§ Mr. William O'Brien (Normanton)
I beg to move amendment No. 12, in page 1, line 5, at beginning insert—'Subject to subsection (1A) below and to the making of an Order under this section:'.
§ The First Deputy Chairman of Ways and Means (Sir Paul Dean)
I suggest that it would be for the convenience of the Committee to consider at the same time the following amendments: No. 16, in page 1, line 8, after 'of', insert 'an Order made under'.
No. 25, in clause 3, page 3, line 14, at beginning insert—
'Subject to subsection (1A) below and to the making of an Order under this section.'.
§ No. 29, in clause 3, page 3, line 16, after 'or, insert 'an Order made under'.
No. 47, in clause 1, page 1, line 9, at end insert—
'(1A) The Secretary of State shall, where he makes an Order under this section to give effect to the reductions specified in subsection (1) above, within one month thereafter issue guidance to charging authorities as to preparatory steps which may be appropriate with respect to—
- (a) any proposals he may consider appropriate concerning the level of local taxation in the financial year commencing on 1st April 1992; and
- (b) proposals concerning the possible introduction from that date of any new system of local taxation.
(1B) No guidance shall be issued under subsection (1A) above before the completion by the Secretary of State of consultation with such persons representative of local authorities in England and Wales as appear to him to be concerned.'.
No. 48, in clause 1, page 2, line 6, at end insert—
'(8) Subject to subsections (1A) and ((1B) above, the Secretary of State may by Order give effect to the provisions of subsection (1) above.'.
No. 49, in clause 3, page 3, line 19, at end insert—
'(1A) The Secretary of State shall, where he makes an Order under this section to give effect to the reductions specified in subsection (1) above, within one month thereafter issue guidance to local authorities as to preparatory steps which may be appropriate with respect to—
- (a) any proposals he may consider appropriate concerning the level of local taxation in the financial year commencing on 1st April 1992; and
- (b) proposals concerning the possible introduction from that date of any new system of local taxation.
(1B) No guidance shall be issued under subsection (1A) above before the completion by the Secretary of State of consultation with such persons representative of local authorities in Scotland as appear to him to be concerned.'.
No. 50, in clause 3, page 4, line 15, at end insert—
'(9) Subject to subsections (1A) and (1B) above, the Secretary of State may by Order give effect to the provisions of subsection (1) above.'.
§ Mr. O'Brien
This group of amendments refers in the main to orders that the Secretary of State will make to ensure that the future financing of local government is 878 sound and fair to those who contribute to local government services and to local authorities which administer those services.
Everybody who works and serves in local government is fed up with the constant changes that have been made to local government taxation in the past 12 years, but more so in the past three years in Scotland and in the past two years in England and Wales. As the Prime Minister and Secretary of State now agree, the poll tax is not acceptable, will not work and is costly to administer and collect. Tonight, we are arguing that it should be abolished. We also want son of poll tax to be abolished.
Clause 1 deals with the statutory reduction in the poll tax for England and Wales. Amendment No. 12 urges the Secretary of State, when making an order under clause 1, to take into consideration the matters detailed in the other amendments in this group. Whether clause 1 reduces the poll tax for all poll tax payers or just a few, as now appears to be the case, we want amendment No. 47 to be given serious consideration.
Amendment No. 12 provides that, before any action is taken, the amendment should come into serious play because the Secretary of State should issue guidance on what he is preparing, what the level will be and the sort of taxation there will be to finance local services for local government in the year commencing I April 1992.
I have two significant questions to put to the Secretary of State about any commitment to abolish the community charge. First, does the new local tax embody any elements of a poll tax? We were told by the Secretary of State on 21 March that the new local tax will comprisea single bill for each houshold comprising two essential elements, the number of adults living there and the value of the property.Those, we are told, will be the two essential elements included in any future local government tax bill. In response to a question asked by the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley) —who advocates the retention of the poll tax—the Secretary of State said that the new taxcombines many of the elements of my right hon. Friend's ideas".My second question to the Secretary of State relates to timing. When will the new local tax be in place? Amendment No. 47 seeks information about any proposals involving the new system of taxation. What will it entail? Is there to be a register of people who will have to pay the poll tax? The Secretary of State said:It is perfectly possible that we shall not need a register".He also said:I have already said that it is possible in the new arrangements that a register of the sort associated with the community charge will not be necessary. It is a detailed and technical matter that must be looked at. We shall be putting forward in the consultation document a number of options—they are not firm proposals now—to deal with the matter because it is important, as I have said several times, that the local authorities become involved at this stage in advising on the most effective way forward." —[Official Report,21 March 1991; Vol. 188, c. 404, 408, 409, 415.]Ministers have said that that is right. May I have an assurance that there will be no register?
§ Dr. Keith Hampson (Leeds, North-West)
Since the Labour party's proposal is to return to the rates, does not the hon. Gentleman accept that there was one basic problem—the rates did not distinguish between the single person and the multi-occupancy of a household? Does he not welcome, therefore, the idea of a consultation 879 document that might consider the various ways in which a distinction could be made between what those different households pay?
§ Mr. O'Brien
The rebate scheme sought to distinguish between the single householder and the family, but that scheme was dismantled by the Government. We propose a favourable rebates scheme that will meet the concern expressed by the hon. Member for Leeds, North-West (Dr. Hampson). If the hon. Gentleman cares to sit through the debate on the next group of amendments, he will hear our precise proposals on the issue that he raised.
Will there be a register? The Minister's silence shows that there will be a register, as there is at present. As we know, that register is totally unworkable. How will the local tax compare with the poll tax before and after the poll tax surcharge on VAT has been levied, and how will it square with the principle enuniciated by the Secretary of State to underpin any form of local tax? The Government will have to answer those questions if we or local government are to have any confidence in the Bill.
In fairness to local government and to poll tax payers, any guidance should be issued within a month of any order, and poll tax payers or ratepayers, whatever the classification, should be afforded fairness in any orders that are made. Our experience of the poll tax legislation over the past three years is that it is unfair. Will the new tax be fair? As we have said, if there had been more time to prepare and more consultation with interested bodies, the flat rate reduction of £140 per poll tax payer could have been applied more fairly. Rebates could have been increased or the 20 per cent. contribution by people on income support could have been abolished. Poll tax could have been reduced proportionately so that some authorities could have levied a low poll tax or none at all. If time had been allowed for consultation, the distribution of the £4.5 billion could have been much fairer.
§ Mr. Richard Tracey (Surbiton)
The hon. Gentleman speaks about fairness. For the education of the Committee, could he give us the comparison between the current community charge levels in, for example, Barking, Dagenham and Ealing and the level of local government contribution that householders in a two-bedroomed house in those places would pay under the system proposed by Labour?
§ Mr. O'Brien
I have no objection to making comparisons, but if the hon. Gentleman and his colleagues want to make them, they should tell us how many people in Barking or Dagenham will receive the £140 rebate
§ Mr. O'Brien
If we are to have comparisons, let us have some figures from the Government, who are proposing the Bill. As the Secretary of State has made it clear that he is not happy with the poll tax., can we assume that he will endeavour to abolish any proposals in the Bill that resemble a poll tax?
I have here the report of an interview with the Secretary of State in The Times of 10 May last year, at the start of his leadership campaign. In it, he said of the poll tax:In many of the marginal constituencies by which the tenure of power is determined…is a belief that it is either too high, unfair or both, and it has created a lingering sense of injustice. I have never known so large a postbag—from880those with a life-long commitment to the Tory cause who, having bought their homes, saved to ensure their independence and budgeted carefully for their old age, feel badly let down.Last May, the Secretary of State was telling everybody that the Tory party had let down its supporters because of the introduction of the poll tax. If he believes in what he said then, he should put that belief into practice and make sure that there is no element of poll tax in the Bill.
The uncertainty of the Government's proposals for local government finance has led members of the Tory party, both inside and outside the House, to suggest all kinds of formulae to ease the pain and problems through which their party is going. Some hon. Members say that there should be a higher VAT charge, some say that we should abolish local tax, some say that we should take some services from local government, including education and the police and fire services. Because of this uncertainty, local authorities will need sufficient time to make the necessary changes if the poll tax is abolished. The Labour party is committed to abolishing the poll tax. We intend to fulfil that commitment.
§ The Minister for Local Government and Inner Cities (Mr. Michael Portillo)
The issue before the Committee is one of the most simple that we can debate—whether we should take £140 off the headline community charge of each and every person in the country. The Labour party apparently agrees with the Government on that proposition, because it did not oppose Second Reading.
The second issue before the House is whether the balance of taxation should be as proposed by my right hon. Friend the Chancellor of the Exchequer in his Budget. The Government have made it clear that they believe that the new balance which is established by the Bill, as set out by my right hon. Friend the Chancellor of the Exchequer, should be the balance not only for this year but for future years. On this item as well, I believe that the Labour party agrees with the Government.
I believe that for two reasons: first, the Opposition did not oppose the Second Reading; secondly, the hon. Member for Dagenham (Mr. Gould) said that he wishes the proportion in future to be about 20 per cent. That implies a slightly higher level of local taxation funding than is brought about by the Bill, but for the moment I shall let that pass; let us say that we are in the same ball park. Again it appears that there is no matter of principle between the two sides.[Interruption.] Perhaps the hon. Member for Dagenham would stop squeaking, "Let's get to the amendment." I am filling the background before dealing with the amendment. My remarks will be seen to be perfectly germane.
§ Mr. Gould
I simply observed that, if the Minister of State had wanted to speak in the Second Reading debate, he had every opportunity to do so, but as this is not a Second Reading debate, I invite him, through you, Sir Paul, to concentrate on the amendment so ably moved by my hon. Friend the Member for Normanton (Mr. O'Brien).
§ Mr. Portillo
I am grateful for the hon. Gentleman's intervention. Perhaps I can now get on with my speech.
The reason for setting out the principles on which the Bill is based—and the principles upon which, apparently, the two parties are agreed—is that, having said that it is in favour of these principles and having failed to oppose the Second Reading, the Labour party now wishes to set up in 881 the first amendment a series of obstacles to providing people with the £140 reduction in their community charges. Having avoided any public obloquy by opposing the Second Reading—recognising, as it did, that if it had opposed the £140 reduction, the British public would have been extremely angry—in this first amendment the Labour party now tries to make it difficult to make those £140 payments. By indirect means, the Opposition wish, if not to deny people a reduction in their community charge, at least to make it very difficult for that reduction to be made and to delay its delivery. I trust that I am now dealing with the amendment to the satisfaction of the hon. Member for Dagenham.
§ Mr. O'Brien
Does the Minister not feel that those on income support who will continue to pay 20 per cent. of the community charge should have a share in the £4.5 billion? That is the point of the amendment.
§ Mr. Portillo
They will have a proportionate share of the £4.5 billion. They will get 20 per cent. of the £140, just as they are asked to pay only 20 per cent. of the community charge. Furthermore, since the hon. Member for Dagenham is so keen that I should stick to the amendment, I ought to point out that a number of other amendments deal more directly with that question. My hon. Friends and I will be pleased to deal with them.
The amendment seeks to introduce into the Bill a series of irrelevancies that have nothing to do with giving people a £140 reduction in their community charge in the coming year. That series of irrelevancies has nothing to do with changing the balance between what is raised in local taxation and what is raised in national taxation. The hon. Member for Normanton asked many questions about the future form of the local tax that we shall introduce. I do not intend to go over my right hon. Friend's statement. It was made only last Thursday. It is as clear as crystal, and it is in everybody's mind. However, I remind the hon. Gentleman that the review that the Government are conducting was always foreseen as being in phases. So far the phases have been as follows.
We made some changes to the community charge reduction scheme, which benefited millions of people. In the Budget, we announced a reduction in the community charge of £140, the headline figure. Last Thursday, we made a statement on finance, structure and functions. That process will be followed by consultations during the summer, to be followed by legislation, which I expect will be introduced in the autumn. That is a clear series of stages in the review.
At one point, the hon. Gentleman asked me to give him guidance—I do not know whether that was a slip of the tongue—on what the level of taxation would be on 1 April 1992. I have no difficulty in answering that question. The level of taxation will be as it is today. The balance between local taxation and national taxation will be as has been set out by my right hon. Friend the Chancellor of the Exchequer, and the form of taxation in place on 1 April 1992 will be the community charge. We have made it clear that we hope to be able to introduce the local tax by 1 April 1993.
§ Mr. David Blunkett (Sheffield, Brightside)
Can the Minister tell us what the Chancellor meant when he suggested yesterday that, in the coming year, the VAT increase would not raise sufficient funds to cover the allocation that is now being made? I refer the Minister to column 700 of the Official Report. What taxes was the Chancellor referring to when he suggested that other increases were necessary to achieve the Government's goals?
§ Mr. Portillo
I do not have column 700 of Hansard at hand, but I believe that my right hon. Friend the Chancellor, in summing up yesterday, said that the VAT increase and the Government's objective of reducing the average amount actually paid in community charge to a figure below £175 would enable us to make further changes in the community charge reduction scheme, to which I referred later yesterday in the debate on the money resolution relating to this Bill.
The matters with which this amendment deals are irrelevancies. There is absolutely no need to delay the introduction of the reduction of £140 while the Labour party seeks further clarification of our proposals. Those proposals will be clarified fairly shortly, in line with the timetable that I set out this evening, which confirmed the timetable that the Government had set out earlier. I urge Labour Members that it is not in their interests to display to the British public that their objective is to put hurdles in the way of the introduction of the reduction of £140 in the headline figure of community charge. Certainly my hon. Friends take the view that we should implement the reduction as soon as possible, and therefore that the amendment should not be accepted.
§ Mr. A. J. Beith (Berwick-upon-Tweed)
I shall be very brief.
It seems that the Minister has got himself into a bad mood at the start of these proceedings. I do not know why he should resent the expenditure of a little time to ensure that this Bill will achieve its stated purpose. We have got past the Second Reading. I do not now why the Minister even expected anyone to vote against the Bill, or even to delay the proceedings unnecessarily. Indeed, I suggested to him that the guillotine was unnecessary. The evidence that that contention was right seems to be mounting. The Minister is indeed a little out of sorts.
We have been told that the purpose of the Bill is to achieve a reduction of £140 in the headline poll tax level for every charge payer in the country. That was quite specific, but it does not appear to be what the Bill achieves. Substantial numbers of people will not have their poll tax bills reduced by £140 from the headline level.
I do not know why the Minister wants to cause this confusion. He can tell us why, in his view, it would not be appropriate to give additional relief to those who are already benefiting from the transitional relief scheme and the extension of that scheme that has been announced. It would be perfectly proper for him to rest on that case, but what good is served by leading a great many people to expect a greater reduction than they will actually get?
Ministers have been through this once already. A previous Secretary of State announced at his party conference that nobody would have to pay more than a certain amount above the previous rates, but all the complications were left out. Lots of people suddenly found that that did not apply to them. It applied only on the basis 883 of the Government's definition of the charge—not on the basis of the charges set by local authorities, almost all of which, whatever the political part n in power, were higher. If people had moved house, and for all sorts of other reasons it did not apply.
There is no benefit to anybody in pretending that the Bill does other than what it actually does. Let the Minister advance his case about the precise level of relief, and not pretend that people will get reductions that they will not get. Otherwise, there will be enormous disappointment and great irritation, and the disfavour that the Government already suffer will be increased. These proceedings could be advanced more quickly and more successfully if people stopped making grand and exaggerated claims.
If the Minister agrees to do that, I shall be happy not to make any more grand claims about local income tax for most of the night, because the case for it is clearly made out.
§ Mr. Harry Barnes (Derbyshire, North-East)
The key amendment is No. 47, which deals with the arrangements for moving towards 1992. I tabled amendments Nos. 51 and 52 in an attempt to tackle the problem. The Bill applies only to the coming year and does nothing about the position after that.
My hon. Friend the Member for Normanton (Mr. O'Brien) expressed great concern about registration. The Secretaries of State for the Environment and for Scotland have given different answers on the subject. In reply to my right hon. Friend the Member for Salford, East (Mr. Orme), the Secretary of State for the Environment said:It is perfectly possible that we shall not need a register to administer the tax.In answer to my hon. Friend the Member for Workington (Mr. Campbell-Savours), he said:No one has raised this issue as a problem in the course of designing it. No one has raised it with me as a problem in moving from the community charge to the local tax, so I have no reason to suppose that there is any problem that I must account for.Now it is a matter of ignorance. The issue has not been brought to the Secretary of State's attention, so he has not thought about it. It is not that there is to be no register.
The matter would have been considered if the Secretary of State for the Environment had accepted my offer in January to discuss the impact of registration. Two months later, I received a letter from the hon. Member for Salisbury (Mr. Key) saying that there was no time to pursue that matter. Yet the impact of the poll tax on the electoral register is of considerable concern. Some 600,000 people are missing from the electoral register compared with last year and taking into account the number of people over 18 years old in the population. Interestingly, the Government refuse to answer questions about' the number of people on current electoral registers, which would allow us to judge whether the poll tax has resulted in an improvement or a worsening of that trend.
The Secretary of State for the Environment than told me:under the new system we shall not need a register. I have made that clear. Answers to such questions will be clear in the consultation document.Yet the Secretary of State for Scotland told my hon. Friend the Member for Western Isles (Mr. Macdonald): 884Clearly, there will have to be some kind of register, as there is with any kind of local tax." —[Official Report,21 March 1991; Vol. 188, c. 409–22, 474.]We need to know whether there is to be a register. The existence of such a register is of considerable importance. If the electoral register is to be used, the system envisaged will be a direct tax upon the franchise. If another form of register is to be used, such as the one that we have experienced, it will be an indirect tax upon the franchise and will have an equally serious effect.
Every hon. Member should be concerned to protect the existence of the franchise. The House should pride itself on having extended the franchise until this Government came along and implemented the poll tax. I hope that the issue of the register will be taken into account.
§ Mr. Dave Nellist (Coventry, South-East)
Will my hon. Friend confirm that the Census (Confidentiality) Bill was designed to reassure people that there was no link between the collection of the 10-yearly census information and the compilation of a poll tax register, which many people felt would prejudice the accurate collection of information on the census? Will he further confirm that the Government will not protect the electoral register in the same way, because they have probably worked out that the bulk of the 600,000 who have disappeared from the electoral register were hardly likely to have voted Tory in the first place? Therefore, the Government are trying to fiddle the franchise in order to fiddle the next election result.
§ Mr. Barnes
It would be serious enough if 600,000 people were missing randomly, across the political spectrum: everyone should have the right to exercise the franchise. But for 600,000 people whose views point in a particular direction to be missing is ghastly—especially given the present first-past-the-post electoral system, which means that the impact need only be felt in a number of marginal seats for a fantastic general election result to follow.
We should feel deeply concerned about the fixing and fiddling of general election results. The Census (Confidentiality) Bill recognised the problem, but if the register is not to disappear altogether, we shall need an Electoral Registration (Confidentiality) Bill to protect it from the effects of poll tax registration.
This is probably the most serious impact on democracy that the poll tax has had. Its knock-on consequences have hit the very foundations of the British constitution. Constitutional lawyers would surely consider electoral registration not just another statute, but one of the key statutes that are equivalent in this country to a written constitution.
§ Mrs. Alice Mahon (Halifax)
I think that the Minister was joking when he said that Opposition Members were not concerned about the £140 that would be taken off poll tax bills. Let me tell him that many people would be grateful if just a few pounds were taken off their bills, because of the misery that they are now experiencing. With a little more thought, that £140 could have been targeted much more appropriately—it could have gone where it is really needed. It is not too late for the Minister to act. His concern for the Labour party is very touching, but I can tell him now that the country is ready to judge him. If his performance on "Newsnight" is anything to go by, I do not rate his chances of re-election very highly—he really got his come-uppance there.
885 Amendment No. 47 is a probing amendment. We want to know the Government's plans for future taxation. We are saying, "Please tell us that you are going to abolish the poll tax—although no Opposition Member thinks that you will, given the deep divisions within your party." There is a split from top to bottom of the Conservative party, with the Secretary of State wanting a property tax and half the rest of the party wanting a poll tax.
As my hon. Friends have said repeatedly this evening, we have ended up with a three-tax system. The Minister has a duty to tell us what he is going to do. We need to know about future taxation, given what the Chancellor has done with VAT. As has also been said repeatedly this evening, people in receipt of income support will benefit very little from the £140 rebate, but will pay much more VAT on what they buy. They will receive 54p a week from this giveaway, which in practical terms is no more than a bribe to enable the Conservatives to win the next election.[Interruption.]
§ Mrs. Mahon
If people spend £22 on goods that are liable to VAT, they become losers. It is easy to do that. I obtained a list from the Library of items liable to VAT. It included fruit juice, sweets, hot takeaway food, fish and chips, hamburgers, telephones, biscuits and toilet items, which people use every day. Once a child reaches 13 or 14, he goes into adult clothes, which are liable to VAT. It is important that we know about these matters.
The Minister and the Secretary of State cannot get away with going on about Wandsworth and Westminster. People in Halifax will want to know why they have to pay extra on a pint of beer so that the rich fat cats of Westminster and Wandsworth can get their services for nothing. Clearly it is not fair. Will the Minister tell us why he thinks that it is a fair tax?
The Minister must also tell us when he will abolish the poll tax. We all know that he will not abolish the tax, but we must keep pushing and probing. We must say to him, "Take that silly grin off your face. You have lost heavily and you will lose the next election heavily. Start giving some truthful answers at the Dispatch Box." The Minister has wasted billions of pounds of taxpayers' money on the foolish ideological flagship of the previous Prime Minister and her Government. If Ministers were councillors, they would be surcharged out of existence. It is a disgrace.
Every time I think about the wasted £14 billion, I think about hospitals that have shut, wards that have closed and schools that are scrimping and saving. I visited a school in my constituency last Friday which had classrooms propped up with steel bars. Every time I think about the £14 billion, I think about what we could have been spending on services. For the Minister to stand at the Dispatch Box with the arrogance that is symptomatic of Conservative Ministers and pretend that it does not matter and that the Opposition are playing games is disgraceful. Let him get on his feet and tell us now what he intends to do about the poll tax.
§ Mr. O'Brien
I wish to reiterate what I said earlier. There are two significant questions that I will put to the Minister. First, is there to be a poll tax element in the new tax system? We have been told that the new tax system will 886 comprise two significant elements—the number of adults living in the household and the value of the property. Will the Minister confirm that the tax will include a poll tax element, or will he deny that? Secondly, I asked whether we could be told when the new local tax would be in place. Many people inside and outside the House want to know when the changes will be made.
I raised the point about a fairer distribution of the £4.5 billion. If there had been more time available and consultation with interested bodies and organisations, I am sure that there would have been a fairer distribution through abolishing the 20 per cent. contribution to be paid by people on income support. There could be a greater review of the issue of whether poorer people who have to pay the poll tax could be given a greater rebate. Those matters will be discussed later. We want answers on those issues. I ask the Minister to address just two points: will there be a poll tax element, and when will the new tax system be put into place?
§ Mr. Portillo
Although I spoke for only about five minutes at the beginning of the debate, the hon. Member for Berwick-upon-Tweed (Mr. Beith) accused me of being out of sorts, while the hon. Member for Halifax (Mrs. Mahon) accused me of joking and having a silly grin on my face. I do not believe that those descriptions are consistent.
I have already dealt with the questions that the hon. Member for Normanton (Mr. O'Brien) has just reiterated. I specifically told the hon. Gentleman that is our ambition that the local tax should be in place on 1 April 1993. The hon. Gentleman rightly identified the two elements of the local tax, but I have nothing to add to my right hon. Friend's statement on that, which was extremely clear.
The hon. Gentleman called on us to consult about the distribution of the £4.3 billion, but his hon. Friends have spent much of the day deriding us for so consulting. However, his hon. Friends have also spent much of the day praising the speech of my right hon. Friend the Member for Blaby (Mr. Lawson), but he said that, on matters of taxation, which certainly includes the Budget, it is not possible to consult.
§ Mr. John Maxton (Glasgow, Cathcart)
We have got no details on the new tax and no legislation on those details is in the pipeline—two separate Bills will be needed for Scotland and for England and Wales. All the experts I have spoken to—finance officers and registration officers—in local government in Scotland say that it is impossible to introduce the tax by 1 April 1993. Those people are not elected members of authorities, but officials. Has the Minister had any conversations with those officials on the practicalities of the proposed tax?
§ Mr. Portillo
I reiterate that it is our ambition to introduce it by 1 April 1993.
It is interesting to note that, when the Government introduce a proposal, suddenly the Labour party says that it is impossible to do it so quickly. For the past couple of years, however, the Labour party has told us that one can do things overnight. I do not believe that the Labour party could even go back to the rates overnight—a proposal which would be deeply unpopular with and resented by the people.
The hon. Member for Berwick-upon-Tweed was worried that I had misrepresented the Bill, but I thought 887 that I was careful to talk about £140 off the headline charge. In a response to a previous intervention from the hon. Member for Normanton, I discussed the position of those on benefits. The reduction in their bills would be £28, which is absolutely right since it is in proportion to the 20 per cent. of the charge that they are paying. I cannot accept that I have misrepresented what the Bill is about.
The hon. Member for Derbyshire, North-East (Mr. Barnes) was concerned about people who have left the electoral register. Perhaps he believes that they have done so to avoid paying the community charge, but the hon. Gentleman should consider what I said in the House on 13 March when I pointed out that a Labour party newspaper had carried an advertisement headed "Don't Register, Don't Pay". The hon. Gentleman may complain about people not registering, but he should acknowledge that the origin of that action is advice carried in a Labour party newspaper.
§ Mr. Harry Barnes
That paper is not an official Labour party document. Non-registration has occurred not because of a specific tactic encouraging it, but because people in desperate circumstances have ducked for cover. The bulk of such people are those coming up to 18. Statistics show that that has happened in Scotland and then in Wales and England. It has not happened in Northern Ireland, where the rate of registration by those attaining 18 is healthy.
The nature of the poll tax is unbearable, and some people have sold their franchise rights in desperation. No one should be placed in that situation, which undermines the Representation of the People Act 1983. If that Act has a higher constitutional standing than the poll tax, that tax is legally at fault, not the electoral registration law.
§ Mr. Portillo
I have no responsibility for electoral registration, which merely serves to emphasise the distinction that exists between community charge and electoral registers—they are two entirely separate registers. Having said that I have no responsibility for it, I am advised that there is no statistical evidence that the community charge is affecting the level of electoral registration. One of the effects of the community charge seems to be that there has been higher participation in local elections. More people are voting in local elections because they are more aware of the choices that they are being called upon to make.
§ Mr. Jeff Rooker (Birmingham, Perry Barr)
This year in Birmingham, there are still only about 705,000 people on the poll tax register. We are pleased to declare that there are 730,000 on the electoral register as a result of a deliberate campaign by the local authority to improve registration, which is now thought to be 97 per cent., because we got across to the people of the country and of our city that the only way to get rid of the poll tax was to register and to vote it away. There are some cities in the country where there has been a deplorable lack of efficiency—in particular, one area in London where they have lost 7,000 people off the electoral register. Frankly, that is a damned disgrace for the people in charge of that authority.
§ Mr. Portillo
I certainly agree with the hon. Gentleman that the only way that people can vote for or against anything is by being on the electoral register. I am sure that, from our different points of view, we all support the 888 maximum number of people being on the electoral register, so that they can vote for the things that we believe in and against those that do them harm. I certainly urge them to register in large numbers. Fortunately, in the local elections in London last year, people voted against a lot of things that did them harm in what were formerly Labour boroughs.
After this further discussion, I still find no reason why the reductions of £140 for community charge payers should be delayed, as proposed in these amendments, and I continue to urge my hon. Friends to ensure that they are not accepted.
§ Amendment negatived.
§ Mr. Maxton
I beg to move amendment No. 15, in page 1, line 5, after 'amount', insert'payable by any person liable either to pay in full a personal community charge, or to pay a charge reduced from such an amount under the Community Charge reduction scheme.'.
The First Deputy Chairman:
With this we may take the following: Amendment No. 18, in page 1, line 8, after 'reduced', insert'In respect of such a person'.Amendment No. 21, in page 1, line 9, at end insert—'(1A) Any amount payable by any person entitled to a rebate of 80 per cent. of a personal community charge shall from the relevant day be reduced in respect of the 1991 financial year by such sum in each case as will reduce the amount to £0.'.Amendment No. 28, in clause 3, page 3, line 15, after `year', insert'(and payable by a person liable either to pay in full such a charge, or to pay a charge reduced from that amount under the Community Charge reduction scheme)'.Amendment No. 32, in clause 3, page 3, line 19, at end insert—'(1A) The amount payable by a person entitled to a rebate of 80 per cent. of a personal community charge shall in respect of the 1991 financial year be reduced by such an amount as will reduce the amount to £0.'.Amendment No. 35, in clause 3, page 3, line 31, at end insert—'(3C) Notwithstanding anything in the 1987 Act, student nurses over the age of eighteen in full time training shall be absolved from payment when such payment would have been less than £140.'.Amendment No. 36, in clause 3, page 3, line 31, at end insert—'(3A) Notwithstanding anything in the 1987 Act, a person who is deemed to be liable for the community charge at the reduced rate of 20 per cent. shall be absolved from payment when such payment would have been less than £140.'.Amendment No. 37, in clause 3, page 3, line 31, at end insert—'(3B) Notwithstanding anything in the 1987 Act, a person over the age of eighteen in full time education shall be absolved from payment when such payment would have been less than £140.'.New clause 2—The 20 per cent. contribution in England and Wales—`( ) The charging authority shall, from the relevant date, no longer seek payments from those who would otherwise be required to pay 20 per cent. of the personal community charge.'.New clause 3—The 20 per cent. contribution in Scotland—`( ) The local authority shall, from the relevant date, no longer seek payments from those who would otherwise be required to pay 20 per cent. of the personal community charge.'.
§ Mr. Maxton
This group of amendments deals with the rebate system and the 20 per cent. minimum payment. It deals directly with an issue that the Government could deal with. It does not delay payment in any way and it will not cause any great problems for the Government, but we consider it to be vital.
I have been around the poll tax for longer than most hon. Members. I spoke in and wound up the Second Reading debate on the Abolition of Domestic Rates Etc. (Scotland) Bill for the Opposition in December 1986. It seemed to come as a surprise to English Tory Members in our earlier debate that poll tax legislation for Scotland was introduced before the last general election.
I led the Labour party through the Committee stage of that Bill. It was a long and arduous task. Almost everything that Conservative Members have been saying about the poll tax—about its unworkability, the problems of collection and its unfairness—we mentioned in Committee during the winter of 1987, four years ago. We have continued to tell Conservative Members, over and over again, that that was what was wrong with the poll tax—it was unfair, unworkable and difficult to collect—and that they would have enormous problems with it. Even the hon. Member for Stirling (Mr. Forsyth) has privately admitted that I was right. I hope that he does not mind my repeating it. When I said that the poll tax would not be popular, he pooh-poohed the idea. He thought that the poll tax was one of the greatest election winners that the Tories had ever had. He now admits that, although, in his view, the poll tax is still right in principle, I was right to describe it as "very unworkable".
I do not believe that Opposition Members should now calmly accept things, stand back and say, "Oh well, at long last, the Government have learnt the lesson." Why should we simply accept that we suddenly have a lot of converts to our views among Conservative Members? The Government are now begging us to talk to them and to have discussions with them about all the various options that they are outlining. I say to them, "You're too late. We told you what was wrong. You had the opportunity to amend the provisions, and you never learn from your mistakes."
There is one thing on which I take issue with some of my hon. Friends. It is the description of the poll tax as the "flagship". The late Prime Minister certainly described it as such—[HON. MEMBERS: "Former."] Yes, I accept that. I should have said "the former Prime Minister". I know that the hon. Member for Stirling is one of those who is waiting for the time when the right hon. Member for Finchley (Mrs. Thatcher) is Prime Minister again. The former Prime Minister certainly described the poll tax as the "flagship", but a flagship is not born in blind panic.
§ Mr. David Winnick (Walsall, North)
If it comes to a choice between Conservative Members who supported the principle of the poll tax and those right hon. and hon. Members, many in government, who had no time for the poll tax but who, for career reasons, went along with it, defended it and apologised for it, does my hon. Friend agree that, while that may have been fair of the former Prime Minister, it is the latter whom we should hold in contempt much more than the former?
§ Mr. Maxton
My hon. Friend has a point, but I hold both of them in fairly equal contempt—those in the first group who still believe in the poll tax because they are 890 stupid, and those in the second group because they are dishonest. Accordingly, both are worthy of our contempt. Some Conservative Members are now saying that they were always against the poll tax but did not resign from the Cabinet at that time because it was such a key issue.
The poll tax was born in blind panic. In 1985, the Tories—rightly, in our view—revalued properties for domestic and commercial rates—[Interruption.] We did not oppose that revaluation when the Tory Government introduced it. They then got into a total blind panic over it and refused to raise revenue support grant to ensure that the impact of the revalution did not hit their voters hardest.
Suddenly, the true Tories—the Eastwood, Stirling, and Bearsden Tories—started to say that they would not vote Tory again. The Tories went down to 12 per cent. in the opinion polls in Scotland. Only 12 per cent. of the electorate in Scotland said that they would vote Tory. Then what happened? The then Secretary of State, the right hon. Member for Ayr (Mr. Younger), went on to the platform at the Tory party conference and, faced with opposition from Tory voters at the conference said, "Rates are no longer an alternative. We are not going to keep them."
Suddenly, of course, the Tories had to find an alternative. That was the first time they were faced with that problem, because until then they had said, in their 1983 White Paper for example, that rates were the system of local government finance that they would have for the foreseeable future. Suddenly, however, the rates were to go. The Secretary of State for Scotland said it, and the former Prime Minister backed him and said the same. The Tory party suddenly had to find an alternative and the only thing that they could come up with was to go to the hon. Member for Stirling, whose scheme for a poll tax they had derided. That is how the poll tax was born. It was born in a panic, and it is now dying in a panic.
If, in 1985, the Government had found something like £250 million for Scotland and given it as rate support grant instead of introducing a poll tax, they would not have had to abolish the rates—and £250 million would have been a small sum in comparison with what they are now having to find to bail themselves out of the poll tax. If they had done that, rate bills would not have gone up, they would not have had to abolish rates and the crisis that we are now in would never have arisen.
At the core of the legislation when it eventually came was the absurd idea that everybody, with the exception of the mentally handicapped, had to pay something. We even had problems persuading the Government to accept that they should not be taxed. The poorest, the unemployed, the old-age pensioners, the physically disabled and even some mentally handicapped people had to pay at least 20 per cent. At the core of what we are trying to do in the amendments is an attempt to right for the next financial year that wrong done to so many people.
The requirement to pay 20 per cent. has probably created more problems for the Government than anything else. Despite claims from the SNP about non-payment, about 80 per cent. of the people in Scotland who have not paid are on rebates. The vast majority of the 80 per cent are on the maximum rebate and have to find just the 20 per cent. There are 800,000 people in Scotland on that minimum payment. If we add to that total students, 891 student nurses and other groups on the minimum 20 per cent., we find that close to one third of all eligible poll tax payers supposedly have to find only 20 per cent.
The collection of the 20 per cent. causes enormous administrative problems for local authorities. We are talking about a payment of £80 to £90 per head. That might be reduced marginally by the Bill. The 800,000 will not get the reduction of £140; all they will get is a reduction of £28. Their poll tax will not be wiped out, as will happen to the wealthy people in Wandsworth and Westminster. They will still have to pay something.
As well as it being grossly unfair that some people should have to pay 20 per cent., collection causes great difficulty for all local authorities, not just Labour-controlled authorities. We suggest that the Government should use a comparatively small amount of the money that they are making available to local authorities to get rid of the 20 per cent. payment.
I am told that the amounts required to do away with the 20 per cent. would be £300,000 out of £4.3 billion for the United Kingdom and £30 million out of £500 million for Scotland. Instead of a reduction of £140 in everybody's poll tax, there would be a reduction of about £125. With three people in my household paying the poll tax, under the Bill we will benefit by £300-odd. I would be happy to accept a lower reduction in my poll tax to ensure that the poor do not have to pay anything. I am sure that all my hon. Friends would be happy to have a smaller reduction.
§ Mr. Maxton
Fine. We know what happens to cheques written to the Treasury. They soon disappear into other things. Certainly, under this Government, the poor would never get the benefit of any cheque that I wrote to the Treasury.
The simple fact is that the Government have an opportunity to right one of the wrongs of their poll tax system. They have an opportunity to get rid of the 20 per cent. minimum and improve the rebate system. They ought also to backdate rebates to 1 April 1989 in Scotland to take out of the system people who should have had a rebate but never received it or never claimed it. They now face two years of full bills. It would cost a small sum of money compared with the total to take those people out of the system, and it would right enormous wrongs. It would also reduce the administrative burdens on local authorities.
I have been pleading for the 20 per cent. minimum to be removed—the hon. Member for Eastwood (Mr. Stewart) will admit that—ever since it was introduced. I have certainly argued that case during the past two years in the House at Question Time and after Question Time. The Government now have an opportunity to do it. I hope that they will take it. However, despite my pleas, not only do I expect not to achieve the abolition of the 20 per cent. minimum payment now, but it is unclear whether the same 20 per cent. minimum payment will remain under the new tax. We simply do not know. What we know from the Scottish Office, however, shows that the 20 per cent. will remain.
892 I hope that the Under-Secretary of State for Scotland, the hon. Member for Eastwood, who will reply to the debate, will take this opportunity to show a little generosity. I am not asking much. I am not asking his constituents to give up large sums of money. It is just a small amount to help the poorest in our society, such as my constituents who live in Castlemilk, Easterhouse and Drumchapel. Getting rid of the 20 per cent. payment would remove an oppressive tax from them. Let that be the first step towards abolition of the tax, followed by the introduction of a fair rating system, which is the only method which can replace the poll tax fairly.
§ Mr. Archy Kirkwood (Roxburgh and Berwickshire)
I wish to make a brief speech.
My credentials are as good as those of the hon. Member for Glasgow, Cathcart (Mr. Maxton). I too, perhaps from a different perspective, have argued the case for removing the ceiling on rebates for the community charge. I started doing so when the idea was first mooted in the 1985 Green Paper on social security reform. The first real evidence of independent worries about the issue was in the Social Security Advisory Committee report of that year. It said:Our concern is twofold: first, and most important, we believe that the proposalto put a ceiling on rebates for community chargecould cause real hardship to many claimants, especially those on income support; and second, the proposal will cause local authorities extra administrative difficulties, and therefore higher administrative costs, at a time when the Government is committed to simplifying administration and controlling costs.The committee's words in 1985 have come true. The Government were silly not to heed such independent advice. The Social Security Advisory Committee was not the only body to warn against the proposal. Other bodies did so, as did the hon. Member for Cathcart and I in the House. Those warnings went unheeded, and we all see the result this evening.
My purpose is briefly to speak to new clauses 2 and 3 tabled by my right hon. and hon. Friends. While those new clauses may be technically incompetent, they are clear in their intention to try to persuade the Government at this eleventh hour to contemplate the abolition of the ceiling on rebates. It is important for the Minister to talk about the number of people who are caught by the ceiling on rebates and how much money is involved. In the debates in 1985 and 1986, the comments seemed unrealistic in terms of the sums involved and the impact that they were having.
Before the ceiling on rebates was introduced, about 3 million people were eligible for a 100 per cent. rebate on their rates under the old local government system. A further 4 million people had a partial rate rebate. Today, nobody gets a 100 per cent. rebate, so that significant change has had a considerable impact, particularly on low-income families.
The Government's justification for the change was that it would improve the link between payment and the use of services—that in some magical way there would be a resurgence in interest in what town halls and local authorities throughout the country were doing. There is little evidence, if that was the intention, that it was well founded.
Even people who follow these issues closely cannot make a direct correlation between Government grants, specific grants and the various means by which local 893 government finance is provided by central Government and other sources; so they cannot make a comparison between what was previously being spent on their behalf by local authorities and what was spent following the introduction of the so-called system of accountability.
If the Government are looking for a system that gives more accountability in local government, they should examine the way in which local authorities are elected. A system of electoral reform that included proportional representation would give a more sensitive system to meet the needs and wishes of local people.
From a social security point of view, the £1.30 increase in income support that was given in 1987 to try to compensate people for paying a 20 per cent. contribution towards the poll tax was totally inadequate and reduced the already meagre levels of income support available to many claimants. About 17,000 claimants north of the border are now having deductions taken from their income support payments to make contributions towards poll tax arrears. That is a scandal and a disgrace.
I remind the Committee that, on their proposal to impose a ceiling on the rebate system, the Government were defeated in the other place in June 1986. Their Lordships withdrew a provision designed to impose a cap on the poll tax rebate system. The Government were wrong to reintroduce the proposal and reverse in this House that decision of the other place. We have been paying the price for that ever since.
Experience of the ceiling on the poll tax rebate for the last two or three years has revealed a two-tier system of local government. There is the kind of local government that can be provided and paid for in relatively stable areas of population, such as in the borders and my constituency, where there is less of a turnover in population and the people are perhaps more law-abiding than in other parts of the country. That applies to my constituent, the hon. Member for East Lothian (Mr. Home Robertson). It certainly applies to my right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel), who pays his debts, is kind to animals and treats his wife well.
In districts such as the borders, there is a stable population, so it is much easier for the poll tax to be administered and collection rates can be more than 90 per cent. to a semi-reasonable extent. But it is impossible to do so in urban districts such as Glasgow, Strathclyde, Edinburgh and Dundee. The Audit Commission has found it impossible to achieve those relatively high levels of collection in such regions. That is the inevitable consequence of the development of a two-tier system of local government.
The level of services one can enjoy depends on where one lives. If one lives in an urban context, one's services are reduced, but if one lives in a landward district, the services tend to be better financed and better provided. It is wrong that such a consequence should flow from poll tax legislation.
It is absurd when the amount to be collected from many people will be less than the cost of collecting the tax. That cannot be sensible in any system. My hon. Friend the Member for Orkney and Shetland (Mr. Wallace) told me earlier this evening that the poll tax contribution to be solicited from students in Shetland is £9, but it will cost 894 nearly three times that amount to collect that poll tax from students, which seems to be completely stupid. That contrasts with the provisions now being made for Wandsworth, where, by and large, residents can easily afford to pay for local services. They will not now be paying anything. The principle that everyone pays is clearly no longer the case.
As the hon. Member for Cathcart said, the Scottish experience is that a significant number of those facing action as a result of non-payment, certainly in Scotland, are those paying the 20 per cent. contribution. The latest estimate is that 70 per cent. of those facing court action in Scotland are 20 per cent. contributors. That is quite wrong, and the Government should do something to put it right.
In its report earlier this month, the Audit Commission showed that 30 per cent. of authorities reported a significant problem of unprocessed benefit applications. That is wrong and the Government should do something about it. Clearly, the costs of collecting the poll tax previously, today and in future are fixed. The Government should recognise that, as they should recognise that many people are suffering great hardship—most of them income support claimants and many of them pensioners. They are being subjected to the 20 per cent. contribution, which is immoral, unjust and an administrative nightmare. I hope that the Government will take the opportunity of the amendments, at this eleventh hour, to make sensible changes to make the system much better, more easily administered and much fairer to those who are least able to pay.
§ Mr. Patrick Cormack (Staffordshire, South)
I did not intend to speak this evening, and I shall be brief. I want to make only one point. I am grateful for what the Government have done. I have been implacably opposed to this tax from the word go, as Opposition Members know. I did not support it at any stage. But we are now moving rapidly towards its abolition, for which I am extremely grateful. I believe that the Government are entirely right to consult widely to get the system right.
The 20 per cent. contribution system is nonsense. Its collection costs are often more than the sum collected. I discussed collection with the treasurer in south Staffordshire a fortnight ago. It is a prudently managed authority, where about 93 per cent. of the tax has already been collected this year. It is not a question of being unable to collect the tax or of having constituents who do not pay. The cost of collecting the contribution of those who pay only 20 per cent. of the charge far exceeds the yield. That applies especially to students, who quite legitimately might have two or three abodes in the course of a year.
I accept that we are debating an interim measure, and I fully understand the Government's line. I hope that, when the new system is in place, people who at the moment qualify for 80 per cent. rebate will not be charged. We should not charge the non-earning spouse, the student or the non-householder over the age of 70. I hope that we can look at the detail of such matters and that we shall do so quickly. In future, may we please have no 20 per centers?
§ Mr. Dick Douglas (Dunfermline, West)
This is an interesting debate. Amendments Nos. 35 and 42 in my name and those of my hon. Friends, relate to the amendment moved by the hon. Member for Glasgow, Cathcart (Mr. Maxton). Experience in Scotland has 895 clearly shown that the poll tax has failed not just because of its unfairness and injustice, but because in many areas it is uncollectable. That is not because, as the hon. Member for Glasgow, Garscadden (Mr. Dewar) averred, I and others have suggested that people should not pay and have led them into debt, but manifestly because people on low incomes do not have the resources to pay.
The hon. Member for Garscadden yawns. I am sorry if I am boring him. He cannot say that 80 per cent. of those who are not paying cannot pay while at the same time saying that they should obey the law and pay. The hon. Member for Glasgow, Maryhill (Mrs. Fyfe) is in her place—
§ Mr. Douglas
We had it for some time in Scotland. People like the hon. Gentleman do not worry me in the slightest. Dinna fash yoursel'. Haud your wheesht. Belt up. On 15 September 1988, the hon. Member for Maryhill said:Non-payment is for us an act of solidarity with those who won't pay because they can't pay.
§ Mrs. Fyfe
The hon. Gentleman will recall that those were my sentiments, and I still think that embarking upon such a campaign was justified at that time. However, when Strathclyde regional council later found itself in extreme financial difficulties and faced the prospect of paying off staff, especially low-paid staff, some of us changed our minds and decided to pay up. Plainly, the hon. Gentleman does not agree with that, because he waited until his party had abandoned its non-payment campaign. When he s me, perhaps he would the record in full.
§ Mr. Douglas
People are entitled to change their minds. [Interruption.] It is one thing to have a change of mind when the poll tax is manifestly dead; it is quite another to tell people in legalistic terms, as the hon. Member for Garscadden has, that people should pay because it is the law, when he knows that they cannot pay.
The hon. Member for Garscadden spoke earlier about those with senile dementia, and the hon. Member for Cathcart spoke of the severely mentally handicapped. Both hon. Members know the fight that Opposition parties put up to have those groups excluded. Time and again, the Secretary of State for Scotland said that it was impossible to exclude those suffering from senile dementia.
The Scottish National party asked the shadow Secretary of State for Scotland what people should do, and he kept advising them to pay. The tax has now been defeated not because of what happened in the House but because of what happened outside. I believe passionately in parliamentary democracy, but a balance has to be struck, and that element should not be put on too high a pinnacle. When the Prime Minister tells people outside the House that votes cast against his party and its policies in a by-election are rubbish bin votes, and when people demonstrate because that is their only way to protest against the onerous tax, and when these factors are ignored, particularly in Scotland, people are left with little 896 alternative but to defeat the tax by not paying it. That course of action is still advocated by some on the Opposition Benches.
Non-payment has made a significant contribution to non-collectibility. What advice is the hon. Member for Garscadden giving local authorities in Scotland? They are pursing diligence on the very people who he has said cannot pay.
§ Mr. Allan Rogers (Rhonnda)
The hon. Gentleman talked about rubbish bin votes. What would happen in his community if nobody paid the tax? In the past couple of years, has he put out rubbish bins? If so, who has paid for them to be collected? What will happen to old people's homes, social services and other facilities if no one pays the tax? He does not have the sole lien on non-payment or opposition to the poll tax. Many of us thought that, if local services were to be maintained for those who needed them, we should have to pay the tax.
§ Mr. Douglas
I accept what the hon. Gentleman has said, but I come back to my initial position. Opposition Front-Bench spokesmen on Scottish matters cannot say that 80 per cent. of those who are not paying cannot pay but that they ought to obey the law and pay. There is an inherent contradiction there. I am asking the hon. Members for Cathcart and for Garscadden whether, through the Labour party, they are telling local authorities in Scotland to desist from diligence because of the onerous nature of the imposition of poinding, and from threatening warrant sales on those people. They should desist from making sheriff orders—there have been 300,000 in Strathclyde alone—and from hounding the very people whom hon. Members have said cannot pay. I will give way to the hon. Member for Garscadden on this point, but he is silent when asked what advice he will give.
§ Mr. Douglas
When I stood for election in 1987, I made it patently clear that I would not pay. The Labour party went about lying in their teeth about me. I lost my honorary membership of the National Union of Mineworkers because honourable people like them—I use the word "honourable" loosely—went about telling lies. If the hon. Member for Garscadden wants me to give way again, I am willing to do so. We know what happened in Scotland. We have the Convention of Scottish Local Authorities figures. It argues that, because of nonpayment in Scotland, at present no recovery action can be taken against non-payers until they are three months or more in arrears, and that, on such a timetable, it would not be fully possible to pursue non-payers until October or November next year.
We know that the system of local authority finance is collapsing. I told the hon. Members for Garscadden and for Cathcart (Mr. Maxton) ages ago that, if a Labour Government came to power on a Thursday, no one in Scotland would pay the poll tax the following Monday. I asked them what they would do then, and what interim measure they would put in place.
The Government have produced an interim measure. It is not entirely satisfactory, but the House has chosen not to vote against it. In effect, it is a concealed income tax. I 897 do not know anyone who pays taxes out of anything other than income, but some Conservative Members may take a different view. On both sides this is a huge facade—a farrago—to establish other taxation systems to collect £1 in every £10 of local authority revenue.
Would the Labour party repeal this measure if it came to power after the next election? Of course it would repeal the poll tax, but what would it put in its place? It would put some form of rating in its place. How long would that take? It would take two or three years. The hon. Member for Garscadden said this morning that the Labour party could do it by April—April of the following year. That would be an interim measure. The Scottish National party has submitted to the Secretary of State details of a local income tax that could be introduced very quickly in Scotland.
§ The Chairman of Ways and Means (Mr. Harold Walker)
Order. The hon. Gentleman is going very wide of the amendments that are before the Committee. I hope that he will return to them.
§ Mr. Douglas
With great respect, Mr. Walker, I am suggesting that, if we had a local income tax, those who could not pay—assessed in relation to their income—would not pay. That is a fair system of taxation. That is what the amendments deal with—the poorer sections of the population who should not be brought into the local government taxation system anyhow, for the simple reason that the idea that everybody should make a contribution to local authority revenue is nothing but a lot of damned nonsense.
When we ask Conservative Members about Wandsworth, their reply is, "Ah, but people in Wandsworth pay for it through general taxation." So why not relate ability to pay to general taxation? We were told earlier that this was an interim measure. The Secretary of State suggested that the value added tax to be used as a supplement this year will not be available next year and that, under rate support grant measures, general revenue will be used.
We have argued very forcefully that the poorest sections of the population—students, student nurses, people on income support, the disabled, the unemployed—should not be brought within the orbit of the tax because it is clear that they cannot pay.
However, if there is a vote on amendment No. 15, the Government's majority will undoubtedly carry the day. I hope that the Government will ultimately consider a system of taxation that excludes certain people. What is needed, particularly in Scotland, is a system that takes account of people's ability to pay. Our figures were rubbished simultaneously by the Government and the Labour party. Scotland could have a local income tax to replace the 10 per cent. or thereabouts that would come from the residue of the poll tax. The cost would be 3p or 4p in the pound. The system could be authorised by an independent Scottish parliament and operated by that parliament through, and in harmony with, single-tier local authorities. That will not be possible if the Government persist with the stupid notion that everyone must pay for local services.
§ Mr. Jeff Rooker (Birmingham, Perry Bar)
Having attended all the poll tax debates, including those relating to Scotland, I never cease to be amazed at the way the Scottish National party attacks the Labour party more 898 than it attacks the Tories. My impression has not been changed by the speech of the hon. Member for Dunfermline, West (Mr. Douglas).
§ Mr. Rooker
The amendments before the Committee relate to people who, by definition, are the poorest in the country. People who have to pay 20 per cent. of the poll tax are required to pay 100 per cent. of the water rates. Like all other hon. Members, I have constituents who pay water rates amounting to twice the poll tax charge. They do not quite understand that. It is beyond belief that anyone should be asked to pay a water rate of £150 in respect of a two-bedroom inner-city flat in Birmingham. For such people, the poll tax is the last straw.
Let us be clear what will happen when the Bill is on the statute book. I take the Labour party view. Even if guillotines and other devices have been used, a tax that has been approved by Parliament is legal. We know, however, that this tax is immoral and unfair. Money has to be collected to pay for the services required by the poor and the disabled. People who cannot pay have to be pursued. Bearing in mind the events of the past 10 days, I do not know how any reasonable local authority could issue summonses against such people for the purpose of enforcing poll tax charges of 20 per cent.
The Government have said that the poll tax is going. Or have they? They are rushing this Bill through Parliament. The Prime Minister has spoken. We have heard all the arguments about the cost of collection. We know that hardly anybody in Wandsworth or Westminster will contribute directly to local government finance. How can any responsible local authority of any political persuasion carry on issuing summonses for those paying 20 per cent.?
§ Mr. Rooker
No, I am not giving way to a member of the Scottish National party.
I do not see how that policy can be pursued. That is a real dilemma for responsible local authorities. They know full well that the Government are not prepared to bend. I know that the Government will not accept the amendments, but I believe that they will be forced by circumstances to move on this issue and perhaps on a couple mentioned by the hon. Member for Staffordshire, South (Mr. Cormack). That is inevitable. They are on the slippery slope. This is more than the thin end of the wedge. The rush is on, and I am convinced that the Government will have to move.
§ Mr. Rooker
No. For the avoidance of doubt, I am not giving way to a member of the SNP. Okay? Right. I say that after my visit to Scotland last Friday. My views were reinforced after discussions with many of my political friends in the nation.
We could have avoided being in this situation. During the passage of the original legislation, the Government could answer hardly any questions about losers and gainers. They could answer hardly any questions about those on rebates. When we asked in November 1989 what information the Government had as they set out on pushing their flagship through Parliament, they said that 899 no estimate has been made of the likely numbers on rebate in each local authority. On 13 January 1988. the Government said that no information was available on the proportion of households with below-average income and in receipt of rate rebates. On 15 December 1987, the Government were unable to give information on 18 to 25-year-olds gaining and losing. Those are just three examples from a list of about 30 points that I made at the time on which the Government had no information. They could not answer detailed questions as they launched their flagship.
The Government are in the same position now. They cannot tell the House how many people will receive £140 off their poll tax or less than £140 off their poll tax. The other week, the Government boasted that more than half the poll tax payers in England—18 million-plus—would benefit either from the rebate or from the reduction scheme. They boasted that half would pay less than the full amount, but they cannot quite bring themselves to admit now that, by definition, if more than 50 per cent. gained under the old scheme, more than 50 per cent. of adults in England will not receive £140 off their bills. The one follows the other. What the Government cannot give us tonight, and what they should give us tonight, is a breakdown of those who will not get the full £140 including those paying 20 per cent. whom we are trying to exempt with our amendments.
I was reminding myself of what was said during the passage of the legislation, and I came across a few gems that I want to share with the House. We are talking about something that affects millions of our fellow citizens—your constituents, Mr. Deputy Speaker, and mine. Just listen to this:Every time I hear people squeal I am more than ever certain that we are right".That was the former Secretary of State—the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley)—who has not had the courage to appear in the Chamber once today.
We put the same point to the right hon. Gentleman repeatedly. In Committee, he said—I am not quoting him out of context; the details will be in the record—With a flat rate charge, it must be true that the burden will fall more heavily on those with low incomes than on those with high incomes." —[Official Report, Standing Committee E;23 February 1988, c. 936.]We know that; we kept telling him that. That is why the poll tax flat rate is unfair, and why taking £140 off the top figure, rather than the bottom figure, is still unfair to the low paid.
I should like to share with the House another quotation from the record of that debate. I have given the hon. Member concerned notice. During that debate, my hon. Friends and I tried to secure a 100 per cent. rebate to protect the poorest in the land. We do not accept the "holy grail" dictum that everyone should make a contribution—people are contributing through the general tax system every time they buy a VAT-rated good.
The hon. Gentleman to whom I refer said in Committee:Above all, I am worried because in recent years we have seen the development of two societies. I wholeheartedly support the Government for having helped to achieve growing prosperity for the majority of our citizens. However, we have also created an under class of hapless people who are in enormous personal difficulties.900 That was before the poll tax was introduced. The hon. Gentleman continued:I am sure that hon. Members share my constituency experiences, except if they happen to represent such areas as Sunningdale…I represent a prosperous area, too.In his authority, he said:we shall, on balance, benefit by the introduction of the measure. However, constituents no longer approach us, as Members of Parliament, with the same financial and social problems that, a few years ago, we could have solved with relative ease. We could break through local authority bureaucracy and contact our ministerial colleagues to obtain help with their problems. They were manageable and solvable. Sadly, that no longer applies.I am not over-dramatising the position, but I have noticed the haunted look in the eyes of people who shuffle into my surgery.I shall repeat that, for the benefit of any hon. Member who has not witnessed the same thing since the introduction of the poll tax in England:I am not over-dramatising the position, but I have noticed the haunted look in the eyes of people who shuffle into my surgery. They have been caught in the poverty trap which has come about by a combination of our benefits and tax system and low income. The proposals are an understandable reaction by the Government faced with such an awkward situation. I am sure that they wanted to impose the poll tax on everyone. But we must have a benefit system, otherwise there would be an outcry because of the additional burden on the poorest members of our society who are finding it increasingly difficult to make ends meet.We have a get-rich-quick, materialistic environment. It scorns people who cannot keep up with it. That is also distressing for parliamentarians. People need our help; they must not be kicked in the teeth by a system that is becoming increasingly hard on them. They might be regarded by hard newspapers, such as the Daily Expressand The Sunas the unsuccessful minority about whom we should not worry too much. Those newspapers probably advocate a small support system at the margin that will just keep such people going. That is the most severe charge facing all parliamentarians when we consider even the small details of the proposals." —[Official Report, Standing Committee E;23 February 1988, c. 884.]I am quoting the hon. Member for Harrow, East (M r. Dykes), the Tory Member who has usually backed us all the way on the poll tax. That could have been said by any Opposition Member, but I venture to say that not many Tory Members could have said it.
I should like to think that, in the past two years—and certainly in the past year—Conservative Members had learnt some of the lessons. People may have shuffled into their surgeries, if they have them and if they are available, unlike the situation in some constituencies where people have to wait nine months for an appointment and where they only get to see their Member of Parliament when they have written a letter to the local newspaper. It happened in a midlands constituency, which I shall not name— —
§ Mr. Rooker
The hon. Member concerned is not here, so it would not be fair. I would name him otherwise.
The position has got worse because of the imposition of the 20 per cent., which also gives the Government a convenient loophole when they talk about losers and gainers. By introducing the 20 per cent. the year before the poll tax came into operation in England, they try to compare like with unlike. They should compare the present position with what was happening before, when the poorest paid taxes through VAT and other excise duties but were exempt from the local tax, as they were exempt from income tax, on the ground of low income. 901 That is only fair in our society. Given that the system does not make sense from a practical or from a financial point of view, and given that it does not make sense from a moral point of view when the Bill will give £280——
§ Mr. Rooker
No, I have nearly finished.
We shall give £280 to a person who owns a second home and who, by definition, would not be getting a rebate under the Bill, and we shall give him £140 off the poll tax for his first home, as my hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett) said earlier. The person who will not have a penny piece rebate will receive a £420 handout, but only £28 will go to the person with only income support. We know that such a person will pay more than that once he has spent more than a half dozen weeks' benefit money. After £1,100 of expenditure liable to VAT, his gain will have gone, whereas everyone else will have to spend £13,000 before the benefits are wiped out. How can that be fair? How can it be fair for someone with a second home, who does not have a penny piece rebate because he is not entitled to it, to have £280 when there will be only £28 for the poorest?
If the Government had any sense, they would accept the amendment. If they had any sense, they would have listened to us in 1988 and not proceeded with the poll tax. We told them then from the Dispatch Box that we would bury the Government with the poll tax legislation, and bury them we will.
§ Mr. Dafydd Wigley (Caernarfon)
I shared many long hours in Committee with the hon. Member for Birmingham, Perry Barr (Mr. Rooker) and I am heartily glad to see the poll tax now coming to an end. I intend to be brief. We are talking on those of the lowest incomes who face bills that, although lower, are difficult for them to pay. I listened with considerable interest to the hon. Member for Staffordshire, South (Mr. Cormack) a few minutes ago. He spoke a lot of sense. The Government would be well advised to listen to him.
If the Government go ahead and insist, during the two-years interim period before the new scheme comes about, that everyone must continue to pay, they will put a millstone around people on low incomes who have considerable difficulty paying and around local authorities which have to collect payments at a cost that, in many cases, exceeds those payments.
In Wales, we have a level of poll tax that is, on average, lower than that in England or in Scotland. It will cost more to collect payments from people on the 20 per cent. level than they pay. That makes no sense from the point of view of the individuals who are suffering, or from the point of view of local authorities. Surely there is a need to reconsider the matter.
If the Government based their case on the need for every individual to make a payment, they have surely conceded that case with the abandonment of bills to individuals and with the introduction of only household bills from 1993. They have also abandoned the principle in cases such as Wandsworth, where many people will not receive bills. The Government have also acknowledged the difficult position of some authorities where minimal 902 payments may be made. As one Minister said, that would be a matter for the discretion of the authority. We need some clarification about how far that discretion goes.
If some areas end up with a residual charge of £3 or £5, do local authorities have the right to waive that bill? Are they expected to pursue those bills although it may cost £50 or £100 to collect them? The Government must tackle that problem. If they had any sense, they would accept the amendments on that issue, or they could table an amendment even at this late stage.
The Government should find a way in which to ensure that those on a low income, the unemployed, the disabled and pensioners—those who receive 80 per cent. benefit on the poll tax—are exempt from the new charges. That would remove the pain suffered by those many people who have had to go to court because they have not paid their local authorities.
A few weeks ago, I was in court in Caernarfon. A thousand non-payment cases came before it that day. A large proportion of those cases involved people who receive 80 per cent. benefit but who still do not have the resources to pay the 20 per cent. It is not in the interests of central and local government, or good government, to pursue cases in such a manner.
It is not too late for the Government to acknowledge the argument that has been advanced by all parties in the House. Even now they could find a way in which to free those on a low income and in receipt of support from the iniquitous poll tax. That would mean that local authorities would have a much easier job in the next two years until we bury the poll tax once and for all.
§ Mr. Robert Adley (Christchurch)
I echo the words of the hon. Member for Caernarfon (Mr. Wigley) —the sooner we bury the poll tax the better. The hon. Member for Birmingham, Perry Barr (Mr. Rooker) will know that I have opposed it throughout.
I shall weary the House for just two minutes as I illustrate the nonsensical unfairness of the system by quoting my family circumstances. First, my wife and I are classed as two payers. She has never paid the rates and she does not pay the poll tax—that exposes the fiction that more people paid the poll tax. We know that that was nonsense.
In Westminster, my rates were £1,200. Last year, because it is a second home, they came down to £380—now they are down to £72, but I do not claim to be one of the poorest in the country. Last year we were in receipt of transitional relief on our home in Dorset and, this year, my wife and I will be receiving £220 of Government grant. I know perfectly well that I am receiving that money while many on a quarter of my income are not getting any relief.
Yesterday, I received a letter from the hotel in Cornwall where my wife and I intend to spend the summer holiday. The management told me, quite fairly, that, as a result of the increase in VAT, the price of our holiday will be increased by 2.5 per cent. I accept that, as it is an expensive hotel. I shall enjoy staying there, and I shall happily pay that extra VAT in the knowledge that I do not have to spend that money, but that I want to, because I can afford to stay in a decent hotel. I shall be paying that contribution in accordance with my ability to pay.
I urge my right hon. and hon. Friends to stop the nonsense. Let us get out of this unfair and unworkable tax at the earliest opportunity. I am not the only one to argue that we should use as much of central Government 903 taxation as possible to pay for local services. I do not recall Lieutenant General de la Billière saying that he felt guilty about using his tanks in the Gulf because he had not raised the money for them. I have never appreciated the logic of certain local councillors who have said that, unless they raised the money, they did not feel justified in spending it. The best way in which to assess the value of a local councillor is not how he raises the money, but how he spends it. The less money we spend on raising local taxes the more we shall have to spend on services.
We all know that the poll tax is to be buried. I urge my right hon. and hon. Friends to stop pretending to everyone—let us get rid of it at the earliest possible opportunity.
§ Mr. Eddie O'Hara (Knowsley, South)
I am sure that we all listened with respect to the hon. Member for Christchurch (Mr. Adley), who has just spoken, and to the hon. Member for Staffordshire, South (Mr. Cormack), who have both always been honourable and consistent in their opposition to the poll tax.
Perhaps it is appropriate that I should say that I come to praise at least one aspect of the poll tax from the Opposition Benches. The one credit that I can give the poll tax is that it finally blew the cover on the elaborate deception of the 1980s to which my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) alluded—that local government expenditure was rising at an unacceptable pace. The truth of the matter is that, throughout the 1980s, the central Government contribution was being steadily reduced and the levy that had to be made upon ratepayers to bridge the gap was rising. That was commonplace.
Then came the poll tax. My first introduction to it was in 1986, when I was a local government chairman of finance and I went to the Chartered Institute of Public Finance and Accountancy conference in Scarborough—a serious conference, attended by all the weighty professional bodies and institutions concerned with local government finance. The community charge proposals were unveiled there. I remember being astounded at the weight of opposition to the proposals.
The Government were advised then that the administration of the tax would be horrendously complex and expensive; that implementation would be fraught with anomalies and unfairness; that people would delay payment; and that it would be difficult to police. However, for them to take notice of that weight of distinguished advice would have smacked of consultation—a word which had no place in the Tory lexicon in those days of certainty and decisiveness. And so the poll tax came to pass—or perhaps I should say that it was passed.
Knowsley's standard spending assessment for 1990–91 was £278, and we levied a poll tax of £365, which is a difference of £87. Why? Because no allowance had been made for expected increases in bad debts, which accounted of £15 a head, or for extra costs of collection, which came to £15 per head; there was an unrealistic inflation allowance of 4.6 per cent., when inflation was 7.7 per cent., which accounted for £30 per head; and finally, and worst of all, Knowsley, the poorest local authority in the land, contributed £16 per head to the safety net, to bail out the likes of Wandsworth. That amounts to £76 out of the £87, leaving £11, which is easily and fairly accounted for by the inadequacy of the funding formula, which recognized 904 factors that favoured Wandsworth and Westminster, but gave insufficient recognition to Knowsley's manifest social needs.
If Knowsley had received Wandsworth's level of grant allocation in that year, the poll tax would have been reduced by £15, and if it had been given Westminster's, the tax would have been a mere £56.47. That is merely taking into consideration the rate support grant and non-domestic rating contributions, and not all the other fiddles or grants which were given to Wandsworth and Westminster. Knowsley's poll tax could have been in—
§ The Chairman
Order. I hope that the hon. Gentleman is going to come to the amendments that are before the Committee.
§ Mr. O'Hara
Indeed I am. Knowsley's poll tax in 1991–92 was £424.60—£54 more, of which £42 was made up of losses on collection, interest charges and deficits on the collection fund. It could have been a negative figure if Knowsley had been given the same level of grant as Westminster. That is the fulfilment of predictions in 1986 about complexity, expense, anomaly, unfairness, evasions and accumulation of bad debts, and that is only the financial story.
Now, Mr. Walker, I come to the amendments. There have been cuts in education, affecting hundreds of teachers, and the youth service has been wiped out. Social and leisure services have been affected, as have the voluntary bodies, including the citizens advice bureaux and the money advice centres, which have been losing their funding. Yet we know that 81 per cent. of the clients coming to the money advice centres in Knowsley are those affected by the 20 per cent. rule. They are coming to those money advice centres in desperation for advice on how to find that 20 per cent.
As I have said, the one saving grace of all this is that these crazy sums have blown the Government's cover, exploded the myth of council extravagence and laid the blame at the Government's door as scheme after elastoplast scheme has been devised to cover the gaping wounds. Hence the community charge reduction scheme, with the Government scaling new heights of gerrymandering. The fourth such scheme was introduced nine short weeks ago, and we now have this Bill of amendment. To stay in order, Mr. Walker, and to refer to the amendments, I must add that perhaps this amendment is the Government's last chance to inject just a grain of fairness into the Bill by taking account of those who will pay 20 per cent. and allocating a moderate sum from the £4.5 billion to alleviate that distress.
I conclude with my personal epitaph on this sorry story. We have had plenty of imagery—of the 'three-card trick' management of the community charge, and or circus sideshow trickery'. Hon. Members will have heard of Nero, the Roman emperor who fiddled while Rome burned. In 68 AD, he was assassinated. Interestingly, there was then a civil war and a series of four emperors in that year. I wonder whether that is an omen. One of those emperors, Vitellius, was immortalised by the historian Tacitus in "Capax imperii nisi imperasset", which means, "Capable of being emperor, if only he had not become emperor," or, more felicitiously translated, "An emperor with a glorious future behind him." Perhaps the poll tax will show that we have a Prime Minister with a glorious 905 future behind him.
§ Mr. Tony Banks
I rise to speak in favour of the amendments, but I shall be brief, having sat through all our proceedings. I send that message to my Chief Whip with great love and affection. In view of the quotation just given by my hon. Friend the Member for Knowsley, South (Mr. O'Hara), I shall try to be as taciturn as I can.
The amendment seeks to remove what is clearly the most unpopular aspect of the poll tax. The tax has many injustices, but requiring people on the lowest level of income in our society—those on income support—to make a payment is so cruel that hon. Members of all parties have now recognised that.
I pay great tribute to the hon. Member for Christchurch (Mr. Adley) for having been so frank in telling the House his personal circumstances. I hope that Conservative Members will investigate and examine their consciences in the same way as the hon. Member for Christchurch has. When they do, I think that they will come to the same conclusion—that the amendment must be carried and that the idea of the poorest paying 20 per cent. has to go.
We understand the reasons for the rule—at least, we understand the words that were used to explain it—that everyone who benefits from local authority services should make some contribution. But it is perhaps surprising that that principle is not applied to the payment of income tax and to voting at the national level. After all, many people do not pay income tax—such as those who are unemployed and those who are on income support—but I have not heard any Conservative Member suggest that, because those people are not contributing to the services provided nationally by central Government, their general election vote should be taken from them. If the Government want to be consistent, they must take the vote away from people who do not pay income tax or allow people who cannot afford to contribute to continue to
We know many people who cannot afford to contribute. My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) gave details from a speech made by the now somnolent figure of the hon. Member for Harrow, East (Mr. Dykes). It was a very good speech, but obviously not one that he can recall at the moment. No doubt he is seeking inspiration. I see that he has once again joined the land of the conscious. He made a very good speech in Committee. He made it clear that it was upsetting for hon. Members as well as for their constituents when people found themselves in a position where they could not pay.
I am not so concerned about people who made a political gesture. Although that is an honourable attitude to adopt, those who do so must take the political consequences. There is a role in politics for those who consider a tax to be immoral and an imposition and who refuse to pay it. I was more concerned about those who could not afford to pay and those who broke down in tears in my advice surgery. They are the people we have to look after. They are the people who are still caught up by the poll tax.
Great play has been made of the fact that there is to be a reduction of £140. As we know, for those on income support the reduction will be only £28. They will get just 20 per cent. of the £140, but they will be paying 100 per cent. of the 2.5 per cent. increase on VAT—no one has suggested that they should pay only 20 per cent. of that—so the poorest members of society are still being asked to pay the poll tax disproportionately. Figures have 906 been given in the debate to show that it is the poorest 10 per cent. who pay proportionately far more of their income on VAT-charged goods and services than the richest 10 per cent. That is grossly unfair.
If hon. Members will be as decent as the hon. Member for Christchurch and examine their consciences, they will realise that they are voting to benefit themselves to the disadvantage of the poorest people in this country, and will do as the hon. Member for Christchurch will no doubt be doing and join us in the Lobby in support of the amendment.
§ Mr. Salmond
I intend to be very brief. To avoid any doubt, I will not give way to the hon. Member for Birmingham, Perry Barr (Mr. Rooker). However, I should like to support two of his arguments. The first has been expressed by many hon. Members in the debate: it is now long past time to get the poll tax off the backs of the poor. The £140 should not be a top-line reduction but a bottom-line reduction, taking not just the 20 per cent. but many of the low-paid out of the poll tax net.
The Government have a stark choice: they can make that concession now with as much good grace as they can muster, or they can have it forced on them in coming weeks and months. That concession is coming, not because of any generosity of spirit in the Tory party but purely because the tax is uncollectable, to use the Prime Minister's word, from the poorest people.
The hon. Member for Perry Barr advanced a second argument. I am sorry to say that he did not have the courtesy to say that he was reflecting that of my hon. Friend the Member for Dunfermline, West (Mr. Douglas) a few seconds earlier. He said that, in current circumstances, it would be insupportable for any local authority to pursue by civil diligence those who cannot afford to pay the poll tax. If the hon. Member for Perry Barr could communicate to his Scottish Front Bench colleagues, the hon. Members for Glasgow, Cathcart (Mr. Maxton) and for Glasgow, Garscadden (Mr. Dewar), the need to take the poll tax off the backs of the Scottish poor, I might not express some of my criticisms of the Labour party.
§ The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart)
I thought that I had heard some two thirds of the speech of the hon. Member for Glasgow, Cathcart (Mr. Maxton) before—indeed, on several occasions. He was kind enough to pay a compliment to the good people of Eastwood. The good people of Eastwood look forward to hearing and analysing the Labour party's proposals for replacing the Government's proposed system. I assure him that the good people of Eastwood will be fully informed of the Labour party's proposals.
§ Mr. Maxton
I wonder whether the good people of Eastwood are equally attracted to the idea of single-tier local authorities, which will inevitably lead Eastwood to be part of Glasgow.
§ Mr. Stewart
I know that that is the policy of the hon. Member for Cathcart. He has confirmed it on many occasions. There are many possible formulae for single-tier authorities. I suggest—[Interruption.] I see that Opposition Members are becoming a little restive about my being tempted down that path by the hon. Gentleman.
907 We have had two debates this evening. First, there was the well-considered debate, with speeches from the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood)—I certainly would not challenge his credentials in this matter—and my hon. Friend the Member for Staffordshire, South (Mr. Cormack). I am sure that my hon. Friends will consider carefully the points that my hon. Friend made about the future. We had a speech from my hon. Friend the Member for Christchurch (Mr. Adley) and the House appreciated the hon. Member for Knowsley, South (Mr. O'Hara) improving the class of the debate considerably at one point.
Then there was the sub-plot to the debate. At some points, I felt that I did not wish to intrude on the private grief of Opposition Members. I wondered whether we would ever get a word in edgeways. The hon. Member for Dunfermline, West (Mr. Douglas), leading off for the Scottish National party, asked 26 questions by my count, 25 of which were directed at the hon. Members for Glasgow, Garscadden (Mr. Dewar) and for Cathcart. It is rumoured in the press that the hon. Member for Dunfermline, West intends to challenge one of those hon. Gentlemen at the next general election. I am sure that that will be—I was about to say a battle of the titans, but I am not sure that that is an appropriate phrase. Certainly it will be a battle worth watching.
§ Mr. Stewart
The hon. Gentleman is welcome to stand against me if he wishes to do so.
The amendments fall into two sub-groups—if that is the correct word. First, there are the amendments which seek to give those who already benefit from the community charge reduction scheme the full charge reduction under the Bill. The House will agree that the scheme has been generously improved, especially as result of the statement of my hon. Friend the Minister for Local Government and Inner Cities. Secondly, amendments have been tabled by hon. Members representing the Official Opposition, the Scottish National party and the Liberal Democrats and by the hon. Member for Caernarfon (Mr. Wigley) that have the broad effect of eliminating charge payments for those who would otherwise pay 20 per cent.
The purpose of the Bill is to achieve a general reduction of £140 in the headline personal community charge figure. As a result of the eloquence of my right hon. Friend the Secretary of State for Scotland when replying to the Second Reading debate, the House did not seek to challenge that principle. The importance of that principle must be emphasised against the background of what has happened.
The hon. Member for Garscadden defended the expenditure patterns of Scottish councils, but they have increased the charge by 30 per cent. this year. 'Their expenditure remains about 30 per cent. per adult higher than expenditure in England or Wales. The regional councils have loaded two years of non-payment on to one year and rebuilt balances after election year.
As hon. Members have said, by no means everybody pays the headline charge, because they benefit from the community charge reduction scheme or because students benefit from the reduced charge. Others have the advantage of the community charge benefit. Those who benefit from charge assistance would, if the Opposition 908 formula was adopted, benefit twice. The principle of the Bill is that people should benefit from the reduction in proportion of the amount of headline charge that they pay.
§ Mr. Kirkwood
It would help the Committee if the Minister would say about how much money we are arguing. How much would it cost to abolish the rebate system ceiling?
§ Mr. Douglas
Does the Minister challenge COSLA's figure of £30 million? Will he, when he meets COSLA on 8 April, clarify that and let us know? The £30 million figure appears to be given with some authority and substance.
§ Mr. Stewart
I assure the hon. Gentleman that we will analyse the COSLA figure.
There is a well defined principle here—that, with well defined exemptions, all adults should make a direct contribution to the services that they use. That principle of accountability is important and has had an effect in Scotland, as could be seen by the behaviour of Scottish regional councils last year, election year. In 1990–91, broadly speaking, they increased the community charge by about the level of inflation. It is interesting to note that this year, without elections, they have sharply increased the figures.
§ Mr. Stewart
I have given way twice, and I now wish to proceed.
The hon. Member for Caernarfon (Mr. Wigley) was concerned with the issue of waiving. The general principle is that an authority is not obliged to pursue collection if the action would not be cost effective—that is, if it would not be in the overall financial interest of its charge payers. It is for the individual authority to decide in each case whether the principle is satisfied. I think that an authority is likely to set its general approach in the light of the views of its auditor.
The hon. Member for Dunfermline, West (Mr. Douglas) alleged that the community charge was uncollectable. That is simply not the case in Scotland. Of course there are those who have not paid, but the idea that in Scotland there is an enormous dedicated army of people who have not paid is not true. There are variations in Scotland. In the hon. Gentleman's regional council, Fife has an excellent record of collection. It is a primarily industrial area with a Labour regional council and it is estimated that its collection rate in 1991–92, in general terms, will be the same as, or higher than, in the current year.
I emphasise to the Committee the importance of the rebate scheme, under which more than 1 million people in Scotland benefit. Opposition Members have suggested that many people have serious debt problems. The House is entitled to ask, "Whose fault is that?" It is not the fault of Opposition spokesmen, but it is in large measure the fault of the Scottish National party Members and some Labour Members because there has undoubtedly been a cynical exercise in misleading people about non-payment, which has had two effects. First, it has resulted in a tide of 909 outrage among decent people who have paid at having to pay a surcharge to subsidise those who have not, but could afford to do so. That tide of outrage sweeps across people of all political persuasions. Secondly, and perhaps more seriously, the campaign may have misled people and encouraged them to get into serious debt.
That serious responsibility lies on the shoulders of those Scottish National party Members who have advocated non-payment, many of whom continue to do so. I shall not intrude on the private grief of the SNP over non-payment after the conference at the weekend where, I understand, the hon. Member for Banff and Buchan (Mr. Salmond) was described as avoiding calamity by 27 votes.
§ Mr. Stewart
No, I shall not. We shall wait to see whether calamity arrives.
The Bill is about the present system, and 1991–92. I ask the House to reject the amendments and send, not the Opposition's message to the people, but a different message—that the Bill is generous—[Interruption.] Of course it is—that is why Opposition Members did not vote against it on Second Reading.
The Bill reduces the costs for everyone. The average charge in England will be £250–20 per cent. of that is less than £1 a week.
People in Scotland have been misled by the non-payment campaign. For 1991–92, the Bill gives substantial help to everyone in paying their personal community charge. Therefore, let everyone make his or her contribution.
§ Mr. Maxton
What we have just heard is the rearguard action of the Scottish Office fighting to retain whatever last elements of the poll tax it can salvage from the wreckage around it. It has been fighting that campaign in the review during the past few months. We only have to listen to the leaks coming from the Scottish Office, the Secretary of State for Scotland and the Secretary of State for the Environment. I gather that there is an investigation into who is doing the leaking. Those involved have only to stand in front of a mirror to see who has been doing the leaking during the past few weeks. We have seen the last remnants of that fight in the Minister's speech.
The Government have no give, no take, no generosity and no ability to see that the poor are being hit. That is what is so desperately wrong with the Government—they cannot, with any dignity, admit their previous mistakes and say, "We were wrong, we are sorry and we will now put it right." This is the chance for those Conservative Members who have a sense of responsibility to the poorest in our society—two of whom have courageously continued to speak their minds against the poll tax tonight—to join us in the Lobby to vote for the amendments.
§ Question put, That the amendment be made:—
§ The Committee divided: Ayes 184, Noes 284.912
|Division No. 105]||[1 am|
|Abbott, Ms Diane||Barnes, Mrs Rosie (Greenwich)|
|Archer, Rt Hon Peter||Barron, Kevin|
|Armstrong, Hilary||Battle, John|
|Ashton, Joe||Beckett, Margaret|
|Banks, Tony (Newham NW)||Beith, A. J.|
|Barnes, Harry (Derbyshire NE)||Bell, Stuart|
|Bellotti, David||Jones, Barry (Alyn & Deeside)|
|Benton, Joseph||Jones, Martyn (Clwyd S W)|
|Bermingham, Gerald||Kennedy, Charles|
|Blair, Tony||Kinnock, Rt Hon Neil|
|Blunkett, David||Kirkwood, Archy|
|Boyes, Roland||Lambie, David|
|Bradley, Keith||Lamond, James|
|Bray, Dr Jeremy||Leadbitter, Ted|
|Brown, Gordon (D'mline E)||Lestor, Joan (Eccles)|
|Brown, Nicholas (Newcastle E)||Lewis, Terry|
|Caborn, Richard||Livingstone, Ken|
|Callaghan, Jim||Livsey, Richard|
|Campbell, Menzies (Fife NE)||Lloyd, Tony (Stretford)|
|Campbell, Ron (Blyth Valley)||Lofthouse, Geoffrey|
|Campbell-Savours, D. N.||Loyden, Eddie|
|Canavan, Dennis||McAllion, John|
|Carlile, Alex (Mont'g)||McAvoy, Thomas|
|Carr, Michael||McCrea, Rev William|
|Cartwright, John||Macdonald, Calum A.|
|Clark, Dr David (S Shields)||McFall, John|
|Clarke, Tom (Monklands W)||McKelvey, William|
|Clay, Bob||McLeish, Henry|
|Clwyd, Mrs Ann||McMaster, Gordon|
|Cohen, Harry||McWilliam, John|
|Cook, Robin (Livingston)||Madden, Max|
|Corbyn, Jeremy||Mahon, Mrs Alice|
|Cousins, Jim||Marek, Dr John|
|Crowther, Stan||Marshall, David (Shettleston)|
|Cryer, Bob||Marshall, Jim (Leicester S)|
|Cummings, John||Martin, Michael J. (Springburn)|
|Cunliffe, Lawrence||Maxton, John|
|Dalyell, Tarn||Meacher, Michael|
|Darling, Alistair||Meale, Alan|
|Davies, Rt Hon Denzil (Llanelli)||Michie, Bill (Sheffield Heeley)|
|Davies, Ron (Caerphilly)||Michie, Mrs Ray (Arg'l & Bute)|
|Davis, Terry (B'ham Hodge H'l)||Mitchell, Austin (G't Grimsby)|
|Dewar, Donald||Moonie, Dr Lewis|
|Dixon, Don||Morgan, Rhodri|
|Doran, Frank||Morley, Elliot|
|Douglas, Dick||Mullin, Chris|
|Duffy, A. E. P.||Murphy, Paul|
|Dunnachie, Jimmy||Nellist, Dave|
|Dunwoody, Hon Mrs Gwyneth||O'Brien, William|
|Eadie, Alexander||O'Hara, Edward|
|Eastham, Ken||Orme, Rt Hon Stanley|
|Evans, John (St Helens N)||Patchett, Terry|
|Ewing, Harry (Falkirk E)||Pike, Peter L.|
|Ewing, Mrs Margaret (Moray)||Powell, Ray (Ogmore)|
|Fatchett, Derek||Prescott, John|
|Fearn, Ronald||Primarolo, Dawn|
|Fisher, Mark||Quin, Ms Joyce|
|Flynn, Paul||Randall, Stuart|
|Foot, Rt Hon Michael||Robinson, Peter (Belfast E)|
|Foster, Derek||Rogers, Allan|
|Fraser, John||Rooker, Jeff|
|Fyfe, Maria||Rooney, Terence|
|Galbraith, Sam||Ross, Ernie (Dundee W)|
|Galloway, George||Rowlands, Ted|
|George, Bruce||Ruddock, Joan|
|Godman, Dr Norman A.||Salmond, Alex|
|Golding, Mrs Llin||Sheerman, Barry|
|Gould, Bryan||Sheldon, Rt Hon Robert|
|Graham, Thomas||Shore, Rt Hon Peter|
|Grant, Bernie (Tottenham)||Short, Clare|
|Griffiths, Win (Bridgend)||Sillars, Jim|
|Hardy, Peter||Skinner, Dennis|
|Harman, Ms Harriet||Smith, Andrew (Oxford E)|
|Heal, Mrs Sylvia||Snape, Peter|
|Hinchliffe, David||Soley, Clive|
|Hoey, Ms Kate (Vauxhall)||Spearing, Nigel|
|Hogg, N. (C'nauld & Kilsyth)||Steel, Rt Hon Sir David|
|Home Robertson, John||Steinberg, Gerry|
|Hood, Jimmy||Stott, Roger|
|Howells, Geraint||Strang, Gavin|
|Hughes, John (Coventry NE)||Taylor, Mrs Ann (Dewsbury)|
|Hughes, Robert (Aberdeen N)||Taylor, Matthew (Truro)|
|Hughes, Roy (Newport E)||Turner, Dennis|
|Hughes, Simon (Southwark)||Vaz, Keith|
|Illsley, Eric||Walley, Joan|
|Ingram, Adam||Wareing, Robert N.|
|Watson, Mike (Glasgow, C)||Wise, Mrs Audrey|
|Welsh, Andrew (Angus E)||Worthington, Tony|
|Welsh, Michael (Doncaster N)||Wray, Jimmy|
|Wigley, Dafydd||Young, David (Bolton SE)|
|Williams, Rt Hon Alan|
|Williams, Alan W. (Carm'then)||Tellers for the Ayes:|
|Wilson, Brian||Mr. Frank Haynes and Mr. Allen McKay.|
|Adley, Robert||Douglas-Hamilton, Lord James|
|Aitken, Jonathan||Dover, Den|
|Alexander, Richard||Dunn, Bob|
|Alison, Rt Hon Michael||Durant, Sir Anthony|
|Allason, Rupert||Dykes, Hugh|
|Amess, David||Eggar, Tim|
|Amos, Alan||Emery, Sir Peter|
|Arbuthnot, James||Evans, David (Welwyn Hatf'd)|
|Arnold, Jacques (Gravesham)||Evennett, David|
|Arnold, Sir Thomas||Fairbairn, Sir Nicholas|
|Ashby, David||Fallon, Michael|
|Aspinwall, Jack||Favell, Tony|
|Atkins, Robert||Field, Barry (Isle of Wight)|
|Atkinson, David||Fishburn, John Dudley|
|Baker, Rt Hon K. (Mole Valley)||Fookes, Dame Janet|
|Baker, Nicholas (Dorset N)||Forman, Nigel|
|Baldry, Tony||Forsyth, Michael (Stirling)|
|Batiste, Spencer||Forth, Eric|
|Bellingham, Henry||Fox, Sir Marcus|
|Bendall, Vivian||Franks, Cecil|
|Bennett, Nicholas (Pembroke)||Freeman, Roger|
|Benyon, W.||French, Douglas|
|Bevan, David Gilroy||Fry, Peter|
|Biffen, Rt Hon John||Gale, Roger|
|Blackburn, Dr John G.||Gardiner, Sir George|
|Blaker, Rt Hon Sir Peter||Gill, Christopher|
|Bonsor, Sir Nicholas||Gilmour, Rt Hon Sir Ian|
|Boscawen, Hon Robert||Glyn, Dr Sir Alan|
|Boswell, Tim||Goodhart, Sir Philip|
|Bowden, A. (Brighton K'pto'n)||Goodlad, Alastair|
|Bowden, Gerald (Dulwich)||Goodson-Wickes, Dr Charles|
|Bowis, John||Gorman, Mrs Teresa|
|Boyson, Rt Hon Dr Sir Rhodes||Gorst, John|
|Brandon-Bravo, Martin||Grant, Sir Anthony (CambsSW)|
|Brazier, Julian||Greenway, John (Ryedale)|
|Bright, Graham||Gregory, Conal|
|Brown, Michael (Brigg & Cl't's)||Grist, Ian|
|Browne, John (Winchester)||Ground, Patrick|
|Bruce, Ian (Dorset South)||Hague, William|
|Buck, Sir Antony||Hamilton, Hon Archie (Epsom)|
|Burns, Simon||Hamilton, Neil (Tatton)|
|Burt, Alistair||Hampson, Dr Keith|
|Butler, Chris||Hanley, Jeremy|
|Butterfill, John||Hannam, John|
|Carlisle, John, (Luton N)||Hargreaves, A. (B'ham H'll Gr')|
|Carlisle, Kenneth (Lincoln)||Hargreaves, Ken (Hyndburn)|
|Carrington, Matthew||Harris, David|
|Cash, William||Haselhurst, Alan|
|Chalker, Rt Hon Mrs Lynda||Hawkins, Christopher|
|Chope, Christopher||Hayes, Jerry|
|Clark, Rt Hon Alan (Plymouth)||Hayhoe, Rt Hon Sir Barney|
|Clark, Dr Michael (Rochford)||Hayward, Robert|
|Clark, Rt Hon Sir William||Heathcoat-Amory, David|
|Clarke, Rt Hon K. (Rushcliffe)||Heseltine, Rt Hon Michael|
|Colvin, Michael||Hicks, Mrs Maureen (Wolv' NE)|
|Conway, Derek||Hicks, Robert (Cornwall SE)|
|Coombs, Anthony (Wyre F'rest)||Higgins, Rt Hon Terence L.|
|Coombs, Simon (Swindon)||Hill, James|
|Cope, Rt Hon John||Hind, Kenneth|
|Cormack, Patrick||Hogg, Hon Douglas (Gr'th'm)|
|Couchman, James||Holt, Richard|
|Cran, James||Howard, Rt Hon Michael|
|Currie, Mrs Edwina||Howarth, Alan (Strat'd-on-A)|
|Curry, David||Howarth, G. (Cannock & B'wd)|
|Davies, Q. (Stamf'd & Spald'g)||Howell, Rt Hon David (G'dford)|
|Davis, David (Boothferry)||Howell, Ralph (North Norfolk)|
|Day, Stephen||Hughes, Robert G. (Harrow W)|
|Devlin, Tim||Hunt, Rt Hon David|
|Dicks, Terry||Hunter, Andrew|
|Dorrell, Stephen||Irvine, Michael|
|Jack, Michael||Redwood, John|
|Janman, Tim||Riddick, Graham|
|Jessel, Toby||Roberts, Sir Wyn (Conwy)|
|Johnson Smith, Sir Geoffrey||Rossi, Sir Hugh|
|Jones, Robert B (Herts W)||Rumbold, Rt Hon Mrs Angela|
|Jopling, Rt Hon Michael||Ryder, Rt Hon Richard|
|Key, Robert||Sackville, Hon Tom|
|Kilfedder, James||Sainsbury, Hon Tim|
|King, Roger (B'ham N'thfield)||Sayeed, Jonathan|
|Kirkhope, Timothy||Scott, Rt Hon Nicholas|
|Knapman, Roger||Shaw, David (Dover)|
|Knight, Greg (Derby North)||Shaw, Sir Giles (Pudsey)|
|Knight, Dame Jill (Edgbaston)||Shaw, Sir Michael (Scarb')|
|Knowles, Michael||Shepherd, Richard (Aldridge)|
|Knox, David||Shersby, Michael|
|Latham, Michael||Sims, Roger|
|Lawrence, Ivan||Skeet, Sir Trevor|
|Lee, John (Pendle)||Smith, Tim (Beaconsfield)|
|Leigh, Edward (Gainsbor'gh)||Soames, Hon Nicholas|
|Lennox-Boyd, Hon Mark||Speed, Keith|
|Lester, Jim (Broxtowe)||Speller, Tony|
|Lilley, Rt Hon Peter||Spicer, Sir Jim (Dorset W)|
|Lloyd, Peter (Fareham)||Spicer, Michael (S Worcs)|
|Luce, Rt Hon Sir Richard||Stanley, Rt Hon Sir John|
|Lyell, Rt Hon Sir Nicholas||Steen, Anthony|
|Macfarlane, Sir Neil||Stern, Michael|
|MacGregor, Rt Hon John||Stevens, Lewis|
|MacKay, Andrew (E Berkshire)||Stewart, Allan (Eastwood)|
|Maclean, David||Stewart, Andy (Sherwood)|
|McLoughlin, Patrick||Stewart, Rt Hon Ian (Herts N)|
|McNair-Wilson, Sir Patrick||Stokes, Sir John|
|Malins, Humfrey||Summerson, Hugo|
|Mans, Keith||Tapsell, Sir Peter|
|Maples, John||Taylor, Ian (Esher)|
|Marland, Paul||Tebbit, Rt Hon Norman|
|Marlow, Tony||Temple-Morris, Peter|
|Marshall, John (Hendon S)||Thompson, Patrick (Norwich N)|
|Marshall, Sir Michael (Arundel)||Thorne, Neil|
|Martin, David (Portsmouth S)||Thornton, Malcolm|
|Mates, Michael||Thurnham, Peter|
|Maude, Hon Francis||Townend, John (Bridlington)|
|Mayhew, Rt Hon Sir Patrick||Townsend, Cyril D. (B'heath)|
|Mellor, Rt Hon David||Tracey, Richard|
|Meyer, Sir Anthony||Tredinnick, David|
|Miller, Sir Hal||Trippier, David|
|Mills, lain||Trotter, Neville|
|Mitchell, Andrew (Gedling)||Twinn, Dr Ian|
|Mitchell, Sir David||Vaughan, Sir Gerard|
|Moate, Roger||Viggers, Peter|
|Monro, Sir Hector||Waldegrave, Rt Hon William|
|Moore, Rt Hon John||Walden, George|
|Morris, M (N'hampton S)||Walker, Bill (T'side North)|
|Morrison, Sir Charles||Waller, Gary|
|Moss, Malcolm||Ward, John|
|Moynihan, Hon Colin||Wardle, Charles (Bexhill)|
|Needham, Richard||Warren, Kenneth|
|Nelson, Anthony||Watts, John|
|Neubert, Sir Michael||Wells, Bowen|
|Newton, Rt Hon Tony||Wheeler, Sir John|
|Nicholls, Patrick||Whitney, Ray|
|Nicholson, David (Taunton)||Widdecombe, Ann|
|Nicholson, Emma (Devon West)||Wiggin, Jerry|
|Norris, Steve||Wilkinson, John|
|Onslow, Rt Hon Cranley||Wilshire, David|
|Oppenheim, Phillip||Winterton, Mrs Ann|
|Page, Richard||Winterton, Nicholas|
|Paice, James||Wolfson, Mark|
|Patnick, Irvine||Woodcock, Dr. Mike|
|Peacock, Mrs Elizabeth||Yeo, Tim|
|Porter, Barry (Wirral S)||Young, Sir George (Acton)|
|Powell, William (Corby)||Tellers for the Noes:|
|Price, Sir David||Mr. John M. Taylor and Mr. Timothy Wood.|
|Raison, Rt Hon Sir Timothy|
§ Question accordingly negatived.
§ Mr.Paul Murphy (Torfaen)
I beg to move amendment No. 13, in page 1, line 5, leave out from 'amount' to end of line 15 and insert 913'payable in respect of the year 1991–92 by a person to whom regulations made in accordance with subsection (2A) below apply shall from the relevant day be reduced by such amount as may be determined under those regulations.'.
§ The First Deputy Chairman of Ways and Means (Sir Paul Dean)
With this, it will be convenient to discuss the following amendments: No. 23, in page 1, line 15, at end insert—'(2A) Regulations made under subsection (6) below may make such provision for the application of additional rebates as the Secretary of State may consider appropriate in respect of persons not entitled before the passing of this Act to a rebate of 80 per cent. of a personal community charge.'.No. 27, in page 3, line 14, leave out from first 'amount' to end of line 19 and insert'payable in respect of the year 1991–92 by a person to whom regulations made in accordance with subsection (2A) below apply shall from the relevant day be reduced by such an amount as may be determined under those regulations.'.No. 34, in page 3, line 24, at end insert—'(2A) Regulations made under subsection (6) below may make provision for the application of additional rebates as the Secretary of State may consider appropriate in respect of persons not entitled before the passing of this Act to a rebate of 80 per cent. of a personal community charge.'.
§ Mr. Murphy
I begin by referring to this afternoon's speech by the Secretary of State for the Environment, in which he said that the Bill would provide "direct help" for community charge payers in England and Wales. However, the reduction of £140 is not linked to ability to pay the headline tax. The term "headline tax" is a perpetuation of the local government financial gobbledegook that has developed during the last 10 to 15 years. It does not help us to understand these matters. The fact is that everybody will enjoy this £140 reduction, irrespective of income. It perpetuates the inequality of the poll tax.
Reference was made in the last debate to the £300 million that would have exempted the poorest people from paying the poll tax. However, the Committee decided not to accept the amendment. This series of amendments relates to the introduction of new rebates. About £600 million would reduce the taper on benefit from 15 per cent. to 7.5 per cent. For every £1 that a claimant's income rises above that threshold, 15p of poll tax benefit is lost. If that were to be reduced to 7.5p, a considerable impact on the so-called poverty trap could be made.
During consideration of the Local Government Finance Bill in Standing Committee in 1988, the Under-Secretary of State for Wales will recall, as he too was a member of the Committee, the many references that were made to the fact that the poverty trap creates considerable problems with regard to rebate. Furthermore, the rebate system does not address the problem of the poverty trap—those who do not earn enough to claim benefit and those who earn just too much to be able to claim it. Those people are caught in the middle. If some of the value added tax money could be directed towards increasing the new rebates and alleviating such problems, many thousands of people in Wales and tens of thousands of people in the United Kingdom would be better off.
The last debate referred to Scottish matters. Therefore, I intend to deal with the rebate system as it applies in the Principality. Incomes in Wales are much lower than those in the rest of the United Kingdom. We are at the bottom of the British earnings league. In Wales, 40 per cent. of the 914 people earn less than the European so-called decency threshold. In the Principality, 35,000 men and 70,000 women earn less than £130 a week.
We all know that the additional 2.5 per cent. value added tax will hit hardest those people who are on low incomes. In the Cynon Valley, Merthyr and Blaenau Gwent there are some of the poorest people in the United Kingdom. They will be affected very severely indeed by this extra burden. The editorial in the Western Mail of the day after Budget day said that, in Wales, the £140 would soon disappear because of extra VAT.
The people of Wales can see through the trick of switching from one form of tax to another. Those who wish to improve their properties will not be helped. The Rhymney Valley district council informed us recently that many people currently in receipt of rebates will not benefit from the cut of £ 140 in the so-called headline tax, as a large number of them undoubtedly expect to do. For instance, a single old-age pensioner will receive only about £27. In New Tredegar, a single person on income support will get just over £7. Literally thousands of people in Wales who are in receipt of benefits will get nothing like the £140 that has been trumpeted from the rooftops during the past few days.
There is another strange consequence. People in Wales who are currently eligible for grants to carry out minor repairs and improvements to their properties will no longer be eligible. That will hit a tremendous number of people in the valleys—people who have already been hit by changes in the way in which grants are means-tested. Those two disadvantages are being combined, even if unwittingly. In many parts of Wales, there will be considerable disharmony as a direct consequence of this change.
These are just two examples of the anomalies and injustices that will result from this measure.
§ Mr. Rhodri Morgan (Cardiff, West)
Does my hon. Friend agree that a third example of the rediculousness of this proposal is that the Secretary of State for Wales will pay no poll tax in respect of his flat in the Crown buildings in Cathays park, in Cardiff? Why, when so many people will not get the benefit that they expect from this measure that is being trumpeted tonight, should the Secretary of State not have to pay poll tax?
§ Mr. Murphy
I could give examples of that kind of thing in many parts of the Principality. Blanket relief of £140 is daft. People up and down the Principality who earn many tens of thousands of pounds will get the same relief as people on average incomes. My hon. Friend's point is very valid.
The introduction of the community charge reduction scheme—the so-called transitional relief—has produced anomalies throughout Wales. The system in the Principality is different from that in England. In certain communities, people are divided, and considerable bitterness has been created. Some people on very low incomes get no benefit at all by way of transitional relief. That problem will be exacerbated by the fact that the rebate of £140 will apply throughout the Principality. Our experience in Neath and elsewhere during the past two weeks shows that this panic measure has not been well received in Wales.
915 This is an ill-thought-out, badly drafted Bill, which certainly does not address the main issues. There should have been proper consultation with Welsh local authorities before the details of the scheme were finalised.
§ Mr. Wigley
The hon. Member for Torfaen (Mr. Murphy) has made some important points which apply to many parts of Wales. The Bill will result in many anomalies. However, I disagree with him when he says that the Bill is not going down well in Wales. We would be misleading ourselves if we believed that the £140 reduction in bills was not going down well. People always welcome a reduction in hills of that sort.
We would not deny the average figure of £95 in Wales, but we would like to see the money raised in an equitable way, and we advocate a local income tax. I realise that there are different views on this within parties as well as across parties, but a local income tax would overcome the anomalies of which the hon. Gentleman spoke, which certainly need to be overcome in some way.
In some areas the rebates are significant while next door they are next to nothing. People in the same circumstances in adjacent communities such as Felinheli and Llanddeiniolen in my constituency have a difference cif £50 to £60 in their community charge. That is not a sensible way to work things out in the long term. One needs to find a formula which takes into account people's abilities to pay.
Our previous debate dealt with the 20 per cent. threshold. A large number of people could have been exempted if we had done away with that threshold, but even so, there would still have been the question of gradation. The Government have a formula which gives rough justice. They need to work on that or the anomalies will cause bureaucratic and administrative difficulties as well as penalising the families concerned and creating much work and heartache in the next year or two through to 1993.
For that reason, the Bill should be amended. The wording of the amendments appeals to me because it allows the Secretary of State to bring forward regulations to cope with some of the problems as they arise. It is well worth building in such amendments to give the Secretary of State the sort of powers that he may well find himself needing to overcome the anomalies in the rough justice Bill being rushed through Parliament tonight.
§ Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)
I rise to draw to the attention of the House the nonsenses that will occur as a consequence of the Bill. They stem from the fundamental principle of the poll tax—the notion that a citizen is accountable only if he pays some sort of tax. For generations, in Budget after Budget, Chancellors have tried to take people out of taxation by raising personal allowances, age reliefs, and so on. That has not made them any less responsible or less accountable or made the system less democratic. It has been a sensible administrative arrangement not to drag people into marginal forms of taxation.
Yet the poll tax did just that—it dragged a host of people into paying the most marginal sums of money possible. Now, having introduced the £140 reduction, we shall have an absurd situation in which some people will end up paying as little as £10 or £12 per year. The notion that someone who is paying such a sum is still accountable—still part of a democracy, and a responsible citizen who 916 will worry about how he votes because he is paying £12 a year—makes nonsense of the idea of any relationship between paying tax and being a responsible citizen. Hundreds of thousands of people do not pay national taxation; they have been taken out of the system, justifiably, because of their low incomes. Those people are no less accountable, no less responsible and no less democratic than anyone else.
In my constituency, borough treasurers—or directors of finance, as they are now called—will have to issue new bills for what could well be £12; the cost of billing people in the area could well be £13 per person. What is the point? Will that somehow reinforce the concept of accountability and democracy? The nonsense of the poll tax has already been laid bare by the Government's pathetic attempts to correct the anomalies, and to remove the anger and resentment that they have caused. If we achieve nothing else by constantly voting against the Government's proposals, we shall continue to reveal the stark absurdity of the idea that people must still pay a marginal tax—20 per cent. of the total—to be responsible citizens.
§ Mr. Richard Livsey (Brecon and Radnor)
I fully endorse what has been said by the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands), but I should like to add something about owners of second homes. They will receive double relief, in the form of £140 on each home. In Wales, tens of thousands of second-home owners will benefit in that way. Single poll tax payers who have been involved in a multiplier of two will often benefit more than some of the poorest people in Wales, and I do not think that that is fair. Does the Minister think that it is? I want a straightforward answer. In my view, it discriminates in favour of some of the wealthiest people in our society.
§ Mr. Nicholas Bennett
Anyone listening to what Opposition Members have said would imagine that community charge bills in Wales are the highest in the United Kingdom rather than the lowest. I am sorry that the hon. Member for Torfaen (Mr. Murphy) did not congratulate my right hon. Friend the Secretary of State on securing for Wales the most generous settlement that any Secretary of State for Wales has ever achieved. Although, from the start, Welsh community charge bills were £100 or more lower than those in England, my right hon. Friend managed to achieve the full £140 reduction.
The hon. Member for Torfaen is usually very generous. He might have acknowledged that achievement, which means that the £260 headline figure that would have been Wales's community charge in the coming year will he reduced to £120 after the £140 reduction. The reduction will bring down the average bill in Wales to £95. Surely no one could consider that a matter for criticism; surely it is a matter for praise. The hon. Member for Torfaen is criticising my right hon. Friend unfairly.
§ Mr. Bennett
No, I will not give way. I want to continue on this subject for a minute.
The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) spoke of bills of £12 or £13. Strangely, he seemed to be suggesting that we should not have reduced the bills by so much. We should note that. The fact that we have reduced the charge to such an extent means that some authorities will have such small sums to collect that it 917 would be uneconomic to send out bills. We have made it clear tonight, as we did yesterday, that, if it is uneconomic to collect the charge because of the cost of billing, it is up to the local authority to talk to the district auditor to see whether it needs to collect the money. I hope that that answers the point made by the hon. Member for Merthyr Tydfill and Rhymney.
§ Mr. Rowlands
If the citizen does not receive a bill, does that make him less accountable or less democratic?
§ Mr. Bennett
I did not quite understand the hon. Gentleman's point about accountable citizens. I thought that the whole purpose of the community charge and of the principle that most people should make a contribution was to make the authorities accountable. We are not talking about the citizens. We are talking about making the authorities accountable. The principle that most people should make a contribution towards the services about which they have a vote and which they receive was generally acceptable. The problem with the community charge has been the outrageous charges made by some authorities, especially those in inner London such as Lambeth, which would have sent out a bill for £595 for the coming year if it had not been reduced.
§ Mr. Tony Banks
The hon. Gentleman knows, because he has employed it himself, that the argument is that, if all the people in a local authority area pay something, they are far more aware of the level of services that are provided and their cost. The Minister hoped that, if people made a contribution, they would influence elections to local authorities. That was, as the Minister has said, a way in which to make people more responsible. My hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) was correct to say that that was one of the original intentions of the poll tax.
§ Mr. Bennett
The community charge was a way to ensure that local authorities were more responsive to the wishes of the citizens. We have clear evidence from the results in Wandsworth and Westminster in May 1990 that that happened.
It is also important to note the remarks of the hon. Member for Brecon and Radnor (Mr. Livsey). He complained that those who pay two standard community charges would get the reduction. They will get a £280 reduction. He would be the first to write to complain to the Welsh Office if his constituents who are forced to pay two standard community charges did not get that reduction. It is a typical Liberal Democrat ploy to try to have it both ways. It seems fair that people who pay two standard community charges, on top of their personal charge elsewhere, are as entitled to the reduction of £140 as anybody else in society.
The hon. Member for Torfaen talked about the benefits scheme. The benefits scheme in Wales is exactly the same as that operating elsewhere in Great Britain. In so far as earnings in Wales are lower than in other parts of England, that is not the point of the benefit scheme. What is relevant is that Welsh charge payers will be treated in exactly the same way as those in England who face similar charges 918 and who are on similar incomes. There is no Welsh dimension in the matter. The system is exactly the same for people in Wales as it is for those in England.
Mention was also made of the separate scheme that applies in Wales with regard to the community charge reduction scheme. It may benefit hon. Members if I explain the basis for the scheme in the coming year. The average 1989–90 rate bill in a community area has been compared with the actual 1990–91 charge. If the 1989–90 bill is exceeded by £37 in 1990–91, relief is given through the community charge reduction scheme to everybody who lives in that community council area. That is unaffected by the 1991–92 reduction.
The amendments are therefore not acceptable to us. They are designed to remove from the Bill the general reduction in headline community charges and to substitute for it a requirement that the Secretary of State should make regulations, in effect applying the resources saved to improving the community charge benefit scheme for those charge payers with incomes above income support level.
§ Mr. Wigley
I wanted some clarification in case, at this early hour of the morning, I had misunderstood what the Minister was saying. Is he saying that, where there is a community charge reduction, as is applicable in Wales, of, for example, £60, people benefiting from that would benefit from the £60 and from the £140, and so might benefit by up to £200? The net figure left would then be about £50. The Minister spoke about a comparison between the poll tax for the coming year and the figure for 1989. Is the Minister making that comparison before or after taking the community charge benefit into account? That makes a significant difference.
§ Mr. Bennett
Let me explain exactly how it is done. One starts off with a headline charge of £250, less the £140, which brings it down to £110. One then deducts the community charge reduction scheme entitlement, which might be £40, and that brings the charge down to £70. After that, the community charge benefit for the individual is considered. That is how it is done in Wales.
§ Mr. Bennett
In that sense, we shall continue to operate as we have in past.
Although I understand the Opposition's arguments in support of the amendments, I do not, of course, accept them. They would emasculate the Bill. Our purpose in proposing a general reduction in community charges is to give charge payers the benefit of switching a part of the burden which at present falls on them to national taxation. Those who are eligible for community charge benefit will get a proportionate reduction in the amount that they pay.
The effect of applying the resources that we propose to use to hold down charges generally to improve the benefit scheme would be to extend the taper right up the income scale. Hon. Members will be able to judge the effect if I say that the cost of the community charge benefit in the current year for the entire United Kingdom is in the region of £1 billion, which assists 10 million charge payers. If all the £4.3 billion net cost of the measures that we have announced were applied to improving the benefit scheme, many millions more would qualify for benefit and the situation would become extremely complicated and 919 expensive. That would leave less money available for distribution, as it would be swallowed up in extra administrative costs.
How much better, therefore, to take the course that we propose, of reducing headline charges throughout Great Britain, and improving the community charge reduction scheme in England and Scotland, so that all charge payers will pay less, including those who are eligible for community charge benefit.
§ Mr. Griffiths
I did not intend to make a speech, but wanted to ask the Minister a question. Perhaps he will take the opportunity later to answer it.
At the beginning of his speech, the Minister emphasised that we should all be grateful that the £140 flat rate relief will be applied in Wales on top of the other benefits that already accrue, which try to minimise the damage inflicted on people by the poll tax. That generous money to be given to the people will be taken from them in the first place through the additional 2.5 per cent. on VAT.
The Minister has told us about the great things that have been achieved for the people of Wales. Can he tell us exactly how much the flat rate relief will be and how much the Treasury expects to gather from Wales as a result of the increase in VAT? It would be interesting to know the relevant figures to assess whether the people will enjoy any benefit or whether, as the Financial Times said the day after the announcement, the electorate are being bribed with their own money.
§ Mr. Paul Flynn (Newport, West)
The Minister was rather ungracious when he accused my hon. Friend the Member for Torfaen (Mr. Murphy) of not complimenting the Secretary of State.
One could also accuse the Minister of ungraciousness, because we are a little puzzled that low or nil community charges in Wales are not mentioned. Garw valley has set a nil community charge, but all we have heard about is Wandsworth and its prudent local authority. A low community charge in Wales is credited not to the prudence of a local authority, but to the Secretary of State. The Government should pay tribute to the good sense that Welsh local authorities have displayed over the years.
The other problem that has been skated over during the debate, and that will cause great furore when the bills finally arrive, is the foolish decision to have a different transitional system in Wales. It will then become apparent that, with the present reductions, the difference between neighbours will be greater proportionally than it was originally. For reasons best known to themselves, officials at the Welsh Office decided to give the benefit not to individuals but to areas. There is rough justice in that decision if the area is homogeneous—all a valley area, or all a rural area—but it becomes distorted in areas that are a mixture of urban and rural, as in my constituency.
What happens to the arithmetic then is that, because the old farmsteads and cottages in the country areas were de-rated and had low ratable values, when officials studied rates in farming areas, they found that they were low. As a result, in the rural wards in my constituency, which are 920 some of the most prosperous, virtually everyone receives a handsome rebate, but in council estates in the urban areas, which are the poorest, people receive no rebates.
I know of dramatic examples where the difference between the charges for people in streets of identical houses is £50. With the new lower rate of community charge, that difference will become even more marked.
A time bomb is ticking under the Welsh Office, and Ministers will discover the ferocity of the voters' feelings in the election. Voters will put up with a great deal—with high charges and all the nonsense and waste of Government—but they will not put up with unfairness. The system as it operates in Newport East, Newport West and many other constituencies in Wales is grossly unfair.
§ Mr. Nicholas Bennett
I shall briefly answer the extra remarks that have been made. The hon. Member for Newport, West (Mr. Flynn) referred to the Secretary of State and asked why there had been no praise for Welsh local authorities. The reason why local authorities have such low charges in Wales is entirely due to the fact that the percentage that is given by the Welsh Office in aggregate external finance in the coming year will be 92 per cent. of their total expenditure. If it were left to local authorities, charges would be much lower.
Wandsworth did not get the sort of aggregate external finance that is being given by the Welsh Office to local government in Wales. If one studies the figures for external financing of Wandsworth, and compares it with those for Lambeth, Hackney, Manchester and Tower Hamlets, one will find that they all received more than Wandsworth.
A remark was made about VAT and the cost to the Exchequer. However, a couple who are receiving £280 would have to spend £13,000 on VAT-rated goods in the coming year before they were out of pocket. That is the difference.
§ Mr. Bennett
Yes, but there are other debates that hon. Members want to take part in.
Hon. Members also referred to the transitional relief scheme, which is now the community charge reduction scheme in Wales, and said that it was a foolish decision. I find that strange when, only last year, local authority associations were applauding the Government for having a separate system in Wales; that meant that there were no administration costs, because all the money was diverted straight to the community charge payer.
Last year, community charge payers in Wales benefited to the tune of £20 million. This year, due to the work of my right hon. Friend the Secretary of State, in discussions with the Treasury, that will increase to £62 million, which means that two thirds of the people of Wales will receive a community charge reduction in their benefit this year, and 612 out of 865 communities will benefit.
I accept that there is an element of rough justice in that, but we also accept that it means that all the money that was available for the reduction scheme will be sent direct to the charge payers and none will be swallowed up in administration. The fact that we gave a much larger percentage of our local government expenditure finance from the centre—92 per cent.—that the scheme was devoid 921 of any administration costs and that my right hon. Friend the Secretary of State has decided upon a £140 reduction for Wales, as well as for England, are all measures that the people of Wales recognise. They are grateful for the fact that the Secretary of State has fought so hard for Wales and has achieved such a magnificent result.
§ Mr. Murphy
The Bill would not be emasculated if the Government accepted the amendments. Seeking to ensure that people are taken out of the poverty trap is by no means a bad idea.
On the issue of transitional relief, the Minister is now aware that the local authority associations in Wales have changed their minds about the value of the scheme and realise the anomalies that my hon. Friends have outlined. The most interesting part of the Minister's speech was his unlikely use of the word "congratulate", when he said that we should congratulate the Government on what has happened.
Do we congratulate the Secretary of State and his hon. Friends on introducing the tax in Wales in the first place? Do we congratulate them on squandering £10 million to set it up and an extra £10 million to administer it? Do we congratulate them on having £80 million-worth of sweetners that would have been totally unnecessary if the tax had been a decent one in the first place? Do we congratulate them on the fact that local authorities in Wales will have to raise, by way of loans, at least £100 million in the next few months to overcome their cash flow problems, and on the fact that £1 million of that will be necessary to repay the debt and to administer what has happened?
There is no case for congratulation whatsover in connection with the poll tax in Wales. Indeed, the people of Wales can see through all this, which will be one of the main reasons why the Government will be turfed out throughout the United Kingdom, and especially in the Principality, at the forthcoming general election.
§ Amendment negatived.1.45 am
§ Mr. O'Brien
I beg to move amendment No. 14, in page 1, line 5, leave out from 'amount' to second 'for' in line 7 and insert'payable by any person after allowance for any rebate or other reduction in respect of a personal community charge'.
The First Deputy Chairman
With this, it will be convenient to consider the following amendments: No. 26, in clause 3, page 3, line 14, leave out from first 'amount' to 'the' in line 15 and insert'payable by any person after allowance for any rebate or other reduction in respect of a personal community charge for'.No. 30, in clause 3, page 3, line 17, leave out 'authority is' and insert'charge is in respect of'.No. 31, in clause 3, page 3, line 18, leave out 'authority is' and insert'charge is in respect of'.No. 46, in clause 3, page 3, line 19, leave out 'authority is' and insert'charge is in respect of'.
§ Mr. O'Brien
It is apt that we should be discussing these amendments following the speech of the Under-Secretary of State for Wales.
922 If amendment No. 14 is passed, clause 1 would readThe amount payable by any person after allowance for any rebate or other reduction in respect of a personal community charge for the 1991 financial year shall, by virtue of this section, be reduced by £140 or such lesser sum as will reduce the amount to £0.The Minister said that, because of the work of the Secretary of State for Wales, poll tax payers in the Principality are to be granted the benefit of the £140 reduction in addition to the other benefits to which people might be entitled because of their circumstances. We have been advised that they will receive the best of all worlds.
The amendment seeks to ensure that the same principle and the same rebates apply to the rest of the United Kingdom. Although Ministers and Conservative Members voted to reject the amendment that was so ably moved by my hon. Friend the Member for Newport, West (Mr. Flynn), it is difficult to understand how they can reject this amendment because it is a levelling-up exercise. We therefore seek the support of Conservative Members if they believe in fairness and equality between poll tax payers throughout the United Kingdom. We have been told more than once that there will be some benefit for people who are paying 20 per cent. of their poll tax under the present system. If the amendment were accepted, it would ensure that people on income support, those on low income and those on low fixed pensions would benefit considerably. The amendment would ensure fairness for everyone paying poll tax.
I call on Conservative Members to have due regard for the principles embodied in amendment No. 14. In view of the points made in the debate on the previous set of amendments, it is difficult to see why the Minister could not accept the amendment and agree to fairness applying throughout the United Kingdom. Therefore, I appeal to the House to accept the amendment.
§ Mr. Tony Banks
As no one else wishes to speak, I may as well put in my fourpenn'orth. This set of amendments is similar to a set which we debated earlier. It highlights the position of those who will not get the £140 reduction in their poll tax but only £28 because they pay only 20 per cent. I could have voted against the whole Bill with a partially easy conscience on the grounds that about 41,000 people in my borough will not get a reduction of £140 but will get only £28 although they will have to pay the full 2.5 per cent. increase in VAT. That is grossly unfair.
I tried to get in on the chirpy little Under-Secretary of State for Wales when he said that the beneficiaries would have to spend something like £13,000 on VAT-charged goods and services before they ran out of the credit that they had received through the lower poll tax. That might apply to someone who was paying the full poll tax and getting the full rebate, but not to those getting the £28 reduction.
The point that I wanted to make to the Minister, and which I am sure he would have accepted in his usual fair, impartial and objective fashion, was that someone paying only 20 per cent. of the poll tax and getting the £28 reduction would, after spending £1,100 on VAT-charged goods and services, be losing the value of the £28 reduction. The Treasury would then be making a profit.
If we were to add all the figures, I suspect that we would find that the Treasury will make a profit out of the whole damned thing anyway. It will depend on the resurgence in retail sales and services. I should not be surprised if the 923 Government got back more in the 2.5 per cent. increase in VAT than the £4.3 billion that they are paying out to bring the poll tax down by £140.
The 40,000 people in my constituency and many hundreds of thousands in Wales and the rest of the country who are on income support and who are paying 20 per cent. of the poll tax will find themselves out of pocket because of the Government's proposal. That is why I could fairly easily have voted against the Bill. The Secretary of State said earlier that there is no VAT on essential things like food. That is true at the moment, but pressures are building up for us to levy VAT on food. That will put the people at the lowest level of income in real trouble.
§ Mr. Maxton
My hon. Friend is absolutely right to say that there is no VAT on most basic foods, but VAT is levied on foods which especially the children of poor families buy, such as crisps, sweets and lemonade.
§ Mr. Banks
I accept that point. Many kids in low-income families subsist on the unhealthy diet that my hon. Friend has described. That is a double tragedy for them, but it has to be taken into account.
The figures provided by the Library show that the poorest 10 per cent. spend 9.2 per cent. of their income on VAT-charged goods and services, while the richest 10 per cent. spend only 5.7 per cent. of their income on such goods and services. Once again, this measure falls disproportionately on the poorest people. The Minister proposes a regressive tax, so we cannot be grateful to him for the formula that is being devised.
I hope that the Minister will see just how unfair the measure is. I hope that he appreciates that among all the inequalities of the poll tax, the 20 per cent. charge for the poorest people in our communities is the most invidious of all. He did not accept the earlier amendments to deal with that, but perhaps he will change his mind. Changing their minds seems to be something that the Government do as regularly as they change their underpants—or, looking at some of them, perhaps even more regularly.
§ Mr. Harry Barnes
The 20 per cent. minimum payment should certainly be removed. If not, some of the exemptions in the poll tax legislation will be removed. Some people who were exempt will now have to pay extra VAT. Some of them may be able to afford to pay more. For some peculiar reason, the overseas forces do not pay the poll tax but will have to pay the extra VAT. Diplomats, who could presumably afford it, do not pay the poll tax and nor do people in prison, unless they are in prison for non-payment of the poll tax.
Some groups of people deserve to be exempt from the poll tax but will have to pay the extra VAT. They include groups such as tramps and vagrants, who presumably sometimes spend money on VAT-rated goods. The Government finally agreed to make monks and nuns exempt, on the grounds that they took vows of poverty. Some may take vows of poverty but others have poverty thrust upon them, especially by the actions of the Government. The same principle that applied to monks and nuns should have applied to other groups.
One group worthy of consideration is the severely mentally handicapped. They are excluded from the poll tax but will pay full VAT. Apart from monks and nuns, the groups that I have mentioned were excluded because they were also excluded from electoral registration. The quaint principle of accountability is the fault in the measure which 924 led to the anomaly. The severely physically handicapped, who might be in as poor circumstances as the severely mentally handicapped, need as much money and resources spent on them and as much assistance. Therefore, they have good grounds of hardship and need for social provision to be exempted. Yet they are not excluded, although the severely mentally handicapped are. The difference is in relation to electoral registration.
Yet the severely mentally handicapped will still be first to pay not only the VAT but, when we move towards the new legislation, presumably the new property tax. We do not know whether the new poll tax amount will be based on the principles of the existing poll tax or whether son of poll tax will be based on a fresh provision and the severely mentally handicapped will come within the exemptions in that legislation.
§ Mr. Maxton
If a physically handicapped person lives in his own house and tries to look after himself, he has to pay the poll tax, but if he is in a long-stay hospital or home he does not have to pay it.
§ Mr. Barnes
In addition to that, severely handicapped people have to pay the full VAT. There is nothing in the Bill to tackle that problem, so we are bound to he concerned lest those who were not paying anything previously are called on to pay under the Bill.
§ Mr. Tony Banks
My hon. Friend described monks and nuns as deserving cases who are exempt from paying the poll tax. Considering that they vote and use local authority services, why are they exempted?
§ Mr. Barnes
Various categories of people were added as the poll tax legislation proceeded through Parliament. The lobby in favour of monks and nuns pointed out that they took vows of poverty and should be excluded. The exemption crept in and cut across the principle that it had to be related to the electoral register. An interesting piece of legislation, the Caldey Island Act 1990, linked the electoral register and the poll tax register. It was discovered that on Caldey island there were monks and fishermen who were not on the electoral register. Many of them were not on the poll tax register either, so a special measure had to be introduced to sort matters out.
I recall that the Minister missed the boat one evening when the Caldey Island Bill, as it then was, came before the House.
§ Mr. Barnes
There are increasing indications, from the Home Office circulars, remarks by electoral registration officers, the Caldey Island Act and other measures, that there is an intricate link between electoral registration and poll tax, and it must go.
Scottish Ministers say, "All must pay the poll tax," while Welsh and English Ministers say, "Most must pay the poll tax." They must get that sorted out. Only when we get rid of the principle on which the poll tax is based shall we overcome some of the many social problems of which my hon. Friends have spoken.
§ The Parliamentary Under-Secretary of State for the Environment (Mr. Robert Key)
I never cease to wonder at 925 the chirpiness of debates at this time of night, particularly the chirpiness of the hon. Member for Newham, North-West (Mr. Banks). It is a pleasure to have him with us at this late hour. It is also a pleasure for me to be in the company again of the hon. Member for Normanton (Mr. O'Brien). About 14 hours ago, he and I were debating upstairs a rating issue which had everything to do with double counting. In a sense, we are also discussing a problem of double counting here.
The hon. Member for Normanton opened by saying that he was interested in extending the fairness and equality of the system. I am a bit puzzled by his suggestion that the amendments level up the English position to that in Wales. The amendments would mean that the £140 reduction would apply not to the headline charge but to the amount of liability of the charge payer. As my hon. Friend the Under-Secretary of State for Wales has just explained, the £140 reduction in Wales applies to the headline charge, just as it does in England.
I think that the hon. Member for Newham, North-West understands the amendments and asked who would benefit from the reduction that we have introduced. We have always made it clear that charges everywhere will be reduced by £140, except where the original charge set is less than £140, as in Wandsworth, where the charge will be reduced to zero. The charge set by the authority is being reduced, and where a charge payer pays that charge, the amount that he pays will be reduced by £140. Where a charge payer pays only a proportion of that charge, the reduction in the amount that he pays will be a proportion of £140. It is a complete misrepresentation to present that system as meaning that those charge payers are losing out.
§ Mr. Harry Barnes
They lose out compared with people who already gain under the poll tax. In Derbyshire, some people have gained considerable amounts of money. The authority has been poll tax capped, so they have gained another £55, and now they are to gain another £140. Some people are doing very well, but those at the other end are doing desperately badly.
§ Mr. Key
I suppose that that partly explains the problem that Members such as the hon. Member for Derbyshire, North-East (Mr. Barnes) have with any income tax cuts, because the same is true there. The more someone earns, the more income tax he pays, and the more he benefits from any reduction. I accept that point—it depends which end of the telescope one looks through.
§ Mr. Key
I must get on, because I must answer the point raised by the hon. Member for Derbyshire, North-East, and I shall certainly not give way to an hon. Member who has not bothered to be here for the debate.
The amendments' purpose is to provide that the reduction of £140 in the community charge effected by the Bill is made, not from the headline charge, as the Government intend, but from the liability of each charge payer, after relief under the community charge reduction scheme and community charge benefit has been calculated. The net result would be that a substantial number of charge payers would pay nothing in 1991–92.
926 The Bill's purpose is to reduce headline charges. It follows from our decision to shift a substantial part of the burden currently borne by the community charge payer to the national taxpayer. It is not the Bill's aim to ensure that all charge payers should pay £140 less than would otherwise have been the case. The Bill provides generous relief. Under the community charge reduction scheme we have provided relief for former ratepayers who had been especially affected by the move to the community charge. Yesterday, my hon. Friend the Minister for Local Government and Inner Cities announced substantial improvements to the scheme. For those charge payers on low incomes we have also provided community charge benefit. It is perfectly reasonable that eligibility for relief under the reduction scheme and for benefit should be calculated after, not before, the deduction of £140.
§ Mr. Key
It is being paid for by taxpayers, the hon. Gentleman's constituents, my constituents and, above all, the residents of Wandsworth who, over many years, have invested in their local government services.
The amendment would exempt not just 20 per centers, as they have been called, but many more people who fall into a category above that benefit. The important factor is that, in the past, we have taken too much taxation locally, and we are now redressing the balance. As we have said, our aim is to achieve average charges of about £175.
The amendment is not justified. The Bill, with the community charge reduction scheme and community charge benefit, form a generous and substantial package which will reduce the average charge payable next year to less than £175. I urge the Committee to reject the amendment.
§ Mr. O'Brien
I asked the Minister to bring about equality between poll tax payers in the Principality of Wales and those in the rest of the United Kingdom. The Under-Secretary of State for Wales said that a person in Wales who receives the benefit of the community charge reduction scheme could also receive transitional benefit and the £140 relief. If people in the English counties and the metropolitan areas receive the benefit of the community charge reduction scheme and transitional relief, why should they not also have the benefit of the £140? The bottom line would be the same.
The Minister has not convinced anyone that there should not be special consideraton for people who pay 20 per cent. of the charge. People who deserve the largest slice of the £4.5 billion will not get it, and the amendment seeks to rectify that. The people who should benefit most from that money are those who are on income support. The Minister did not address that, and I ask him to reconsider. Instead of appealing to the Committee to reject the amendment, he should tell his hon. Friends to support it, because it would benefit people on low incomes. They should be given fair and full consideration.
§ Amendment negatived
§ The Chairman of Ways and Means (Mr. Harold Walker)
With this it will be convenient to consider the following amendments: No. 3, in page, 1, line 10, after `personal', insert 'or standard'.
No. 4, in page 1, line 20, after 'personal', insert 'or standard'.
No. 6, in clause 3, page 3. line 15, after 'personal', insert `or standard'.
No. 7, in clause 3, page 3, line 20, after 'personal', insert `or standard'.
No. 8, in clause 3, page 3, line 22, after 'personal', insert `or standard'.
No. 10, in clause 3, page 4, line 4, after 'personal', insert 'or standard'.
§ Mr. Beith
I shall be brief, because, in answers to questions that I put to him, the Secretary of State seemed to dispose of the matters that I sought to clarify by tabling this amendment. If the Minister can answer yes to my questions, we can quickly get rid of this group of amendments and move to the next one. I tabled these amendments to establish whether standard community charge will be reduced by £140. Secondly, will multiple standard community charge be reduced by the appropriate multiple of £140? Thirdly, will local authorities be fully reimbursed whether for a single or a multiple charge? The Secretary of State's reply to the last question was, "That is correct." What is the answer now to those questions?
§ Mr. Nicholas Bennett
I am surprised that the hon. Member for Berwick-upon-Tweed (Mr. Beith) moved this amendment, because his hon. Friend the Member for Brecon and Radnor (Mr. Livsey) in the debate on an earlier amendment argued against giving standard community charge payers the reduction. Plainly, the Liberal Democrats need to get their act together.
I confirm that the answer to the first and second questions posed by the hon. Member for Berwick-upon-Tweed is yes. The third question does not apply, because in giving authorities the grant in the first place, no account was taken of standard community charge payers. That was a bonus.
§ Mr. Beith
Local authorities will find themselves with considerably less money than they thought they had. For example, the borough of Berwick-upon-Tweed will have over £200,000 less than it thought it would have. Some other authorities with many second homes in their areas will suddenly find that, because of the reduction in the charges, they will have a great deal less money to meet the cost of services at a time when they can no longer increase their charge to compensate. Will the Minister explain what they are supposed to do?
§ Mr. Bennett
We did not include in the standard spending assessment the fact that they would have the advantage of charging up the two multipliers on the standard community charge.
§ Mr. Beith
I am grateful to the Minister, but he has not resolved the problem. Local authorities cannot now change their budgets. They are obliged to stick to the level of charge minus the amount by which the Bill will reduce it. They cannot now take account of the fact that they will have £250,000 less than they expected. Therefore, the Bill creates a difficulty that it cannot resolve. The Minister has given an answer that is different from that given by the 928 Secretary of State. I asked him whether authorities would be reimbursed, and he said that that was correct. The Minister has one last opportunity to clear up the matter.
§ Mr. Bennett
They will be reimbursed. The point is that the SSA that was originally calculated included the fact that authorities would get a bonus from the standard community charge multiplier, but they will be reimbursed, so they get it doubly.
§ Amendment, by leave, withdrawn.2.15 am
§ Mr. Beith
I beg to move amendment No. 2, in page line 1, line 9, at end insert—'(1A) Where the reduction has taken place by virtue of this section, a charging authority shall have the discretion to issue no demands if, in its judgment, the total amount to be collected from the charge payers as a whole is likely to be exceeded by the cost of collecting the charge.'.
§ The First Deputy Chairman of Ways and Means (Sir Paul Dean)
With this it will be convenient to take amendment No. 9, in clause 3, page 3, line 24, at end insert—'(2A) Where the reduction has taken place by virtue of this section, a local authority shall have the discretion to issue no demands if, in its judgment, the total amount to be collected from the charge payers as a whole is likely to be exceeded by the cost of collecting the charge.'.
§ Mr. Beith
The amendments are intended to make it possible for a local authority to avoid being obliged to issue a community charge demand, even though the amount of money raised by doing so would be less than the cost of collecting it. Because of the circumstances of the Bill, the local authority has no discretion. If the authority had found that, because of the favourable grant, it needed to raise only £2, £3, £10 or £12 by way of poll tax, then it would probably have decided not to levy a poll tax at all. Some authorities will be levying very small poll taxes because of the Bill. A number of authorities, including Westminster, have come to the conclusion that it will cost them more to collect the money than they would obtain from collection. It cannot make sense to waste money in that way, and the Government cannot be encouraging them to do so.
The purpose of the amendments is to avoid such waste.In our debate on the money resolution last night, the Minister for Local Government and Inner Cities, who is so fond of the poll tax, argued that local authorities could ask the district auditor what he thought about this, and if he said, "It's all right, don't worry, I shan't trouble you," they could avoid collecting the amounts involved. That is not a satisfactory basis on which to proceed. The Minister has tipped the wink, the district auditor has given a nod, and the authority does not have to send out the bills.
In a world in which local authorities have found themselves plunged into illegality when they conscientiously engaged in swap deals, one cannot tell local authority treasurers, "Don't worry, you won't get into trouble, I have had a word with the district auditor and he has promised that he will not take you to court." That is not a reasonable basis on which to proceed. Surely Ministers do not want the collection machinery set into motion when less will be raised than the cost of the collection.
929 Ministers are apt to say that the cost of collection is only the cost of sending the bills out—that is, the printing, postage and stamp time involved in the distribution of the bills. That is not so. A local authority cannot send out a series of bills without thereby committing itself to using its best efforts to get the money in. That means going beyond the first bill, to the reminder, and right along the road to the bailiffs and court proceedings. The Minister would be the first to admit that it would be an irresponsible local authority which issued a bill without intending to secure payment of that bill by using the powers at its disposal. Ministers would strongly criticise any local authority which sent out bills without any serious intention of collecting the money.
Therefore, I ask the Minister to accept the amendment, unless he can show that there is some other, absolutely clear way in which a local authority, in good faith, judging that the amount to be collected is less than the cost of collecting, can avoid sending out bills.
§ Mr. Key
One of the problems is the wide variation in efficiency of collection by local authorities. If all local authorities were equally efficient at collection, we should be in a different ball game, but there is a huge variation. The Minister for Local Government and Inner Cities, my hon. Friend the Member for Enfield, Southgate (Mr. Portillo), was right last night when speaking to the money resolution to point out the importance of the auditor. The issue cannot be ducked. If a local authority honestly believes that it would be more expensive to go ahead and collect, it is absolutely right if it decides to approach the auditor to find out whether he agrees, but there are also other ways of approaching the problem.
The amendments are designed to ensure that, when an authority reduces its charges by virtue of the requirements of the Bill, it need not issue charge bills for the residual amounts, if it considers that the cost of collecting them is likely to be greater than the yield of the reduced charges. The amendments are unnecessary. The existing legislation already permits an authority to achieve what they seek. Incidentally, the amendments could also lead to a deficit in an authority's collection fund, which would create a serious problem.
If an authority's charges, after allowing for the reduction required by the Bill, were comparitively small—possibly only a few pounds—it might consider that it was not worth collecting the amounts concerned, thereby saving it the administrative expense of so doing. The correct course then for the authority would not be not to issue bills for the reduced amount, as the amendments propose. That would run the risk of creating a deficit in the collection fund, since estimated income and outgoings would be out of kilter. What such an authority could do would be to reduce its charges to £140 by making an appropriate reduction in its budget—that is, its demand on the collection fund—and then setting substitute charges under section 35 of the Local Government Act 1988, thus passing on the reduction. The provisions of the Bill would then bite by reducing those charges to zero. If one wished to reset the budget downwards, it would simply be a question of giving seven days' notice, having a full council meeting and passing a single resolution. It is not a lengthy affair. That is another reason why I urge the Committee to reject the amendments.
§ Mr. Beith
The Minister made great play of the deficit in the collection account. I am worried about the deficit in the collection account that will occur if a local authority attempts to collect a charge which yields less than the cost of collecting it. The Minister has set out alternatives. I am not very happy about the idea of a quiet word with the district auditor. It puts local authorities in precisely the position in which they found themselves over swap deals. Which district auditor warned local authorities that they could not safely engage in swap deals without risking the whole system becoming unstitched in the courts which, as the Minister knows full well, it clearly did? The only alternative is that which he has set out—in the few days now available immediately to call a meeting to reduce the charge to £140 and thereby get down to zero.
If a local authority takes that course, I hope that it will not then be criticised by Ministers for delaying the issue of bills. It is an extraordinary fact that local authorities cannot move without being subjected to criticism. On the understanding, nevertheless, that that is a course which they can reasonably take, I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Mr. O'Brien
I beg to move amendment No. 20, in page 1, line 9, at end insert—'(1A) The Secretary of State shall within one month of the relevant day lay before Parliament his estimate of the number of persons for whom the actual level of payment for which they are liable in respect of the personal community charge in the 1991 financial year will not be reduced by £140 from the actual payment for which they were liable before the relevant day.'.We have heard statements about those who will be eligible for the £140 reduction in their poll tax bills due to the 2.5 per cent. increase in value added tax. There are substantial differences in the numbers of people we are told will receive the benefit. Amendment No. 20 would help to clear up the confusion.
We are asking that the number of people whose poll tax will not be reduced by £140 in the financial year 1991–92 be stated. If those people who are in most urgent need of assistance are to be helped, information of this kind ought to be available. The purpose of our constructive amendment is to improve the Bill in that way. I hope, therefore, that the Minister will accept it.
§ Mr. Portillo
I do not think that there is any need to amend the Bill in order that this information might be made available. It is always open to hon. Members to seek information in all sorts of ways.
As the hon. Member for Normanton (Mr. O'Brien) knows, the £.140 comes off the headline community charge figure. If people get less than £140, it will be because they are receiving some other type of help. They may benefit from community charge reduction and thereby pay little more than the amount of their rates bill; or they may be on benefit, in which case they pay perhaps only one fifth, or some larger fraction, of the community charge; or they may be students, in which case they pay only 20 per cent. of the community charge in any case. People may already receive help for any one of those reasons. Those who pay the full charge will get a reduction of £140, and others will get a reduction of less than £140 in what their bills would have been. In the latter case, the figure is less than £140 only because such people already get help in another way against the full charge.
931 I may be able to help the hon. Gentleman by telling him what the figures are likely to be. We estimate that, as a result of this Bill, 13 million charge payers in England will pay £140 less than they expected to pay. The remaining 22.5 million will also pay less, but the amount of their reduction, on account of the Bill on its own, will be lower than £140. As I have said, the figure will depend on entitlement to relief under the community charge reduction scheme and benefit.
As has been said, 16 million people will benefit from the community charge reduction scheme. Of those, about eight million are brought into the scheme as a result of yesterday's announcement. In Scotland, about 2.5 million people will get a reduction of £140. About 1.25 million will get less than that. Of those, 600,000 are on the community charge reduction scheme. In Wales, where the reduction scheme operates on a different basis, the £140 will be received by everyone, except students and those who are on benefit. That comes to almost 600,000, out of the 2.14 million community charge payers in Wales.
I hope that that information is helpful to the Committee. It certainly obviates any need to amend the Bill.
§ Mr. Blunkett
We should point out to the Minister that the statement that he made on Monday evening in the debate on the money resolution has caused havoc to local authority administration, computer software and billing proposals. The Government cannot have realised, and certainly the Department of the Environment did not advise them of, the enormity of the changes in what appeared to be a small and inconsequential announcement late on a Monday evening. The results of that could be as large as the difficulties facing local authorities in the process of reassessing and re-billing people under the Bill that we are debating tonight.
Because the figure of 8 million, 16 million, once upon a time 18 million, people who were supposed to be entitled to rebates under the community charge reduction scheme is now in such doubt, it is important that, even at this late hour, as we reach 2.30 am and come, like Cinderella, to the point where the coach turns back into a pumpkin and the white horses turn back into mice—an appropriate analogy——
§ It being half-past Two o'clock, MR DEPUTY SPEAKER proceeded, pursuant to the Order yesterday, to put forthwith the Qustion already proposed from the Chair.
§ Amendment negatived.
§ MR. DEPUTY SPEAKER then proceeded, pursuant to the Order yesterday, to put forthwith the Questions necessary to dispose of the business to be included.
§ Clause 1 ordered to stand part of the Bill.
§ Clauses 2 to 5 ordered to stand part of the Bill.
§ Question, That the Bill be now read the Third time, put forthwith, pursuant to the Order yesterday, and agreed to.
§ Bill accordingly read the Third time, and passed.