when he winds up the debate, about why the prudent authority in Lothian, which spends markedly less than Dumfries and Galloway, the authority of the Secretary of State for Scotland—we should consider every criterion of fairness and rectitude—should be punished in an uncalled for, vindictive and devastating way? May we have an explanation about Lothian?

Mr. Heseltine

?: I can produce instant satisfaction for the hon. Gentleman. He will be given the most eloquent and intellectually coherent explanation when my hon. Friend the Under-Secretary of State for Scotland winds up the debate this evening.

The House will realise that two new and related arguments give urgency to the action that we are discussing this afternoon. My right hon. Friend the Chancellor of the Exchequer has provided substantial help for charge payers this year. As a result, the contribution of local taxation to the funding of local government spending in Great Britain has fallen from 25 per cent. in 1990–91 to 14 per cent. for 1991–92.

My right hon. Friend the Chancellor has also set out our determination to maintain the new and lower proportion of locally raised contribution. It is apparent that the new arrangements lead to a particularly high gearing for overspending. Every 1 per cent. of overspending is equivalent on average to 7 per cent. on charges. Hon. Members could say that that will be its own deterrent. But my right hon. Friend's generosity undermines that argument. He has enabled local authorities to reduce their headline community charge by £140. It would be folly indeed to allow authorities to erode this benefit for so many people by overspending.

This year our legislation ensured that the extra money went straight to the charge payers themselves because we waited until local authorities had set their budgets before we announced the new scheme. But that option is not open for us for the coming year. We must therefore anticipate the risk that the Chancellor's generosity might be frittered away. To prevent that is the purpose of the first part of this legislation. It is for those reasons that we seek to strengthen our capping powers next year by bringing authorities which budget below £15 million into the scope of capping, and by bringing the powers to cap Scottish authorities into line with the more extensive powers which are available in England and Wales.

Mrs. Maria Fyfe (Glasgow, Maryhill)

Would the Secretary of State care to tell the House which Scottish local authorities he considers to be extravagant and to spend too much of poll tax payers' money?

Mr. Heseltine

My right hon. Friend the Secretary of State for Scotland has been eloquent on that subject on many occasions. I have not the slightest doubt that I do not need to add to the graphic descriptions that he has provided. However, if the hon. Lady persists in her questioning, my hon. Friend the Under-Secretary of State will give a most coherent answer and specify a long list of such authorities when he replies to the debate.

I turn now to the provisions of the Bill. Clause 1 will remove the £15 million—

Mr. Dick Douglas (Dunfermline, West)

On a point of order, Mr. Deputy Speaker. I apologise for interrupting, but I am extremely intrigued about how the Secretary of State for the Environment will discuss in detail a Bill which has seven clauses, only two of which apply specifically to England and Wales, three of which apply specifically to Scotland and two of which are shared. How can he entertain the House with a graphic description of the detail of the Bill when he persists in telling us that all questions about Scotland will be deferred until the reply to the debate?

Mr. Deputy Speaker (Mr. Harold Walker)

That is not a point of order.

Mr. Heseltine

If the hon. Gentleman will contain himself, I shall answer his question specifically. The first answer is on clause 2 which deals with Scotland and will bring the Scottish capping powers into line with those in England and Wales. Experience has shown that the existing powers have proved inadequate given local authorities' lack of regard for the interests of their charge payers. Yet under the present legislation, my right hon. Friend the Secretary of State for Scotland has taken action against only one authority. That authority has been referred to already. It is Lothian regional council. My right hon. Friend took action against only one authority notwithstanding that Scottish authorities chose to increase their charges by an average of 30 per cent. That outrageous increase was despite a very fair grant settlement of 10.4 per cent. which should have enabled local authorities to keep charges at reasonable levels.

Clause 2 will amend the Scottish capping powers, thus enabling my right hon. Friend to take capping action where he is satisfied that an authority's planned expenditure is excessive or that there is an excessive increase in such planned expenditure compared with the previous year. With these amendments for the first time my right hon. Friend will be able to take action against excessive increases in budgets. My right hon. Friend will also for the first time be able to set out the principles or criteria by reference to which he will take his capping decisions.

Mr. Donald Dewar (Glasgow, Garscadden)

The Secretary of State says that, for the first time, the Secretary of State for Scotland will be able to take action against excessive increases in budgets. Will he explain why that was not possible under section 5 of the Local Government (Scotland) Act 1966? The Secretary of State has smoothly referred to the increase in the community charge, but will he tell us the increase in local authority expenditure in the same period?

Mr. Heseltine

I do not remember any 1966 Act. I thought that the position was clear and that the Labour party had not introduced specific capping measures. Any measures that we introduced must have come in the 1980s and I was not asked questions about them.

Mr. Douglas

Will the Secretary of State give way?

Mr. Heseltine

No. I have given way to the hon. Gentleman before.

Mr. Dewar

I am sure that the Secretary of State will remember that the foundation legislation in which powers to take action against excessive and unreasonable expenditure are taken is section 5 of the 1966 Act. Of course, that Act has been amended many times. I ask the Secretary of State to explain the exact change in terms of the excessive expenditure of a threatened authority. Will he also answer the other question? When he says that excessive increases in expenditure are important, will he give the excessive increase last year in the expenditure of Scottish local authorities?

Mr. Heseltine

I have given the figures for the increased expenditure of local authorities and the effect on their charges. In our view, it was excessive and unacceptable. For that reason, my right hon. Friend the Secretary of State for Scotland has decided to bring the powers in Scotland into line with the powers in England.

The hon. Gentleman asked me about the position that arises out of the 1966 legislation. However, the capping provisions were introduced under this Government some 20 years later. So it is not realistic to think that the Labour Government in 1966 ever sought to constrain Scottish local authorities under the type of legislative controls that we are discussing. If they did—[Interruption.] I do not know what the fuss is about, or why the Labour party constantly carps about what we are doing. I hope that the Labour party will vote with my hon. Friends and me in the Lobby because apparently we have reached unanimity about the need to cap Scottish local authorities.

This Bill therefore, if approved, will strengthen our capping powers for 1992–93. It is our intention, as this year, to announce in advance the capping criteria that we intend to adopt. We are seeking rapid enactment of this measure so that our capping powers are clear before we come to make that announcement in the autumn and before authorities come to consider their budgets. All authorities will know before they take their budget decisions what are our intentions for capping. Neither my right hon. Friends nor I are seeking next year to cap large numbers of authorities. It is our hope that authorities will choose to budget sensibly. But let there be no doubt that we shall not hesitate to cap any authority which budgets excessively or budgets for an excessive increase and thus burdens its charge payers. With our new powers, if this Bill is approved, charge payers everywhere will have the protection which they have the right to expect.

Clauses 3 to 6 of the Bill deal with valuation and are the first step towards our objective of introducing a council tax from 1 April 1993. We published our consultation paper on the new council tax to replace the community charge on 23 April. I told the House that there would be no need for precise valuations of every house or flat for the council tax.

Dr. Norman A. Godman (Greenock and Port Glasgow)

Will the Secretary of State give way?

Mr. Heseltine

If the hon. Gentleman will forgive me, we are short of time and I must get on with this section of my speech.

Instead, our plans for the council tax involved allocating properties to one of seven broad bands. The Bill provides the necessary powers. I remind the House that under the scheme that we have proposed, people in the lowest band of property will pay two thirds of those in a property in the middle band in the area. People in a highest band property will pay two thirds more than those in the middle band in the area. That means that, in each case, a household in a highest band property will pay two and a half times as much as one in the lowest band.

We are committed to avoiding the very high bills which discredited the rates.

Dr. Godman

Will the Secretary of State give way?

Mr. Heseltine

No.

This year, on the assumptions that we set out, a council in England which spent at the standard level— —

Dr. Godman

With his usual courtesy, will the Secretary of State give way?

Mr. Deputy Speaker

Order.

Mr. Heseltine

A council which spent at the standard level would have charged a household of two or more people in a top band property no more than £668 and such a household in a lowest band home no more than £267.

Dr. Godman

I am grateful to the Secretary of State. Clause 3 deals with the assessment by local assessors of the value of domestic properties in Scotland. Does the Secretary of State intend to say anything about a right of appeal? Will such a right be part of the extant Scottish legal system or will an independent appeals tribunal be created in Scotland?

Mr. Heseltine

The hon. Gentleman raises an important point. There will be a right of appeal. As the hon. Gentleman knows, assessors in Scotland come within the local government system, which is different from the arrangements for England. The Bill contains special arrangements to deal with that contingency and, particularly, to make grants available to local authorities in Scotland to meet the additional expenditure involved.

There are specific provisions for Scotland, and certainly there will be a right of appeal in Scotland as there will be in England and Wales.

Mr. Dewar

I am sure that that will be a matter of discussion later in the debate, but the right hon. Gentleman will know that there has been much curiosity in Scotland about clause 5(3) which states: A local assessor shall comply with such directions as may be given by the Commissioners of Inland Revenue. In Scotland, the assessor has always been an independent authority, and I am anxious to know what those directions might be.

Mr. Heseltine

That is an important point; there should be parity of valuation in Scotland, England and Wales. It is our intention for the Inland Revenue to mastermind the valuation exercise, using assessors in Scotland. It is important that it should be possible for the Inland Revenue to give appropriate directives so that the Scottish valuations are in line with those in England and Wales. That is the purpose of the exercise.

Mr. Tony Marlow (Northampton, North)

My right hon. Friend will remember that when we debated the community charge legislation a lot of his hon. Friends supported it on the basis that we thought it would be introduced at a relatively low level. In the event, it came in 50 or 60 per cent. higher than we anticipated.

My right hon. Friend has just said that, on his calculations, when the council tax is introduced—bearing in mind the fact that people spend according to needs and are effective and efficient in their use of resources—the tax levels reached will be acceptable to his hon. Friends. Will my right hon. Friend say how confident he is that the council tax will be restricted to those levels?

Mr. Heseltine

My hon. Friend will want to join me with enthusiasm in the Lobby tonight. It is precisely because we do not want to get caught again that we now have comprehensive capping arrangements to prevent the Labour party from frittering away the benefits that the Chancellor of the Exchequer has made available in his recent Budget.

Taken together with the personal discount, this year households with one adult would have paid no more than £501 in the top band and no more than £200 in the lowest band. People on low incomes will receive rebates in addition to any discounts to which they are entitled and there will be no minimum contribution to the council tax. It will be seen, and it has already been seen by public opinion, as a fair tax and much to be welcomed.

Mr. Barry Field (Isle of Wight)

Does my right hon. Friend not think that there is a logical case for introducing the council tax at the same time as local government reform or for bringing local government reform forward to coincide with the introduction of the council tax in those areas which have already had the benefit of a Boundaries Commission recommendation? Will he confirm that the discretion on the 50 per cent. reduction rebate for second homes will remain with local authorities and not be taken by central Government? I was robust in ensuring that all my second-home owners paid a full charge and were not subsidised by the local community. Will he also confirm that 100 per cent. rebates will be available when necessary because that has been a particular problem with the community charge?

Mr. Heseltine

My hon. Friend has asked a number of questions. We have made it clear that there will be a comprehensive rebate system and that there will not be a minimum assumption as under the community charge arrangements. Our arrangements for empty properties have also been made clear. They will be subject to two personal discounts, and that will be a standard arrangement across the country and without discretion.

My hon. Friend also asked about the possibility of phasing in the new council tax. I do not think that that would be practical or, frankly, desirable. I believe that people want to see the council tax in place at the earliest possible opportunity, which we believe to be 1993. The phasing of the structural changes to local government will start in 1994 and will follow on from that. It would not be appropriate to wait for that to coincide with financial changes and there would be a great deal of pressure on us to introduce the community charge replacement scheme in 1993 as we intend.

Mr. Adley

I am sorry to interrupt my right hon. Friend again. It sounds as though there will be a perpetual motion of changes to local government finance and local government boundaries. That causes some concern.

The Association of District Councils seems to be encouraging chief executives to tell their Members of Parliament that, whatever the Government's intentions, there will be a need to establish a register for the council tax. Will my right hon. Friend disabuse us of that proposition? Will he say a little more about how rebates can be claimed? Will he do his best to ensure that that information is disseminated as widely as possible? How will he go about that?

Mr. Heseltine

My hon. Friend will understand that they are matters for the principal legislation, which will be introduced in the autumn. When I made my first announcement to the House, I made it clear that we did not see the need for a register to make the system workable. One of the attractions of a broad banding system is to avoid the need for a register. I believe that that was widely welcomed when I made that announcement.

Details on the specific nature of the rebate system will be announced in good time for people to understand them and to make comments on them as we move towards legislation. They are not covered by the narrow and specific Bill that we are debating today.

The provisions in the Bill will enable progress to be made as soon as possible towards the new system we decide upon after considering the suggestions put to us during consultation. The provisions are enabling provisions covering two crucial aspects of preparation for a new property-based council tax.

First, they provide the power for the allocation of domestic properties to bands to be carried out—that is a power to prescribe principles for the exercise in regulations. Secondly, they ensure access to the information needed to ensure that the allocation is soundly based. There are tough safeguards on the use that can be made of that information.

We have made no secret of our intention that private sector valuers should undertake much of the work involved in the valuation. This will be effective and economical. It will ensure speedy action and, most of all, it will make use of the great expertise available in the profession which it must be right for us to tap. I can, however, assure the House that the overall process of valuation will be supervised by the commissioners of Inland Revenue to ensure the uniformity of treatment that is essential if the valuation is to be fair and sound.

I have already described how those provisions interrelate with those for Scotland where the assessors will be responsible for carrying out valuation. The expertise which they have accumulated in undertaking large-scale valuation exercises makes them well placed to do the job promptly and thoroughly. It is important that the valuation task is tackled consistently throughout Great Britain, and the commissioners of Inland Revenue are given a power—which hon. Members have mentioned—of direction to ensure that consistency in Scotland. The assessors already work with the Inland Revenue valuation office to achieve consistent treatment of non-domestic valuations, and this collaboration will now be extended to the domestic sector.

Mr. Douglas

rose—

Mr. Heseltine

I have already given way three times to the hon. Gentleman.

As the assessors are local government employees the clause empowers the Secretary of State for Scotland to pay local authorities' grant towards the assessors' costs. In other respects, the provisions for Scotland follow the parallel English provisions.

Clause 4, for England and Wales, and clause 6, for Scotland, enable those carrying out the valuation to obtain the information necessary to do so. Information is a sensitive subject, and I would particularly draw the attention of the House to the protection we have built into the Bill. In particular, clause 3(6) provides that disclosure of information obtained for the purpose of valuation could lead to imprisonment or a heavy fine, or both. I cannot stress too highly the importance that we attach to securing that the information which is obtained as part of this exercise is used properly and only for the purpose for which it has been provided.

We have set out our firm intention of introducing a council tax on 1 April 1993 and have been advised that to do so requires urgent action if the preparations are to be made properly. We have listened and have brought before the House practical measures which will result in a fair and soundly based system of local government finance operative from 1 April 1993.

The Bill prepares the way for the introduction of the council tax. By strengthening our capping powers, we can be confident that expenditure will be restrained and that charges will be at acceptable levels. We are now bringing forward serious practical measures designed to secure our firm objective of introducing a fair and practical council tax from April 1993.

6.10 pm

Mr. Bryan Gould (Dagenham)

The only remarkable feature of the otherwise unremarkable speech that we have just heard is the fact that it was the Secretary of State made it. After all, he has shown a marked reluctance to come to the Dispatch Box to spell out his views on capping. Just two days before the Whitsun recess, he ducked out of the capping order debate and delegated it to his Minister of State. He originally intended that this measure, too, should be handled by his junior Ministers. At least this time we have shamed the right hon. Gentleman into coming to the Dispatch Box to explain the measure, but his right hon. Friend the Secretary of State for Scotland does not appear to be present.

The Secretary of State for the Environment is not usually a shrinking violet—he does not normally shun the limelight. That leaves us puzzled about why he has shown uncharacteristic reluctance and reticence, an impression that was reinforced by his speech today, in which he scarcely concealed his distaste for some of the proposals that he had to put forward. We are also puzzled about why he has been prepared to show that he has little enthusiasm for the measure.

The most likely explanation is that the Bill represents a series of defeats. It is a compendium of the defeats that the Secretary of State has suffered at the hands of the Cabinet and the Prime Minister. As a consequence, he regards the Bill as an embarrassing record of his failures and therefore feels little commitment to it. Indeed, he feels antipathy for some of the provisions.

Mr. Patrick Nicholls (Teignbridge)

Will the hon. Gentleman give way?

Mr. Gould

No, I wish to complete this point.

The fact that the Secretary of State does not mind who knows his position speaks volumes for his relationship with the Prime Minister. Even his speech this evening can only fuel speculation that, in common with the rest of the country, the right hon. Gentleman has decided that the Prime Minister's days are numbered and that he does not mind whether his conclusion becomes public knowledge.

Mr. Nicholls

The hon. Gentleman spoke of embarrassment. As he is on record as saying that he approves of capping and also that he does not approve of it, will he share his embarrassment with us and say which of those alternatives he supports?

Mr. Gould

The hon. Gentleman is pushing his luck; there is little doubt about our position, which has been established on many occasions and which I am happy to repeat now. We oppose wholeheartedly and thoroughly the principle of capping and, as we advocate the independence and value of local government, we believe that the right controls over local government spending are those exercised by the electorate through the ballot box.

Mrs. Edwina Currie (Derbyshire, South)

Will the hon. Gentleman give way?

Mr. Gould

I shall give way in a moment.

It is not surprising that the Secretary of State is less than enthusiastic for the Bill.

Mr. Nicholls

On a point of order, Mr. Deputy Speaker. The hon. Gentleman is on record as having said that, in extremis, there must always be a reserve power. Is it in order for him now to say that he said no such thing?

Mr. Deputy Speaker (Sir Paul Dean)

That is a matter for debate, not a point of order for the Chair.

Mr. Gould

It is not surprising that the Secretary of State is less than enthusiastic about the Bill. After all, its first objective is a massive and comprehensive extension of capping powers, something against which the Secretary of State has consistently—at least he has been consistent on that issue—set his face. The Bill achieves nothing short of the universal capping which the right hon. Gentleman proclaimed, in his famous article in The Times on 10 May last year, would be an act of centralised power outside our experience. On those grounds alone it should be resisted. The mere fact that the Secretary of State has nailed his colours to that mast does not mean that he will not chop it down at the first opportunity. After all, he cannot pass a revolving door without spending a couple of enjoyable turns within it.

Mr. Marlow

Will the hon. Gentleman give way?

Mr. Gould

If the hon. Gentleman will allow me to develop this point, I shall give way in a moment.

It is significant that, despite his U-turns and climbdowns, the Secretary of State has so far not recanted on that subject. His enthusiasm for the position that he has taken has been consistently maintained, as he has showed this evening. On this measure, he has been clear and vehement. In his article in The Times, he virtually issued a call to arms in defence of local government independence. Little wonder that he is so reluctant to have to eat those words and to introduce universal capping, which he so eloquently condemned in that article.

Mrs. Currie

We should all like to know the hon. Gentleman's views on capping. I heard him say, on the "Today" programme on Radio 4, on 27 March 1990, that, in extremis, there would have to be a reserve power. Does he still think so? If not, how on earth does he propose to control public spending and inflation?

Mr. Gould

The Labour party is opposed, and always has been, to the principle of capping. We would control local government spending through the discipline exercised by the ballot box, which we would ensure was more effective because of our provision for annual elections.

Mr. Heseltine

I have listened carefully to my hon. Friend's questions. What did the hon. Gentleman mean by the words "in extremis"?

Mr. Gould

If the right hon. Gentleman really wants me to spell it out, I am glad to do so. I was answering a question that was put in such terms as to suggest that no legal controls could ever be exercised over local government spending. The point that I was making was that, in extremis, in cases of illegality or fraud, a reserve power would always be available. Anyone who understands local government would accept that point.

Mr. Heseltine

I am sure that the hon. Gentleman remembers George Bernard Shaw's well-known phrase, "We have established the principle; we are now haggling about the terms."

Mr. Gould

I happen to know the full story, but it is clear from the frozen reactions of the Secretary of State's colleagues that not many of them do. I am sorry that he failed to make his point.

Mr. Marlow

Will the hon. Gentleman give way?

Mr. Gould

No, I wish to make progress; I shall bear the hon. Gentleman in mind.

By eating his words even on capping—the one issue on which he steadfastly maintained his position for well over a year—the Secretary of State presents a sad spectacle. He is embarrassed not only because he is now forced to act inconsistently with his stirringly stated principle, but also because he knows that he was right on 10 May 1990 and he is wrong now.

No Secretary of State who claims to value local government can come to the House and proclaim that henceforth every budget for every local authority must be set within limits prescribed by central Government. However, that is the sad end of a long process that began a long time ago—it certainly seems so—with fine words that many hon. Members will remember about the poll tax reinforcing local democracy and imposing renewed accountability. The process then took refuge in a limited capping power, which the Secretary of State said was designed to restrain the largest overspenders. That process has now been swept away, and all pretence has gone that the Government are interested even in paying lip service to the principle of local government autonomy.

Let us be clear what the Bill is about. It is no longer a question of restraining the largest authorities or the most irresponsible overspenders or even—this is the point for the hon. Member for Northampton, North (Mr. Marlow)—those Labour-controlled authorities so beloved of Tory mythology. The Bill is a comprehensive statement of no confidence in the whole of local government. It does not matter how big the authority is, what its record on spending might be or what its political control is or has been. All local authorities are now on notice that they are not to be trusted.

Under the new powers, every budget will be set within the limits imposed by the Secretary of State. Let us be clear on how extensive those powers will be. If the £15 million protection had not been in force for 1991–92, 37 districts would have spent more than 25 per cent. above their standard spending assessment, 42 would have been spending 20 per cent. above their SSA, and 55 would have spent 12.5 per cent. above their SSA. On the criteria applied for this year, huge numbers of local authorities would have had to be capped, including many Tory-controlled smaller districts.

So much for local democracy and the power of local electors to decide what services they want and what they are willing to pay for them. Henceforth, the man in Whitehall knows best. It is far from clear on what basis his judgment is to be made. Is it to be made on the basis of SSAs, which everyone now knows to be unrealiable, in which confidence is completely lacking and which, in the case of small authorities, even Ministers conceded during the passage of the Local Government Finance Act 1988, provided too blunt an instrument to fine-tune the budgets of small authorities? Is that to be the basis of the judgment imposed from Whitehall, or is it to be a criterion that measures a year-on-year increase in spending? If so, the Secretary of State may well find himself capping many districts that have restrained their spending to lower than the SSA.

The process is the apotheosis of that centralising power that the Secretary of State described. It is not an exaggeration to say that it will be the end of local government as we have known it for more than a century, until that happy day comes when we can get rid of the Government who have imposed the dead hand of Whitehall on local democracy.

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

I am grateful to the hon. Gentleman, who is saying that, under his policy, the ballot box will be arbiter. If that is so—I believe that he will accept that in some authorities 20 to 25 per cent. of the electorate pay nothing; indeed, there are some authorities where about 80 per cent. did not pay the full rates—where on earth is the democracy? How is it democratic for that percentage of people to vote for an ever smaller number of people to pay more and more in totally unlimited spending within a local authority?

Mr. Gould

In the light of the local government election results last month, I can well understand why the hon. Gentleman is nervous about the judgment of voters at the ballot box. The answer to his question has been most eloquently provided by his right hon. Friend the Secretary of State, who said—I do not have his exact words, but I am sure that the right hon. Gentleman will remember them—that it was a complete myth to assume that large numbers of people did not pay the rates. He said that virtually everyone made some contribution, perhaps under an informal arrangement within a household or as part of a rent payment.

I hope that the Secretary of State will not do a cartwheel on that, because I have always thought that he was right on that issue, and has stuck to being right. It was a well-taken point in favour of rates and a property tax, and in view of the wholesale conversion among Conservatives who now condemn the poll tax, I am surprised that the hon. Member for Nottingham, South (Mr. Brandon-Bravo) has not caught up with the new orthodoxy.

The fact that the Secretary of State has doubts and hesitations about capping is eminently understandable and is no doubt matches by his reservations on the Bill's second major objective—the preparations that it makes for the council tax. It enables the Secretary of State to give instructions to valuers so that a new valuation register can be prepared. The Bill's provisions must surely be an embarrassment to any Government who still pretend to be competent. We are still no nearer to knowing what the basis of that valuation will be. We have been told by the Secretary of State that it will be solely capital values.

We were then told by the Minister of State on the Radio 4 "Today" programme, of which Conservative Members are such avid listeners, that other factors might also be taken into account. When we challenged the Secretary of State in the House on which of the conflicting views was correct, he said that they both were. The Bill does nothing to clear up that confusion. That is surely one of the questions on which the process of consultation is intended to cast light, so why not wait until the consultation has taken place?

The answer to that question reveals another Government embarrassment. They have to give the impression of making rapid progress to deflect the widespread scepticism about the timetable that they have set for themselves. The Government still say that they are aiming for 1993, despite the experts' publicly stated doubts about whether that date is remotely achieveable. Only by going through the motions can the Government keep alive—at least until the election—the illusion that the poll tax is rapidly on its way out. That illusion matters, because the poll tax, far from being dead, lives on and will be here for years to come.

Already, there is widespread anger on the part of nearly half of all poll tax payers as they discover that they do not qualify for the full £140 reduction that they were promised. That anger will mount as people realise that the poll tax bills will keep coming, they will still have to live with the unfairness and unworkability of the tax and, for each year during which it survives, they will have to pay, on average, £140 per household more than they need.

That is to say nothing of the nightmare facing local government as it grapples with the problems of collecting a tax that the Prime Minister describes as already uncollectable, and which can only become more so the longer it lingers. That is why the Government have to pretend to a certainty that certainly does not exist, and why they have had to truncate the process of consultation, revealing it to be the sham that it truly is.

While I am talking about truncating processes, I understand that we are to be subjected to a guillotine motion next week for the purpose of rushing the Bill through. I give notice that we shall oppose that motion with all the strength at our command.

Another vexed question involves the number and range of the bands. The Bill specifies that it is intended that valuations should be made on the basis of bands, but it does not say how many. It does not state whether individual valuations will first be made and then assigned to bands, or whether the exercise will simply push whole chunks of property into certain bands. Whatever the answer, we should be clear that, contrary to the optimistic noises from Ministers, there is the prospect of huge numbers of appeals when people feel that they have been placed in the wrong band.

Or course, the Government have committed themselves outside the terms of the Bill to a seven-band system, on the basis of which they have produced some figures—the Secretary of State used them again this evening—which purport to tell people the size of the bills that they will have to pay. It is worth rehearsing for a moment the history of this disreputable exercise.

At the end of February, the Government set in train an exercise that required district valuers to make an estimate—no field work was done, no valuations would be carried out—in the course of about five days which would allocate all the properties in their areas to one of 14 bands, the top band of which was £500,000 or more. Once that exercise had been done on that very shaky basis, it was presumably taken by the Secretary of State to Cabinet. When the Cabinet and the Prime Minister saw it, they did not like it: they threw it out. They insisted on substantial change, and the Secretary of State suffered yet another of his defeats.

The Prime Minister insisted that a 14-band system would be too painful for well-heeled Tory supporters, especially in the south, and he further insisted that a seven-band system, with a new top band of only £160,000, should be substituted. None of the seven bands then defined corresponded with any of the 14 bands delineated in the earlier exercise. So we are left with a 14-band exercise based on guesstimates which were then translated into seven wholly different bands— —

Mrs. Currie

So what?

Mr. Gould

The hon. Lady reveals a great deal about the psychology of Conservative Members, and thereby invalidates the very figures that the Secretary of State advanced this evening to try to persuade people that the council tax would somehow produce lower bills.

We are left, as I said, with a series of inventions based on estimates. It is on the basis of these wholly fanciful statistical inventions that the Government have produced their supposed figures for average bills. The only conclusion that can be drawn is that the Government were panic-stricken, not to say gobsmacked, and were so intent on producing any figures, however wild the assumptions on which they were based, that they rushed out figures based on total invention.

Mrs. Currie

I think that I am right in saying that the hon. Gentleman has even less experience of government that I have. Had he any experience of government, he would know that the intelligent, sensible way for Government to go about their business is to invite papers from their civil servants and to discuss various possibilities. That is exactly what the Government did. Does he not consider that a matter not for criticism but of great credit to the Government?

Mr. Gould

I do not want to be too cruel to the hon. Lady, but I think that, in the light of her record in government, she would do well to be a little less patronising. I suspect that, if we compared experiences in a year or two, we might find that the balance had changed somewhat.

The hon. Lady does not understand why a 14-band exercise which was abandoned and converted to a seven-band exercise without proper valuation cannot be a sound basis for the figures that the Government have produced. But worse was to follow. Presumably because he knew how shaky was the statistical structure to which he had been shackled, the Secretary of State then tried to have a proper exercise carried out. District valuers were asked to carry out a nine-band exercise. But when news of that leaked within a couple of days, it was hastily aborted and the seven bands were pronounced to be the Government's last word on the subject. Consultation was at an end—again revealed as a total sham.

Mr. Marlow

rose—

Mr. Gould

No, I have given way frequently.

So the Government were panicked into inventing figures, and were then so terrified by the prospect of being charged with trying to produce verification for them—so terrified of being accused of dithering—that they panicked all over again and closed their minds altogether.

Little wonder, then, that the Government have a reputation for panicking and for mistaking panic reaction for firm Government. Where the Home Secretary went with pit bull terriers, this Secretary of State had been before him with the council tax—

Mr. Marlow

Will the hon. Gentleman give way?

Mr. Gould

No, I will conclude shortly.

Worse was to come, because the Government were now committed to seven bands with a £160,000 ceiling, and committed to the fundamental unfairness that that makes inevitable. I know that Ministers—especially the chairman of the Tory party—sometimes have difficulty in understanding this simple arithmetical point, but the fact is that an insistence on lopping off the top range of bands so that those at the top end of the scale do not pay their fair proportionate share, means, as a matter of logic, that those lower down the scale have to pay more. That is why, the Government's panic-stricken attempt to produce favourable-looking figures notwithstanding, they ended up—despite all the stastical inventions that they had felt free to use—with figures which still showed, for reasons that they clearly did not understand, that even on the most favourable assumptions their bills would be £67 per household higher on average than they would be under our fair rates proposal.

This is a sorry story of a Government who have abandoned all principle and all claim to competence. They have abandoned all pretence at considered policy-making. This Bill, like so many recent measures, is nothing more than a save-the-Government's-skin measure—but this is a Government whose skin is not worth saving.

They are a Government who require the Secretary of State to come to the Dispatch Box to defend a banding system which he knows to be indefensible, and who compel him to repudiate his own statements against universal capping. I do not blame the right hon. Gentleman for appearing to be unhappy about this humiliation. The poll tax has continued to exercise its malign influence and to cast its long shadow. I recommend that hon. Members share the Secretary of State's real judgment of the measure, and defeat this disreputable Bill tonight.

6.37 pm

Mr. Paul Channon (Southend, West)

It is clear from what the hon. Member for Dagenham (Mr. Gould) has said that the one thing that really annoys the Labour party is that its members can see that the Government have produced a proposal that is popular in the country and which will lead to lower bills for our constituents. No wonder the hon. Gentleman is disappointed about that. I am disillusioned with him. When one hears him on the "Today" programme occasionally, he seems to be the voice of the Labour party speaking ex cathedra, yet today we have been told that what he said on that programme was inaccurate. I understand him to be saying that in no circumstances short of fraud would he introduce—were he to be in power—any capping measures. So again the message goes out from this House that the Labour party, if in office, would do little or nothing to protect people in peril of overspending authorities.

Mr. Brian Wilson (Cunninghame, North)

Can the right hon. Gentleman think offhand of any good reason why he, with his substantial personal wealth and large properties, should pay only two and a half times more than the poorest people? Why should the poor subsidise him?

Mr. Channon

I have no comment to make on that except to say that I pay—rightly—a great deal more in tax than many others do.

The House should understand that this measure represents two modest steps forward. One relates to valuation. It seems to me right to press ahead with that, because, if we do not, how shall we get the tax ready for its introduction in 1993? Surely both sides of the House want lower bills for constituents.

The council tax seems to have been a satisfactory way out of the problem. The Secretary of State and the Minister of State deserve the highest credit for the way in which they have managed to defuse this issue in the past few months—[Laughter.] Despite the laughter of Opposition Members, I do not believe that the issue was thought to be significant in the recent local elections.

Great credit goes to my right hon. and hon. Friends for having come up with a solution to the problems of local government taxation that seems to be satisfactory, or as satisfactory as anything can be. No local tax will ever be popular, and no local tax is likely to be perfect. My right hon. Friend the Chancellor of the Exchequer was entirely right to alter the balance between the levels of central Government and local government spending in his Budget.

Mr. Allen McKay (Barnsley, West and Penistone)

Will the right hon. Gentleman give way?

Mr. Channon

We have been asked to be brief, but I shall give way to the hon. Gentleman. It is probably the last time that I shall give way this evening.

Mr. McKay

The right hon. Gentleman thinks that it is right to get the balance right between the levels of central Government and local government spending. He thinks that the measures that have been taken will result in the right balance being achieved. Why was it right in the first place to destroy the balance that then existed by cutting grants to local government from central Government? The cutting of grants year in and year out caused the imbalance.

Mr. Channon

On reflection, I think that the hon. Gentleman has a point. It is right that central Government should be responsible for a larger share of the expenditure, but both Conservative and Labour Governments are to blame. As I have said, the hon. Gentleman is on to a sound point.

The council tax has been designed so that it will not place an excessive burden on those who will have to pay it in future. The authority that has responsibility in my constituency spends close to its standard spending assessment, as does the county council and I estimate that about 93 per cent. of householders in my constituency will be better off under the council tax than they were under the poll tax or the rating system.

I cannot understand the opposition to the Bill, which will enable the new tax to come into force in 1993. If that is to be done, the process of valuation must begin as soon as possible. That being so, I wish to ask a couple of questions.

Mrs. Fyfe

Will the right hon. Gentleman give way?

Mr. Channon

I must press on. I shall speak for only a few more minutes.

I wish to ask two questions about the process of valuation. First, how do my right hon. and hon. Friends propose to deal with appeals? Secondly, although I understand the view that we do not need revaluation, surely there are certain portions of our towns and cities in which values vary considerably from time to time. Certainly there have been variations during the past few years. How are anomalies to be avoided if there is no general revaluation? I am sure that my hon. Friend the Under-Secretary of State for Scotland has the answers to my questions. I shall be grateful——

Mr. Barry Field

Does my right hon. Friend agree that there should be a regular revaluation every five years, for example, to avoid anomalies?

Mr. Channon

I am against regular revaluations. The process of revaluation is extremely time-consuming and enormously unpopular among those who lose as a result. If regular revaluations can be avoided, that is good on the whole. There will be exceptional circumstances from time to time, and I am not sure how the Bill will deal with those. No doubt the solution will come later, and it is necessary to have the Bill first. As I have said, I estimate that 93 per cent. of my constituents will be better off with the new tax.

The Bill deals only with valuation—we must press ahead with that so that the council tax can be ready in 1993—and capping. The official Opposition have explained their position with more clarity than they have done in the past. I agree with my right hon. Friend the Secretary of State that, in an ideal world, it would be better if there were no capping. Equally, it would be better if all local authorities behaved responsibly. Of course it would be better if all local authorities did not impose excessive burdens on ratepayers or charge payers. Alas, that is not the world in which we live. It is right that capping powers have been taken in the past. It is right that such powers should be used, but not excessively. It is right that early notice was given, so that local authorities knew exactly where they stood. It is right also that, at the end of the day, only very few authorities had to be capped.

I do not want to go into the details of all the district authorities that are at risk because of the removal of the £15 million threshold. Every hon. Member will have specialist knowledge of his constituency. Surely it must be right, however, that there should not be an arbitrary threshold. Unfortunately, there are local authorities that are abusing the system and charging their ratepayers or charge payers more than is reasonable. It is right that the Government should take the necessary powers, which they will not be able to exercise until next year at the earliest.

The powers are especially relevant when we consider the position of some small authorities. I have no doubt that there are many local authorities that have special cases to bring to the Government's attention. For example, my hon. Friend the Member for Wealden (Sir G. Johnson Smith) was arguing a short time ago that the authority that has responsibility in his constituency is a special case. That, of course, can be considered. In general, however, the proposed powers should exist. I am sure that any authority with a special case will be able to take it up with the Government, and that my right hon. and hon. Friends will be entirely reasonable. Perhaps my hon. Friend the Under-Secretary of State for Scotland will have time to say something about that when he replies.

Those of us who think that the council tax will be a great improvement on what has preceded it, and those who believe, as I do, that the Government have defused a difficult situation by changing people's thinking about local government taxation, and therefore deserve our congratulations, should press on and ensure that the council tax will be ready by 1993. To do that, valuation must take place at the earliest possible date, and if that is to be done we must have the powers that are set out in the Bill. It would be wrong for the Opposition to seek to delay the Bill's progress, as they were saying a short time ago. It is essential that the Bill passes through the House at an early date. I hope that it will do so in the very near future, so that my constituents and the constituents of many hon. Members will face lower bills in future than in the past.

6.48 pm

Mr. David Bellotti (Eastbourne)

In October 1987—

Mrs. Fyfe

On a point of order, Mr. Deputy Speaker. There will be hon. Members contributing to the debate who have considerable personal wealth. Any benefit that they enjoy as a result of the Government's proposals will be merely a cherry on the top of the cake. Surely they should declare an interest when they speak.

Mr. Deputy Speaker

The House knows the rules about declarations of interest. Had the right hon. Member for Southend, West (Mr. Channon) had any interest to declare, I am sure that he would have declared it.

Mr. Bellotti

In October 1987, the then Minister for Local Government, the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), who is now Secretary of State for Employment, said: Under the new system of the community charge, local authorities will become fully accountable to their electorates. I wonder what happened to that possibility. I wonder also why we have been presented with draconian capping powers. The Minister added: Let me make it clear that we are only taking such powers because of the appalling record of a dozen or so authorities". The capping powers that are before us will extend well beyond a "dozen or so" authorities, as we all know.

In 1988, the Minister said that the exemption limit of £15 million was being proposed because the community charge levied by authorities that spent less than £15 million accounted for only a fraction of the total community charge when the precept of other authorities is taken into account. If the Minister believed that then, what has changed tonight? He explained that, from his point of view, it was unnecessary in the context of protecting local charge payers for local authorities that spend more than £15 million to be brought into the ambit of charge limitation.

The capping powers before us are certainly draconian. If implemented, they will attack our public services at the grass roots. In introducing the Bill, the Secretary of State said that he wanted something that was appropriate to the system. Many hon. Members want local services appropriate to local needs and do not put the system before the needs of people. Most of our discussion should centre on the SSAs, and the House should conclude that, in the past, SSAs have been proved unfair and discredited. Local authorities of all political persuasions can be used as examples of that.

Of the local authorities that would have been caught in 1991–92 under the powers that are now being sought for the following year, 37 that are now exempt from capping plans were planning to spend more than 25 per cent. above their SSA. A further 42 planned to spend 20 per cent. above their SSA, and 55 planned to spend more than 12.5 per cent. above SSA, which is an important figure in the Government's current thinking about limiting the spending powers of local authorities. The Government will have either to cap an enormous number of local authorities, or to change the rules and introduce different details.

Liberal Democrats believe that those local authorities should be free to set their budgets, and should be accountable and answerable to their local electorates. There have recently been many local authority elections in which local people considered the manifestos of the political parties and made their judgment. They then elected councils of different political persuasions.

Mr. Richard Holt (Langbaurgh)

Would the hon. Gentleman care to tell us in which local authorities a political party produced a manifesto that was fully costed?

Mr. Bellotti

I visited Torbay—I do not know whether the hon. Member for Torbay (Mr. Allason) is present, but I am not seeking to gain an advantage if he is not—where the manifesto had been costed, and I had the pleasure to launch that manifesto. I could give other examples. Political parties in local elections across the country do their best to cost the programmes that they put before the electorate. That is honourable, and credit should be given to them by members of all parties in the House.

The local elections resulted in the Conservative party's losing more than 900 seats. We should have confidence in the local electorate, and produce the programmes that they supported. By introducing capping powers, the Secretary of State is saying to those electors—some of whom voted Conservative, but most of whom voted for other parties—that they will stop people who have been properly elected from delivering the programmes that they promised. That is not only grossly unfair; it hits at the heart of democracy. That is why the Liberal Democrats are opposed in principle to capping.

Mr. Barry Field

Would the hon. Gentleman include in his comments the manifesto of the Liberal Democrats on the Isle of Wight? The proprietor of the new ice rink protested to the leader of the Liberal Democratic party because it had told a deliberate lie. The leader declined to comment. The proprietor of the ice rink was rather upset, because he was a lifelong Liberal.

Mr. Bellotti

I have never been ice skating, so I am not well qualified to comment. However, I had the pleasure of visiting the hon. Gentleman's constituency a few months ago. I hope that that had some bearing on the fact that the Conservatives lost overall control of both the district councils on the Isle of Wight.

Mr. Field

That is not true.

Mr. Bellotti

I believe it to be true.

Mr. Field

It is untrue.

Mr. Bellotti

That fact can easily be verified.

In amongst the flak that the Secretary of State is now getting because of the draconian measure of capping authorities that spend less than £15 million, I notice the flak of a furious Roy Thomason, the chairman of the Association of District Councils. He has not previously been against the Government's draconian measures, but on this occasion he is. What he said is relevant: We appear to have a Government that is being run by the Treasury for the sake of Treasury convenience". If previously ardent Government supporters such as Roy Thomason issue such public press statements, the Secretary of State must take on board the feeling across the country these draconian measures.

My constituency includes part of the areas covered by Wealden district council. I am glad that the hon. Member for Wealden (Sir Geoffrey Johnson Smith) mentioned the council earlier, and I want to add something to what he said. His point was well made, and what he said was true, but he could have gone on to say that, if the Secretary of State follows the line that he has followed in previous years in capping local authorities, and if that is applied to Wealden on current spending plans, it will lead next year to a cut in its budget of £400,000.

By no stretch of the imagination can a local authority such as Wealden district council be accused of being profligate, expensive or extravagent. It is a well managed, well run authority, which can often be encouraged to develop its programmes rather than cutting them. I do not know where Wealden will find £400,000 worth of cuts.

The chief executive of Wealden district council said that, unless the proposals were changed, there would be a breakdown in the provision of local services". That statement was supported by the leader of the council.

One of the reasons for such comments is the ridiculous situation of the SSAs leading our thinking. Wealden is a member of a family of similar local authorities. I sue the term "family" in the context of the Audit Commission's recognition that Wealden is in such a family of local authorties. In that family, SSAs vary from £88 to £173 per head of relevant population.

Surely the Government can see that the SSAs should not be the starting point for their consideration of local government spending.

Mr. Barry Field

Will the hon. Gentleman give way?

Mr. Bellotti

I shall give way to the hon. Gentleman for the last time.

Mr. Field

I am obliged to the hon. Gentleman for giving way to me a second time.

Surely the hon. Gentleman is not imputing a political overtone to this matter. He must be aware, as the local government spokesman of his party, that the Edwards committee in the 1960s recommended that there was a shortfall in rating revenue for the Isle of Wight. We created the document "Island Apart" to prove the increased cost of local government on the Isle of Wight. That is a regular feature of local government in the United Kingdom. Surely the hon. Gentleman is not suggesting that it has suddenly arisen under the present Government.

Mr. Bellotti

It has certainly worsened under this Government, because, since 1979, local government has lost £58 billion of central Government support. In 12 years of Conservative government, that loss of revenue has led to local authorities becoming less enchanted with the Government.

I want to make some progress now, because other hon. Members want to speak. I want to refer to one other local authority—my own, in Eastbourne. I mentioned that Wealden council might have to make £400,000-worth of cuts next year unless the Government changed the rules and gave way to representations.

The figure for Eastbourne borough council is almost £1 million. One could not regard Eastbourne council as extravagant or profligate. In addition to the delivery of local services, Eastbourne council needs to generate the local economy in areas such as tourism to bring wealth to the town.

If £1 million-worth of cuts in Eastbourne and £400,000-worth of cuts in Wealden would have to be made, we must call on the Government to listen to representations from across the country, and to think again about their proposals. The leader of the council in Eastbourne, Alan Shuttleworth, said that the proposals take no account of the needs of our communities and attack basic services, which local people depend upon. I now ask the Government to consider a separate matter concerning Eastbourne. In addition to their current proposals, the Government are asking that the cost of short-term leases on houses be transferred from the housing revenue account to the general fund of local authorities. That will add another £250,000 to Eastbourne's expenditure, purely because of the way in which the costs are transferred. That must affect other local authorities as well. The Government must consider that specific point and whether there is any possibility of excluding that from the present arrangements.

When this Government first came to office, they began to attack local government, and local government has now lost £58 billion. We saw what happened to the Greater London council and to some of the metropolitan authorities. The Government then capped some of the larger spending authorities. Tonight, the Government want the House to approve the capping of smaller spending authorities. Where will it all end? Will it end with the parish councils and the local town councils? Will the Government attack local community groups on local councils? Will the Government stop local councils providing park seats, bus shelters and litter bins? Where will the draconian measures end?

When I consider the Government's attack on local authorities, I am reminded of the words of Pastor NiemÖller: "First they came for the Jews, and I did not speak out—because I was not a Jew. Then they came for the Communists, and I did not speak out—because I was not a Communist. Then they came for the trade unionists, and I did not speak out—because I was not a trade unionist. Then they came for me—and there was no one left to speak out." Local government has been attacked, from the GLC down to the parish councils. People must stand up and dig in. If they do not, every local authority will be attacked by the Government—if it has not already been attacked.

The proposals in the Bill are ridiculous. I was asked earlier about costed manifestos. Well, the Bill refers to costing valuations; it says that the valuation of property will cost £250 million. There are 21 million properties in this country. How do the Government think that a property can be valued for £12? Many people would like to know that. The Government have not costed their proposals. They simply want to attack local authorities. Some hon. Members are prepared now to stand up and support local authorities.

Mr. Barry Field

On a point of order, Mr. Deputy Speaker. It is a tradition of this House that Front-Bench spokesmen take care not to mislead the House. The hon. Member for Eastbourne (Mr. Bellotti) is the local government spokesman for the Liberal Democrats. I distinctly heard him say that, as a result of the local elections, there was no overall control in the two borough councils on the Isle of Wight. That is quite incorrect in respect of Medina borough council, because it remains under Tory control despite the fact that it was one of the three borough councils, which included Salisbury council in the constituency of the Under-Secretary of State for the Environment, my hon. Friend the Member for Salisbury (Mr. Key), to be specifically targeted by the hon. Gentleman's party. I am sure that the hon. Member for Eastbourne did not intend to mislead the House, and that he will want to put that right.

Mr. Deputy Speaker

That is a point of dispute between two hon. Members; it is not a matter for the Chair.

7.3 pm

Miss Emma Nicholson (Torridge and Devon. West)

This small but important Bill is a large step towards well managed local authority expenditure. The Bill is crucial, and the banding is a sane and sensible way to define a good and accurate measure of local personal input. The capping is crucial for fairness. It will protect local people from large expenditure by local authorities and protect the central taxpayer who now provides the largest proportion of locally expended money.

With the large rises in local authority expenditure, capping universally has become a necessity and a step towards the correct management that I will define. Local authority expenditure has increased by nearly 25 per cent. in only two years. We want to see whether we have received better value for money by a similar proportion. Have we received 25 per cent. better value for money from the central taxpayer and the local charge payer? I think not, and that must be why central charge capping is necessary. Lambeth council has not offered 25 per cent. better value for money in terms of local expenditure over the past two years.

We must also consider the quality of work carried out by local authorities. My hon. Friend the Minister for Health earlier considered local child care institutions. She told us that expenditure on such institutions has increased by 60 per cent. over the past 11 years and the number of children in care has decreased by 40 per cent. over the same period, but, despite that enormous fresh sum of money and fewer children, the quality of work has clearly deteriorated.

The basic premise that local authority expenditure is created from the central taxpayer and the local taxpayer rests on redistribution to achieve acceptable standards throughout the country. However, that does not apply to education. There may be a first class sixth form in one school, but in a school in a different area where education has been over-politicised, generally speaking by Labour party councillors, the standards of education may be very much lower. The redistributive formula has not—alas—led to higher standards when local authorities have been left to get on with the job. Unrigorous thinking through over-politicisation has led to an unacceptable lowering of standards. Perhaps we should dub that "Bookbinderism". That kind of thinking allows public money to be spent lavishly to score political goals in respect of ordinary commodities such as school writing paper.

Local people now want to pay less central and local tax and they demand the best services. Clearly, when we consider the way in which Labour councils in particular have been behaving, those services are not being provided. That is why the restructuring of local government responsibilities must follow the charge-capping powers in the Bill and the methods of extracting funds both locally and centrally through banding. We must focus on cutting out waste, rewarding good management and restoring real accountability.

We must agree that there is a huge amount of dead wood in local authorities, particularly in Labour-controlled local authorities. In Labour local authorities, there seem to be whole forests where nothing moves and where there is such a stench of decay that it is clear that the living forest has decayed almost into a combustible fuel that is due to go up in smoke.

We all want local accountability, a fair charge and a reasonable way of ensuring that the local charge payer is not taken for a ride by the local councillors. It does not seem possible to achieve that under the local system, although I wish it was. The central charge-capping provision will protect the local charge payer and ensure that we take the next steps forward and work out the best possible mechanisms for redistributing local authority responsibilities and expenditure. By that method, I am confident that, by 1993, we will be able to present to the electorate a sane, sound and sensible system whereby that key 15 per cent. raised locally is spent wisely and well.

7.9 pm

Dr. Norman A. Godman (Greenock and Port Glasgow)

I should like to speak about the Bill's relevance to the people whom I represent and hope to represent for a few more years.

My constituency is bedevilled by scandalously high unemployment. Increasingly, the communities that I represent are aging because, in response to that scandalously high unemployment, many young people in my part of Scotland are resorting to the traditional Scottish solution, which is emigration. At the weekend, I said goodbye to a young electrician and his wife who are heading for Australia. He is emigrating because he is sick of being out of work on the lower Clyde.

Many of my elderly constituents need the first-class services provided by the social work department of Strathclyde regional council. In Scotland, the Government party is in the minority and recent opinion polls show that the Conservatives have a 23 per cent. rating. It is likely that some Scottish Conservative Members will not be returned to the House at the next election.

The odd job lot at the Scottish Office are seeking to emasculate local government. Ian Bell, the well-known Scots journalist whose distaste for the Conservative party is equalled only by his dislike of Labour Members and councils—I have some cross-party support for that observation—wrote yesterday about the Secretary of State's decision to cripple Lothian region through its budget. In yesterday's Observer Scotland, that famous Scots journalist—some hon. Members might say infamous—said: What the Government is doing to Lothian Region is a national disgrace. It is victimisation of the crudest, most partisan sort, and Labour deserves the support of every Scot in its attempts to fight it. The trouble is, I'm not clear about what the party or its Lothian councillors propose to do about the Scottish Secretary's decision to cap the region's poll tax and force 18.5 million of budget cuts. It's no piddling amount by anyone's standards. In Lothian it could mean the closure of schools, old people's homes and children's centres, an end to free bus travel for the aged, the closure of evening classes, a jobs freeze and cuts in road repairs. Compulsory redundancies cannot be ruled out. Strathclyde regional council has to make a bleak, stark choice between making huge cuts in its budget or increasing its poll tax next year. The Secretary of State for Scotland has made his intentions as plain as possible. He said: this is a long-term step change in the central-local taxation relationship. If local authorities find themselves under tighter control in future because of accountability to the national taxpayer being more rigorous than accountability to local residents, they can reflect on the fact that they had their chance to be more responsible in their approach."—[Official Report, 26 March 1991; Vol. 188, c. 872.] Earlier in the debate, we heard that same distinction drawn between national taxpayers and local residents, as if the two were mutually exclusive. I remind the hon. Member for Torridge and Devon, West (Miss Nicholson) that local residents pay national income tax. It is absurd to distinguish between local residents and national taxpayers. The Secretary of State's intention is plain for all to see.

Mr. Dalyell

I am a Lothian Member, and I have never known a Scottish Secretary of State who was so vindictive towards a local authority. Does my hon. Friend think that such behaviour is honourable when, on every criterion, the Secretary of State's own authority of Dumfries and Galloway is spending more than Lothian region? The Secretary of State's behaviour towards his own authority in relation to what he has done to Lothian borders on the grossly dishonourable and even corrupt.

Dr. Godman

My hon. Friend asks me to offer an observation on the conduct of the Secretary of State for Scotland. Despite the temptation, I cannot say that his conduct is dishonourable because you, Mr. Deputy Speaker, would ask me to withdraw such an allegation. When one compares the two councils mentioned by my hon. Friend the Member for Linlithgow (Mr. Dalyell), it appears disreputable. Such discrepancies are not lost on the Scottish electorate. The Secretary of State and his colleagues will pay for them at the general election—when they call it.

The local authority seeks to provide all kinds of services for my constituents. It has a good integrated transport system. Because of the conduct of the Secretary of State and his predecessor, the regional council has already had to make cuts in those budgets that are designed to help vulnerable people. I shall give one example. Section 12 of the Social Work (Scotland) Act 1968 gives local social work departments a budget that can be used to help people who are facing severe problems, such as domestic violence.

Such a case was brought recently to my surgery. It involved a young woman who was desperately anxious to get away from her psychopathic husband. She was able to return to her home in Birmingham using the money given to her by a local social worker under section 12. The budget for such cases allocated to the district manager, Mr. Donald McQuade, of the social work department, Greenock, has been drastically cut and is nothing like what is used to be. That fine 1968 Act allows social work departments and those much maligned professionals, social workers, to assist people, but the budgets have been cut. That reflects badly on the Secretary of State.

I shall give another example of Strathclyde regional council being unable to provide decent welfare facilities for my vulnerable constituents. In the centre of Greenock, almost alongside the famous custom house in Custom House lane, the Fitzgerald training centre for those suffering from mental handicap takes in students or trainees, not only from my constituency but from the constituency of my hon. Friend the member for Renfrew, West and Inverclyde (Mr. Graham). It is bursting at the seams. The building is riven with damp and has inadequate facilities. My hon. Friend and I received a promise from Strathclyde regional council's social work department that a new centre would be built in Greenock, but we have now been informed that, because of cuts inflicted on its budget by the present Secretary of State, there is no chance of that desperately needed centre being built within the next three or four years—if the present odd job lot remain in power.

The home help service for my elderly constituents is also being cut back. There will be other cuts, because the Secretary of State has Strathclyde regional council fixed firmly in his sight—if not his own regional council.

As to clause 3, the banding range does not seem to be large enough. There should be about 14 or 15 bands, with a top banding for properties valued at £500,000 or more. There are few houses of that value in Scotland, but those who live in them should pay their full whack.

When the Minister replies, perhaps he will say a word or two about rights of appeal against valuations and what form the procedure will take. Will an individual have the right to take an appeal to the sheriff court or even to the Court of Session? Will there be a system of appeals tribunals? We have not yet been given answers to those important questions.

The Bill is a disgraceful measure, from a Government who seek to destroy local government in Scotland. There is no principle behind it. The Bill has been devised because Scottish local government is overwhelmingly anti-Conservative party.

7.22 pm

Mr. Robin Squire (Hornchurch)

I hope that I may reassure to some degree the hon. Member for Greenock and Port Glasgow (Dr. Godman). This time last year, those of us in England and Wales were hearing bloodcurdling tales about the cuts in front-line services that local authorities would be required to impose and the mass redundancies that they would need to make. However, the National Association of Local Government Officers—which I am sure the hon. Member for Greenock and Port Glasgow accepts is not a Tory front organization —found that councils such as Brent, Basildon and Lambeth made no cuts in front-line services and announced no redundancies. That is not to say that there will be none, but it is clearly the case that, when certain proposals are made, councils talk up their implications —but the reality is something much less worse.

I have frequently expressed in this Chamber my scepticism about capping. I have listened to the arguments for and against over the years, and have eventually become convinced, sadly, of the necessity of capping as a last resort. The need for it flows directly from the behaviour of a small number of authorities, but, unless capping remains available, the number of errant authorities will grow. If there is to be capping, it is difficult to argue against the logic of extending it to the majority of local authorities —including the district councils that are currently outside the system.

Presumably, the hon. Member for Dagenham (Mr. Gould) has gone through a similar intellectual exercise, and has worried about whether or not capping should exist. Our only problem is that he seems to have reached the conclusion that it should not exist, whereas he is on record—as my hon. Friend the Member for the Isle of Wight (Mr. Field) said—as confirming that Labour wanted to retain capping as a last resort. If Labour now thinks that capping should not exist, that is a very recent conversion. My guess is that, in the unlikely event of Labour finding itself in power, it would quickly need to devise ways of restraining a small number of local authorities.

I want to comment briefly on standard spending assessments. The hon. Member for Eastbourne (Mr. Bellotti)—who, perhaps understandably, has temporarily left the Chamber—missed the point, because I remember him telling the House that the Government had substantially reduced the proportion of expenditure that is borne by central Government. That is true, but the logic of that statement is that, to the extent that a lower percentage of local authority expenditure is met by central Government, so, relatively speaking, is there less impact from the operation of SSAs. One cannot have it both ways. The hon. Member for Eastbourne rather overlooked that point.

I take the view that there is a continuing need for many refinements to SSAs. I say that on behalf not only of my own council of Havering but of many other authorities, including Doncaster, Barnsley, and Sheffield.

Mr. Holt

And Langbaurgh.

Mr. Squire

Langbaurgh, too, I am told by my hon. Friend. Certainly the other three that I mentioned are not Conservative-controlled authorities, but, like Havering, they have become convinced that the bases of the SSAs are invariably drawn against them. The reasons have been well ventilated in a number of debates, and I will not repeat them now. However, I urge my hon. Friend the Minister always to keep that aspect in mind. Right hon. and hon. Members in all parts of the House who have investigated it in detail are convinced that we have not yet found the best answer.

The Parliamentary Under-Secretary of State for the Environment (Mr. Robert Key)

I hope that my hon. Friend will accept my assurance that, in the latter part of every year, local authorities have an opportunity to discuss their SSAs with Ministers. That is done on a regular basis with a large number of local authorities. There is barely an SSA that is not at some point adjusted as a result of such representations—and of our discussions with local authority associations. We are very mindful of the concerns that right hon. and hon. Members in all parts of the House express.

Mr. Squire

I am grateful to my hon. Friend. He would expect me to say that we will be even more grateful when his comments are translated into perceived higher figures for all the local authority areas that currently feel themselves to be discriminated against.

The main part of the Bill prepares the ground for the new council tax. I welcome unreservedly the form that it will take, but will comment briefly on the details of its operation that have so far been made available. I recognise that it did not have to follow the introduction of the council tax, but I welcome the fact that those on income support, and one or two others, will no longer be required to pay. I can see why the House was convinced that they should pay, but enough evidence has shown the difficulties that local authorities and those on income support have experienced for us to realise that it is an improvement to take them out of the local tax system.

I welcome anything that does away with regular revaluations. Labour Members from north of the border should urge their colleagues from England and Wales to be slightly less fulsome in their support of the rating system, as they have more recent experience of rating revaluations. Like other hon. Members, I expect that the existing system of rebates will be transferred, so that the more generous system that we enjoy will continue.

The Government have proposed seven bands, whereby the largest property will pay two and a half times as much as the smallest. That seems right, because many people, especially elderly people, live in homes that they acquired many years ago, when their incomes were higher. I should hate them to be unreasonably penalised, as they would be by a system based only on valuation. Whether the system is based on seven, eight or nine bands is an important detail, but that is the right range.

Most important is the provision for relief for the single adult householder. Conservative Members need to reiterate that at every opportunity. Hon. Members who are allured to the old rating system and wish to return to it as soon as possible must explain to every single adult household in the country why should they suffer from the same burdens as they did under the old rating system, which were the main reason why the system was discredited. I have no hesitation in commending the Government's recognition of the problem of the single adult householder.

What would be the alternative? What do those who oppose the Bill—we now understand that both opposition parties do so—put forward? We know what the Liberal Democrats want, but I shall not stretch your tolerance, Mr. Deputy Speaker, by going into detail on a local income tax. Suffice it to say that it would lead to many more problems in practice than its adherents believe in theory.

The Labour party does not believe in a local income tax, but wants a return to a rates system. Many in the parliamentary Labour party come from Scotland and will be aware of up-to-date rating values, but values in England and Wales date back to 1973 unless the house was constructed after that date. Therefore, the values for the majority of properties are ridiculously out of date. That would be bearable, perhaps, if that were the only problem, but rates carry the criticisms that I am reiterating and that many Labour Members have made over the years, and no doubt would privately still be making had it not become official Labour party policy.

Mr. Donald Dewar (Glasgow, Garscadden)

I am falling into personal temptation in intervening, but I am genuinely curious. The hon. Gentleman is making an impressive point about the out-of-date nature of the valuation base in England and Wales. Does he believe, therefore, that the new so-called council tax will require regular revaluations? What does he make of the promise made, I think, by the Minister of State, Department of the Environment, that once a property has been placed in a band it will remain there in perpetuity?

Mr. Squire

The hon. Gentleman makes two good points. The first and reasonably clear consequence of a banding system is that it would not need the same frequency of valuations as a system without bands. Once a house is in a band, it would be likely to stay within it, and the movement of values in the area would, broadly speaking, be in line. The hon. Gentleman's second point was whether it would, stay there in perpetuity, and the answer is that it would, subject to major improvements. The hon. Gentleman knows that the discussion document recommends that the valuation should be adjusted at the point of sale of the property. That also makes much sense and avoids many valuation changes that would make relatively little difference.

As far as I understand it, the Labour party proposes four different values in an uneasy alliance, involving replacement and rental values that, by implication, would be reviewed annually. I urge Labour Members who understand these things to look carefully at what they are pledged to. I do not expect them to agree with the Government's proposals—that would be asking too much —but they have wide experience and they know that, if the Labour party's proposals are remotely as I have suggested, they do not make sense. In their own interests, let alone the interests of better discussion of local government finance, they should do a bit more homework.

I believe that the Bill is a simple Bill that is justified. It will herald a good and better system for local government taxation and I give it my full support.

7.37 pm

Ms. Hilary Armstrong (Durham, North-West)

I rise to speak with some weariness. The Government have meddled with local government finance and must hold the record for the number of Bills introduced to adjust or change local government legislation. I note with interest that there has been little enthusiasm for the Bill among Conservative Members. It seems, having listened carefully to the Secretary of State, that the Government are in a hole and are digging themselves deeper into it because they know of no way out. We do—a general election—but the Government are frightened of that.

I intend to be parochial. I usually hope not to be so, but I wish to speak specifically about clause 1 and the problems that it will cause district councils such as Derwentside and other small district councils, which have suffered from enormous industrial devastation in the past 20 years and are trying to deal with the consequences.

It was interesting that the Tory leader of the Association of District Councils gave the Bill a warm welcome. His press release says: A furious Roy Thomason, ADC Chairman, declared: `We appear to have a Government that is being run by the Treasury for the sake of the Treasury convenience. I am shocked that the Government should be threatening small-spending district councils with these centralist controls. The budgets involved are trivial sums in terms of overall public expenditure.' Those sums may be trivial in terms of overall public expenditure, but they are critical to the survival of areas such as Derwentside and to the way in which they can deal with the economic devastation of the past decade.

Other districts in Derwentside are also vulnerable because of the ludicrous standard spending assessments. The SSAs are inapplicable to small district councils which have particular problems, and they do not match needs.

Mr. Holt

While specifically criticising the SSAs, will the hon. Lady home in on the aspect in Durham and Langbaurgh with which she particularly disagrees? Is her reason based on the fact that that area does not get large sums under SSA, like Langbaurgh, because they do not have a large immigrant population? If so, does the hon. Lady wish to have a large immigrant population in Derwentside to get more SSA?

Ms. Armstrong

That intervention is somewhat bizarre. I am arguing that SSAs should be related to an area's needs.

Mr. Holt

They are.

Ms. Armstrong

I am sorry, but they are not. When regional policy was actively pursued in the north, much money was spent on infrastructure—for example, on making sure that our housing was adequate. That made us ineligible because of the way in which SSA is calculated. I shall not pursue the discreditable views of the hon. Member for Langbaurgh (Mr. Holt). I wish to talk about the needs of my constituents.

Before last month's elections in Derwentside, the Conservatives held three seats—they now hold only two.

Mr. Holt

How many do the Liberals have?

Ms. Armstrong

The electorate have had their opportunity to give their verdict on the Government's legislation and actions. They made that clear in Derwentside.

Mr. Holt

What about the Liberals?

Ms. Armstrong

The district council is overwhelmingly Labour, gaining an overwhelming vote of confidence from the electorate at the elections.

Mr. Holt

How is Derwentside doing under Labour?

Mr. Deputy Speaker (Mr. Harold Walker)

Order. The hon. Member for Langbaurgh (Mr. Holt) must not persist in heckling from a sedentary position. I hope that he will desist.

Ms. Armstrong

Derwentside district council—

Mr. Holt

Now will the hon. Lady answer?

Mr. Deputy Speaker

Order. I very much hope that the hon. Member for Langbaurgh will not disregard my advice.

Ms. Armstrong

Consett is located in the Derwentside district. In 1980, the economy of Consett and the surrounding area depended on the steel industry and related industrial activity. Because of the nature of the area and the town's location, the problems facing the district during the past decade are, thankfully, unique. Over the past few years since the last general election, Ministers and Conservative Members have lectured me about the economic miracle in Consett and told me that I should be grateful for the increased activity and should not run down my area when pointing to its needs.

None of the regeneration would have been possible had it not been for the determination of Derwentside district council, which went into partnership with the public sector, the voluntary sector and whoever was prepared to invest or to work in the area—it was prepared to do whatever was necessary and possible to attract industry and support. It cost the electors of Derwentside money, but they took, and take, the view that, if they had riot been prepared to contribute, their area would die. Because of their determination to have a future for themselves, their families and their community, they were determined to contribute to attract support from the European Community, central Government, regional agencies and the private sector. Derwentside industrial development agency is a model for many other parts of the country of the way in which public and private sectors can work well together. It cost money, but it has not solved all the problems.

Over the past year, measured unemployment in Derwentside has risen by 16 per cent. and 3,925 people are unemployed. The unemployment figures in Henley, the Secretary of State's constituency, are slightly different. Unemployment rose by 150 per cent. during the past year, but the number of people unemployed in his constituency is one third the number of Derwentside. The base in Derwentside is a much bigger problem to overcome.

Serious problems still exist in Derwentside. The council decided that it had a responsibility to fight for economic regeneration, so it spent to ensure a future for the area, even though regional support through the regional development agency has declined significantly over the past decade. Now the council is told that, by making that commitment, it is going against the Government's views of what an authority of its size should spend. The Government have no idea of the problems that the area faces. A council has a responsibility in those circumstances to meet the needs of its population and to work with it to secure a future. An enormous amount of work must still be done.

If the Government succeed with the Bill, they will be saying to the people of Derwentside, "We do not see you as having any future. We are not prepared to support you in creating a future and opportunities for the people you serve." I cannot support such a Bill or such vindictive action, and I hope that Conservative Members will think again.

7.49 pm

Mr. Patrick Nicholls (Teignbridge)

I suspect that it will be a good few years before we hear the last word on the community charge, but even at this stage one can make two points which will probably command some support from Conservative and Opposition Members. First, the community charge was not perceived as fair; secondly, whatever the right amount should be, it was clearly costing too much.

On the question of fairness, there is no way in an imperfect world that there will ever be agreement across the board about what is a fair basis for local government taxation. Having said that, it has become clear to me from the many people to whom I have spoken in my constituency that even though some have misgivings about the council tax, it is seen on the whole as being fairer. In an imperfect world, that is probably the most that we could expect.

The amount is crucial because I suspect that if we had got the amount right in advance, people would not have picked away at the concept of the charge to decide whether it was fair. We did not get the amount right and the amount was too high. It is one thing to ask how much the amount should be and one can bandy figures around. It may be difficult to define what a fair amount is but, in the end, one can see what is fair. It has seemed to me for a long time that the way to arrive at the appropriate amount for a local government tax is to shift some expenditure back to central Government. It seemed clear to me that, in these days, 25 per cent. is probably too large a proportion of expenditure to expect a local authority to raise. It is now 14 per cent. as a result of the measures taken in the Budget by my right hon. Friend the Chancellor, which seems about right.

Even if we now have a structure which is fair, and even if we now have a mechanism to ensure that the amount is seen to be fair, that can only work provided that one absolutely crucial point is made—we must ensure that the amount that a local authority can raise in local taxation is to some extent controlled.

One of the miseries from the community charge debate and one of the things that may yet make it worthwhile is to try to learn what harsh experiences sometimes teach us. I have seen the operation of the community charge from inside and outside Government, and it seems that the critical aspect is to recognise that no control mechanism will work except capping. The theory was great. The theory was that, in some way, the system would police itself; that, if a local authority levied at too high a level, the electorate would in the end deal with that and there would be a self-correcting mechanism. It is a tremendous theory, which makes perfect sense, provided that it is only talk. In reality, it did not work. Any responsible way of approaching the problem must acknowledge that simple fact.

There are probably three principal reasons why we did not succeed in producing a situation in which the electorate would pass their own judgment on the level of the community charge in a particular area. First, in many parts of the country it is unrealistic to think that there would be a meaningful change in the complexion of local party government. Some areas are strongly Conservative, whereas others are strongly Labour. In my experience, it is unrealistic in such areas to think that there will be such a sea change in attitude that the community charge, or the local government tax, can be controlled.

Secondly, if it is correct to say that the electorate will pass judgment, they can do so only after the charge has been introduced. The electorate are never able to pass judgment beforehand or at the time. Therefore, even if there is some electoral retribution around the corner, it does not happen soon enough. In the meantime, a locality may have imposed on it a community charge which is unjustifiable. A considerable time might elapse before the electorate can do anything practical about it. Once again, the system breaks down.

Perhaps the most important reason why leaving the decision to the electorate does not work is that, faced with the responsibility of saying that their local authority is at fault, the good old British electorate will instead blame the Government. It has been an interesting experience to receive correspondence from people who readily admit that they understand that their local authority is responsible for setting the level of the charge, but who nevertheless decide that the Government are to blame.

What happened in my district council is an interesting example. It is an issue with which I hope that my hon. Friend the Under-Secretary will deal. I do not think that hon. Members are especially aware of the circumstances in my district council. The charge that it set was certainly larger than I should have liked, but it paled into insignificance when compared with what happened in many Labour-controlled areas. It was interesting to see how the debate took place locally. There was an expectation that the local council would set a community charge in line with the SSA. The debate was heated, and there was an initial vote. It seemed as though a proposition had been carried and as if a charge would be introduced at a certain level. There was then a recorded vote on a narrow majority.

Suddenly, the electors of Teignbridge were faced with a community charge which, although nothing like as great as would have been imposed in a Labour area, was being imposed in an area with no overall Conservative control where people noticed that it had been set at a far higher level than the Government would have wanted. When people wrote to me about that, they acknowledged that the Government were not directly at fault because the local council had set the charge, but they asked, "Why on earth did the Government not see it coming? Surely all your experience of local government was such that you must have realised that, given a free hand, some local authorities will spend."

Authorities may spend from the best of motives, but if we want to see an ultimate discipline imposed on local authorities, we cannot leave it to the electoral mechanism because that will not work, and we have seen that in practice. People said to me that it might not be the Government's fault on this occasion, but capping powers exist. They argued many times that such powers are used only in the grossest of cases and should be applied more widely.

One of the things that I hope to find out, now that the £15 million exemption has been removed, is at what level the Government are prepared to tell a local authority that they have confidence in the SSAs, that they will negotiate with the local authority but, if the local authority goes beyond a certain level, what degree of excess the Government are prepared to sanction.

The starting point must be that we have confidence in the SSA mechanism. I was once on the inside and had responsibility on a day-to-day basis for the calculation for that formula. It was possible to see that it was fair and uniform and that, in the process of negotiation, it could be made to fit as best as could be in a particular area. If the Government believe that the SSA is an appropriate level, it seems strange that the charge will have to be very much in excess of it before the Government step in. I am aware of people who have been in local government—as I have —who say that that is ridiculous and that the Government are detracting from the right of people to elect their own representatives and that they should have the final say.

I am in favour of people having the final say; I am in favour of democracy. But let us make no mistake—local government is the creation of the House of Commons, which must take the ultimate responsibility for revenue raising in this kingdom and, at the end of the day, the people will decide that, if they do not like the Government of the day, they will put that Government out of office. That is the way it should be, and I have no complaint about that system.

For a local authority to pretend that it can set up an alternative sovereignty and say that its judgment, and not that of the House, must prevail is an extraordinary proposition. Too often, we mouth such sentiments as, "It must be a matter for the local authority—we mustn't interfere." Sometimes we must get back to first principles and the first principle in this issue is that the House of Commons must make the ultimate judgment, and bluntly, the House and the party of Government will be put out if the electorate disagree with the choices that they make.

We are debating Government policy and it is right that we should. However, when people assess the worth of the Bill and examine the provisions in it, they will want to know something about the alternatives. I found it fascinating—I say that with all the insincerity at my command—to see the hon. Member for Dagenham (Mr. Gould) thinking desperately on his feet trying to work out how to explain that, in extremis, there must always be a reserve power to cap. His explanation was that it was something to do with fraud. We all know that, with matters of fraud, one does not have to a reserve power to cap. We all know that fraud can be dealt with in any event.

The hon. Member for Dagenham apparently forgot what his earlier explanation was. At one time, it was not fraud. He said: It's really just a hypothetical question to ask us to define what would be extreme circumstances. What I am saying to you—I am not ducking your question in any sense—I am saying in extremis that reserve power would have to be reserved, but it's impossible to say in advance what those circumstances would be". There we have it from the hon. Member for Dagenham. There will be the terrors of the earth, but he is not certain what they are.

We heard this evening a wriggling, squirming and giggling assurance, which came through in the end, that a Labour Government would not cap. On 15 February 1991, the hon. Member for Dagenham was asked what he would do about a 60 per cent. rise. He said: Well I don't see, even then, that we would want to come in … and cap". That was his attitude. In a sense, one would expect nothing less from the Labour party; one could say that, in the end, the hon. Member for Dagenham came clean under some pressure and admitted that that was his attitude.

What I found extraordinary was to hear the hon. Member for Eastbourne (Mr. Bellotti) in no way try to dissociate himself from that proposition. He was eager, anxious and positively bouncing to associate himself with the Labour party.

Mr. Bellotti

indicated assent.

Mr. Nicholls

The hon. Member for Eastbourne is nodding his assent now. He has made it clear that he too would see no restrictions imposed——

Mr. Bellotti

indicated assent.

Mr. Nicholls

I am glad to mention the hon. Gentleman's sedentary assent, so that it can be recorded in Hansard. The hon. Gentleman made it clear, and continues to do so, that he can see no circumstances for capping.

The hon. Member for Eastbourne mentioned a passing acquaintance with local government in the west country. I remind him that we too can remember the experience of Liberal affairs in local government in Devon. We can remember a time only about five years ago when a Liberal administration was kept in power in county hall by the Labour party. The price that the Liberals were prepared to pay was to agree to abolish Devon's last grammar school. The reality of Liberal Democrats in local government is that they will always jump into bed with the Labour party in the end. It says much for the Labour party that, in the end, even it found the association with the Liberals so disgraceful that it felt the need to withdraw.

In the end, the House of Commons must act as the ultimate protector against the exploitation of the people. Without proper capping powers, that exploitation will continue. The experience of the community charge has been bad and painful enough. It would be unthinkable for us not to be prepared to learn from our mistakes. The pity of it is that the Labour party and the Liberal Democrats have shown tonight that they are quite incapable of learning from a mistake. Mercifully, that charge cannot be laid against the Conservative party.

8.2 pm

Mr. Dick Douglas (Dunfermline, West)

I want briefly to follow the hon. Member for Teignbridge (Mr. Nicholls) in his constitutional analysis of the protectors of the people. In a few months—we do not know how long it will be—we shall go to the country in an election. I very much doubt whether any hon. Member will say blandly to the electorate that the real protection of the rights of the people is the House of Commons. Candidates will be pleading for votes, and there will be little discussion, especially in Scotland, about the legislative sovereignty of the United Kingdom Parliament. There will be a great deal of speech-making about the sovereignty of the Scottish people. That shows clearly to me one of the major failures of the House of Commons, which was revealed in the nature and thrust of the speech by the hon. Member for Teignbridge.

The only part of the United Kingdom that had the poll tax in front of it, in legislative terms, was Scotland in 1987. The people of Scotland overwhelmingly rejected the poll tax, but the Government and the House of Commons in particular paid little or no attention to them. The Bill is a panic measure in a retreat from what could have been foretold—the tenacity of the people of Scotland. It is the result of ignoring the views of the people of Scotland, and of the massive campaign of righteous civil disobedience and non-payment in Scotland.

We have moved a considerable way. The hon. Member for Greenock and Port Glasgow (Dr. Godman) is not in his place. I understand his reasons and I am not referring to him pejoratively. He referred to an article on Sunday by a Scottish journalist, Mr. Ian Bell. The hon. Member quoted a remark by Mr. Ian Bell which showed that, on this occasion, he was speaking in terms that were not unfavourable to the Labour party. Mr. Ian Bell concluded by saying that "Labour opposes and Lang disposes".

What does Labour do when the Secretary of State uses powers that have been called "corrupt" by the hon. Member for Linlithgow (Mr. Dalyell)? Does Labour say, "Lie down and obey the law," or does it show some tenacity in its opposition? Perhaps the hon. Member for Glasgow, Garscadden (Mr. Dewar) will give us some idea of Labour's intentions when the capping powers are used, as they are being used in a sense by the Secretary of State at present.

In a point of order, I made an allusion to the nature of the Bill. It is a tawdry Bill. In view of the lack of Scottish legislation going through the House at present, there should have been a unique and specific Scottish Bill to deal with the matter expeditiously in relation to the position that prevails in Scotland. One way or another, we would have been given the opportunity of doing what is amply justified in terms of fairness. We could have abolished the poll tax in legislative form; it has already been abolished in practical terms because of the attitude of the Scottish people. We would have had the opportunity to abolish the poll tax not in 1993—if the Government persist in office —but in 1992.

There are two ways in which the poll tax could be abolished. The first way is not entirely favourable to me, but might suit the hon. Member for Garscadden. We could introduce a Bill to reintroduce the rating system. I understand that that is the short-term Labour party measure, and it could be done.

The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart)

Long-term.

Mr. Douglas

I may have it wrong, but I understand that it would be a short-term measure and that Labour has longer-term proposals, with which I do not want to deal tonight. The idea is that the Government of the day would reintroduce the rating system. In Scotland, the basis for rating is not too outmoded because of the recent revaluation, which caused us all the difficulties in 1985. It might be uprated without too much difficulty in terms of inflation.

I argue far more strongly that, given the time scale between now and April 1992, we could introduce a local income tax for Scotland without great difficulty. I do not argue the same case for Britain or for the United Kingdom as a whole, but I suggest that, in Scotland, the mechanism is there and that we could do that.

What have we gone through all the paraphernalia to do? We are considering the collection of about £800 million by means of a massive process of banding, valuation, revaluation, assessment and appeals, which would run in harmony with the poll tax registration. It is completely unnecessary. Why do I think that it is unnecessary? I shall repeat comments that I have made before, because they do not seem to be getting through to the electorate. [Interruption.] The hon. Member for Garscadden sniggers. Does he or anyone else in the House know any people who pay their rates or poll tax out of anything other than income? I do not know anyone who sells his paintings or other capital assets in order to make his contribution to local revenue. Everyone I know pays out of his income.

A tax related to income should be an income tax. We hear strictures from the Opposition about the change in the balance of taxation. They say that the Government have altered the balance from direct to indirect taxation. Might I ask the hon. Member for Garscadden whether it is the intention of the Labour party to go back on that? Would a Labour Government reverse the increase in VAT and return to a rate of 15 per cent? Those are important considerations for the electorate.

Mr. Allan Stewart

Does not the hon. Gentleman want an answer?

Mr. Douglas

I do not expect an answer, but the points that I make are important and must be put on the record.

We have seen an alteration in the gearing of local government funding. In Scotland, only £1 out of £10 of local authority revenue comes from what will be called the community tax or council tax. There may have been an argument in the past for using fairly draconian powers to cap local authorities because a substantial amount—up to 25 per cent.—of local expenditure was raised locally. Where is the thrust of that argument now in relation to gearing? The Government have no confidence whatever in the local economy or local accountability. A local income tax would create local accountability. It is possible to go either way. Other countries raise a much higher proportion of their revenue from local income tax than the United Kingdom.

I was heartened today by the decision of Grampian regional council, which is Labour-controlled, to support a local income tax. The vote was 23 Liberal and Scottish National party members for and eight Tories against, while Labour members, who could not make up their minds, abstained.

There is a further point in favour of a local income tax in Scotland. We could dispute the figures. We asked the Secretary of State to supply his own figures. He did so, but we dispute them. I wish to put it on the record for the Scottish National party that the necessary £800 million or so could be raised by a Scottish income tax of about 3.5p or 4p in the pound.

Mr. Allan Stewart

No.

Mr. Douglas

The Minister disagrees, but that is a matter for discussion and analysis by both hon. Members and experts. I am willing to have such discussions with the Minister.

To substantiate my support for a local income tax, I quote from the report of the Institute of Fiscal Studies. Although the institute argued initially for a property-based tax, the report says: In the longer term, however, if it is intended that local taxes should contribute more to the costs of local government, we see no alternative to the eventual introduction of a local income tax, either as a supplement to, or replacing, property taxation". That is a considered view.

I argue forcibly for a local income tax in Scotland by 1992. It would be possible to introduce it if there was the will to do so. The only objection comes not from Scotland but from the United Kingdom Treasury. That objection would persist whether a Conservative or Labour Government were in power. If we are to return to fundamental autonomy and accountability, local authorities must have a flexible and buoyant source of finance. The only one that would work is a local income tax.

In his speech, the Secretary of State did not deal with some detailed points. I am aware that some of the points that I intend to raise may be Committee points, but I fancy that we shall have a truncated Committee stage. Therefore, with your indulgence, Mr. Deputy Speaker, and that of the House, I shall ask the Under-Secretary to explain several points.

Clause 2(2)(a) refers to an excessive increase in those expenses over the total estimated expenses there mentioned of the local authority in respect of the financial year". What legal backing do the Government have for that definition? What does it mean in legal terms? Who will determine what is excessive? That is a fair point.

An open-ended suggestion is made in the proposed section 3A in clause 2(2)(b). It says: Different principles may be determined under subparagraph (3) above for different classes of local authority and the Secretary of State may classify local authorities for the purposes of this sub-paragraph by reference to such factors as he thinks fit. What does that mean? What criteria will be used when the Secretary of State forms a view of what he thinks fit?

Clause 3(9) says: The Secretary of State may be order amend, or substitute another definition for, any definition of domestic property for the time being effective in relation to Scotland. What is the nature of the power that the Government seek? It is an open-ended power. The Secretary of State could make up his mind and impose on us any definition of domestic property that he thought fit.

We are told that clause 4 applies to England and Wales only. Clause 4(6) contains significant definitions of the charging authority, the community charges registration officer and the valuation officer. None of them applies to Scotland. The Bill contains no definition of a valuation officer in Scotland. The Secretary of State said that the Commissioners of Inland Revenue would be the top dogs. This is a new procedure, under which the local assessors in Scotland would not be asked to work in harmony with the Commissioners of Inland Revenue. I am open to being convinced otherwise by the Minister, but as I read it, the local assessor will be subordinate to the Commissioners of Inland Revenue. As far as I am aware, that is something new.

Mr. Allan Stewart

The hon. Gentleman makes several perfectly proper and constructive points The Commissioners of Inland Revenue will ensure consistency of approach north and south of the border. The responsibility for carrying out valuations will lie with the assessors.

Mr. Douglas

I am sorry to pursue the matter, but that is not what the definition of a valuation officer says. I refer the Minister to clause 4(6), which says: 'valuation officer' means any officer of the Commissioners of Inland Revenue who is for the time being appointed by them to be a valuation officer or a deputy valuation officer for the purposes of the valuation under section 3 above. The Parliamentary Under-Secretary of State will have an opportunity to clarify that when he winds up, which I would welcome.

My major objection is to the regulations that could be made under the Bill, which is an important one for local democracy. It is a departure from the procedures that have existed hitherto. It will be an enabling Bill, but the Government have the audacity to provide in clause 7(3)(a) that the power to make orders will be done under the negative procedure for statutory instruments.

It surprised me that the hon. Member for Garscadden made no real attempt to state what the Labour party would do if and when it entered office to overcome the massive difficulties that local authorities are encountering in ending the poll tax.

In the interim, the Government have a responsibility to abolish the poll tax a year earlier in Scotland. I have suggested some ways in which they could do that, and they have a major responsibility to consider the collapse of local authority finance in Scotland. The Government cannot wash that away and say that it is a result of massive campaigns of non-payment. The situation has been imposed by the Government, and anyone with credibility in the Government has a responsibility to consider what is happening in Strathclyde, Lothian and other regions of Scotland. The Government will rue the day if they do not take action immediately.

8.21 pm

Mrs. Edwina Currie (Derbyshire, South)

I rise to support the changes in the Bill as I think they are very welcome indeed.

May I take the House back to the question of capping powers that are included in the first part of the Bill? My main local authority is Derbyshire county council, led by the estimable Mr. Bookbinder, who is rapidly becoming known throughout the country, as we have known him for some time in Derbyshire, as the epitome of irresponsible local government. It is a Labour-controlled authority and it was capped last year. Its budget was reduced from £560 million to £520 million which, given the size of Derbyshire and the fact that on the whole we have relatively few problems, is one hell of a lot of money to be spending and to be lifting from local people.

This year, Derbyshire has not been capped and that gives point straight away to the suggestion that the existence of effective capping powers has a substantial effect on the councils concerned. The very fact that the powers exist means that often they do not have to be used. Fewer councils are being capped this year than were being capped last year, and some of the councils that were capped last year, such as Derbyshire, have decided to behave themselves, with the consequence that they are being much more sensible. As a result, in Derbyshire, the budget is up 7 per cent.—just a smidgeon under 7 per cent. —from last year to around £556 million. That is exactly the amount to the whisker that the county council could increase its budget to under the stated capping rules set out by my right hon. Friend the Secretary of State for the Environment last autumn without being capped this year.

I would suggest that Labour-controlled county councils such as Derbyshire are very cute indeed about the capping procedure. They know exactly what the rules are, they are smart enough to work it all out, and they are being entirely and thoroughly cynical about the way in which they operate the rules. Let me illustrate one result of their cynicism.

Last year, Derbyshire county council was capped but, hey presto, there were no redundancies. This year, the county is not capped and has seen a 7 per cent. rise in its budget. Suddenly, 400 teaching jobs are to go, other redundancies have been announced, music lessons have been cut, swimming lessons were stopped in March, libraries all over the county have been closed and museum pieces have been sold to raise money, which has resulted in the authority being thrown out of the Museums Association and thus losing grants. In other words, everything has gone completely berserk up there, and my constituents are extremely worried.

What puzzles me about this is that, if there has been an increase of 7 per cent. of spending in Derbyshire—a 7 per cent. increase is not a cut—why do we need any redundancies at all? What on earth does the county think it is playing at? Other councils have been capped and made similar judgments, and if they can manage, why cannot Derbyshire manage as well?

If one takes the trouble to read Public Service, the newspaper of the National and Local Government Officers Association—NALGO—one sees that Basildon has made it clear that it can be capped without cuts and redundancies and that Bristol and Lambeth have also made that clear. That leaves open the question: why do we need redundancies in Derbyshire at all?

The answer is that we do not need redundancies in Derbyshire. They have occurred in the most cynical way possible. It would have been very easy for the council to keep within its budget in the way that other councils have kept within theirs since councils were created, by, for example, marginally increasing some charges. The council has failed to increase, and has made a virtue of its policy of refusing to increase, the charge for school meals for 10 years. Therefore, much of the spending has gone on an increased subsidy for school meals. That subsidy is not to free school meals which are covered by statutory policy, but to others. Children in my constituency and that of the hon. Member for Derbyshire, North-East (Mr. Barnes) arrive at school in big cars and yet have their food subsidised because the council believes that without the subsidy they would not eat. What absolute, impossible, irresponsible nonsense. That is where much of the increased spending in Derbyshire is going.

Mr. Harry Barnes (Derbyshire, North-East)

What has that to do with the Bill, which is about poll tax capping for authorities with budgets under a certain size and relates to, for example, South Derbyshire district council? Does the hon. Lady feel that South Derbyshire needs such a Bill?

Mrs. Currie

I do not think that the hon. Gentleman has been listening. Perhaps if he listened a bit more he would learn a bit more. If he more willingly paid his own community charge and gave a lead to the whole of Derbyshire to do that instead of pretending that people on salaries of the kind that we pick up here should not have to pay anything, I should listen to him more carefully. I shall do him the courtesy of listening to him again.

Mr. Barnes

The hon. Lady is behind the times, because my community charge has been paid. I was not going to leap to the position in which it would cross into another financial year.

The hon. Lady's circumstances are such that she gained considerably from the operation of the poll tax and now wants further legislation that would benefit her still further. She has benefited from the £140 reduction, she benefited from the original legislation, and now she seeks to benefit from this Bill. If the hon. Lady wants to talk about individuals, she should talk about herself.

Mrs. Currie

The hon. Gentleman did not pay a bean until he was threatened with a summons. He and his colleagues in the north of the county had to be threatened with being taken to court by his own Labour-controlled council a year after he received his community charge bill, like all the rest of us. He has a long way to go before he has any credibility. In response to his point, let me say that I am interested in protecting all my constituents, from the very poorest upwards. I am trying to do my best to protect the hon. Gentleman's constituents as well.

Mr. Brandon-Bravo

My hon. Friend touches a point when she speaks about trying to protect the poorest and most vulnerable in our society. She has spoken of the cuts and redundancies that Derbyshire introduced for purely party political purposes and for the publicity it wanted to achieve. Does my hon. Friend accept that much the same happened in Nottinghamshire? It was not capped and had a substantial increase in its budget, but to make a political song and dance, the council wanted to close 12 old people's homes. Happily, it was its own supporters that forced it off that political nightmare.

Mrs. Currie

My hon. Friend, who is also my neighbour, is absolutely right. In my home county, school meals alone are now subsidised to the tune—an admitted tune—of over £13 million, while cuts are being sought to the tune of £16 million. Derbyshire needs no cuts, and it would be easy for the county to balance its books. The cause of the problems in Derbyshire, Nottinghamshire and other such councils is not the Government's action on capping but cruel, stupid and short-sighted administration at county headquarters. I am convinced that, before the end of this financial year, members of Derbyshire county council will be disqualified from public office—and good riddance, too.

This debate not only concerns Derbyshire but is of national significance—[Interruption.] Opposition Members have spoken about their constituencies and would criticise me if I did not speak about mine. I am delighted and honoured to have the opportunity to do so in the House, and shall continue to do so after the next election—so they can put that in their pipes and smoke it.

Mr. John Maxton (Glasgow, Cathcart)

Did the hon. Lady vote for the poll tax Bill? If so, did she do so for one of the good reasons that was put forward by the Conservative party—because it would make local government accountable? Accountability means giving local councillors the right to take decisions and to pay the price through the ballot box. Why is the hon. Lady now so much in favour of removing that accountability?

Mrs. Currie

I shall follow the hon. Gentleman down the route that he suggests. I voted for the community charge legislation, and have always voted for accountability in local government. I spent 11 years in local government and developed a considerable knack at spending enormous amounts of public money and explaining myself afterwards to the electorate. The hon. Gentleman is really saying that the Labour party has a devil-may-care approach to running the economy, which is of far greater concern than the accountability of local councils.

I understand that the Labour party is, more or less, against capping, although some Labour Members talk of reserve powers. Indeed, Opposition Members from Derbyshire have been amongst the strongest advocates of doing away with capping and say that they would rely on the ballot box. That was the approach that we took and it does not work. I wish to heaven that it did. The hon. Member for Glasgow, Cathcart (Mr. Maxton) has only to look through today's vote and the blue pages of more than 800 motions signed by hundreds of hon. Members to see how often we would vote for more money to be spent and how seldom we would vote, in this House, this country or this world, for taxes to be raised to match that spending. That is the problem

Over and over again in local government, in my constituency, in the wards that I represented in the city of Birmingham and the wards and constituencies of Opposition Members, we find that, given the chance, people vote to spend more money and to defer the tax or have it sloughed off on to somebody else. That is human nature and is, ultimately, why this Bill has been introduced.

Mr. Brandon-Bravo

Perhaps my hon. Friend would like to develop this point a little further in the light of the comments of the hon. Member for Eastbourne (Mr. Bellotti), who was, I believe, speaking on behalf of the Liberal Democrat party. He said that, over the past few years, local authorities should have had another £58,000 million. That figure was based on spending during a period when there had been spending limits and capping on those local authorities. I do not know whether the Liberal Democrats and the Labour party would impose limits or whether that £58,000 million would then become £68,000 million or £100,000 million. Where on earth do they believe that that money will be found? It is the biggest con that I have ever heard.

Mrs. Currie

May I suggest to my hon. Friend that the money would come from the same place as it has always come from when Labour Governments have been in office and when Labour Governments have been backed up by Liberals because they have not had a majority in the House. It would come from the printing press. It is the easiest thing in the world to print or borrow money, and to see inflation rise and then wonder why it has risen. The net result of all those promises would be an increase in taxes, borrowing and inflation—there would be no choice —because that is the inevitable result of the promises and policies that Opposition Members offer.

The appalling speeches that we have heard from the Opposition tonight show that the Labour party is not ready or fit to govern—

Mr. Maxton

We are going to govern.

Mrs. Currie

No, they are not going to govern. That is what the hon. Gentleman said before the last election and the election before that, and look what happened. Indeed, that is what they said before the 1979 election. The electorate knows that the Labour party is incapable of running the economy because it makes promises that it cannot, could not and should not keep. There is no such thing as Labour probity or prudence on public spending. The fact that it is against the Bill proves that.

The Labour party would replace the Audit Commission with a quality commission, which appears to be designed so that more money can be spent instead of being kept under control. It would abolish compulsory competitive tendering which, by any measure, has produced major savings and improvements in quality in local government. The Opposition would have regional assemblies so that, on top of Derbyshire county council, we would have a regional assembly in the east midlands. My hon. Friends and I would have to cope not only with parish councils, district councils and county councils but also with a regional assembly. I presume that that, too, would be financed out of thin air. I remember when we got rid of west midlands county council, which we brought in, and how no one noticed that it had gone because it did nothing of value. Heaven help us.

It is apparent that the Labour party has no policy to control local government spending. It is simply against ours and against every sensible effort that we make in Bills such as this. Their approach is neither subtle or intelligent nor plausible. Capping is absolutely necessary in the national interest. It is part of the long hard struggle to reduce inflation and to keep it down. Clearly there should be no exemptions, and that is why the Bill is necessary.

The greatest pity of all is that we did not take such a measure when we introduced the community charge in 1990.

Mr. Maxton

In 1989.

Mrs. Currie

I agree with the hon. Gentleman, as he is right about that.

We should have taken powers in 1989 to cap every local authority in the country, knowing that it would probably not be necessary once those powers existed. If we had done so, I am sure that the introduction of the community charge would have been much less traumatic. Councils would not have been able to increase spending and load it on to the community charge. We may have been able to keep our promise of a community charge of about £250, which is the present average, and it is possible that we would not have needed to seek a third system of local government finance in as many years. However, I am convinced that the third system will be better than the previous two. If I say it often enough, I may convince my electors, too.

I hear the bone-crunching sounds of a Government who have learnt their lesson. My right hon. Friend the Secretary of State said that they do not intend to be caught again. However, in the background I hear the snorting noises of a Labour party that has not learnt its lesson about inflation, and never will. On that basis, I am more than happy to support the Bill.

8.39 pm

Mrs. Maria Fyfe (Glasgow, Maryhill)

During this lengthy debate, I have been making a careful note of the issues that Conservative Members seem to feel have some substance. The hon. Member for Derbyshire, South (Mrs. Currie) said that it was necessary to cap councils as part of the Government's macro-economic control of the economy, but at the start of the debate my hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett) asked the Secretary of State to explain how councils making local decisions would affect the country's economy in a macro-economic sense, to which he received absolutely no answer. The answer has never been given. Conservative Members keep asserting that that is so, but never give evidence to prove it. There is quite a weight of academic evidence to show that the idea is nonsense.

The hon. Member for Teignbridge (Mr. Nicholls) gave three reasons why councils had to have their poll taxes capped. His first curious reason was that a council can go on and on, never change hands and remain in the power of one party. Most distressing to him was the idea that a council could remain in the hands of the Labour party for years and years. It does not seem to have occurred to the hon. Gentleman that that is so because the local electorate want it and, if and when the day comes that they are dissatisfied with the council, it will be removed from office. That is why there are elections on a fixed term of every four years. Incidentally, that is a fairer system than the one in Parliament, where the Prime Minister holds the starting gun and can decide to hold an election when he or she feels that the time is appropriate.

The hon. Member for Teignbridge also said that the local electorate could not respond to decisions that they did not like because the time span involved meant that they had to respond too long after the decisions were made. He must think that his local electorate are incredibly stupid and have short memories if he believes that they cannot recall decisions made by their local authority that they did not like. All of us, particularly those who have been involved in local government, are well aware that local authorities do not always please all the people all the time. People can be annoyed with some decisions, but in local elections most electors have the common sense to make up their minds based on the whole scheme of things, not one issue that may have annoyed them two or three years before. They take the rough with the smooth and decide accordingly on the general performance of the party running the council and the opposition parties.

The hon. Member for Teignbridge offered another curious reason why councils need to be capped—that people decide that, although they are dissatisfied with local government, central Government are to blame. Could they not be right? Perhaps the Government are to blame for the decisions that the council have to make. We have only to think of occasions such as tonight when the Government are giving themselves powers to impose on a council decisions that the voters of that council did not want and clearly voted against. It is understandable but not satisfactory that people react by blaming the local council. When they decide that the Government are to blame, they are perfectly correct.

One Conservative Member said that one reason for imposing capping was that some people who vote in local elections do not pay rates and so are not entitled to a say. That is a curious argument that we have heard throughout the debates over the years about central Government control of local authorities. It was pointed out that, in reality, nearly everyone paid a share of the rates by making arrangements within families and households. Even if that were not so, it does not seem to have occurred to that Conservative Member that people who do not pay income tax have the right to vote in a general election. Is he saying that that should not be so? If so, let him say so clearly now. The principle is exactly the same: if one is entitled to vote for national Government whether or not one pays taxes, one should be entitled to vote for local government whether or not one is able to contribute to the local authority coffers. To say otherwise is simply an attack on the poor, because the only people who would be ineligible to pay would be those without the funds to do so.

Although it will be 1993 before the poll tax comes to an end, people are still being forced to live with it. Councils that are desperate to spend money on much-needed services are having to advertise and take out large, almost full-page, adverts in newspapers urging people to pay their poll tax bills. People have been under the mistaken impression that they need no longer pay because the Government have put an end to the poll tax. It is an act of gross irresponsibility on the Government's part to allow people to believe that, because the poll tax is being brought to an end, there is no need to pay it. The Government should convey more clearly the message that the poll tax will not come to an end till 1993. They are not facing up to their responsibility to ensure that they play their part in running local authorities. Far from contributing to what councils need, the Government are already capping local authorities in Scotland. The case of Lothian council has already been mentioned.

Earlier in the debate, some of us asked why the Government felt that there should be seven bands, and those fortunate enough to come within the highest band would have to pay only 2.5 times what those on low incomes and in poorer housing who fell in the lowest band would have to pay. I said that surely, if some hon. Members were so wealthy that they were immeasurably better off than others, were in the top band and were voting in the House, they should declare that fact when making their speeches. Conservative Members cried out that that was the politics of envy. In reality, we are talking about the politics of greed and of people who are extremely well off. As my hon. Friend the Member for Dagenham (Mr. Gould) said, if some people save money, other people —those who are far less well off—end up paying a higher proportion of their low incomes. However, that is not the worst of it: such people pay more and suffer the effects of cuts in local authorities.

Mrs. Currie

Will the hon. Lady give way?

Mrs. Fyfe

I shall give way in a moment.

Conservative Members have argued that we need not believe it when councils forecast large cuts, because they are not necessarily accurate. Conservative Members say, "Don't worry—it won't turn out to be as bad as they predict." Let me tell the hon. Member for Derbyshire, South in particular that the Secretary of State for Scotland is currently forcing Lothian council to make budget cuts of £18.5 million, which is not, as Ian Bell said, a small sum of money in anyone's terms. It is a reality, not a day dream, that Lothian council is having to consider closing schools, old people's homes, children's centres and evening classes, bringing to an end free bus travel for the elderly, and cutting road repairs. Will the Government say which, if any, of those proposals they think would allow acceptable and decent levels of service? They never answer that question, but tell the councils to make the cuts and leave them to pick up the pieces as best they can.

Mr. Allan Stewart

Why does not Lothian council simply adopt the budget increase of Strathclyde—the hon. Lady's authority? If Lothian had done so, it would not have been subjected to selective action.

Mrs. Fyfe

That was an incredible intervention, when we bear in mind that Strathclyde council faces major cuts and will have to decide how to cope with them. [Interruption.] The people of Lothian voted for Lothian council's policies because they approved of them.

Mrs. Currie

The hon. Lady and I will ignore the comments of the chaps sitting around her who are trying to stop both of us speaking. Would her point about wealthy people paying more apply also to the hon. Member for Linlithgow (Mr. Dalyell), who lives in a castle, to the right hon. Member for Leeds, East (Mr. Healey), who has done well out of the sale of his autobiography—I congratulate him on that—or to the hon. Member for Kingston upon Hull, East (Mr. Prescott), who lives in a castle and who drives to work in a ruddy great Daimler?

Mrs. Fyfe

The hon. Lady seems to miss the obvious point. Some Opposition Members are considerably better off than the average person, but they are not trying to dodge their responsibilities and get out of paying their fair share. That is the difference. Some Conservative Members are doing that, and have been doing it for years. That is their whole raison d'etre: making sure that the better-off can dodge their responsibilities, sometimes by allowing employers who are subsidised by the taxpayer to pay low wages and sometimes by other dodges that have been thought up in the past 12 years.

Mr. Dalyell

To return to the Minister's intervention, does my hon. Friend accept that, on the figures, Strathclyde receives £914 per capita on the budget estimates, and £733 in respect of Government support per capita? Lothian's figures are £922 and £645 respectively, so the Minister's attempt at a comparison with Strathclyde was quite wicked. The figures for Dumfries and Galloway are £941 and £762. So what has happened to Lothian is a matter of pure political vindictiveness and spite.

Mrs. Fyfe

My hon. Friend is absolutely right. He made a point about the Secretary of State's own area earlier, and the right hon. Gentleman failed to respond to it.

I ask again: which cuts should Lothian make which the Government believe would be acceptable? People voted for those services and it is sheer effrontery on the part of the Government, who can muster only 10 seats in Scotland and only tiny minorities in local authorities, to turn aside electors' decisions in this way.

Ian Bell's article in The Observer has been mentioned. He was of course right to attack the nature of the cuts and the way in which the Government are undemocratically imposing their will on the people who voted for the services provided in Lothian. The article comes up with one way of opposing such cuts which the Labour party has not yet contemplated. Bell asks: Why not resign and allow the Tories to administer their own cuts? Why not fight local elections on this one issue? I do not see the point in—perfectly legally—resigning a seat and standing again for election. Councillors who had resigned their seats would have to stand on doorsteps asking local electors who voted for them in the local elections to do so again. Householders would want to know why, to which councillors would have to reply that they were seeking authority for the council to keep to the budget that it had set. Householders would rightly say, "We gave you that authority when we voted for you in the local elections. Why do you want it all over again?" If elections are held anyway and these councillors are re-elected, will the Government cave in? Not a bit of it. They will continue to impose their will because they believe that they have a sacred right to impose their views on local authorities, regardless of the outcome of local elections.

I certainly admire Mr. Bell's support for people to have what they voted for, but I suggest that his remedy does not work. I keep on telling people that if they believe seriously that local government should be local government and not an arm of the state—if they believe that it should have the right to run local authorities—there is no recourse but to vote at the general election for a party that genuinely believes in local autonomy, local democracy and local government. That is the answer. It is not an exciting one, but it is the truth, and soon the time will come when people can vote for such a party.

8.54 pm

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

Like many other hon. Members I came to the House with a background of quite a few years as a local councillor at county borough and district level. That was a satisfactory and worthwhile role, yet until I had been in this place for a year or two I had not truly appreciated the enormously important role that local government plays in our national life. I would be the first to admit, eight years on, that I probably appreciate even more now the necessary part that local authorities play and that they must go on playing it.

I am a great devotee of the role of local authorities. Although I understand the growth of anxiety in the past couple of years, I do not subscribe to the view that local authorities are too troublesome or that local finance is too complicated—"Scrap it all; let's do it all from Westminster." It would be tragic if that view were adopted, and I hope that it does not get to the starting gate.

Way back about 20 years ago, there was an understanding between this place and local authorities that here in Westminster resided the sovereign power, the law makers and the guardians of what the nation could or could not afford to spend. The parties were agreed on that. I do not recall capping in those days but I do recall that if the Government of the day in their wisdom wanted to rein in expenditure, as was their right, local authorities did their best to comply. All that was necessary was a circular from the Secretary of State at the Department of the Environment, or whatever it was called in those far-off days, and we in local government did our best in response. It never occurred to us in a major county borough such as Nottingham, whether Labour or Conservative-controlled, to do otherwise, because we accepted that the Government reside in Westminster.

All this changed, sad to say, when too many people began to think—and, almost by accident, legislation began to speak—of local government instead of local authorities. They began to think of local authorities as little governments in exile with almost unlimited powers in their areas. Piling absurdity on absurdity, such people developed the notion that someone else should pay.

The Labour party talks about the generality of taxpayers. In an intervention, I drew attention to the large sum that the Liberal Democrats say should have been given to local government. I do not believe that that sort of money is ever likely to be available. The change in philosophy and the loss of understanding between central and local government led to everything going badly wrong. The Liverpools, Sheffields, Hackneys and Lambeths have much to answer for when we reflect on the relationship between this place and local authorities over the past few years.

Mrs. Currie

Does my hon. Friend agree that the real tragedy that underlines the stupidity of the cuts that have been introduced by some Labour-controlled councils is that the most vulnerable in our society are hurt? Social services budgets are cut and old people's homes are faced with closure. Even in areas such as my constituency, libraries and other facilities are proposed for closure. In many instances, there is nowhere else for people to go. It is the very people who socialists tend to say they are trying to protect who are hurt the most in Labour-controlled authorities.

Mr. Brandon-Bravo

My hon. Friend is right. Whenever a Labour authority is faced with trying to restrain its budget, its immediate reaction is, "Who are the most vulnerable in our society? If those people are hurt, there will be headlines in the local press. We shall be able to say that the wicked Tory Government are forcing us to stop meals-on-wheels services or to cut home-help provision." It is always the sector that deals with the most vulnerable people which is under threat. Those are the people who are nailed to the wall by the so-called caring Labour party.

If the Labour party and the Liberal Democrats want a vast sum to be found in addition to that which is already spent, and that is no small sum, and if expenditure is to be unlimited, who do they think will pick up the bill? I fear that those who are in a position to do so—the enterprising, the highly educated and the highly qualified—will not stay around waiting to be robbed, and penal taxation comes down to plain robbery.

Under the Labour Government there was penal taxation. Income tax was levied at 83 per cent. in some instances, and it was possible to be faced with 98 per cent. taxation. Even the basic rate which the ordinary working-class person paid was 37 per cent.—and that was before national insurance. In those days, we came to realise, as we are saying now, that a Government can have 40 per cent. of something, which is better than the Labour Government's take, which was 100 per cent. of nothing. In many instances, the Labour Administration lost because of emigration. That must not happen again.

When the opposition parties talk about unlimited spending, we must remind them that the able, the skilled and the highly qualified will pack up their bags and go. It is a small world, and we cannot ask people to stay loyal when they are being robbed through penal taxation.

I have no doubt that it is necessary for the Bill to be enacted. As my hon. Friend the Member for Derbyshire, South (Mrs. Currie) said, "Oh that we had had draconian capping powers when we voted willingly for the concept of the community charge." When the bills came through for the first year—I accept that this is a simple rule of thumb but the result would have been not one cut—we could have provided that no local authority could spend a penny more than it had spent the previous year plus the rate of inflation. I agree that that is a somewhat simplistic approach but it serves to make my point.

If that approach had been adopted, the community charge overall would have been £2.5 billion less than it was, roughly £70 less for every adult in the United Kingdom. As my hon. Friend the Member for Derbyshire, South said, "Oh that we had had that sort of limit imposed when we changed from the rating system to the community charge." Who knows, perhaps the charge would still have failed, but we would have had a charge reasonably in line with what we thought it would be when we voted for the enabling legislation. If that had been done, it is possible that we would now be in a different ball park.

I hope that the powers in the Bill will be as tough, or even tougher, when we have the new tax. For the first, perhaps, two years I would like to see an absolute limit on spending, so that the new system can be seen and judged on its true merits—and, unlike the old system, cannot be wrecked because authorities up their spending to discredit it. Let us not fool ourselves; many local authorities were determined to ensure that, whether they agreed or disagreed with the community charge, they wrecked it by whatever means at their disposal.

In my county council, the charge was upped by over £100 for every adult in our city. I thought that that was outrageous, but we could do nothing because my lords and masters—my senior colleagues on the Front Bench—never believed that local authorities could be so wicked as to screw their constituents to the wall by charging them an extra £100 for the pleasure.

Even now, after all the publicity and the details that appear on our community charge bills, I still receive the usual crop of queries from constituents. They ask why on earth they are charged some £20 for excess county council spending when they live in the city. If ever there was a case for a great city such as Nottingham to be able once again to run its own affairs, what has happened in the past couple of years says it all. That change cannot come about too soon—yesterday, please, Minister.

It is a pity that, having taken powers to cap authorities, we have not taken powers to force local authorities to collect their dues and taxes. Uncollected dues and taxes should not be lumped on to the backs of the innocent majority. Perhaps the district auditor should have the power to take action where, in his view, the local authority has been dilatory in sending out bills, never mind lax about collection. As a result of that laxity, a further financial burden is placed on the long-suffering charge payers—usually the majority of honest people.

The percentage of local spending funded from central taxation has now been increased so that only 14 per cent. is raised locally. We must have a system that avoids the trap that even the previous Labour Government recognised. Those of us who were on local authorities in those days—the 1970s—know that to be true. Today, a project may cost £100,000, and local councillors may say, "Never mind, we only have to find £14,000 and Westminster—the taxpayer—will find the other £86,000."

Capping is a necessity. It is even more essential when we are dealing with a ratio of 86 per cent. to 14 per cent. That gearing effect worries me most. If a local authority has to raise only 14 per cent. of £ 100 of spending and only spends £100, the Secretary of State's figures, which were quoted by both Front Benches, will hold water. But if that local authority spends £114, the poor charge payer must find £28. Therefore, his charge doubles. We cannot permit that because it would be an unjust reflection on a good Bill and a good scheme. We must ensure that that does not happen.

The valuation is set out in clauses 3 to 5. Although the old rating system may have been inaccurate, anomalous or difficult to understand, the valuations were precise. Until a few years ago, if someone carried out a home improvement which I believe added less than £30 to the rateable value, that was ignored. If the improvement added more than £30 to the rateable value, the home owner was penalised for spending his own money on his property and doing what many would argue was a national service by preserving the state of our housing stock.

The message from the Government seems to be that we should have banding for local taxation purposes. If my right hon. Friend the Secretary of State meant what he said when replying to my intervention when he presented his case earlier, I hope that it will be clear that there will not be precise valuations and that properties will be placed in particular bands. There must be no disincentive to the generality of home improvements, and people should not be frightened to spend their money on their own homes in case they are forced into a higher band.

It was said earlier that the value should change only when a house is sold. I hope that we do not pursue that path. If houses are valued according to broad bands, houses in a particular street that are all much of a muchness should be in the same band. It would be ridiculous if a house in that street was sold and attracted a higher tax simply because it had changed hands a few weeks before. I hope that all properties of a similar nature in a street will stay in the same band.

Mr. Tony Worthington (Clydebank and Milngavie)

Sit down.

Mr. Brandon-Bravo

I will sit down when I am ready. I was told to continue until 9.15 pm

It has been said that there will be problems about appeals. Under the banding system someone would have to be convinced that the property was in the wrong band before appealing. If someone thinks that the property is broadly in the right band or somewhere near the top, he is unlikely to appeal in case the appeal body shoves the property into a higher band.

I hope that we mean what we say and that there will be rough valuations placing properties in bands and that houses will not change in value if home improvements are carried out and that they will not change in value for taxation purposes on resale. If I can have those assurances, this will be a first-class Bill and it will pave the way to the new local tax structure which I hope will be presented to the House in this year's Queen's Speech so that it can be up and running before the next general election.

9.13 pm

Mr. Harry Barnes (Derbyshire, North-East)

In a sense, we are discussing two Bills today—a Local Government Finance Bill and a Local Government Valuation Bill—because the Local Government Finance and Valuation Bill falls clearly into two parts. The local government finance part is an extension of the 1988 legislation that introduced the poll tax and it is in keeping with the poll tax principles. We have not begun to get rid of the poll tax. We are building upon the earlier provisions for England and Wales contained in the 1988 legislation. The valuation part sets up what the Government call the council tax. I will not spend much time considering that as there will be a general election before the Government can introduce that principle and it will bite the dust in the long run. I should like to speak to clause 1 and about my authority in north-east Derbyshire, because that authority is seriously affected by the Bill.

Much nonsense is talked about the operation of the standard spending assessment and its application in capping district authorities. District authorities are placed in a much worse position by capping than are larger authorities, because they do not have the leeway to manoeuvre with funds. My authority has a current budget of £7.3 million and would be £1.5 million or 27 per cent. over the SSA.

According to the chop logic of the Government, that council is profligate and irresponsible, but nothing could be further from the truth. All the information supplied by the Audit Commission shows that my authority is well run and efficient and that it operates according to the normal tendering provisions. For example, its direct labour force has recently obtained the refuse collection franchise. However, it is close to the bottom of almost every list of grants and SSAs per head of the population or charge payers. That applies in the context of the 26 authorities with which it was compared by the Audit Commission.

A list in answer to a parliamentary question that I asked on 5 December puts my authority at No. 346 out of 366 authorities in terms of the percentage of grant that it receives from central Government. That being the case, one would expect it to have certain characteristics that the Government would think ideal, because it would seem to need little money. However, of the 366 authorities in England, only one receives a smaller proportion of SSA per charge payer—east Dorset.

That area and north-east Derbyshire provide a stark contrast. East Dorset is represented by the hon. Member for Christchurch (Mr. Adley), who has a majority cif over 22,000, and by the hon. Member for Dorset, North (Mr. Baker) who has a majority of almost 12,000. North-east Derbyshire is represented by me with a majority of 3,700 and by my hon. Friend the Member for Bolsover (Mr. Skinner) who has a majority of 14,000. I understand that north Dorset feels considerably aggrieved about the SSA level that has been adopted for it but north-east Derbyshire's grievance is even greater.

The details of the standard spending assessment require a full debate in the House. If I had the opportunity to speak in such a debate, I would deal with how the SSA is assessed, the different factors that are taken into account and the nonsense of the system in the context of north-east Derbyshire, which is seriously handicapped by the different methods of calculation. It is left with very little money from central Government and is now being handicapped by the total SSA level that will be provided. As my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) has yet to speak, I do not have time to describe that aspect in detail.

However, I hope that the Minister will agree to meet a deputation from north-east Derbyshire, to explain the iniquities of the SSA as it applies in that area. It has become doubly dangerous. Before, we had higher poll tax levels than we would have had with a reasonable SSA. Now, we are likely to face poll tax capping and to be unable to provide essential services. Once one takes into account the statutory provisions and the parish precept, which has not been ignored in the figures, little leeway is left. Non-statutory money remains, so that expenditure of £2.5 million would have to be reduced to £1 million, which would have a devastating effect on a whole range of services. I hope that the Minister will agree to meet our deputation.

9.20 pm

Mr. Donald Dewar (Glasgow, Garscadden)

The Bill is clearly born of the chaos that was the poll tax. Over the past few months, we have witnessed the failure of every policy for which Government supporters have argued, every principle for which they have fought, and every prejudice that they have defended with the blind faith of the zealot.

We were told by Ministers—the Secretary of State for Scotland was prominent among them—that the poll tax would make it possible to abolish the sad and arbitrary use of central Government capping powers. Responsibility was to be built into the system, and the electorate would be master of the instance. All that is in the past. Accountability is no longer in fashion. It has become one of the many casualties of the Government's disordered retreat. We have seen also the abandonment of the 20 per cent. rule, although that is to live on illogically—because, if it is inappropriate or unjust in 1993 or 1994, it is equally so now.

We have seen the most unlikely people come to the Dispatch Box to defend the principle of a household tax for which only the householder is liable. I remember the abuse—I use that word advisedly—to which my right hon. and hon. Friends were subjected when they tried to defend exactly the same principle. It is extraordinary to hear the Secretary of State for the Environment and the Secretary of State for Scotland say that one of the virtues of the new council tax is that it includes in the payment net 90 per cent. of the citizens of this country—when they would have treated with contempt any such claim for the old rating system.

We have seen a display of intellectual flexibility that beggars belief, as the same right hon. and hon. Gentlemen have swallowed their pride, capital valuation, and the rate poundage system. I say this to the hon. Member for Eastwood (Mr. Stewart), who I understand is standing in for the Secretary of State. If, a few months ago, I had come to the Dispatch Box and offered him a vision of a property-based tax and a capital valuation system that provided an individual valuation for each property and then applied a rate poundage—and suggested one or two other small changes to the rebate system, with a small concession here and there—and had asked the hon. Member for Eastwood if that would do, he would have condemned it root and branch. He would have said that it represented a return to the old rating system and as such was totally unacceptable. If the hon. Gentleman is intellectually honest, he knows that would have been his

It is amazing what party loyalty will do to principle. The hon. Member for Eastwood and most of his right hon. and hon. Friends are examples of intellectual schizophrenia. They have been compelled to make the bitter pill more palatable. As everyone knows, the cost is £4.25 billion. The Secretary of State made a remarkable reference to the Chancellor's generosity, as though he had taken out his cheque book and dashed off a quick personal promissory note for the sum of £4.25 billion—when, at the end of the day, every person in the country with purchasing power will make up that shortfall by paying more value added tax.

It is clear above all that local democracy will be the victim. The Conservative party once saw itself as the defender of local democracy. It had an honourable tradition of arguing that local communities should run their own affairs, and ought not to be bullied or overshadowed by the power of central Government. Yet members of that same party now say that it is not only right—as a temporary expedient, to get them out of an electoral difficulty—that local government should control only 13 or 14 per cent. of the revenue that it spends, but that such a concept should be enshrined in our system in a way that I think is quite indefensible.

We are promised a great future of fierce and determined capping. There will be no diversion of resources, whether it be for a child at school or for an elderly person looking for improved day care facilities, without the say-so of central Government.

Mr. Marlow

The hon. Gentleman, flushed with moral indignation, is complaining about the Government developing their policy. He belongs to a party that has said for many years that the rating system is totally wrong and should be scrapped as it is unfair and unreasonable. I understand that the Labour party is now proposing its solution to the problem—a fair rating system. What is the difference between a rating system and a fair rating system? That is the sort of thing of which Alice Through the Looking-Glass would be proud.

Mr. Dewar

If we had time, I could explain to the hon. Gentleman the difference between a fair rating system and an unfair system. He could find that difference by reading our policy and that of the Conservative party.

The Secretary of State for Scotland courteously wrote to me on 31 May about the Bill. I found it extraordinary that he said that he did not accept that the proposals in the Bill represent a major change in the relationship between central and local government. The provisions in the Bill concerning charge capping do no more than bring my powers in this area into line with those of my colleagues south of the border. It occurred to me that "into line" was an appropriate phrase; it has the ring of the drill square about it, which, I suspect, tells us much about the Government's approach.

I must tell the Secretary of State that this is an important change. It is only a part of what is happening, but it is an integral part of a substantial shift in power between central and local government that is not desirable and about which we protest.

Let us consider what is being proposed. The test of reasonableness in Scotland will go. Section 5 of the Local Government (Scotland) Act 1966—the Secretary of State for the Environment had clearly never heard of it—is the foundation of the present powers that lie with the Secretary of State. I have been in Scottish politics for a long time and have spent a good part of the past decade poring over amendments to that section, but it has survived and is still part of the Abolition of Domestic Rates Etc. (Scotland) Act 1987. The test, as anyone interested in local government in Scotland knows, was whether the expenditure was unreasonable and excessive. We have got rid of the test of reasonableness; it will be only whether the expenditure is excessive.

Even on that there used to be guidelines, because the Secretary of State had to take account of the financial and other relevant circumstances of the area of the authority. That goes as well.

That section offered little protection. People might tell me that I should not build too strong a case on it, but at least that test had to be applied and the Secretary of State had to meet that hurdle, but now it is gone. All that we are left with is that the test of excessive is what the Secretary of State says it is—what the Secretary of State decrees. That is a licence for arbitrary authority, which the House should not lightly grant.

There has been much talk about the experience of Lothian region this year. I do not want to go into the figures, but what has happened to Lothian is not an encouraging precedent for granting the powers that the Secretary of State is asking the House to grant in the Bill. As many Scottish Members will know, this year Lothian received the lowest grant per head of any regional council in Scotland. Its average expenditure is well below the average of regional councils in Scotland, but if it had received the average grant per head of regional councils in Scotland, it would have been worth more than £170 for every poll tax payer in the region. That puts in some perspective the way in which even the present powers are being used by the Secretary of State, never mind the powers that he will have when we further enfeeble the safgeguards and remove what few checks and balances statute allows.

The Secretary of State said in his letter to me that there will be no change in how grant-aided expenditure is calculated. I must accept that, as I do not believe that he would be inaccurate on that. Grant-aided expenditure is acceptable—we have all learnt to live with, if not love, the client group approach which is used to distribute the Scottish total among individual authorities, because there must be some way of distributing. It is a matter of argument, debate and dispute, but we all recognise that that machinery must exist. It is totally different if grant-aided expenditure becomes an arbitrary benchmark for penalties and a point beyond which an authority cannot spend even if it wishes to do so, if the electorate at the ballot box are willing to authorise that expenditure" and if there is a crying need in the community.

I cannot agree with the Secretary of State's view that this is not a matter of fundamental change. We are facing a difficult time in local government. On top of what we are discussing, we have the threat of a reform of the structure which is designed to destroy, or at least to weaken. There is also a problem of morale. The Secretary of State should not underestimate that problem. It will increase greatly if the House puts on the statute book the changes embodied in the Bill.

I turn briefly, inevitably, to the valuation provisions of the Bill, which are also of great interest. It would be churlish not to say immediately that I welcome the small, but important, U-turn by the Scottish Office. The Secretary of State made it clear to the press in briefings that control of the valuation process would lie with the Inland Revenue valuation office. That is not now the case. The assessors—who have the knowledge and expertise to do the job—have been reinstated. That is right not only because they are best qualified to do that job but because they are a small group who took hard knocks during the row over the poll tax—sometimes from my side of the political divide and certainly from the system. Most of those I know well disliked the system that they had to administer, but they did their duty. When valuation was reinstated as part of local government finance, a proposal to deprive assessors of the duty of doing that work was ingratitude which was not entirely honourable. I am glad that the Secretary of State had second thoughts.

In a letter to me on 31 May, the Secretary of State said that it was important, if the council tax is to come into operation on 1 April 1993, to get the valuation process under way. Perhaps the Under-Secretary of State will say whether he is confident that the Government are on track for April 1993, whether they will make the date or whether he will hedge his bets on 1994, as the Secretary of State for the Environment appeared to do a week or two ago.

Perhaps the hon. Gentleman will comment further on the interesting provision that the assessors will be under the direction of the Inland Revenue commissioners. I understand from the Secretary of State for the Environment—I intervened on this point—that this was merely to harmonise valuation law. My impression was that it would be about the niceties of the contractors' principle and such matters. What will the relationship be?

This is an important matter. Traditionally, although an assessor is provided with the wherewithal to carry out his task by regional councils—which supply premises and budgets—he is totally independent and uses his professional judgment and discretion. It is hard enough to establish the credibility of any form of local government taxation, but it is important that the people carrying out the valuation—if it is that kind of system—are seen to be above political control and beyond reproach. The assessors have established that reputation. I regret the fact that we will not have the in-depth examination in Committee that we would normally have, as the Bill will be taken in short measure on the Floor of the House. It is important that the Under-Secretary gives a substantial definition of that relationship.

Banding is another important matter. I do not intend to spend much time on this point, but it is well known that the Labour party believes that the spread within the system is not equitable. Undoubtedly—to be fair, the Secretary of State has never hidden this fact but has paraded it—there is a measure of protection for those at the top end of the housing range, which inevitably means that those in modest properties pay more than they should. The Secretary of State said in the House on 23 April 1991 at column 938 of Hansard that the impact of banding was "dampened" by the way in which the system has been adjusted or, as some of us would say, rigged.

If we are talking about credibility, perhaps the Secretary of State will consider the credibility of the figures that he has produced in connection with the new form of rating that he proposes to introduce. I quote from what I thought was a splendid letter of 8 May, which he was kind enough to send to me. It is a description of the valuation methods which led to the figures that were so proudly unveiled. It states: it is important not to confuse the initial exercise to produce illustrative examples, which was essentially an in-house exercise conducted by IRVO on the basis of data which they already have for the purposes of carrying out their functions, with the much larger exercise that will be required for the actual distribution of properties in appropriate bands. I do not think that any useful purpose would be served by publishing details of the methodology of the initial exercise which was essentially statistical". The last phrase is a magnificent piece of "Yes, Minister" speak for saying that there was no attempt to value properties at all. The whole thing was done, I suspect, by starting with a predetermined answer and working backwards to the desired result. It carries no credibility.

Briefly, I want to make the important point about the absolutely startling dishonesty of the Conservative attempt to suggest that one could run the system that they outlined without any form of regular revaluation, or perhaps without any revaluation at all. I shall react the remarkable quotation from the Minister of State, Department of Education and Science which appeared in the Municipal Journal of 24 May. He said: Once a property has gone into a band, we think it will stay in that band virtually in perpetuity. That is a staggering prospect and it is why I was so interested in the exchanges that I had with the hon. Member for Hornchurch (Mr. Squire) whom I respect as being something of an independent on such matters. The hon. Gentleman was naturally anxious to see the back of the poll tax and therefore anxious to endorse the system now offered to him. However, he said that we could not have what the Labour party suggested to get the system up and running quickly, which was to use the old valuation roll. It might, he said—this is an interesting concession —be possible in Scotland, where, after all, the last revaluation was carried out in 1985, but it was not possible in England, where the previous revaluation was as long ago as 1973.

However, the hon. Gentleman went on to argue how splendid it was that we would not need a revaluation, and I challenged him about this but he held to it. The trouble with his position is that, if one takes the view that one can put a property into a band in the year dot and then come back some time in perpetuity and the property will still be in that band, why not do it with the 1973 revaluation?

Mr. Squire

The hon. Gentleman will concede on reflection that there is a world of difference between a system in which all properties must be valued or for which one must use a total historic value, and a system in which one allocates properties into a series of set bands and recognises that, in general, they will move within an area in roughly the same proportion.

Mr. Dewar

I must confess that I did not understand that, but I shall read it carefully. If we assume that an honest attempt is being made to value individual properties and to put them into a band, the nature of fluctuations in fashion, in demand and in property prices will mean that the valuation base becomes outdated. That is why we are constantly told that the whole problem of the valuation and rating system was that it required valuations periodically because the rating base became outdated. If that is the case, to suggest that we can keep property in bands in perpetuity is a striking dishonesty.

At the end of the day, we shall find that under the pressure of events and even if the scheme sees them through for a short time if they get that opportunity, the Conservatives will be driven more and more to the Labour party's views on this issue as they have already been on others during the past few months.

I believe and I fear that we shall face a bitter period of uncertainty. There is a genuine problem, which is that, in community associations, in residents' associations, and in ordinary homes, people imagine that the poll tax has already gone. The problem of collection is becoming almost insurmountable. At the end of April 1991, after a full two years of the poll tax in Scotland, the uncollected revenue was £427 million, or one quarter of the income from the poll tax during that period. In the first month of the new year, the total take in Scotland was £12 million, or £3 per head for every poll tax in Scotland. If that goes on, we face a catastrophe. Strathclyde, not because it has been capped by Lothian and for no other reason than the collapse of its income, already seeks £21 million of additional cuts at the beginning of this financial year.

Against the background of crisis, the shabby little exercise that we have been offered tonight is totally unimportant. The Secretary of State for the Environment put great emphasis on what he said was, in Scotland, the increase in expenditure of local authorities. My understanding is that the revenue expenditure during the period of this Government has gone up by 9.6 per cent. in real terms. Capital spending, excluding housing which involves a different financial system, has dropped by 8.2 per cent. I believe that I am justified in suggesting that, if one compared that with the record of the Scottish Office over the same period, one would probably find that local government came out well, even if one applied the criteria that the Conservatives want us to apply.

It is extraordinary how, under electoral pressure and concentrating on saving their electoral skins, the Government can shake out the pennies when the time comes. I will not listen to them preaching to my colleagues in local government, who face problems, about fiscal or political responsibility.

The Bill is a paving Bill: it paves the way to the wrong scheme on the wrong timetable. I do not accuse Ministers of a lack of urgency, but I accuse them—and the electorate will accuse them—of having the wrong targets and wrong-headed objectives.

9.42 pm

The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart)

A number of Conservative and Opposition Members, such as the hon. Member for Durham, North-West (Ms. Armstrong), the hon. Member for Eastbourne (Mr. Bellotti) and my hon. Friend the Member for Hornchurch (Mr. Squire), have rightly and properly used the occasion to make a number of purely constituency points. All of them have been noted by my right hon. and hon. Friends, and by myself if they refer to Scotland, although I hope that the House will appreciate that, in the time available, I will concentrate on the broad principles that have underlain the debate.

My right hon. Friend the Member for Southend, West (Mr. Channon), in his excellent speech, said that the hon. Member for Dagenham (Mr. Gould) had nothing to say. That criticism was a little unfair. The hon. Member for Dagenham had a great deal to say. The problem was that it was mostly the product of a fairly vivid imagination. We heard conspiracy theory after conspiracy theory. To be helpful, I must say to the hon. Member for Dagenham that if, in the next Parliament, in opposition, he wishes to enhance his personal income, he has a considerable career as a political novelist in front of him.

The second point to make about the speech of the hon. Member for Dagenham is that he has a genial and cheerful brass neck. He talked about U-turns. I have counted the changes in Labour party policy on the issue of local government finance since 1987. I make it that it has had 67 different policy positions—a U-turn every three weeks. It has had the local income tax, the roof tax, the floor tax, a supplement on national income tax and a combination of them all.

The third point to be made about the speeches of the hon. Members for Dagenham and for Glasgow, Garscadden (Mr. Dewar)—I shall come back to the serious points made by the hon. Member for Garscadden—is that they seem to sing a different tune. My right hon. Friend the Member for Southend, West, said that he understood the position of the hon. Member for Dagenham on capping. My right hon. Friend is rather better at understanding the hon. Gentleman than I am. I am still not entirely clear about his position. As I understand it, he is against capping.

In contrast, the hon. Member for Garscadden quoted favourably several times section 5 of the Local Government (Scotland) Act 1966, which was introduced by the Labour party and created a form of rate capping. I agree that, if the hon. Member for Garscadden ever became Secretary of State for Scotland, he might wish to return to the provisions of the 1966 Act. But that is clearly incompatible with the position of the hon. Member for Dagenham.

In his excellent speech, my hon. Friend the Member for Cambridge (Mr. Rhodes James) said that the key factor was the total cost to the local taxpayer, which we have reduced significantly. My hon. Friend the Member for Teignbridge (Mr. Nicholls) rightly said that the Government have switched the burden from the local taxpayer to the central taxpayer. The position of the hon. Member for Dagenham on that is perfectly clear. I listened to him on the "Today" programme on Radio 4 on 26 March 1991. He said that Labour planned to increase the burden of council spending met locally from the current figure of about 14 per cent. to about 20 per cent. Would that apply in Scotland?

Mr. Gould

The Under-Secretary should recognise that he owes an obligation, as do his ministerial colleagues, at least to treat the figures on a common basis. If the Minister checks what the Secretary of State for the Environment told the House earlier in the week to which he refers, he will see that the Secretary of State claimed that the switch to VAT had reduced the proportion of local government spending accounted for by local government revenue from 34 per cent. to 22 per cent. That was a clear statement. The fact that the Secretary of State, the Prime Minister and now the Under-Secretary have chosen to alter the basis of the calculation so that they judge the proportion of a different sum——

The Secretary of State for Scotland (Mr. Ian Lang)

No.

Mr. Gould

Yes, that is entirely the case. If the Secretary of State does not understand that, we have a good insight into why local government finance is in such a mess.

Mr. Stewart

The hon. Member for Dagenham had a perfectly good opportunity earlier to make his own speech. My point is simple: do his figures apply to Scotland or not? We had no answer to that point from the hon. Member for Garscadden either. On issue after issue, the debate has shown that there are differences—and key differences—between the Labour party north and south of the border.

Mr. Marlow

Is not the key difference that we have found out today from the speech of the hon. Member for Dagenham (Mr. Gould) that, if there were ever the misfortune of the return of a Labour Government in this country, what they would do with local government finance would be to let it rip?

Mr. Stewart

My hon. Friend is right. A Labour Government would say to Lambeth, Liverpool arid every loony lefty council in the land, "Spend, spend and spend again." That would be their policy.

Mr. Dalyell

Will the Minister give way?

Mr. Stewart

I shall come to the question of Lothian, which was raised by the hon. Gentleman.

The point about policy which comes out of Labour party speeches made north and south of the border is that there are significant differences between the Labour party in Scotland and the Labour party in England and Wales. Frankly, it is a case of one left hand not knowing what the other left hand is doing.

Sir Nicholas Fairbairn (Perth and Kinross)

Whatever may happen in Lambeth or to the loony left south of the border, does my hon. Friend appreciate that the loony left north of the border, in Tayside region, has taken on more than 300 extra employees in the past three weeks?

Mr. Stewart

As always, my hon. and learned Friend makes an apt and accurate point. I hope that the community charge payers of Tayside pay full attention to his remarks.

My hon. Friend the Member for Nottingham, South (Mr. Brandon-Bravo) spoke from experience of the importance of the role of local government. He pleaded for independence for Nottingham council. That is not the subject of this debate, but I am sure that his plea has been noted by my right hon. and hon. Friends.

One of the key purposes of the Bill is to extend capping powers. Those powers were rightly praised and justified by my right hon. Friend the Member for Southend, West and my hon. Friends the Members for Torridge and Devon, West (Miss Nicholson) and for Hornchurch, who was right about revaluation. My hon. Friend the Member for Derbyshire, South (Mrs. Currie) was also right to say that the proposed powers are necessary as they are in the national interest.

I want to deal with the three major points that were made by Opposition Members, especially those representing Scotland. The hon. Member for Garscadden asked about the capping powers.

Dr. Godman

rose——

Mr. Stewart

I am sorry that I missed the hon. Gentleman's speech, and I shall give way to him.

Dr. Godman

I am extremely grateful to the Minister, who displays his characteristic courtesy by giving way. On the system of appeals north of the border, can the Minister say something about the appeal procedure vis-a-vis the assessment of valuations of domestic properties?

Mr. Stewart

That is a perfectly fair point, which was also raised by my right hon. Friend the Member for Southend, West and a number of other hon. Members.

The hon. Member for Greenock and Port Glasgow (Dr. Godman) will be aware that the consultation on our proposals is continuing. We shall consider carefully what those consulted say about appeals. However, that issue is a matter for the main Bill which we shall introduce in the autumn. I assure the hon. Gentleman that that Bill will contain the appropriate provisions to set up an appeals mechanism. If the hon. Gentleman has any particular points that he wishes to put to us on this matter, we look forward to receiving them.

The hon. Member for Garscadden asked about the capping powers in Scotland. The major purpose of the Bill is to introduce stronger capping powers as the present ones are limited. Some local authorities have completely ignored accountability. They have flagrantly ignored the interests of their charge payers this year. As a result, the charge levels set by local authorities for 1991–92 have increased, on average, by 30 per cent.

I believe that it is our duty to protect local taxpayers from the excesses of some local authorities. It is also our duty to ensure that the fundamental shift in the balance of taxation brought about by the Community Charges (General Reduction) Act 1991 has the intended effect of keeping local taxes down to a reasonable level.

Mr. Dewar

rose——

Mr. Stewart

I have already given way several times, and I hope that the hon. Gentleman will allow me to continue.

The new level of local charges made possible by the 1991 Act must be passed on to local people. The new capping powers will enable us to do just that by making local authorities exercise restraint on spending. They will protect the interests of central and local taxpayers.

In the autumn, my right hon. Friend will make a declaratory statement on procedure for capping criteria, as was done for England last year. Authorities that budget in excess of those criteria will then be subject to capping, which will constitute a much more straightforward approach to capping in Scotland.

The hon. member for Garscadden also asked about the position on valuations in Scotland. My right hon. Friend the Secretary of State made clear in his initial statement that we shall consult on how that will work most effectively in Scotland. The Scottish assessors and the Inland Revenue valuation office have been working together for about five years to achieve the harmonisation of non-domestic rating. In the case of the council tax, we made it clear that supervision of the banding process at a national level would be the responsibility of the valuation office.

A direction-making power will be given to the valuation office under the provisions of the Bill. That will simply ensure consistency of treatment north and south of the border. I should have thought that that was a perfectly reasonable objective and it is surprising, therefore, that the hon. Member for Garscadden has criticised it. His criticisms sit oddly with the comments of the president of the Scottish Assessors Association, who described the Government's decision as sensible and said that he felt comfortable about the role of the Inland Revenue at the Great Britain level.

What are the Labour party's policies? It plans to introduce a fair rates system based not only on notional rental values but on a mixture of capital values and rebuilding, maintenance and repair costs. The hon. Member for Glasgow, Cathcart (Mr. Maxton) wants to return to the domestic rates system in Scotland. I remind him of the wise words of his right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman), who said that rates were an irrational, inefficient, highly resented form of taxation. If a thing does not make sense—and the rating system makes no sense whatsoever—the right thing to do is to abolish it". The Labour party wants to bring back that system.

Mr. Dalyell

rose—

Mr. Stewart

The hon. Member for Linlithgow (Mr. Dalyell) asked me about Lothian. He suggested that in all possible tests Lothian's expenditure was no greater than that of Dumfries and Galloway. I shall answer that serious question with two comparisons. The charge that was originally set by Lothian was £420. The charge originally set by Dumfries and Galloway was £242. Lothian's budget was more than 12 per cent. above its grant-aided expenditure figure, whereas the budget for Dumfries and Galloway was below the grant-aided expenditure figure. Opposition Members have alleged that Lothian's level of grant was unfair. That grant is assessed through the client group approach, which is agreed by the Convention of Scottish Local Authorities and the Scottish Office. If Opposition Members feel that the grant is unfair, why do they not ask COSLA about it, because that is not what it is saying?

The Bill lays the foundation for the orderly introduction of the council tax from 1 April 1993. The extension of our capping powers will mean that irresponsible local authorities cannot cynically exploit the run-up to the council tax and burden their charge payers with unacceptably high charges.

We are determined to ensure that the authorities do not frustrate our objective of keeping charges' down to acceptable levels by using the considerable extra sums that we are providing to fuel higher spending. Unlike Opposition Members, we have firm and realistic proposals, which today we are beginning to implement. We have acted and brought the Bill before the House. The debate has shown that the Opposition have no realistic policies. In so far as they do have policies, they are totally irresponsible. I commend the Bill to the House.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 275, Noes 200.

Division No.154]	[9.59 pm
AYES
Adley, Robert	Forth, Eric
Aitken, Jonathan	Fowler, Rt Hon Sir Norman
Alison, Rt Hon Michael	Fox, Sir Marcus
Amos, Alan	Franks, Cecil
Arbuthnot, James	Freeman, Roger
Arnold, Jacques (Gravesham)	French, Douglas
Arnold, Sir Thomas	Fry, Peter
Ashby, David	Gale, Roger
Aspinwall, Jack	Gardiner, Sir George
Atkins, Robert	Garel-Jones, Tristan
Baker, Rt Hon K. (Mole Valley)	Gill, Christopher
Baker, Nicholas (Dorset N)	Gilmour, Rt Hon Sir Ian
Baldry, Tony	Glyn, Dr Sir Alan
Banks, Robert (Harrogate)	Goodhart, Sir Philip
Batiste, Spencer	Goodlad, Alastair
Bellingham, Henry	Goodson-Wickes, Dr Charles
Bendall, Vivian	Gorst, John
Bennett, Nicholas (Pembroke)	Grant, Sir Anthony (CambsSW)
Benyon, W.	Greenway, Harry (Ealing N)
Bevan, David Gilroy	Greenway, John (Ryedale)
Biffen, Rt Hon John	Gregory, Conal
Blackburn, Dr John G.	Griffiths, Sir Eldon (Bury St E')
Blaker, Rt Hon Sir Peter	Griffiths, Peter (Portsmouth N)
Body, Sir Richard	Grist, Ian
Boscawen, Hon Robert	Ground, Patrick
Boswell, Tim	Grylls, Michael
Bottomley, Peter	Hamilton, Hon Archie (Epsom)
Bottomley, Mrs Virginia	Hamilton, Neil (Tatton)
Bowden, Gerald (Dulwich)	Hampson, Dr Keith
Bowis, John	Hanley, Jeremy
Brandon-Bravo, Martin	Hannam, John
Brazier, Julian	Hargreaves, A. (B'ham H'll Gr')
Bright, Graham	Hargreaves, Ken (Hyndburn)
Brown, Michael (Brigg & Cl't's)	Harris, David
Browne, John (Winchester)	Haselhurst, Alan
Bruce, Ian (Dorset South)	Hawkins, Christopher
Budgen, Nicholas	Hayes, Jerry
Burns, Simon	Hayward, Robert
Burt, Alistair	Heathcoat-Amory, David
Butler, Chris	Hicks, Mrs Maureen (Wolv' NE)
Butterfill, John	Hicks, Robert (Cornwall SE)
Carlisle, John, (Luton N)	Higgins, Rt Hon Terence L.
Carlisle, Kenneth (Lincoln)	Hill, James
Cash, William	Hogg, Hon Douglas (Gr'th'm)
Channon, Rt Hon Paul	Holt, Richard
Chapman, Sydney	Hordern, Sir Peter
Chope, Christopher	Howard, Rt Hon Michael
Clark, Rt Hon Alan (Plymouth)	Howarth, Alan (Strat'd-on-A)
Clark, Dr Michael (Rochford)	Howarth, G. (Cannock & B'wd)
Clark, Rt Hon Sir William	Howell, Rt Hon David (G'dford)
Coombs, Anthony (Wyre F'rest)	Hughes, Robert G. (Harrow W)
Coombs, Simon (Swindon)	Hunt, Rt Hon David
Cope, Rt Hon John	Hurd, Rt Hon Douglas
Cormack, Patrick	Irvine, Michael
Couchman, James	Irving, Sir Charles
Cran, James	Jack, Michael
Currie, Mrs Edwina	Janman, Tim
Curry, David	Johnson Smith, Sir Geoffrey
Davies, Q. (Stamf'd & Spald'g)	Jones, Gwilym (Cardiff N)
Davis, David (Boothferry)	Jones, Robert B (Herts W)
Day, Stephen	Key, Robert
Devlin, Tim	King, Roger (B'ham N'thfield)
Dickens, Geoffrey	King, Rt Hon Tom (Bridgwater)
Dicks, Terry	Kirkhope, Timothy
Douglas-Hamilton, Lord James	Knight, Greg (Derby North)
Dover, Den	Knight, Dame Jill (Edgbaston)
Durant, Sir Anthony	Knox, David
Dykes, Hugh	Lang, Rt Hon Ian
Emery, Sir Peter	Latham, Michael
Evans, David (Welwyn Hatf'd)	Lawrence, Ivan
Evennett, David	Leigh, Edward (Gainsbor'gh)
Fairbairn, Sir Nicholas	Lennox-Boyd, Hon Mark
Fallon, Michael	Lester, Jim (Broxtowe)
Field, Barry (Isle of Wight)	Lloyd, Sir Ian (Havant)
Fookes, Dame Janet	Lloyd, Peter (Fareham)
Forman, Nigel	Lyell, Rt Hon Sir Nicholas

McCrindle, Sir Robert	Shaw, Sir Michael (Scarb')
Macfarlane, Sir Neil	Shelton, Sir William
MacGregor, Rt Hon John	Shephard, Mrs G. (Norfolk SW)
Maclean, David	Shepherd, Colin (Hereford)
McLoughlin, Patrick	Shepherd, Richard (Aldridge)
McNair-Wilson, Sir Michael	Shersby, Michael
McNair-Wilson, Sir Patrick	Skeet, Sir Trevor
Madel, David	Smith, Tim (Beaconsfield)
Major, Rt Hon John	Soames, Hon Nicholas
Malins, Humfrey	Speller, Tony
Maples, John	Spicer, Sir Jim (Dorset W)
Marlow, Tony	Squire, Robin
Marshall, John (Hendon S)	Stanbrook, Ivor
Maxwell-Hyslop, Robin	Stanley, Rt Hon Sir John
Mayhew, Rt Hon Sir Patrick	Steen, Anthony
Meyer, Sir Anthony	Stern, Michael
Miller, Sir Hal	Stevens, Lewis
Mills, Iain	Stewart, Allan (Eastwood)
Miscampbell, Norman	Stewart, Andy (Sherwood)
Mitchell, Andrew (Gedling)	Stewart, Rt Hon Ian (Herts N)
Mitchell, Sir David	Sumberg, David
Moate, Roger	Summerson, Hugo
Monro, Sir Hector	Tapsell, Sir Peter
Montgomery, Sir Fergus	Taylor, Ian (Esher)
Moore, Rt Hon John	Taylor, Teddy (S'end E)
Morrison, Rt Hon Sir Peter	Tebbit, Rt Hon Norman
Moss, Malcolm	Temple-Morris, Peter
Moynihan, Hon Colin	Thatcher, Rt Hon Margaret
Mudd, David	Thornton, Malcolm
Neale, Sir Gerrard	Thurnham, Peter
Needham, Richard	Townend, John (Bridlington)
Neubert, Sir Michael	Townsend, Cyril D. (B'heath)
Newton, Rt Hon Tony	Tracey, Richard
Nicholls, Patrick	Tredinnick, David
Nicholson, David (Taunton)	Trippier, David
Nicholson, Emma (Devon West)	Twinn, Dr Ian
Norris, Steve	Vaughan, Sir Gerard
Onslow, Rt Hon Cranley	Viggers, Peter
Page, Richard	Wakeham, Rt Hon John
Paice, James	Waldegrave, Rt Hon William
Parkinson, Rt Hon Cecil	Walden, George
Patnick, Irvine	Walker, Bill (T'side North)
Patten, Rt Hon John	Waller, Gary
Pattie, Rt Hon Sir Geoffrey	Walters, Sir Dennis
Peacock, Mrs Elizabeth	Wardle, Charles (Bexhill)
Porter, Barry (Wirral S)	Watts, John
Porter, David (Waveney)	Wells, Bowen
Portillo, Michael	Wheeler, Sir John
Powell, William (Corby)	Whitney, Ray
Price, Sir David	Widdecombe, Ann
Redwood, John	Wiggin, Jerry
Rhodes James, Robert	Wilkinson, John
Riddick, Graham	Wilshire, David
Rifkind, Rt Hon Malcolm	Winterton, Mrs Ann
Roberts, Sir Wyn (Conwy)	Wolfson, Mark
Rossi, Sir Hugh	Wood, Timothy
Rost, Peter	Woodcock, Dr. Mike
Rumbold, Rt Hon Mrs Angela	Yeo, Tim
Ryder, Rt Hon Richard	Young, Sir George (Acton)
Sackville, Hon Tom
Sainsbury, Hon Tim	Tellers for the Ayes:
Sayeed, Jonathan	Mr. David Lightbown and
Shaw, David (Dover)	Mr. John M. Taylor.
Shaw, Sir Giles (Pudsey)
NOES
Abbott, Ms Diane	Battle, John
Adams, Mrs Irene (Paisley, N.)	Beckett, Margaret
Allen, Graham	Bellotti, David
Alton, David	Benn, Rt Hon Tony
Anderson, Donald	Bennett, A. F. (D'nt'n & R'dish)
Archer, Rt Hon Peter	Benton, Joseph
Armstrong, Hilary	Bermingham, Gerald
Ashdown, Rt Hon Paddy	Blair, Tony
Ashley, Rt Hon Jack	Blunkett, David
Ashton, Joe	Boateng, Paul
Banks, Tony (Newham NW)	Boyes, Roland
Barnes, Harry (Derbyshire NE)	Bradley, Keith
Barnes, Mrs Rosie (Greenwich)	Bray, Dr Jeremy
Barron, Kevin	Brown, Gordon (D'mline E)

Brown, Nicholas (Newcastle E)	Jones, leuan (Ynys Môn)
Buckley, George J.	Kaufman, Rt Hon Gerald
Caborn, Richard	Kennedy, Charles
Callaghan, Jim	Kirkwood, Archy
Campbell, Menzies (Fife NE)	Lamond, James
Campbell, Ron (Blyth Valley)	Leadbitter, Ted
Campbell-Savours, D. N.	Leighton, Ron
Canavan, Dennis	Lewis, Terry
Clark, Dr David (S Shields)	Livingstone, Ken
Clelland, David	Lloyd, Tony (Stratford)
Clwyd, Mrs Ann	Lofthouse, Geoffrey
Cohen, Harry	Loyden, Eddie
Cook, Robin (Livingston)	McAllion, John
Corbett, Robin	McAvoy, Thomas
Corbyn, Jeremy	McKelvey, William
Cousins, Jim	McLeish, Henry
Crowther, Stan	McMaster, Gordon
Cryer, Bob	McNamara, Kevin
Cummings, John	Madden, Max
Cunliffe, Lawrence	Marshall, David (Shettleston)
Dalyell, Tam	Marshall, Jim (Leicester S)
Darling, Alistair	Martin, Michael J. (Springburn)
' Davies, Rt Hon Denzil (Llanelli)	Martlew, Eric
Davies, Ron (Caerphilly)	Maxton, John
Davis, Terry (B'ham Hodge H'I)	Meacher, Michael
Dewar, Donald	Meale, Alan
Dixon, Don	Michael, Alun
Dobson, Frank	Michie, Bill (Sheffield Heeley)
Doran, Frank	Michie, Mrs Ray (Arg'l & Bute)
Douglas, Dick	Mitchell, Austin (G't Grimsby)
Duffy, A. E. P.	Morgan, Rhodri
Dunnachie, Jimmy	Morley, Elliot
Dunwoody, Hon Mrs Gwyneth	Morris, Rt Hon A. (W'shawe)
Eadie, Alexander	Morris, Rt Hon J. (Aberavon)
Eastham, Ken	Mullin, Chris
Edwards, Huw	Murphy, Paul
Evans, John (St Helens N)	Oakes, Rt Hon Gordon
Ewing, Harry (Falkirk E)	O'Brien, William
Ewing, Mrs Margaret (Moray)	O'Hara, Edward
Fatchett, Derek	O'Neill, Martin
Faulds, Andrew	Orme, Rt Hon Stanley
Fearn, Ronald	Patchett, Terry
Field, Frank (Birkenhead)	Pendry, Tom
Fisher, Mark	Pike, Peter L.
Flannery, Martin	Prescott, John
Flynn, Paul	Primarolo, Dawn
Foot, Rt Hon Michael	Quin, Ms Joyce
Foster, Derek	Radice, Giles
Foulkes, George	Randall, Stuart
Fraser, John	Rees, Rt Hon Merlyn
Fyfe, Maria	Reid, Dr John
Galloway, George	Richardson, Jo
Garrett, John (Norwich South)	Robinson, Geoffrey
Gilbert, Rt Hon Dr John	Rogers, Allan
Godman, Dr Norman A.	Rooker, Jeff
Golding, Mrs Llin	Rooney, Terence
Gordon, Mildred	Ross, Ernie (Dundee W)
Gould, Bryan	Rowlands, Ted
Grant, Bernie (Tottenham)	Ruddock, Joan
Griffiths, Nigel (Edinburgh S)	Salmond, Alex
Griffiths, Win (Bridgend)	Sedgemore, Brian
Grocott, Bruce	Sheldon, Rt Hon Robert
Hain, Peter	Shore, Rt Hon Peter
Harman, Ms Harriet	Short, Clare
Hattersley, Rt Hon Roy	Sillars, Jim
Heal, Mrs Sylvia	Skinner, Dennis
Healey, Rt Hon Denis	Smith, Andrew (Oxford E)
Hoey, Ms Kate (Vauxhall)	Smith, C. (Isl'ton & F'bury)
Hogg, N. (C'nauld & Kilsyth)	Smith, J. P. (Vale of Glam)
Hood, Jimmy	Snape, Peter
Howarth, George (Knowsley N)	Soley, Clive
Howells, Dr. Kim (Pontypridd)	Spearing, Nigel
Hoyle, Doug	Steel, Rt Hon Sir David
Hughes, John (Coventry NE)	Steinberg, Gerry
Hughes, Robert (Aberdeen N)	Strang, Gavin
Hughes, Simon (Southwark)	Taylor, Mrs Ann (Dewsbury)
Illsley, Eric	Thomas, Dr Dafydd Elis
Ingram, Adam	Turner, Dennis
Janner, Greville	Vaz, Keith
Jones, Barry (Alyn & Deeside)	Walley, Joan

Wardell, Gareth (Gower)	Wilson, Brian
Wareing, Robert N.	Winnick, David
Watson, Mike (Glasgow, C)	Worthington, Tony
Welsh, Andrew (Angus E)	Wray, Jimmy
Welsh, Michael (Doncaster N)
Wigley, Dafydd	Tellers for the Noes:
Williams, Rt Hon Alan	Mr. Frank Haynes and
Williams, Alan W. (Carm'then)	Mr. Allen McKay.

Question accordingly agreed to.

Bill read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Patrick.]

Committee tomorrow.