Community Charge (Hansard, 8 May 1991)

§ 1. Mr. Eastham
To ask the Secretary of State for the Environment when he will publish a draft Bill on the replacement of the community charge; and if he will make a statement.

§ The Minister for Local Government and Inner Cities (Mr. Michael Portillo)
The Government are currently consulting on the council tax. Our intention is to introduce legislation in good time to implement the new system for the financial year 1993–94.

§ Mr. Eastham
Why do the Government intend to wait two years to introduce this new legislation when it is obvious that it could be introduced in the coming year? As the Government appear to have a light legislative programme for the coming year, why are they dithering and not getting on with getting rid of the poll tax? Let us kiss it goodbye once and for all.

§ Mr. Portillo
I am delighted to have that welcome for the council tax. I wish that all Opposition Members had been so welcoming. Clearly the hon. Gentleman has been reading the Local Government Chronicle and he agrees with its conclusion that the council tax will do Manchester a lot of good. As for why we cannot legislate earlier, the hon. Gentleman will know, because the Opposition set it out in a document, that it is necessary to consult on the matter, to get it right and to give the House and another place time to consider it in detail.

§ Mr. Sims
My hon. Friend refers to the consultation paper, but his right hon. Friend the Secretary of State has made it clear that he has no intention of altering the bands proposed in the document. Will he therefore take this 706 opportunity to explain the basis of the valuation of properties to be put in the bands? I am sure that he will be aware of the concern in constituencies such as mine where it appears that, if the valuation is based on the price of properties as exhibited in the offices of local estate agents, people in quite modest properties will find themselves in the same band as those living in millionaires' row. It would be helpful if my hon. Friend could explain the basis of valuation.

§ Mr. Portillo
We thought carefully about the number of bands proposed and looked at a number of different options. We decided that seven bands was the right number to put forward as our firm proposal. The capital valuation will be based on capital values—that speaks for itself. A number of special factors may be involved in certain properties and that is one of the matters on which we are consulting.
My hon. Friend may not be giving enough weight to the fact that the tax is intended to collect much less than the old rating system used to do and that we have arrived at a balance where those in the most expensive properties will be asked to pay two and a half times as much as those in of the least expensive properties. On the whole, people think that that is a fair apportionment of the burden.

§ Mr. Wigley
If it will take two years to implement such legislation, have the Government considered introducing parallel legislation, which could come into effect much sooner, to prevent those who presently receive an 80 per cent. reduction from having to pay anything at all under the present poll tax system?

§ Mr. Portillo
Of course, we have thought about it, but we do not propose to do that. People on income support who are expected to pay 20 per cent. of the community charge bill receive an addition to their benefit in respect of the average of those 20 per cent. bills. There has been no adjustment to the amount that they get to take account of the fact that the community charge has been reduced by £140, so a number are receiving more in their benefits than they are asked to pay in their 20 per cent. community charge. That is particularly the case in those local authorities where the charge is low.

§ Mr. Oppenheim
Bearing in mind that the Labour party proposes to abolish capping and spending limits if it comes to power, will my hon. Friend invite his opposite number to explain to the House how his so-called "fair rates" figures could be kept down to the quoted levels if Labour abolishes capping and competitive tendering? Are not Labour's figures a complete sham?

§ Mr. Portillo
Labour's figures are not worth the paper that they are written on—partly because the arithmetic is wrong but also because, as my hon. Friend said, Labour does not intend to limit in any way the amount that Labour authorities can spend. We know that those authorities spend through the roof, if they are given the opportunity to do so. We know also that Labour has opposed the transfer of part of the burden to value added tax. Again, Labour's figures are based on an entirely false assumption—on the lower burden being taken from local taxpayers. However, Labour has spoken out against the VAT increase that made that possible.

§ Mr. Gould
Will the Minister clear up at least part of the confusion that surrounds his proposals? Although he 707 published figures purporting to show the council tax under a seven-band system, is it not the case that no work on such a system has been undertaken? Is it not the case also that district valuers were asked to provide estimates on the basis of a 14-band system and that the decision was then taken to lop off the top six bands? Why was that done? Does not that decision completely invalidate the Government's figures and show that the unfair and familiar principle underlying the poll tax has been retained? I refer to the principle that the rich should be protected from paying their full whack, while an unfair burden falls on the rest of us.

§ Mr. Portillo
We got rid of the unfair principle underlying the old rating system, to which the hon. Gentleman wants to return, whereby the occupants of more expensive properties—even if they had modest incomes—were expected to pay limitless sums towards local government. The hon. Gentleman also wants sole occupants to pay as much as multiple-occupancy households. That was a major unfairness under the rates system, and we are not prepared to return to it.
The hon. Gentleman has been barking up the wrong tree for some time. We devised a system that appeals to the British public as being fair, because it dispenses with the extremes of the rating system. We prefer to base a system on 1991 values, whereas the hon. Gentleman wants to use 1973 values.