§ [FIRST DAY]
§ Order. for Second Reading read.3.33 pm
§ The Secretary of State for the Environment (Mr. Michael Heseltine)
I beg to move, That the Bill be now read a Second time.
I hope that the House will not lose sight of the fact that a debate on what Labour has claimed to be a deeply controversial and retrograde step has managed to attract only 20 Labour Members. If anything can be said to justify our belief that the Bill to abolish the poll tax is deeply unpopular with Labour, it is the fact that Labour Members are not even prepared to come here and discuss it today, and to listen to what we have to say.
The Bill will abolish the poll tax and replace it with——
§ Mr. Tony Banks (Newham, North-West)
§ Mr. Heseltine
No, I will not give way. The hon. Gentleman would do better to go off, as he did last week, and whip in a few more hon. Members from the Corridors of the House so that they can hear what I have to say.
The Bill will abolish the poll tax and replace it with the council tax. The council tax is a fair and straightforward method of raising local government revenue. It is based on the market value of property; it takes account of the number of people in households; it provides generous rebates for those on low incomes; it offers special protection for students, student nurses, those on youth training schemes and apprentices. The tax requires no register, and the discount and rebate provisions are simple and straightforward.
§ Mr. David Winnick (Walsall, North)
Is the right hon. Gentleman aware that he constantly refers to the poll tax, while all his predecessors—and every other Minister—have used a different phrase? While he is at it, will he apologise, on behalf of the Government, for the poll tax and the devastation that it has caused throughout the country? As a Back Bencher, the right hon. Gentleman spoke against the poll tax, but what about the Government whom he represents? They voted for it, including the Prime Minister.
§ Mr. Heseltine
The only apology that is required is one from the Labour party, which is frustrating our attempts to get rid of the poll tax. [Interruption.] The longer that Labour Members keep up this unnecessary barracking, the longer it will take to get rid of the poll tax. We will not tolerate that. The poll tax is going, and nothing that Opposition Members can do will deter us from doing what we intend to do.
Part 1 of the Bill provides for authorities to levy and collect council tax to replace community charges. Let me describe the main provisions. Clause 3 defines the dwellings on which the tax will be levied. They include most domestic properties, including caravans and houseboats. Clause 4 allows certain dwellings to be exempt. We have already announced that student hostels and halls of residence will be exempt, as will households 784 containing only students. Other dwellings, including those classes of empty dwellings whose owners currently pay no standard community charge, will also be exempt.
Clause 5 sets out the value bands for England and Wales, and the tax rates associated with them.
§ Sir Rhodes Boyson (Brent, North)
I am sure that my right hon. Friend is aware of the overwhelming support on this side of the House that has been expressed for the council tax—as opposed to Labour's so-called "fair rates". Some hon. Members who represent constituencies containing high-value properties, however, feel that a fourth set of bands should be provided for properties in London and the south-east, and in other areas containing properties of a similar value. It is felt that that would be equitable. The Conservative-controlled London Boroughs Association has prepared a new set of hands. Would my right hon. Friend be prepared to consider inserting that proposal in the Bill?
§ Mr. Heseltine
I welcome my right hon. Friend's support. I appreciate that few right hon. and hon. Members know more than he does about the ramifications of these complex matters. I do not think, however, that my right hon. Friend is giving himself full credit. In response to the pressures brought to bear on the Government by him, and by many of my right hon. and hon. Friends—especially those representing constituencies in the south-east—we have already introduced a new band, band H. My right hon. Friend will also be aware that we propose a limit representing a factor of one to three between the top and the lower bands to protect those in the circumstances to which he has drawn our attention.
§ Mr. John Marshall (Hendon, South)
Will my right hon. Friend look again at the question of regional banding? Is he aware that, in East Anglia, 44 per cent. of homes are in bands A and B; in the north-west 56 per cent.; in the north, 65 per cent.; in the west midlands, 51 per cent.; and in the London borough of Barnet, 1 per cent?
§ Mr. Heseltine
My hon. Friend draws attention to one of the local authorities that contains a significantly higher concentration of high-value properties. There is a relationship in our proposals between the level of tax paid to the council and the circumstances of the household, including the value of their property. It so happens that my hon. Friend represents a part of the country in which that applies particularly. I am sure that my hon. Friend recognises that the politics of envy, which so characterise the Labour party, have been specifically excluded from our fair proposals. We have limited the range of difference between what people pay by a factor of one to three. That was done deliberately in order to respond to such feelings as my hon. Friend holds.
§ Dame Elaine Kellett-Bowman (Lancaster)
My right hon. Friend referred to the circumstances of the household. May I draw once more to his attention the fact that in my part of the world, and in other rural areas, many people live in houses that are far bigger than they normally would live in because they are in tied occupations. They may be estate workers, forestry workers or clergymen. The value of their houses bears no relationship to their incomes. Could not there be a special category for people who live in tied houses?
§ Mr. Heseltine
My hon. Friend makes a most important point. When she studies the admittedly complex arrangements in the Bill, she will find that many of her concerns have already been addressed. My hon. Friend was right to raise that point. I am glad to be able to confirm that we have taken that point into account.
§ Dr. Michael Clark (Rochford)
I know that my right hon. Friend takes great pride in presenting to the House the council tax, which he considers to be fair. However, does he accept that by category school teachers, civil servants, policemen, nurses and others receive the same salary, by and large, regardless of where they live and that those who live in the south-east have less disposable income due to large mortgages brought about by the high price of housing? Why, therefore, should those people be penalised a second time by having to pay a council tax that is based on house prices?
§ Mr. Heseltine
When my hon. Friend studies the legislation and examines the reports of the deliberations in Committee, he will recognise, when all these things are added to the considerable additional resources provided by the Chancellor of the Exchequer for lowering the overall contribution by local citizens and when he considers the figures for the various bands and the various evaluations of property, that we have taken the necessary steps in our system to protect people who fall into one category or another. Of course there are differences in income and variations between one part of the country and another. If, however, my hon. Friend looks at the exemplifications we have produced, he will recognise that we have met his concern. It is also the case, as I said to my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman) a few moments ago, that in many of the valuations we take account of the fact that they are tied in one way or another to a specific occupation.
§ Mr. Simon Hughes (Southwark and Bermondsey)
I accept that the Secretary of State has rejected, as have the Government, our proposals for a local income tax, but will he explain how it is more fair for people to pay for local government services on the basis of the value of their property, which may bear no relationship to their incomes, than on the basis of the income that they receive in the year in question? To take a constituency such as mine that contains very few people on high incomes but where property values are very high, how can there be any argument but that a local income tax is fairer for places such as inner London, including Bermondsey, than the council tax?
§ Mr. Heseltine
The hon. Gentleman is right. His party came to us and fairly put to my hon. Friend the Minister for Local Government and Inner Cities the argument for a local income tax. We had to ask whether we thought that it would be in the widest interests of the country that the income tax rates of those who will pay towards local government services should be in the hands of the Labour party. The hon. Gentleman must address that question. Does he believe that allowing Labour local authorities to push up income tax even faster than the Labour party would if it ever took office would serve the interests of this country?
We were not trying to create a local income tax. We were considering a tax that was based on two factors—the number of people living in the property, and its value. 786 Those were the ingredients that we had in mind when designing the council tax. When one considers the revenue that will be raised by the council tax and the differences between the bandings, it is apparent that we have found a system of damping the process that is broadly fair across the country.
§ Mr. Ralph Howell (Norfolk, North)
I am delighted to hear the enthusiasm with which my right hon. Friend is announcing the end of the poll tax. Bearing in mind that it was half ended by adding 2.5 per cent. to VAT, why on earth are we going through all the pain and problems that this wretched tax will engender? Why not solve the whole problem by adding a further 2.5 per cent. to VAT?
§ Mr. Heseltine
There were many ways in which we could have made progress, but we determined that that was not one that we wished to adopt, because the inevitable conclusion on my hon. Friend's proposals—I know how strongly he feels about this point—is that every authority's spending is fixed precisely. Authorities have no capacity to raise additional revenue, and, to the most minute detail, central Government fix their expenditure. That would not be the right way to progress.
The second argument that I must put to my hon. Friend the Member for Norfolk, North (Mr. Howell) is that societies that are broadly equivalent to ours have some form of property—based tax. We have introduced a property—based tax that, by and large, reflects the number of people living in a property. That is a sensible and practical way forward that maintains the width of the tax base, which has desirable qualities.
§ Mr. Frank Haynes (Ashfield)
I am going to test the right hon. Gentleman's memory. In that period when he was swinging the Mace around his head—when he was in opposition—does he remember saying that there should be less central control? He is now proposing more central control. Why?
§ Mr. Heseltine
I remember the occasion vividly. Labour Members were standing singing "The Red Flag". If the hon. Gentleman wants to know why they were singing it, let me point out that it was because they had cheated to get a piece of nationalisation legislation through the House. At least I apologised to the House, which they never did. They went on to lose general election after general election as a consequence, and that was a very good thing. [Interruption.]
§ Mr. Speaker
Order. It would he a good idea if we returned to the debate.
§ Mr. Heseltine
I have explained to you, Mr. Speaker, and it is manifestly true, that the Labour party will do all in its power to keep the poll tax on the statute book. Even now, it is seeking to delay the proceedings of the House with irrelevant interruptions. Interruptions from this side of the House are constructive; interruptions from the other side are destructive.
I wish to proceed with my analysis of clause 5, which sets out the value bands for England, as I said to my right hon. Friend the Member for Brent, North (Sir R. Boyson)—at least he understood what I was talking about. As the House knows, there are eight bands. The tax rates are arranged so that a property in the highest band pays three times as much as a property in the lowest. This limited range of tax bills ensures that the high-value properties do 787 not face excessive tax bills and it damps the effect of regional variations in house prices. They ensure that regional bands—which would bring many anomalies—are not therefore necessary.
Clause 6 sets out those who will be liable to pay the tax. The principles are based on common sense. In owner-occupied property. it will be the owner. In rented property, it will be the tenant. In other occupied property, it will be the resident. In unoccupied property, it will be the owner. Where two or more people fall into the liable category, they will be jointly liable. Spouses or partners will also be jointly liable for the household bill.
Clause 11 provides for discounts of 25 per cent. where there is one adult resident and 50 per cent. where there is none. It also provides that certain groups of people, who are described in schedule 1, are not counted when assessing the number of residents. Therefore, a single parent whose student daughter lives with her will still receive a 25 per cent. discount. The discount is set at 25 per cent. because the basic bill is half the property and half the personal element. It assumes two people, so that where there is only one adult resident he or she gets a discount equivalent to half the personal element, or 25 per cent.
Clause 13 provides for reductions in council tax and will enable a scheme of transitional relief during the change to the new tax to ensure that no household faces an excessive year-on-year increase in its bill.
§ Dr. Keith Hampson (Leeds, North-West)
This point is crucial. As my right hon. Friend knows, most of the students of Leeds live in my constituency. There is some confusion as to whether they will get only a percentage discount or whether they will be exempt across the board. Will my right hon. Friend say whether, unlike under the old rating system, students will not pay a rateable tax and that universities will not pay for the buildings even if the students are exempt?
§ Mr. Heseltine
My hon. Friend raises an important point. We have exempted students from payment of this tax. Their presence in a house does not give rise to a liability. If my hon. Friend studies the Bill with care—I know that he will—he will discover the way in which we have ensured that that happens.
§ Mr. Chris Butler (Warrington, South)
My right hon. Friend issued illustrative figures showing what the charges are likely to be on the basis of this year's community charge. As he presumably knows how capping will work, will he publish illustrative figures showing what the maximum charges are likely to be when the council tax is implemented?
§ Mr. Heseltine
As my hon. Friend knows, we have taken the existing budgets of local authorities and, on the assumption that we have moved through the transitional period, we have extrapolated what the equivalent figures would be under the council tax based on the best information available to us. We cannot look forward to budgets in two years' time which local authorities have not yet prepared and extrapolate on the basis of such hypotheses. That is not possible. The fact that one cannot do that shows why the Labour party attempted to follow the same methodology as we followed, although it left out a significant number of the costs involved.
§ Mr. James Wallace (Orkney and Shetland)
Will the right hon. Gentleman clarify the position of students? His Department's press release states:Students, student nurses, apprentices and those on YT schemes will also be eligible for discounts. Student halls of residence and other dwellings where all the adult residents are students will be exempt from council tax.Will some students be exempt and will others be eligible only for discounts and therefore have to pay a proportion of the bill? How does the right hon. Gentleman justify that disparity?
§ Mr. Heseltine
The hon. Gentleman is broadly right. On the last part of his question, he must take into account that, in the normal course of events, student nurses would be eligible for rebates whereas students would not. When the hon. Gentleman looks at the detailed drafting of the Bill, he will find that the Government's broad intentions have been carried out.
§ Mr. Jacques Arnold (Gravesham)
Will my right hon. Friend give way?
§ Mr. Heseltine
If my hon. Friend will forgive me, I shall not give way.
Clause 13 provides for reductions in council tax and will enable a scheme of transitional help during the change to the new tax.
Clause 15 provides for valuation tribunals to hear appeals in connection with the council tax. These tribunals will adjudicate on issues of property banding and liability for the tax.
Chapter II of part I concerns valuation lists. Such lists, which will show property details only, will be compiled for each authority. The allocation of properties to bands is now being carried out under the auspices of the Inland Revenue Valuation Office.
Clause 24 provides for the alteration of lists. We intend to provide that a dwelling may be rebanded upwards only when it changes hands and then only if a material increase in its value results from work done to the house. However, we shall provide that a property may be rebanded at any time if there has been a material reduction in its value, whether caused by partial demolition, a change in the nature of the locality or adaptation of the dwelling to make it suitable for a disabled person. There is provision for appeals on these matters.
Chapter III of part I is technical and deals with the setting of the council tax each year from April 1993. Chapter IV of part I deals with the issue of precepts by major precepting authorities such as county councils and local precepting authorities such as parishes.
§ Mr. Jacques Arnold
How will my right hon. Friend ensure that the revenue support grant received by councils in the south-east will not be reduced as our constituents already pay more for the housing in which they live?
§ Mr. Heseltine
My hon. Friend makes an important point and I shall deal with that specifically.
Part II of the Bill contains similar provisions for Scotland. Part III abolishes the community charge from 1 April 1993. Part IV contains a number of miscellaneous but important provisions. Clause 101 amends social security legislation to provide for council tax benefit. The relevant legislation is being consolidated this Session and the references are to the consolidation Acts. They were 789 introduced in another place a week ago. The rebate system will provide rebates of up to 100 per cent. There is no minimum contribution to the council tax.
Those are the main provisions of the Bill. The schedules provide more detail on the groups who will qualify for discounts, on the billing——
§ Mr. Donald Dewar (Glasgow, Garscadden)
I am grateful to the Secretary of State for giving way as I have tried hard without success to get an answer from his colleague in Scotland. As I understand it, there is now no dispute about the fact that the 20 per cent. rule is indefensible and must go in April 1993. Why can it not go in April 1992?
§ Mr. Heseltine
The hon. Gentleman knows the answer. As we have said many times, the 20 per cent. that is collected from people on low incomes is covered in the additional payments that they receive. Therefore, it is appropriate to consider the matter, not in two bites—one this year and one next year—but in the introduction of the new system.
§ Mrs. Margaret Ewing (Moray)
§ Mr. Heseltine
I hope that the hon. Lady will forgive me but I must get on.
I have covered the main provisions of the Bill. The schedules provide more detail on those groups who will qualify for discounts, on the billing and recovery procedures, on rebates, non-domestic rating, grants and funds. The council tax is, therefore, based on straightforward common-sense principles. It will provide a fair and stable basis for local government finance. It avoids the obvious faults of the old rating system.
Under the rating system, the valuation based on notional rateable values was difficult to understand. The council tax uses market values which everyone understands and for which there is plenty of evidence. Under the rating system, small improvements to properties led to higher bills. Under the council tax, small improvements will have no effect on the bands and larger ones will be taken into account only when a property changes hands.
Under the rates, each property had an exact valuation, and there was a large range of bills, from the lowest to the highest. The council tax limits the range, protecting households from disproportionately high bills. The rates took no account of the number of people in a household. The council tax will ensure that single adult households pay less. It will also maintain accountability. Thirty-eight million of the 42 million adults in Great Britain—that is, more than 90 per cent.—will be directly taken into account by the council tax. Many of the remainder will be eligible for discount even if they were counted provisionally.
Property is a sensible basis for a local tax—I think that even the Labour party would agree with that—but property does not pay tax. It is people who have to pay tax, and the council tax recognises the fact that, although there is not a perfect correlation between people's circumstances and the value of the property in which they live, there is a relationship.
In place of our straightforward banding system, the Labur party would introduce individual valuations of properties, and it is interesting to consider how it would do that. We know about generalisations of rental values, but 790 will they be arrived at on the basis of the old rating system, or will the Opposition use capital values, which they would argue are easier to understand, or rebuilding costs, or repair costs? Which of those factors will account for what proportion of the valuation process? We have seen no evidence to suggest that the Labour party has done any work whatever on the subject, and the reason for that is perfectly clear: the Opposition do not want to have to answer any of the specific questions that anybody responsible for preparing the legislation would have to answer.
We are left with the concept of fair rates, from a party whose leader, as we have said many times, said as recently as September 1980—[Laughter]Rates are the most unjust of all taxes, which take most from those who can least afford it.Those were the words used by the leader of the Labour party to describe the basis of the system to which his party now wishes to return.
It is worth asking how quickly the Opposition think they can go back. Opposition Members have made it absolutely clear that they would like to return to the system as quickly as they possibly can. In an interview on "Frost on Sunday" on 27 October, the hon. Member for Dagenham (Mr. Gould) said——
§ Mr. Martin O'Neill (Clackmannan)
Was that 1991 or 1980?
§ Mr. Heseltine
On 27 October 1991, the hon. Member for Dagenham said of the community charge:We would … repeal it in almost all circumstances because we still believe, even if there were an election in JuneJune 1992, that is—we would still believe that the quickest and most sure way of getting rid of the poll tax by the following 1 April would be to pick up our fair rates proposals.When asked on "Any Questions" on 5 October how the Labour party would move forward, the shadow Chief Secretary had this to say:There is absolutely no question that if the Government have got the council tax in place … we would replace it with our system of fair rates, which is infinitely superior.But the hon. Member for Sheffield, Brightside (Mr. Blunkett) said just 12 days later that Labour wouldamend the council tax to bring it in line with what we want to do.Not wanting to be left behind, the hon. Member for Dagenham said, on 27 October, "We would repeal it." So Labour Members do not actually know what they are going to do, and they do not have the valuations on the basis of which to do it. That did not stop the hon. Member for Brightside saying, on 17 October:The full scale revaluation for the eventual introduction of fair rates might take two or three years.Now let us put the pieces of the jigsaw into place. Let us start with the unhappy assumption that the Labour party does, indeed, win an election in June 1992. The Labour Government start the process on day one and work all through the long recess. According to the hon. Member for Brightside, three years later, in June 1995, they will have come up with the revaluation. They introduce the legislation in November 1995.
§ Mr. John Evans (St. Helens, North)
On a point of order, Mr. Speaker.
§ Mr. Speaker
I have heard nothing out of order.
§ Mr. Evans
On a point of order, Mr. Speaker. Can you ascertain from the Secretary of State whether he has finished talking about the Bill which is supposed to be having its Second Reading? If he has, we may as well go and get a cup of tea and stop listening to the appalling waffle and rhetoric——
§ Mr. Speaker
Order. The Secretary of State is not out of order.
§ Mr. Speaker
He is introducing the Bill in his own way.
§ Mr. Heseltine
I believe that it is completely legitimate for me to discuss on Second Reading the amendments that the Opposition claim that they want to make to the Bill.
§ Sir Peter Emery (Honiton)
My right hon. Friend has been most generous in giving way and I am grateful to him for giving way once more. As there is support for the replacement of the community charge with the new council tax, will he explain to many people who would like to see it operating from this coming May why there are difficulties in achieving that? It is necessary to have the answer to that on the record.
§ Mr. Heseltine
Because—in spite of the obstruction of the Labour party—one must legislate to take the proposals through the House and conduct a revaluation process, and the local authorities must introduce the software to send out the bills. There is no quicker way of achieving what we intend to achieve than the way we are proposing now.
§ Mr. David Blunkett (Sheffield, Brightside)
If that is so, why did not the Secretary of State take up our offer on 11 and 12 June when he introduced the paving Bill and offered to abolish the poll tax by 1 April 1992?
§ Mr. Heseltine
The hon. Gentleman refused to come and talk to me when I asked him to in January of this year. Labour's proposals are founded on nothing but their desire to obscure the issue and not to reveal their proposals.
According to the hon. Member for Dagenham, there will be a valuation in three years. There will be legislation in November 1995 and Royal Assent in 1996. If we are lucky, and with a fair wind. Labour's new proposals would be introduced in 1997, but the hon. Member for Brightside still thinks that he could have achieved it in 1992. Labour has no conceivable or practical alternative other than to allow us to put our proposals on the statute book. The Opposition know that they would seek to make only some minor changes to what we have designed and carried out.
There are a number of aspects to the Bill which the House will want to consider. The first is that part of the legislation that introduces the consequential and procedural implementations for capping. The House and a wider electorate will want to understand Labour's views on capping. I cannot fully comprehend exactly where the Labour party is on capping. There have been many Opposition views about what they would do.
At first there was an outcry and the Labour party was against capping. That was until the hon. Member for Dagenham appeared on the "Today" programme—I think that was the programme—and said that he was against capping except in extremis. We have tried on many occasions in this House to explore what in extremis means and where it would apply. Would it apply in high-spending 792 Labour local authorities? If so, how high spending? Would there be capping in Kirklees, Barnsley, Greenwich, Lambeth and Haringey, or would it only apply in extremis? Is the real distinction that one would not actually have it anywhere except in some academic concept designed by the hon. Gentleman?
The fact of the matter is that, as we all know, unless one has capping, the one thing that one can be sure about today is that the £140 that was put in by my right hon. Friend the Chancellor of the Exchequer will, in practice, be consumed by Labour authorities pushing up their expenditure. We having made adjustments to bring down the level of contribution of local people to 15 per cent., and having committed ourselves to doing so, I see no argument for local authorities under Labour control then pushing up expenditure on the assumption that the local people will not have to pay it.
§ Mr. Tony Banks
I realise that it is difficult for the right hon. Gentleman, as a millionaire, to understand the problems of Labour local authorities in, for example, my part of east London. However, is he aware that the so-called high-spending authorities are those that provide nursery education and home helps? The top 20 are all Labour authorities. Why does not he rely on the judgment of the electorate in those local authority areas to decide whether a local authority is efficient, high spending or low spending? Trust the people.
§ Mr. Heseltine
I remember what the hon. Gentleman's constituency and the area around it was like in 1979. It was a desert of dereliction which had been ignored by the Labour party in power. The area has now been transformed into one of the most successful urban renewal areas anywhere in the world because of what our party is doing.
The hon. Member for Newham, North-West (Mr. Banks) has helpfully brought me on to the issue of the cuts—the suggestion that, over the course of the decade, there is a pattern of cuts in local authorities. Consumption—expenditure—in local government in the recent decade has risen by 20 per cent. in real terms. That is the fact of the matter. That is why, if we look at local authorities service by service, we find in, for example, education that pupil-teacher ratios have improved from 19:1 to 17:1. There were certainly no cuts there. That is why we discover that one in four of our 18-year-olds are now going on to higher education, and soon it will be one in three. There were no cuts there. We find that standards in education are rising, so there were no cuts there. If we look at services on a service-by-service basis, we see that there are 40,000 extra people in social services, 18,000 extra people in housing, 2,500 extra people in planning, and 15,000 extra people in the police force. All those figures represent increases over the decade.
There is no issue about cuts in those services; it is simply that, as a Government, we have had to constrain local authorities' appetites so that they do not get out of control. Even then, without capping, one finds that they often run seriously ahead of the rate of budgets which are acceptable in the national interest.
§ Mr. John Battle (Leeds, West)
Will the right hon. Gentleman give way?
§ Mr. Heseltine
No, I will not give way.
§ Mr. Andrew Hargreaves (Birmingham, Hall Green)
My right hon. Friend illustrates a point that is well met in my constituency. On various occasions, Birmingham council has increased either its rates or its community charge from 30 per cent. to 42 per cent. In particular, I refer my right hon. Friend to the elements of capping. Is he prepared to give the community charge payers and future council tax payers of Birmingham an assurance that, other than the section that would come from the council's ability or inability to raise that tax, he will cap any excess expenditure over and above inflation? Can he give them that guarantee?
§ Mr. Heseltine
My hon. Friend is as concerned as I am about the levels of increase in local government expenditure, but I ask him to bear with us until we publish the details of our capping proposals, which we expect to do relatively shortly.
§ Mr. Graham Riddick (Colne Valley)
Will my right hon. Friend give way?
§ Mr. Heseltine
I should be grateful if I could make progress.
The next aspect of this legislation that will be of concern to the House is that which deprives councillors of the right to vote if they have not paid their community charge or council tax. That issue has been seriously ventilated in this House and before a wider audience. What I found most extraordinary about our debate on this subject last week was that, when I asked the hon. Member for Dagenham whether he would oppose the legislative proposal to take the right to vote away from councillors who had not paid, he was on his feet as quick as lightning saying, "No, we will not oppose it".
Therefore, I ask the hon. Gentleman the same question today: by what conceivable justification could the Labour party tolerate non-paying councillors standing and campaigning in its name and how could it tolerate having Members of Parliament who do not pay their council tax, yet the moment the Tories do something about it the Labour party climbs on the bandwagon as though it has always supported our action? I find that extraordinary. It gives the clearest possible indication of the Labour party's rule—that it leaves the difficult decisions to us and hides behind the responsibility that we deploy.
Opposition Members never protest within their own party. They campaign on behalf of their non-paying councillors and their non-paying Members of Parliament. They welcome them into their deliberative process and tolerate them until we do something about it and then they capitulate, like the windbags that they are.
§ Mr. Heseltine
§ Mr. Heseltine
Anybody who is interested in the effect that the lack of control and the lack of capping would have—that is what the Labour party has threatened our entire community with if it was returned to power—must be interested to learn that the Opposition have ambitions to extend the scope of municipal activity into yet a further area of extravagance. Doubtless the hon. Member for Dagenham will want the House to read today's interesting interview in the Financial Times. When Andrew Adonis and Ian Hargreaves asked the hon. Gentleman why he 794 now feels that he can take a relaxed view of local government, its councillors and the Labour party, when compared to previous years, he said:Local government today is very much more aware of its responsibilities in restraining expenditure than a decade ago. They all understand very clearly that the sky is not going to be the limit.That will be a reassurance to all those who pay the community charge and who will pay the council tax.
Perhaps I can ask the hon. Gentleman which Government, which party, brought about the discipline. Who made local government realise all that? Who finished the job that the right hon. Member for Bethnal Green and Stepney (Mr. Shore) had to begin in 1977, with the International Monetary Fund at his back? Who had to take that on? Who came to the local government scene determined to change its attitudes? And which party, through its council work, the activities of its Members of Parliament and in the press and the media campaigned, in partnership with its friends in the trade unions, to perpetuate that attitude of irresponsibility? It was the Labour party.
Anybody who thinks that that game is over should return to that article in the Financial Times. When talking about the benefits of competition and about how this Government are always seeking to extend competition in the private sector, the hon. Member for Dagenham said:Ministers are fond of saying there should be no `no-go' areas for the private sector. I would reverse that and say that in principle, there should be no 'no-go' areas for the public sector either.—[HON. MEMBERS: "Ah."] Yes, ah. Not only is the cap coming off, not only are the unions to get their pay-off, but the local authorities will be enabled to indulge in municipal enterprise—what a contradiction in terms—in any area without let or hindrance.
Just to help the hon. Member for Dagenham to argue his case, I refer him to the Evening Standard of 8 November, from which we discover that Lambeth is in the dark and £11 million in the red. So great is the confidence in that bulwark of municipal enterprise that London Electricity wants cash up front before it will fit any more street lamps in Lambeth. No constituent in the country is safe from the marauding instincts of the Lambeth direct labour organisation which will compete in every constituency in every county of the land, given the restraints which the hon. Gentleman intends to remove.
Last of all I want to come to the Bill. I was not referring to this excellent piece of legislation introduced in my name and that of my right hon. Friends. I was referring to the piece of legislation produced by the Labour party to get rid of the poll tax. Within it we have one interesting question. It has been at the forefront of the Labour party's campaign that in order to collect the council tax we shall need a register. We have pointed out to the Labour party that there are no powers in our legislation to give local authorities the right to form a register. That power does not exist. But the argument goes on, "Ah, but you will need so much information about individuals that local authorities will need a register."
Of course, local authorities have a great deal of information about people. That is perfectly true. I dare say that that information may be relevant. That is likely. Before Labour Members get carried away with mirth at the curious concept that local authorities may take a little trouble to find out whether people who claim discounts are entitled to them, I draw my right hon. and hon. Friend's 795 attention to the Bill produced by the hon. Member for Brightside. No one would expect the hon. Member for Dagenham to get as far as producing a Bill, but the hon. Member for Brightside brings an integrity to the Opposition Benches for which I commend him.
Clause 10 of the Bill of the hon. Member for Brightside enables the Secretary of State, after consulting various people,to provide for rebates of, and special help with, fair rates up to the full amount that would otherwise be payable by persons, including the following:(a) single retired people who live alone;How will councils know who they are? Who will find them out? Will there be a list, a register, a snoopers' charter? Where will the information come from?
§ Mr. Blunkett
It is on record.
§ Mr. Heseltine
The hon. Gentleman says from a sedentary position that it is on record. If it is on record, a register already exists. We go on. Pensioner couples, persons and families on low incomes and persons with disabilities will also be eligible for discounts. All those people will be eligible for discounts, regardless of their income. The richest single retired people who live alone? The millionaire's widow? Eligible, eligible, eligible?
The revelation is totally clear. Opposition Members have made it clear by their own admission that one does not need a register. They say that they can achieve many of these things without a register. We have made exactly the same point. It is not necessary to have a register, so local authorities will not have the power to create a register.
Our tax, the new council tax, will replace the community charge by April 1993. We shall see it on the statute book at the earliest possible opportunity. It will be fair and it will be welcomed. It will be cheap to administer and easier to collect. I commend it to the House.
Mr. Bryan Could (Dagenham)
I propose to introduce a novel element into the debate by speaking about the Bill. When the Secretary of State could bring himself to talk about his own legislation, we heard from him in effect an admission that the Government who brought us the poll tax are now bringing us a new poll tax. Just when we thought it was safe to dip a toe into the poll tax water, we are faced with a poll tax mark II. No wonder the right hon. Gentleman did not want to talk about the Bill. All the familiar features, the problems and the objectionable unfairnesses of the poll tax are there, but this time combined with the further complications of a totally new and untried property tax. In other words, it is the poll tax crossed with a capital value tax—a roof tax crossed with a head tax—a cross-bred monster which gives us the worst of all worlds.
The Secretary of State seems to think that we should be so grateful that the Government have promised that the poll tax will go that we should not look too closely at what will replace it. The reverse is true. The poll tax disaster should surely put us on our guard. We must ensure that that terrible mistake is not repeated. The British people will not forgive a Government or a Parliament that make another comparable mistake.
As the Local Government Chronicle put it in its leading article of 1 November: 796To introduce poll tax is a mistake, to bring in council tax is a disaster." The omens are far from promising. The new tax is bred out of panic coupled with cowardice. All its problems arise directly from the political situation from which it springs, from the urgent need felt by the Government to distance themselves from the poll tax and the equal need to placate those internal supporters of the poll tax who will choke over any support for a property tax.
The first motivating factor was the overriding need to be seen to get rid of the poll tax before the next general election. No matter that the poll tax bills will still arrive, bigger and nastier than ever next year and probably the year afterwards. All that matters to the Secretary of State and the Prime Minister is that they should be able to face the electorate with the commitment to replace the poll tax enshrined in legislation. The nature of the replacement and whether it would work hardly matter. As so often with the Government, the illusion and not the reality is what really counts.
That is why haste is everything. The Prime Minister may have complained that under former management the poll tax was bounced through, but he will gladly ram through the new poll tax. The years taken to prepare the poll tax look like a model of wise and thoughtful government by comparison with the pretence at consultation and the shockingly truncated parliamentary timetable with which we are now confronted.
The unseemly haste is dictated not merely by the Government's electoral timetable, but by the fear that if the measure is given proper time for debate there will also be time for the real, but as yet nascent, concerns of Tory Back Benchers and their constituents to grow and mature. A Government seeking to minimise awkward questions will try to railroad the the Bill through, hoping that by the time that Back Benchers have woken up to what is happening and their constituents have understood the dangers it will again be too late.
§ Mr. Patrick Cormack (Staffordshire, South)
How does the hon. Gentleman reconcile this carefully rehearsed diatribe with his oft-stated desire to abolish the poll tax as quickly as possible?
§ Mr. Gould
Because our course for abolishing the poll tax provides a guarantee that it can be done, because we shall pick up an existing system that we know will work.
§ Mr. Robin Squire (Hornchurch)
Will the hon. Gentleman give way?
§ Mr. Gould
I shall make some progress first and give way again in a moment. As the hon. Gentleman knows, I usually do.
It is not merely we parliamentarians who are the victims of that haste; local government is again caught up in a hopeless struggle against the odds. The poll tax has been a nightmare which shows no sign of ending. Non-collection will total £1.5 billion by the end of this year and 7.5 million summonses will have been issued. The courts and the police will be unable to cope.
Against that background, local authorities are now required to prepare for a totally new tax—requiring a new valuation, a new banding system, new discounts and new registers. As Mr. Ron Lord, Wakefield's assistant chief financial officer, points out in the Municipal Journal, they could at least introduce the poll tax 797against a background of a stable rating system which managers were able to put on automatic pilot while diverting their attention to the multitude of practical problems that were to arise with the new system. There is no such luxury available with the implementation of council tax.
§ Mr. Squire
As I expected, the hon. Gentleman responded to the last intervention by saying that a Labour Government would simply reintroduce rates. He knows that that would not only cause a major upheaval in local government but would be followed shortly afterwards by other proposals. The hon. Gentleman must recognise that the Labour proposal would cause a double upheaval and a return to a system which the Opposition Front Bench has criticised many times.
§ Mr. Gould
I am disappointed in the hon. Gentleman, who usually follows these matters quite closely. He will know that we propose for the sake of speed and practicality to use an existing valuation register, which everyone agrees exists and can be used. To the great relief of local government, we would then abolish the 20 per cent. contribution rule and extend the rebate system to help those special groups which might otherwise be disadvantaged. We would then be able to do what Conservatives should have done from the outset—pick up and operate a tried and trusted system and concentrate on dealing over time and in proper order with imperfections that had developed. That is what we propose to do, and in his heart of hearts the hon. Gentleman and many other Conservative Members know that that is the right course.
No wonder that independent experts and local authority treasurers are in despair about the timetable that is being forced upon them. As Mr. Lord warns, there is no room for mistakes or changes. It will have to be right first time. Most experts agree that it cannot be done and that the poll tax will live on until 1994.
§ Sir Peter Emery
Will the hon. Gentleman give way?
§ Mr. Gould
No. The hon. Gentleman is having a good try. I shall give way when I am ready.
I appeal to the Secretary of State, his Ministers and the House not to inflict chaos yet again on local government. Please do not posture and pretend that these problems do not exist. We have been warned in the most solemn terms, and a Government who were responsible for the poll tax should surely this time show some humility, some willingness to listen and learn.
Of course the Government could have avoided these difficulties. They could have done what we suggested. They could have accepted our offer of co-operation on a short Bill to return to the rating system as a first step towards a more general reform. But, again, the politics got in the way. No doubt it was hard enough to accept the volte face involved in embracing an element of property tax. A return to the reviled rates would presumably have been too much to take.
All the denunciations of a property tax could just about be accommodated, but how were the Government to overcome the whole rationale of the ill-fated poll tax experiment, the supposed unacceptability of the rates? The country is asked to pay the price of the Government's overriding concern that they should not lose face.
§ Sir Peter Emery
Will the hon. Gentleman give way?
§ Mr. Gould
No. I shall continue with my speech and will allow the hon. Gentleman to intervene later if he wishes to do so.
That overriding concern is why we have to have not just a property tax but a new and different property tax that is fraught with novel and unpredictable difficulties. That is why we have to have a new basis for valuation, a capital values tax. How is a totally new, totally comprehensive valuation of capital values—something that has never before been done in England and Wales—to be carried out within the dangerously tight timetable dictated by the Government's electoral concerns? That is where the banding proposal comes in, offering as it does, by virtue of its crudity, a short cut to a new register which poses the most horrific problems on the way.
Those problems were foreshadowed by the confusion that attended the production of the Government's banding proposals. No work was done. Figures were plucked out of the air. Guesses were made and 14, nine and seven bands were variously decided upon and then rejected. By some arbitrary and misleading reading of the entrails, it was apparently finally decided that eight bands should be the basis.
Banding is by necessity crude and regressive. Properties that are worth less than the mid point in the band must be overvalued, whereas those above the mid point are necessarily undervalued. We understand that no individual valuations will be done and that leaves unanswered questions about how individual properties—for example, those that have been adapted for disabled people—will be assessed. We heard today from RADAR that it remains far from convinced that it can rely on the Minister's assurances that benefits available under the Rating (Disabled Persons) Act 1978 will be restored.
The same panic-stricken drive for speed dictates that the valuation must be done on the cheap. There will be subcontracting to local estate agents, who will tender for cut-price job lots of up to 20,000 houses at a time. What confidence can the individual householder have in such a process? Surely it is storing up horrendous problems for the future. We can expect hundreds of thousands of appeals from irate householders, just at the time, in early 1993, when the new tax is supposed to be implemented.
§ Sir Peter Emery
§ Sir Peter Emery
I thank the hon. Gentleman for giving way, and refer him to a part of his speech when I tried to gain his attention. He passed over—I might suggest even glibly—the fact that 1.5 million people have not paid their community charge. Will he, from that Dispatch Box, condemn that non-payment? Otherwise, he will be encouraging it.
§ Mr. Gould
The hon. Gentleman makes an entirely false point, because we have repeatedly condemned nonpayment. He cannot even get the facts right. That was why—and I confess it to him quite freely——
§ Sir Peter Emery
I was right.
§ Mr. Gould
When the hon. Gentleman reads Hansard, he will understand my reluctance to give way to him. I somehow had the feeling that he was not properly 799 following the argument. As a consequence, he misunderstood—[Interruption.] I am happy to repeat the facts. By the end of the year, there will be a backlog of uncollected poll tax amounting to £1.5 billion. En case anyone rushes to say that that is the fault of local authorities, the point that I made, and which the hon. Gentleman failed to understand, was that by that point local authorities will have had to issue 7.5 million summonses—the biggest debt collection exercise in the history of the world.
§ Mr. Keith Mans (Wyre)
§ Mr. Gould
I regret that I cannot give way. I am not encouraged to do so when interventions are based on such inaccuracies.
The real problem arises because of what the Secretary of State for Scotland, who has now left the Chamber, revealingly described last week as dampened banding—the artificial compression of the true range of property values into the eight bands defined by the Secretary of State for the Environment. It is that, together with the insistence on one national register for England, which causes so much distortion.
The need for a different range of property values in Scotland and Wales has been properly recognised, which makes it all the more baffling that, given that the most extreme variations in property values occur within England, the Government have blindly insisted on only one set of bands for England as a whole. The consequences are horrific. As the right hon. Member for Brent, North (Sir R. Boyson) said during last week's debate—and I am sorry that he, too, has left the Chamber:But the largest differences are not between Scotland, England and Wales but between the north and south of England, where the disparities in property prices are tremendous. Only 1 per cent. of houses in greater London are in the bottom band, whereas in the north 47 per cent. of houses are in the bottom band. In greater London, 31 per cent. of houses are in the top three bands, whereas in the north only 4 per cent. are in the top three bands. Those are not anomalies—they are great chasms."—[Official Report, 1 November 1991: Vol. 198, c. 142.]I can only agree.
The consequences for many people will be that the new tax will be a form of property poll tax—a virtually flat-rate tax. Worse than that, for those in areas with high property values the flat-rate tax will be at or near the highest level, even though they live in ordinary, average houses. Because the dampening or flattening of the bands has the effect of reducing the bills for those at the top of the scale, the necessary consequence is that the bills for those lower down the scale will be higher than they should be.
How did the Government get into that position? It is bad enough to have a crude and regressive banding system in the first place, but why have a system that is deliberately distorted in that way? The answer again lies in politics and the tangle into which the Government have got in trying to extricate themselves from the poll tax mess. The poll tax was, and is, hated by the majority of people. It benefited a wealthy minority, who found that its deliberate unfairness meant that their bills were reduced. The majority of those beneficiaries were Tory supporters. Not surprisingly, they are reluctant to give up their windfall. The Secretary of State decided that they had to be protected—that it was politically too dangerous to create yet another set of losers.
800 The new tax, like the poll tax before it, is deliberately skewed to protect the better off and to excuse them from paying their fair share. That is why the bands are dampened—to enshrine the political principle of a poll tax, the principle of unfairness which so justifiably outraged the whole people.
I know that this is a bit too complicated for the Secretary of State—details and sums were never his strong point. In the debate on the Loyal Address last Wednesday, he revealed that he had not yet got to first base, when he asserted:If one does not raise more money from the top bands, one does not actually help the people in the lower bands."—[Official Report, 6 November 1991; Vol. 198, c. 533.]That could be dismissed as a piece of charming naivete if it were not for the fact that this is the man who proposes to inflict that unfair system on the British people, and the man who will himself benefit—in the sense that his bill as a millionaire in the heart of London will be lower than that of most other bills in the country. Will the right hon. Gentleman admit that he did not understand, and perhaps still does not understand, the central feature of his own proposals? I believe that his own preferred phrase is, "Get off your butt."
The unfairness was not the only concession made to the devotees of the poll tax. A Government and a Secretary of State who belatedly tried to make a virtue of recognising and acting upon the obvious defects of the poll tax have simply lacked the political will and courage to make a decisive break.
§ Mr. Gould
No, I am dealing with the Secretary of State. When I have finished, I may give way.
As a result, we have a continuing head tax element, which adds to the complexities and difficulties of the new tax. That is the price which had to be paid to placate the remaining Thatcherites—the sop to Cerberus. Unfortunately, it was a very large and costly sop.
It is that notion of single person discounts that defies what should be the basic principle of any such tax in modern Britain—that it should reflect the ability to pay. Discounts for single-person households will offer reduced bills to 7 million taxpayers, or 33 per cent. of the total, but they will be wholly untargeted and unrelated to the income of the householders.
A millionaire living alone in a luxury penthouse will, as a result, have 25 per cent. knocked off his bill, while a family man struggling on a low income will not. The family man's bill will have to be higher than it would otherwise be to make up for the discount offered to the millionaire. Where is the fairness in that?
The position becomes even more complicated when account is taken of the status discounts. Those discounts are, in the case of people such as students, extremely welcome, but they immediately give rise to other anomalies. The Secretary of State was uncharacteristically uncertain when he attempted to draw distinctions between questions of exemption and eligibility for rebates and discounts.
The complications become nightmarish when one realises that the liability in each case is to be calculated on a daily basis, so that individual liability could change from day to day not only a result of the individual moving his or her address—which, as the Audit Commission 801 discovered, occurs on a massive scale—or status, but as a consequence of a move or change in status by others as well.
How are local authorities to keep track of all those moves and changes of status within households, and of the knock-on consequences for individuals who do not themselves change their address or status, but whose status is changed by the moves of others? The only answer is that they will have to keep a record of who lives where. That is the considered view of the local authority associations and of all those who have looked at the problem.
It does not matter much whether local authorities are or are not required by statute to keep something called a register. The practical needs of the situation will require them to have a point of reference and a database. If they do not keep a register themselves, they will no doubt make use of the one register that does exist—the electoral register, thereby prolonging and exacerbating that threat to civil rights already posed by the poll tax, which has induced hundreds of thousands of people to trade away their votes.
Few local authorities will be much comforted by the distinction attempted by the Secretary of State for Scotland last Wednesday:There is all the difference in the world between a register and a list. A register is a statutory designated body that is a basis for designating liability, and a list is a source of administrative efficiency for the use of the local authority."—[Official Report, 6 November 1991; Vol. 198, c. 540.]If he expects, on the basis of such unconvincing casuistry and gobbledegook that local authorities will say, "That's all right then," I fear that he will be sadly disappointed.
§ Dr. Hampson
That particular point is referred to in Labour's fair rates document, which makes it crystal clear that the only people in the Chamber calling for a register are Labour Members. That document calls for the computerisation of the Inland Revenue to be the basis of the calculation for liability of widowers, pensioners, the disabled, and other groups. The only people arguing for a register are Opposition Members. No register will be needed if people have to claim.
§ Mr. Gould
The hon. Gentleman has totally misinterpreted, to put it kindly, or has misreported what is in our document. The only proposals that we made in respect of the categories that he mentioned are for a long-overdue extension of the existing rebate scheme.
Again, the Local Government Chronicle gets it right. It said in the same leading article that I quoted earlier:If the single person discount remains a feature of the tax, they will have to create a register—a point that Michael Heseltine will eventually have to acknowledge. The discount—the achilles heel of the system—would be better abandoned now rather than later.I hope that the Secretary of State for the Environment heeds that advice, although on past form I am not optimistic.
§ Mr. Tony Banks
The Department of Social Security's internal working party's papers make it clear that local authorities will have to keep a register if they are to apply fairly the benefits that the Secretary of State did not spend much time talking about in his roustabout Second Reading speech.
§ Mr. Gould
My hon. Friend is right, and his advice coincides exactly with that of all the professional bodies.
§ Mr. Harry Cohen (Leyton)
There is nothing inherently terrible about keeping registers. The problem with the Government's system is that the information that is required to gain benefits and discounts is so detailed and personal that it will be a terrible invasion of the individual's privacy.
§ Mr. Gould
I continue to believe that it is the civil rights implications of keeping a register of where people live that is the most worrying feature—of not only the poll tax but the proposed council tax.
The poll tax legacy continues to do its damage. The rules establishing joint and several liability are another survivor of the poll tax, causing as they do such difficulty, incomprehension and bitterness within families. The new tax will be costly to administer and complicated to collect. The collection level will be low and the collection costs will be high. The load lifted for those at the top of the scale and for the single millionaire will mean an extra burden borne by those less able to pay. For all those reasons, council tax bills will—on the Government's own figures—be much higher than they should be.
Other aspects of the Bill arouse almost equal concern, but I will mention them only briefly. The uniform business rate is to remain nationalised, narrowing local government's tax base and cranking up the gearing effect to an alarming extent. The grant system is to be calculated on the same distorted valuation base that will so unfairly penalise those districts that have high property values but low average incomes. The 20 per cent. contribution rule is to be done away with, but, the abandoning of the principle having been conceded, it is nevertheless to be retained for the remaining lifetime of the poll tax.
Why is the chance not being taken to abolish the rule—if not immediately, at least from 1 April 1992?. Why is the misery to be prolonged for millions of people? Why is the Audit Commission's advice to be ignored, and why is local government to be forced to go through the costly and futile business of trying to squeeze blood out of millions of stones?
This is an ill-starred Bill, conceived in haste out of the disaster of the poll tax and fathered by a Secretary of State who is more interested in gimmickry than in good government. It is a sort of poll-tax zombie which will stalk the land long after the poll tax has supposedly been laid to rest. There is only one chance for us to ensure that the worst mistakes of the poll tax are not repeated and magnified: we can take advantage of that chance if the House, for once, does its job properly, standing up for the constituents whom we represent and insisting that good government must not be prostituted to short-term electoral considerations. We, the Opposition, will do our duty; I appeal to Conservative Members to do theirs.
§ Mr. Robin Squire (Hornchurch)
I am delighted that I have been called before any other Conservative Back Bencher. As hon. Members on both sides of the House will know, Conservative Members who opposed the community charge at the time of its introduction have had a difficult few years. To the dismay of the then Ministers, my voting record in this regard was—probably—rather similar to that of the hon. Member for Dagenham (Mr. 803 Gould). My reaction to today's news is, however, very different from his. I unreservedly welcome the Bill, for it is transparently obvious not only that the new system will be fairer than the present one, but that it will be delivered more quickly than could any of the options suggested by the hon. Member for Dagenham.
I feel—not least because of the experience of the past few years—that I should explain why I believe that the present tax should go. Some of my hon. Friends may regret the current lack of consensus, but there has always been a lack of consensus in regard to this tax. I remember saying in the House that it would be repealed by the first non-Conservative Government—or, quite probably, by a future Conservative Government. That is one of several predictions that I have made which are now proving correct.
§ Mr. John Maxton (Glasgow, Cathcart)
Did the hon. Gentleman vote against the Scottish legislation?
§ Mr. Squire
The hon. Gentleman—who has questioned me from a sedentary position—will be delighted to learn that I did not support the Scottish legislation at any stage.
§ Mr. Maxton
Unlike his right hon. Friend.
§ Mr. Squire
I suspect that I had better not reply to any more sedentary interruptions, or my hon. Friend the Whip will become increasingly upset with me—as will you, Madam Deputy Speaker; that is even more important.
One reason for the change is the difficulty of collecting the current tax, especially in the inner cities. Just as important is the fact that the tax is not perceived to be fair by a significant number of people, particularly those whose circumstances place them just above the rebate level. It must therefore be reformed. My right hon. Friend—whose speech has greatly heartened his Back Benchers—was right to present this Bill, and to stress the importance of passing it quickly. I am sure that it will be possible for us to debate the issues in depth, while also ensuring that the measure is sent on its way and the new tax is in place on 1 April 1993.
Having made my views on the community charge clear, let me add that I believe that there should be no question of an amnesty for non-payers. That would constitute an affront not only to hon. Members, but to the many law-abiding people all over the country who have met their responsibilities, and who rightly expect local authorities to continue to chase those who are not doing so.
Let me make a small suggestion, which I am sure can be tackled in Committee. I feel that local authorities should be expected to exercise some judgment with regard to very small sums that are outstanding—whether the tax concerned is the community charge or the old rating system—if it would clearly be unproductive and expensive to pursue them. There should, I think, be provision for authorities to write off such debts.
The main point about the new tax is the fact that it is property-based. Many of us consider that an advantage, and I hope that it will be given at least a qualified welcome on both sides of the House. The Labour party has been on an odyssey of a journey, with some 70 stops to date and more to come—especially after the speech made recently by the hon. Member for Dagenham. That applies not least to the question of valuation.
I am a reasonable person. I do not happen to believe that, come next spring or summer, when the valuations will all be in, the hon. Member for Dagenham—were he to 804 become Secretary of State for the Environment, which I do not think he will—would ditch those valuations and return to the rates, and then to some four-part valuation system. That would not make sense. The hon. Member for Sheffield, Brightside (Mr. Blunkett) has already implied that there is a faint possibility of Labour's adopting the valuations. The stronger that possibility becomes, the more chance there is of a consensus. On issues such as this, consensus is desirable, and I feel that adopting professional valuations would be a good idea.
Let me tackle the question of regional banding head-on. As a London Member, I might be expected to think, instinctively and understandably, that regional banding makes sense. I have examined the matter in some detail, and I believe that regional banding would require justification; its adoption would certainly produce many more anomalies than would otherwise arise.
Let me give an example, however. Even if we agreed on the London boundaries—taking, presumably, the old GLC area—there would still be a major impact on Essex, Kent, Surrey, Berkshire and Buckinghamshire, all of which contain properties whose value has some correlation with that of properties immediately inside the GLC boundary. If those areas are included, what will be the position in the outer parts of the west midlands, for instance, or in the more prosperous parts of the Bristol area? Once we start, we find that no natural regional boundary can be drawn.
Apart from the practical problem, we encounter a moral principle here. Are we trying to suggest that, although this is to be a property tax, we should ignore property values and endeavour to ensure that people receive the same bills regardless of what their homes are worth? I do not think that that is a terribly moral argument. Surely someone whose property is worth three times as much as another property should be expected to pay more than the owner of that property, especially now that the property-tax element is so much smaller than it was under the old system.
§ Mr. Gould
I was confident that the hon. Gentleman would give way to me: we seem to have established the practice.
I have listened with considerable interest to what the hon. Gentleman has had to say. Does he not accept that the problem arises—a problem that both he and I, as well as some of his hon. Friends, wish to address—not just as a result of a national banding system for the whole of England, but because the system is dampened, according to the Secretary of State? That is what forces people living in some parts of London to be crowded into the top two or three bands, and thus to pay what is virtually a flat-rate tax at the top level. There is little differentiation between those living in properties of average value and those living in much more expensive properties. That is what is worrying people in London, and it is a function of dampening rather than of the banding principle.
§ Mr. Squire
I disagree with the hon. Gentleman. Had there been major steps in the bands—eight times, or whatever figure the hon. Gentleman might care to suggest—I should have sympathised with his point. Although the system that is to be introduced distinguishes between properties of considerably different values, it does not do so in such a way that one ends up with some of the anomalies that we found with the old rating system.
805 For example, a widow who had lived in a large property for 40 years might not want to move from that property for the last 10 years of her life. Under the old system, her rates bill was unlimited. The banding system ensures, above all, that the highest rate is related to the lowest rate. That being so, we are being fair to people who are in such a position and to people in general. We shall ensure that there is an upper limit and that what they pay will not go above it.
§ Mr. Cormack
Both my hon. Friend and I have taken the same line on the poll tax, from Scotland onwards. My hon. Friend's reference to a widow who had lived for 40 years in her home provoked me to intervene and to say that perhaps in Committee we ought to consider length of occupation of a property. A problem faced by some people is that they bought their house when it was not very dear. Now, however, having lived there for many years, they find that it is worth a very great deal of money. Their income, though, has not kept pace with property prices. I hope that that point can be addressed in Committee.
§ Mr. Squire
My hon. Friend makes a legitimate point that ought to be considered by the Committee. I am sure, however, that Ministers will be anxious not to create too many complexities within the system.
As for the single-person discount, if my earlier comments on valuation hold true, it is possible that the single-person discount will be one of the major differences between the two parties. I have always believed that the biggest, perhaps the only major drawback of the old rating system was the way in which single people inevitably lost out by comparison with two, three, four or more wage earners in similar if not adjacent properties. If the rates were to be reintroduced without such a charge, in whatever valuation form, the new system would stumble and fall at that hurdle. I believe that 25 per cent. is about right, though it would be foolish to suggest that 25 per cent. is the uniquely correct figure. Nevertheless, there is some correlation between the full charge, the 25 per cent. and the 50 per cent. off an empty property.
It is important to understand why. I do not know how many properties throughout the country contain only one person, but I am told that it is as high as 33 per cent. If we introduced a property tax that did not recognise the special position of the single person, which applies in one out of three homes, there would be a legitimate outcry. People would say, "We expected this system to be fairer. The only bit that we liked about the current system was that it recognised the single person, whereas the rates did not. In return for losing that—and we understand why—we expect our position to be recognised in the replacement system.- They would be right to say that. I urge the Opposition to consider the impact of not recognising the position of people living alone, which would be the consequence of their proposals.
I welcome the abolition of the 20 per cent. rule. I do not intend to say too much about it. I suspect that it is welcomed in all parts of the House. That experiment began before the introduction of the community charge, although most people outside the House do not remember it. It led to an inordinate amount of local authority administration and attracted a limited amount of income compared with the expense of administering it.
806 I welcome also my right hon. Friend's treatment of students. I have two in my household. It is difficult for some of us to get used to the concept that students will be invisible. Even if they are invisible, they will certainly still be heard. Nevertheless, the principle of making students invisible is absolutely right. It is an improvement on the present position, as is the treatment of home improvements. When a property is improved, I understand that its valuation will reflect the improvement only on the sale of the property. That will provide a direct incentive to people to improve their property. Under the old rating system, property improvements led to a higher valuation and higher rates.
I reject the need for a personal register. There will be a 100 per cent. property register, but as 50 per cent. of those on the register will not be eligible for one or other of the discounts available, it is iniquitous to suggest that we also need a full-blown 100 per cent. personal register. I confidently expect that to be one of the gains of changing the system.
Like every Conservative Member—I understand that Opposition Members now agree with us—I welcome the proposal that councillors should be unable to vote on setting the local charge if they have not paid their community charge or council tax. That change is overdue. I understand that about 250 councillors throughout the country still refuse to pay. They are joined by six Members of Parliament—not, as some of my hon. Friends might think, by just two Members of Parliament.
A small point that is relevant to hon. Members in all parts of the House that continues regardless of the underlying system is the way in which standing spending assessments operate. Almost as I say it, I can feel those who sit on the Treasury Bench stiffening. The concept of how we distribute grants is one that never goes away. We are correctly changing the underlying basis of local government, but many local authorities, and the Members of Parliament who represent those areas, are convinced beyond argument that the present system does not fairly reflect their needs and the pressures upon them compared with the way in which it reflects the needs of and pressures on other authorities. There is no easy answer. My right hon. Friend the Secretary of State for the Environment—in his second coming, so to speak—is more aware of the problem than others may be. I urge my right hon. Friend and the Minister for Local Government and Inner Cities constantly to keep in mind the deep dissatisfaction about aspects of the standard spending assessments and to remember that even small improvements can bring benefits out of all proportion to those who feel discriminated against.
I am conscious that I have been on my feet for some time. I do not wish to prevent others from speaking. [HON. MEMBERS: "No."] When I was trying to make an equivalent speech against the community charge, Madam Deputy Speaker, the response from my hon. Friends was very different. It is strange how things change.
In his most seductive way the hon. Member for Dagenham sought to sell to us a return to the rates. It is important to underline why that is a foolish proposal. In an interjection I referred to the fact that any change is time consuming for local authorities. It involves additional work which they would rather avoid.
807 We must recognise the consequences of reverting to the rates system, the first of which is that the residents of properties in England and Wales that have been constructed since 1973 will feel unfairly treated.
The issue of single-adult households has returned, which cannot be to the advantage of the Labour party. Labour's proposal is merely a staging post for a further change, about which, blessedly, we were given limited information today. Labour proposes a return to the rates despite the fact that if I were to go through past copies of Hansard I suspect that I would find that the majority, if not all, of the shadow Cabinet had criticised the rates system without qualification. That does not seem to be much of a recommendation for the system.
If Labour's policy to return to the rates is looking a little shaky, its policy on expenditure is simply incredible. The cumulative impact of its proposals will be that local authorities will not be capped, there will be no compulsory competitive tendering and no Audit Commission. However one seeks to describe it, that must mean higher local authority spending. Labour wants no limit on bills for higher value properties and no transitional relief—all in all, a series of inadequate proposals.
This is a good day for those who have taken a long interest in local government finance and are looking forward to having a tax in place that will be seen to be fair and that will cause few of the problems that we have experienced in the past. I give it my unreserved support and look forward to the Bill emerging from Committee.
§ Mr. Terry Lewis (Worsley)
It is always a pleasure to follow the hon. Member for Hornchurch (Mr. Squire). We went in the same Lobby when we were going through the tedium of trying to defeat the poll tax. Sadly, not enough Conservative Members shared the hon. Gentleman's view.
I must part company with the hon. Member for Hornchurch now, because we are discussing poll tax mark II. I cannot describe the council tax as any thing other than a mish-mash of poll tax mark I. The poll tax will stay with us as long as people are still being dragged through the courts. I make no excuse for people who can pay but will not pay: I have no truck with such people, nor have my colleagues. I always took the view that whatever the origins of the tax, council services must be paid for. I came to this place to provide services to people who needed them. It did not seem fair not to pay the tax and then ask why home helps were not being paid. I hope that that point is out of the way; I do not want to hear more about it for the rest of the debate.
That does not alter the fact that many millions of people are still suffering. The tragedy is that, like mark I, poll tax mark II will be bulldozed through the House. Mark I was ill thought out; it was the then Prime Minister's prejudice being translated into legislation. Events are being repeated today to help the Tories' electoral chances. The baloney about the new Prime Minister having a different view because he is a different Prime Minister and altogether more wholesome than the previous one does not wash with me or with people outside.
The Bill has nothing to do with efficiency in local government. In the past 12 years, more than 100 measures designed to make the delivery of local government services more difficult have been passed. As my hon. Friend the 808 Member for Dagenham (Mr. Gould) pointed out, it has nothing to do with fairness but everything to do with political expediency.
The motive for this change came during the Conservative party leadership campaign last November. The Bill is typical of the nervousness and panic of Conservative Members who have marginal seats in the north-west. It is the same as all the lunatic policies that they have slavishly followed. They voted in the Lobby night after night, but when they returned to their constituencies they found that the legislation militated against the interests of their constituents, so they turned tail, chased the new leadership, panicked about small houses in Ribble Valley and elsewhere in the north-west and here we have poll tax mark II.
I hope that some Conservative Members will reflect on and recall what happened last year and when we originally debated the poll tax. They should also speak to the hon. Member for Hornchurch, who argued strongly against the poll tax. They should recall what happened, because we shall be in the same position in a few months' time. In the 1987 election campaign, I concentrated on the poll tax.
§ Mr. Tim Janman (Thurrock)
Are not the hon. Gentleman and his party panicking? After Labour's pathetic swing in the Langbaurgh by-election, its only way of opposing the Bill is to sloganise and to keep shouting "poll tax mark II" when it is nothing of the sort.
§ Mr. Lewis
The hon. Gentleman's constituency will be a Labour gain at the next election. What the country and this party needed last Thursday was not three by-elections but a general election. We did not get the general election because of panic here and in No. 10.
In the 1987 general election campaign, I ignored the literature from headquarters and concentrated specifically on the poll tax. I am glad that I did so, because my electors probably know a little more about the darn thing than most. That will be reflected in the election result in a few months' time.
Before Conservative Members allow history to repeat itself, I want them to find a little humility, which would help. I want them to consider the damage that has been done to people because those Members did not think and trooped through the Lobby blindfolded. I want Conservative Members to think of the human resources in town halls which were wasted by devotion to an inordinate amount of administration over the past few years and which could have gone into the delivery of services—[Interruption.] I was about to say that that happened in Tory as well as Labour town halls, but contributions like that make one doubt the case.
Conservative Members should consider the wastage of resources—the waste of money and of the time of civil servants and the effort that was demanded of the judicial system. My hon. Friend the Member for Dagenham (Mr. Gould) recited the numbers of people who had to go through the courts. The hon. Member for Honiton (Sir P. Emery), who intervened earlier and has now left his place, believes that all the people who have gone through the courts already will not pay this time. I do not agree.
Most of the people who have gone through the courts, most of those who have chosen to pay the poll tax rather than eat and most of those who are still in debt because of the poll tax are decent, honest, honourable people who were caught up by legislation introduced by selfish people. 809 I should like Conservative Members to show a little humility before the debate finishes. I should like a Minister to say to those people, "We are sorry. We made a mistake. We recognise that you are paying for it." But to believe that that will happen is to live in cloud cuckoo land.
During the past few months, one of the most effective images on our television screens of victims of the infamous poll tax was the very sick lady who, with the help of ambulance people, bravely went to court to say why she could not pay her poll tax. She did not have the resources to pay it. She was in court with a car battery keeping her vital medical equipment going. That is what the Government put people through with poll tax mark I, and it will happen again.
More often than I care to remember, Conservative Members shout across the Chamber, "You are throwing money at problems. You cannot do that." I cannot think of any problem which has arisen during the time I have been involved in local government and in the House that has had as much money thrown at it as the Government have thrown at the poll tax—about £50 billion just to reduce the bills before the local elections a year or so ago.
The Government should be thoroughly ashamed of the 2.5 per cent. additional VAT. That is not for a week or a month but for ever. Through VAT, people will be paying for ever for the poll tax mistake. At the next election, the Government will not be allowed to get away with it.
What will poll tax mark II provide? The prospects are not good, and I want to put five questions to Conservative Members. First, will the council tax be fair? My hon. Friend the Member for Dagenham demolished that argument. It will be manifestly unfair and as unfair as poll tax mark I. Secondly, will there be less to pay? Judging by the predictions on almost every aspect of financial life, we have to say with regret that the council tax predictions will be as out of sync as all the others, and people will not pay less.
Thirdly, will the council tax provide more accountability? Under the Government's policy, accountability has been eroded in every aspect of human life. Current levels of Government grant and capping powers make it unlikely that the council tax bills will offer any more public choice than was offered under the original poll tax. I cannot say hand on heart that I am confident that there will be more accountability with this tax.
Fourthly, what about collection costs? One of the problems with the collection of the poll tax was the ridiculous 20 per cent. rule. From the beginning, it was argued in this place that that was a ludicrous concept, and events have proved us right. Like every Opposition Member, I am pleased to see it go. None the less, I am sure that the cost of collecting the council tax will be far higher than the cost of collecting any popular tax should be. The council tax will not pass that fourth test.
Fifthly, will a register be necessary? We have gone over that argument in detail today and, no doubt, we will do so in future. I intended quoting the comments last Wednesday by the Secretary of State for Scotland, but I was beaten to the punch by my hon. Friend the Member for Dagenham.
§ Mr. Ian McCartney (Makerfield)
Quote them again.
§ Mr. Lewis
I will not do so. No doubt, Madam Deputy Speaker, you will be bored by some of the contributions that we are likely to make during the next two days, and I do not want to bore you further.
Like all the professional bodies with an interest in this matter and which have reported ad infinitum on it, I am certain that, of necessity, there will be a register. I do not know whether it will be the list proposed by the Secretary of State for Scotland or the register about which my hon. Friend the Member for Dagenham spoke.
I hope that Conservative Members find a little humility, that they are prepared to reflect on the mistakes of the past, that they will listen carefully to the debate over the next two days and that one or two will have the courage to vote in the right Lobby tomorrow night.
§ Mr. Patrick Nicholls (Teignbridge)
I am sure that the hon. Member for Worsley (Mr. Lewis) is right when he says that we should look into the entrails of the community charge to see whether any lessons might be drawn from it. Whatever else I might disagree with him about, he is right on that point.
The hon. Member for Worsley is wrong about one aspect, although if I were in his position I would probably say the same as he did. He is wrong to present this tax as community charge mark II. In a sense, Labour Members have to say that because, if it is not community charge mark II, they have all sorts of problems. One could probably speak all evening and on into the early hours of the morning about ways of proving that it really is community charge mark I.
The hon. Member for Worsley paid a generous tribute to my hon. Friend the Member for Hornchurch (Mr. Squire) for his able and sterling work over the years in being a thorn in the flesh of Ministers. My hon. Friend the Member for Hornchurch said that climates change and that one man's villain can be translated, within weeks, into someone else's hero.
I put it rhetorically to the hon. Member for Worsley that, if my hon. Friend the Member for Hornchurch believes that it is community charge mark II, he is precisely the sort of person who is likely to vote against it. The hon. Member for Worsley might conceivably have doubts about me, but I shall say nothing more about that.
§ Mr. Nicholls
I thought that I would give the hon. Member for Worsley something on which he could feast and that I could record his comments for posterity. My hon. Friend the Member for Hornchurch is not a man to take anything other than an independent view. He does not think that this is community charge mark II, and I suggest to the hon. Member for Worsley that my hon. Friend is probably correct.
§ Mr. Lewis
The hon. Member for Hornchurch (Mr. Squire) and I worked on the Select Committee on the Environment and I also have great regard for his work. However, even he knows that the run-up to a general election might colour one or two attitudes.
§ Mr. Nicholls
If there is a man in the Conservative party who can take a fearless and independent view it is my hon. 811 Friend the Member for Hornchurch. Lest my praise embarrasses him as much as I hope that it embarrassed the hon. Member for Worsley a moment ago, I shall move on.
One cannot consider the council tax or the community charge in isolation from the old rating system. For a moment—but only a moment—I was almost overwhelmed by a sense of nostalgia when I heard the hon. Member for Dagenham (Mr. Gould) talk longingly and lovingly about the good old days when we had the good old rates system. When one hears such nonsense one has to pinch oneself to remind oneself who is in the real world. One dislikes—although frankly, not very much—treading on private internal grief, but we should bear it in mind that during the past four years the Labour party has had not one or two but 72 changes of heart about local government finance.
I should say to the hon. Member for Dagenham—if pressing commitments had not taken him elsewhere—that if it is so easy to return to the old rating system, it should not take 72 volte faces to do so. The hon. Member for Dagenham found that his route back to the obvious was blindingly tortuous. The reason was summed up in a phrase that was so pithy that one wonders whether he wrote it himself. The phrase was used by the Leader of the Opposition in 1980. He said that the rates werethe most unjust of all taxes.As a taxpayer I consider all rates unjust unless someone else is paying them. However, one must grant the Leader of the Opposition that he was probably right—rates probably were the unfairest of all taxes. The hon. Member for Dagenham said with his typically Antipodean casuistry that there may be imperfections in the system but they could be dealt with by the 72 steps, so that one ends up where one did not want to start.
If one can say that a tax is not merely unpopular but that it is the most unfair of all taxes, that tax is not riddled with imperfection—it is a tax that is intellectually dead from the neck up. It is a tax that must go. The Labour party cannot have it both ways. It was sad to hear the hilarity with which the Opposition greeted the quotation earlier in the debate. The point was made that the Leader of the Opposition made that statement 10 years ago and the Opposition started to laugh. What are 10 years? When talking about the Leader of the Opposition changing his policy, what are 10 minutes? The Opposition laughed at the idea that one should quote what the Leader of the Opposition said 10 years ago. They might have said, "Good gracious me, times change", and they did. The principles of the Leader of the Opposition may be as changeable as the weather in Britain or in New Zealand, but the Opposition knew how they felt about the rates then and they know how they feel about them now. It is not up to me to pass judgment on which view is correct, but it is clear that the two are fundamentally irreconcilable.
One thrust of the speech made by the hon. Member for Worsley which I back to the hilt was that he wished to look into the entrails of the community charge to discover what lessons might be learnt. That is a constructive viewpoint. When talking to people at the height of the debate on the community charge, I was struck time and again by the fact that their conversation always started with the words, "I agree with the principle of the community charge, but …" Those people once presented a very lengthy petition to me. They agreed that everyone should pay something, but that phrase was followed by many "buts".
We all have a list of things that we believe to be wrong with the community charge, but I believe that the principle 812 was right. Everyone should pay something. Very few hon. Members—if they think for a moment before denying this proposition—would disagree with that idea. But, they ask, "What is 'something'?" and "Surely not everyone can pay?" In other words, one should take what seems to be a good idea and see how it works in practice.
During the consultation period and when the legislation was being passed, it was obvious—if not then, at least when the community charge was being put into practice—that the principle with which everyone agreed was being compromised because there were some ideas that people would not tolerate. The first was the amount, which many people felt was too high. Once that decision had been made, other ideas came thick and fast. Another such idea was that a 20 per cent. contribution was wrong. For what it is worth, I think that it probably was wrong that a member of the working poor had to pay 20 per cent. of the community charge. The principle that everyone should pay something was a good one, but 20 per cent. was too much. What about students? What about those with second homes?
Such problems were not foreseeable—that would have been asking too much. When the community charge was being put into practice it was relatively easy to see that there were particular issues which, if they were not dealt with, would so change the quality of the argument that in the end people would not merely preface their objections to the charge by pointing out that they were in favour of the principle, but would be so angered by the objections, or qualifications, that they would forget that they were originally in favour of the charge.
A Government or an Opposition who do not have the confidence to admit, "Sometimes we get it wrong" do not have the confidence or ability to say, "We can say that because most of the time we get it right." The Government said ultimately, "We should have listened." I have no doubt that if experience and the representations made to Members of Parliament and thus to Ministers had been taken into account, some aspects of the community charge could have been changed to ensure that it would be with us today. Although it would not have been the flagship, it would not have been the potential Titanic. The moral is that we should have listened earlier to save the community charge. We did not, but, in time, we listened.
One of my most amusing experiences—if one's sense of humour can stretch to it—is that 14 or 15 months ago—it seems so long ago—I wrote for Ministers at the Department of the Environment a carefully reasoned and extremely well-thought-out brief on how to save the community charge. I know that it was carefully reasoned and extremely well-thought-out, because I wrote it. In the light of experience, I put together detailed proposals of ways in which the principle of the community charge could be retained, although certainly not in a form acceptable to the Opposition. It was a good submission, but I should be breaching confidence if I revealed the exact nature of it.
However, three months later I found my own submission on my desk at the Department of the Environment. I was the Under-Secretary of State with the responsibility of replying to myself. That will give you, Madam Deputy Speaker, a flavour of what the reply would have been had I sent it, but in the end I decided not to write the letter. Suffice it to say that if some aspects of the community charge had been dealt with in time, it could have been saved.
813 Despite my brief acquaintance with local government finance during my time at the Department of the Environment, I could see what is obvious to many hon. Members: some aspects should have been dealt with. I see none of the potential difficulties with the council tax. I have no doubt that the council tax preserves the one essence of the community charge which almost everyone favoured—the basic proposition, subject to proper caveat and qualification, that everyone should pay something. It will never be everyone, only most people. If people cannot afford to pay, they should not have to pay. That principle is included in the council tax, and I welcome that.
Clearly there will be problems with banding. Some of my constituents will be winners and some will be losers in the transition from the community charge to the council tax. There is no doubt that nobody would gain from a return to the rating system. Certainly, if we went back to the rates, people in my constituency would be at risk in a way in which they could not conceivably be at risk from the council tax or the community charge.
Although I am confident that nothing in the council tax begins to give rise to the sort of unresolved difficulties that existed with the community charge, there is, nevertheless, a point to be made. I should like to think that, if during the passage of the Bill or once the tax has been implemented we find that it has certain adverse effects—which may be obvious only in the light of experience—the Government will say, "Fine. This is a well-reasoned case and we will listen to it." The fact that the Government can come to the House seeking to repeal their own legislation and put the council tax in its place shows that they are prepared to listen to such reasoned argument. There is nothing contradictory or humiliating in saying, "We think that we have the policy right, but we are told—and not just by mavericks or people trying to rock the boat—that its implementation is not going as well as we had hoped." Sometimes what the House hears from the electorate and what Ministers hear from Members of Parliament is worth taking on board—although, frankly, a lot of the time it is not. When it is, we ought at least to entertain it. I should like to think that, if, in due course, it appears that there are lessons to be learnt concerning the council tax, the Government will be prepared to listen to the arguments.
Will that make the council tax a popular tax? You bet it will not. There is no such thing as a popular tax—nor should there be. The only popular tax is a tax which somebody else pays but which benefits oneself. Will the tax be too high? Many will say so. Everybody knows what the correct rate of taxation is: it is the rate that bites on someone earning slightly more than oneself. In the end, however, in a British way—grumblingly, grudgingly and sometimes with tongue in cheek—people recognise that our basic tax system is usually fair. In the context of local government finance, the council tax brings us as close as we shall ever get to the unattainable and there will come a time when people will say, "This tax is about as fair as it can be."
My final point relates to the fact that the Government are again to have capping powers, and I am extremely pleased to see that that is so. I have always been of the view that the Government's capping powers should have been far more rigorous than they were initially and that they should be severe enough also to catch recalcitrant 814 Conservative councils—or those who pass themselves off as such. I have no objections to, or difficulties with, capping. I say that for two reasons—the first constitutional and the other more pragmatic.
The pragmatic reason is that I do not see how Members of Parliament can stand by and watch people in an area having their money squandered. We all have examples of money being squandered: often, one man's squandering is another man's investment. Can we really stand idly by for example, and watch Derbyshire county council spend thousands of pounds on a party to celebrate the release of Nelson Mandela? Can we stand idly by knowing that, with taxpayers' money, Hackney council provided assistance to the "International Lesbian and Gay People of Colour Conference"? Somewhat later, Hackney's lesbian and gay men's sub-committee issued a report—it is dated 7 June 1990, should anyone wish to look it up—estimating that the council's lesbian and gay men's unit would cost £55,807. How on earth can such expenditure be justified?
§ Mr. Cohen
Will the hon. Gentleman tell us the amounts involved? Are not they peanuts by comparison with the budgets concerned? Are not such issues matters for local electorates? Are not such activities inconsequential compared with those of councils such as Tory Westminster, which sold cemeteries worth millions of pounds for 5p each? Was not that a chronic waste of money—and a waste about which the Government did nothing?
§ Mr. Nicholls
Peanuts can bring forth monkeys, but I would not describe the sums as peanuts. At least one Labour Member was prepared to go to prison rather than pay a sum substantially less significant. We cannot stand by and watch sums of money squandered in that way.
My constitutional point is at least as embarrassing for the Liberal party—represented in the Chamber at the moment by the hon. Member for Orkney and Shetland (Mr. Wallace) alone—as for the Labour party. Local government and national Government are not equal partners in government. Local government is the creature of national Government: it is set up in statute by central Government and central Government regulate and control it. It is unrealistic to expect national Government to say to local government that the two are equal partners in determining the fiscal policy of the nation. Central Government must make those decisions and, if they get them wrong, they have to face the consequences at a general election and are replaced.
To some extent, the Liberal Democrats want to dine a la carte and take the easiest bits of each party's policies. I find it astonishing that their policy—unless their position has changed in recent minutes—is that they will have no truck whatever with capping. In a recent local government debate, I asked the—temporary—hon. Member for Eastbourne (Mr. Bellotti) whether the Liberal party really opposed the principle of capping. So anxious and eager was he to get the message over that he was like a whippet on steroids bounding up and down. He said, "There is no question whatever about it: we are thoroughly against capping."
In considering the present local government reforms, the council tax and the possibility of a return to the rates, people should ask themselves which party is prepared to 815 say, "Central Government take responsibility. They will take the credit and the blame and they are not prepared to stand by and see councils fleecing their own electorates."
Over the years, the Liberal party has produced many sound ideas and some original ideas—although the sound ideas are never original and the original ideas are never sound—and I find it remarkable that the Liberal Democrats should not be able to see that capping is an absolutely essential safeguard. I suppose that the difficulty is that the Liberal Democrats, who have made it clear that the price that they will demand to keep a Labour Government in office is proportional representation, want to ally themselves with the party that never stops, and, when it comes to local government spending, we know which that party is.
§ Mr. James Wallace (Orkney and Shetland)
I shall deal in due course with the points raised by the hon. Member for Teignbridge (Mr. Nicholls) in the latter part of his speech. I note in passing, however, that, when it comes to squandering the nation's money, I cannot think of a better example than the enormous amounts squandered by the Government in setting up the machinery for the administration of the poll tax, which is now to be totally unwound. I am sure that, if those on the Treasury Bench had been in local government, they would soon be facing surcharges for the abuse of public funds.
The Second Reading of a Bill usually deals with the principles that underlie it. The hon. Member for Hornchurch (Mr. Squire) and the Secretary of State made it perfectly clear that the Government believe that the fairest and best means of raising local government finance is through a property tax. That principle is also supported by the official Opposition, and that explains the difficulty that the hon. Member for Dagenham (Mr. Gould) experienced in the debate. We may have had from him an attempt at Opposition fury, but, on occasion, he experienced pretty heavy weather in trying to make distinctions between his party and the Government on an issue on which, in essence, they agree. Both parties accept the central principle—no matter how it is dressed up—that local government finance should be based on a property tax.
A review of debates over the past two or three years reveals another unusual aspect. Not only are the two major parties united in favouring a property tax; in the past, they were united in fiercely opposing such a tax. It is to their obvious embarrassment that they are again together.
Many hon. Members on both sides of the House must be embarrassed about some of the comments that they have made in the past. The right hon. Member for Manchester, Gorton (Mr. Kaufman) once described the rates asan irrational, inefficient, highly resented form of taxation. If a thing does not make sense—and the rating system makes no sense whatever—the right thing to do is to abolish it.I shall not dwell on the comments made by the Leader of the Opposition in 1980, as they have also been referred to. In 1990, however, the hon. Member for Sheffield, Brightside (Mr. Blunkett) said:What isn't right is the disparity between someone living alone, living next to three or four earners.816 That disparity lies at the heart of our opposition to a property tax. The disparity is acknowledged in the Bill with an attempt at a discount scheme, but that disparity has not been overcome.
Although the Labour party opposes the discount scheme, it does not attempt to address the unfairness inherent in a property tax. The poll tax was introduced because rates as a property tax were seen to be becoming increasingly unfair and undefendable. Not unnaturally, Ministers have savaged the workings of a property tax ever since rates were abolished. In March 1990, the Secretary of State for Wales vehemently denounced rates and said:If there is one thing which unites Conservatives everywhere it is our deep and abiding abhorrence of the rating system. It is no wonder we hate it so. It is at the heart such a socialist system. How much more abominable than a tax on widows? But that is what the rating system is.I submit that that is what the council tax is as well, 25 per cent. discount notwithstanding. Everything the Labour party said about the unfairness of rates was right and everything that the Conservative party said about the unfairness of rates is right. Property taxes cannot be fair because property cannot be an absolute guide to people's income or wealth. The hon. Member for Lancaster (Dame E. Kellett-Bowman) made that point eloquently when she intervened during the Secretary of State's speech.
People acquire their homes at different times and in different circumstances. A family home in an up-and-coming area like the south-east or London can rise rapidly in value. My hon. Friend the Member for Southwark and Bermondsey (Mr. Hughes) has already said that people in central London on relatively low incomes may live in high-value houses. The income of inhabitants does not change in the same proportion if they start off in equal housing. The housing may rise in value, but people's relative incomes may not necessarily rise by the same amount.
Many people have exercised their right to buy homes that they previously tenanted from local authorities. They bought them at a substantial discount. Under the council tax they will be charged according to the full capital value of those homes. An identical range of people might live on a newly built Barratt estate. Those people may have roughly the same income and circumstances and they may all be able to bear the same burden. However, there are few communities like that.
In many streets, although the houses may appear similar to the estate agent who drives along valuing them, they are often far from uniform. Some may have been divided into flats while others may have been newly modernised or renovated. Some may need modernising. Some may be long-standing family homes, while others may be just a step on the housing ladder. They are all vulnerable to property prices and the need for valuation regardless of individual circumstances. However, all the inhabitants will be expected to pay roughly the same regardless of their income.
The Government acknowledge that a property tax is essentially unfair and not linked to income and that is why the Bill includes banding and discounts and why student halls of residents are rightly excluded. However, those exemptions and discounts merely reinforce the fundamental flaw at the centre of the council tax. A property tax is essentially unfair unless so many qualifications are built into it that it becomes complicated and expensive to administer.
817 We have already heard the hon. Member for Staffordshire, South (Mr. Cormack) suggest that there should be a further element which would take into account the length of time that someone has lived in a house. That only underlines how complicated property taxes can be in an effort to make them fair. In his reference to the poll tax, the hon. Member for Teignbridge referred to the many things that had to be built on to it and the many anomalies that had to be addressed. Many of those anomalies were identified by my colleagues at the very outset of the poll tax escapade. Experience has shown that anomalies arose and had to be addressed and that caused massive administrative complications.
§ Mr. Nicholls
I actually said that there were relatively few anomalies and that if they had been addressed the tax would have found favour. However, is the hon. Gentleman suggesting that a system of local income tax would not create economic ghettos and areas in which the Chancellor of the Exchequer and the local Labour authority would have carte blanche without capping—something which he will not allow and which will have to be dealt with through exemptions?
§ Mr. Wallace
The hon. Gentleman is not suggesting that a system of local government finance would be without a method of equalisation. Every system of local government finance has possessed such a system.
We believe that the council tax is already hovering between being unfair and being unworkable. The concession on students and the way in which the Secretary of State for the Environment struggled to answer my question underline that point. Institutions do not provide enough student accommodation. Some students have no choice but to live out. Some students will be completely exempt from the tax and some will qualify for discounts. Others will have to pay a proportion of the tax, and in London and Aberdeen that proportion could well be high. If it has been conceded that students should not pay the tax, the Government should accept the logic and exempt students altogether.
§ Dr. Hampson
It seems that virtually all students will be exempt. The only category in which that will not apply is when a student is living with or married to someone who is not a student. In that case, there will be a bill for the property and the non-student will have to pay while the other person contributes 25 per cent.
§ Mr. Wallace
The hon. Gentleman accepts my point that there will be a distinction between students. I can think of another example. A student who is forced to live out may be lodging with the old lady who seems to feature regularly in local government finance debates. In that case, the discount provision will apply, but the student will still have to pay some proportion when other students pay nothing. It would be welcome to hear that all students are to be exempt.
§ The Secretary of State for Wales (Mr. David Hunt)
I had hoped that my right hon. Friend the Secretary of State for the Environment had dealt with that point very effectively. The student living in lodgings is invisible in terms of qualifying for the council tax and does not add one jot to the amount that the widow or anyone else would have to pay. They are disregarded.
§ Mr. Wallace
If that means that all students are exempt, it would have been better if the Department of the Environment press releases had stated that expressly. I suspect that that is not so, and we can probe it in more detail in Standing Committee.
The 25 per cent. discount is another concession that exposes flaws in the tax. It is an attempt to meet what the Secretary of State for Wales described as the widow factor. However, it does not go far enough. A widow in a modest terrace house on a low income, with—for the sake of argument—a council tax of £200, will be liable for £150. In a modernised house next door, a two-earning couple will be liable to only £100 each. A single merchant banker in the next house might qualify for his discount on a salary that could be far higher than any other salary in the street.
We cannot support the Bill because it bears no relation to people's income. It will penalise people on low incomes who do not qualify for discounts, and through the banding system it tends to benefit the rich. If we listen on the one hand to the Secretary of State for the Environment and on the other hand to the Minister for Local Government and Inner Cities, it seems that the DOE has something like Dr. Doolittle's "Push-me—pull-you." The Secretary of State is anxious to concentrate on rebates to do something for those who will by hit be the property tax, but the Minister has scorned property taxes and is determined to weight the tax in favour of the better-off. That internal contradiction means that the council tax will not survive. As a result, the Bill will not be the last word on local government finance. It will be an interim attempt to be seen to be doing something to replace the discredited poll tax.
The real tragedy is that there is an alternative which, unlike the poll tax or any property tax, has been tried and tested in many countries in Europe and in America. It is fair and easy to administer. We have supported that alternative—a local income tax—since our submission to the Layfield inquiry into local government finance in 1976. That inquiry, the most authoritative ever carried out, favoured a local income tax. The details of our proposals have been well documented.
We accepted the Secretary of State's invitation to engage in the consultation process which he initiated. Not only can we point to the success of such a tax abroad, but at no stage in recent negotiations or since have we been told that a local income tax would not work. It is important that that point is understood. It would appear that the objection to local income tax is political rather than practical.
Having listened to Government spokesmen, it appears that their political objections are twofold. First, they wish to be seen to be reducing personal taxation. It does not matter whether the overall burden of tax increases, as long as they are seen to be reducing personal taxation. Secondly, and perhaps most important, they have claimed that they do not want to hand over control of an income tax to what they perceive to be extremist Labour local authorities.
The lack of accountability was the reason which drove the Government to introduce the poll tax. The poll tax has wasted £14 billion of taxpayers' money, led to cuts in services and jobs, caused great hardship for thousands of people, and has led to a general breakdown in law and order. It is now being replaced by a highly complicated tax that will take two years to value and will be a burden to those on low incomes in high-cost areas.
819 That is happening because the Government will not make local councils representative of and accountable to their electorates. A fair voting system, which we would also like to see in local government, would mean that it would be unlikely that there would ever be extremist Labour councils. There would be no reason to have introduced the poll tax and no reason for another arbitrary and unfair property tax. Capping would be done by the electorate, which, in a democracy, is where power should lie. The electorate would determine whether the local authority was getting out of hand and penalise accordingly.
Mr. Robert G. Hughes
The hon. Gentleman has told the House that, if we had proportional representation for councils, we would not have extreme Labour councils and that, somehow, the more widespread distribution of seats would stop that happening. If that is the case, when Brent council was at its most extreme, when it was spending enormous sums of ratepayers' money and destroying services, why, at every turn, did the hon. Gentleman's party support the Labour party through thick and thin? It would not have made any difference in that borough. We would still have had an extremist council—not Labour, but Labour and Liberal combined.
§ Mr. Wallace
If one had properly representative councils—for example, in Liverpool, where the minority within the Labour group managed to take control and impose extremist policies—that would not be possible. In any event, the views of the electorate would be much more fairly represented at the next local elections. I have no detail of what individual Liberal Democrat councillors in Brent did, but, i it was perceived by the electorate to have been wrong, they would have undoubtedly paid the political consequences at the following election. That is where the real power of capping should be—with people in the electorate, not with the heavy hand of central Government. We could then allow local communities to decide more of their own priorities and allow councils to justify to the electorate the cost of the various policies that they put into practice. We should put the concept of community back into local government. Fair votes, a reformed structure and a local income tax will provide representative and accountable councils with sufficient finance, raised fairly and efficiently, to meet the community's needs.
We are faced with a Government who are determined to get the Bill on to the statute book before an election. I do not believe that the tax will ever be implemented. Nevertheless, in Committee we will consider the Bill seriously to try to highlight anomalies and alleviate some of the flaws in the detail. The Government are making a mistake unduly to curtail debate. If they had faith in their own proposals, they would be happy to see them discussed in detail.
During consideration of the Local Government Finance Bill, 218 Government amendments were tabled in Committee and 135 were tabled on Report. In the House of Lords, 196 Government amendments were tabled in Committee, and 286 were tabled on Report. It was clear that the Government were not able to get their legislation right at the first attempt. That will be the case in respect of this legislation, and a host of anomalies will come to light. 820 Guillotining the Bill at this early stage shows that Ministers are frightened to come to grips with the legislation and face scrutiny of the details of their own Bill.
We all want the poll tax to be abolished as soon as possible. A large number of people seem to share the Prime Minister's belief that the poll tax is already abolished. Collection, particularly in areas such as Strathclyde, is becoming ever more difficult. Cuts in services and jobs will follow. The anger of those who pay the poll tax will mount as they find out the additional amount that they must pay because their local authorities are unable to collect outstanding poll tax. A member of one local authority in England—I will not name it for obvious reasons—told me that the police in that area have said that following up poll tax debts and warrants is not a high priority. When that matter was put to the Home Office and the Department of the Environment, we were told that it was for the local authority to sort out the matter with the local police force.
Local Government is in a state of low morale and near collapse because of the poll tax. Thousands are still facing the burden of a 20 per cent. contribution, even though it is costing up to two and a half times more to collect than the revenue raised. If the Government increased funding to local authorities in need and abolished the 20 per cent. contribution, they would take the sting out of what remains of the poll tax and we might then be able to have a proper debate on what should replace it.
The council tax could be the shortest-lived tax in recent history—even shorter than the poll tax. We will campaign for its abolition and vote against it, because it is a property tax, and property taxes have been shown to be unfair and expensive to administer. Our relief at the abolition of the poll tax does not mean that we will accept its cobbled-together, ill-thought-out and deeply flawed replacement. Only a local income tax is a practical, efficient, simple, easily introduced and, above all, fair means of raising local revenue. Some time in the next six months Ministers will have to justify to the electorate why they forced the untried poll tax and now the council tax on to the British people and, above all, why they have rejected a local income tax which not only meets every sound principle of local finance but has been proved to work in many other countries.
§ 6.6 pm
§ Mr. Robert G. Hughes (Harrow, West)
The hon. Member for Orkney and Shetland (Mr. Wallace) has described the proposed council tax and any property-based tax as difficult and expensive to administer. That is rather rich, coming from a party that is putting forward a local income tax. I am reassured by the fact that the Liberal Democrats stick to the idea of a local income tax, because a local income tax is everything that we would expect from that party. It sounds absolutely marvellous. It sounds like the simple solution for which everyone has been looking. However, it does not stand up to examination. That is true of much of what the hon. Gentleman's party says. The Liberal Democrats think that they can get away with skating over the surface of problems.
The hon. Gentleman thinks that the council tax, or any other property tax, is difficult and expensive to administer. How does he square that with a proposal that would have everybody inside a council area paying a lump sum to the council and later receiving a rebate because they had paid 821 too much? That is in the hon. Gentleman's party's proposal. It is no good the hon. Gentleman shaking his head. If he was putting forward a serious proposal, he would have explained it. The hon. Gentleman has sat down now—he has had his chance. He should have explained his proposal when he was on his feet. If his proposal is not expensive and difficult to administer, I should like to know what is.
§ Mr. Wallace
The hon. Gentleman needs to ask why, in all our discussions with Ministers and Secretaries of State—the Scottish National party also put forward a local income tax—it was never argued that what we were proposing was impractical or difficult to administer. The objections have been narrow political ones, never ones of practicability. We still await practical objections from Ministers who examined our proposal.
§ Mr. Hughes
I had always thought that Orkney and Shetland was a fairly realistic constituency, but I now recognise that the hon. Gentleman lives in a dream world. He need only examine the speeches made by my right hon. and hon. Friends either from the Front Bench or at venues outside the House to know that they have specifically described the Liberal party's proposals as difficult, complex and unworkable.
My second objection to the Liberal party's scheme is that people would vote with their feet. If people in a particular area were to be charged a substantial amount in income tax, does the hon. Gentleman seriously think that young, mobile and professional people would choose to live in that place? My understanding of the Liberal party's proposals is that, on current spending, the London borough of Camden would have to levy a local income tax in excess of the standard rate of income tax—somewhere near 30p in the pound. Does the hon. Gentleman really think that, on that basis, anyone who could move would keep a house in the London borough of Camden or anywhere else where they would have to pay so much? I repeat that that is a typical Liberal party solution. It sounds good when it is discussed for five seconds, but it starts to fall to pieces when it is discussed for half a minute or longer.
In one sense, today's debate is a repeat of last week's debate on the Queen's Speech. I find it odd in the extreme that the Labour party should have taken up a whole precious day's debate in our response to the Gracious Speech to discuss the council tax when Opposition Members must have known—everybody else knew this, including the newspapers—that we were due to have a two-day debate on that subject this week. Looking at the Labour Benches, it seems that they have shot their own fox. Labour Members have not turned up and I understand that they did not turn up for the other debate.
§ Mr. McCartney
What about Conservative Members?
§ Mr. Hughes
We do not necessarily have to come along on such occasions. Although it does not do so with much conviction, the Labour party says that it is angry about our proposal. It says that the council tax is the poll tax mark II, but you could have fooled me, Mr. Deputy Speaker, given the heat generated from the Opposition and the number of them present.
822 I should like to rehearse the history of how we arrived at the council tax. It is important to remember what people objected to in the old rating system. First, people objected to the complicated system of valuations. When my right hon. Friend the Member for Finchley (Mrs. Thatcher) spoke about reforming the rating system and about the community charge, which she ushered in, she always returned to the same basic point, asking whether people in England were to be saddled with a revaluation of their property after 17 years. She took the view strongly—and I agree with her——
§ Mr. Janman
They would be saddled with it under Labour's proposals.
§ Mr. Hughes
My hon. Friend the Member for Thurrock (Mr. Janman) is absolutely right to point out one of our basic objections to the Labour party's proposals, although I suspect that that is something that the Opposition will skate over in their normal way.
My right hon. Friend the Member for Finchley was right in saying that the people of this country would have regarded an enormous difference in their rating bills as a result of the revaluation of their property unacceptable when that property might not have changed in any material sense. The problems of the rating system were focused when people made any minor change to their property. lf, for example, someone put in a downstairs loo, up went the rates bill. It was right to say that that system must go. Indeed, at that time there was cross-party consensus that the rating system was wrong, unfair and had to go.
§ Mr. Janman
I am grateful to my hon. Friend for giving way again, especially since I share an office with him. Does he agree that not only does the Labour party not want to discuss this Bill, but it does not want to discuss the bills that will land on people's mats if its system is put into practice?
§ Mr. Hughes
That is absolutely right. The fact that my hon. Friend makes such a good point leads me to understand why he keeps such massive quantities of paper around his desk in our office.
The second reason why people objected to the old rating system was that it was unfair to people living alone. Again, the Opposition parties always skate over that argument. The hon. Member for Orkney and Shetland talked with some hilarity about the mythical widow living by herself next door to several wage earners who occupied an identical house. However, we all know as Members of Parliament—and many of us were councillors before being elected to this House—that that situation did and does exist. That problem had to be addressed, and that is what the community charge did.
The third problem with the rating system was the ability of Labour councils—or of councils in which the Labour party was kept in power by the Liberal party—to overspend and to hide the results from the voters. Because of the way in which council rents were collected, many people did not realise that they were paying rates to the local authority. When I was a Conservative candidate in the London borough of Tower Hamlets, people there thought that it was marvellous that the local Labour council had frozen the rents for several years. However, because of the way in which they were billed, they did not necessarily realise that their rates bill had overtaken their 823 rent bill. They were paying far more in rates than in rent, but the Labour party hid that from people, pretending that the rates somehow did not apply to them——
§ Mr. Blunkett
To clarify that point—we might as well have a sensible debate if we are to have one at all on this Bill——
§ Mr. Janman
Sit down then.
§ Mr. Blunkett
That is about the level of debate that we have come to expect from Conservative Members, and especially from the hon. Member for Thurrock (Mr. Janman).
Perhaps the hon. Member for Harrow, West (Mr. Hughes) will explain how the tenants in Tower Hamlets did not understand that their rates had increased despite the fact that they had to be billed each year for the rates increase when he believes that they understood that their rents had not increased because they had been frozen. If they were billed for rates and rents combined and their rates had increased, their bills must have increased even if their rent had been frozen. Therefore, because of the frozen rents, they should have known that their rates had increased. Perhaps the hon. Gentleman will explain how the tenants, whom he believes were so ignorant that they did not understand that their rates had increased, managed to miss that fact when their hills as a whole had increased.
§ Mr. Hughes
It is not I who believe that council tenants are ignorant. Indeed, at that time my wife and my in-laws were council tenants in that borough and I am certainly not saying that they were ignorant. I am saying that the billing system and the fact that it was not possible to prosecute tenants for non-payment of the rates either led them to believe in some cases that paying the rates was something that they could get out of or they were persuaded by the Labour council that it was the Government's fault. The fact is that the Labour party managed to hide behind the old system and anyone who is a former leader of a Labour council, such as the hon. Member for Sheffield, Brightside (Mr. Blunkett), knows that that is true.
Fourthly, it is clear that the tax base of the rating system was too narrow. Given that very few people believed that they were responsible for the rates, something had to be done about the system. Again, that was a matter of consensus.
Given that there were all those objections to the rating system, why did people object so strongly—as clearly they did—to the community charge or poll tax? I put it down to two things. The first is the size of the bills. It is inevitable that people's view of a tax is directly linked to the size of the bill that they have to pay. The figures that were projected by my right hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) were not exactly those on the bills with which we ended up. That was one of the major factors that contributed to people losing confidence in that system—[Interruption.] My right hon. Friend goes from strength to strength and from interesting statement to interesting statement, but we shall leave that for another debate on another day.
Secondly, and probably more importantly, people of different wealth, at least as judged by the size of their home, appeared to pay exactly the same. We had stories about people living in a small rented flat paying the same as someone in the stock broker belt up the road. On the 824 face of it, that appeared to be true but everyone in the House knows that in reality the tax paid by the individuals in the two examples that I cited could differ by a ratio of as much as 25:1. However, principally for the reason that I gave, the poll tax did not match up to the British sense of fair play, which runs deep in our society, so the poll tax, rightly, had to go.
The Labour party has blamed the poll tax for almost all ills. First, it has blamed the poll tax for most of what has happened in local government for the past few years. It did so to hide its embarrassment about Labour's record in local government. Let us take Birmingham as an example of a Labour authority. We are told that there are many services which it would fund if it were not for the poll tax. Such services, perhaps more nursery education, housing and so on, could have been funded if the authority had not paid for 149 trips to 31 countries in the past year or so. [Interruption.] I will give way to the hon. Member for Sheffield, Central (Mr. Caborn) if he is prepared to speak on his feet. Opposition Members may think that that was a good use of public money. They may think that the councillor and top officials who went to Italy to see the preparations for England's match in the world cup was a good use of chargepayers' money. I do not. Perhaps the hon. Member for Sheffield, Central would like to justify it.
§ Mr. Richard Caborn (Sheffield, Central)
Does the hon. Gentleman accept that some of those trips may well have brought some of the inward investment which Department of Trade and Industry Ministers have been asking to attract for a considerable period? If the hon. Gentleman criticises areas such as Birmingham, he could also criticise areas such as Sheffield, which ran the world student games. We went and looked at some of the best sports facilities in the world and now the Ponds Forge swimming complex in Sheffield is bringing a tremendous amount of activity to Sheffield and a tremendous amount of kudos to British sport. In 1993 we will stage the European swimming championships. That is the vision of Labour authorities. It is unfortunate that the Conservative party is so negative.
§ Mr. Hughes
Nevertheless, I wonder whether the advantages to Sheffield will amount to enough to justify the £1.5 million spent on renovating 700 flats to house the athletes and the £250,000 spent on attracting the student games in the first place.
§ Mr. Caborn
It brought investment.
§ Mr. Hughes
That may be true. That is a judgment which Labour councils have to make. They must face the chargepayers with that. However, it is doubtful that they will be able to do so logically.
§ Mr. Mans
Does my hon. Friend agree that the money spent by Sheffield city council on renovating those flats for the athletes could have been better spent on renovating other flats for people really in need of housing? [Interruption.]
§ Mr. Hughes
Opposition Members are asking from a sedentary position who is in those flats now. The interesting question is whether the council would have renovated the flats otherwise. We see Labour spending priorities here.
Perhaps international relations are catching in the west midlands. Coventry is twinned with so many places that its council has had to set up a department of international 825 relations. Will Opposition Members tell me that that is peanuts, to use their word in earlier interventions? Will they tell us that the department was set up without full backup? If Opposition Members are so confident that that was money well spent, can they tell me what the bill was?
The Labour party has blamed the community charge for many things, including the inability of Labour councils to spend money in priority areas. The Labour party's own priorities have led to that. It also sought to divert the debate from the level of spending that its policies entail. That is why we hear repeatedly from the hon. Member for Dagenham (Mr. Gould) the assertion that it would be easy to implement Labour's plans. Labour Members want to make people assume that it would be easy and cheap to introduce another system and that the billions of pounds which need to be raised can be raised easily.
Any system of raising local government finance is subject to councils' spending plans. Councils must take responsibility for what happens in their area. The hon. Member for Dagenham would not give way when I sought to intervene in his speech. He compared what my right hon. Friend the Secretary of State would pay in Westminster—£273 on current estimates—with the average bill in Middlesbrough of £447. He described the system as surcharge that families would have to pay for the continued life of a Tory Government. High bills are a surcharge not for the continued life of the Tory Government but for having a Labour council. Rotten services and high bills: that is the double surcharge that people pay. It is not for my right hon. Friend the Secretary of State to apologise for paying a lower bill than people in other parts of the country. It is for the Labour party to look at who is controlling those councils.
The Labour party pretends that the council tax is unduly complex and difficult to administer but that Labour's scheme is simple and easy. Any suggestion that a change in the system of raising local taxation can be simple and easy lacks credibility. If the Labour party really believes that its system will be simple, it must come forward with the figures. I notice that it is reluctant to come up with specific figures to show what its spending plans would mean. It said that it would produce such figures during the Queen's Speech debate. It has not done so. I know that the Labour party does not like to get into specifics, but it will have to learn that between now and election day it will have to come up with specifics if it is to be taken seriously.
The new tax combines the ease of collection and the property base of the rating system with a new simplified system of valuations which people will see as fair, reasonable and just. People will accept that the broad value of the property should be used rather than the specific valuation, based on a notional rented value, to which the Labour party wants to return.
The Labour party is floundering in this broad debate because it knows that the council tax is widely regarded as fair and reasonable.
§ Mr. Maxton
Did the hon. Gentleman vote for the poll tax?
§ Mr. Hughes
If the hon. Gentleman has not been following my speech, I am happy to start again for his benefit. If he had followed it, he would understand.
826 The Labour party must take on board the important point that any change in the system of local taxation means that some people will pay less and some will pay more. But the Labour party wants to sell its scheme as one which has only winners. Such a scheme does not exist. If it laid out the details, people would know that that was the case. They will understand that that is the case even though the Labour party hopes to hide it from them. That simply is not possible and the Labour party knows it.
Regional banding has been raised by some of my parliamentary neighbours. I fundamentally agree with my hon. Friend the Member for Hornchurch (Mr. Squire) that a regional banding system would not be practicable. There are areas in Britain where property prices are akin to those in London. Therefore, a regional system of banding would create more difficulties than it would solve.
I hope that the Ministers who wind up the debate tonight or open it tomorrow will take into account the fact that some councillors in London are worried that, because of the value of properties in the city, some money will flow out of London as a result of the grant settlement. When the grant for the coming year is announced, and also for the first year of the council tax, we want the Government to ensure that money does not flow out of London and that the £200 million that has been suggested by the London Boroughs Association is taken into account and kept within boroughs for them to use.
It has been suggested that introducing the council tax is so difficult that authorities will not be able to do it in time. That is an attack on the local authorities concerned by the Labour party which does not do them justice. We should take fully into account the fact that it will be difficult for local authorities to implement the council tax but also that it would be difficult to implement any change. We should understand that. Rather than listen to the words of the Labour party, saying that it would be impossible to introduce the council tax by 1993, I would prefer to take the word of the Audit Commission. Although in paragraph 13 of its response to the Government it said that thegovernment's proposed timetable is extremely tight",it recommends an April 1993 introduction and believes that that will be possible.
I urge the Labour party to take a more positive attitude towards helping local authorities with the obvious difficulties that they will face.
As regards the London boroughs grant scheme in clause 103 of the Bill, I welcome the reserve scheme—as Conservative-controlled boroughs will certainly welcome it. Year after year there have been difficulties with the grant scheme. The problem has been that Labour adventurism has put worthwhile and important projects in danger, while Labour and Liberal members seek to blackmail morally Conservative Members on the scheme to agree an excessive level of funding. Some areas which should not be are funded by the grants scheme.
I welcome the reserve scheme in the Bill, but I ask my hon. Friends to consider one change. It is not adequate for one of the criteria for the grants scheme to be that any scheme funded by it should apply to two or more boroughs. That definitely leads to abuse. Some schemes are deliberately pushed across to a neighbouring borough, whether it needs the scheme or not, so that they qualify for funding, unless someone notices and pounces on it. I suggest that either four or six should be the minimum number before a scheme receives funding.
827 If my reading of schedule 3 of the Bill is correct, I think that the penalty for wrongful claim of discount, would be a £50 fine. If people wrongfully claim a discount, a relatively substantial amount is involved and the penalty should more equally fit the crime. There should be a range of penalties to fit the intent of the person who makes a wrongful claim, which is undoubtedly theft. People should understand that it is not merely a technical matter but theft from neighbours and local friends.
Lastly, I welcome clauses 104 to 110 which restrict voting for non-payers. In one way or another, most members of the Labour party have at least gone along with the tactics of non-payers. They have made a mistake as they have underestimated the feelings of the people that they represent. The law breaking involved makes most people utterly sick and they have no respect for those who urge non-payment or who tacitly go along with it.
Most people will welcome those clauses and I look forward to hearing what the Labour party has to say.
Finally—I am sure that Opposition Members will be delighted to hear that I have only one more thing to say. In the debate on the Queen's Speech the hon. Member for Dagenham was looking for support from Conservatives to ensure that the Bill receives proper scrutiny. I can give him and his hon. Friends one assurance: I want the Bill to receive proper scrutiny in Committee because that will reveal the hollowness of the Labour party's opposition. It will reveal the holes and the threadbare nature of the Opposition's proposal. I want to ensure that the Bill gets proper scrutiny because by so doing we shall dish the Labour party's proposals.
§ Mrs. Maria Fyfe (Glasgow, Maryhill)
The hon. Member for Harrow, West (Mr. Hughes) has uttered more "finallys" than Frank Sinatra.
Since it seems to be fashionable to quote party leaders tonight, Conservative Members may find it useful to hear the Prime Minister's words. On 1 July 1988, when speaking on the poll tax at the annual conference of the Association of District Councils, he said:Once implemented and through the transition, I believe the new system will prove enduring and a vast improvement on the status quo.A year ago, on 24 November, when he was the victor in the coup within the Conservative party, he said in the Daily Mail:I'll tell you about the poll tax. We were bounced into it quickly because there was such a fuss about rates in Scotland and we were bounced without thinking because of the political fuss.That is what we have for a Prime Minister—someone who gets bounced into something without thinking, who imposes it on Scotland a year ahead of the rest of Britain and then, still unthinking, imposes it on the rest of the United Kingdom.
I am sorry that the Secretary of State for the Environment gave up listening to the debate a few hours ago. Perhaps when he reads it tomorrow he will recall that the poll tax was imposed in Scotland against our will. He did not oppose it. He became conscious of the poll tax and its defects only when it became applicable to England and Wales.
Now the Government are trying to impose the council tax against our will. How many Kincardines does it take 828 to tell them? When are they going to listen? Do they have to lose every seat in Scotland before they start to pay attention to the views of the electorate in Scotland?
I notice that some of the more right-wing Conservative Members have already given up on Scotland and could not care less if they never won another seat there because they hope to gain permanent government of England. However, if they will not listen to the people of Scotland perhaps they will listen to the people of Langbaurgh, because it is clear from last week that they have not restored their support there. With all the promises of a change from poll tax to council tax, there was hardly an overwhelming response in support of the Conservatives.
The estimated cost of collecting the new council tax would be £185 million, we have been told, but I am not clear exactly who estimated that. Could it possibly have been the same people who assured us that the poll tax would be only slightly dearer to collect than the rates, when the Government were told by every authority in the land—by all those people with expertise in such matters—that it would be far dearer to collect and so it proved? It has cost hundreds of millions of pounds. The money that the Government have wasted in setting up and collecting the poll tax makes the Western Isles council look like models of sound financial management.
As regards valuation bands, while the Government have decided on eight bands for different parts of the United Kingdom, so far in the debate there has been no discussion of the fact that in Scotland properties in band A will be worth up to £27,000. That may not seem a substantial sum—to people paying yuppie prices in London it will seem like nothing at all—but in the remoter areas of Scotland, including the isles, some properties can be worth considerably less than £27,000, perhaps about £20,000 or even less. Thus a gross unfairness is being perpetrated against people who live in rural properties which are so much less valuable. I hope that, even at this stage, the Government will take account of that fact. They should take account of that possible injustice. It seems that caravans and boats will be included in band A if they are worth less than £27,000. Some of the boats moored in Loch Lomond are not worth tuppence, and it is remarkable that the Government propose to levy any tax at all on them.
Conservative Members have spent more time criticising the old rating system and Labour local authorities than they have spent debating the Bill. There were some advantages in the rating system. A council could decide how much it needed and add together the total value of its domestic properties and calculate the rate poundage. That meant that householders paid exactly their fair proportion. The problem with bands is that people who fall on the wrong side of a band will pay far more than someone whose house is worth very little less. The Government do not seem to have addressed that problem. Under rate poundage, the amount that people paid was in direct proportion to the value of their house and that could allow for fine differences in house values. Under the council tax, a person who falls into another band by only a few pounds will end up paying much more money. That is bound to cause resentment.
Another flaw in the system is the Government's plan to use estate agents to carry out a massive valuation. A few years ago, when I wanted to sell my flat, I decided to ask three estate agents in the neighbourhood to value it in order to get a good idea of the price it would fetch.
The Parliamentary Under-Secretary of State for Scotland (Mr. Alan Stewart)
The hon. Lady will be aware that in Scotland the valuation will be carried out by assessors.
§ Mrs. Fyfe
I am speaking not only about Scotland. I am sorry if I did not make that clear. I am making the general point about estate agents being brought in. The Minister says that assessors will be used in Scotland. Why not use assessors throughout the United Kingdom? [Interruption.] The three estate agents that I called in arrived at three different valuations for the flat in the same week. How do the Government propose to solve that problem?
§ Mr. Wallace
There are different bands.
§ Mrs. Fyfe
That is not the point. One estate agent might place a property in band B while another could put it in band C. How is the owner supposed to know the true valuation of his house? Have the Government addressed that question?
§ Dr. Hampson
They must be pretty crummy estate agents if there is a difference of £40,000 in their valuations. The hon. Lady does not seem to understand what is proposed, which is that houses will not have a specific valuation. There is no question of people feeling that they are on the edge and should be in another band. They will be in a broad category and will not have a precise value.
§ Mrs. Fyfe
One can be in a broad category and still fall into a different band because of a few pounds. The hon. Gentleman says that they must be pretty crummy estate agents. We know that there are many crummy estate agents. That is why we objected to the whole idea in the first place. Will there be quality control of estate agents and, if so, may we have more details? Will they have to pass a test of competence in valuation?
There are only eight bands, and those on the top band will pay three times the amount paid by those on the lowest band. However, their incomes may be considerably more than three times the incomes of those on the lowest band. Conservative Members have expended a great deal of energy on attacking us for daring to propose a national minimum wage of 3.40 per hour. Many people whose houses are likely to fall into band H should be in bands—if we must have bands—well beyond that. Their incomes may not be merely three times £3.40 an hour but perhaps 30 times that amount, or more. That is another fundamental objection to banding. At the top end some wealthy people will pay nothing like their fair share of the council tax. It is only a slight move from the basic injustice of the poll tax, which was that, with few exceptions, the duke and the dustman paid the same amount.
Some hon. Members have talked about single people and widows. I am a widow, but on my salary I do not think that it would be right for me to receive special treatment. It should be a case of paying according to ability to pay. Not all widows or single people are poor. Wealthy single people should pay their fair share and there is no reason for any discount. Obviously for people who are poor it is an entirely different matter.
§ Mr. Wallace
The hon. Lady says that people should pay according to their ability. May we sign her up for local income tax?
§ Mrs. Fyfe
No. Tory Members dodged the problem of a local income tax, which is the difficulty of collecting it. A company with branches across the United Kingdom would be expected to collect different local income taxes for people in towns and cities throughout the United Kingdom. Why should that firm bother? What is in it for the company? If such firms are paid to carry out the job, how could we be sure that they were doing it correctly? The money may be paid to central Government, but I would not trust this Government to dispense it fairly to local authorities. It is a fair idea in principle, but it is not practical.
Unlike Conservative Members, I do not intend to filibuster. It has been said that there will be no need for a register for the council tax. Thousands of people evaded being registered because they could not afford to pay the poll tax and came off the electoral roll. They deprived themselves of the right to vote because of a tax that they could not afford. Will the Government spend some money on advertising to tell people that they should have no fears about this tax? If the Government are sure that it is a fair tax, they should be prepared to encourage people to get back on the electoral roll. Of course it is still an unfair tax, and many people will still feel that they cannot afford what is proposed and will deprive themselves of the right to vote.
As I have said, there has been deliberate filibustering and time wasting. The Government hope to get the Bill through by Christmas, but Conservative Members have wasted time by criticising Labour local authorities or quoting what people have said about Labour's proposals, instead of discussing their Bill. If they carry on in the same way in Committee, I hope that the Chairman will make vigorous efforts to stop them. If the Government hope to succeed in their aim of getting the Bill through in a few weeks, they had better make sure that the debate is about the Bill and is not time-wasting nonsense.
§ Mr. Keith Mans (Wyre)
One of the main reasons for the Bill is that the rates system that existed for many decades was totally discredited in the 1970s and early 1980s. I speak from a certain amount of experience, having been a deputy leader of a district council. I saw what went on across the country, particularly in areas controlled by the Labour party and especially in inner-city areas. A remark by the former Labour leader of Liverpool city council makes the point much better than I could. He said:Frankly, we have put the interests of the providers of the service, the workforce, above the interests of the tenants.That sums up a great deal of what went wrong with the old rating system. The Labour party turned a system of a consensus into a system of overtaxation for a minority of people within a borough. As a result, the system became untenable.
All that contributed greatly to a lack of good services in our inner-city areas, where there was a lack of accountability, too much bureaucracy, too many new departments being set up to do questionable things, and a low collection rate for both rates and rent. It is sometimes forgotten that in Labour boroughs not only has the community charge not been collected over the past two years, but the rates were not collected over many decades. That is one of the problems in many large cities such as Liverpool.
831 Fewer and fewer good services were being provided in those Labour boroughs. It is interesting to note that in Liverpool, the only time in living memory that the rubbish has been collected on time has been during the past four months, when the city council decided to put out the refuse collection to tender. Previously, it had been costing that council £16 million to collect the rubbish. The council's direct labour force decided that it could do the job for £8 million. In fact, the contract went to a private contractor for £4 million. The rubbish in that city is being collected much more efficiently for £4 million than it ever was for £16 million under the direct labour force. That is just one example of what happened in inner-city areas controlled by the Labour party, and continued for years, if not decades. It is one reason why the old rating system became discredited and had to be changed.
§ Mr. John Maxton (Glasgow, Cathcart)
If the hon. Gentleman is so convinced that the old rating system was untenable and unworkable, can he explain why his Government, as late as October 1983—only 15 months before they introduced the idea of a poll tax—said in a White Paper that rates were a fair system of local taxation and would be the local tax system in place for the foreseeable future? Does the hon. Gentleman agree that it was the blind panic in the Tory party over revaluation in Scotland in 1985 that led to the end of the old rating system, and that it had nothing to do with what the Government thought about the system in England and Wales?
§ Mr. Mans
I agree with the hon. Gentleman to the extent that if the old rating system was fair at all, it was fair in those areas controlled by the Conservative party, where there were not excessive increases in rates. The hon. Gentleman knows that for a number of decades the Tory party has been committed to producing a better system for financing local government. Indeed, the hon. Gentleman put his finger on an important point: one reason why the rating system became discredited was the difficulty of carrying out a revaluation exercise. I must point out that that exercise was skipped over again and again by the Labour party when it was in government. It refused to carry out a revaluation because it understood that there would be difficulties with the electorate when it was put into practice. In many ways, it was unfortunate that the old rating system became discredited and we had to come up with a new system.
All that I want to say about the community charge is that while I do not fully agree that the principle was wrong, its implementation undoubtedly caused a number of complications.
§ Mr. McCartney
§ Mr. Mans
The hon. Gentleman may think that they are excuses, but the way that the implementation of the community charge was used by Labour councils to increase considerably the amount of money that individuals had to pay to their local authorities meant that the system had to be modified, if not changed. One of the most disreputable actions during the past few years was that of a number of councils—notably Labour, and especially Labour county councils such as Lancashire—which deliberately increased the amount of the community charge for those on slender means. They hoped that they could push them into believing that the Labour party had 832 the right solution in wanting to return to the old rating system and that it was the fault of the Conservative Government that they had to pay considerably more to local councils.
§ Dr. Hampson
I accept everything that my hon. Friend has said about Labour councils, but is it not about time that some of us stopped saying, rather defensively, that the principle of the community charge was correct—that principle being that everybody should pay the same amount? We acknowledged that that was wrong when we started to introduce rebate scheme after rebate scheme and reduction scheme after reduction scheme, which meant that the majority of people were not paying the same amount.
§ Dr. Mans
I have considerable sympathy with what my hon. Friend says. The main point is that simply because of the size of the charge and because a number of councils increased it—and not just Labour, in this case—well above that originally intended, it appeared to be most unequal. In that respect, I agree that because of the number of rebates that had to be introduced it became clear that the system needed to be changed. The new tax at least takes into account our experience of the community charge and, indeed, our experience of the old rating system—which, despite all its faults, was a simple tax, whereas the community charge was a complicated tax. I agree with my hon. Friend that the community charge became increasingly difficult to operate properly.
Although it is a pity that, once again, we are having to change the system of local government finance, I am having great difficulty coming to terms with the Labour party's idea that the best way forward for the 1990s is to return to the discredited system of the 1970s and 1980s. I cannot imagine many people, including many Labour supporters, going along with a system that goes back to the sort of inequalities that I have mentioned. We must learn from the experience of the past few years—both in trying a system that should have been fairer and from a system that clearly was not fair—to produce a system that takes the best of both previous systems and is also simpler.
In debating the new tax, both now and in Committee, we must look closely at some of the major problems with the community charge and try to iron them out before the Bill becomes law. The problems that need to be sorted out now, rather than later, are those associated with people who move around a great deal. Perhaps they work abroad, are in the armed services or the merchant marine, or are fishermen. People in my constituency have found themselves in difficulty both with the old rating system and, more specifically, the community charge. I hope that we will consider those whose occupations mean that they do not stay in one place for very long or move around at regular intervals, and ensure that they are not penalised as against those who stay in one place for a long time.
One lesson that has been learnt during the past few years is that people expect the Government to protect them against high-spending local councils. It is therefore important that there are stringent capping mechanisms, not only for this April, but for the next few years under the new council tax system. Ultimately, people at local level still believe that the Government have an obligation to stop high-spending councils taxing them too heavily. Unlike Labour, we understand the need to prevent over-taxation and over-spending by local councils, using 833 the capping mechanisms in the Bill. We understand also the need to give some kind of rebate to people living on their own. Again, that was a particular inequality with the old rating system. Many widows living in the houses that they occupied when their spouses were alive ended up paying the same amount to the local council, despite the fact that they were living on reduced incomes. I am pleased that the Bill recognises and deals with that particular problem.
Most important of all, we have devised a simpler and fairer system of raising local finance. I believe that we must give councils some method of raising finance locally, and that the council tax will provide the fairest method of doing so.
§ 7 pm
§ Mr. Peter Hain (Neath)
At the end of yesterday's Remembrance Day parade in Neath, I enjoyed the hospitality of the Royal British Legion. One of the ex-service men present asked me about the council tax, and I sought his own view. He was quite blunt. He said, "The Government are on the fiddle again." I have to agree with him.
Although the Bill says that it will abolish the community charge—more accurately the poll tax—it will be with us until at least 1993, and even then there is some doubt about whether the Government will be able to introduce their new tax, assuming of course that they are re-elected.
Over the past 18 months, there has been an incredible waste of literally billions of pounds, which have been poured down the drain as a result of the poll tax. The Local Government Information Unit calculates on current figures that the cost to the country will be £19 billion by the end of the year 1992–93. The LGIU estimates that every week the extra cost of continuing the poll tax amounts to £170 million. Every week, money is being poured down the drain.
Imagine what could be done with £19 billion, which is being wasted with such reckless abandon. Imagine what could be done in terms of investing in new housing, schools and hospitals, and in industry and jobs that could put the country back to work and prepare it for the threat of 1992 and economic integration with Europe.
We have seen under the poll tax, and will see under the council tax, the rich freeloading off the rest. There is the classic example of the Duke of Westminster, whose old rates bill was £10,400. His inititial poll tax bill fell to £400—the same as his chauffeur, butler or gardener. With the £140 rebate announced by the Secretary of State for the Environment earlier this year, presumably the Duke of Westminster's poll tax bill is now just below £300. Under the council tax, he may have to pay between £500 and £600. How can that collapse in the Duke of Westminster's payment, from more than £10,000 to £500 or £600, be justified?
§ Mr. Mans
Will the hon. Gentleman confirm that he retains a home in Wandsworth—the home of many champagne socialists—for which he pays nothing?
§ Mr. Hain
I am happy to confirm that I continue to retain a home in Putney in addition to my main residence in Neath. I am happy to confirm also that I continue to pay 834 community charge in Putney, in addition to the full charge that I pay in Neath—though what that has to do with the debate, nobody knows.
I spoke of the monumental waste that has occurred under the poll tax, and I shall now refer to its monumental incompetence. There are £1.5 billion in uncollected arrears, requiring 7.5 million summonses by the end of the year. With crime soaring and the courts clogged up with criminal cases as a consequence of the Government's incompetence in other areas of their policy responsibilities, it is an incredible diversion of resources and effort to allow the courts to be clogged up with poll tax cases. Instead of concentrating on the real criminals, the Government are prosecuting people as a result of their own incompetence and failure to deliver a proper local authority finance system.
Over the years, the Conservatives have claimed to be the party combating waste and inefficiency, but the Government were responsible for the most wasteful and inefficient system of local tax collection possible to devise. If the Government intend to abolish the 20 per cent. rule in respect of the council tax, why not abolish it now in respect of the community charge? Such a measure could be introduced immediately as part of the Bill and would relieve a great deal of repression and injustice for some of the poorest members of our communities. It would also relieve local authorities, for whom the expense of collecting the tiny revenue that they enjoy under the 20 per cent. rule exceeds the income that it produces. The Audit Commission estimated that for every £15 spent by local authorities collecting the poll tax under the 20 per cent. rule, they receive only £6 in return.
§ Mr. Janman
The hon. Gentleman urges the Government to introduce the council tax even more quickly, yet the hon. Member for Dagenham (Mr. Gould) accused the Government of being too hasty. Which does the hon. Gentleman want?
§ Mr. Hain
The hon. Gentleman did not listen. I said that if there is to be any consistency in the Government's actions, they should abolish the 20 per cent. rule in respect of the poll tax immediately. That could be done today or tomorrow, if the Secretary of State were willing.
The legacy of the poll tax still hangs over, for example, the constituents whom I represent and affects them in a punitive and discriminatory fashion. The latest twist in this sorry saga is that the poorest and often oldest members of that community pay the same as those of us who have a decent income. One of my constituents is a retired person on income support who has a home overlooking the Gnoll, which is the home of Neath rugby club. He wrote to me asking why he had not received the full £140 reduction promised by the Government when they tried to sugar the bitter poll tax pill earlier this year.
It transpires that, whereas a full charge payer such as myself living in the valley of Resolven was levied an average rate of £229.54 last year, this year we are paying an average of £79.17—£140 less. However, someone receiving benefits, such as the retired resident on income support who wrote to me, who was paying £65.18 last year, received only a £20 reduction this year and is now paying £45.18. In other words, he is paying just £34 less than the richest charge payer in Neath, compared with £164 less last year. How can that be just and equitable?
835 I want the Secretary of State for Wales to justify the way in which that discriminatory system is penalising my constituents—many of whom are least able to bear the brunt of ever-increasing costs as a result of the Government's incompetence. [Interruption.] Conservative Members may shout and scream, but let them come and explain to my constituents how the situation I described can be justified.
My constituents know that if they vote Labour—as they will in their tens of thousands—and if a Labour Government are elected, as I am confident will happen next year, we will have a fair rates system that ensures that the poorest members of the community will pay no community charge at all, and that those who can afford to pay towards local government finance will be levied at a fair and just rate.
In preparing to implement the council tax, the Government are still starving local authorities in Wales of the finance that they need. Their standard spending assessments are ridiculously out of line with local needs, and are a figment of the imagination of the Welsh Office, and of the Department of the Environment in respect of the rest of the United Kingdom.
§ Mr. David Hunt
That has nothing whatever to do with the Department of the Environment. Standard spending assessments are worked out after close consultation with the Council of Welsh Districts and the Assembly of Welsh Counties. The SSAs to which the hon. Gentleman has referred were suggested arid agreed by those bodies. He should acknowledge that, as I do, for they have done some fine work in reaching such agreements.
§ Mr. Hain
The Secretary of State is right to clarify that technical issue. My point is that—as I am sure the right hon. Gentleman will be ready to concede—the assessments are set following his imposition of financial disciplines and restrictions on local authorities. It is those restrictions that are causing the cuts that are being made in local services, thus placing local provision with local needs.
On 25 July, I raised the problem of West Glamorgan county council with the Minister of State, Welsh Office, but nothing has been done. The council's net revenue budget for the current year stands at £242 million. Education accounts for £138 million of that, social services for £28 million and environment and highways for £15 million. As the Secretary of State will doubtless acknowledge, the county council is renowned for providing a better standard of nursery education than almost every other authority for 90 per cent. of three-year-olds; it is almost famed for its provision of music and drama in schools.
Although the council has a reputation for financial prudence, the Government's financial restrictions are causing it to run into a brick wall. Moreover, next year it will need to spend an additional 6 per cent.—£11 million—just to meet the additional statutory obligations that the Government are placing on it. These are not optional spending measures proposed by a profligate council; they are obligations required by the Government, and requiring 6 per cent. real growth.
The demographic changes resulting from the fact that school rolls are beginning to rise again, together with increased student participation in higher education, will add an extra £1.5 million to West Glamorgan's spending. National curriculum support measures will require an 836 extra £500,000. Local management of schools and colleges, the provision of extra computer systems, administrative support and training for staff and governors will require an additional £400,000. Special educational needs identifed by the Education Act 1981—the provision is not discretionary—will require an extra £500,000, which the county will have to find from its local charge payers.
I am informed that the maintenance of school buildings will require an additional £1.5 million, against a maintenance backlog of £20 million. Clearly, the full demand is not being met. As for social service provision, the Children Act 1989—introduced by the present Government—requires additional support for families, which means that an additional £500,000 will he needed.
The Government have unceremoniously dumped on local authorities such as West Glamorgan a variety of community care responsibilities, which will require an additional £750,000 or so. Mental handicap and mental illness provision will require an extra £300,000. The Government have imposed many other obligations on the council; it must, for instance, spend an extra £5 million on upgrading highways. If there is no change in the existing financial provision, West Glamorgan will be unable to meet the Government's requirements without making savage cuts.
This year, the council has been allocated an increase of just 6 per cent. Of that, 1 per cent. has already been committed for the full-year effects of this year's pay award to staff, principally teaching staff. The Secretary of State has assumed that some 4.5 per cent. will cover price and pay rises. In other words, 5.5 per cent. of that 6 per cent. has already been swallowed up, leaving just 0.5 per cent. to cover any additional award above the 4.5 per cent. that teachers may receive.
Against that background, how can the introduction of the council tax possibly be just? This is a charter for the rich. The banding system is deeply unfair. The Prime Minister himself told the Financial Times on 27 November 1990, "Banding does not work." I agree with that assessment.
§ Dr. Hampson
The Prime Minister was referring to income banding, which was then the subject of debate. He was not talking about banding in relation to property values.
§ Mr. Hain
The Prime Minister was referring to banding in the context of the circumstances. [HON. MEMBERS: "Withdraw."]
Let us look at the way in which the Secretary of State has applied the banding system to Wales. The top band covers properties valued at £240,000 and above. I can tell the House that there are not many such properties in Neath; they can be counted on one hand. Although such properties are worth at least eight times as much as those in the lowest band, their occupants will pay only three times more than the owners of those properties. The Secretary of State, who owns a property in Westminster, will pay a little more than twice what will be paid by the average charge payer in Neath; yet his property is worth 10 times as much. How can that possibly be just? How can the right hon. Gentleman possibly defend such an inequity to my constituents?
§ Mr. Janman
Will the hon. Gentleman give way?
§ Mr. Hain
No, I will not.
The Secretary of State's salary is now about £1,200 a week, 10 times the average income of a couple of pensioners living in the average property in Neath. Many people in my constituency will feel that they are subsidising rich residents in England and elsewhere in the United Kingdom. Moreover, the system centralises financial provision to such an extent that just 8 per cent. is raised locally in Wales. If my local authorities wish to raise their expenditure by 1 per cent., they must increase council tax by 12 per cent.
§ Mr. Janman
§ Mr. Hain
I have given way plenty of times; I will not do so again.
The council tax is hugely complicated. According to Neath borough council, it will be just as difficult to administer as the existing poll tax system. It will cause chaos: bills will arrive literally weeks before payment is due, and people will have only a few weeks in which to appeal against the bandings applied to them. This is a Heath Robinson proposal; it has simply been cobbled together.
I sympathise with the Secretary of State for Wales. He is a decent man fallen among knaves, trying to do an honest job on behalf of the people of Wales. He is far too sensible to have thought of this proposal off his own bat. He is steamrollering it through, knowing that it is nonsense. He has been very unlucky: his first Prime Minister dumped the poll tax on him and the second has burdened him with the council tax, which will be just as unpopular as its predecessor. It is a schizophrenic tax, unable to decide whether it is a head tax or a roof tax. That is one of the reasons why I believe that the people of Wales will reject it, and vote in a Labour Government next time.
§ Dr. Keith Hampson (Leeds, North-West)
When I tried to raise some of the education issues with the hon. Member for Dagenham (Mr. Gould), he refused to let me intervene. I wished to make the simple point that the Labour party's "Fair Rates" document makes no reference to students, and to add that, in my view, our proposals offer students the best deal that they have been offered by any system of local finance.
It does not embarrass me at all to say that I did not approve of the principle of the community charge. I opposed it from the very beginning. My opposition goes back to 1979 and to the work done in the Department of the Environment when I was in it on the production of the 1981 Green Paper. It stated clearly that a flat rate charge could not cope with the scale of local authority expenditure and that it could not do so fairly. Experience has proved that to be the case.
When we considered the impact that such a system would have on my city of Leeds, when it was thought that it would be about £187 per head, we realised that that in itself would be disastrous. On that basis, about 80 per cent. of my constituents would have been worse off. However, the Leeds charge came out at about double that figure. It was therefore a disaster for towns in the north, particularly those that contained a high proportion of terraced property built around the turn of the century. I do not weep over its loss.
838 Although one can say good riddance to it, I do not wish there to be a return to the past, as the Opposition propose. The community charge system became more and more discredited. Some of my colleagues have accepted that it became discredited, but they are still trying to a certain degree to defend it. The reason that it became discredited on the scale and at the speed that it did was due to the efforts of the gentleman who introduced it, the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley).
Due to the way in which he handled its introduction, it did not have a cat in hell's chance of succeeding. Not only was there no capping of the excessive expenditure that Labour councils were bound to indulge in, but my right hon. Friend insisted that it should be introduced not as a phased tax but all in one year. Above all, he insisted on reducing the revenue support grant rather than increasing it, which is what all of us said was necessary to soften the blow.
The effect of those actions devastated the tax and meant that in no circumstances could the level be low enough to make it justifiable and acceptable. What happened reflects upon the competence and judgment of my right hon. Friend, as has been demonstrated again recently.
The Labour party document states that there should be a return to the old system and to the valuation of properties that was carried out in 1973. How can the Labour party believe that it is fair to value properties on the basis of the 1973 valuation? Do not the Opposition remember what happened in Scotland when properties there were revalued? Do they not realise what would happen to a young couple who bought a terraced cottage that had a traditionally low rateable value? Under the Labour party's proposal, that property would be revalued, which would have a devastating effect on the finances of that young couple. There would be the same backlash and bitterness as happened in Scotland.
If the people of Leeds want a Labour Government to be returned to power, they can be sure that property in Leeds, particularly that sought by young people, will have devastatingly raised valuations. Their bills will he higher than this year's community charge bills. Under our scheme, the bill for the average property in my constituency will be approximately halved compared with what people are expected to pay under the community charge. The headline bill—in Leeds about £400 per person—will instead be about £400 per house.
The Opposition have totally failed to grasp the banding concept. It is possible to have a relatively speedy valuation because no attempt will he made to place a specific value on every house. However, that is what the Labour party would do. After having introduced the outdated 1973 valuations, at some stage it would have a nationwide revaluation. A specific value would be placed on every house. There would be a return to all the anomalies that the old rating system caused. It would take a very long time to implement and would be very costly.
Moreover, the Labour party's system is guaranteed to penalise property improvement. If changes were made to a house that increased its value, the valuation would be increased; hence, one would pay more tax. It would be a major disincentive to property improvement. The value of banding is that it can be done speedily and quickly. It might even be possible for Members of Parliament to walk down the street and assess the approximate value of 839 property in one street compared with property in another. Moreover, if the bands are sufficiently wide, they will cope with any alterations and improvements to property.
My only hesitation is whether the two middle bands are wide enough. I argued passionately for a top higher band. But if a new kitchen were needed in an older property, it would cost about £10,000. The difference between the two bands in the middle is about £10,000. A slight extension of those bands could ease the extra cost that might be brought about by improvements.
The hon. Member for Neath (Mr. Hain) said that there will be chaos when everyone appeals. I do not believe that that will happen. The difference between the sums of money in the different bands that people will have to pay is relatively small. It is probably not worth appealing about a difference of approximately £40. It is also conceivable that if one strays across a band because a property has been improved to the tune of approximately £10,000, one will not have to pay much extra.
§ Mrs. Fyfe
The hon. Gentleman believes that because there will be broad bands whole streets will be assessed in one go, not individually. If, however, an estate agent in England says, "I think that this street of properties is worth £35,000, or £45,000 or £58,000" and it is just on the borderline between bands, who will get the benefit of the doubt? Will it be the council, on the ground that the upper band would provide it with more money, or will it be the householder?
§ Dr. Hampson
I do not believe that there would be any complication. People will be told that their property comes within a certain band which ranges, say, from £52,000 to £68,000. They will not complain if they believe that their property is worth more than the band in which it has been allocated. If, however, they want to say that their property should be in the band below, it will be a simple matter of testing it on appeal. There will be a great deal of evidence, from the valuation office and market prices in the area, upon which to test it.
Opposition Members are desperately struggling to find every conceivable thing to carp at, because they know that the scheme will be relatively speedy to introduce and that it will work effectively. Compared with anything that they have dreamed up, it is a clear-cut, simple scheme. Their solution is to return to an outdated system and then to try to improve it. The consequent revaluations would cause mayhem, chaos and huge bills for those on the receiving end. The Opposition have not found a way round that problem.
The Labour party's document makes no reference to students. It preaches the virtues of helping all hardship cases, but the old rating system to which the Opposition wish to return would impose considerable costs on students, as it did before. University halls of residence had to pay for students. If students were in digs, they had to pay their share of the rates. Under this measure, universities will not be charged for halls of residence and students will not be liable to a council tax charge in the rent that they pay. The only problem relates to those students who are married to someone who is not a student, in which case there is a 25 per cent. discount.
Furthermore, we have not dealt clearly enough with the position of those students who may be living in the same property as their landlord. Landlords will have a 25 per cent. discount because they take in students, but will they 840 pass on the full tax to the students? We must make it clear to students that they can appeal against their rent to a tribun-al so that the tribunal can decide whether the landlord is overcharging them on the council tax element.
We must make our argument clear. Only today I received a document from the Committee of Vice-Chancellors and Principals that shows that it does not understand. It fears that universities will have to pick up the tab, and it draws a sharp distinction between those who will be non-payers and those who will get 25 per cent. I should like to believe—we must make this clear—that only a very small proportion of students will contribute. The concept of the poll tax was that the more people there were in a property the more they paid, whereas under the council tax students will not add to but will deduct from the bill.
Of the 42.5 million adults in this country, only about 3 million are from households with more than two people. I never understood why we got in the tangled bureaucratic mess of the community charge to pick up the tiny amount of 3 million out of 42.5 million people. The council tax is related to the number of people in a house, but it offers more generous treatment for people such as students, who will not add to the household bill.
Have Ministers considered taxing people who accommodate students as a business the universal business rate rather than the property rate, and whether that might be a way of avoiding any burden falling on students? I raise that as an off-the-cuff thought.
We must also make it crystal clear how much shopkeepers, who gave us so much flak when we introduced the business rate and the community charge, will now be paying. They will still pay the universal business rate, but what will they contribute to the new council tax? The council bill must clearly show not only the precept for each level of local government but itemise what they are paying for street cleaning, for dustbin collection, for the police and for the various local government services.
The Labour party attacks us for not operating a fair system, yet the old rating system offered relief in the form of rebates. Labour now realises that that system of relief was not adequate. It therefore proposes a register of those who are eligible for relief. Its document says that it is against rebates.for which application has to be made.Therefore, it proposes that as a result of computerisation at the Inland Revenue a local authority register will be established so that authorities are aware of the pensioners, those with disabilities and those on low incomes. Relief will then be offered to such people. That is a register-based system. Our system is not register based but claimant based.
The Labour party cannot have it both ways: it attacks the system either because it expects people to claim or because it requires a register. Of course it is a claimant-based system—no one has ever hidden that fact. People who can be eligible for up to 100 per cent. will claim for it, and then, as under the old system that worked simply and cheaply, it will be on the records. That is the system, with extensions, that we are now returning to.
The single person discount will not apply equally to the rich millionaire and to the poor elderly widow. The male millionaire will not get any rebates, whereas the single older widow will be eligible for substantial rebates, and a single unmarried mother with several children who is on 841 income support will pay nothing. The reality that the Opposition overlook is that the combination of the single person discount and rebates of up to 100 per cent. make the council tax far fairer than the old rates, certainly fairer than the poll tax, and much fairer than the Labour party's proposals. For the elderly, and especially for students, it is a better deal than was offered by any previous alternative system of local government finance, and it is much fairer and is a better deal than what would be imposed by the Labour party.
§ Mr. Dick Douglas (Dunfermline, West)
Although we have gone over ground that we have gone over many times in the House, the debate has been extremely interesting. I make no apology for going over some of the ground again.
I recall the reform of local government—not local government finance—in the 1970s. By trying to reform finance without simultaneously considering local government's powers, boundaries and responsibilities we are making the same mistake as we made then.
We have two Bills—one for England and Wales and one for Scotland. Separate Bills were introduced for the poll tax. A Scottish Bill was introduced in 1986–87 because the Government panicked about local authority finance for Scotland.
We have heard much in the past weekend, if not before, about the concept of the mandate. Labour Members from Scotland—some of them at least—have raised that concept. The Liberal Democrats, particularly their leader, have suggested that the Government have no moral authority in Scotland. It is strange that that point is being made because of a shift of about 1,000 votes in a constituency. But the Government had no moral authority in Scotland in 1987. The Scottish people overwhelmingly rejected their policy.
We must consider the mandate not in party terms but in personal terms. I sought a mandate from my constituents to oppose the poll tax and made it plain exactly what I would do.
§ Mr. McCartney
Seek a fresh one.
§ Mr. Douglas
I shall give way to the hon. Gentleman, for whom I have some affection, or to any other Labour Member who can tell me what part of that mandate I have reneged on.
§ Mr. McCartney
I shall contribute later. The point is clear: if the hon. Gentleman feels that he is totally committed to his mandate and that he has not changed his opinion, he should ask the electors of Dunfermline, not me.
§ Mr. Douglas
I meet the electors of Dunfermline regularly, not just once a month. They can come to me at any time.
What part of the 1987 manifesto is still in place? The commitment to Trident, which is particularly important to us in Scotland, is not. It is evident that the hon. Member for Glasgow, Garscadden (Mr. Dewar) does not rest his case on opposition to the poll tax. At the next election, he will seek to enhance the so-called sovereignty of Parliament. I reject the sovereignty of Parliament. We 842 have the poll tax because there is no such thing as the sovereignty of Parliament. There is the sovereignty of the majority party and its Whips.
We all know that the poll tax does not have a friend in 1991, so why did that tax have so many friends in 1987 and afterwards? Conservative Members—with a few honourable exceptions—were dragooned through the Division Lobby by the Government Whips. They did not consider what was happening. We have had the example of Scotland, where we have suffered from the poll tax for a year longer than people in England and Wales, and much grief and sorrow have resulted.
People say to me, "You did not pay the poll tax and could afford to pay it." I did not pay the poll tax. Before I took that stand, I made it plain what I was going to do. I still feel justified in taking that stance, especially as the people of Scotland, aided by the Scottish National party, were partly instrumental in ensuring the downfall of that tax.
We have all talked about finding a fair local government taxation system. Front Benchers and Back Benchers have been going through the hoops, trying to devise a system that is fair and is always related to ability to pay. That was suggested by the Labour party in "Fair Rates" and by the Conservative party in their so-called council tax—somehow, mysteriously, the system has to be related to ability to pay.
I cannot envisage a system related to ability to pay that does not approximate to income flows. I repeat what I have said many times: I do not know of any person who pays taxes out of anything other than income. That is why we and the Scottish National party have suggested a local income tax.
Conservative Members have said that there would be many difficulties with such a system. It might be unfair because of different earning capacities in different areas—I think in particular of Scotland. Under the present arrangements, we would expect to raise from local income tax about 14 per cent. of local revenue. I estimate—although I would not go into the trenches on it—that that could be achieved in Scotland with a tax of 3½ip or 4p in the pound.
People say that that would cause local authorities to be profligate. The Government castigate the Labour party for wanting to raise taxes—particularly, I suggest, income tax. The Government claim credit for tax reductions, albeit only 1 p or 2p in the pound at the standard rate. Local income tax would provide a salutary device to bring about local accountability. Why have all this paraphernalia?
The Secretary of State for Wales is in the Chamber, so he can confirm or deny my comments. In Wales, all this administrative machinery will be erected to get 8 per cent. of the revenue. That is farcical. In England, it will result in between 15 and 20 per cent.
§ Mr. David Hunt
It will be 14 per cent.
§ Mr. Douglas
It will be 14 per cent. That will happen because we will not allow local authorities to administer a local income tax. One could argue that, if central Government were so magnificent at controlling finances, we could castigate local authorities for being profligate. But the Government expanded the public sector borrowing requirement overnight, going from a PSBR of 843 almost zero to one of £20 billion—and that is not supposed to be profligate. Why not? It is not profligate because the Conservative party wants to win the election.
If local authorities want to raise revenue for essential services which the Government have said they must provide, it is supposed to be dastardly. If someone from Mars were considering what has happened, he would think it weird and wonderful that so-called intelligent people oppose a local income tax on other than economic grounds. The grounds are political.
We met Ministers to discuss our proposals. I said that we could abolish the poll tax and, within three months, introduce a local income tax in Scotland. I am willing to debate that case in any forum. We would also look into a system to reform local government in Scotland and, as others have suggested, to have a much fairer electoral system.
We are discussing a band and hope tax—properties will be banded together; the assessors, the Government hope, will get the job done by 1993; and some of the anomalies will he ironed out, for example, in relation to students. The council tax will not provide a buoyant source of local revenue and will not give direct local accountability.
What does the council tax do in Scottish terms? I have been on demonstrations with Labour Members who are not here in the Chamber—[Interruption.] I apologise to the hon. Member for Glasgow, Pollok (Mr. Dunnachie), who is here. Those Labour Members said no to warrant sales and poinding. We have not heard anything about that today from the Labour Front Bench. Schedule 8 perpetuates that system in Scotland. Surely, in this day and age, we can devise a system of getting people to pay. We need a fair tax that avoids the noisome 19th century practices of breaking down the doors of people's houses and poinding and selling their furniture. I plead with the House: if we are trying to get 8, 9 or 15 per cent. of local revenue, surely we can at least achieve a much more satisfactory system, based on ability to pay.
The 20 per cent. rule bears heavily on some sections of the population and should be abolished forthwith. Because I was on the court of Stirling university and have had direct association with many students, I know that students are in dire circumstances now. In fairness to them, the Government should not wait until 1993. If I have understood correctly, when the Secretary of State for Social Security introduced the new measures—many of which are welcome—he suggested that, although benefits have been upgraded, they were not related to a continuation of the 20 per cent. rule. A precedent has been set. The Government should not continue the farce of believing that they can extract the 20 per cent. contribution from local electorates and poll tax payers in Scotland. They should take steps immediately which would not be very costly. The Minister may contradict me, but I believe that it would cost £120 million to write off that contribution for three years. If the Government do not do that they are behaving stupidly because it is extremely unfair to ask local authorities to pursue people who cannot pay and thus to perpetuate the system.
We take cognisance of the Bill and, naturally, we welcome the abolition of the poll tax but we shall oppose many aspects of the council tax. I hope that I have made it plain that I am extremely proud of the stance that I took in opposing the poll tax. I am not by nature a law breaker but I am proud of the stance that I took to stand by the people who would be humiliated because they could not 844 pay. I have nothing to be ashamed of. I would have sought my personal mandate at any time and I made my stance clear to the electorate at large.
§ Mr. Patrick Cormack (Staffordshire, South)
I believe that the hon. Member for Dunfermline, West (Mr. Douglas) is an extremely honourable man, but he is misguided in his stance on the poll tax. However, I unite with him on one issue—I also fought for a personal mandate at the previous general election. I did not support the introduction of the poll tax in Scotland and would have nothing to do with it. I said that I should oppose it consistently if the Government were misguided enough to introduce it in England.
This evening I feel as if I have come in from the cold——
§ Mr. Richard Shepherd (Aldridge-Brownhills)
Only two minutes ago.
§ Mr. Cormack
In answer to my hon. Friend, I did hear the opening speeches. I feel that I have come in from the cold and can support the Government wholeheartedly and without any major reservation. We have at last got rid of one of the most misconceived pieces of legislation that any Government have introduced for a long time and we have now replaced it with something eminently sensible and fair. I congratulate my right hon. Friend the Prime Minister on his courage in recognising that a mistake had been made and in introducing new legislation. Some people fail to appreciate the fact that it takes great courage to say, "I was wrong" and that the higher one's position, the greater the courage that is called for. The Prime Minister has shown enormous courage which deserves to be rewarded.
Some years ago, I introduced on three occasions a rating reform Bill and on one of those occasions I was supported by my right hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), who has strayed since those days. That Bill had two main objectives. The first was to remove the ridiculous anomaly whereby a householder was penalised for improving his property, and the second was to introduce a head count so that the amount paid would to some extent reflect the number of people in the household. Those of us who attended ratepayers meetings in the 1970s—and I attended many—know that two criticisms in particular were always voiced. The first was that any improvement to a property was penalised and the second was that which has been quoted so often—the fact that a single person, very often an elderly widowed lady who lived next to a family of three or four wage earners, paid the same as that family.
It seems that the Government have tackled three issues—the two anomalies that I outlined and the manifest unfairness of the poll tax. They have introduced a new tax which we believe is infinitely preferable to the Labour party's proposals. I concede that I should have preferred to return to the rates rather than to stick with the poll tax, and I make no apology for that. I have never sought to disguise my views. However, what is now proposed is better than the Labour party's proposals, and I had hoped that we could approach the issue in a spirit of consensus. I regret that the Labour party did not accept the invitation of my right hon. Friend the Secretary of State for the Environment to participate in the talks earlier this year. 845 Had it done so, we might have had an even better Bill. I believe that when the shouting has died down and the controversy of the next few days is over, the Labour party will think again and will realise that there is great merit in a mutually agreed system of local government finance. We do not want to enter another general election while people still feel uncertain.
The new proposals are sensible and fair, but, of course, they are not perfect. No system will ever be perfect and various issues will need tidying up in Committee. However, if there is a spirit of consensus, there is more chance of sensible and suitable amendments being passed in Committee. I sincerely hope that that will be the case.
I intervened on my hon. Friend the Member for Hornchurch (Mr. Squire) to say that I was especially concerned—and I know that he is also concerned as, I believe is my right hon. Friend the Secretary of State—about people who have lived in a house for a long time. The value of their property may have increased enormously but the income of the occupants may not have increased. In some cases, the occupants are not the owners but merely tenants. In Committee we should devise a mechanism to take account of that fact, because such people may not be eligible for any rebate but could still be badly hit by the new tax. I hope that my right hon. Friend the Secretary of State for Wales, who is a sensitive man and who thinks deeply about these issues, will discuss with the Secretary of State for the Environment whether something can be done to deal with the problem. In my constituency it causes heartache and anxiety.
We are all delighted with the return of the 100 per cent. rebate and the abolition of the 20 per centers. That is a sensible move. I join all hon. Members who wish that the 20 per cent. contribution could be abolished before 1993. I hope that even now we can think again.
Other issues have been raised by the bodies that must administer the tax. I have the honour of being a vice-president of the Association of District Councils which has submitted a paper that I know my right hon. Friends have seen. However, I draw to the House's attention two points in that paper that deserve careful consideration. The paper states:The Association does not accept that the long-term health of local government can be sustained on the basis of one locally variable tax yielding only 15 per cent. on average of the spending needs of local authorities. The Association believes that the national non-domestic rate should be returned to local control".I understand why we introduced the uniform business rate, but, as we are reforming the structure and finance of local government, it would be wrong for us to say that we shall not consider the issue again. The points made by the ADC are worthy of careful consideration. It would not be appropriate to incorporate such reforms in the Bill, but I hope that after we have won the next general election we shall reconsider the matter seriously and do something about it.
The other point made by the ADC is, I know, contentious and I do not suppose that I shall carry my right hon. Friend with me. The ADC's paper states:The Association thoroughly opposes the principle and practice of capping local authority expenditure.846 I must say that I have always felt unhappy about it myself. If we are talking about accountability, we must give local authorities greater freedom and flexibility and call them to account.
§ Mr. Janman
They have abused it.
§ Mr. Cormack
My hon. Friend says that they abuse it, and they frequently do; I accept that. It is an entirely reasonable point to make, and I fully understand why we have indulged in capping and why it is written into the Bill. Frankly, however, capping does not sit easily with a belief in local government or the freedom of local government.
We shall have to keep the matter carefully under review. The ADC is not a body led by the extreme left. It is a highly responsible body, which has reached a considered consensus view on the matter. I know that that view will not be entirely popular with my right hon. Friend the Secretary of State but I commend it to him for further consideration. I am not unrealistic enough to suppose that the argument will be accepted during the passage of the Bill, but capping is both crude and unsatisfactory and I hope that we shall not have to live with it indefinitely.
My hon. Friend the Member for Leeds, North-West (Dr. Hampson) referred to the paper circulated to a number of us by the Committee of Vice-Chancellors and Principals. I saw my copy this morning. If people as erudite and eminent as the vice-chancellors can be under such misapprehensions, it is important that we should clarify the matter for them. I hope that, during the debate and in personal correspondence, my right hon. Friend will be able to do that, because it seems to me that we have moved a long way, and the right way, on the position of students.
I am glad to have had the opportunity to participate in the debate. The Bill is extremely important. I believe that it represents a milestone that we should all be glad to have reached, and I congratulate my right hon. Friends on having had the courage to introduce it. It will be widely welcomed in the country at large. It is an enormous improvement on what has gone before and an improvement, too, on the rating system that preceded that. We now have the possibility of a really sensible stable system of local government finance, and I wish the Bill well.
§ 8.1 pm
§ Mr. Tony Banks (Newham, North-West)
I shall be brief, because I know that many hon. Members wish to speak.
The Secretary of State's speech consisted mainly of an account of the article in the Financial Times rather than an explanation of the details of the Bill. It sounded very much like the speech made by the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley) when he introduced the poll tax Bill—the Local Government Finance Bill 1987—on 16 December 1987. It is all on record: the right hon. Gentleman told us that the poll tax would be a fairer, simpler tax which would give rise to greater accountability. He claimed for the poll tax precisely the same advantages as the present Secretary of State now claims for the council tax. How can anyone in the House—particularly any Opposition Member—or anyone outside it believe a word that the Secretary of State says? It is clear that the present Bill will be rushed through the House because the Government decided that the poll 847 tax is an electoral liability which must be replaced as fast as possible. It is all part of the general style that the Conservatives have adopted in dealing with local government ever since they were elected in 1979, and even earlier than that.
I have been going through some of the major changes in local authority structure and procedures that have taken place in recent years, all of which have been introduced by Conservative Governments. In 1963, we had the abolition of the London county council and the setting up of the GLC. In 1972, we had the creation of the metropolitan county councils which nearly mirrored the GLC. Then, in 1986, we had the abolition of the GLC and the metropolitan county councils. After that, we had rate capping, to which the hon. Member for Staffordshire, South (Mr. Cormack) referred, and the poll tax. Now we have another proposal for further changes in local authority structures and the institution of unitary authorities outside London.
How on earth can anyone in the country say that the Government know how to organise local government structure or finance? Theirs is a record of interference, mess and confusion. Now they come back to the House not with an apology but seeking credit for clearing up the mess that they previously created. They will get no thanks from the Opposition and no thanks from anyone in the country. We know what all this is about. It is not really about finance but about politics and the Tory party's view of politics.
I did not hear the sedentary intervention of the hon. Member for Thurrock (Mr. Janman) in the speech of the hon. Member for Staffordshire, South, who was referring to rate capping, but I gather that the hon. Gentleman said that local authorities abused the system. The hon. Gentleman, in his directness and honesty, sums up the Tory party. The Tories do not trust local democracy. They do not trust local electors to get rid of local authorities if they do not like them and to support them if they do. They want local authorities to reflect precisely the views of the Tory party in government. Many Conservative Members have no respect for local democracy or any other form of democracy. They merely want local authorities to do what the Tory party would have it do.
§ Mr. Janman
What I actually said was that local authorities have abused the system. I was talking not about a theoretical position but about historical fact. Personally, I should like to see the implementation of a referendum system at local level on a non-party basis, because that would provide a mechanism to ensure local accountability. In the absence of that, however, we need a capping mechanism such as that proposed in the Bill.
§ Mr. Banks
I still do not agree with the hon. Gentleman, although I am glad to hear that he agrees that there should be some local control over the local decision-making process. That seems right, but, of course, we already have such mechanisms in place: they are called local elections and local democracy. Local government has thrived in Britain and, in many ways, our system is the envy of the world. The hon. Member for Thurrock may laugh, but I repeat that we have one of the finest local government systems in the world. It is as simple as that.
§ Mr. Janman
§ Mr. Banks
It is no good the hon. Gentleman picking an authority that he does not like and trying to use it to knock every other aspect of local democracy. What worries me is that the Government have been totally cavalier in their attitude to the whole process of local democracy and accountability—indeed, they have used parliamentary sovereignty to destroy local accountability and, in the final analysis, such actions undermine democracy.
I had hoped that, with a gentler, kinder, more responsible and responsive Prime Minister in control, we would move away from all this, but it seems that the Government cannot get it out of their system: if they do not like what local authorities are doing—and they do not like what a lot of them are doing—they interfere. In the end, they will abolish them.
We all know what sort of local authority the Government would like. They would like them all to be Tory authorities. The City of London, for instance, is so totally Tory that its members can say that it is non-political. What they mean is, "It is Tory right the way through." When they say, "We are going to keep politics out of the City of London and out of this local authority," what they mean is, "We are going to keep your politics out of this local authority." That is what it is all about and the Bill is just another stage in the dismantling of local accountability and local sovereignty.
The shadow that hangs over debates such as these is the right hon. Member for Finchley (Mrs. Thatcher)—the Finchley whinger. It was the right hon. Lady who said that the poll tax was the Government's flagship. Like a captain, she went down—temporarily—with her flagship. Unfortunately for the Conservative party, however, she keeps bobbing up again: her head keeps appearing above the waves. We therefore now have the ridiculous image of the new Secretary of State in his new lifeboat rowing away from the disaster and cracking the right hon. Lady on the head every time she emerges and tries to get into the lifeboat with him. The Tories do not want her in the lifeboat because they know that as soon as she gets on board it will overturn. The right hon. Lady will ruin the Tories' chances at the general election—it will not now be on the poll tax but, I suspect, on Europe. The former Prime Minister sends letters to Bruce Gyngell, of TV-am, saying "Dear Bruce, I am sorry. (Sob, sob.) I never thought it would end like this." She should send a letter to every single person in the country, apologising for the poll tax. That is the kind of task that she should be given. That is the punishment that should be inflicted on her. I would like to see her chained down and made to write out by hand a letter to every poll tax payer. That would undoubtedly give her writer's cramp.
We did not hear much about the Bill from the Secretary of State for the Environment. In his knockabout speech, he did not seem fully to understand the problems that he is going to create. The council tax is a rerun of the poll tax. Once again, it is being done in haste. When legislation is passed in haste, it is always repented at leisure. However, there is not much leisure time left to the Government betwen now and the general election.
The Bill will throw up just as many anomalies and problems as the poll tax Bill and we have less than 17 months before the tax is due to come into operation. Unfortunately, a Labour Government will have to clear up the mess. That is what really worries me. There should be poetic justice in letting the Tories clear up their own mess, 849 but we cannot allow them to do that because we will then undoubtedly have poll tax mark III. That is what will happen if the Conservatives are re-elected.
The local authorities are confused about the proposals in the Bill and that is not surprising because we will not see much of the detail until the spring of 1992. The Bill proposes that only 50 per cent. of the tax will be paid for second homes and for properties with low residence. That is grossly unfair. Why will local authorities in Wales be able to charge the full 100 per cent. for second homes while only 50 per cent. can be charged in England? Does that have something to do with the problems that second-home owners in Wales are experiencing with the Welsh Language Society? Why cannot local authorities in England charge the full 100 per cent? If people are lucky enough and rich enough to have two homes, they should be prepared to pay two taxes because they will undoubtedly require services in both the areas where their residences are located.
The discount system and the benefits are very complex. Local authorities are not looking forward to the administrative nightmare that will be created if the Bill becomes law.
In Newham nearly 20 per cent. of the households are occupied by single people among whom there is a high turnover rate. Experience in compiling the poll tax register bears this out. In addition, the multiple occupancy nature of many Newham properties means that discount administration will be very complex as household structures change. The council tax is based on the Tory utopia of two persons, preferably married, households. The reality in Newham, as in most other London boroughs——
§ Mr. Janman
Who wrote that?
§ Mr. Banks
One of the Newham officers wrote it and I want to ensure that the views of the Newham officers who have to administer the scheme are made clear in the House.
The Newham officers also wrote:Newham expects over 30 per cent. of council tax payers to be eligible for benefits. When this is combined with the 20 per cent. of single person households, high turnover and multiple occupancy, it is clear that by any stretch of the imagination, this is not a tax which will be simple and cheap to collect.That is another problem that we will have to face in Newham. The system of discounts and benefits will be administratively complex. The vagaries of the property bands mean that the highest council tax payers will pay only three times more than the lowest, even though their property could be worth eight times as much.
In Newham, as little as 9 per cent. of overall income will be raised by the tax. That is the second lowest in the country. Our next door borough, Tower Hamlets, is the lowest—excluding the City of London. It is clear that a total catastrophe is to be replaced by chaos. That is what we are being asked to examine tonight.
There will be a guillotine motion tomorrow and the Bill will be pushed through its Committee stage without the kind of detailed examination required by legislation as complex as this. One would have thought that some of the lessons and failings of the poll tax would by now have sunk into the thick skulls of Conservative Members. Obviously, 850 that has not happened. They are so grateful to escape from the poll tax that they will grab any pig in a poke that happens to be passing by.
The Bill is a pig in a poke. I am only grateful for the fact that people will not have to live with it for very long. My colleagues on the Opposition Front Bench will be in government in a few months' time and they will have to restore to local authorities the accountability and control over local decision making and local resource raising that they should have and had enjoyed in the past before this interfering bunch of incompetents stumbled into Westminster. Fortunately, they are on their way out and local government can be put back on to a fit and proper basis.
§ Mr. Tim Janman (Thurrock)
There are two striking features about this debate. The first is unusual in that this must be one of the few areas of our work in this place that we can debate today without the European Community poking its nose into what we should or should not be doing. The other striking feature is very common in this Parliament and that is the lack of detail and genuine, constructive criticism from the Opposition. The hon. Member for Dagenham (Mr. Gould), in opposing the Second Reading, made the utterly vacuous speech that we have come to expect from him.
The community charge is no longer a big issue. In many parts of the country, until it was announced that the community charge was to be abolished, non-payment of the charge was not particularly different from previous non-payment of domestic rates in any given locality. For the whole of the borough of Thurrock, non-payment of the community charge in March 1991 was down to 6.4 per cent.—a level at least commensurate with non-payment in the last year of the rating system and probably slightly lower than that. We must bear in mind that the system that we are leaving behind, until the announcement of its abolition, had not been the unmitigated failure in terms of its implementation and collection that some hon. Members believed it to be.
We are considering today the council tax, a major piece of legislation to introduce a new way of raising local revenue for the financing of local government. I will be voting for the property tax tonight——
§ Mr. Tony Banks
If the hon. Gentleman does that, he will be the only one because we shall be voting tomorrow night.
§ Mr. Janman
I am grateful to the hon. Gentleman. I will be voting for the property tax tomorrow night. The most important reason why I will do that is that the vast majority of my constituents will gain from the replacement of the community charge with the property tax.
Before any Opposition Member pipes up with the question, "Why did you vote for the community charge in 1988?", I must explain that compared with the revaluation of rateable values which would have occurred if the community charge had not replaced the rating system, most of my constituents were gaining from the advent of the community charge. I am being consistent. I am voting for a change in the system of local government finance that will benefit my constituents compared with the other options on offer.
851 It does not matter what system a Government introduces, there will always he winners and losers when one system of local government finance is replaced with another. However, even those who will lose, primarily people who live on their own in properties in the higher bands—of which there are not many in my constituency—will not be losing as much as they would lose if we had a Labour Government introducing their so-called fair rating system.
We have an opportunity with this Bill to introduce a system of local government finance that will be a middle-of-the-road option in comparison to its two forerunners. The old rating system took no account of the problem whereby one person living on his or her own would be expected to pay the same for their local government services as, say, four people all earning a wage and living in an identical house.
It is correct to differentiate between the fundamental principle of the community charge and the exact implementation of it. Some of my hon. Friends say that that is not a fair differentiation, but it was fair. The community charge took us from one extreme, in which there was no account of the number of people living in a household, to another extreme. For example, in my constituency, due to the high overspending of my local Labour-controlled council, four adults living in a three-bedroom semi-detached house would have been paying £1,700 because of the profligacy of my local Labour council.
Under the community charge, the straight line relationship in terms of how much a household paid and the number living in it was just that—a far too straight line. With this legislation, we are moving towards a better balance between protecting households of only one person and not overcharging households of a greater number of people.
Given that we are replacing the community charge, we must ask whether it improved accountability. The hon. Member for Newham, North-West (Mr. Banks) made much of that point. There is conflicting evidence. It is true that, in almost two years since the community charge was introduced, there have been far more letters to the Thurrock Gazette about the inefficiency and wastage of my local Labour council than there were in the days of the rating system. By making everybody make some contribution, however small, the community charge concentrated people's minds on what the local council was or was not doing and on whether it was effective and efficient.
I take issue with the hon. Member for Newham, North-West, because we must consider whether the community charge made any difference to voting patterns in local government elections and whether it made any difference to whether people fully understood their local council's revenue-raising powers and other powers. The theory of the community charge was that, with every person making some contribution, there would be a much higher turnout in local elections and a trend towards the electorate understanding that the people they put in office had revenue-raising powers and it is therefore important to examine critically their proposals. Perhaps with the exception of certain London boroughs, that has not happened.
I have spoken to hundreds of constituents about this matter because it genuinely fascinates me. A substantial percentage of the electorate do not vote in local elections, 852 according to what the Labour party and Liberal Democrats are saying; they vote on the basis of the performance of the national Government. One has only to look at the correlation between local election results and the party in power and how it affects the same party at local level to realise that that is true.
In the 1970s, probably some reasonable Labour councils were chucked out of office because of the appalling Labour Government of the day. [Interruption.] I am not making a party political point. Whether the hon. Member for Newham, North-West likes it or not, local government democracy, which he clearly loves and talks about often, actually breaks down because of the party political system. As he knows, the vast majority of people do not even bother to vote in local elections. My local Labour party, which has 33 of the 39 seats on Thurrock borough council, saw its hegemony reinforced in May this year by getting fewer than 17 per cent. of the votes of those who are eligible to vote.
§ Mr. McCartney
How many voted for Tory candidates?
§ Mr. Janman
That is not the point. It does not matter which party it is. I am not trying to make a party political point in the way that the hon. Gentleman normally does. Irrespective of which party it is, it is ridiculous to say that, in most local authorities, the party in power has the overwhelming support of the local people, based on the percentage of the local community who actually voted and put their cross by the name of that party's candidate.
Many people—it is only because nobody has told them—do not understand how much power county and borough councillors have. When I say to people that elected councillors on Essex county council, when its gets its massive dollop of revenue from the Government, can decide how that massive dollop of taxpayers' money is divided, they look at me aghast. They do not understand how much power elected borough and county councillors have.
Rightly or wrongly, and conveniently or inconveniently for the concepts and theories of local government of the hon. Member for Newham, North-West, most people look to central Government to rescue them from the overspending and largesse of local councils. In Thurrock, where my local Labour-controlled council is overspending to the tune of £50 a head, that is certainly no exception. I agree, certainly in respect of my own locality, that it is a shame that people do not rescue themselves by voting in local elections in the way that they vote in a general election. If they did that, we would not have a Labour council any more. Because of that, I support the Government's capping proposals.
I support the capping proposals in the absence of a radical reform of finding a local mechanism for holding local politicians to account. I would much rather a system where, if local councillors, having been elected, wished to spend more than central Government thought they should, they did not have to stand for re-election as my right hon. Friend the Member for Henley (Mr. Heseltine) suggested, but faced a yes-no referendum on whether councils should be allowed a budget that was bigger than that commensurate with the standard spending assessment set for it.
I hope that Opposition Members agree that, although that would take away the party political aspect, which would reduce confusion in the electorate about who has 853 authority for what and exactly what the power relationship is between central Government and local government, it would make matters clear cut. People would be asked, "Do you vote yes or no to local councillors in effect challenging the authority of central Government, who obviously have the duty to protect public spending as a whole?" That would give an accurate and specific local mechanism which was better than the current mechanism which is clouded by party labels and national party politics.
We must not make the same mistake that we made when we changed from the rating system to the community charge, when councillors—mainly socialist but including some Tory councillors who were only Tory in name and description but not in action—took their community charge payers, the Government and this Parliament to the cleaners. They used the opportunity that was presented by the change in the system to whack up their spending in a cynical fashion. When Thurrock council did that, I said in the local papers that its cynicism was worse than that of Ceausescu in Romania. That ruthless political cynicism went on up and down the country and the main victims were those who were least able to pay. However, Labour councils were determined to ensure that people were fleeced. They banked on the fact—with some success, unfortunately—that the electorate would blame the change in the system, whereas it was the promises and decisions that those Labour councils were making within the system that were to blame for millions of citizens being fleeced.
I also support the courts retaining strong powers to extract payment from those who will not pay. My Labour opponent in Thurrock trotted along to the inaugural meeting of the Thurrock branch of the Anti-Poll Tax Union, which was held at the Thameside theatre at Grays, thus giving that organisation succour and support. With the odd exception—I accept that there will always be odd exceptions, especially in relation to the standard community charge on houses that are no longer lived in and where there are problems in selling the property—because of the generous rebate system that exists, and the even more generous rebate system that is proposed under the new legislation, there is no valid excuse for non-payment for the person paying one personal community charge.
The most important improvement under the new system as compared with the old rating system is the provision for a 25 per cent. discount. However, I should like to know how the figure of 25 per cent. was arrived at. Is there any likelihood, on reflection, of its being increased? Although I would not go as far as some of my hon. Friends who believe that there should be a discount of 50 per cent.—although none has said so in the debate—I suggest that the discount should be about 40 per cent. For reasons that I shall not go into in detail now, and although I believe that the 50 per cent. figure is illogical, I believe that the 25 per cent. discount is possibly too low. Could not larger households, containing more than two adults, pay a small supplement to the council tax and thus, in effect, fund the increased reduction of 40 per cent. for single householders?
The principle of the community charge was never all that unpopular—[Interruption.] Opposition Members 854 may make strange hissing noises, but, as has already been said, the vast majority of the British people are fair-minded, and they saw nothing wrong with the principle that all those who have the right to vote in local elections should, in some degree or another, make some contribution to the revenue that has to be raised. The Labour party will come unstuck on that point. Opposition Members may glibly adopt slogans and dub the council tax "poll tax mark II", but they will come unstuck if they make such comments as a way of buttressing their attack on the principle that any system of local government finance should take at least some account of the number of people living in a household. The proposed reduction for single person households is the only element of the previous system that has been retained. I cannot put it any more strongly than "an element". The Opposition will come extremely unstuck if they attack the Bill on that basis.
One weakness of the current system is that community charge payers do not see the separate charges imposed by the county tier as opposed to the borough or district council tier of local government. Therefore, I am pleased that the legislation proposes to give a separate council tax figure for each tier of local government for those parts of the country, such as mine, where there are two tiers. However, may I also ask—if the answer is no, I hope that it will change—that the individual comparative standard spending assessment be set against the individual amounts? If that does not happen, we could end up with the tricky situation of a Tory-controlled county council, such as Essex, spending 2 per cent. under its SSA but, because it is a county, it will be raising a much bigger proportion of the total tax bill than the borough. Thurrock, for example, has a much smaller budget and raises a much smaller amount of money, but is overspending by £50 per head against its SSA. Given the deviousness of the people who run that council, I know that they will come out with all sorts of claptrap about the Labour local council taking much less money than the Tory county council. If the two figures are separated and given as individual amounts, it is essential that the individual SSA comparatives are also given so that people can put the figures in their proper context when they receive their bill.
I am pleased to support the Bill tonight and shall be pleased to vote for it tomorrow on Second Reading. I am always grateful to the hon. Member for Newham, North-West for making sure that I know where I am going and what I am doing. He does a good job on that. Surely, however, it cannot be beyond the wit of man to find a system of local government finance which is practical to implement and enforce, which is fair and is perceived as being fair by the public, which is comprehensively accepted by them and which gives accountability. Let us hope that the council tax is it.
§ Mr. Ian McCartney (Makerfield)
First, I should like to assure the hon. Member for Aldridge-Brownhills (Mr. Shepherd) and my hon. Friend the Member for Leyton (Mr. Cohen) that I shall stick to what I understand to be the agreement behind the Chair to ensure that every hon. Member who wishes to participate in the debate has the opportunity to do so, especially those who have stayed for the whole debate——
§ Madam Deputy Speaker (Miss Betty Boothroyd)
Order. I must correct what the hon. Gentleman has just said. The Chair is not involved in the question of the length of hon. Members' speeches. It is of course very nice if all hon. Members can be called, but a debate is a debate.
§ Mr. McCartney
I did say "behind the Chair", Madam Deputy Speaker.
As someone who has spent most of the last decade as an elected member of a local authority and having continued to serve in that capacity for a period after being elected to this House, I have listened with anger to those Conservative Back Benchers who are on the road to Damascus tonight and who have given us the reasons why they did not really support the introduction of the poll tax. They have said that it was all the fault of the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley); that it was the fault of the former Chancellor of the Exchequer for not providing sufficient resources when the legislation was implemented; that it was the fault of the profligate Labour local authorities and that the local authorities failed to play fair with the central exchequer and to develop adequate systems for ensuring payment for local services. However, none of that is true.
As my hon. Friend the Member for Newham, North-West (Mr. Banks) has said, the poll tax was the Government's flagship. Last November, however, when the captain was ashore in Paris, restocking the victuals, the right hon. Member for Henley (Mr. Heseltine) delivered the black spot. But it was not the right hon. Gentleman who delivered the final blow; it was the former Prime Minister's most trusted and personally appointed Chancellor—the man who would ultimately replace her—who made the right hon. Lady walk the plank because of the poll tax.
The right hon. Member for Henley delivered a 52-minute speech earlier today, of which five minutes dealt with the council tax while he spent 47 minutes on anything but the council tax. That was a signal that the admiral had finally scuppered his own flagship. Not since the sinking of the Graf Spey have we seen so many rats deserting a sinking ship at the same time.
Unfortunately, Conservative Members have sought only to defend themselves tonight. They have not apologised for the poll tax's consequence for local government, its cost to local government or to the individuals who have suffered from it. At one stage, some Conservative Members even gloated over the fact that people in Wandsworth who can pay the poll tax do not have to pay any in the current year. That is grotesque when hundreds of miners' widows in my constituency, whose husbands died of pneumoconiosis, now have to pay the full poll tax because their widows' pension is taxed at 97p in the pound. They do not qualify for poll tax rebates simply because of that level of taxation. It was because of such grotesqueness that people recognised the unfairness of the poll tax. Many of my constituents who are Conservative voters and who can afford to pay the poll tax have been turned against that party because of its basic unfairness. It was only in November last year when it became clear that the right hon. Member for Henley was making a major grab for the Conservative leadership that the Cabinet was forced to do something about the poll tax.
856 Conservative Members have blamed everything bar themselves. What did the Prime Minister say in an interview with the Daily Mail shortly after being elected Prime Minister? He said:I'll tell you the trouble with poll tax. We were bounced into it quickly because there was such a fuss about rates in Scotland and we were bounced without thinking because of the political fuss".Without thinking, the Chancellor of the Exchequer and his colleagues in the Cabinet bounced the poll tax and its consequences on the electorate of Britain. Tonight they ask us and the people of Britain to believe them when they say that they have got it right this time.
What an admission for the Prime Minister to say that he did not think about the introduction of such a major piece of legislation. The poll tax being introduced in its second form this evening is a panic measure. It is an attempt to get the Conservatives over the next general election and give the impression, as they seek to do with the economy, that things are going well and are about right. They say, "Leave it to us chaps. With a steady hand on the tiller over the next few months, everything will come right and after the next election that will prove to be the case."
The timescale is out of sync for one major reason. We have a crisis in local government funding in the United Kingdom. Whether local authorities are Conservative, Labour, Scottish National party, Liberal Democrat or Plaid Cymru, in the length and breadth of Britain there is a major crisis in the funding of local government. There is a crisis in the structure of local government, people's expectations of local government and the delivery of services. The reason is that for over a decade local government has been undermined, underfunded and placed in a hostile position by the Government.
The consensus about delivery of local authority services in Britain was smashed deliberately by the Government and continues to be smashed by the introduction of this legislation. The measure will be unsuccessful. The tragedy is that the unsuccessful nature of the Bill will result in many of our constituents continuing to pay huge amounts towards local government finance while resources are ploughed into not improvement and development of services at local level but the administration of a system which is about hoping to ensure the return of the Conservative party to power.
The council tax is clearly poll tax with another name. It has three basic and fundamental weaknesses which were present in the poll tax. It is not simple to understand—it is complex. Its complexities will mean that whether hon. Members support it or not, they will be unable to do anything to improve it within the parliamentary timescale. Therefore, a flawed Bill will go on to the statute book, just as the Bill which introduced the poll tax was flawed. The way in which the Bill will be put through the House will be a negation of the House of Commons' right to develop a strategy to create good legislation. Surely that is what the House should be about, irrespective of hon. Members' party political differences about the concepts and principles of legislation.
When the Bill leaves the House it must be understood and it must be workable. To be workable it must be good law and have a benefit flowing from it. There is no way in which misuse of the guillotine can ensure that the Bill will 857 go out as a good and acceptable measure which will improve local government finance and the way in which the British people pay for it.
The link between the concept of paying for local Government resources at local level and the maintenance of those payments has been the greatest disaster and tragedy of the poll tax. Previously, 99 per cent. of people paid the rates. More than 99 per cent. of local businesses paid the rates. In my area the figure was 99.7 per cent. The system was understood. It was simple and, despite people's grumbles, there was a commitment and an understanding that local government services had to be funded proportionately at local level. The poll tax ended that consensus for ever. No matter what system is brought into operation, millions of people will decide not to contribute to paying for local government services. In my view, that is a wrong decision. The Government broke into that basic tradition of life in the United Kingdom.
The council tax will be expensive to administer and collect as was the poll tax. The council tax does not relate to people's ability to pay. That is one of the major reasons why the speech by my hon. Friend the Member for Neath (Mr. Hain) was important. How can it be that someone who has in excess of £150,000 per year disposable income can pay the same or less than a miner's wife in my constituency? Under no circumstances is that a fair system of local taxation.
Not only the Labour party says that the council tax is unfair. The Secretary of State for Wales will reply to the debate tonight. He owes it to those of us who are worried about it to clarify exactly how students, and especially nursing students in the national health service, will be treated. The Royal College of Nursing has made it clear that the regulations which currently define students for the purposes of the community charge distinguish between nursing students pursuing Project 2000 courses, who are in receipt of a bursary, and students pursuing conventional nursing courses, who receive a training allowance. The incomes of the two groups of nursing students are similar but under the community charge Project 2000 students pay 20 per cent. of the tax while the others pay 100 per cent.
In the same health authority student nurses may work together making beds and caring for patients. But when they leave the ward, one is exempt from the new community charge and others make an immediate payment. The Government must clarify the position under schedule 1 for nurses on the two types of courses. If they do not do so tonight, they should table amendments in Committee. It cannot be acceptable in terms of either logic or good administration to discriminate between the two types of student nurse.
I will probably be one of the Opposition members of the Standing Committee that will consider the Bill. Although we are opposed to it in principle, I genuinely hope that the Government will provide an opportunity to examine the workings of this complex piece of legislation and ensure that when it leaves the House it has some semblance of a workable piece of legislation. Local authority treasurers, irrespective of local authority and party, all say that the timescale within which the Government intend to introduce the council tax and the way in which they intend to force through the proposals will leave local authorities in administrative trauma. The Government owe it to the 858 House, local government and, more importantly, to the British people to introduce workable proposals. I hope that when it is seen in Committee that there are major flaws in the Bill, the Government will be big enough to accept Opposition amendments to improve it. Britain cannot afford either financially or in terms of its democratic structures to go through another debacle like the poll tax.
§ Mr. Richard Shepherd (Aldridge-Brownhills)
It is clear from the debate that every right hon. and hon. Member wants an equitable and bearable form of local government taxation. Indeed, as was rightly pointed out, this is not the first time that we have sought that end. My right hon. Friend the Home Secretary and my right hon. Friend the Health Secretary set about devising such a form of taxation and it was the poll tax and the uniform business rate which brought us to this stage and so low in public esteem.
My hon. Friend the Member for Teignbridge (Mr. Nicholls) said that the central proposition of the poll tax was that everyone should pay a little. Of course, if one recalls, that was not the first principle of the poll tax. The first principle was that we should all pay equally. On Second Reading of the poll tax legislation I accepted the advances of the Government and voted for the Bill. I am grateful for the processes of legislation in the House, because as the Bill unfolded it became clear that the original principle was unsustainable. It was so unsustainable that the Government had to accommodate the changes, inadequate as they turned out to be, which enabled my hon. Friend and other Conservative Members to argue that the principle of the poll tax was that everyone should pay a little, almost as if it were a discretionary tax. But the original concept was that everyone should pay equally and it was swept up by the magnificent phrase of my right hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) with his usual panache—"Why should a duke pay more than a dustman". That phrase swept round the country and concentrated our minds on what the debate meant more than any other contribution.
During the parliamentary discussions one began to understand the principles that underlay the debate, what it amounted to and why the tax could not be borne by our constituents. We could genuinely signify neither acquiescence nor consent.
The spokesman for the Liberal Democrat party pointed out something about the process of legislation that was very true. At our first attempt to reform local government finance in the House, taking three bites of the cherry, there were 218 Government amendments in Committee—not the perversities of modest Back Benchers such as ourselves—135 on Report and 268 on Lords Report. That was the scale of amendments to a thought-through, carefully designed Bill that we were told was certain. We were told that we could return to our constituents and assure them that the tax was bearable, just and equal.
I wish this Bill the best in the world. I want an equitable and bearable form of local government taxation. Normally, I would vote for the Second Reading, but the most extraordinary guillotine that has ever been introduced into the House is marching with the Bill. We are talking about a guillotine, which will be moved tomorrow, but in the knowledge of the Bill and of the fact, 859 fundamental to its passage, that we shall discuss in Committee for only nine days a Bill whose predecessor required more than 700 Government amendments. We have witnessed Ministers unable even to argue their new clauses let alone understand, for the conviction of the House, what the Bill means.
The Government are insistent that by 6 December—St. Nicholas' day, that is Father Christmas' day—they will bring back to the House a Bill that they will claim has been thoughtfully considered. Conservative Members understand Burke's understanding of the British constitution. As Back Benchers of a constitutional party our role is to scrutinise legislation and to attest that our constituents, our people, will bear it. That is the justice of the system of Parliament—Parliament meaning that we have the right to free speech on behalf of our constituents. Yet, on the same Order Paper as this measure, the Government propose to restrict debate to nine days in Committee. It is a travesty of parliamentary procedures. It will do us down—not because the Bill may be wrong, but because we will be unable to judge it. Driving through a major piece of taxation legislation to secure their purpose this side of Christmas is the most high risk strategy that a Government can undertake.
There is no point in imploring the Government because they have cast their die. I hope and pray that this Bill has integrity, because the assumption behind it is that my right hon. Friend the Secretary of State for the Environment has spent his days since he came to office with the Lord above and the accounting angels to forge the most perfect piece of legislation that has been known. That is an absurdity. I cannot imagine that the Government will not come forward with a large number of amendments.
In the justice of this argument we are talking about the Local Government Finance Bill, but we have not heard one word from the Government about the uniform business rate which has been a fundamental element in the finances of our local authorities for many years. That issue has not been tackled.
Whether the Bill is enacted before a general election is also a moot point, as we have no call over the processes and the time that the House of Lords takes for consideration of the Bill. Therefore, it may or may not come about. All that the Government will demonstrate is that by the brutal use of a guillotine they will certainly ensure that the Bill is enacted without proper and adequate debate. As a constitutional party, we have a duty to have regard to the form of debates and procedures in the House.
§ Mr. Harry Cohen (Leyton)
That was an eloquent and honest speech by the hon. Member for AldridgeBrownhills (Mr. Shepherd) and he is right to draw attention to the savagery of the guillotine on this measure. This tax is being imposed on our constituents without proper parliamentary consideration. There will be an enormous number of flaws and unfairness in it. Like the poll tax, the consequences will be a scandal.
The Secretary of State for the Environment's speeches today and during the Queen's Speech were full of jokes and banter, but many of my constituents do not view the costly shambles of the poll tax as much of a laughing matter. The Secretary of State has pretensions as a political heavyweight, but his performances have been more of a light banterweight. During the five minutes that he spoke 860 about the Bill in his 52-minute speech he was floored by his own seconds—Conservative Back Benchers—when they expressed their concern. That is why he spent as much time as he possibly could outside the ring, talking about anything but the council tax.
The poll tax could have been abolished from April next year, but it will linger on for at least another year under the Government. At the end of 1990–91, £1 billion of the poll tax remains uncollected in England alone and about 7.5 million summonses will have been issued by the end of the year. That is the largest debt collection exercise in history.
Many people think that the poll tax has already been abolished, which will make it even harder to collect. The non-collection element will be loaded on to the bills of those who pay, which is an inherent feature of the poll tax system. The Government must get the blame when bills go through people's doors, and I for one intend to make clear that that is their fault.
§ Mr. James Paice (Cambridgeshire, South-East)
How can the hon. Gentleman say that it is the Government's fault when someone does not pay taxes? He is right to point out that arrears caused by people who have not paid are a burden on the vast majority of law-abiding people who pay up, whether they agree with the basis of the taxation or not. However, as some of the non-payers are members of the Labour party and are his colleagues on the Opposition Benches, how can he blame the Government for the fact that people have decided of their own free will not to pay a tax?
§ Mr. Cohen
It is the Government's fault, because their legislation took no account of ability to pay. There will always be vast numbers of people who cannot afford to pay. I tabled a question asking how much the Government had set aside for bad debts, and the answer showed that not one penny had been set aside. There should he immediate abolition of the minimum 20 per cent. payment. That should happen this year, or at least in 1992–93.
§ Mr. Key
The hon. Gentleman is on an important point. The 20 percenters, as they are colloquially known, receive benefits which more than compensate this year for their 20 per cent. payment of the community charge.
§ Mr. Cohen
That is not the case in London where the 20 per cent. bill is higher than elsewhere in relation to DSS payments. Secondly, as my hon. Friend the Member for Neath (Mr. Hain) reminded the House, the Audit Commission has said that it costs £15 to collect £8. Thirdly, there is a housing benefit crisis in local government. Low-income families are put at grave risk and local authorities are unable to administer the housing benefit system efficiently because they are tied to the 20 per cent. element. If it were abolished, administration of the poll tax system would be easier.
The Government have accepted 100 per cent. rebates for the new tax. Why should abolition not apply to the poll tax during what are allegedly its last two years? The Government have been most mean in not getting rid of the 20 per cent. payments. On BBC news on 23 November last year the Prime Minister said: 861One of the difficulties we got into with the community charge was being bounced into decisions before they were fully thought through and before we knew precisely how they would affect people.As the hon. Member for Aldridge-Brownhills so eloquently pointed out, we are seeing exactly the same thing with this tax.
§ Mr. McCartney
In today's truncated debate hon. Members have questioned in great detail the precise nature of the rebate system for students and others who are eligible. The Government have been woolly about the exact meaning of their proposals. Because of the guillotine, amendments to ensure that the rebate system is simple and reaches people who require it may not be properly discussed.
§ Mr. Cohen
My hon. Friend makes a good point. We will not know whether an ability-to-pay element will apply in relation to the rebates.
One of the major problems for local authorities is the computer software that is essential for the efficient billing and collecting of the tax. For the poll tax the Government gave councils 18 months to get their computer software in order, but the councils were unable to do so because they did not have the resources and the rules and complexities kept changing. It is now less than 17 months to April 1993 when the council tax will be introduced. Much of the information and secondary legislation which are vital to work out what will be in the computer programmes are not yet available. The Government are leading us to a shambles.
§ Mr. Key
I am delighted to reassure the hon. Gentleman on the subject of computer software for local authorities. My Department is working closely with local authority associations on the matter. Only last week we had yet another meeting with them on the subject of computer software. My right hon. Friend the Secretary of State has already made it plain that, unlike some other Bills, we hope that for this one not only will most of the regulations be in place before Royal Assent, but that draft regulations will be composed parallel to the legislation. Many of the draft regulations will be complete by Christmas. There is no point in engaging in scaremongering about a matter that is well in hand.
§ Mr. Cohen
Experience shows that there will not be enough time and that on the Government's reckoning there will not be enough resources. Is the Minister saying that by Christmas every dot and comma of what local authorities need for their computers will be in place? The Government keep changing the rules of the game, which creates enormous problems for local authorities.
§ Mr. McCartney
The Minister is disingenuous, because he did not mention the twin-track approach that local authorities have been asked to operate—not only the introduction of the new tax, but the maintenance of the poll tax. There will not be the same winding down that occurred with the old rating system. In addition, because of poll tax capping, local authorities have to deliver their budgets within a matter of weeks of the Government's decision on standard spending assessments. There could well be a major collapse in the administration of local government funding. I make not a party-political point, 862 but one which shows the reality of not having proper consultations on the time scale for implementing such a major piece of legislation.
§ Mr. Cohen
My hon. Friend is right. Local authorities will have to administer the dying poll tax and deal with all the problems associated with that, while trying to get the new council tax system into play. The Government have not provided sufficient time or resources to ensure that the system works properly.
Three major elements run through the council tax. One is its complexity, both for the authorities to administer and for ordinary people to understand. Secondly, a register will be required. As I said earlier, I do not think that a register is necessarily bad. We had a register of property under the old rating system. However, the new register will include personal details, especially in relation to the benefit and discount systems. That invasion of privacy will be a problem. Thirdly, many of the unfairnesses of the old poll tax will persist in the new council tax system.
I want to run through the discount system. It is not targeted at those in greatest need, because ability to pay will not be a factor. Indeed, two discounts will be available to the owner of a second home—
§ Mr. Tony Banks
Not in Wales.
§ Mr. Cohen
Why should that be so in Wales, but not in England?
The administration of the new tax will be complex. Local authorities will have to check the applications of those claiming discounts. They will have to police the discounts, both for someone's initial eligibility for the discount, and for any change in circumstances that might take away that eligibility. That is an enormous and difficult task for local authorities.
The vital secondary legislation on the benefits system has not yet been published. My understanding was that it was likely to be published in the spring. Although I welcome the Minister's assurance that it will be earlier than that, we shall have to wait and see. Local authorities can do little preparatory work before the regulations are published.
§ Mr. Tony Banks
My hon. Friend makes a good point about the complexities of the system, especially with regard to benefits. In my local authority it is estimated that only 9 per cent. of overall income will be raised by the council tax. Despite all the effort, the local authority will get only 9 per cent. of its income from the tax, even if it manages to achieve 100 per cent. collection—and the very idea of that is a nonsense. Does my hon. Friend know the estimated figure for his local authority?
§ Mr. Cohen
Local authorities in London are estimating the figure to be about 15 per cent. The business rate has been taken away from local authorities, and in London that accounted for about £2 billion of income. That has implications for the gearing of the system.
The proposed method of operation for the benefits system will cause enormous problems for families. If a liable person wants to claim benefit, he must tell his local council that a second person in the household has a low income. That implies that that person already knows the financial details of the second person, and if he does not that could create some problems. There is absolutely no incentive for the second person on a low income to sign the application form because he is not liable to pay the tax. He 863 will not be the one receiving the bill. Who is supposed to tell the council of any changes in circumstances? It may be in the interest of neither of those two persons to do so. If there is a fraudulent claim for benefits, who will be prosecuted? That is not clear from the way that the Bill is worded. The benefit structure is not workable, and it will be a software nightmare until it is made clear.
§ Mr. Key
If one is talking about second adult rebates, of course it is true that we need to try to simplify the proposals, to overcome the administrative difficulties brought to our attention by local authority associations. It is true also that the regulations will be a matter for discussion at a later stage. Those aspects will have to be the subject of regulations that the House will have to consider later.
§ Mr. Cohen
The Minister was not particularly forthright. Is he saying that they will be completed by Christmas?
§ Mr. Cohen
The Minister is shaking his head, so they will not be completed by Christmas. Local authorities had their fingers burnt before when they tried to get the software up and running and then found that the Government were changing the rules. It looks as though exactly the same will happen again in respect of the benefits system.
Another feature that will survive from the poll tax is joint and several liability. Under that unfair system, many women were caught for bills payable by their husbands, and vice versa. Under the council tax, that hierarchy will be extended to two tenants, who, if they are at the same level in that hierarchy, could become responsible for each other's council tax jointly and severally. A tenant could be held responsible for an absentee landlord, in the same way that a married couple and partners living together as husband and wife will be responsible for each other. Not only is that unfair, but it will require checks by local authorities, and snooping to see how couples are living together to decide whether they are liable for each other's bill.
Londoners will be particularly disadvantaged by the valuation banding. Most London homes will find themselves at the top levels. The Department of the Environment's own statistics give a Greater London average council tax for two adults of £478. From past experience, that figure could be out by as much as 100 per cent. In any event, it is 20 per cent. higher than for the rest of England and Wales.
The Government must look to be fairer to London, with equalisation at least in the grants system—perhaps on the basis of incomes, or by taking the regional banding approach. They could at least give the business rate—or an element of it—back to London so that the bills can be kept down there.
There is no local accountability in the new system. That was discarded as the justification for the poll tax. In its place we shall have the serious problem of gearing for London. As I said, something like 15 per cent. of a local authority's revenue will come from the council tax, and my hon. Friend the Member for Newham, North-West (Mr. Banks) said that in some local authorities the percentage will be even lower. That will have serious consequences, because where there is a small increase in spending by a 864 local authority, high gearing will result in a large increase in the council tax that it has to levy. In Tower Hamlets, for example, a 1 per cent. spending increase will mean an 11 per cent. rise in council tax. In Newham, the figure is 9 per cent.; in Hackney, it is 8 per cent.; in Waltham Forest, my borough, it is about 7 per cent. That is unfair, and it certainly does not represent local accountability.
§ Mr. Tony Banks
As my hon. Friend clearly knows far more about the Bill than does the Secretary of State, I am far more likely to get sensible answers out of him. What will this mean for my borough?
§ Mr. Cohen
Every 1 per cent. over the figure set by the Government will mean at least a 9 per cent. increase in Newham's tax. Moreover, the Government's original standard spending assessment may or may not be realistic.
The Secretary of State also controls the criteria for capping. If he considers an authority's budget excessive—or, indeed, considers it an excessive increase on the previous year's budget—that is sufficient reason for him to cap that authority. Although the authority may appeal, the Secretary of State controls the appeal process as well. That, too, directly negates the principle of local accountability.
§ Mr. McCartney
A recent survey showed that my local authority, Wigan metropolitan council, was one of Britain's top 10 councils in terms of giving value for money. According to its standard spending assessment, Manchester needs 69 per cent. more money to provide the same level of service. Why is my borough—which is also in the constituency of my hon. Friend the Member for Worsley (Mr. Lewis)—to be capped? It is being penalised for providing a cost-effective service.
§ Mr. Cohen
That is an example of the arbitrary nature of the capping arrangement, and shows the extent to which it is controlled by the Secretary of State. Local accountability has gone out of the window; Ministers no longer even talk about it, because they know that it is not a reality.
§ Mr. Cohen
No, I will not; I have only a few minutes left.
The Government may call the proposed tax a council tax, but the bills will be their bills. That message will become increasingly clear.
§ Mr. Lewis
I did not take it personally, but I thank my hon. Friend none the less.
I have just had an exchange with the Secretary of State for Wales across the Floor of the House. The irony of the position described by my hon. Friend the Member for Makerfield (Mr. McCartney) is that, if Wigan had received the same amount in grant as was received by Wandsworth and Westminster in the year in which it was capped, it would not have had to levy a tax at all; indeed, it might have been able to give money back from the previous year's levy.
§ Mr. Cohen
My hon. Friend has made his point very well.
865 The Bill gives the Secretary of State wide-ranging new powers, relating not only to capping but to the vast number of orders and regulations that he will be able to issue, and even to the grants that will be given to London's voluntary organisations. If a London voluntary body cannot agree a budget, as happened this year, the Secretary of State will set one, but will make no allowance for inflation. It would have been far better if majority voting had applied in that instance.
The worst aspect of all, however, is the way in which poll tax penalties have been carried forward and retained in this council tax Bill. The National Association of Citizens Advice Bureaux commented on two features of the problem: imprisonment, and the position of bailiffs. In regard to bailiffs, the association said:We believe that the law and practice concerning the bailiffs should be urgently reviewed and amended. CABs would wish to see enforcement by private bailiffs abolished. All cases against individuals involving less than a specified amount (£25,000, for example) should be enforced through the County Court. It is much more straightforward to have warrants set aside and negotiations entered into in the County Court whereas Magistrates Courts are usually unwilling to reconsider until a warrant has been returned to the court. In addition, County Court bailiffs are employees of the court and usually better trained and more aware of the legal responsibilities and duties. On the other hand, private bailiffs are subject to far less control and scrutiny. Disturbing cases of abuse of power and criminal activity have been reported concerning private bailiffs. Monitoring of private bailiffs is needed as a matter of urgency.On imprisonment the National Association of Citizens Advice Bureaux says:Imprisonment of people for arrears of community charge should cease immediately.It is not a left-wing Labour council or Member of Parliament who says that. It is the NACAB, which continues:It is financially highly inefficient and imprisoning people because of their financial vulnerability should be anathema to a humane society.The council tax is better than the poll tax, but only just. It is still appallingly ill thought out and it will be grossly unfair. It is a mess. We need an election and a Labour Government to clear up the mess.
§ Mr. Barry Jones (Alyn and Deeside)
I am glad to follow my hon. Friend the Member for Leyton (Mr. Cohen). The hon. Member for Salisbury (Mr. Key) made a number of unscheduled statements in the debate. I listened to them with great interest.
At the beginning of the Secretary of State for the Environment's speech there was a fusillade of Government interventions. The tenor of those interventions was worry and apprehension. There were interventions from the right hon. Member for Brent, North (Sir R. Boyson), and the hon. Members for Hendon, South (Mr. Marshall), for Lancaster (Dame E. Kellett-Bowman), for Rochford (Dr. Clark), for Leeds, North-West (Dr. Hampson), for Warrington, South (Mr. Butler), for Gravesham (Mr. Arnold) and for Honiton (Sir P. Emery). The hon. Member for Norfolk, North (Mr. Howell) sought a 2.5 per cent. increase in value added tax—but he is standing down at the general election.
I heard the hon. Member for Staffordshire, South (Mr. Cormack) say of the poll tax that it was the most 866 misconceived legislation ever. He was intensely critical of the capping proposals in the Bill. He said that capping is "crude and unsatisfactory." I understand that the hon. Member for Aldridge-Brownhills (Mr. Shepherd) strongly criticised the Bill. The hon. Member for Leeds, North-West—a Conservative—said that the poll tax was a disaster. He severely criticised his right hon. Friend the former Secretary of State for the Environment, the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley), for the manner in which he had introduced the poll tax. The hon. Member for Teignbridge (Mr. Nicholls)—a Conservative—said that the Government had got the poll tax wrong. The hon. Member for Orkney and Shetland (Mr. Wallace) said that the Government had wasted vast sums of money and that the council tax would not survive.
My hon. Friend the Member for Worsley (Mr. Lewis) made a robust speech. He called the council tax the poll tax mark II and said that the new tax was to be bulldozed through the House. My hon. Friend the Member for Newham, North-West (Mr. Banks) said that Her Majesty's Government did not know how to organise local government. In his vigorous speech, he produced examples of the statements he has made. My hon. Friend the Member for Makerfield (Mr. McCartney) expressed his anger at Conservative Back Benchers who had supported the poll tax measures and who are now trooping forth to support this Bill. My hon. Friend the Member for Leyton made a passionate case for getting rid of the 20 per cent. minimum payment.
My hon. Friend the Member for Neath (Mr. Hain) called the council tax a schizophrenic tax. He must be right. He spoke for the people of Neath and west Glamorgan, as he always does. We on these Benches agree with his wish that the money thrown at the poll tax had been invested in schools, hospitals and job creation. We understand why he had come to the House today to denounce freeloading for the rich. He, too, sought the end of the 20 per cent. payment.
My hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe) spoke eloquently for social justice and said how the Prime Minister had been bounced into supporting the poll tax. We all drew the appropriate conclusions from her remarks on that.
I hope that the Secretary of State for Wales will tell us whether the rumours are correct that this week—perhaps tomorrow—the Government will make statements on local government finance for 1992–93.
Less than four years ago, the House debated the Second Reading of the poll tax bill. The poll tax has been a social, political and economic disaster of historic proportions. It has brought financial and administrative chaos to councils throughout Wales. It has caused collection problems on a hitherto unprecedented scale, and more than £100 million worth of taxpayers' money has been squandered on administering the wretched tax in Wales alone. The people of Wales deserve an apology from Ministers
The poll tax was conceived in Finchley, tested on Scotland, and imposed on Wales via the Wirral. The people of Wales have had the misfortune of having a concentration of poll tax fanatics representing them in Whitehall. I shall be generous because I shall exclude the right hon. Member for Conwy (Sir W. Roberts), who is not here. He is well liked and sticks to his brief come what may—a tactic that has rightly earned him the nickname of the "Bardic steamroller".
867 The hon. Member for Pembroke (Mr. Bennett) is of a different vein. He told the House:The community charge is a fair tax and a reasonable charge to make on people, so we should support it."—[Official Report, 23 May 1989; Vol. 153, c. 911.]We know that he was the archetypal loyal Thatcherite Back Bencher in the Second Reading debate four years ago. He told the House:The system of charging on the basis of property … is absurd."—[Official Report, 16 December 1987; Vol. 124, c. 1151.]He was a member of the No Turning Back group, and he has not changed.
To placate the hon. Member for Pembroke and his kind, the Government introduced the council tax—a property-poll tax hybrid that makes but fleeting reference to ability to pay.
The poll tax has been an outstanding success for the right hon. Member for Wirral, West (Mr. Hunt)—it has got him into the Cabinet. When his appointment as Secretary of State for Wales was announced, he told the House:I … look forward to explaining in Wales, as I have in England …the way in which the community charge is a much fairer and simpler system"—[Official Report, 21 March 1990; Vol. 169, c. 1109.]He told the Conservative local government conference:In time I believe the community charge will come to be accepted for what it is; simple, straightforward, and, above all fair.What came next? It was a priceless gem:But it will also do local government a power of good.It did, like a dose of strychnine. That is how the right hon. Member for Wirral, West got into the Cabinet.
I found one other instructive quote from the right hon. Gentleman—a delphic utterance worthy of William Wordsworth at his best. In March 1990, the right hon. Gentleman said:I have an instinctive suspicion of calm. Calm comes before a storm. But equally so, a storm precedes calm. So too, I believe, it will be with the community charge.Can we believe anything that Conservative Ministers say? Dare we believe anything that the Secretary of State for Wales will say? Did these Welsh Office Ministers experience a Pauline-like conversion on the road from the Welsh Office to the House? No. Poll tax panic prompted this change—a change borne out of short-term electoral desperation. It is not repentance; it is simply that they are scared for their skins and wish to save parliamentary seats in the general election.
With the council tax, the Government are set to repeat the mistakes of the poll tax. Like the poll tax, this property tax is deeply flawed. We believe that it is not fair, it is not practical, and it will not stand the test of time. The undoing of the poll tax was its unfairness. The people of Wales—not the local authority associations, not even Her Majesty's splendid Opposition—killed the poll tax. The people of Wales saw that it was unfair and they will not be fooled by this council tax.
The council tax will retain the most objectionable parts of the poll tax—the head count tax on the individual. As my hon. Friend the Member for Worsley said, the council tax will simply put a new kind of poll tax on the statute book. Just like the poll tax, as my hon. Friend the Member for Neath said, the council tax is designed to protect the very rich. It will protect, at the expense of the rest, those people in Wales who live in the most expensive properties. 868 People in the top band in Wales will pay only three times the council tax of those at the bottom, although the value of their property is more than eight times greater.
The importance of the head count element in the property poll tax is most clearly shown in the proposals for the discounts. There is no relationship to ability to pay. One could say that a bank manager living alone will receive the same discount as a dustman. The poll tax has been a bureaucratic nightmare. It has thrown Welsh councils into administrative chaos and has proved difficult and expensive to collect. In Wales alone, it has cost more than £100 million to set up and administer.
§ Mr. Blunkett
In Wales alone.
§ Mr. Jones
In Wales alone, as my hon. Friend says.
The poll tax has succeeded in making ordinary citizens suspicious and resentful of local taxation. Some now pay late and with ill feeling. That is the achievement of Conservative Members. Resentment of the council tax will grow. That is certain as people begin to understand that the valuation given to their property is not necessarily the actual property value. That is soon to dawn on the people of Wales, and on people throughout Britain.
That resentment will grow further when people realise that the Welsh Office has got its sums wrong and that the bills that they pay will be much higher than Welsh Office estimates. I hope that the Secretary of State will address this question: does he accept that council tax bills are likely to be much higher than the Welsh Office predicted? Does he agree with the Nationwide Anglia building society, which said that house prices in Wales are below those used by the Welsh Office for its council tax calculations?
The right hon. Gentleman already had to allocate more than £10 million to offset part of the cost of implementing the council tax in Wales. As with the poll tax, our local authorities believe that the cost will far exceed that predicted by Welsh Office Ministers and their officials. Indeed, Welsh councils are also unhappy about the fact that the Government have invented a new tax but that the councils are expected to foot part of the bill for its implementation from their existing resources.
We believe that the principle of accountability in local democracy has gone out of the window under this Government. First under the poll tax and now under the council tax, central control has replaced local democracy in determining spending.
§ Mr. McCartney
An old Soviet system.
§ Mr. Jones
An old Soviet system, as my hon. Friend says. Local authorities are to be held accountable for the effects of a financial system over which they will have even less control than the councils in England and Scotland. In Wales, for every 1 per cent. increase in local spending, the council tax will rise by an average of 12 per cent. That is a severe gearing.
Greater accountability could be achieved if the Government accepted Labour's proposal to return control of the business rate to local authorities. I emphasise that the Assembly of Welsh Counties, the Council of Welsh Districts and the Audit Commission back the restoration of local control over the business rate. In this case, only the Secretary of State stands in the way of a move to decentralise control over local spending and to return it to 869 local communities. The Bill contains no provision for the widely supported proposal to strengthen local accountability.
I refer briefly to the question of second homes in Wales. Some hon. Members referred to the issue, but in the time available I say only that we all accept that second homes present a threat in parts of Wales. We also know that the poll tax arrangements for empty premises can be very unfair, for example, to elderly people in hospital or old people's homes. The Government's proposals for second homes in Wales are wrong.
The discount principle is costly to administer. It will require a register, and a proper rebate system would do the job much better. In Committee we shall probe deeply into that issue.
The Government are bringing the council tax to Wales out of the utmost panic. The Conservatives are offering a property poll tax in a desperate effort to avoid what we know to be their imminent electoral slaughter, as we would call it. The people of Wales observe the Government's panic-stricken measures with contempt. They do not support them. They recollect that the Secretary of State for Wales perfected the poll tax and boasted of its merits. Indeed, he was promoted to the Cabinet for his total commitment to that hated and unjust tax in Wales.
The people of Wales do not believe the right hon. Gentleman's protestations about the so-called council tax. We know that it still has a poll tax element, that it will still need a register, and that it still does not relate to the ability to pay. It will still create administrative chaos. It is still unfair and costly. It still keeps the uniform business rate. It still celebrates central Government control.
All of us who represent Welsh constituencies know that in the general election the Conservatives will lose their seats there. The people of Wales now regard this tired Government with the utmost contempt. They await the general election with enthusiasm because they want this wretched Government out of office. They know that the next Queen's Speech will be the product of a Labour Government. They want a fair deal and, under the Administration of my right hon. Friend the Member for Islywn (Mr. Kinnock), justice and fair play is what they will get.
§ The Secretary of State for Wales (Mr. David Hunt)
I have listened carefully to 19 speeches, each of which has, in its own way, added to the lustre of this occasion.
Before dealing with the many points raised by right hon. and hon. Members, I propose to say something about Wales but, before doing that, I should point out that I have never in my life before spoken from one doughnut to another. Given their present configuration, Opposition Front-Bench Members might better be described as a hot dog. I do not know where all the Labour Back-Bench Members, supposedly so angry about the Bill, can have gone. It appears that only five or six Labour Back Benchers have come here to protest about local government finance. [HON. MEMBERS: "What about your lot?"]
Although the hot dog is making so much noise, I shall endeavour to say something about the structure in Wales. My predecessors and I have enjoyed a close and fruitful 870 working relationship with local authorities in Wales over many years and I believe that that has contributed significantly to the efficient and effective conduct of business between central and local government which is the key to the debate. I have previously paid tribute to the high level of dedication and professionalism exhibited by the staff of all Welsh councils in introducing and managing changes in local government finance. It is commendable that they have once again quickly seized the opportunity to involve themselves fully with my Department in working towards the successful implementation of the council tax in 1993.
In that respect, close contact has been established with leaders of the Council of Welsh Districts and the Assembly of Welsh Counties, and local government officers and my officials are paying detailed attention to the practical aspects of implementing the new council tax, including—as the hon. Member for Leyton (Mr. Cohen) said—the information technology requirement.
It is nonsense to claim—as one or two Opposition Members have—that councils will not be ready to implement the tax in 1993. The Government have introduced the Bill at the earliest possible moment in the Session, and we shall ensure that secondary legislation is made as quickly as possible. Combined with the preparatory work now being undertaken, that will give councils the maximum time to prepare themselves before April 1993.
I welcome the positive approach—perhaps I should qualify that by saying "part positive"—adopted by the hon. Member for Makerfield (Mr. McCartney) towards the Committee stage. I hope that the Committee will examine the Bill carefully. I know that my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) has a longstanding opposition to guillotines, but he will recall that many hon. Members on both sides of the House have proposed that we should adopt a procedure under which there is an automatic timetable motion in respect of all Bills. He should consider that. However, my hon. Friend is right to point out that there must be sufficient time to consider the Bill. We must be satisfied that there is an appropriate amount of time. My hon. Friend made his point very effectively.
We believe that the council tax is straight forward and fair. It is based on the market value of properties, as my right hon. Friend the Secretary of State for the Environment explained. I agree with my hon. Friend the Member for Hornchurch (Mr. Squire) that regional banding would produce many more anomalies. The tax takes account of the number of people in households. My hon. Friend the Member for Thurrock (Mr. Janman) asked us to review the 25 per cent. discount. However, 90 per cent. of adults are counted if one counts, as we do, one or two in the household. There are generous rebates for those on low incomes. In that context, we commend the new council tax.
§ Mr. McCartney
Before I accept the Secretary of State's olive branch and damn my political career in front of my colleagues on the Opposition Front Bench, will he clarify at an early stage in the Standing Committee the position about nurses in Wales, England, Scotland and Northern Ireland who take courses and then return to their own districts? Irrespective of how nurses enter a training scheme, will all nurses undertaking training be treated in the same way?
§ Mr. Hunt
I withdraw the commendation that I gave the hon. Gentleman, but only because that is damaging his political career.
My hon. Friend the Member for Leeds, North-West (Dr. Hampson) and the hon. Member for Orkney and Shetland (Mr. Wallace) asked about students and student nurses. I want to make the Government's proposals absolutely clear. Students, student nurses, apprentices and YT trainees will receive a 25 per cent. personal discount. That means that such people cannot increase the bill for any household. As I have said before, they are invisible with regard to the council tax.
Student nurses, other than those on Project 2000, with apprentices and YT trainees, will be able to claim council tax benefit if they are on low incomes. However, because most students and student nurses on Project 2000 cannot obtain social security benefits, we have made special arrangements for them. Property occupied only by students will he exempt. Student halls of residence and hostels will be exempt, as will be houses and flats where all the residents are students. Students living alone will not therefore have to pay.
§ Mr. Wallace
The Secretary of State for Wales is trying to be helpful and to clarify the matter. However, if a landlord or landlady has a resident student, is there any guarantee that the student will not be asked to contribute towards the council tax?
§ Mr. Hunt
I obviously cannot give that guarantee. Where students choose to share accommodation with non-students, the point that the hon. Gentleman described arises. They will have to decide between them how the council tax bill is shared. However, their presence will not add to the bill. If a number of people share a house, it is unlikely that any student in it would be worse off than under the community charge.
Several hon. Members have said that there must be a register. The Government have made it absolutely clear that a statutory register of council taxpayers is not required. There is no provision for one in the Bill. It will be up to councils to decide how to keep—[Interruption.] Of course it will. It will be up to councils to decide how to keep——
§ Mr. Douglas
§ Mr. Hunt
May I finish my sentence?
It will be up to councils to decide how to keep information about people who are liable to pay the council tax. Some councils may choose to canvass residents, but there will be no requirement, and there is no requirement in the Bill, to respond to such a canvass.
§ Mr. Douglas
Will the Secretary of State canvass how this matter is being approached from the point of view of data protection? What advice would he give local authorities which might want to keep not a register but a list? What is the difference between a register and a list in relation to data protection?
§ Mr. Hunt
I could say that the hon. Gentleman should ask one of his former hon. Friends because he has given a definition. I am talking about a statutory register. There is no provision in the Bill for a statutory register. I make that absolutely clear. We have answered that point—there is no statutory register. The hon. Member for Dunfermline, 872 West (Mr. Douglas), who I believe is a prospective candidate in Garscadden, need have no worries about a statutory register in respect of the council tax.
§ Mr. Paul Flynn (Newport, West)
Will the Secretary of State give way?
§ Mr. Hunt
I have many points to answer, rather than respond to hon. Members who have not been present for the full debate.—[Interruption.] I shall give way in a few moments.
One of the points that the hon. Member for Alyn and Deeside (Mr. Jones) failed to make is what he proposes to introduce in Wales. I can disclose tonight that there is a five-point plan of pain for the Welsh people. I will tell the hon. Gentleman what it is. The first point was given by the hon. Gentleman's hon. Friend the Member for Dagenham (Mr. Gould) on 26 March in an interview on the "Today" programme. He said that the Labour party intends to increase the burden of council spending met locally to 20 per cent.
§ Mr. Hunt
Let me finish the quotation. I want the hon. Member for Alyn and Deeside to respond, because, although that is an increase of 40 per cent. in England, it is two and a half times what is raised presently in Wales.
§ Mr. Hunt
I want the hon. Member for Alyn and Deeside to respond. I say to the hon. Member for Dagenham what the hon. Member for Orkney and Shetland (Mr. Wallace) said about his speech, which is that he made very heavy weather. As soon as he finished his speech, he fled from the Chamber like a fly-by-night quack doctor, disappearing before his patent medicine is tasted. He might well brief the hon. Member for Alyn and Deeside.
§ Mr. Blunkett
On a point of order, Mr. Deputy Speaker. There is a convention in the House that if an hon. Member is attacked by a Front-Bench Member, he is allowed the opportunity to reply.
§ Mr. Hunt
I was merely quoting what the hon. Member for Alyn and Deeside said and I have said that I am willing to give way to him.
The second point is that we have been told that we in Wales would return to the rates. At present, Wales has rates that are structured on rateable values that were worked out in 1973. Like my hon. Friends the Members for Harrow, West (Mr. Hughes) and for Leeds, North-West, I must now advise the hon. Member for Alyn and Deeside that a revaluation would be bad news for Wales. I do not believe that the rates are a fair system.
The words of the right hon. Member for IsIwyn (Mr. Kinnock), speaking in Gwent in 1980, have been quoted against us many times today. The Opposition replied, "That was 10 years ago", to which my hon. Friend the 873 Member for Teignbridge (Mr. Nicholls), whom I commend for this observation, said, that 10 years was a very long time for the Leader of the Opposition and 10 minutes was about the average length of every policy that he had put forward. The right hon. Gentleman said that the rates were the most unjust form of local taxation, yet under Labour we would have a revaluation that would be carried out on an arbitrary basis such as the market price; the rebuilding cost; the maintenance and repair cost; the private rent value; the number of windows, the size of the roof, or the view from the property. What on earth is the modernised valuation system? It is bad news for Wales.
Under Labour, there would be unlimited spending. As my hon. Friends the Members for Wyre (Mr. Mans) and for Thurrock have said, people expected to be protected by central Government, but we have been told by the Labour party that there will be no limit whatsoever on spending. If we look at the rates proposals—[Interruption.] I shall give way to the hon. Member for Alyn and Deeside—[Interruption.] He does not want to intervene because what I am saying is right. I advise him that with unlimited spending, with arbitrary revaluations, with a rates proposal that goes back to 1973——
§ Mr. Hunt
No, I have said that I will give way to the hon. Member for Alyn and Deeside.
With a rates system that no longer preserves the Welsh grant advantage, it is all bad news for Wales.
Labour's rates proposals are to fairness what Henry VIII was to marital stability and what Basil Fawlty is to the art of hospital and hotel management. Labour's faulty fairness is something—[Interruption.] Hon. Members should see what Basil Fawlty has done to hospitals as well as to hotels.
It is about time that Opposition Members reconsidered this matter. I made an offer to the hon. Member for Alyn and Deeside that he may well recall. I said that I was 874 willing to see him and his colleagues to consult on how best and how quickly to abolish the poll tax and on how best and how quickly to introduce a new and fairer system. The Liberal Democrats, Plaid Cymru and Conservative Members came in to see me, but the Labour party did not.
§ Mr. Lewis
Will the Secretary of State tell us how many ideas from the Liberals and others he has included in the Bill?
§ Mr. Hunt
I am not sure what the hon. Member for Worsley (Mr. Lewis) is trying to say, but although I made an offer to his hon. Friend the Member for Alyn and Deeside, the hon. Gentleman did not come to see me. The hon. Member for Alyn and Deeside is brandishing a document that he sent to me, but he refused my offer to come to see me. I understand that the hon. Member for Dagenham also refused a similar offer from my right hon. Friend the Member for Henley (Mr. Heseltine). It does not sit easily with that denial of consultation for the hon. Member for Alyn and Deeside now to criticise my right hon. Friends and myself for introducing fair and straightforward proposals for a council tax.
Many of the points which have been raised this evening will be considered in Committee. Not only did the hon. Member for Neath (Mr. Hain) get his facts wrong, but the key point——
§ Mr. Barry Jones
The Secretary of State has consistently misrepresented the position of my hon. Friend the Member for Dagenham (Mr. Gould) and all the statements that the Labour party has made about the matter. The people of Wales are tired of observing him whingeing and whining his way around Wales. The people of Wales do not take kindly—
§ Mr. Jones
—to being lectured by the right hon. Gentleman, who is the man who perfected the poll tax. He should be ashamed of himself.
§ It being Ten o'clock, the debate stood adjourned.
§ Debate to be resumed tomorrow.