§ Order for Second Reading read.7.33 pm
§ The Secretary of State for the Environment (Mr. Michael Heseltine)
I beg to move, That the Bill be now read a Second time.
§ Mr. William Ross (Londonderry, East)
On a point of order, Madam Deputy Speaker. The Bill before us purports to reduce local government taxation by £140 per head of the electorate of the United Kingdom. It does not, of course, extend to the whole kingdom. I note that, in the case of Scotland, the reduction applies separately to the regional councils and the district councils. We in Northern Ireland have a regional rate and a district rate. How are we to find out about the legislation relating to Northern Ireland? As we do not know whether the Province will be discriminated against, we are quite incapable, at this point, of forming an opinion as to whether we should support the Bill.
§ Madam Deputy Speaker (Miss Betty Boothroyd)
The matter to which he refers is one for the Secretary of State rather than the Chair. If the hon. Member is fortunate enough to catch my eye later, he may be able to put his question to the Secretary of State.
§ Mr. Heseltine
As the House knows, in 1976 the then Labour Government began to switch a growing proportion of the costs of local services on to the local ratepayer. That process was continued until last year. If, emerging from our consultation process, there is one thing on which most people agree, it is that reversal of the trend was necessary. This Bill brings about a significant reversal. It gives practical effect to the Government's decision that the central taxpayer should pay more than the local taxpayer pays.
In specific terms, that means that the bills for the coming year's charge must be reduced—but not so as to allow local authorities to indulge in another round of spending increases. Our determination is that the people should benefit. Accordingly, the Government have made a series of announcements explaining how the £4.3 billion that the Chancellor of the Exchequer provided in his Budget is to be used to help people directly. As my hon. Friend the Minister for Local Government and Inner Cities said last night in the debate on the money resolution, the financial memorandum to this Bill has to be read in the context of the proposals in the Bill and the proposal to change the community charge reduction scheme. My right hon. Friend the Chancellor made it clear, in winding up the Budget debate, that the £4.3 billion covers both the provisions of the Bill and the community charge reduction scheme changes. The Bill addresses the specific commitment to reduce the headline community charges set by local authorities by £140, or, when the charge is already set at less than £140, to reduce it to £0.
We estimate that, instead of an average gross community charge of £392 in England next year, the figure will be about £250. In other words, the average community charge in England will be reduced from £357 this year to £252 next year. In every local authority area, people will 833 face a lower headline charge than they face this year. The equivalent figures for Scotland are £306 and £253, and those for Wales are £232 and £120.
§ Mr. Richard Tracey (Surbiton)
I apologise for intervening at such an early stage in my right hon. Friend's speech, but there is a point that I am sure he will want to clear up. In today's press, there is a report that councils will be covered for the reimbursement of £140 not on the standard community charge but simply on the normal community charge. Can my right hon. Friend refute that story? It is very damaging in Westminster and in other parts of London, but I am sure that people throughout the country will be concerned.
§ Mr. Heseltine
I am most grateful to my hon. Friend for raising that point. Later in my speech I will demonstrate that the suggestion to which he has referred is unfounded.
§ Mr. Max Madden (Bradford, West)
As the Secretary of State was in the House during the debate on the money resolution last night, he will have heard a number of hon. Members, including myself ask the Minister for Local Government and Inner Cities to ensure that we would be told tonight what proportion of the £140 reduction will be enjoyed by those who are on rebate or on transitional relief. Will such people receive the whole £140, part of it, or none of it?
§ Mr. Heseltine
I am grateful to the hon. Gentleman for raising that question. I was indeed in the House last night, and I heard what my hon. Friend said. I can help the House further. If the existing rebate or reduction arrangements take an individual below the level at which he would pay the £140, we cannot make provision that would double the amount of assistance. To that extent, it is not possible, within the arrangements that we have made, to help further.
What we are trying to do in these schemes is to help people who have been particularly hard hit by the transition from the old rating system to the new community charge system. That is the purpose of the community charge reduction scheme. The new £140 reduction that the Bill provides brings the headline charge down to figures that are below or closer to the old rates the people would have paid.
My hon. Friend was asked about the number of people who would benefit from the arrangements that he was describing and he said that the figure in this current year would be about 8 million people and that he would come back to the House if he wished to add to that figure. I am pleased to take the House a stage further today, because, as a result of the arrangements that we are making and debating today, not 8 million people but 16 million people will be helped. If the House wishes to probe further these matters, which it might well wish to do, my hon. Friend will be pleased to deal with the detail when he replies to the debate.
§ Mr. David Blunkett (Sheffield, Brightside)
How is it then that on 17 January the figure given for those who would benefit from the new schemes was 18 million people? It was not 8 million people, as announced last night—it was 18 million people, and the Prime Minister pronounced on it himself.
§ Mr. Heseltine
The 8 million referred to the number of people who benefited before the £140 reduction to which the Bill relates. That figure has to be adjusted again to take account of the community charge reduction scheme additional announcements that my hon. Friend made, which takes the figure up to 16 million. I hope that that satisfies the hon. Gentleman.
§ Mr. Tony Banks (Newham, North-West)
Is it not a fact that those who at the moment are paying 20 per cent. of the poll tax because they are on benefit will in the end get £28 out of the Secretary of State's announcement, and that, when they have spent about £1,100 on VAT-rated goods, they will have paid out all that £28 and still have to carry on paying the extra 2.5 per cent?
§ Mr. Heseltine
The hon. Gentleman takes no account of the fact that many of the most essential things that such people buy are not VAT-rated in the first place. All that the hon. Gentleman shows is the wide range of schemes that already exists to help different categories of people depending on their needs.
As I explained to the House, the headline charge is, in many cases, further reduced by rebates or the community charge reduction scheme. It is only when all those calculations are made that people know what they are to pay. This year, the average net charge is about £275. Taking into account the improvements in the community charge reduction scheme announced last night, the net charge in Britain next year will be less than £175. That is significantly less than the average paid per adult in the last year of the rates.
I should stress one point on which my right hon. Friend the Chancellor laid stress in his Budget. The substantial switch of costs to the centre is not a decision for this year alone. The Government intend the new balance to be sustainable in the future.
The five-clause Bill before the House is designed to implement the first phase of our longer-term strategy. I shall not take the House through it clause by clause; suffice it to say that it extends to England, Wales and Scotland and that, if it is enacted, it will have three broad effects.
First, it will provide that the community charges which authorities have set for 1991–92 are replaced the day after the Bill's enactment by new charges which are £140 lower. Councils will not need to meet to set the new charges, but they will be treated in all respects as if they were set by authorities in the usual way. Secondly, it will suspend charge payers' liability to pay any charges for 1991–92 until they receive a bill reflecting the new charges. Thirdly, my right hon. Friends and I will be empowered to pay grants to authorities to make good the loss of income resulting from the reduction in charges and to cover authorities' additional administrative costs arising as a consequence of the Bill.
§ Mr. Brian Wilson (Cunninghame, North)
Will the Secretary of State clarify the position on the standard community charge? Will the standard community charge be a multiple of the new individual community charge? As I see the Secretary of State nod, does that mean that there will be a substantial reduction in the standard community charge for some enormous second homes?
§ Mr. Heseltine
If the hon. Gentleman had been here from the beginning of the debate, he would have known that my hon. Friend the Member for Surbiton (Mr. 835 Tracey) raised exactly that point, and it so happens that this is precisely the moment in my speech when I wish to deal with it.
There is an incorrect report in The Times this morning that councils will not be compensated for the loss of income from standard community charges. In fact, grants will be paid to compensate authorities for loss of community charge income from all charge payers—that is, personal, standard and collective charge payers alike. I welcome this opportunity which my hon. Friend has given me to set the record straight.
§ Mr. A. J. Beith (Berwick-upon-Tweed)
Does that mean that, in those authorities where the standard charge is a multiple of twice the personal charge, the authority will be reimbursed for twice the charge?
§ Mr. Heseltine
That is correct.
The charges that we have announced involve local authorities in rebilling. There was no alternative way of achieving our purpose. We could not have made a switch of funding of the size involved outside a proper Budget statement. The House and the wider financial community would have expected to be told how such a switch was to be financed. We could not have acted, either, until all local authorities had set their budgets. There are simply too many authorities which, if they had had any idea that there was more money coming, would have wanted to use it to increase their spending and not to help local people. We were not prepared to put up with that.
§ Mr. Graham Riddick (Colne Valley)
Will my right hon. Friend confirm that the £140 reduction will also be available to local authorities and community charge payers next year? As Labour local authorities have been clearly setting the highest possible community charge that they can get away with this year, will my right hon. Friend confirm now that he will use his capping powers as ruthlessly as necessary to stop Labour authorities ripping off my constituents and those of all other hon. Members next year?
§ Mr. Heseltine
My hon. Friend raises an important point. I can confirm that we shall take what steps we think appropriate to prevent an explosion of local authority expenditure as a consequence of the generosity of the settlement that we have made today.
My hon. Friend's other point relates to our determination to keep the balance broadly in line. We have confirmed our intention to do that. Next year, it will probably be appropriate to do that through the aggregate exchequer finance arrangement as opposed to a specific legislative vehicle such as we are addressing today, but the upshot of it will be to preserve the balance broadly as my right hon. Friend the Chancellor has described.
§ Mr. Dennis Turner (Wolverhampton, South-East)
Will the Secretary of State also keep the balance between a poll tax in Wolverhampton next year of approximately £275 and that in Wandsworth, where charge payers will pay nothing? My constituents would like to know who will pay for the social workers and teachers in Wandsworth while my constituents, with their many social problems, will have to pay up to £300.
§ Mr. Heseltine
There is a simple way to meet the hon. Gentleman's objective. If he wants the community charge level of Wandsworth, all he has to do is to vote 836 Conservative at the forthcoming election. I had not intended to make a divisive party point at this stage in my speech, but it is worth repeating that to vote Labour costs, on average, £50 across the country.
§ Mr. John Bowis (Battersea)
Will my right hon. Friend also point out to Opposition Members that a great deal more central Government grant per head goes to the neighbouring Labour inner-London boroughs than comes to Wandsworth? One of the benefits of the Bill that he has not yet highlighted is the extent to which people receiving income support will benefit. The 20 per cent. put into income support is 20 per cent. of the national average community charge. For every council that comes in under the national average—and the Bill will help that to happen—such people will receive considerably more in income support than 20 per cent. of the national figure, and if the council comes in at zero, the whole amount will go into their pockets.
§ Mr. Heseltine
My hon. Friend has made a number of interesting points, and has reminded me of some interesting statistics. Wandsworth—a London borough—received £1,192 per adult, and then set a community charge of £137. Tower Hamlets received £1,862 per adult, and set a charge of £287. Hackney received £1,755, and set a charge of £462. Lambeth received £1,557, and set a charge of £590. If Labour Members want me to make comparisons, let me compare Wandsworth's £1,192 with Manchester's £1,170. Manchester set a charge of £432, while Wandsworth's charge was £137. Labour Membrs should think carefully before suggesting that there is no relationship between authorities' profligate spending patterns and the fact that they are Labour-controlled.
§ Mr. Heseltine
I think that the House has heard enough to be convinced that the legislation is essential. We should make progress. We intend to secure the passage of the Bill and any appropriate regulations this week. We have already informed the House in detail of our intentions, and we are writing again to local authorities today, sending them copies of the draft regulations on billing and enforcement. Before the financial year begins, authorities should have all that they need to send out the revised bills. We have made it clear that we shall advance cash from non-domestic rates to compensate local authorities for the unavoidable delay in the collection of their community charge income.
I have been impressed by the determination evident in local government generally—and especially among those to whom I have spoken directly—to convey this excellent new arrangement to local people as quickly as possible. What they have told me destroys the arguments of those who say that, inevitably, no new bills will be issued before June. It would be unforgivable if local authorities now delayed issuing their bills to hide from the electorate the substantial help that the Government have given. I am confident that the great majority will want the new bills to be sent out very soon, and that that end will be achieved.
The Bill is as short as it is important. It helps people. It shifts the burden from local to central taxation. It is a constructive and decisive product of our local government review, and I commend it to the House.
§ Mr. Bryan Gould (Dagenham)
I do not often feel sorry for the Secretary of State for the Environment, but I confess that I felt a twinge of sympathy for him this evening. He could not quite conceal his embarrassment, which was bespoken by the brevity of his remarks in support of the Bill.
That embarrassment was partly as a result of the breathtaking cynicism of the measure that the right hon. Gentleman had to propose, and partly due to the extraordinary circumstances—an unprecedented guillotine motion. Mostly, however, it was a consequence of what the Bill, and the Secretary of State's role this evening, tell us about the right hon. Gentleman's part in the attempt to bring the poll tax fiasco to an end.
I think that the right hon. Gentleman's embarrassment stems from the fact that he is now required to present a Bill—in extraordinary and unprecedented circumstances—to implement a measure in whose formulation he really played no part. In this Government of faction and cabal, he was treated as an outsider by the Treasury-dominated group that decided that the Budget strategy should be completely distorted by the need to throw money at the poll tax problem. The Bill may be a Department of the Environment measure, but it was conceived and promoted in the Treasury—a Department that has no understanding of local government, and even less sympathy for it.
We must assume that the decision to promote the measure was made without consultation of the Secretary of State. Presumably even he would not easily have consented to legislation that would require him to stand on his head in quite so spectacular a fashion. It is, after all, less than three months since he came solemnly to the House to present his revenue support grant settlement.
That settlement was presented as the culmination of long and responsible consideration by the right hon. Gentleman. He had, he told us, made his judgment about how much of local government spending should be funded by central Government. He dismissed any suggestion that the settlement represented anything other than a prudent and accurate judgment of the amount that central Government should provide. Yet here we are, less than three months later, with the Secretary of State compelled by his Treasury colleagues to concede that his judgment was wrong—to the tune of a small matter of £4.25 billion. No wonder he seems more than a little discomfited.
§ Mr. Gould
I shall give way in due course; I want to develop this point first.
Nor can the Secretary of State get away with the excuse that he may want to make: that he inherited the revenue support grant from his predecessor, and has recast the settlement according to his own long-held ideas and principles. The settlement that he announced in January did not, after all, come out of the blue. It was very much in line with earlier settlements, which had made a point of reducing the proportion of local government finance to be funded by central Government from that inherited from the preceding Labour Government—a steady reduction over the whole period from 62 per cent. to 35 per cent.
The Minister who initiated that long, consistent and steady process of disengagement——
§ Mr. Gould
Let me deal first with what the Secretary of State falsely said in his opening remarks. The proportion of local government finance provided by central Government was the same at the beginning of the last Labour Administration as it was at the end: 62 per cent. There was indeed a bobble upwards in the middle to about 65 per cent., but the level remained stable throughout that Administration. The real reduction began when the Secretary of State of the day decided to initiate the process that culminated in central Government funding of only 35 per cent.
Who was that Secretary of State? Who began that process? None other than the present incumbent. The Bill that the Secretary of State has been forced to present to the House today not only runs counter to a 12-year-old pattern set by the present Government; it runs counter to the whole process launched by the right hon. Gentleman himself. There is just a little inconsistency for him to explain away.
§ Mr. Heseltine
I know that figures are always an embarrassment to the hon. Gentleman, but the fact is that, in 1976, the proportion was 66 per cent. It went down by about 2 per cent. a year until the present Government were elected, and, broadly speaking, it did not go down much more than that throughout the 1980s. The switch began in 1976. Can the hon. Gentleman deny that?
§ Mr. Gould
I note with interest—and so, I am sure, did the House—that the Secretary of State took great care not to contradict my assertion, which, for the sake of those who failed to grasp it the first time, was that the level of central Government support for local government remained stable at 62 per cent. throughout the term of that Labour Government. The real reduction began in 1979 and reached a low point of 35 per cent. in the right hon. Gentleman's revenue support grant settlement this year.
§ Mr. David Nicholson
The hon. Gentleman's opening diatribe completely ignores the fact that the £4 billion in the Budget, which will be enacted by this legislation, is intended to reduce the charge to charge payers, not to add to resources for higher spending. As my right hon. Friend pointed out, if the money had been made available before many local authorities had set their budgets, they would have used it to increase spending.
§ Mr. Gould
What I find interesting about that intervention—although it had no bearing on my argument with the Secretary of State—is that it points to an absolute and unavoidable necessity. If, by any misfortune, this Government are still running things next year, as this trick cannot be turned a second time, the only way to avoid the trap that the Secretary of State has set himself is the solution offered from his own Back Benches—universal capping. That would, in turn, require the Secretary of State to stand on his head all over again. He has gone on record time and time again as against capping and in favour of accountability yet, once again, he has contradicted himself in the space of just a couple of weeks.
§ Mr. Gould
When the Secretary of State announced his community charge reduction scheme, he assured us that it was the last word in making the poll tax fair and workable. 839 It is no doubt true that a scheme designed to win the Ribble Valley by-election looked a little less attractive and persuasive when Ribble Valley was duly lost. However, it is still a remarkable volte face for the Secretary of State to come to the House so soon to admit by implication that he was wrong and to propose what is, in effect, a general election reduction scheme. To judge by its immediate reception, the new scheme looks as certain as its predecessor to be unsuccessful in its chosen aim.
If the timing of the measure is embarrassing for, the Secretary of State, his embarrassment pales into insignificance by comparison with the upheaval that the Bill has inflicted on local government. Virtually every poll tax bill had been calculated, many had been printed and a large number had been dispatched. I have received mine, and I am sure that many hon. Members have also received theirs. The consequence of this last-minute reversal is that 35 million poll tax bills will have to be recalculated, and the millions of bills awaiting dispatch will have to be shredded. There has been nothing more damaging to the Government's reputation than the sight of bales of millions of poll tax bills waiting to be destroyed—a sight that we have seen on our television screens over the past couple of days.
What drove the Government to reverse the position to which they had adhered for 12 years and to inflict such chaos on local government'? The only conclusion that we can safely reach is that we are dealing with a Government who are in a blue funk. They are now desperate and cynical in equal measure. They are so desperate that they will clutch at desperate measures. They are ready to try to save their skin at any cost. The cost is not borne by the Government because—as they never tire of telling us—they have no money. The money that they are throwing at the poll tax problem—all £4.25 billion of it—is not theirs. It is the taxpayers' pockets that are being raided.
If there is any justice, there will be a cost to the Government, and they will pay that cost. The whole shabby and disreputable exercise will be carried through at the cost of what shreds remain of the Government's tattered reputation for competence and prudence. Are they competent? To say that they could not run a whelk stall is to insult those in my constituency who continue to run such businesses successfully. If the Government were running a public company, the shareholders would have sacked them long ago before calling in the fraud squad. If they were in local government, whose fortunes they presume to treat in such a cavalier fashion, they would certainly have been surcharged, bankrupted and disqualified.
We should not mince words. On the evidence of this passage of events, we are dealing with a bunch of craven incompetents whose only saving grace is that they are so bad even at incompetence that they have been rumbled straight away.
Are the Government a prudent Government who look after public finance? That can produce nothing but a horse laugh.
§ Mr. Gould
The Government have generously agreed to cover the cost of their bungling. Even they did not dare to ask the poll tax payer to pick up the tab, but we have been given only a blithe estimate that the exercise will cost a mere trifle—just £60 million. Even that little bauble seems 840 certain to be an underestimate on the basis of evidence given to me over the past few days by local authorities, which are aghast at what the Bill will mean to their costs, administration and financial position.
I should like to give some examples. Birmingham says that if—as it will be compelled to do—it must use different software, the printing and dispatch of new bills will cost £100,000 in additional administrative costs, and it will suffer a loss in cash flow of £1.25 million. Newcastle estimates £200,000 as the cost of new calculations and dispatch of bills and a further loss of £700,000 in loss of interest. Peterborough says that its administrative costs will rise by between £50,000 and £100,000 and it will lose £200,000 in interest in one month alone.
The £60 million—unacceptable though it is as the price tag of the Government's folly—will not, on that basis, go very far. I want to know, either from the Secretary of State of from his Minister of State, what calculation lies behind the blithe estimate of £60 million. On what basis was it calculated? How confident is the Secretary of State that he knows the true figure, or is it just one more example of a stab in the dark by a Government whose claims to prudent management must now be met with derision and contempt?
§ Mr. James Paice (Cambridgeshire, South-East)
The hon. Gentleman has spent 15 minutes telling us his views of the Government. Will he, at any stage, tell us why he is opposing the Bill? Is he against the idea of reducing the bills by £140? If he were to have his way and the Bill were defeated, how would he answer the accusation from charge payers that he would have cost them £140 each?
§ Mr. Gould
I have not finished demolishing Tory luminaries yet.
We have here luminaries who profess to be abreast of all matters of public concern, but they do not yet know what any idiot could have read in today's newspapers. We are not opposing the Bill—we do not intend to stand in the way of a welcome reduction in the poll tax burden—but we reserve the right to explore the cynicism and disreputable nature of the Bill itself.
It must be recognised that the £60 million fleabite is of little consequence when compared to what the poll tax has already cost, and when we look at the start-up costs and the admitted additional administrative costs per year. The Minister of State is on record as conceding that it will cost £300 million additionally each year.
§ Mr. Gould
We must look at the burden of the lower-than-forecast collection level, which runs at £1.4 billion, and at the sweeteners already announced by the Secretary of State, which amount to £5 billion or £6 841 billion. We now add £4.25 billion from VAT. No wonder the Secretary of State can pretend that £60 million does not matter.
§ Mr. Hughes
The important point about the Bill, which we shall pass tonight, is that it gives us a clear idea, not only for this year, but for the future, of how many billion pounds the new scheme is designed to raise. To help us understand what the hon. Member for Dagenham (Mr. Gould) is saying on behalf of the Opposition, will he tell the House how many billion pounds his scheme is designed to raise? We shall then know what size of bill people will get.
§ Mr. Gould
The hon. Gentleman talks about the House becoming clear by the end of the debate precisely how the scheme is to work. I look forward to that clarity. My constituents in Dagenham will be keen to know precisely how many of them will get the £140 reduction that they have been promised. There has never been any mystery about our assertion. The Secretary of State may have changed his mind overnight, but we have always been clear that the balance between central and local government spending has been rigged by the Government and has gone to an extreme that even the present Administration now have to recognise must be corrected.
The£13 billion or£14 billion now thrown at the poll tax is not money that is being spent on a great national project or to improve the quality of life of the people of this country. It is money spent solely and sordidly on saving the Government's skin. Do not let me hear again Conservative Members claiming to be prudent or responsible in the management of public resources.
The irony is that, like so much else about the poll tax, the Bill does not even deliver what it promises. Only half—perhaps not even half—of those who have been promised the reduction of £140 will receive it. Those who receive rebates or who qualify under the community charge reduction scheme will find that their reductions are far less. I do not blame a Government who can make a mistake and then correct it in 24 hours—a mistake of only 100 per cent.
It was a mistake that led the Minister of State to tell us last night, less than 24 hours ago, that only 8 million people would benefit from the community charge reduction scheme. The Secretary of State corrected him today and said that the figure was 16 million. I do not blame an Administration who have such difficulty with figures for being unable to tell us precisely how many people will get the £140. Nevertheless, it is a matter of abiding interest to my constituents. They would dearly like to know the answer, and I look forward to hearing the Minister's answer later.
It is characteristic of the poll tax that those who are most certain of the benefit of the full £140 are those at the top of the income scale. The benefit is worth £274.50 to someone paying top rate income tax. Those at the bottom will benefit to the maximum of only £28, and many of them will receive even less. There is no justice in the famous flat-rate principle, which did so much to discredit the poll 842 tax. The flat-rate principle allows the people of Wandsworth to pay nothing. Whatever happened to the idea that everyone should contribute something? That principle allows the people of Wandsworth to pay nothing, while others get the same £140 and still have to pay £300 a year.
Is it not typical of the Government that, when they filched billions of pounds from local government, they used it to finance income tax cuts to benefit the well-off? Now that they recognise that they have made a terrible mistake which must be corrected, and now that they have unwillingly decided that they must pay back the money, who do they expect to pay it? They expect it to be not those who benefited from income tax cuts, but the ordinary family, who are hard hit by the increase in VAT.
If the money is available, why is it not used to abolish the 20 per cent. contribution? Can the Secretary of State think of a better way? I believe that on this issue, his heart may be in the right place, but I suspect that, again, he has been outgunned by the Treasury. Is there any better way of spending the available money than to remove the misery and despair of people who are terrified by poll tax bills that they have no hope of paying because they have no income with which to pay them?
§ Mr. Wilson
Does my hon. Friend share my understanding of the reply that I received earlier from the Secretary of State on the flat-rate principle? Not only will the poorest people in the land receive £28 under the new scheme while the better-off obtain £140, but a very wealthy person who owns a substantial second home will obtain £420 from the scheme.
§ Mr. Gould
My hon. Friend is right. His intervention shows that, try as they may to wriggle off the poll tax hook, the principle of the poll tax remains to dog the Government. Wherever they go, the flat-rate principle, which the Secretary of State dare not abandon because of the uproar on the Conservative Benches, distorts everything he does in reforming the poll tax.
The real flaw in the Bill is not that it is confused, ill thought out, unfair and chaotic, but that it tries to prop up the poll tax rather than to abolish it. We could be debating today a short Bill which would ensure that this year's poll tax bills would be the last. The Government turned down our offer of co-operation on such a Bill. Instead, we have a Bill that does no more than offer a sop or a bribe, with no guarantee that it is the prelude to the abolition of a tax whose manifest and manifold deficiencies have made the distortions necessary.
The Government are so confused and divided that they cannot decide whether the poll tax is eventually to go. The right hon. Member for Blaby (Mr. Lawson) spoke the truth—freed from the burdens of office, he had that unaccustomed luxury on the Conservative Benches. He spoke a truth recognised by millions when he said that what is known of the proposals of the Secretary of State can properly be described as "son of poll tax". He pointed to a Government who have lost faith in their own creation, but who dare not dispatch it for good.
In the meantime, we have a shoddy, shabby and cynical Bill. It is a measure designed to mask the stench of the poll tax rather than to bury its corpse. We regard the Bill as deeply disreputable. We shall seek to amend it so that it more nearly serves the interests of the 90 per cent. of public opinion that now wants to see the back of the poll tax.
843 We regard the relief offered to reduce the burden of the poll tax for some of those who have been driven to despair by its unfairness as no more than a down payment. It is a payment on account on the way to the complete abolition of that hated tax. This is the down payment, but the full price will be paid by the Tory Government at the next general election. That is where the poll tax bill will finally be paid. It is now clear that we must look to that general election and to a Labour victory before we have any chance of abolishing the poll tax.
§ Miss Emma Nicholson (Torridge and Devon, West)
The Bill, with the other reductions that have recently been announced, will reduce the average community charge payment in England to about £170. So low now are the charges, that no one-person or two-person households will pay more than £2 more than they paid under the old rating system if they have not moved house. The strength of the Bill is that it is a small part of a far wider exercise which is designed to look throughout the local government system—not just at the payment issue or at the method of raising funds, but at services. I commend the Bill and will support it tonight.
The low level of the charge reminds one of the benefits of it. Before there are howls of disbelief from the Opposition, let me point out some of them. For the first time in the parliamentary memory of many of us, we gave the elector full knowledge of what his local authority was doing by making the elector contribute to that local authority expenditure. Putting one's hand in one's pocket—paying for a round at the bar—concentrates the mind marvellously. As a result of that change, local authority budgets were trimmed, sometimes dramatically—there can be no argument about that because that is the truth. The savings were not made in terms of the services given to those who need and deserve them, but by authorities undertaking internal cost reductions.
In my local authority, right down in the county of Devon, well known to my right hon. Friend the Secretary of State, the electors were able to consider what was happening at county hall and in the district councils. When the community charge arrived in Devon, the economic expenditure of those authorities was low, but it was still possible for them to make large and proper expenditure cuts internally.
§ Mr. Robert G. Hughes
My hon. Friend may be being a little unfair to the Opposition: my experience in London is that Conservative authorities cut administration while Labour councils cut services.
§ Miss Nicholson
Alas, that is so. Many Conservative councils have brought in outside experts to study their budgets to find ways in which they can be trimmed internally. We should not forget the magnitude of councils. They have swelled in recent years, rather like a queen bee fed on special pollen and honey. In this case, the pollen and honey came from the taxpayer's pocket.
§ Miss Nicholson
No, I shall continue for a little longer if I may.
It would be foolish and inaccurate for Opposition Members——
§ Miss Nicholson
I shall not give way.
It would be foolish and inaccurate for the Opposition to pretend, as they seek to do for the purposes of political debate, that councils are perfect organisations that never overspend and do not put 17 per cent. of their education budgets towards the cost of their staff in county hall.
Another benefit of the community charge is the reintroduction of accountability to local people. That had been lost for many years, particularly under Labour Governments. I believe that accountability is a great and continuing benefit of community charge.
Given that the community charge is so low, why do we not retain it? Many of my colleagues would like to do just that. I believe that there are two good reasons why we should not retain the community charge and I intend to demonstrate that those key weaknesses are even larger and are inherent in the alternative proposals offered by the Opposition.
The first weakness is that the system of collection is too expensive and intrusive. Even the most sophisticated official has found it extremely tempting to acquire more knowledge about the individual elector than he should have done in pursuit of his duty to collect the community charge. Some councils might be in contravention of the Data Protection Act 1984—some are before the Data Protection Registrar now. We must remember the problems of such intrusiveness when we consider the Opposition's proposals.
The second weakness of the community charge is that its gearing bore down too heavily on the individual. Some bills rose greatly, largely under Labour councils that may have been indulging in inappropriate expenditure under current guidelines. I hope that the local government review will root out that problem. It is difficult to see why a special pressure group such as black lesbians in Newcastle should be taught karate, paid for by taxpayers' money. That was unusual. Perhaps the local government review will throw light on what local government does best and where the weaknesses of the current system inhibit decision making to such a degree that it becomes so expensive that it might best be scaled down or scrapped. Despite the current low level of the community charge, I find it difficult to argue that it should be retained, although I accept that it offers good benefits.
The community charge is too difficult and expensive to collect because people move around so much. Every year, 40 per cent. of the population of Islington moves. Given the behaviour of Islington council, one is not surprised at that. If I lived in Islington, I would move as fast as possible to get away from the enormity of the indiscretions committed with local taxpayers' money.
I believe that community charge collection could have been done economically had, we had identity cards, enforcement and a single software provision from the centre. The privacy issue, however, is difficult to counter. The Labour party has complained bitterly about what the Government have suggested, but the plans proposed by the Opposition do not bear scrutiny.
The Liberal democrats have advocated a local income tax, but the Labour party has recognised that that is administratively impracticable and could produce enormous local variations. I agree with the Labour party that it would be a difficult tax to introduce. I shall not go into the detail of my arguments against that tax, as it is simply 845 a non-runner because the Liberal Democrats will be unable to persuade the two large parties to adopt that policy.
The electorate should be alerted to the danger in the Labour party's plans. The Labour party is offering a mixture of ideas. It proposes a return to the old rating system, but the Opposition will not recognise that the gearing of that system bears even more heavily on the minority of the electorate than the community charge gearing. It is so atrociously unfair that it is difficult to countenance the return of that system. I find it difficult to believe, however, that the Labour party would care about that unfairness. It would probably believe that such a change would not affect its voters. It would not mind about that small minority if it felt that it could get away with it.
But the Opposition say that the new proposals must be linked with the famous words "the ability to pay". That is where the Labour party gets into difficulty. The only way in which one can focus on the ability to pay other than through the type of proposals that we have on the household tax, which are a rough and ready calculation of how many people there are in a household combined with the rebates that people may receive if they are on income support, would swiftly become unacceptable to the public once they understood what lay behind the change.
Labour's paper states that computerisation of the Inland Revenueoffers the possibility that means tested rebates … could be replaced by an automatic calculation of liabilityand that thatcould be an important step towards a much wider reform, encompassing the benefit system as well as taxation … offering the prospect of a single tax benefit transaction between the individual and government".With breathtaking gall, or with an innocent lack of understanding of modern technology that demonstrates the Opposition's unfitness for government—one can hardly believe that they are so naive—the paper continues by saying that the new systemprotects confidentiality and civil rightsandis forward looking in terms of general taxation".Of course, it is nothing of the sort. It is a destruction of civil rights and an utter and total destruction of individual privacy, because the only way to focus upon that famous and saleable quality, "ability to pay" is—as the Labour party document properly proposed, although it was improper as regards confidentiality and citizens' rights—by creating one large, Government-controlled computerised record on each citizen in the land. The Opposition do not know—because they do not have the knowledge and they do not even bother to find out—that the Inland Revenue is set up solely for the purpose of collecting inland revenue. It does not contain the number of one's house, where one lives, who one is, how many children one has, one's income, one's stocks and shares, what sort of car one has, and all the other bits and pieces that are needed if one is to tailor raising money for local income to what is so laughably called, "ability to pay".
§ Mr. David Bellotti (Eastbourne)
Is the hon. Lady aware that the PAYE system in the Inland Revenue offices contains the names, addresses and postal codes of everyone liable to pay it? If she does realise that, and as she 846 quoted the phrase, "ability to pay" in her earlier comments, does she not realise that a local income tax added to the national taxation system would be easy to collect and would meet the other requirements that she mentioned earlier? Is she aware that all the required information exists and that such a proposal could be introduced within six months?
§ Miss Nicholson
I do not deny that such information exists on computer records—I know it does and I am well aware of those systems. I argue against a local income tax for slightly different reasons. I believe that we are too small a country for a local income tax to work. It would produce large distortions in people's movements and inequalities for people living one side of a border if there were large differences in demands for local income tax from authorities on the other side of the border. I know that the information exists, but I do not believe that local taxation is a feasible system.
Regarding the other proposals from the largest Opposition party, my comment is not that the information does not exist—indeed it does. For example, my right hon. Friend the Member for Blaby (Mr. Lawson) introduced a change in married women's income tax—which he promoted so heavily, and for which I honour him—that required matching tax points for married women with those of their husbands. Certainly the information exists. However, at the heart of the confidentiality which exists for the individual in the United Kingdom is the determination that the different systems should not be merged—the determination that tax, benefits and everything else known by Government about an individual should not be put on one computer record because then the destruction of personal confidentiality would be complete, and state control in place for ever.
If the Labour party really means what it stated in that paper about such a system offering civil rights protection and confidentiality, may I point out that, before Labour brings it in, it would have to introduce both a personal confidentiality Bill and a Bill that placed a value on information. Labour would have to introduce a sea change of legislation through the House which would take for ever and would be unique to the United Kingdom.
Thus, the Opposition may say that they can put aside the community charge—nothing is easier than to tear up an existing piece of legislation—and immediately put in its place something that is fair, is related to the ability to pay and fulfils the contradictory proposals that I have read out from their document on the community charge and local government, to do so they would in practice have to go through many years of debate and the individual would still be at large risk of Government control.
Time is needed for any genuine alterations to the complexities of local government finance. That is why I believe that the Secretary of State, the Chancellor of the Exchequer and the Prime Minister have given that time properly. They have given time for their own proposals to come to fruition and for consultation and they have given time by reducing the community charge.
When we talk about mechanisms for reducing costs, I remind the House that value added tax has two large benefits which have not yet been identified. First, it is lower, as a proportion of equivalised disposable income, for retired people than for working people, so it is good for the retired and the elderly. Secondly, the United Kingdom has a total value added tax—final, private, consumption 847 expenditure as an annual expenditure percentage rate—that is the second lowest in the European Community. That is because one quarter of value added taxable goods are zero-rated and, on top of that, there are exemptions. No other European Community country offers that, and it gives us the second lowest average of the entire Community.
The former Chancellor of the Exchequer, when he is critical of raising value added tax, surely cannot have looked at those figures and seen the extreme slowness with which we are pursuing our desired objective of shifting from tax on income to tax on expenditure.
§ Mr. Tony Banks
Is the hon. Lady aware that the former Chancellor of the Exchequer seems to be very much in favour of bringing our VAT rates into line with the rest of Europe? In the end, that would also involve putting VAT on some essentials such as food. Does she support such a move?
§ Miss Nicholson
Again, I think that the former Chancellor's words may have been paraphrased inaccurately to reflect his speech. There is no possibility of bringing value added tax in line throughout Europe, because it is as varied as it is interesting. It is unique to each country. There is a 33 per cent. difference between the bottom and top band of value added tax, which would suggest that there will never be one VAT band for the Community in 1992, or whenever. I suggest that the hon. Gentleman studies again what my right hon. Friend the Member for Blaby said.
§ Mr. Dickens
I am grateful to my hon. Friend for giving way during her excellent speech. Does she agree that there is a certain appeal about value added tax, because the millions of foreign tourists that flood into the United Kingdom on holidays and shopping sprees will now contribute more to local government finance, as we do when we go on holiday abroad? That is important. Our system has to be fair and affordable. We are making it affordable at the moment to help people through this difficult time. Does she not agree that we shall produce a fair system?
§ Miss Nicholson
I agree with my hon. friend that the millions of incoming tourists will enhance our local government tax-raising capacity by spending more, especially since tourists will spend more on the sort of items that take them into the higher bands of expenditure. It is worth remembering that people have to spend £13,500 a year before the additional 2.5 per cent. would affect their expenditure. I certainly agree with my hon. Friend that tourists will contribute more.
My right hon. Friend the Secretary of State introduced the Bill with his usual intellectual rigour, clarity of expression and—[Interruption.] I am fascinated that Her Majesty's Opposition, having had their own cover blown wide open by me, have not even come back on my central point of attack on their proposals—I am bound to think that the admitted deficiencies in our education system are being reflected in their lack of numeracy. Is it possible that Opposition Members have not read their own document? Is it even more possible—or even probable—that they cannot add it up?
My right hon. Friend the Secretary of State has shown an openness to the House and the electorate in embarking on various stages of consultation as he develops these 848 matters that affect us all domestically and locally. I believe that that true consultation will be a hallmark of this Prime Minister's Administration. The electorate will welcome it, just as we welcome the Bill tonight.
§ Mr. Dave Nellist (Coventry, South-East)
There is a certain pleasure in seeing the rout of the Government over the past eight days. Eight days is, indeed, a long time in politics, because it was only last Monday that the Prime Minister spoke to Tory Back Benchers, explaining that the poll tax was "uncollectable" because of the number of people not paying it and the courts being overloaded. On Tuesday, the Chancellor made his announcement about "shifting finance". On Thursday, we had a classic understatement from the Secretary of State for the Environment that "people are not persuaded" that the poll tax is fair. Last night, the right hon. Member for Blaby, (Mr. Lawson) who made one of his rare appearances in the House to collect his pocket money, told us all about "Son of Poll Tax". If the Government stay in office, we may well get what a Hammer horror producer might introduce as "Poll Tax II: Return of the Undead", so much is the poll tax still part of the thinking of the Government.
Those of us who have been most directly involved in the anti-pool tax campaign take a certain vicarious pleasure in witnessing the past eight days of Government by the headless chicken tendency. We now have an unprecedented "24-hour Bill" in the Chamber, which will pass through Parliament in just one week.
As was suggested earlier, what is happening has not passed unnoticed in my learning curve. When we have a Labour Government, I hope that Conservative Members will find no cause to complain if I venture to suggest to my hon. Friends on the Front Bench that they can abolish the House of Lords in a week or introduce a "General Nationalisation of Industry Bill" in one night. Such measures could also be applied to Scotland and we could give a future Secretary of State for Trade and Industry the general power to nationalise. I advise Conservative Members that they will see in the months ahead what we have learnt tonight.
However, the real victory does not belong to tonight's debate—it belongs to the millions of people outside this place who refused to be browbeaten or intimidated and who participated in what an article in tonight's Evening Standard calls themost successful civil defiance campaign in living memory".The Chartered Institute of Public Finance and Accountancy has said that 14 million people have either stopped or never started paying the poll tax. On Tuesday last week "Newsnight" put the figure at 15.7 million people—I presume that Scotland has at last been included in the figures. On Monday, the Prime Minister said that the figure was 18.5 million people. That achieved what many of us were told was impossible, especially by the press. It forced the Government to make a humiliating U-turn before a general election. I have no doubt that, in drafting the Bill, the Tories had a general election in mind.
The Bill legitimises non-payment for the next three or four months. In a written answer on 19 March, the Secretary of State stated:The Bill will suspend the liability of charge-payers to pay any 1991–92 charges until a charge bill has been received reflecting the reduced charges."—[Official Report, 19 March 1991; Vol. 188, c. 49.]849 That answer means that people need not pay at least until May, or perhaps even until August. The Government have at last legalised non-payment.
As I have said, victory belongs to those millions of people. It is not a victory against the poll tax but, as I know from personal discussions during the past eight days, it is a catharsis for all the Government's attacks and intimidations on ordinary people in the past 12 years. I refer to their attacks on the miners and on other communities, to the hospital and school closures, to what happened at GCHQ and to other unions, and to the privatisations. The past eight days are a sweet revenge on the Government for all those past attacks.
The Bill and the Secretary of State's review will result in an alteration to the law after the challenge to that law took place outside Parliament. It was ever thus. The right of people to vote for Members of this place, the right to join a union or to take industrial action were first established outside Parliament and later legitimised by the passage of legislation or by bad laws being repealed. That is what we are seeing beginning tonight—the repeal of a bad law because of a challenge from outside Parliament.
Unlike the charges that I and others have faced from Conservative Members, there was never what was so perversely pictured by Conservative Members—there was never any intention to widen the battle or to generalise law breaking. I challenge any hon. Member to prove the opposite. Those who have not paid their poll tax or who delayed paying it have not in any way encouraged general lawlessness. They simply wanted to see the repeal of the poll tax legislation, and we are seeing the start of that tonight.
If the Bill is enacted, the reduction of £140 in bills will have been brought about by individual sacrifice. I should like to mention by name some of the people who have made sacrifices so that they are part of the record. They include Brian Wright, Pat Westmore and John Ayes. They are the three people who have gone to prison in England for not paying the poll tax—only two days ago in the case of John Aves.
§ Mr. Nellist
You will notice, Madam Deputy Speaker, that a Conservative Member has said, "Good." Presumably he is the same hon. Member who voted for the Tories to change the law in November 1988 so that no one in Scotland could go to prison for being in debt. That can happen only in England and Wales.
I pay tribute also to those who lost their liberty through arrest during the past two years, most notably a year ago at Trafalgar square. I pay tribute also to my constituent, Bob Pheelan, who died outside Coventry magistrates court after being forcibly removed by the police during a poll tax hearing last year.
After what has happened and the passage of the Bill, there will be a reduction of £140 in the poll tax. But what would have happened if we had all paid or tried to pay the poll tax? Many millions of people would have had to go into debt, take their cars off the streets, cancel their holidays or deny things to the kids. We would not have had the extra transitional relief that was given in recent months, or the relief that the Government have offered to millions of families in the past 24 hours. There would have 850 been no review and no climb-down. The right hon. Member for Finchley (Mrs. Thatcher) would still be ensconced in No. 10 Downing street. Those who told us that by not paying our bills we were increasing other people's poll taxes will have to realise that by not paying our bills we have reduceed everybody's poll tax by £140.
The Secretary of State has said that there is "no other way" than the way that he has chosen. He is almost resurrecting "TINA" to justify what he has done. He has said that there was "no other way" to achieve the reduction other than by raising VAT. I shall suggest another way to him in view of the answers that he and his Department have given me this week. They provided the figures to prove it. The right hon. Gentleman could have cancelled the debts of all the local authorities in this country and relieved them of more than £6,000 million a year in interest charges alone, which could have reduced the poll tax by £200 per person.
If the Secretary of State thinks that that is not possible, I refer him to the figures that he gave me on 19 March about the exact amount of local authority debt. A year ago, his Department gave me the figures on the amount of interest charges paid by local authorities each year. If the right hon. Gentleman were to cancel those debts, it would have the additional welcome effect, even for Conservative Members, of reducing every pound of rent paid by council tenants—by 27 per cent. in the shire counties and by 34 per cent. in the metropolitan authority areas. That is the percentage of rent that passes immediately out of the back door of the council buildings on debt interest charges.
Some Conservative Members may say that that policy is impossible, but they would have said that this Bill was impossible just two or three weeks ago. I must advise them, however, that debt cancellation is a regular tool of this Government. In a reply to the hon. Member for Glasgow, Govan (Mr. Sillars) on 13 March, the Minister showed how £15 billion-worth of debt was cancelled—£3 billion for British Telecom £1.7 billion for the new towns £4 billion for British Steel and £5 billion for the water companies—to ensure that the Government's mates in the City had a better deal on privatisation.
In a press release the Government said that the average community charge or poll tax after the Bill would be £252. If they cancelled debt they could have brought it down by a further £100 per head—in other words, to £152. They admitted on 26 February to the Tory Member for Stockport (Mr. Favell) that that is what the poll tax would have been if they had kept the rate support grant at the same rate since 1979 when they took office, instead of cutting over £57 billion from local council support in the last 10 years.
§ Mr. Nellist
I am afraid that I cannot give way, as I know that other hon. Members want to speak.
Why are the Government in retreat? It is certainly not because they have seen the error of their ways or realised the injustice and unfairness of the poll tax. They have not even offered to reinstate the social security cuts, the axing of benefits to 16 and 17-year-olds, or the ending of housing benefit in certain areas, which has hit many of my constituents even more than the poll tax.
I vividly remember accusing the right hon. Member for Finchley for her treatment of a 33-year-old widow in Coventry who had lost £25 a week because of the axing of 851 school meals for her four children and the cuts in housing benefit. Cuts in minimum wages, maternity grants and health and safety will not be restored. The difference was that, while we had to co-operate in our own robbery by going to the post office and paying over the money owed to the council, 18.5 million people not only said no, but had a framework in the Federation of Anti-Poll Tax Unions, which allowed battle to be joined and won against the Tories.
Those who said that that was impossible must realise that millions have crossed a barrier in the last 12 months. They remember what a famous American president said at his inauguration ceremony:the only thing we have to fear is fear itself.Millions realised that, if they did not pay a civil debt, the Government would be forced into the most humiliating retreat. It will not finish now. If the Chancellor can cancel £870 million of corporation tax in a full year by reducing the tax from 35 per cent. to 33 per cent. and backdating the cut to 1 April last year, we can demand that poll tax payers who went into debt to pay to pay their poll tax should get the same alleviation from this year's bills as the Tories are prepared to give off next year's hardship.[Interruption.]The hon. Member for Dunfermline, West (Mr. Douglas) reminds me that people in Scotland ought to receive compensation for the previous year's poll tax.
If the Government can cancel debts for their friends in Rover, Rolls-Royce, Harland and Wolff, British Telecom, the electricity and water undertakings, and so on, they can cancel the outstanding debt of the people who are facing prosecution for not paying their poll tax. The Secretary of State has said that he will continue to enforce payment. Do Tory Members realise that that means that 18.5 million people face court proceedings? According to information given to me by the Department, as at 31 December 2.2 million people had been summonsed, 77,585 had turned up in court, and 9,785 hours of court time had been taken up.
The Prime Minister has said that the courts are overloaded. What will he say if the Government try to prosecute another 15 million people? Where will they put all the people if seizure by bailiffs and deductions from wages and benefits do not work, as will be the case? Will they send them to prison? Do they not understand that there are already 45,000 people in prisons which were built to hold 43,000? There is no way the Government could put 15 million more people in prison, and even if they could, do they not realise that it costs £380 per week to keep a person in prison? That should be compared to the amount owed in poll tax.
The position is not getting better. Only 10 days ago the Audit Commission said that in the shire counties only 82 per cent. were paying the poll tax, in the metropolitan counties 73 per cent., in outer London 77 per cent. and in inner London 66 per cent. Collection is dropping like a stone.
When the Tories had their leadership contest in November, people stopped paying because all three candidates said that they would abolish the poll tax. When the Government announced the introduction of the Bill last week, people stopped paying in droves. Let the Government ask any local authority treasurer if they want to find out what the position is. It can only get worse, because the Government are legitimising non-payment for the next three months at least.
Under the Bill, the Government will be robbing Peter to pay Paul. We are supposed to feel grateful for the increase 852 in VAT. According to an article in "Economic Trends" in May 1990, the poorest 10 per cent. in the country spend 9.2 per cent. of their disposable income on VAT, compared to 5.7 per cent. for the richest 10 per cent. The Library has worked out for me that, with the increase of 2.5 per cent. in VAT, those percentages will become 10.8 and 6.6. Again, the poorest will pay so that the richest can benefit. That will not go down well.
We should have had not this Bill but a measure immediately to abolish the poll tax. I and millions of people welcomed the motion put before the House by my party on 13 March. That was the clearest statement ever that our real alternative is the abolition of the poll tax.
The Government are in retreat. On the middle east they said that there should be no ceasefire until there was agreement on all the terms. Those involved in the anti-poll tax movement should follow the Government's advice. They should seek the complete abolition of the poll tax, an amnesty for those facing court proceedings, and compensation for those who tried to pay their poll tax.
We must seek an answer to the real question put by parents today from Tory Warwickshire. I do not see any right hon. or hon. Members from Warwickshire in the Chamber. Those parents came to appeal to hon. Members not to agree to anything which would allow capping to remain or insufficient funding of local authority services. The parents told me today that in Warwickshire, which has been a Tory shire for 100 years, pre-school education is under threat and they face the closure of homes for the elderly, the closure of day centres for people with learning difficulties, and curtailment of youth services. That is not in a Labour inner-city London borough but in a Tory shire county.
The main lesson that the people have learned over the past three years in Scotland and the past two years in England and Wales, epitomised by the climb-down of the Government, is that if they struggle they can win. They can force concessions and even beat back the confident Tory Government. That knowledge will be absorbed not only on the poll tax but by those facing hospital closures. school closures, factory closures or redundancy. They will realise that if they get off their knees and stand up they can beat the Tories.
§ Madam Deputy Speaker
Order. Several hon. Members are seeking to speak. I appeal for shorter speeches, so that I may call all those hon. Members.
§ Mr. Simon Burns (Chelmsford)
I trust that the hon. Member for Coventry, South-East (Mr. Nellist) will forgive me if I do not follow his unreconstructed approach to life. His was the sort of speech with which the late Enver Hoxha would have been pleased, but I suspect that it would not play all that well with the Leader of the Opposition. Listening to the sheer horror of some of his ideas about what he would like a future Labour Government to enact sent shivers down the spines of not only his right hon. Friend but all my right hon. and hon. Friends on this side of the House.
I am disappointed that the hon. Member for Dagenham (Mr. Gould) is not in the Chamber. I wanted to congratulate him on spinning out for 25 minutes a speech that basically said little. I knew that he was in serious 853 trouble when he started recycling the jokes that he made to the House 13 days ago during the Supply day debate initiated by the Labour party on the community charge.
Only the most churlish of people will not welcome the £140 reduction in community charge bills throughout England. It is to be welcomed, because it will mean that the bill of every community charge payer in the country will be slashed. I believe—I have never made any bones about it—that the principle behind the community charge was right. I genuinely believe that everyone who uses local authority services should make some contribution to the provision of those services. Regrettably, the community charge was made unacceptable by the level of bill imposed on far too many people for the provision of those services. That is why it was necessary to produce a Bill of this nature. I congratulate my right hon. Friends the Chancellor of the Exchequer and the Secretary of State for the Environment on the way in which they have acted to reduce people's bills. My right hon. Friends will bring genuine help to everyone in England and correspondingly in Scotland and Wales.
The Government have identified a problem which has been apparent to all—the level of community charge imposed by the vast majority of local authorities. The Government listened to the arguments and decided to take action. Several Opposition Members have criticised the fact that the Bill is proceeding through the House in one day. If we had not made it do so, we would have been criticised for not taking decisive action when it was needed.
Some Opposition Members said that we should have introduced the Bill two, three or four weeks ago. If we had done that, local authorities would have known what we intended to do before they set their community charges, and would simply have hiked up their spending to thwart the change that is bringing the benefit to people.
§ Mr. Wilson
As he is on the chronology of these matters, and for the benefit of those who read the debate, the hon. Gentleman will wish to place on record his proud membership of the Committee which considered the Local Government Finance Bill and the fact that he supported every dot and comma of the Bill. All the points made by the hon. Member for Torridge and Devon, West (Miss Nicholson) and all the other Tory Members who are now being held to account were spelt out to them in Committee. Will he confirm that?
§ Mr. Burns
—I apologise; it was in The Independent on Sunday about six months ago about hon. Members such as me who served on that Committee and some of the comments that we made, I suspected that the hon. Gentleman would raise the matter again during this debate if I had the opportunity to speak.
I will answer his point. I reiterate what I said about three minutes ago. I make no apology for believing that everyone who uses local government services should make a financial contribution of some degree to the provision of those services.
§ Mr. Donald Dewar (Glasgow, Garscadden)
Presumably the hon. Gentleman does not take the view that paying general taxation is sufficient, because that was rejected with contempt during the debates on the poll tax. Is he distressed by the fact that apparently we are now committed under the Government's new scheme to a household bill which will mean that there will be no legal liability for anyone but the householder? [Laughter.]
§ Mr. Burns
Before Opposition Members start giggling like schoolgirls, they should listen, because they may learn something.
As the hon. Member for Glasgow, Garscadden (Mr. Dewar) correctly said, there will be a single bill. But as far as the plan has been announced—it is only the skeleton—[Laughter.] Hang on. We know that part of the bill will be based on the value of the property and the other part will take into account the number of adults living in that property. Although the bill will go only to the household, it will contain an element that reflects the number of people living in the property, and therefore the number of people using and benefiting from the services.
The Bill will result in my constituents receiving a reduction of £140 in their community charge bills. For a household of two, there will be a reduction of £280. The community charge set in Chelmsford on 6 March was £363, a reduction on the previous year. There would have been an even greater reduction, because Essex county council came in at £49 million below SSA, but, sadly, the Liberal-controlled Chelmsford borough council again increased its spending by substantially more than its SSA. So Chelmsford was to have paid for the profligacy of that council, which will be getting its marching orders on 2 May, after which it will no longer control Chelmsford.
As the Bill will mean a reduction of £140 from the £363 that would have been charged, excluding some of the parishes in parts of my constituency, there will be a community charge of £223 per person. For two people in one house, the bill will be £446, substantially less than the average rates bill of £680 in the last year of rates.
Calculating from the community charge what the rates would have been had the old system been maintained—I understand that it would mean a 10 per cent. increase on the rates—the average rates bill in my constituency would have been £750. So the vast majority of my constituents will benefit from 1 April in the coming financial year as a result of the Bill. I shall vote wholeheartedly for the measure, because it will be in my constituents' interests.
§ Mr. Burns
That is so, because my wife and I live in my constituency and will pay the community charge there. What applies to my constituents applies to me, so the hon. Gentleman's comment is self-evident. The same is true of all hon. Members who live in their constituencies.
At £446 for two community charges in my constituency, the vast majority of my constituents will be winners and will not mind making a contribution to local government finances. They objected, with reason, to the unacceptable charge of £392 in the current year, which represented £784 for two people. That caused hardship and was considered to be unfair. Let us not forget that the reduction as proposed has nothing to do with the local authority that set the charge in Chelmsford. The Government have simply taken steps to rectify the problem.
855 The Government will also be helping local authorities with the bills that will be going out for the new community charge. I urge the Secretary of State for Scotland to raise with the Secretary of State for the Environment an important point concerning the sending out of those bills. Chelmsford borough council set its community charge this year on 6 March. By 20 March, within a couple of weeks, the bills had gone out to 20,000 households.
This legislation will probably be on the statute book by Thursday, when we go into recess. We have been told that instructions are being sent to local authorities to enable them to begin preparing the new bills. I assume that they will receive all the instructions and information that they need by the end of next week. If so, it is in the interests of many local authorities throughout the country to ensure that those new bills are not delivered through the letterbox before 2 May, so that they can spread confusion and misunderstanding about the community charge reductions until after polling day. That will enable them to milk that confusion for as much political advantage as possible.
Can my right hon. Friend the Secretary of State for Scotland do anything, even if it means amending the Bill, to ensure that bills are delivered before polling day? Unless local authorities can show the Department of the Environment that there is a good reason why they could not be delivered, I believe that should be done.
Too many councillors and political parties are afraid of the implications of the Government's reduction of the community charge. Many hon. Members are trying to denigrate the scheme and spread confusion because they do not want people to be able to judge those implications before they cast their votes. They should be allowed to vote knowing precisely what they must pay. I hope that, notwithstanding the reassurances from my right hon. Friend the Secretary of State for the Environment the Government will ensure that, however people vote, they do so knowing exactly what they will pay for their local government services in the financial year 1991–92.
§ Mr. David Bellotti (Eastbourne)
That is an extremely difficult act to follow. It is now clear that, whereas Eastbourne disposed of the right hon. Member for Finchley (Mrs. Thatcher) and Ribble Valley disposed of the poll tax, this Bill, which is being rushed through the House in one day, is an attempt by the Government to stop their being disposed of at the forthcoming general election.
The debate was preceded by headlines in the national press such as, "Everybody will get £140 off their poll tax bill." They will not. The press reported that because of a letter dated 19 March from the Department of the Environment to local authority chief executives, which said that there will belegislation to reduce the community charges set by local authorities for 1991/1992 by £140.Local authority chief executives throughout the country who received that letter knew that it was ambiguous in the extreme, and they did not know how to respond to local inquiries. When picking up the information from the Government, the national press could do no better than translate what they thought the Government were saying. Earlier today, the Government gave more information to try to explain what they had in mind. The information given to local authorities has led to utter chaos.
856 I am surprised that the hon. Member for Chelmsford (Mr. Burns) should want poll tax bills to land on the doormats of his constituents before 2 May. Thousands of his constituents think that they will pay nothing because, previously, they paid less than £140. In reality, they will pay a great deal, and their rebates will be less.
The poorer people in our communities will be hit harder. There is little joy in the Bill for students or those on income support. I have just heard during the debate that there is rather more joy for people who own second homes. If that is the level of what the Government are trying to do to give the poor some economic relief, it would be better for those poll tax bills to arrrive on doormats before the elections on 2 May. I am surprised that Conservative Members have not received the same volume of letters as me in the past few months from people who cannot afford to pay their poll tax.
In Eastbourne, the poll tax for the coming year has been set at just over £400. The council is controlled by the local Conservatives, who, I am glad to say, will not be there much longer. However, people who have to pay a 20 per cent. contribution will receive only between £20 and £30 relief under their proposals. The relief that they want is to pay nothing. They do not have the "ability to pay", whether it be £50, £60 or £82.80.
§ Mr. Keith Mans (Wyre)
Bearing in mind what the hon. Gentleman said earlier, will he encourage the chief executive of Eastbourne council to get the bills out before 2 May?
§ Mr. Bellotti
The chief executive of Eastbourne tried to rescue the poll tax bills from the post office and, due to co-operation from the staff, they have not been delivered. He and his staff now face the mammoth task of trying to understand the information sent out by the Department of the Environment. On television last Wednesday, the hon. Member for Leeds, North-West (Dr. Hampson) said that it should be an easy task, because one merely had to knock £140 off the bills. That is what he believed then, but today we know that it is not true.
§ Dr. Hampson
The hon. Gentleman knows that he is talking nonsense because what I said appears in the transcript. I clearly said that, for those councils that have sent out bills—only 15 per cent. have—there might be a way to ask people to make a deduction, which could be corrected afterwards, but that was not the point that the hon. Gentleman was making. It is perfectly clear to the hon. Gentleman, although he and others wished to distort it, that the £140 was to come off the figure fixed by the council, as he has just read out from the letter. Obviously. rebates and the reduction scheme apply after the figure has been fixed. He knows that, he has always done so, and he is simply trying to deceive people.
§ Mr. Bellotti
I am grateful for that intervention, because it clearly shows that the hon. Gentleman does not understand how the system proposed by the Government will work. If he thinks that the majority of people will be able to perform their own calculation of the rebate available after tonight's announcement, I challenge him to make his own calculation and see how long it takes.
§ Mr. Bellotti
I am sure that, if the hon. Member for Wyre did not like my answer, he will be able to catch your eye later, Madam Deputy Speaker. I do not intend to take further interventions, because many other hon. Members wish to speak, and I have already been generous enough.
I am sure that there are hon. Members from Scotland here who wish to be called in the debate. The estimates of billing in Scotland will be even more difficult to send out to Scottish constituents than those in England, for reasons that I am sure Scottish Members will know—the timetabling of billing Scotland. I am sure that hon. Members who represent Scottish constituencies will outline those problems.
It is interesting that the Minister for Local Government and Inner Cities is no longer with us. In October 1990, just five months ago, he said:The community charge is a courageous, fair and sensible solution. Far from being a vote loser … it will be a vote winner and launch us on a fourth term.If I had made that statement, I should want to leave the Chamber during the debate, despite my responsibilities.
The core reason for tonight's debate has been referred to. Since 1979, the Government have taken back from local authorities nearly £58 billion that they should have given. The £4.25 billion that they now propose to make available to enable local authorities to reduce the poll tax is but a mere trifle compared with the funding that should be there.
The principle of the poll tax is that everyone should pay. What about Wandsworth, where no one will pay for the services because of the high Government grant? The Bill is no more than a bus stop on the road to a new system of taxation—two taxes instead of one. Only one system of taxation will meet the needs of local communities and ensure that services are delivered. People who can afford to pay will do so, but those who cannot need not. That system is, of course, a local income tax. Such a system works in Japan and in Denmark, which is smaller than this country. It works in America and Germany, and it would work here. The Government should urgently examine a system of local income tax. Conservative Members seem to advocate the return of some form of property tax, combined with a poll tax of sorts, but that would produce burdens for millions of people.
§ Mr. Bellotti
Our system of local income tax is extremely easy and would mirror the systems in some of the countries that I have mentioned. The level would be about 5.5p on the standard rate of income tax. That is a Government figure that we asked for.
The Bill will make it more difficult for local authorities to collect the money they need. For example, people on income support and students, who last year could not pay the poll tax, will have to contribute next year, and that money will cost a great deal to collect. Conservative Members say that everybody should pay something towards local services. If the cost of the collection is 858 greater than the sum that would be realised, should the local authority continue to pursue the collection? That is not cost-effective government or cost-effective taxation.
The Bill is designed to dig the Government out of the poll tax pit. Its effect is to draw attention to a Government who have clearly run out of steam and out of policies. They should soon be run out of office.
§ Dr. Keith Hampson (Leeds, North-West)
I agree with the hon. Member for Eastbourne (Mr. Bellotti) that whatever system we move to should not be based on the principle that everybody should contribute to the cost of local government. About 70 per cent. of defaulters are those who are supposed to pay 20 per cent., and it is nonsense to pretend that an increase in social benefits will be passed by the recipient to his local council. That has been proved not to be true, and we should stop pretending that it will be. We should acknowledge that, if people do not have enough money to contribute to local government, they should not be expected to do so. That principle applies to central Government taxation.
It is clear that there is to be a reduction of £140 which applies to the charge set by councils. On that there will be rebates and the benefits of the reduction scheme. The central question relates to the proportion that is to be raised locally. This scheme reduces that sum from about £12 billion to about £8 billion. That seems perfectly reasonable, because the last time that the rates were used, they raised about £8.7 billion after rebates and reliefs. That is about where it should be.
I do not understand the figures used by the hon. Member for Dagenham (Mr. Gould), who opened for the Opposition. He said that, when my right hon. Friend the Member for Henley (Mr. Heseltine) was last at the Department of the Environment, the proportion of the rate support grant fell to 35 per cent. That is not true—or is true only on the basis of a peculiar calculation. I have figures from the Library showing that, in 1986, the proportion was still 54 per cent.
Despite what my right hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) may now claim, he was the man responsible for slaughtering the proportion of that grant and hence the poll tax mess we are in. It could not be said to have happened earlier, unless one works on the calculation used by my right hon. Friend the Member for Blaby (Mr. Lawson), which includes all local authority revenues, such as the housing revenue account. That is how he can say that the local proportion has gone down from 20 to 11 per cent., but one cannot then claim, as the hon. Member for Dagenham did, that it was 60-odd per cent. under Labour Governments. On the basis of that calculation, we brought the proportion steadily down to 54 per cent. Then, with the community charge, it fell significantly.
In the last financial year, the community charge raised 37 per cent. of local authority income. We have now reduced that by just over £4 billion. I believe passionately that that position should be maintained. To say that that will be the approximate contribution from now on should be the Government's first commitment in the new system, but I do not want the money to be poured out indiscriminately in the form of untargeted central grant. If a proportion of funding is to be transferred to the centre—which is what the Government are doing—it should be 859 targeted on services. There should be a general Government grant, the RSG, a uniform business grant, which we already have, and an education grant.
The education service has distorted local government ever since the mid-1950s. In 1957, when we moved away from specific percentage Exchequer grants for education, all the local authority associations, all the teaching unions and the Labour party condemned the Conservative Government. They said, rightly and understandably, that it would be wrong to move to a block grant because education was too important to be considered on the same plane as refuse disposal, parks and libraries. They said that some authorities would spend money intended for education on other services, that standards across the country would he far from uniform, that there would be growing disparity in education provision and that we should not be able to deliver national priorities in education policy. They cited the fact that there was a Russian satellite going round that year to prove that technical education was important.
They were right, and we have not delivered national priorities in education. However, the same people now condemn the attempt by some of us to move to a central education grant. They claim, for some reason, that it would lead to a gigantic central bureaucracy which would deny local democracy. It did not do so then and would not do so now. It would be good for education and for local. government.
A royal commission, the Redcliffe-Maud commission, based its entire structure of local government on the optimum number of people required to run an education service. That is how far education has distorted local government. It is still distorting council budgets, accounting for 60 per cent. of a country's resources. For heaven's sake let us get back to raising locally a proper local services tax, with national services paid by national Government.
How should we fund that remainder? I have some suggestions for my right hon. and hon. Friends. We must go back to a property-based tax. Every sensible, sophisticated, modern western economy has one. The question that remains, however, is on what principles to judge the value of property. The Inland Revenue valuation service would like to revalue every house in the country as often as possible. Many more valuers would have to be recruited and they would have a lot more to do, but it would be daft and unnecessary. We do not even need to obtain modern capital valuations. We certainly do not need to do what my right hon. Friend the Member for Blaby suggested—have a rolling programme over 10 years. If we did that, by the end of the process the valuations that we started with would be completely irrelevant. The process is an abstract concept. It is a theoretical, undesirable norm that is irrelevant in practice.
What matters to the people of, say, Leeds, is not whether their semi-detached houses are valued on a similar basis to semi-detached houses in Luton. What matters to them is whether semi-detached houses in Leeds relate properly to terraced houses in Leeds and big, detached houses on the edge of Leeds. I believe that we could move instantly back to a sensible categorisation of properties by using values already on the computer. They are already used for the collection of water company charges. Those values are not irrelevant and dead; they are used now. Local authorities would categorise properties within broad bands, on the basis of existing local authority valuations.
860 To take Leeds as an example—I made a speech on the same issue months ago in the House—if we used the old valuations, properties valued at below £100 would be within category A. Properties valued at more than £1,000 would come into the highest category. Most of the properties in Leeds were valued at between £300 and £450. There could be a band for properties valued at between £100 and £300 and another for properties valued at between £500 and £1,000. That would stop the nonsense of properties being revalued when their owners improve them by adding a bit on, or installing central heating. We do not want individual revaluations of property. That causes enormous irritation, imposes an enormous cost and takes a great deal of time. We could move immediately to a broad assessment. Accountability would then be pinned on to local authorities.
If one revalues on a rolling basis or on an instant year basis, as happens in Scotland, householders become confused about accountability. They believe that it is the Government who have caused the increase in the value of their property, while the local authority gets the credit for lowering the poundage. However, local authorities never reduce it sufficiently to compensate people; generally they end up paying more. It is a purposeless exercise that does not solve the problem. People ought to know that they will pay less if they live in one type of house and that people with more money who live in much bigger houses will pay more.
The local council would adjust the boundaries. It is a rough and ready system, but if certain parts of a town improved while other declined, the onus would then be on the local authority to move properties into the relevant band, just as the onus would be on the local authority to change the poundage year on year and not to confuse it with revaluations. Once houses were put into categories A, B, C and D, that would be it. Each authority, whether in the south or the north, would put properties into those bands, regardless of what other authorities did, to raise the revenue they needed. That would be a straightforward system that could be introduced quickly.
The other remaining issue that my right hon. Friend must resolve is whether we take account of numbers and how that is to be done. We must state as clearly and quickly as possible that to take account, in broad terms, of the number of people who live in a house does not involve a twin-tax system. Whatever the Opposition may tell the public—that the Government intend to impose a poll tax on top of a property tax—we are not doing that. [HON. MEMBERS: "Yes you are."] I do not believe we are. I hope that my right hon. and hon. Friends will say that that is not what we are going to do. If I allow them to speak for themselves, I must be allowed to speak for myself and to suggest that we could—I trust that the consultative documents will suggest a number of options—place the charge at a level that would be the equivalent of a couple. That charge would be halved if a single person were living in a particular property.
The press have suggested that the charge would be fixed on the assumption that three people were living in a house. That could be done, a reduction being made if only two people or one person lived in the house. I should not favour such an option, because the basic number in a household is two, not three. I do not think it is worth while trying to count the numbers in households with four, five or six people. Most households do not have more than three people.
861 This would be a rough and ready system which would end the abuse of the rating system—to which the Labour party would go back—under which a single person would pay the same as three or four wage earners in the house next door. It would take account of numbers in an approximate way.
If one wished to do more than that, one could impose on the owner of the house the duty to declare the numbers of people in his house, as he does for the electoral register. I would recommend to my colleagues, if they wanted to go that way, that it should be a scheme whereby the local authority would check the electoral register to see how many people were living in a house and the owner would then get the bill for two, three or four people. He or she would then decide whether to spread the burden. There are simple ways of doing that and it would not involve a separate bill for each person or keeping a separate register such as the poll tax register. There would be a single bill. It would not involve all the scrutiny, all the inspection and all the policing. I wish to goodness that we could nail this one and stop Opposition Members making nonsensical remarks about it.
§ Mr. Patrick Thompson (Norwich, North)
My hon. Friend just mentioned the community charge register. Does he support my contention that most of those in local authorities who have the duty of collecting local government taxes would agree with him that it is important that we do away with the concept of any separate register?
§ Dr. Hampson
Certainly. I totally endorse what my hon. Friend has said. I do not believe that I have seen any statement from Ministers that suggests that there is any intention of keeping a poll tax register in addition to the electoral register. I do not believe that that makes practical sense, and I trust that Ministers will not pursue that route.
Having outlined two possibilities of what we might do and suggested that, if we are to keep the percentage of central Government grant at its present level, we do so by moving and transferring services such as the bulk of education—we need not move it all, but we could certainly move 75 per cent. of it and go back to something like the system we had until 1957—we might have a balanced system that Opposition Members would feel they could support. I remind them that, when the present Leader of the Opposition was their education spokesman, he endorsed and advocated publicly on platform after platform that I was on that there should be a transfer of at least some education expenditure, so why can we not reach some compromise which Opposition Members would agree to endorse?
§ Mr. Tony Banks (Newham, North-West)
Not-withstanding anything that the hon. Member for Leeds, North-West (Dr. Hampson) or any of his right hon. and hon. Friends have said about the Bill, everyone in the country knows exactly what the Bill is about: it is about trying to save the Conservative Government, and it is borne out of fear and panic.
It was obvious from the very outset to Opposition Members, and to some of the more perceptive Conservative Members, that the poll tax would not work. 862 It has taken a while, but gradually it has dawned on even the most stupid Conservative Members that the poll tax has become an electoral liability, and that is why they are moving so speedily to dump it. After all, nothing concentrates the minds of Members of Parliament more than the possibility of coming second or even third in their constituencies at a general election.
I am sorry that the previous Prime Minister is not in her accustomed place to listen to the debate. She viewed the poll tax as her flagship, but of course flagships are not designed to be hung around the neck. When studying the right hon. Lady's language it becomes politically interesting when for "flagship" one reads "millstone"; for "unassailable" one reads "on the way out"; for "jewel in our crown"—as the right hon. Lady referred to the GLC when it was won for the Conservative party—one reads "abolition"; and for "the iron lady" one reads "rusty old hulk now sitting in the political scrap yard waiting to be torn to pieces". I for one am no mourner as I watch that process.
Tory Members of Parliament knew that the poll tax had to go, albeit rather slowly. They would like to dump it in one day, but that is not possible. But even to dump it slowly, they had to dump the right hon. Member for Finchley rather more quickly. The poll tax represents bigotry and arrogance turned into legislation. Conservative Members went through the lobbies in support of the right hon. Member for Finchley, and now the vast majority of them are repenting.
One would expect some of them at least to have the humility to stand up and admit that they were wrong, and to apologise to local authorities and to the people, but arrogance still sits easily on them. I should like to know, indeed, whether the right hon. Member for Finchley will have the decency to apologise in this House. I suspect that she will not. In that case, she should be dragged here, nailed down to a bench and made to listen to the first ringing of the death-knell of her flagship.
I should like to know whether the right hon. Lady will vote tonight. I understand that the Government have imposed a three-line Whip. Will the right hon. Lady obey that Whip? Has she been paired?
§ Mr. Banks
I shall not give way.
Has the right hon. Lady been paired? Perhaps she has been paired with the right hon. Member for Blaby (Mr. Lawson)—who knows? They would make a very interesting couple. Or perhaps she has been paired with some other friend of the family. If she defies the three-line Whip, will she be admonished or denied her expected elevation to the upper House?
The poll tax has been a total fiasco.
§ Mr. Banks
I will not give way. Many hon. Members want to speak, yet Government Members have taken up ages with boring, tedious speeches. I want to get in and out as fast as possible. Let me give the hon. Member for Gravesham (Mr. Arnold) a bit of advice: he should do likewise, both in his political life and in his private life.
The poll tax has been a fiddle from start to finish. Today again, the Secretary of State for the Environment was less than impressive. He asked who was paying for services in Wandsworth. Someone is paying. Surely it has dawned 863 even on Conservative Members of Parliament that there is no such thing as a free lunch. All that the Environment Secretary could say was that, if everyone were to vote the same way as people in Wandsworth, everyone would benefit in the same way. Let us take that to its logical conclusion. If every local authority went Tory, who would pay for the local government services? It appears that no one in Wandsworth is paying.
It is costing the taxpayers of this country about £14 billion to save the Government's face. The Government have reduced local authority finance to the level of low farce. If any local authority had been responsible for the financial chaos that the Government have visited upon the people, its members would have been surcharged. Indeed, some of them would have been disqualified for many years, as happened to many decent councillors in Liverpool, Lambeth and other places, who delayed making a rate only because they wanted to protect services. The Government have reduced local authority finance to a state of chaos, yet they are still walking around and expecting us to be grateful now that they are trying to clear up the mess that they created. This is hypocrisy raised to an art form.
As for the people who will benefit from this Bill, I hope, Mr. Deputy Speaker, that I shall be able to catch your eye when we are dealing with some of the amendments. Many people in my constituency will not benefit from this reduction of £140. Those who are paying only 20 per cent. will get only £28. They will have to spend only about £1,100 on VAT-rated services to pay all that money back, and they will continue to pay VAT after that. The last time VAT was increased, millions of retailers increased prices by amounts considerably greater than the tax increase. This is a bad deal for many thousands of people. It is certainly bad for the 41,000 in my borough who are on benefit. Those people will receive very little as a result of the Government's munificence. The Government are trying to buy off the taxpayers.
We have an incompetent, bungling, stupid, half-witted Government, who deserve to be kicked out of office as fast as possible. They have done vast damage, not only to local government finance but to the whole machinery of local democracy and accountability. They are a bunch of ratbags, and they deserve to be booted out.
§ Mr. Michael Spicer (Worcestershire, South)
The fundamental question which has lain behind this debate is whether we continue to want local government with the local democracy to which the hon. Member for Newham, North-West (Mr. Banks) referred. I am one of those who believe in continuing to press forward with attempting to have a proper system of local democracy, and there are three possible approaches.
In ascending order of merit, they are, first, to fund local government nationally, as has been suggested by various hon. Members today, by my right hon. Friend the Member for Blaby (Mr. Lawson) yesterday and by my hon. Friend the Member for Norfolk, North (Mr. Howell). I think that that would be a bad idea because, however clever one is with such a funding arrangement, there would have to be a predetermined formula which would essentially have to be based on local needs decided by the Government. My hon. Friend the Member for Norfolk, North has come up with the suggestion of parcelling out money from the 864 centre and leaving it to local government to choose how to spend the money, but the element of choice would he denied by a predetermined formula.
My one anxiety about the Bill—a point that was made by my right hon. Friend the Member for Blaby, my hon. Friend the Member for Norfolk, North and others—is that it is a halfway point, a stepping stone, towards such a national form of local government funding. There are good reasons for worrying that this might be such a step.
On the one hand, the gearing point, which has been made several times, is that, once a position is reached where only 10 per cent. of local funding is discretionary, there is the problem that a 1 per cent. increase of expenditure on top of the existing formula would result in a 10 per cent. increase in the local discretionary funding. That would result in a situation which no Government, of whatever political persuasion, would be prepared to tolerate. This in turn would result in the perceived need for universal capping, and that would be tantamount to nationally run local government. For the sort of reason that my right hon. Friend the Member for Blaby put forward, there must be some anxiety that the Bill is a step in that direction, or might be in the wrong hands. That would be disturbing.
A second broad approach to local government was suggested by my hon. Friend the Member for Leeds, North-West (Dr. Hampson), and that is to leave the proportion funded the same but to take away some of the services. There are some logical arguments in favour of that. That would leave genuine local services which one would hope would be funded locally with maximum local discretion and accountability and that would overcome some of the problems, which undoubtedly lie in the Government's mind, about the enormous size of some items of local funding such as education.
Thirdly, there is a set of suggestions which would involve genuine local accountability. The community charge was undoubtedly such a scheme. Inefficient councils, such as Lambeth, impose severe penalties upon the people who live in their area and those people have the power, which can be developed over the years, to throw out such a council and replace it with ones like that in Westminster, which will give them the benefit of a low community charge.
§ Mr. George Walden (Buckingham)
One important point is constantly elided. My hon. Friend mentioned education in passing. Education is the most costly and important responsibility of local government; whatever decision is made about it should be made not on cost accounting grounds, but on the basis of whether that decision will promote or retard the improvement in quality that is imperative to the country's future.
I am sorry to sound so pompous, but this strikes me as rather important.
§ Mr. Spicer
My hon. Friend has made a fair point. As he says, education is a predominant feature of local expenditure—so predominant, indeed, that it is surely reasonable to ask whether it is a genuinely local service that should be financed through a form of local taxation. I merely suggest that one way in which to preserve the balance between local funding—with genuine local accountability—and national funding, while lowering the overall bill, would be to remove education from the local budget.
§ Mr. Patrick Thompson (Norwich, North)
Does my hon. Friend accept that many hon. Members, possibly on both sides of the House, sincerely believe that there are genuine educational grounds for making the transfer?
§ Mr. Spicer
Certainly I concede that; it is an important—perhaps predominant—factor.
There is a third way of funding local government: by maintaining the democratic local accountability that goes with a system that penalises inefficient authorities, and relates what people spend to the services that are provided. I have already expressed my anxieties about the Bill. I very much hope that it will prove to be a temporary measure to enable us to maintain the fundamental principle that local democracy can survive only if local government is allowed to raise its own money, while accepting the penalties that may be involved.
I cannot see how genuine local democracy and accountability could be maintained under an exclusively property-based tax, or under a system of national funding whereby local government became simply the agent of central Government. I hope that we can retain the fundamental principle that—unashamedly—formed part of the community charge proposals, and which I have defended in my constituency and elsewhere: the desirability of a relationship between what is spent locally and what is raised locally. I hope that the Bill represents no more than a breathing space, and that we shall keep faith with what we have done in the past—although, of course, we must develop and modify past measures for the future.
I should have preferred the money that we are spending in the Bill to be devoted to helping those who are most in need. That is a good Conservative principle, which we should have espoused by developing the rebate system. I trust that the Bill will provide us with no more than an interlude during which we can build on the principles that we have already established.
§ Mr. John Home Robertson (East Lothian)
The hon. Member for Worcestershire, South (Mr. Spicer) was commendably candid when he said that the Bill was intended to buy time on a purely political basis. No amount of time for this legislation can save the Conservative party. If only for his own sake, he should learn the lesson of what happened to his colleagues in Scotland at the previous general election, most of whom lost their seats precisely because of the poll tax.
I welcome the fact that the burden of the poll tax will be reduced as a consequence of the Bill. I even welcome the fact that the Government are beginning to redress the balance by increasing the subvention from central to local government to a proportion similar to that which existed when the Government first came to power. However, my constituents and I will not start rejoicing until the poll tax has been abolished. Whatever else the Bill may be, it is not quite the abolition of the poll tax.
The right hon. Member for Blaby (Mr. Lawson) said yesterday that this would be "son of poll tax", but he was not quite right—it will be triplets. There will be a property tax, a poll tax—a substantial poll tax if the Secretary of State for Scotland has anything to do with it—and a value added tax surcharge to deal with the panic. In spite of the Bill, the poll tax will remain a substantial burden, even after the £140 reduction. My constituents who pay the full poll tax will still have to pay £402 as a consequence of the 866 capricious way in which the Scottish Office distributes central Government grant among local authorities in Scotland. More important, the people on the lowest incomes in my constituency will still pay £80 towards the poll tax, which many of them cannot afford.
I vividly remember, when I received my first poll tax bill, bringing it to the House at Prime Minister's Question Time. I told the then Prime Minister that I should be £1,000 better off as a result of the poll tax, whereas the poorest people in my constituency would have to pay more. She told me that I should give my ill-gotten gains to charity, but that would not be of much assistance to the poorer people in my constituency or anywhere else.
The new formula will still mean that the poorer people will be required to pay substantially more than they can afford, partly to pay for the shortfall in local authority revenue caused by the chronic inefficiency of the poll tax, with which we have all become painfully familiar in recent months and years. It is absolutely vital that, whatever formula the Government try to devise to overcome the crisis that has befallen the poll tax, they must do the honest and fair thing for people on the lowest incomes. I understand that it would cost just £30 million to give those who qualify for the maximum rebate a 100 per cent. rebate in Scotland. That is the minimum that the Government should do to protect those people.
Ministers need not tell us that they were not warned—we told them what would happen. With my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton), I was a member of the Committee which, in the winter of 1986–87, dealt with the Abolition of Domestic Rates Etc. (Scotland) Bill. We warned the Government then that the poll tax would be unfair and unworkable. I remember especially contrasting what Her Majesty the Queen would pay in respect of Balmoral castle—a holiday or second home—with what a pensioner living in a cottage on that estate would pay. We now have the same thing again. The Queen will be £280 better off in respect of her second home at Balmoral, while a single pensioner living in a cottage on her estate will benefit by only £28.
§ Mr. Deputy Speaker (Sir Paul Dean)
Order. I am sure the hon. Gentleman will realise on recollection that he should not bring the royal family into his argument.
§ Mr. Home Robertson
We dealt with that issue in the debate at that time. I was referring to Her Majesty's private estate rather than to her official position, but I shall move on.
I remind the Secretary of State for Scotland how he and his colleagues scoffed and sneered, and exchanged reassurances about how it would be such a grand affair for the Tory party in Scotland to have the poll tax. The Secretary of State said:This is an issue which has been deliberated upon and considered and reviewed in all circumstances and from all angles for a very long time, and it is now appropriate to take decisions … What the Bill proposes is a workable and viable solution to the serious problem."—[Official Report, First Scottish Standing Committee, 13 January 1987; c. 144.]I remind the Secretary of State that, in Committee and on the Floor of the House, when we discussed the Bill on the Scottish poll tax, he voted for the poll tax no fewer than 35 times. A number of his colleagues did the same, but they cannot do so again because most of them lost their seats at the ensuing general election. Those who lost their seats included the Minister in charge of that Bill, Mr. Michael Ancram, and the Whip, Mr. Gerald Malone, who 867 I understand is now in Winchester. Others who lost their seats included Mr. John Corrie, Mrs. Anna McCurley, Mr. Alexander Pollock, Mr. Barry Henderson and Mr. Michael Hirst. Even the Chairman of the Committee, Mr. Albert McQuarrie, lost his seat. The only Tory survivors from that Committee were the hon. Members for Stirling (Mr. Forsyth) and for Eastwood (Mr. Stewart), and the right hon. Member for Galloway and Upper Nithsdale (Mr. Lang), now Secretary of State for Scotland. Yet we understand that they are still fighting to retain the principle of the poll tax. Will they never learn?
The Secretary of State still describes the poll tax as a "remarkable success story" and wants to ensure that the principle is retained in Scotland. I do not mind the Secretary of State and his dwindling band of hon. Friends from Scottish constituencies—11 down and 10 to go—behaving like political lemmings, but I do mind my constituents having to suffer as they do now under this grotesquely unfair tax, which bears no relationship to ability to pay or to access to services in different districts and regions in Scotland, and which takes no account of its chronic inefficiencies.
The Secretary of State for Scotland should face the fact that the poll tax is now in the process of self-destruction. It has been difficult enough for the poll tax to be administered up to now. Now that its death has been announced by the Secretary of State for the Environment, although he is trying to fudge the issue at the moment, what has up to now been a difficult tax to collect will become a non-starter. It will he like carrying on feeding the proverbial dead parrot.
What is required is not tinkering with the poll tax, and not palliatives like the Bill. What is required is the immediate abolition of the poll tax. The only way in which that can be done administratively—whatever the merits of the local income tax or anything else that hon. Members may wish to discuss may be—the only way to get rid of the poll tax this year is to reactivate the rating system and find ways of making it workable and acceptable. It may be worth considering other forms of taxation in due course, but we must face the fact that there is only one way to get rid of the poll tax now—to reintroduce a workable and lair property tax, and that is what we propose. The Government will not be able to get away with this shambles. I am glad that even the hon. Member for Worcestershire, South (Mr. Spicer) admitted that the Bill was only a palliative and a means of buying time, but it will not buy time—the poll tax must go.
§ 10.3 pm
§ Mr. Donald Dewar (Glasgow, Garscadden)
We have seen some remarkable events. This morning, we learned that the Scottish National party has sacked its spokesman on the poll tax because he refuses to pay. The one point about the position of the Scottish National party that strikes me now is that, almost irrespective of what the Government produce, it will have to be backed by the Scottish National party—poll tax element and all. There are changes not only on the Opposition Benches. The Scottish Office has a new slogan. Its advice is not to pay the poll tax until the new arrangements are in place.
§ Mr. Alex Salmond (Banff and Buchan)
Will the hon. Gentleman answer a straight question? Now that nobody, not even Ministers, believes in the poll tax, will he, as shadow Secretary of State for Scotland, instruct Labour 868 local authorities in Scotland to stop poinding the poor, as they are doing now, and to stop arresting benefits and stealing the goods of the sick, of the disabled and of the unemployed?
§ Mr. Dewar
I must confess that the hon. Gentleman's view of local democracy is strange if he thinks that it is my position to instruct those in local government. What is even more disreputable is that someone who has led people into a situation where debts have piled up so that they are no longer able to claim rebates, legal costs have accrued and they face great problems should then lecture me about the morality of the situation as he reaches for his cheque book and walks away from the problem.
If the Government's advice is that people should not pay and that we should all stop our direct debits until the new arrangements are in place, I suspect that the Secretary of State will find that the problems that that creates in terms of take-up in the next two years will be considerable.
There is always a temptation to rewrite history. In the recent statement on local government in Scotland on 21 March, the Secretary of State, when challenged about the liability of the severely mentally handicapped, suggested that the sympathetic approach that the Government had adopted to the community charge would perhaps put people's fears at rest. Those who remember the debate on Alzheimer's disease, our desperate efforts to persuade the Government to consider the problems of those suffering from that illness and the remarkable resistance of the Government to including them in the exemption scheme put up by the Secretary of State will find that charge somewhat unwise
What about the mystery of the register? Ministers are all over the place on whether there will or will not be such a register. On Thursday, the Secretary of State for the Environment told hon. Members:under the new system we shall not need a register." —[Official Report,21 March 1991; Vol. 188, c. 422.]By Sunday, on television, he was telling us that there may be a register. Meanwhile, the Secretary of State for Scotland was telling anyone who listened that there would have to be some kind of register. On that form—it is just a symbol of the debate—it would be a surprise if the Government managed to agree on anything.
The relief scheme also constantly changes its form and substance. Transitional relief mark 1 has given way to mark 2, and now we have the community charge reduction scheme, which was altered yet again during last night's debate.
I accept that all the changes have been made in the cause of simplicity. Therefore, I was particularly interested when the Scottish Office offered a clear explanation today on how the new community charge reduction scheme will work. It offered the following formula:E x C— R — (E — 1 x £52) E",where E is the number of persons in a household, C the poll tax level for 1991–92 and R the rates bill on the property as at 31 March 89. The hon. Member for Leeds, North-West (Dr. Hampson) has suggested that it would be easy for anyone to adjust their poll tax liability under the new scheme, but if that formula is the kind of simplicity and light that the Government are pushing into the world of local government finance, we shall have many questions.
We are getting into an appallingly complicated and confused situation, not on the basis of any principle, but 869 on the fatal basis that Ministers are trying to take a little bit here and a little bit there. Their actions will not produce something for the public good, but they hope that that will keep the warring factions in the Conservative party quiet for a little while longer. Warring factions there are in plenty. Many Conservative Members still look to Finchley as the Jacobites once looked to France.
Undoubtedly there are many Conservatives who are unhappy about what has been announced by the right hon. Member for Henley (Mr. Heseltine). In a recent article in the Glasgow Herald, the vice-president of the Scottish Conservative and Unionist Association, faced with the prospect of a two-tax system, said that that had all the attractions of being stranded on a desert island with Esther Rantzen. Whatever his personal judgment of Esther Rantzen, he has certainly expressed his view on the two-tax system.
I do not know what that gentleman will say about the three-tax system that the Secretary of State has now produced. My advisers tell me that the tabloid press has already described that as "Hezza's hat trick". I suspect that that proposal will be unsellable and will be seen for what it is—a pathetic attempt to buy time while the escape committee continues to meet in vain to find a way out of the difficulties in which the Government find themselves.
The Bill can only be described as a form of conscience money. We accept that any relief is welcome, but we have the most fundamental objections to many of the aspects and implications of what the Government are doing.
Again and again, speakers in this debate have said that it is not everyone who will get £140 off what they have to pay or, if they pay less than that amount, will see their bill totally eliminated. However, I suspect that that fact has not been appreciated by many people. In Scotland, 800,000 people are dependent upon income support. All of them will get a maximum of £28. They are sitting at home thinking about £140, and they are going to be very bitter and disappointed.
I was very interested in what the Secretary of State for the Environment said tonight about the reduction in the headline figures. I noticed, as I am sure he has noticed, that the differential—the reduction—in England is much larger than it will be in Scotland. Considering the minutiae and how the system will impact, we are left with considerable anxieties, and with the feeling that we have been the victims of a con trick.
My constituents will certainly notice the anomaly of Wandsworth and Westminster. They do not see a triumph of accountability in that. They do not see the sacred principle that buttressed the poll tax for so long—the principle that everyone must pay something. It is really no answer for the Secretary of State to say that people should get their local authorities to reduce their charges and also their budgets. Are we going to sack home helps in hard-pressed areas of urban deprivation? Are we going to close schools? Is that the advice of the Secretary of State, who once paraded up and down the length of England, posing as the champion of deprived urban areas? Is that the advice that he is now giving?
I can only talk with detailed knowledge of the Scottish system, but that shows that there is little correlation between the size of the poll tax in the current year and grant payments made or expenditure. For example, in 870 Lothian, which is a major local authority in Scotland, the poll tax is nearly the same as the notorious figure in Lambeth that we have heard so much about. However, Lothian's grant per head from the Scottish Office is the lowest of any region in Scotland, and it spends less per head than the regional average. That puts into perspective some of the simplistic deductions—I regret to say that they were almost sneers—about local government during this debate, sometimes from ministerial sources.
Later tonight, we shall consider amendments. I very much hope that the 20 per cent. rule will be abolished. Again and again, we have tried to convince the Government that it should go, but we have always been met with the argument that it had to be retained because of the principle of accountability, that sacred principle that everyone pays something—except, as my hon. Friend the Member for Dunfermline, East (Mr. Brown) said, in Wandsworth.
I am sure that the Secretary of State will recognise the seriousness of the argument that, if one transfers a large tranche of local government expenditure to VAT, which has been picked as the most invisible of taxes for political reasons, if one proposes a scheme in which the only legal liability will fall upon the householder and no legal liability will fall upon other people who generate liability but are not responsible for it, which I should have thought was the anthithesis of accountability, it is clear that the system of accountability has gone, and with it goes the only possible reason for retaining the 20 per cent. rule.
In Scotland, that rule could go for £30 million. That sounds like a lot of money, but it is dwarfed by the waste and appalling inefficiency which has been forced upon us by the mismanagement of the Government and the inefficiency of the system.
I hope that we shall not get a stony-faced refusal to consider this matter. May I offer some helpful advice? it would greatly help the Government's credibility if they gave ground on this, as they have given ground and scuttled on so many other things after the past three or four weeks.
I finish by returning to a theme of my hon. Friend the Member for Dagenham (Mr. Gould). The situation in Scotland parallels the one to which he referred in connection with the right hon. Member for Henley (Mr. Heseltine). Over a considerable period, the Secretary of State for Scotland has taken a stringent approach to local government finance. We have had a ruthless series of cuts—a withdrawal—[Interruption.] It may not be ruthless by the standards of the hon. Member for Stirling (Mr. Forsyth), but it is ruthless by the standards of any reasonable or ordinary human being. The Secretary of State for Scotland has appeared as a Scrooge-like figure of probity, with the hanging face of an unsympathetic bank manager refusing an overdraft, when saying that any increase in local government spending or in central Government support for local services was anathema.
The kernel of my concern and worries is not the spirit in which the Government have approached the problem. Of course I should have liked to see a retreat and the acceptance that central Government have to make a due contribution and to maintain a proper balance in the funding of local services, but I suspect that this is the start of a process that will leave local democracy with a sterile future. We are starting a process that will mean that there 871 will indeed be a huge percentage of central Government funding, but which will produce an impossible gearing effect.
In Scotland at the moment, only 13 per cent. of local government finance is raised by local government itself and is controlled by local government. The result of that huge percentage dependence on central government support will be low expenditure and deteriorating services, and that is a tragedy. The price of the increase announced in the Budget will be a straitjacket on local government and its most stringent capping by the Secretary of State for the Environment in the years ahead.
There was an interesting exchange the other day at the Convention of Scottish Local Authorities, at which the Secretary of State for Scotland spoke. I listened with care to his speech—as I always do—because on occasions his speeches throw up some interesting ideas. He equated control with accountability, which is a dangerous fallacy. It is not true that control arid accountability are the same thing. In many ways, they are very different.
Central Government control is now being substituted for accountability, and in that we see the essence of the death of local government. That will be seen with great sorrow in many areas of England, where local authorities have been supported by Tory councillors who have worked honourably to control the affairs of their own communities and to run them in accordance with the opinions of their electorate.
If I am right, if that is the process on which we have started, and if the Bill is part of that process, every hon. Member who has an interest in local democracy and in the right of communities to run their own affairs will have every cause for concern.
§ The Secretary of State for Scotland (Mr. Ian Lang)
There have been some interesting speeches in this debate. I thank particularly my hon. Friends the Members for Torridge and Devon, West (Miss Nicholson) and for Chelmsford (Mr. Burns) for their support. I thank also my hon. Friend the Member for Leeds, North-West (Dr. Hampson) for his interesting contribution to the on-going review that we shall be pursuing into other aspects of local government funding, and my hon. Friend the hon. Member for Worcestershire, South (Mr. Spicer).
This is a small Bill, but it is important—not only for local authorities and for local government in general, but also as part of the broad approach to the reform of the funding, function and structure of local government that we are bringing forward in a measured and orderly way. It is most immediately and directly important because it brings an immediate benefit to the residents of local authorities throughout the country. There is no doubt about the reason and need for the Bill—it is the high spending of local councils.
The hon. Member for Dagenham (Mr. Gould) tried to pretend that aggregate Exchequer finance for local authorities had been cut and that only this Government have cut it as a proportion of expenditure. However, as my right hon. Friend the Secretary of State for the Environment pointed out, cuts in aggregate Exchequer finance started from 1976 onwards under the last Labour Government. In Scotland in 1975–76, the figure was as high as 75 per cent. of local government expenditure. By the time we came to power, it had been cut by the Labour 872 Government to 68–5 per cent. Certainly we have reduced it further, but the grant has gone up by 6 per cent. in real terms since 1979.
The problem is that the overall level of the local tax burden is too high. That is what we had to address in the Bill, as my hon. Friend the Member for Chelmsford pointed out. The reason is that local authorities have continued to increase their spending year after year over and above the rate of inflation.
§ Mr. Bob Cryer (Bradford, South)
The Minister is presenting a somewhat distorted picture. My hon. Friend the Member for Coventry, South-East (Mr. Nellist) told us earlier in the debate that it was clear from an answer that he had received to a parliamentary question that, if the rate support grant had been maintained at the same level from 1978–79, the poll tax would be not £250 but £150.
§ Mr. Lang
The hon. Gentleman is ignoring the fact, that while local government funding in Scotland has risen by 6 per cent. in real terms, the increase in spending by local authorities has risen faster and that has caused the burden on local people. In Fife, for instance, in the five years before the community charge was introduced, expenditure rose by no less than 40 per cent. in real terms.
The hon. Member for East Lothian (Mr. Home Robertson) blamed the high poll tax levels in Edinburgh and East Lothian on the grant distribution, but that is absolute nonsense. In fact, the opposite is the case. Lothian got a higher than average increase in Government grant this year. In Edinburgh, spending has risen by no less than 70 per cent. since 1984, and staffing is up by 30 per cent.
§ Mr. Dick Douglas (Dunfermline, West)
Is it not a disgrace that Labour-controlled Fife regional council gets the Douglas Mason accolade from the architect of the poll tax, by showing clearly that, if everybody behaved like that council, the poll tax would be working?
§ Mr. Lang
The hon. Gentleman may wish to fight his private battles with others in Fife on the Floor of the House. The one contribution that we would welcome from the Scottish National party would be an apology to the people of Scotland whom it has led into severe difficulties through its non-payment campaign. The sympathy evinced by the hon. Gentleman and his hon. Friends for the poor in Scotland is the most sickening hypocrisy against the background of having led those people into misery and debt through the non-payment campaign.
Under the community charge, local authorities had their chance to behave responsibly and to show themselves accountable to local residents. Now, for the sake of the community charge payer, we have had to recognise that the local tax base can no longer sustain the burden that councils have been imposing upon it. That is why we have moved to increase funding from central Government and the United Kingdom taxpayer. With that comes more accountability to the taxpayer.
I confirm to my hon. Friend the Member for Leeds, North-West (Dr. Hampson) that 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.
873 I am fully aware that the provisions of the Bill require local authorities to undertake important additional administrative tasks. We are trying hard to keep disruption to a minimum. To the hon. Member for Dagenham I can say that the £60 million estimate of additional administrative cost to local authorities is just that. It is not intended to compensate authorities for lost cash flow because advance payments from the non-domestic rate pool in England and advance payments from the rate support grant in Scotland will do that. On the figures for re-billing given by the hon. Member for Birmingham, Perry Barr (Mr. Rooker), it sounds as though the provision of £60 million is generous.
Our intention is that the Bill should be implemented as quickly as possible. We shall give maximum co-operation to local authorities. There are signs that many local authorities can re-bill quickly. I agree with my hon. Friend the Member for Chelmsford that it would be unforgiveable if local authorities delayed their bills and held them back from the electorate until after the local elections in order to hide the good news.
§ Mr. Dewar
I am a little worried about these allegations. As the senior Minister in Scotland, does the Secretary of State suggest that Labour authorities, or any local authority, would deliberately hold back issuing the bills, thereby putting themselves in much greater difficulty with their cash flow, in order to make the political point that appears to lie behind the Secretary of State's suggestion?
§ Mr. Lang
I was responding to a point raised by my hon. Friend the Member for Chelmsford. I hope that the hon. Member for Glasgow. Garscadden (Mr. Dewar) agrees that it would be unforgivable if local authorities delayed in that way.
The hon. Member for Eastbourne (Mr. Bellotti) suggested that the arrangements in the Bill favoured standard charge payers over those in receipt of community charge benefit. We are applying a consistent principle. That principle is that the personal charge set by an authority will be reduced by £140. Where a charge payer pays the full charge, the amount that he pays will be reduced by £140. Where the charge payer pays only a proportion of the charge, the amount will be reduced by a proportion of the £140. So a student paying 20 per cent. of the charge would have his bill reduced by 20 per cent. of £140—that is to say, by £28.
Likewise, where the standard charge is half the full charge, as in several cases, the bill will be reduced by half of £140—that is to say, by £70. Where the standard charge is twice the full personal charge, the reduction will be twice £140. That is not favouritism but a sensible application of a uniform approach. The hon. Member for Eastbourne cannot find fault with that.
It is essential that the measure should not be regarded simply as a means of reducing charges for the coming year. It should instead be viewed in the much wider context of our review of the future funding of local government. The Bill provides for the initial implementation of a permanent 874 change in the balance of the funding of local services from local taxation to national taxation. In future, the balance will remain broadly the same as it will be following the enactment of the Bill. The future, of course, includes the new arrangements for funding local government expenditure which I and my right hon. Friends the Secretaries of State for the Environment and for Wales announced last week.
The Opposition have sought to characterise our approach as indecisive, yet in the next breath they complain about the unseemly haste that they see in the Bill. In the devil's dictionary and distorting glossary of Labourspeak, careful consideration becomes indecision, decisive action equals panic, sensible consultation equals dithering, and co-ordinated progress is described as chaos.
I will give the House an example of Labour's decisive action. The Labour party's roof tax was drafted in two minutes on the back of an envelope and lasted about five minutes. An example of Labour's careful consideration is the more than 67 varieties of local tax that they have come up with in the past few years. They make H. J. Heinz look like a one-product company. The trouble is that the 67 announcements came first and the careful consideration came later.
The roof tax was described by the hon. Member for Garscadden in February 1990 asa sound, detailed and practical proposal",and the hon. Member for Glasgow, Cathcart (Mr. Maxton) in March said:The principle is firm and I cannot see us moving from it.But the Leader of the Opposition said the next month that he did not think that there was too much enthusiasm for the idea. So with the rates, which the Leader of the Opposition described as the most unjust of all taxes, while his deputy, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) declared that the basis of local government finance must be the rating system. Then the right hon. Member for Manchester, Gorton (Mr. Kaufman) described the rates as an irrational and highly resented form of taxation. Now we have the hon. Member for Dagenham taking us back to the rates. I do not know how the House would describe that, but I would describe it as dithering—dithering to the extent of chaos.
Whatever the background of the present position, at the next election the electorate will have a choice. Electors will be able to choose our new low-level local tax or go back to the rates with Labour. I have no doubt which the people will choose. Our proposals are neither ill considered nor confused. They are part of a well thought out, co-ordinated approach. We seek consultation on some aspects in order to achieve broad agreement on a durable solution that will be accepted as fair.
We are considering local government in the round—its function and structure, as well as its funding—and we shall introduce our first proposal in a measured and orderly way.
§ Mr. Dewar
The right hon. Gentleman was good enough to consider our valuation base and suggested that it was unsatisfactory. Will he confirm that, under his scheme, there will be a property tax which will involve a valuation tax on each individual property, and that there will be regular revaluations in the system? Has he ruled out capital valuations?
§ Mr. Lang
The hon. Gentleman will have to contain his impatience until we publish our consultation document. 875 Today we are debating the Bill. It embodies the first and key component of our plans as well as forming part of the Chancellor's Budget strategy. Its vital contribution is to reduce charge levels to a tolerable level from the inflated levels to which they have been raised by the profligacy of so many high spending councils, feckless in their disregard for the burden that they placed on local residents.
§ Mr. Nellist
Will the right hon. Gentleman deal with a point that I put in my speech? What is the Government's position in relation to the 18.5 million people whom the Prime Minister has identified as being seriously in arrears on this year's poll tax? I am thinking of the family in Coventry to whom I spoke on the telephone tonight, who have been charged £19 for the 19 days of this financial year for which the mother of the family lived. Do the Government intend to continue with prosecutions in the courts?
§ Mr. Lang
The Bill is concerned with the year 1991–92 and not with earlier years.
Labour councils may not care about the burden that has been imposed on local residents, but we do. That is why the Prime Minister and the Chancellor have acted firmly and decisively. I urge the House not to dither but to give a swift passage to the Bill and bring early relief to every community charge payer in the land and then, in a calmer atmosphere, to proceed towards the establishment of a better arrangement for the funding of local government in this country.
I commend the Bill to the House.
§ Question put and agreed to.
§ Bill read a Second time and committed to a Committee of the whole House, pursuant to the Order this day.