Lords Sitting of 23 May 1988

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Leicester.
Lord Cranworth—Took the Oath.

Sea Bird Deaths: Thames Estuary
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
What action they are taking to help to identify the pollution which is causing the deaths of sea birds in the Thames estuary.
The Parliamentary Under-Secretary of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington): My Lords, my noble friend Lord Campbell of Croy may be referring to deaths of seagulls over recent years. The symptoms reported are indicative of avian botulism being the cause of death. Scavengers such as gulls are particularly susceptible to the toxin. There is no evidence to link the deaths with either disposal of waste at sea or the use of pesticides.
Lord Campbell of Croy: My Lords, I thank my noble friend for that reply, which indicates that some progress is being made. However, is she aware that thousands of birds have been killed and injured in the most distressing circumstances, suffering from blindness, paralysis and dehydration, while hitherto the cause has not yet been identified?
Baroness Trumpington: My Lords, the Nature Conservancy Council and the Ministry of Agriculture, Fisheries and Food veterinary service advise that avian botulism periodically attacks gulls. These reported symptoms are consistent with this condition. Hot summers may promote the availability of the toxin at their feeding sites.
Lord Mellish: My Lords, will the noble Baroness say something about the general state of pollution in the River Thames since the Question mentions that river and pollution? Can she also say something about the present and the future, because the past has not been all that good?
Baroness Trumpington: My Lords, I have explained the reason these gulls are dying. Sewage sludge is dumped in the outer Thames estuary under strict MAFF controls. There has been intensive monitoring by the Ministry of the hydrography of the area and of the distribution of bacteria from the dump site. The results show that the dumping has no effect on the levels of bacteria along the estuary shores.
Lord Nugent of Guildford: My Lords, is my noble friend aware that, to be fair to those who at present manage the River Thames and those who managed it
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in the past, a great deal of work has been done to clean up the river? Its condition now is remarkably good—so good that a salmon run up the river is now beginning to become possible. That is a fair indication of the improvement made.
Baroness Trumpington: My Lords, I am most grateful for the remarks of my noble friend.
Lord McNair: My Lords, can the noble Baroness tell us whether a gull suffering from avian botulism is capable of laying an egg which might later be consumed in your Lordships' House?
Baroness Trumpington: My Lords, the type of botulism that these birds have does not affect humans. Avian botulism is caused by the type C toxin of clostridium botulinum. Humans are affected by type A, so noble Lords should feel free to eat any eggs.
Viscount St. Davids: My Lords, in support of my noble friend Lord Campbell, perhaps I may ask whether the noble Baroness is aware that a few years ago the state of the Thames was so had that if a vessel was painted and it remained in the lower Thames for 48 hours, the paint turned black.
Baroness Trumpington: My Lords. I am not sure that anything like that happens to the gulls. The position may have been different in the 1950s, because MAFF licensing controls began in 1974.
Lord Campbell of Croy: My Lords, my noble friend referred to the dumping of sewage sludge some miles out to sea and suggested that that was not the cause. Does she agree that the facts indicate that it is unlikely to be from sources going down the River Thames, which has been cleaned in recent years? Can she also tell us more about industrial and domestic waste coming from the coastline of the estuary?
Baroness Trumpington: My Lords, Thames Water monitors all varieties of material, including pesticides. From that point of view, only minute traces are permitted in sludge, but the symptoms of the birds are consistent with botulism and have nothing to do with what is in the water.

Common Land and Deregistration Policy
2.42 p.m.
Lord Nathan Lord Nathan asked Her Majesty's Government:
Whether they intend to introduce legislation relating to common land and in particular to prevent deregistration.
The Minister of State, Department of the Environment (The Earl of Caithness): Yes, my Lords.
Lord Nathan: My Lords, I thank the Minister. Could he give us some indication as to when the Government have it in mind to legislate and whether, pending such legislation, they will take steps to ensure that development does not take place on common land which has been, or is about to be, deregistered?
The Earl of Caithness: My Lords, we still intend to introduce a Bill at a suitable opportunity when parliamentary time permits. I take on board the second point which the noble Lord made.
Lord McIntosh of Haringey: My Lords, while I hesitate to say anything, particularly this afternoon, which might antagonise those noble Lords on the Government Benches whose natural habitat is more the grouse moor than this Chamber, is it not the case t hat there is more pressure for deregistration of common land from those owners of grouse moors than there is from development?
The Earl of Caithness: My Lords, there are some instances of deregistration occurring throughout the country. Each case is of course looked at on its merits.
Lord Craigton: My Lords, is the Minister aware that common land is almost our last uncommitted area of land in this country? It should be preserved in the common interest, as it will be when the Government get round to legislating on the Mendoza Report. Will the Minister in the meantime please call in any applications for building on recently deregistered common land?
The Earl of Caithness: My Lords, my noble friend is right to infer from this Question that planning permission will be required, and of course that matter must go for decision to the local authority concerned.
Lord Cledwyn of Penrhos: My Lords, before the Government table a Bill in either of the two Houses, will the Minister say what consultation the Government are likely to carry out? Are they proposing to consult the local authorities in England and Wales before they produce such an important measure?
The Earl of Caithness: My Lords, we have already consulted very widely, as the Leader of the Opposition will know. That consultation resulted from the Common Land Forum Report, which was published by the Countryside Commission in September 1986. However, that was not agreed unanimously and we are furthering those consultations on the points that are still in dispute.
Lord Rugby: My Lords, does this matter in any way come under residuary bodies—to look after the public interest in these matters pending legislation?
The Earl of Caithness: No, my Lords. It comes under the Department of the Environment. The Countryside Commission is taking a special interest in this matter at the moment.

Hong Kong and Vietnamese Refugees
2.44 p.m.
Lord Hylton Lord Hylton asked Her Majesty's Government:
What are the present conditions of the 9,000 or more Vietnamese refugees in Hong Kong and what measures are being taken to achieve their permanent resettlement.
The Minister of State, Foreign and Commonwealth Office (Lord Glenarthur): My Lords, a recent influx has brought the total number of Vietnamese boat people in Hong Kong to 13,200. The existing closed centres are very crowded and emergency facilities are being established to accommodate recent arrivals. We are pursuing our own programme of resettlement and continuing our diplomatic campaign to persuade other Governments to follow suit.
Lord Hylton: My Lords, I thank the Minister for his reply. Does he agree that the present conditions are verging on the subhuman? Will the Minister tell us in a little more detail how the Government are going about getting international co-operation to achieve resettlement?
Lord Glenarthur: My Lords, I can assure the noble Lord that we are acutely conscious of the gravity of the crisis facing Hong Kong. We are in close contact with the Hong Kong Government on a way forward. Indeed, my right honourable and learned friend the Foreign Secretary will have this matter high on his agenda when he visits Hong Kong later this week. But the root of the problem lies elsewhere, as I think the noble Lord will recognise. It lies in Vietnam. A long-term solution lies in the creation of acceptable conditions in Vietnam to enable the return to Vietnam of those who see leaving as the most sensible thing to do.
Lord Cledwyn of Penrhos: My Lords, will the noble Lord tell the House what action the Government of Hong Kong with Her Majesty's Government are proposing to take between now and 1997 when the transition takes place?
Lord Glenarthur: My Lords, the noble Lord asks about events after 1997. It is our firm intention that the Vietnamese refugee problem in Hong Kong should be resolved well before that date. But the joint declaration on the future of Hong Kong provides for continuation after 30th June 1997 of Hong Kong's present social and legal systems. Any refugees then in Hong Kong should thus retain their current status.
Viscount St. Davids: My Lords, has the noble Lord taken into consideration that anybody who leaves his country in these extremely difficult and dangerous circumstances is likely to be far above the average in mentality and value in comparison with the rest of the people in that country? Has the noble Lord considered what a Sultan of Turkey said in the Middle Ages, when the Jews were thrown out of Spain: that he considered no man wise who expelled from his country those who were among the most valuable of his subjects in order to enrich his greatest enemy?
Lord Glenarthur: My Lords, the answer to the noble Viscount is that these people are not being expelled; they are choosing to leave under their own volition. But naturally the fault for that lies very largely in Vietnam, where the economic conditions are not suitable to retain them.
Lord MacLehose of Beoch: My Lords, will the Minister confirm that false rumour in Vietnam is playing a part in encouraging this traffic? Will he say to what extent the overseas services of the BBC are being used to put the record straight?
Lord Glenarthur: My Lords, I am not sure to what rumour the noble Lord is referring. All I can say is that we shall certainly take steps to ensure that, so far as possible, we meet the very real concerns of all those involved. As I have said, my right honourable and learned friend is going to Hong Kong and he will discuss this matter when he is there.
Lord MacLehose of Beoch: My Lords, the rumour to which I was referring was that restrictions in Hong Kong were being lifted.
Lord Glenarthur: My Lords, perhaps I may say to the noble Lord that no decisions have been taken on future policy.
Lord Hylton: My Lords, given that many Hong Kong residents and citizens are leaving, have left or are planning to leave, can the Government persuade the receiving countries to which those citizens are going to take an equal number of refugees?
Lord Glenarthur: My Lords, we shall continue to urge all those countries to maintain their high level of uptake.

Shops Act 1950
2.50 p.m.
Lord Ashbourne Lord Ashbourne asked Her Majesty's Government:
Whether, in cases involving the enforcement of the Shops Act 1950, any practice direction has been given to the courts as to when it is appropriate to make a reference to the European Court of Justice regarding the interpretation of Articles 27 and 30 of the EC treaty.
The Minister of State, Home Office (Earl Ferrers): No, my Lords.
Lord Ashbourne: My Lords, I thank the Minister for his brief and helpful reply. Can he tell the House why Her Majesty's Government are making no effort to encourage local authorities to enforce the Shops Act, as they have a statutory right to do?
Earl Ferrers: My Lords, it is up to the local authorities to decide when to prosecute and it is up to the courts to decide what laws operate.
Lord Campbell of Alloway: My Lords, does the Minister agree that it would be wholly inappropriate
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for the Government in any circumstances to issue practice directions to the judiciary as to what they should or should not refer to the European Court of Justice under Article 177?
Earl Ferrers: My Lords, I agree with my noble friend. That is why I gave a somewhat short Answer.
Lord Graham of Edmonton: My Lords, can the Minister tell the House about consultations that have taken place between the Government and interested parties on how the problem of Sunday trading can be resolved? Will he reflect on his inability to give advice to local authorities which find that the law is being broken by so-called law-abiding citizens and companies?
Earl Ferrers: My Lords, as regards the last part of the noble Lord's question, it is up to local authorities to decide who and whether to prosecute. It is up to the courts to decide what laws operate. As regards the first part of the noble Lord's question, the Government intend to take such action as is necessary when a common agreement has been reached on the matter. The noble Lord will doubtless recall what happened to the last Sunday trading Act. We do not wish to see that repeated. It is for those who wish to see Sunday trading laws operate better to come to a common agreement.
Lord Harmar-Nicholls: My Lords, has any firm been caught and dealt with under the European treaty?
Earl Ferrers: My Lords, I believe that two firms have come to our attention. The first is a firm called B&Q which sold picture hooks in Shrewsbury on a Sunday. The firm was taken to court and fined £250. It appealed to Shrewsbury Crown Court and proceedings were adjourned and referred to the European Court of Justice. Some describe that as a hanging matter!
The second case involved a firm which sold European brassieres on a Sunday. The firm was taken to court and fined £250. It appealed to Bodmin Crown Court and proceedings were adjourned and referred to the European Court of Justice. Some describe that as a legal hold-up!
Lord Mishcon: My Lords, without being able to emulate the noble Earl's wit, do the Government consider that the intrusion of the EC into the Shops Acts and the reply made by the noble Earl to the effect that it is up to local authorities to enforce such laws mean that it would be much wiser to leave such matters to local authorities instead of having a national Act?
Earl Ferrers: My Lords, as the noble Lord, Lord Mishcon, knows perfectly well, that is a much wider question. Under the European Communities Act 1972, obligations under the Treaty of Rome form part of our domestic law and are observed by the courts where relevant. To go down the path suggested by the noble Lord would be undesirable.

Business
2.55 p.m.
Lord Denham: My Lords, it may be for the convenience of the House if I announce that the Committee stage of the Local Government Finance Bill will be adjourned at approximately 7 p.m. for approximately one hour and that during this adjournment the Second Reading of the Protection of Animals (Amendment) Bill will be taken.

Business of the House
The Lord Privy Seal (Lord Belstead): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the debates on the Motions in the names of the Lord Cledwyn of Penrhos and the Baroness Ewart-Biggs set down for Wednesday 8th Jane shall each be limited to 2½ hours and that Standing Order 35 and paragraphs 10 to 13 of the Rules for the Conduct of Short Debates shall apply to each debate —(Lord Belstead.)
On Question, Motion agreed to.

Dartford-Thurrock Crossing Bill
Considered on Report.

Local Government Finance Bill
2.58 p.m.
The Earl of Caithness: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.— (The Earl of Caithness.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 1 [The charges]:
Lord Chelwood Lord Chelwood moved Amendment No. 1:
Page 1, line 10, at end insert ("subject to any regulations that may be made under subsection (2) below").
The noble Lord said: Perhaps I may explain Amendment No. 1, although it is very simple and straightforward. I hope that the Committee will forgive me if I speak for somewhat longer than I am in the habit of doing. I want to explain fully what those of us whose names are on the Marshalled List in connection with the amendment have in our minds.
The amendment specifies how the community charge will be related to ability to pay. It articulates a nationwide concern that the poll tax is not fairer than the present archaic system and the overwhelming view that the tax—it is a tax and not a charge—should take account of ability to pay. The amendment gives the Government a year to produce
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a scheme which relates the tax to ability to pay. Ability to pay refers both to the personal and the collective poll tax. The amendment makes no reference to the problem of the second home because that matter did not seem to fit into it.
The amendment applies the ability to pay through a linkage to the whole range of the poll tax instead of rebating in full or in part only one in four ratepayers. Ratepayers who are outside the rebate level amount to some 25 million persons and they include the richest in the land and the near-poor and needy who will pay the same fixed or flat rate. I do not entirely understand the difference between a fixed rate and a flat rate because the Government use first one word and then the other.
Finally, the amendment asks that the new government proposal should be subject to affirmative resolutions, thus making Parliament the arbiter. I think that the amendment is straightforward and contains no real complications. It is a polite request to another place to have a second look at the principle involved in the light of quite startling fresh evidence which I shall summarise as I go along.
I regard the attempt to divert attention from the amendment by suggesting that it may somehow infringe Commons financial privilege as quite unnecessary. The best available advice has convinced me that the amendment is in order in every way and that it is in no way likely to offend against Commons financial privilege. We are a revising Chamber seeking to exercise restraint on the otherwise unfettered power of the elected House. I do not think that the amendment would prove to be intolerable. If it does, under Standing Orders the Speaker is required either to make up his own mind that it is intolerable or to invite another place to express their opinion. That would be the end of the matter.
If the Government claim to have a (highly doubtful) mandate—my noble and learned friend Lord Hailsham has described it as unconstitutional—we should be barred from amending the bill because the Commons financial privilege had not been waived. In that case we would have very little left to do and I should have thought that we may as well go on holiday.
I want to say one thing which I find it difficult to say. It is that some of the attitudes expressed by those in high places in another place and close to it have caused some of us considerable irritation. I say that as a Commons man, having spent a number of years in the other place. I thought that the "hands off" suggestion made on the first day was unnecessary. With respect, the suggestion by the Secretary of State that we had no right to change the Bill was in my view uncalled for, particularly bearing in mind that the Bill had been pretty sharply guillotined, although no more so than other major measures.
When my noble friend Lord Beloff suggested that we were getting too big for our boots I found myself a little cross. I thought that it was a hit much when my noble friend Lord Wyatt said that we were risking disembowelling ourselves by hara-kiri. My noble friend Lord Bruce-Gardyne said that we should not tamper with any legislation which was included in the manifesto. Since almost all legislation is in the

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manifesto—although ILEA was not; it just crept in—if we could not tamper with it (and I think that that is a perfectly respectable word to use although it has various connotations) we would have nothing to do; we would be talking about one-Chamber government. So I have been rather irritated by such remarks and I expect that other noble Lords have been as well.
There are two points which I should like to make absolutely clear from the outset. My three cosponsors and I are in no doubt at all that the present system is totally antiquated and dead on its feet. I would ask my noble friend when he comes to reply not to waste his breath by telling us that the present system has had it. An awful lot of time was wasted on Second Reading telling us that. I think that we all know it.
Secondly, I want to make it absolutely clear that all four of us and our supporters feel that everyone who can reasonably afford to pay rates should do so. It has been suggested by quite a number of people that that is not our view. It is our view. Everyone who can afford to pay rates should pay rates.
There is a consequence of this proposal to which I confess I have not given sufficient thought. I understand that were it to be passed—and I expect it to be passed—a government defeat would throw a spanner in the works as regards Scotland. Everything would be set at nought although a lot of work has been done which may well be of value in the future. All I can do is quote Robbie Burns:
"The best laid schemes o' mice an' men gang aft a-gley".
I hope that that will be of some comfort to the Government.
In the Second Reading debate I said that it was party policy to abolish the rates and replace them with a fairer system. That was the policy in October 1974, when it so happens that the right honourable lady the Prime Minister was Shadow Secretary of State for the Environment. From that date until 1986, when the last edition of the pale green Green Paper was published, it was party policy that the rates should be directly related to the ability to pay. That was the position until 18 months before the general election. I was accustomed to that policy and so were many of my friends.
It came as a considerable surprisewhen I found that there had suddenly been an about-turn and that we had decided, having panned the idea of a poll tax over and over again, having agreed with the Select Committee in the House of Commons and with the Layfield Committee, and having said that it would never work, this was our chosen method. One talks about loyalty, which is a difficult concept to talk about. I was loyal to the previous policy because I thought that it was a very sensible one. I could hardly turn a somersault to order and agree with exactly the opposite. It is a very difficult position indeed. I feel that I have been put on the spot, and that is why I find myself in this somewhat unhappy position.
I should like to say a word about the mandate. In our last manifesto we promised:
"We will legislate in the first Session of the new Parliament to abolish the unfair domestic rating system and replace rates with a fairer community charge".
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I do not think that the present proposals are fairer in any way at all. I think that they are a lot less fair.
Those proposals have very little support. They are extremely unpopular in the country. I have had 300 letters and it is driving my secretary crazy. Nine to one they are against the poll tax. I know that the have-nots are liable to write more often than the haves—I found that in the years I spent in another place—but only one in ten are in favour and without exception they are people who would find that their rates were slashed.
I have been doing some research. What I have found is quite astonishing. The Association of Municipal Authorities is strongly opposed to the poll tax. It says:
"A millionaire will pay half as much as a pensioner couple".
The ACC (Association of County Councils), which represents 45 or so counties in England and Wales—all bar Derbyshire, I think—describes it as having in-built systematic inequity. The National Union of Ratepayers says:
"It is completely unfair through taking no account of the ability to pay".
The National Association of Local Councils, which represents many of the 10.000 parish councils in this country, thinks it is a rotten tax because it takes no account of ability to pay. The Chartered Institute of Public Finance and Accountancy, which consists largely of finance officers in local government, is opposed root and branch to the poll tax. The Institute of Fiscal Studies—a much respected body—is strongly opposed to it because it takes no account of ability to pay. The Inland Revenue Staff Federation, which has some 56,000 members, does not like the poll tax at all because it takes no account of the ability to pay. The Convention of Scottish Local Authorities has the same view. The National Federation of Self-Employed and Small Businesses is strongly opposed to the business rate but has not expressed views on the poll tax.
I forgot to say anything about Layfield. It is an excellent report. It is one's bible if one is studying this subject and knows nothing about it. I knew nothing about it until I was doing some hard work recently. Layfield considered all the options before the report was written and a poll tax was not considered to be worth mentioning. There is not a single word about a poll tax from the first to the last word of the Layfield Report. It was just not a starter for the reason that it took no account of the ability to pay.
I understand that only one representative body—the Association of District Councils—is not unhappy with the Bill, although I believe that consultation with its members has been somewhat lacking. The association wants to see a further tapering from 15 per cent to 10 per cent. That is not something which I strongly favour as it drives a coach and horses through much of what is left of the idea of accountability. I ask my noble friend when he comes to reply to tell the Committee who from among all those bodies (which seem to me to be totally representative) was consulted, what views were expressed and how much account was taken of them.

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We are told that consultation was widespread and went on for a long time.
I did not think that the Green Paper published in January 1986 (I do not recall the index number but it was the big fat one) was a Green Paper at all because it stated flatly that the Government had decided to introduce a poll tax. That is not the language of a Green Paper. The other 132 pages consisted of a great deal of rambling stuff; the key words were that the Government had decided to introduce a poll tax.
We have been told by the Government that as a result of investigations that were made it was found that people were overwhelmingly in favour of such a tax. Who were those people? I should love to know that; perhaps my noble friend will tell me. I think that I must have mentioned almost every representative body of any significance or standing in the whole country and they are all opposed to it.
I apologise for speaking at some length but I should like to put a few quick queries. We read that the poll tax has been tried out in other countries. It has been reported in The Times that it has been tried out in Tarewa and Kiribati. I do not know if anyone can find them on the map; I had a helluva job trying to do so—they are in the Gilbert and Ellice Islands. Apparently it did not work very well. I know that it has been considered in a few Swiss cantons, some small places in Japan and some cities in America (where it is now being phased out) but it has not been used on any scale whatever— merely in respect of something like £3 or £4 a week. I have looked abroad to see how the poll tax works, but I cannot find any example that would encourage us to try to introduce such a tax here. I can see absolutely none. Perhaps my noble friend will tell me which democracies he examined in which a poll tax was the major source of revenue for local government. I do not believe that there are any such places.
There is another obvious question that I should like to ask. These days everyone is talking about Wat Tyler. The Green Paper declares that there was a poll tax in this country centuries ago. I am no historian but I know that in 1381 John Ball and Wat Tyler both came to a sticky end—and so did the Chancellor of the Exchequer who was called the Treasurer and the Chief Commissioner, who today would be called the Secretary of State for the Environment. Such grievances led to the Peasants Revolt. I do not believe that there has been a fiat rate poll tax as the sole means of raising money for local authorities since that time.
My next question is this: how many extra local government employees will there be? I am told that in round figures there are now 13,000 and that there will be 30,000 employees. It sounds almost like a job creation scheme.
Almost finally comes the question: how about the cost of introducing the poll tax? The AMA is a very efficient body, whatever its politics may be, and recently in The Times it has been reported as estimating that from 1st April 1990 the cost of administering the poll tax nationally will come to about £100 million more than the Government have estimated. I specifically ask my noble friend to give us
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the Government's latest estimate and tell us whether the AMA is right or wrong. The association also states that the cost of the buildings, computers and all the rest of the set-up will be £226 million a year for the next three years.
The ability to pay is the key factor. Those people who come just above the rebate level will have the greatest difficulty in paying the charge. They will find the poll tax a heavy and even intolerable burden. During the course of the debates on this Bill many amendments will be tabled with reference to community service volunteers, blind people, the Salvation Army, charities, and many other such groups. I know that the Committee has these groups very much in mind. There will be many people who will find themselves in considerable financial difficulty. About that there is no doubt at all.
I know that absolute fairness is impossible to achieve in any rating system. Moreover, all taxes are unpopular. However, I also know that it is nonsense to say that there is some great constitutional issue at stake in regard to this amendment, which has been described as a wrecking amendment. That is of course a different point. I am told on very good authority that there cannot be a wrecking amendment in this Chamber. I do not believe that there is such a thing although that may be a matter of opinion. There is just an honest difference of opinion between the two Houses of Parliament about this matter. It will sort itself out given the goodwill that exists at both ends of the corridor. However, I have little confidence that anything satisfactory will be devised by a Secretary of State who is today reported in the Daily Telegraph as saying, referring to this Bill, that it involves the impossibility of devising something that we have found to be impossible.
We are in a mess. This Bill has been dubbed a flagship and it is sailing too close to the wind. If she does not come off the wind a little or go about smartly, she will miss stays and then we shall be in a real mess and a much worse one than we are now. I beg to move.
3.15 p.m.
Lord Ellenborough: I should like to say a few words in support of the amendment moved by my noble friend. As a lifelong Conservative and a firm supporter of this Government and our Prime Minister it gives me no pleasure to find myself taking what is possibly a different view from that of some of my noble friends on this occasion. Even so I support this amendment which has been so ably moved by my noble friend Lord Chelwood.
The purpose of this amendment is quite simple. It seeks to ask, persuade and implore the Government to draw back from the brink of the utmost folly in imposing a tax which is so inherently unfair and which commands so little respect and support in the country. The manifesto commitment was to replace the rates with a fairer community charge. It is the word "fairer" that cannot be emphasised too much. Instead of that, the unfair and outdated rating system is to be replaced by a flat-rate poll tax for three-quarters of the population, which is just as unfair. Indeed some would say that it is even more unfair than the present rating system.

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Some 9 million people out of an adult population of 36 million will receive rebates. The recent concessions made by the Secretary of State—and there may well need to be more—merely underline the absolute absurdity of imposing compulsory tax liabilities on people who arc too poor to pay them. Such people are most unlikely to be greatly concerned with accountability if, in the end, their tax bills are to be paid anyhow. It makes no sense to pull people out of tax at the national level (and rightly so) yet at the same time push people who are already enmeshed in the welfare net into local taxation. That is not done for matters of, say, defence. Why do it for education, fire services or police, which are now just as much national considerations as is defence? The colossal rebate system adds to the astronomical cost and the administrative nightmare of the whole affair.
Some people compare the community charge with television or car licences but that is ridiculous. It is not compulsory to have a television—indeed some people do not even like to watch television, although it seems almost unbelievable that they do not. The same is true of cars. Not everybody can or wants to drive a car. Some people share a car. That is not compulsory; but a community charge, which may be called a tax, is compulsory.
The levels of income at which help by rebates ceases are very low. A single person on a weekly income of £51 pays the same as someone with an income of £501 weekly at the national average poll tax levels. Some 27 million, or three-quarters of the population, are to pay a flat rate tax ranging from those just above the welfare net to the very well off.
The manifesto states that there will be a fixed rate charge for local services. I doubt whether the average elector as he hastened to the polls in England clutching a copy of the party manifesto had minutely examined the fine print. However, I should have thought that the wording implied a fixed rate national charge. Most people would be pretty surprised to find that we have 400 different rates ranging from about £200 to £800. There has been a lot of talk about 400 chancellors of the exchequer. One has 400 directors of finance at the moment under the rating system; we shall have 400 chancellors of the exchequer—whatever one likes to call them—under this community charge system.
The Government try to justify the fairness of their proposals by almost parrot-like repetition of the argument that the top 10 per cent. by income of households pay six times as much poll tax as the bottom 10 per cent. This is a statistical sleight of hand. It is produced by a combination of rebates and, most importantly, by using households and not individuals. Most well-off households have more than one person with an income thereby producing more separate poll tax bills. This argument conflicts with the Government's insistence that every individual person will receive a poll tax bill.
In the Second Reading debate I said that it will be more easily understood that income taxpayers pay exactly the same amount of income tax under the community charge system as at present under the rating system, assuming income remains static and that there are no changes in income tax. Although
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contributions through the tax system will be the same, the overall percentage contributed by the better off—that is, in income tax and community charge together—will be less because their contributions paid locally will have decreased. Generally the community charge paid by the better-off will be less than is paid now in rates.
Perhaps I may briefly repeat an example I gave of a fairly average outer London borough where the community charge, if enforced, would be about £262 per annum. In some parts of the borough there are married couples at present paying about £1,760 in rates. They will gain about £1,200—and jolly good luck to them. However, in other parts of the borough there are many more married couples at present paying rates of only £300. They will have to find well over £500—a loss of £200. Those people will feel aggrieved, and rightly so. They will not be very impressed by the government statistics.
This is a desperately unpopular proposed tax, shown by all the opinion polls as the implications have gradually percolated through. As my noble friend Lord Chelwood said, the reaction from most of the professional bodies, the metropolitan and county councils, and a good many of the district councils, is thoroughly adverse. Then there has been the reaction in Scotland where the community charge was an issue at the last general election and at the more recent local elections. In Scotland, there was a blueprint; there was something for people to see. The legislation had been enacted. And look what happened! It was an absolute disaster for the Government.
Most of us know that the Bill would never have passed had there been a free vote in another place. As most of us also know, many Ministers are lukewarm about it. That is why the Mates amendment in another place attracted some support. There, it is realised that honourable Members supporting the Government will have to get out and sell the tax on the doorsteps. As it stands now they know quite well that it is an unsaleable product. Members of the Committee here are lucky that we do not have to get out on the doorsteps. We do not have to seek re-election next time around. Perhaps I may say to the Minister, my noble friend Lord Caithness, that we all wish him well; but perhaps he will spare a thought for his former collegue the Minister in another place who piloted the Scottish legislation through and will consider what happened to him. He lost his seat.
This poll tax will not go away. One noble Lord said that it will all be forgotten in a year or two—just like the GLC, with no-one able to remember what GLC stood for. But the poll tax will come back in a couple of years. It will hit this Government at the worst possible time in the run-up to the next election. No other advanced country has a flat rate poll tax. Only a political decision is lacking for a workable scheme to be put into effect based on ability to pay. It is incredible that the Government cannot produce a more durable scheme likely to command far greater acceptance. It is in their interests, and that of the country, that they should do so.
Viscount Whitelaw: For the first time in 30 years I speak today in Parliament for myself, not officially

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for any government or any opposition. I do not intend to detain Members of the Committee with a detailed argument about the amendments before us. My position, simply stated, is that I went through all the discussions in government about the Bill before its introduction. As a result I am convinced that the decision to abolish the existing rating system must be right. I believe that the proposals in this Bill, with the modifications for rebates already introduced in another place, are basically right. I hope that Members of the Committee will give the Bill the scrutiny for which this House, as a revising Chamber, is so well equipped, and if further detailed improvements can be produced so much the better.
Equally, I have no doubt that the amendments before us seek to change the whole basis of the Bill. I must accept from my noble friend Lord Chelwood—whom I greatly admire and do not seek to criticise—that when he says that they are not wrecking amendments, that is his view. But every man must be judged by the company he keeps, and I see some people in the company who will support the noble Lord who have a very different point of view. There they sit, the noble Lord, Lord Cledwyn, and his friends. They are perfectly clear—and they are perfectly entitled to the view—that they do not like the Bill; they do not want the Bill; and they will seek to stop the Bill by any means they can. If that is not a wrecking position, I do not know what is.
They say very properly—and I admire them for it because I realise the strength of their feeling—that they did not vote against the Bill on Second Reading in accordance with our conventions. I believe that they are abundantly right. I would expect the noble Lord, Lord Cledwyn, to do exactly that; and he and his colleagues did so. But of course they wish to embarrass the Government. Let my noble friends have no illusion about that. So indeed do the parties—as I understand I call them—below the gangway: the SLD and the others. They are all in the same boat. They do not wish to see this Bill enacted.
And so they have allied themselves, very understandably, with my noble friends. I believe that they are more than just wrecking the Bill and that the amendments introduce proposals which are not well thought out; indeed they do not seek to be thought out. Under the amendments the Government are to introduce regulations—secondary legislation—to be put into a primary legislation Bill, to which they are not suited.
For many years I have listened in this Chamber and elsewhere to cries from those who say that they do not like delegated legislation. I have heard those cries from so many noble Lords opposite. I am sorry that the noble Lord, Lord Bruce, is not here because he is a great figure in the field. I have heard him expound at length on the dangers of delegated legislation. But now what does the party opposite seek? It seeks to introduce delegated legislation, or to support the introduction of delegated legislation, which is totally incongruent to the Bill as it stands as primary legislation. Nobody can doubt that fact. I cannot really believe that it is a wise suggestion.
However, there is one other consideration, and only one, that I wish to leave with the Committee. It
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is the reason that I rise to speak today. It arises from my experience as Leader of your Lordships' House. The Leader of your Lordships' House has a great privilege. He also has a great experience of education and perhaps sometimes it is a very humbling experience. As a result I have become a passionate believer in this place as a revising Chamber. I am equally certain that it will destroy its whole effectivenesss in that rôle if it seeks to confront the elected Chamber and the Government in that elected Chamber.
I read and I saw on the television, because I was not here, the noble Lord, Lord Callaghan, make a very good point on the Education Reform Bill. He felt the Government ought to think again. If I may humbly say so, he was perfectly right. I know what was in the hack of the noble Lord's mind. I cannot imagine any Prime Minister at any time who would have been less keen to see this Chamber upset the detailed and solid proposals contained in this legislation, and the noble Lord knows it very well indeed. That is why he was so careful to ask the Government to think again. I believe that that is enormously important in our system of two-Chamber Government; the system will work if the revising Chamber works all the time in sensible co-operation with the elected Chamber and at the same time that the Government of the day believe that it is right and recognise, whether they have a small or a large majority, the value of that arrangement. I see that the noble Lord, Lord Jenkins of Hillhead, is not present. I have read that the noble Lord raises the point all the time that the Government have lost much of their majority in the House of Commons. That is really a very dangerous argument for not standing by the old principle that "one is enough". The noble Lord, Lord Callaghan, had to rely on the principle that one is enough for quite a long time!
The noble Lord, Lord Jenkins of Hillhead, forgets that when he had the great courage, when I was Leader of another place, to support the Heath Government in the Lobbies on the Second Reading of the European Communities Bill, the Government had lost the whole of their majority, not just some of it. So I do not believe that that is a very good argument for saying that this Chamber should suddenly adopt a different position from the position it took before.
In the last Parliament I used to go to my colleagues if the Government had been defeated in this Chamber. Incidentally, I read very nice things in the press from time to time, including that I did not lose votes. The fact is that when I was the Leader of your Lordships' House perhaps—only perhaps because there was a very large majority in another place—I actually lost more votes than any of my predecessors since the war. I do not complain of that for one moment, but what matters in a two-Chamber Government is how one uses that position. I used that position on behalf of this Chamber, and I believe it will be accepted here that that is exactly what I did. I went to my colleagues and told them that they would have to compromise with what had happened in this Chamber. I told them that they would perhaps have to accept what the House of Lords had said. I said that if they were to do that on two amendments,

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they could perfectly properly stand on another, and frequently Bills have gone through on that basis.
There is a sad irony that in the case of the Scottish Bill on the community charge that is exactly and precisely what happened. I had various changes made in that Bill, precisely because this Chamber stood on them and we got them through. There were many other major Bills on which that happened.
I claim that that is the two-Chamber Government working properly, as it should work in all the circumstances. That is how this House will do the best job it can as a revising Chamber, in just the same way as I believe the noble Lord, Lord Callaghan, said that it should.
I am rather proud of some of the compromises that were made. Some of them, as always in one's political life, must be wrong and one has to live with one's mistakes as well as with the things that go right. As I look back over 30 years I find that perhaps the mistakes are in the ascendancy However, that is as it may be! In this case I have no doubt that it was a success. That is the position we are in today.
If this Chamber decides that it will stand against the Government, and indeed the elected Chamber—whatever one may like to say and however one dresses it up—by passing an amendment such as this, it will be confronting the Government in the elected Chamber, the majority in the elected Chamber, whatever may be said about the other place. That is what the Committee will be doing. If that is what the Committee decides to do, that, as I have learnt over the years, is something that it will do. I shall stand up for it because I have become a devotee—let there be no doubt about that to anyone—of the value of this place as a revising Chamber. But I shall bitterly regret any such action because if we do that this afternoon, we shall do so much to destroy the real success of the revising Chamber which over the years noble Lords have done so much to promote.
Lord Callaghan of Cardiff: I feel I must—
Lord McIntosh of Haringey: If my noble friend will permit me, as the proposer of Amendments Nos. 3 and 35 which have, by agreement, been grouped with these two amendments, I accept some responsibility. In speaking to these amendments, my position is made very much easier by the speech that we have just heard from the noble Viscount, Lord Whitelaw. He seems to believe that the difference between my noble friends and the noble Lord, Lord Chelwood, is that, although the noble Lord, Lord Chelwood, is proposing an amendment which he concedes in effect is not a wrecking amendment, we wish to wreck the whole Bill and have it returned to the electorate. I wish that the noble Viscount could persuade my noble friends of that, because that is by no means the situation I find in discussions with my noble friends. The very common view of my noble friends and of the Labour Party at large in the country is very much that expressed by the noble Lord, Lord Ellenborough; that this community charge proposal is not only unpopular now but is bound to do enormous damage to the Conservative Party in years to come.
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Being aware of that and aware of the experience in Scotland to which the noble Lord, Lord Ellenborough, referred and which is already taking place—this is not speculation about the future—some of my noble friends would wish to say, "Let them get on with it"—
Lord Stoddart of Swindon: Hear, hear!
Noble Lords: Hear, hear!
Lord McIntosh of Haringey: Yes, I do not need much confirmation, do I, for that? I have to say that I take a different view. I take the view that the interests of the people of this country who will be voting for and paying for local government in the short, medium and long term are important. My noble friends ought to be supporting my amendment. As it comes first and is not too different in its terms, I shall talk about the substance of the matter before us.
My amendment seeks to protect those most in need from the ravages of the community charge or the poll tax. In doing so, I should first like to say that I do not believe to be valid the charge of seeking to replace primary legislation by secondary legislation which was levied by the noble Viscount on his noble friend. I readily admit that that would also apply to my own amendment. I do not believe that there is any real alternative for this Committee, as a revising Chamber, other than to return the matter to the Government and its majority in the House of Commons to produce a realistic alternative. I do not see that it can be the task of Members of the Committee, on whichever Benches we sit, to produce a completely new revision of the community charge proposals which would meet all the objections which have been raised to them.
I do not say that there is a single solution which will meet all those objectives; far from it. I believe that even the rates are better than what is now proposed; but I am the first person to say that they are desperately inadequate as a fair basis for raising revenue for local government. If the amendment is carried, the Government, with all the resources at their disposal, not only have the opportunity but the obligation to do more than produce legislation. They have the possibility of producing further amendments to put before another place which would dissent from the amendment now being moved and which would put in its place something more acceptable to a wider range of people in our society.
Let us first dispose of the argument that the community charge is related to the ability to pay. I do not believe that the Government make that claim, but it has been made on their behalf. One needs only to quote the Secretary of State to make clear the fact that ability to pay has not been one of the criteria in establishing the community charge. In Standing Committee E on 23rd February, at col. 936, the Secretary of State said:
"With a flat rate charge, it must be true that the burden will fall more heavily on those with low incomes than on those with high incomes. That is beyond contradiction in relation to those who pay the full community charge.".
I shall deal with that qualification in a moment because it is important.

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We must now look at the ability to pay criterion as it applies to the community charge, income tax and various other forms of taxation which might be used to support central or local government expenditure. It will generally be agreed that income taxes are progressive in the sense that a higher proportion of the income of those with higher incomes is taken for tax purposes. I am sorry to be so basic about the matter but there has been a great deal of confusion in the media about it. It will be agreed that indirect taxes—taxes on consumption—to some extent bear more heavily on a higher proportion of those with lower incomes. However, they all have an element of voluntariness in them in the sense that it is not essential to drive a car, to have a television set or to spend more. Value added tax is an expenditure tax and it bears more heavily on those who spend more and have more disposable income. To that extent it is progressive.
The community charge is not like that; it is completely compulsory. If the register can be made to be complete—we shall deal with that matter at a later stage— then if one lives and breathes in this country one will be liable to pay the community charge. As the Secretary of State has made totally clear, there is no doubt that it will bear more heavily, not just absolutely but relatively to all other forms of taxation, on those with lower incomes. To that extent the introduction of the community charge cannot be said to do anything other than to make the poor poorer and the rich richer. It is on that fundamental basis that we are opposed to the charge.
I should like to make it clear that we are not opposed to reforms in the finance of local government. We are not opposed to many of the detailed provisions in the Bill. We do not believe that our amendment or that of the noble Lord, Lord Chelwood, are wrecking amendments. We believe that the flat rate poll tax charge is profoundly socially wrong. We shall support any effort that can be made to remove it from the face of the Bill and to give the Government an opportunity to think again and to protect their political future.
3.45 p.m.
The Earl of Halsbury: I believe that it is the turn of the Cross Benches. Members of the Committee are well aware that the Cross Benches are not a party; we are a heterogeneous collection of people with highly idiosyncratic points of view. When Members are attending party meetings on Thursdays we also have a Cross Bench meeting, not as a party but as an opportunity to discuss public affairs. From time to time we listen to invited speakers of an academic and institutional variety and who give us a non-party view of matters which may be in controversy.
Long before the amendment tabled by the noble Lord, Lord Chelwood, was in the public domain, we invited a representative of the Chartered Institute of Public Finance and Accountancy to talk to us about the Bill. We did so in the belief that we would be listening to an impartial academic exercise on the pros and cons of local government taxation. We met last Thursday and listened to it. To my intense surprise we were given an intensely partisan write-up
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for the amendment of the noble Lord, Lord Chelwood. We were even handed copies of his brief which I have here. It consists of "answers to questions for Lord Chelwood; short statement for Lord Chelwood; briefing note for Lord Chelwood", etc. That document was handed to a group of independent Peers. We would never have permitted that it we had known in advance of the event.
I do not wish that to be the cause of misunderstanding. I do not blame the noble Lord, Lord Chelwood, or anyone on the Cross Benches who arranged the talk. Having been briefed on the noble Lord's amendment, I invite my noble friends to de-brief themselves by trying to forget what they heard and have had all week-end to think about. They have heard the speech made by the noble Lord, Lord Chelwood, in matter and manner. I now invite them to listen to the Government's reply in matter and manner and to make up their independent minds.
My mind was strongly influenced by a remarkable speech made by the noble Lord, Lord Jenkin of Roding, on Second Reading of the Bill. It was on 9th May of this year and appears in Hansard at col. 856. I have read it, re-read and studied it and I am strongly influenced by it. Unless any Member can fault the arguments put forward in that speech, I shall oppose the noble Lord's amendment and vote for the Government.
I shall not enter into any question of constitutionality. Fools rush in where angels and the noble and learned Lord, Lord Hailsham, may from time to time fear to tread. However, I make a discrimination in my mind between having a right and its wise exercise. It is not necessarily wise to exercise the right that one has. If we are ever to challenge the voice of the elected Chamber I should not choose this particular exercise to stand it on.
I should like to make two personal statements. First, as a lone bachelor living in the Royal Borough of Kensington and Chelsea, I pay £1,000 a year in rates, to the nearest teener. Of that £800 goes on the ILEA precept to finance education in other boroughs. I expect that my rates will be considerably reduced in due course as a result of the poll tax. However, I return to the point made by the Prime Minister when she addressed the Church of Scotland last week. Because I shall be, say, £400 in pocket as a result, it does not follow that I shall necessarily spend it on myself. The option is open to me to subscribe to such charities as relieve poverty; possibly poverty caused by the Bill, I do not know. The option is open and it is likely that I shall be greatly in favour of exercising it.
Finally, my experience of radical reforms is that most of the threats which are foreseen do not materialise but all sorts of unexpected side effects do. Therefore, those have to be put right in an amending Bill in two or three years' time. I cannot judge that amending Bill until the side effects have materialised but, unless anybody can fault the arguments which I have used, I shall vote against this amendment and for the Government.
Lord Houghton of Sowerby: We lack some suitable form of communication between your Lordships'

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House and the other place. It is obvious that a new relationship has been building up for some time between the two Houses and we have not devised an appropriate method of communicating one with the other.
Our problem is that when we have a Bill before us from another place the only way we can deal with it, whether we revise it in mild or substantial form, is by amendment. The convention is that we do not oppose the Second Reading of any Government Bill coming from another place. Even at that stage we should probably have the means of communicating preliminary doubts, though that may be a little premature. How do we communicate the deeply seated anxiety here and throughout the country as to the incidence of and the ability to pay this new charge? This is the first time within living memory that a single uniform tax is to imposed on all citizens irrespective of means or other circumstances. We are raising the question of ability to pay.
If a common tax levied on everybody is to be within the means of everybody then there must be a common denominator and we have no information about any common denominator. This Bill is a paving Bill for other people to make a charge upon the citizen. The difference between flat rates of tax and proportionate or progressive schemes of taxation is that the single rate of tax, the uniform rate of tax, the standard rate of tax is enforceable and recoverable.
In other directions, a single uniform tax is on commodities or services like motor vehicle tax, which the citizen may or may not pay according to whether or not he has a car. However, if there is a tax levied on everybody irrespective of services and means then it has to be within the ability of the generality of the citizens to afford. We are not satisfied about that.
I believe that this is the root of the trouble. This is not the imposition of an additional burden of taxation on the community as a whole. This is a spread of taxation from the occupation of domestic dwellings to the citizens in general, whether or not they are occupying domestic premises. In that transfer, surely there has to be some assurance that the amount spread more widely will be within the ability of people to pay; otherwise, there will be claims for exemptions and rebates to the extent that the concept of the uniform charge will be so eroded as to become almost unrecognisable.
I am warned by my friends in the tax gathering community that nowhere else has a tax of this kind proved successful in a form of enforceable taxation and there is the deepest anxiety as to whether people will respond to it. If there is widespread resistance, if enforcement becomes almost commonplace, then it will downgrade the system of taxation and make it a matter for the repute of Parliament which has imposed it.
Therefore, can we ask the other place to think again, or to supply additional information which will enable us to come to a firmer conclusion about the fairness and acceptability of this tax? I do not believe that we should allow the constitutional niceties of convention or history stand in the path of finding a way of expressing these anxieties in another place.
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This amendment does it in a form which puts the least constraint on the other place in the direction of the consideration which they may give. Therefore, that is the least offensive to the susceptibilities of another place. They cannot criticise us for expressing our anxiety in the mildest and most open way for them to give us the basic information about this tax which will remove our anxieties. We are entitled just as much as everybody else to have that information on behalf of the people. We are citizens and we are in a privileged position to express anxieties on behalf of those with whom we may be associated.
Can we find a way of doing that? May I say to the noble Viscount who has just spoken, that when he was the most esteemed Leader of your Lordships' House he let all our conventions rest where they were, and we have not sought to find new ones. At one time he warned us that we must not go too far too fast, and our own susceptibilities were aroused when we received that rebuke and warning from the noble Viscount. I beg this Committee to find some way of communication if this will not do, but if we cannot find one, this will have to do. I believe that the other place must put up with it and respond in a reasonable spirit, and then there will not be any real difference between the two Houses. We cannot go on tinkering about with the revision of this Bill while feeling that basically we are not satisfied that it is sound; we want reassurances before we can proceed with an easy mind.
4 p.m.
Lord Hailsham of Saint Marylebone: I rise with diffidence and I hope to be short. I do not want to talk about the niceties of the constitution, but I want to talk partly about the essence of the constitution and the relationship of the two Chambers and partly about the amendment itself.
On and off I have been a Member of this House since 1950 when my father died, and I believe that I can say as my genuine opinion that at no time has your Lordships' House stood higher in the estimation of the public than it does at present. There are many reasons for this, one of which was the Life Peerages Act. However, I shall not go into all the reasons. I am quite convinced that one reason has been that this House has never set itself up as a general court of appeal from the Commons but has been content to accept the result of the constitutional battle which ended in 1911, and that constitutional battle needs careful consideration.
I am sorry not to see the noble Lord, Lord Jenkins of Hillhead, in his place because I warned him that I might be saying something about his speech on Second Reading. He spent a good deal of time quoting from a book of mine by which I was much flattered, but he will never find that I ever suggested or ever would suggest that this House should go back on the result of 1911 and what that meant. I wish to remind the Members of the Committee as to what it meant. Long before the rejection of the budget in 1909, dating back to the 17th century, the House of Commons has laid it down as a claim to its privilege that one should not amend a charge to tax in this House. I was careful to consider whether this, which is called by the Government a charge and by its critics a tax, was within the terms of the general rule.

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When I wrote a letter to a newspaper the other day I verified my references and looked at two reputable text books, one of which was Eskine May, which is generally reckoned to be the standard work on the subject. I found that there never was, even before 1909, at 1900, a right in this House to amend a charge to tax, whether it was a land drainage rate or whether it was an income tax. It was that which led to the disreputable practice of another place, which has now been disused, to tack non-taxing provisions to a Finance Bill.
If I may say so to the noble Lord the Leader of the Opposition, what I am saying now has nothing whatever to do with the question of whether this Bill is a money Bill. This Bill is not a money Bill and most Finance Bills are not money Bills. They are not, and could not be, certified by the Speaker. The only test of what is a money Bill and what is not is whether the Bill is certified by the Speaker, who is no doubt advised by his parliamentary clerks.
By 1900 it was abundantly plain that this House could not amend a charge to tax. It can be seen plainly from the current edition of Erskine May, at pages 853 onwards, that this charge which is under discussion in the Local Government Finance Bill is such a charge as comes within the prohibition. If the parties opposite are seeking, as they claim to be seeking, to go back on their own traditions as regards the relationship between the two Houses in a matter of this importance, they will be betraying their whole tradition; they will be betraying parliamentary democracy as we have known it hitherto.
I say this in all sincerity. From time to time there have been governments other than Conservative Governments. There may very well be one in the future, especially as, as Disraeli observed some time ago, "no government can be long secure unless it possesses a formidable opposition". Whatever we have at the moment, we have no formidable opposition. The Government by that standard must obviously be highly insecure at the present time. What is done in the green wood will happen again in the dry.
I speak as one who, with the noble Lord, Lord Carrington, had a good deal to do with Conservative opposition when some noble Lords on the Front Bench opposite were responsible for government. I can assure noble Lords opposite, looking behind me this time, that there were a number of horses that were rather/difficult to hold by the noble Lord, Lord Carrington, and myself. If the precedent is now set that this House on a major Bill is going to treat itself as a general court of appeal from the House of Commons, it is a precedent which they may regret having made if, by any possible chance, which I hope will not happen, they were to win this Division.
I look at the actual amendment. As the minutes passed and as Lord Chelwood's speech was succeeded by the speech of my noble friend Lord Ellenborough, I heard a great deal of abuse of the charge which the Government are introducing by this Bill, but I did not hear a single word or a single argument in favour of this particular amendment; nor could such an argument have been presented.
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This amendment talks about ability to pay. It seeks to put those words into an Act of Parliament. Ability to pay is as long as a piece of string. Acts of Parliament are supposed to be construed by the courts. It is totally impossible for the courts to construe that phrase and to know whether the regulations introduced by the Secretary of State, in the unlikely event of the amendment proving law, are within the terms of the amendment or not.
What is even more disreputable (and I use the words without personal offence) is the idea that the Secretary of State by regulations can introduce a tax of any kind. Is is all very well for the noble Lord, Lord Houghton of Sowerby, to argue that "they can do their best," or that "it does not mean anything more than that we are asking the House of Commons to think of it again". The fact is that if regulations were passed, they could not be amended even by the House of Commons. It is not simply a question of secondary legislation which we are asked should be passed by this legislation; it is secondary legislation imposing the terms of a tax which cannot be amended. The Liberal Party would be absolutely disregarding its whole history—not that it often does not do so—if they voted for an amendment of this kind. The Labour Party would be betraying its own past.
The factor of ability to pay under the scheme of this Bill is to be drawn from the Exchequer contribution to local taxation and the business rate, which will be uniform and imposed through central government. That is where the ability to pay comes in. To that, one must add rebates. Rebates are the way to deal with need, not a vague and impossible phrase like "ability to pay". This amendment fails on constitutional grounds. It fails on its merits. The charge is justified. I, like the noble Lord on the Cross Benches, who is sitting so close to me and whom I would otherwise call my noble friend, the noble Earl, Lord Halsbury, was entirely persuaded by the arguments on Second Reading by my noble friend Lord Jenkin of Roding. For these reasons I would ask the Committee to reject this amendment with the utmost decision.
Lord Cledwyn of Penrhos: I have listened with great respect, as I always do, to the noble and learned Lord and to the case which he has just made. However, I am puzzled by one thing, namely, why the noble and learned Lord did not raise this constitutional argument when the Abolition of Domestic Rates (Scotland) Act 1987 was going through the House. That position was on all fours with this and a similar amendment was put down. Why did not he and others then raise this argument?
Lord Hailsham of Saint Marylebone: My recollection is that that amendment was rejected, but the simple fact is that I did not attend any of the debates on the Scottish legislation.
Baroness Faithfull: I have put my name to this amendment and I am most grateful to the noble Lord for allowing me to speak.
The noble Viscount, Lord Whitelaw, said in his very enjoyable speech that never had the reputation

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of the House of Lords stood so high. I maintain that our reputation stands high because we take the line we do, an independent line from the House of Commons. It is not that we wish to wreck a Bill, or that we wish to have conflict with the other place, but simply that we wish them to think again. I cannot enter into constitutional arguments with the noble and learned Lord, but I should like to say that we are not constitutionally trying to transgress the laws of this place; we are only putting forward our views for the other place to consider.
In his Second Reading speech the noble Lord, Lord Chelwood, enumerated the achievements of this country during the past nine years. We owe our rising standard of living, our downward curve of unemployment and our high international standing to Her Majesty's Government, in particular to the Prime Minister. We agree that we need a Bill to deal with the present outmoded and unjust rating system. Furthermore, I agree with the basic principles underlying this Bill; namely, that those who receive a public local service should, as far as possible and practicable, contribute to those services. Equally, I agree that local authorities should stand accountable to the electors, who in turn should be aware of how their community charge is allocated and will know when the charge rises or falls. I ask the Committee to consider whether these right principles are being wisely enacted in this Bill and whether the methods are effective and administratively economic.
As I said, I do not feel that I am taking part in a wrecking amendment. I am only asking the House of Commons to think again. The amendment asks that personal community charges and liability to contributions to collective community charges shall be related to ability to pay. I take the point made by the noble and learned Lord, Lord Hailsham, that these words may or may not be legally correct. There again, if that is so, the House of Commons can surely think about that and put it right. The Secretary of State has already in some measure conceded the principle of ability to pay. How has he conceded this? First, there are six exemptions and more to come—nuns and monks. Secondly, 36 million people will be eligible to pay the community charge and of these the Secretary of State has said that 9 million will receive rebates.
It is known that the rebate system is means-tested and the maximum rebate is 80 per cent., leaving some people to pay 20 per cent. I imagine that the principle here is that each and every person paying the community charge, however small, will watch the expenditure of the local council and that this will be a public form of controlling local authority expenditure. I am bound to say that in reality I do not believe that many people will link the community charge to the efficiency or otherwise of the local authority. In travelling to your Lordships' House today, the taxi-cab driver said to me, "You've got the poll tax in the House of Lords today." I tried to explain it to him and then said, "You see, you will know what your local authority is paying, or not paying, and whether it is efficient or non-efficient." "Hm", he sniffed, "You can tell that to the marines".
I fear that those on low incomes will experience frustration and anger which may well be directed
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against the Government. Those people on family income support will certainly direct their anger and distress towards the Government and not at the local authority, simply because they regard the supplementary benefit offices as part of government, which indeed they are.
There are certain areas of difficulty. Perhaps I may cite a few. Have Her Majesty's Government thought through the effect of the penalty of non-payment on the low paid or those on family income support? I fear that the prison population may grow. Some families who are caring for an elderly relative with difficulty may feel obliged—or indeed the relative may feel obliged—to move into residential care. Wives of men on a low income may feel that they must leave the children to go out to work in order to pay the community charge. The worst off will be those below the income tax threshold but who do not qualify for rebate. I fear that there will be a sense of injustice. While recognising that those on a high income pay high income tax, which in turn contributes to local authority expenditure, nevertheless the flat rate will seem inequitable and will feed into the concept that the rich are getting richer and the poor are getting poorer.
Income tax is based upon the incomes of people; the present rates are based on property; the community charge is based on people. This could be an administrative nightmare, particularly in large cities where there are more homeless people than we care to know about and where there is movement of population. I fear that administration is going to be difficult.
The cost of collecting the community charge and assessing the rebates will be expensive. The cost of carrying out the new scheme is expected to be at least two-and-a-half times that of collecting taxes. I have an article by Robert Calderwood, the chief executive of Strathclyde Council. He states in this article that Strathclyde will need 1,000 extra staff to carry through the effect of this Bill. Central government are giving £6.5 million towards accommodation and a computer and £67 million towards extra costs.
I repeat that there is much in the principle behind this Bill, but the practicalities have not been well worked out and we ask the other place to think again.
4.15 p.m.
Lord Barnett: I refer to the speech of the noble and learned Lord, Lord Hailsham, a few moments ago on the constitutional or, as he called it, non-constitutional niceties of the Bill. The Committee will be aware that we are all extremely fond of the noble and learned Lord but I believe that we are also aware that not often—and even his best friends will tell him—is he the first person to admit that he could just be wrong.
Before I come to the constitutional point that he made, I say at once that throughout my political life I have been opposed to the rating system as a wholly unfair tax and I have not changed my mind one bit. It is still a wholly unfair tax. Until we had this Bill no alternative had ever been acceptable to any government. The present Government have produced the community charge, or poll tax, which is

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now the Government's alternative to the rating system.
One is bound to admit that the new tax alternative to the rates has been modified to help the very lowest paid. I certainly would not dispute that. Equally, I hope that it will not be disputed that, as the noble Baroness has said, the cost of collection will be enormously higher than the collection of the rates. Further, there will be a huge problem of evasion. I can recall in another place introducing anti-tax evasion legislation and the opposition I faced at that time from everyone, from the present Prime Minister downwards, was so intense that I am astonished that the Government are willing to go along with the idea of dealing with the level of evasion that we are likely to get with the poll tax.
However, I hope that those who are in favour of the community charge as being less bad (if I may put it that way) than the rating system will recognise there is at least— putting it no higher—some unfairness in the poll tax system. For example, a man or woman earning £5,000 a year will pay the same poll tax as someone earning £100,000 a year or £1 million a year. To that extent at least, I hope it will be conceded that there is an element—I put it no higher—of unfairness. Again, one should put the problem into perspective. Most taxation will continue to be from general taxation and that will include the financing of local government expenditure. However, it seems that the question today is the wrong one. The question in the amendment proposed by the noble Lord, Lord Chelwood, is whether we can find a less unfair way of having a poll tax.
In another place an amendment tabled by Michael Mates was just defeated. I am bound to say that I would in any case have found it very difficult to support the amendment because it would have simply piled complexity on complexity and in many ways would have made the poll tax even more unfair.
Noble Lords: Hear, hear!
Lord Barnett: However, when noble Lords opposite cheer I hope they will wait a moment. As I say, the wrong question has been put to us today. It seems to me that the real question today is: should we replace a bad tax with a worse one?—and it is a worse one.
Among the alternatives that have been suggested is a local income tax. I have never myself supported the idea of a local income tax. If you collect it centrally and distribute it, which would be the simplest way of doing it, you go a long way towards destroying local democracy. If, on the other hand, you collect it locally you create even more complexity and probably even more distribution problems than you would with the poll tax.
However, again one is bound to ask your Lordships: is the poll tax a better tax then the rating system? The alternative of having no rating system and collecting everything, or a great deal more, through central government by having, say, education and other areas of local authority expenditure financed from direct taxation or general taxation would be equally unacceptable to me
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personally. For me, local democracy must be truly accountable to the local electorate, and therefore to give yet more power to central government would surely be wrong.
So if we want local democracy—a truly accountable local democracy—we have to choose between two bad taxes. As I say, I have always opposed the rating system because it is basically unfair. On the other hand, one must compare it with the system that is proposed. There is at least some relation—I put it no higher to ability to pay by reason of the fact that if you live in a very large house you will pay more rates than if you live in a very small house. But the reason it is still unfair is that it still does not apply equally in every case, and I would be the first to admit it. That is why I do not like the rating system.
However, the poll tax goes much further than that. It imposes exactly the same rate on everybody, regardless of the level of income. At the same time it imposes a cost of collection which is nearly three times as much. Also, the evasion aspect will create enormous problems in respect of personal freedom, about which I used to hear so much from the friends of some of your Lordships in the other place when we posed anti-tax evasion questions.
On the other hand, I do not like the alternative of trying to amend the poll tax. I do not think you can simply make it fair; I do not think that is possible. I shall vote for this amendment, however, and I hope to make it quite clear why. This brings me back to the noble and learned Lord, Lord Hailsham. I shall vote for this amendment because it gives another place the chance to think again. I certainly would not want to bandy constitutional niceties with the noble and learned Lord. The plain fact is that if your Lordships, on a major issue of this description, can never ask the other place to think again, I urge your Lordships to ask yourselves what role is left for the House of Lords.
Lord Boyd-Carpenter: The noble Lord, Lord Barnett, did what other supporters of this amendment have singularly failed to do. He admitted that his main attack was upon the community charge itself; for the amendment he obviously has a great deal of contempt. My noble friends Lord Chelwood and Lord Ellenborough devoted almost the whole of their speeches simply to an attack on the community charge. That is not what the Committee will have to decide upon when it comes to vote on the amendment. Members have before them a specific amendment on which they will be asked before long to come to a decision. Therefore it is surely very important to be clear whether the amendment makes sense or not.
I share the view of the noble Lord, Lord Barnett, about the Mates amendment in another place: it was nonsense. I thought myself when I read it that it was the biggest nonsense possible. I thought so until I read my noble friend's amendment, which is a much bigger nonsense. I say this advisedly. The Mates amendment, though wrong, was at least based on something definite—that is to say, the income tax position of the person contributing to the charge. That is a definite thing. Expensive though it would be,

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it could be ascertained. My noble friends' amendment is not like that at all. It is based on a concept of ability to pay. If passed into law, the courts would be asked to interpret what "ability to pay" means.
The Committee has only to contemplate the difficulties which would arise. The noble Lord, Lord Barnett, said that the community charge would be expensive to collect. But the cost of collection, if we added this provision, would be infinitely greater because it would be necessary to investigate not just the tax position of individuals but their individual financial position. You can very easily have two people with the same income: one will have heavy commitments which means he is unable to meet additional payments; the other may have earnings virtually free of charges. Someone could have to support invalid dependants; he might have a large family; he probably has to deal with his own ill health. One can have all those kinds of things which affect the ability to pay.
Is it seriously suggested that the local authority should have to investigate the precise personal circumstances of everybody over 18 in its area in order to be able to ascertain capacity to pay? That is the effect of the amendments which, for better or worse, my noble friend Lord Chelwood has put forward. It is not a case, as the noble Lord, Lord Barnett, and other noble Lords have suggested, of asking another place to think again. Another place, presented with a nonsense, is not going to feel that this gives it any reason to think again. It will simply see a nonsense which will be very quickly dismissed. That, I beg the Committee to understand, is the effect of the amendment.
Of course it is well intentioned. Anyone who knows my noble friend Lady Faithfull knows that she is moved by the most generous of instincts and that she does a superb job of work on social welfare: everybody knows that. Similarly, I am sure my noble friends Lord Chelwood and Lord Ellenborough are moved by the highest motives and the desire to help those in difficulties. But that does not get away from the fact that their proposal is a nonsense. I cannot help recalling the splendid words which the late Ernest Bevin used about George Lansbury, his then colleague. He said:
"My right honourable friend is always allowing his bleeding heart to run away with his bloody head".
I would phrase it more courteously for my noble friends, of course. I lack the powerful directness of the late Ernest Bevin. But that is really what your Lordships are being asked to do. Because my noble friends are worried—and one understands the worries—about how a totally new system of taxation will affect certain categories of people they have put forward an amendment which does not make sense. I am certainly not going to enter into the constitutional aspects. My noble and learned friend Lord Hailsham, with his unrivalled authority, has done so. I would however ask the Committee to consider what impression another place would have of this Chamber if your Lordships returned to it a plain and arrant bit of nonsense.
4.30 p.m.
Lord Marsh: It is with some trepidation that I start by disagreeing with the noble and learned Lord, Lord Hailsham of Saint Marylebone, and agreeing with the noble Baroness, Lady Faithfull, and the noble Lord, Lord Barnett, on the question of the constitutional position. This is not because I understand the constitutional position but because normally I agree that this Chamber should not see itself as a court of appeal for decisions of the Commons. I believe that the doctrine of the Commons, right or wrong, is no more acceptable than the concept of my Government, right or wrong. If Members of the Committee feel that the Commons has produced something so important and fundamentally flawed that they cannot accept it, I think that they have no alternative but to seek to reject it. If that were to mean that it brought into question the future of this House, so be it. In my view it is wrong and, as I hope to say, unnecessary, to argue against the proposition on the basis of a technicality. I believe—I say this without any disrespect to the noble Lord, Lord Chelwood—that the amendment is fundamentally flawed, based on a series of false premises and totally without merit.
The key problem that we face on this issue is that if one takes a grossly unfair system—no one has argued in favour of the existing system—under which 50 per cent. of the users of local government services pay nothing towards those services and one seeks to reform it, there is an arithmetical inevitability about the fact that some people will he worse off. That is the problem. When the Chamber—and rightly—is faced with the possibility of hardships, if I may say so, it is at its best because it is a place where people feel strongly about hardship and the need to care for others.
The present system is supported by no one, as the noble Lord, Lord Barnett said. It is grossly unfair and totally illogical. But it is worse: if it is to remain, in the not too distant future it will be revalued and a re-rating will follow. I do not believe that those who oppose the Government's community charge proposals have taken on board the scale of the hardship that will strike many people if that re-rating goes ahead on the present system. Because of the massive increases in the prices of housing, many people who have been in houses for 10, 20 years, regardless of their means, will find themselves facing massive charges. The current lunatic system is based on the hypothetical rentability of a particular property. Apart from the manner—
Lord McIntosh of Haringey: The noble Lord spoke of an arithmetical fallacy. Is he not committing an arithmetical fallacy when he talks about re-rating? If the total rateable value in a given authority rises and the amount of money to be raised stays the same, then the rate poundage will surely fall.
Lord Marsh: With respect, I do not wish to be led too far astray. There are properties within the City of Westminster that over the last eight to 10 years have quadrupled in value. That would lead one to assume that, whatever the new rate set, as a result those people will be paying a higher rate relative to others.

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If one is speaking of people being rated on the basis of the hypothetical rental value of their properties, plenty of houses in London—a large number in places like Pimlico—which—which 10 years ago were almost unsaleable would today easily collect a rent of £500, £600, £700 a week. Thus the system is bad and for those people it will get worse. No one wishes to see the system continue.
If one considers the next possibility raised in another place, the proposition of banded contributions, as the noble Lord, Lord Barnett, has said, that is ruled out as well. The idea that every time someone is given an increase in pay one has to work out whether this takes the individual into the next band in terms of the community charge is not a sensible one. The third possibility is a local income tax. I know of no one—very few people anyway—in favour of that.
There is one proposition that in my view is the only fair approach. It is that one funds local government directly out of the revenue. However, the implications—and I would accept them—are that the services of local government are controlled by central government. In my view it would involve (and I am in favour of it) a national fire service, a national police service and probably a national education service. 1 am fully aware that, were I to table an amendment on those lines, I would be lucky to have a dozen supporters in the Lobby. Therefore, that too falls.
The key issue throughout concerns the principle of charges on the basis of ability to pay. It is said that charges should not he levied on people for essential provisions like local government services except after taking into account the ability to pay. Indeed I read one reference to the fact that we have not had a tax that did not take into account people's ability to pay for many hundreds of years. Value added tax takes no account of people's ability to pay and excise duty takes no account of people's ability to pay. As to purchasing essential services—whether this be food, clothing or transport—there is no principle of the ability to pay. The way to deal with people's inability to pay is to ensure that the benefits that they receive from the Exchequer are sufficient to enable them to enjoy a proper life.
In my view the amendment is not a practical proposition. The noble Lords who proposed it were not able to put in place an alternative suggestion—that I understand. The Opposition with all their resources also were not able to put in an alternative proposition. When noble Lords go through the Lobby in support of the amendment, the architects of the amendment will go through in the hope that something can be done to ease the burden, although they are not sure what it is—and that, I understand, is a perfectly honourable position. If we are honest, we know that the reason the Opposition will go through the Lobby in support of the amendment is that they realise that only by riding on the back of the amendment can they cause the embarrassment to the Government that they wish to cause.
Lord Auckland: As a signatory to the amendment I shall detain the Committee for a short time only as the Committee has now spent 102 minutes on the amendment. It is of course a vital amendment to the Bill. Having had 30 years' experience of the House, I have always regarded it as a revising Chamber. This measure is very new and has not been thoroughly discussed because in nine months both Houses of Parliament have six major Bills to discuss, of which this is one. I believe that it is incumbent on the Committee at least to consider the amendment carefully. It has been said that it offers no alternative to what the Government are producing. In the manifesto the vaguest possible words were used—a fairer community charge— but nothing has been properly laid out as to what that is.
I want to ask the Minister what consultation has taken place with local authorities. Members on all sides of the Committee will have had correspondence and telephone calls from local organisations of various political parties. Perhaps I may quote from the Surrey local authority where I lived for some years and which I live next door to now. In the year after the Bill is enacted staff costs alone will come to £280,000. The total expenditure is regarded—as—£629,000. —Local—authorities — particularly Conservative authorities—are not troublemakers; they do not oppose legislation for the sheer hell of it. I support my noble friend Lord Chelwood and, in the interests of time, I have promised to be brief, so I shall just ask my noble friend the Minister to answer these very simple questions. First, were the local authorities properly consulted? Secondly, will the extra charges which local authorities will have to bear—and this may well have an effect on rebates granted—really have the consideration which they deserve under this mammoth Bill?
Lord Howie of Troon: I want to speak very briefly, I shall not take up much of the time of the Committee. Members who know me know that I shall not do so. I want to reflect back to a year or so ago when similar matters were considered in relation to Scotland. At that time arguments arose against the imposition of the poll tax in relation to Scotland, but not then to England and Wales—but such as the noble and learned Lord, Lord Hailsham, did not then argue that these matters were unconstitutional or anything of that sort. It seemed that while they were appropriate to Scotland they have now become innappropriate to England. We went through this argument very thoroughly then. Those of us who are Scottish Members or have connections with Scotland were irked that English people did not come to our aid at that time. We were very hurt and a little subdued. We said, "Look, you are going to get it later on, just you wait". And of course so it has turned out. I do not think that the constitutional arguments are of any significance whatsoever. If they were not significant a year ago, they cannot be that significant now. Things have not changed that much in the time.
I have only one further comment to make, having said that I will be brief. We all know that the rating system is unjust, improper and not quite right. We have know that for many years. We have tried very

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hard to get it right; we know it is unfair. The undertaking of the Government was to replace this tax with something which was fair. People like me would have supported the Government had they produced something that was fairer than the rating system. Members of the Committee know what I am like. I am not a party hack; I will support something which I think is right, reasonable, proper and fair. But this is not that at all. Members on both sides of the Committee know that it is not right; they know that it is not fair; they know that it is not decent. I have no doubt that they can possibly be whipped into proceeding as though it were, but in their heart of hearts they know that it is not right. We agree that the rating system was unfair. All right, we can all agree about that on all sides of the Committee. We know that an unfair system ought to be replaced by something which is proper, fair, decent and reasonable. But whatever we replace it with must be proper, fair, decent and reasonable. This is not it. We all know in our heart of hearts that, just as the rating system was not fair, this is not fair either.
Those of us who are deep in party politics can accept that. But those of us who, like me, are not deep in party politics cannot accept it. We think there is much more to the business than party politics. We shall be trying to get a system which is reasonable, decent and fair. When we replace something which is unfair, it ought to be replaced by something which is fairer. This is not it. The noble Lord on the other side of the Committee who put down this amendment is entirely, totally and fully right and his amendment ought to be accepted by everybody in this Committee.
4.45 p.m.
Lord Ross of Newport: I speak as a very new and junior Member, but I think that it is time we stated our position from these Benches. I hope that is not unfair, but I shall be very brief. Perhaps I may suggest to the noble Lord, Lord Marsh, that he might like to take a bit of bedtime reading home with him and re-study Layfield, because Layfield should have been followed by whichever government was in power. The Layfield Committee studied the whole problem of replacing the rating system. We have of course funked quinquennial reviews. Successive governments have not carried them out and that is why things are in such a mess. The rent Acts have had a disastrous effect on the rents being paid for residential homes, and that is why the present rating system is in such disarray.
Hailsham, that I regret it, but we shall not be accepting his strictures because we shall be supporting the amendment. This is not because we wish to be mischievous or the cause of any constitutional crisis. It is of note that the Sunday Times, prompted, I suspect, from some quarter, is now floating the idea that this Chamber should be abolished. I do not wish to be abolished, I have only just arrived here.
The fact is that we know that the system as currently devised will not work. It is far too complicated, terribly expensive, bureaucratic and there will be widespread abuse. Who on earth will be
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the poor person who will have to go under Charing Cross Bridge and get the 20 per cent? I would not want to be that person trying to get the money from the down-and-outs of this country.
It is notable that there have been few, if any, speeches from the Conservative Benches which have actually praised the so-called community charge. We have yet to hear one. I happen to believe that a local income tax could work. It works in Canada, America, Japan, Sweden and many other countries. Why have we not studied it there? It could be much simpler; it certainly could be much cheaper if the figures quoted in Layfield are true. I thought they were too high, but what we have been told by the AMA and others is horrific.
I also think that there should be a property tax of sorts, probably banded between rates of up to £50,000, then between £50,000 and £100,000 and above. That is something which I think could be dealt with locally; it makes a great deal of sense. That is what I suggest, and what I hope to put at greater length to the Minister when we reach the next amendments. However, the fact is that the poll tax will not work and history is on our side on that.
Lord Carr of Hadley: I do not enjoy differing seriously from my party and the Government on any major issue. I think that in 38 years in Parliament I have never voted against a three-line Whip. However one must be true to one's convictions on a major issue. The imposition by the Government of a tax which applies to every adult citizen in our community is, in my view, certainly a major issue. I have to say that my strong conviction is that the community charge, as at present drafted, is wrong and is unacceptably unfair. I must seek amendment to it and I cannot support it in its present form.
All taxes contain some inherent unfairness, but it is surely indisputable that a flat rate poll tax is inherently the most unfair of all forms of tax. Whether this inherent unfairness becomes unacceptable in practice depends on the level at which it is levied. But my conviction is that at the level proposed and in the form and in the details at present proposed, this community charge is unacceptably unfair. I touch very briefly on what should have been done. Many of those who object to, or at least disagree with, those of us contesting the present position say that we never suggest any alternative.
Surely the commitment in the Conservative election manifesto of the autumn of 1974 got it right in principle. We promised then to replace domestic rates with a combination of taxes related to the ability to pay. Why do we have to change from a system of local taxation dependent solely on the taxation of property to a system dependent solely on the taxation of individuals? Why should we not have a combination of the two? Such a combination would still provide the vital direct link of accountability between all residents and voters and their local councils which this Government so rightly wish to establish. I, wholeheartedly and with great conviction, support that determination.
In this role—as one of a combination of taxes; not as a sole tax but rather as a significantly topping-up tax—even a poll tax might have been found to be acceptably fair. Unfortunately, however, the

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Government have not provided us with any such alternative of a combination of taxes: so all we can do now, and all I seek to do in practice, is to concentrate on doing our best to ameliorate the inevitable and unacceptable unfairness, as I see it, in the detailed proposals before us at the moment.
In another place the Government amended their original proposals in a way which very substantially reduced the unfairness. That was as satisfactory as we could have expected or asked for. But what I am saying in speaking for this amendment is that the Government need to do still more. The Government's present ameliorations have provided for those who are really poor—in the modern sense of what we mean by that term—as satisfactorily as possible. But the burden will still fall unfairly on those who, in this technical sense, are not quite poor.
Under the Government's amended proposals 9 million people will qualify for rebates. That is a very large number, but as has already been said that still leaves some 25 million who will not qualify for any rebates. It is at the lower end of the income scale of those 25 million people that we shall find those who will be most unfairly treated by the present proposals and who need more help.
Let the Committee consider who, according to the Government's own analysis, will be the largest losers and the largest gainers if the community charge is levied in its present form. The biggest losers will be members of households of three or more adults. That is of course what one would expect. And it is prima facie fair as it corrects the most obvious and most frequently noted unfairness (it is not by any means the only unfairness) in the present domestic rating system. But—and it is a very big "but"—the biggest gainers, according to the Government's own analysis, of the proposed new system will also be in this same category of households with three or more adults. That surely shows beyond question the arbitrary and unfair incidence of this charge in its present proposed detail.
Moreover, I must say to my noble friends on the Front Bench that the Government cannot fairly consider the effect of each of their proposals in isolation. They must consider the cumulative effect of their whole package of proposals. The losers under the community charge as at present proposed who are not far above the qualifying line for rebates will include those who also lose housing benefit because their savings are above, but not much above, £8,000. Also included are those who will most feel the pinch of having to pay for the examination of their eyes and their teeth and who benefit least, for obvious, inevitable reasons, from the Chancellor's income tax reductions. On the other hand the biggest gainers from the community charge will, by and large, be those who also benefit most from the Chancellor's reduction in the top rate of tax which, as I made clear in my Second Reading speech, I wholly and strongly approve of.
There is a perceived sense of unfairness which is very great in the community about the total effect of this package. I say to the Government and to the Conservative Party that they ignore it at their peril.
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On the substance of the amendment, I wish to say a very few words about the collective community charge. That, if unameliorated, will bear harshly and unfairly on many voluntary charitable organisations which provide short-stay accommodation for vulnerable and handicapped members of our community. I am sure that many Members of the Committee will have read the letter in The Times last week from the General of the Salvation Army. One could find many other examples of this unfairness. Perhaps the collective charge will need amelioration in the interests of fairness as far as it applies to adult students in universities, polytechnics and other such institutions.
In speaking for this amendment, I say to the Government that we are not trying to wreck the fundamentals of their scheme, much though we might wish that they had chosen a different one. It is too late for that now. What we say is that they really must go back, think again and produce further significant ameliorations. I seek a promise that the Government will think again and that they will seriously attempt to find further significant ameliorations to meet some of the very substantial criticisms of unfairness to which I and other Members of the Committee who support the amendment have drawn attention.
I hope that that is what the Government will do. I cannot support this tax in its present form. If the only way to obtain amendment and reconsideration is to vote for this amendment, then I must and will do so.
Lord Nugent of Guildford: I wish to say a few words in response to my noble friend Lord Carr of Hadley who has made such an authoritative and moving speech. As he said, it is too late to change the structure of this Bill. At least one thing we can all agree on is that the rating system is now impossible. The solution that we have before us now as regards what can replace rates is the community charge system. That community charge has been given a great deal of thought but there is just one other aspect to which I want to refer without repeating the many other arguments that have been heard. It is not a flat rate tax as my noble friend says it is. It will vary from one local authority to another. The actual cash demand made on the individual elector will depend directly on the financial policies of his local authority.
We all know the dramatic differences between, say, Camden, which is always mentioned, and Birmingham, another Labour authority that is very well managed. Those two authorities were both mentioned in the Second Reading debate. Camden, on last year's reckoning, would have had a community charge of £780 while Birmingham would have had one of £ 180. Therefore there is an immense difference depending on the local authority as regards what will be the actual cash demand on the individual elector. That is something that my noble friend Lord Chelwood should take into account. I am sure that my noble friend Lady Faithfull who is looking at me a little doubtfully will also bear in mind that this aspect will have a very major bearing on how much will be demanded of each elector in each local authority.

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The demand will be presented in a form of stating what the community charge is for that local authority. Alongside it will be placed the standard charge for the nation. Every adult in every local authority will see, when he receives his demand, just how his local authority is doing in terms of financial management when compared with other authorities.
I believe that my noble friend Lady Faithfull said earlier that her taxi-driver friend thought nothing of that and had no idea what his local authority was doing. When electors throughout the country receive their demands they will see for the first time just what local government finance is doing. I believe that at the next local government elections they will be there as never before, polling their votes either for or against the local authority, depending on how well it is managed. They will have criteria to judge by for the first time.
That is enormously important, electorally speaking. Many Members of the Committee from all sides of the Chamber have taken part in local government, have an affection for it and wish to see its fine reputation restored. However, those local authorities who have abused the present situation with their extreme policies—as they have; there are small cliques of men and women who are obviously more interested in power than in serving the community—will find that their number is up. They will no longer have small polls of below 40 per cent. which are found generally throughout the country. I think that polls of the future will go up to 50 per cent. and even 60 per cent. We shall have a very different situation with different men and women being elected to local authorities; men and women who serve the community and give it good value. I believe that we shall see—
5 p.m.
Lord Howie of Troon: The noble Lord knows of my great admiration for him. However, will he put his thumbprint on the proposition that more people will vote hereafter in the way that he has just said? I know that he is carried away by the exuberance of his argument. But will he put his thumbprint on that and give me a fiver when the time comes?
Lord Nugent of Guildford: The noble Lord's intervention is, I suppose, of some rhetorical value. Neither he nor I can see into the future and know exactly how many people will vote. I believe that they will vote in far greater numbers. Most Members of the Committee believe that that will be the case when people have precise criteria by which to judge the performance of their local authority. That will eliminate the extravagant councils who make enormous demands on rates now and who would make enormous demands on the community charge in the future.
Accountability is an essential factor and it will be achieved for the first time in local government. I believe that we shall see a very different scene when local authorities who have been abusing their position and extravagant councils and extravagant demands are eliminated. Then we shall see the community charge coming down to a reasonable
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level throughout the country. I believe that that is a very important factor and I ask Members of the Committee who wish to see that matters are dealt with as fairly as possible to bear in mind that the community charge may not achieve everything—it does not, and nothing will but if it achieves only that, it will be a great improvement.
The Earl of Onslow: I am—
Lord Bellw in: I believe—
Lord Stallard: Perhaps I may—
Lord Belstead: We cannot all speak at once. Perhaps I may suggest that the speaking order should be, first, the noble Lord, Lord Stallard; secondly, a noble Lord from the Cross-Benches; and, thirdly, a noble Lord from my own Benches.
Lord Stallard: I am grateful to the noble Lord. I shall not detain the Committee for long. I feel that I must get straight in my own mind one or two points which have been made by a very eminent spokesman from the Government Benches for whom I have the greatest respect. The noble and learned Lord, Lord Hailsham, in his contribution—I do not wish to quarrel with him about the constitution—appeared at one stage to be threatening the Committee, or perhaps some Members of the Committee on the Government Benches who might be inclined to support the amendment, with the horrible things that could or might happen if the Committee votes for an amendment such as this to a Bill which has come from another place.
Perhaps the noble and learned Lord, Lord Hailsham, can comment on a point which he made on 22nd March 1976 as regards the Trade Union and Labour Relations Bill—the closed shop Bill—when this House returned that Bill to another place not once but twice. The noble and learned Lord the Lord Chancellor (as he then was), said:
"the reason given by the Government, or the other place, is a bogus reason. I do not at all regret sending this matter back to the Commons. I think it has shown up the Labour Party: it has shown up the Government".
The noble and learned Lord was justifying that action. He then said:
"We have discharged our duty to the full'— [Official Report, 22/3/76; col. 441.]
He was therefore saying that there was a duty to return the Bill to another place for the reasons which he had stated, albeit the other place had passed the Bill earlier.
Lord Hailsham of Saint Marylebone: The noble Lord has mistaken the whole point of my speech. I was not talking about taxation.
Lord Stallard: I shall not take it any further. The matter can be judged on its merits. The noble and learned Lord also discussed whether we are dealing with a charge or a tax. Of course it is a tax. That was rightly proven by the two noble Lords speaking earlier in our debate.

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Like my noble friend Lord Barnett, I was one of those who supported the idea of a local income tax many years ago. The noble Lord, Lord Boyd-Carpenter, may remember that during the course of our discussions on the Abolition of Domestic Rates (Scotland) Bill I made the point that I supported that alternative. He said that it was not feasible and could not be administered. I said that with computers and political goodwill it could and ought to be.
After the Layfield Report and after the publication of Mr. C. D. Foster's paper, I supported the line of the noble Lord, Lord Carr, which was commonly accepted in those days, that local income tax should be an adjunct to taxes such as rates or other charges. We were happy to discuss those matters. Even today we should be happy to discuss alternatives. But we are not discussing alternatives. We are discussing the Government's proposals. There is no point in asking what the alternative is. We are not here to discuss alternatives. We are faced with the Bill and an amendment.
The purpose of the amendment, as I see it, is to salve consciences. I can well understand the regrets that Members of the Committee opposite must have in appearing to go against the Government. They are in difficulty. The question of a poll tax has been discussed on a number of occasions. To give the noble Viscount, Lord Whitelaw, his due, he may have been at some of those discussions but not at all of them. In 1983, it was decided that the poll tax was not a runner. The Government said: "We cannot have a poll tax and we shall have to carry on with rates as they are with a few amendments here and there". That was what was said, and the idea of a poll tax was thrown out. It has also been thrown out on two or three occasions since.
Members of the Committee on the opposite side of the Chamber who are supporting the amendment are supporting Conservative Party policy as it was clearly stated in 1974. I imagine that Members of the Committee who were in another place in those days canvassed the electorate on the basis of the manifesto commitment, which said that they would abolish domestic rates and introduce a tax based on ability to pay. That was their phraseology. It puzzles me that the noble and learned Lord, Lord Hailsham, the noble Lord, Lord Boyd-Carpenter, and the noble Viscount, Lord Whitelaw, did not advise the Conservative Party Central Office in those days of the evils of provisions regarding ability to pay as they have done today. Why did they not suggest that that form of words was no good and ought not to be included in the manifesto and that they ought not to to canvass on the basis of that form of words? As they have told us today, we ought not to be discussing it in those terms.
It is that double standard which has reduced the credibility of this Chamber. I agree with the noble Baroness, Lady Faithfull, when she said that this Chamber has gone up in people's estimation. They now see that there is a chance, albeit a slim chance, that we will not treat every subject as a political football whether it is rates, housing, or social security benefits. They see that this Chamber will try to be fair
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to the people in the country at large and will try to lessen the effects of what has been called the elected dictatorship in the other place. That is the reason the credibility of this Chamber has risen. People are looking to us to put some sanity into some of the legislation which they see is leading us down the road to turbulence, not and trouble. I hope that noble Lords will consider those aspects and support the amendment.
Lord Wyatt of Weeford: This amendment really deals with inability to pay or what is perceived to be inability to pay. That has already been dealt with very thoroughly by the Government. Already a couple with two children would need to have an income of three-quarters of average earnings before their rebates ceased. Average male earnings at the moment are over £220 a week. In areas where the community charge is higher than average the rebate would continue upwards beyond three-quarters of average earnings. So there is not very much hardship in the present arrangements.
It would seem to me that the movers of the amendment will not be happy until everybody receives rebates and until they reach the position where nobody pays the full charge unless they are in the 40 per cent. income tax bracket. Perhaps they would like nobody to pay the community charge unless they are a millionaire. That would be a real soak the rich policy.
Baroness Faithfull: May I ask the noble Lord on what he bases those statements?
Lord Wyatt of Weeford: I was informed by the Department of Employment last Friday that average male earnings are running at £220 per week. Was that the question?
Baroness Faithfull: I do not wish to prolong the debate, but the noble Lord said that people on this side of the Committee approved of that. We do not.
Lord Wyatt of Weeford: I do not quite follow the question. Perhaps I may proceed to an area which I think I do understand.
The noble Lord, Lord Chelwood, as a new-come revolutionary is seeking a real soak the rich policy. As the noble Lord, Lord Nugent, said, a main purpose of the community charge is to try to put some real domocracy into local government. It is to relate local votes and local voters to financial reality. People will see from their community charge bill whether their council spends above or below what is necessary. Even those at the bottom end of the income scale will be affected. They will be paying 20 per cent. of the national average community charge in their social security benefits. If they live in a low spending area they will be able to keep some of that for themselves. If they live in a high spending area they will have to pay a bit extra out of their own pockets. That will bring home the cost of extravagant councils to everyone. That is very largely the purpose of the community charge.
The revaluation of property will not bring home to people the extravagance of local councils; nor would

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a local income tax. That would simply encourage more extravagance. The present rebates mean that the top 10 per cent. of households by income will be paying 15 times more than the bottom 10 per cent. for the same services. Surely that is enough for social justice for the time being.
The cost of collection of the community charge, which has been referred to, will be about £100 million. That will be more than offset by the enormous amount saved by forcing local councils to be less wasteful. The cost of collection is well worth it for that reason alone and to achieve more local democracy. I do not believe, as the noble Lord, Lord Houghton, believes, that the collection will be all that difficult. There will be a power of attachment of earnings and of social benefits to force the payment of overdue rates. I do not think that collection will be very difficult.
The amendment of the noble Lord, Lord Chelwood, asks for more and more rebates. That would encourage councils to be wasteful. That is the opposite of what we want. Somebody has to pay the higher rebates. It would place a greater burden on the ordinary taxpayers. Whether he likes it or not, the noble Lord's amendment would wreck the community charge passed by another place. He has no idea what scheme of rebates he wants.
On the Second Reading of the Bill he said that the Government must have a secret Bill which could arrange it all for him. It must be very secret, because 1 asked the Department of the Environment whether it could tell me about that secret Bill which the noble Lord, Lord Chelwood, said that it had had for 12 years. The department said it had never heard of it; it had never seen it. Perhaps it has been buried with Kim Philby. The noble Lord's amendment invites us to go on a mystery trip.
5.15 p.m.
Lord Chelwood: I was not talking about a secret Bill. I was simply thinking of the fact that for 12 years the Conservative Party has believed in a rate which bore a direct relationship to people's ability to pay. Twelve years seems to be a hell of a long period of gestation.
Lord Wyatt of Weeford: I thought the noble Lord's raison d'être was that he could not think of a new scheme but he was quite confident that the Government could, because he knew for a fact that they already had a Bill prepared. They must have had, because they had been thinking about it for 12 years. That simply is not true. There is no alternative. He is inviting us to go on a mystery trip. That is not the way to deal with important legislation.
The English community charge is linked to that of Scotland. The Scots will have the full benefit of all the recent rebate improvements. Last May we passed a Bill for the abolition of domestic rates in Scotland through all its stages in this Committee and this House. It has exactly the same community charge system as is intended for England in the Bill which we are now considering. If we now pass the amendment the Scottish Bill will have to be dismantled and reversed.
Noble Lords: Hear, hear!
Lord Wyatt of Weeford: Now we know where we are! The whole thing is to be destroyed. I am glad that noble Lords opposite have given us some evidence of their real intention, which is not to support what they have described as a mild amendment to tinker about with rebates but to destroy the whole of the community charge Bill.
There would not be time to recast the Scottish Bill before April next year, when it will begin to operate in Scotland. All the arrangements have already been made. There will be total chaos. By reversing the Scottish Bill noble Lords would have stood on their heads in the space of a year. We would be saying that Scots are second-class citizens. Where were the great Tory rebel amendments from noble Lords on the Scottish community charge? There were none. When it comes to the English, the movers of the amendment demand more favourable treatment. That would certainly disunite the United Kingdom.
If we passed the amendment not only would the use of our powers be queried, but our sanity would also be queried. I hope that the Committee will resist any further monkeying about with the community charge already passed in another place and in this Committee in exactly the same form for Scotland a year ago.
The Earl of Onslow: I plead guilty to cowardice on the Scottish Bill, because I had my doubts about the poll tax then. I have my doubts about the poll tax now. Those doubts have two bases. One is unfairness. The other, frequently alluded to, is that it is wrong. I think it is unfair that I should pay less tax than does my farm foreman. The charge is wrong and unfair to society as a whole.
A poll tax was introduced by the more drunken of the Turkish sultans; it was introduced in India by the most intolerant of the Mogul emperors who proceeded to watch the revenues of the peasants decline; and it was introduced by the most weak of English Plantagenet kings although I suppose there might just have been a case because he kept the charge for earls at four bob a year. If I were sitting on the Benches opposite I should vote against—yes, I said against—this amendment because I am terrified for the life of this Government, the best government this century in this country. I have just returned from the United States. There, my right honourable friend the First Lord of the Treasury is held in awe in a way in which no other member of any government is held. She is thought of as someone rather special.
When making a carpet the Persians have a trick of always weaving some imperfection into it—because, they say, only Allah is perfect. Should the poll tax be introduced, I believe that it will lose the next election for the Conservative Party. How can we, the party of the family, encourage people to kick their children out of the house? How can we, the party of the family, encourage people to send their elderly relatives into old people's homes in order to avoid paying the tax? How can we, the party of the family, declare that the people whom we encourage to strive and to better themselves shall pay the same amount of tax as those

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who earlier strove and bettered themselves or even those who inherited their money? I had hoped never to see people who have large amounts of inherited money suggesting that they should pay less tax than an ordinary working man with children. I sincerely hope that the Committee will support the amendment of my noble friend Lord Chelwood.
Lord Bellwin: After listening to the last speaker, I am not sure whether he is "agin" us or for us. It takes a little working out. It may comfort my noble friend to know that I do not speak as someone with a large amount of inherited wealth. Unlike my noble friend Lord Auckland, I have not spent 30 years in your Lordships' House; it was only nine years ago that I entered this Chamber. However, I have spent much longer as a working practitioner in local government trying to make the rating system work fairly by taking account of people's ability to pay.
Not for one moment do I question—any more than anyone else questions—the sincerity of my noble friends who support this amendment. I simply want to say that the vagueness of the amendment is breathtaking. It is not good enough to call for the Bill to be sent hack while someone looks into the possibility of producing something which reflects a treater ability to pay. I do not think that the 12 years mentioned by my noble friend Lord Chelwood is long enough. I have been involved in this matter at the highest level for over 20 years studying the alternatives. I know the publication that he held up. I too have the same booklet in front of me. On page 7, referring to the domestic rates, it notes:
"Domestic rates bear too little relationship to ability to pay".
Those are the very words used, and they were being uttered quite a long time ago.
I should have been more impressed had I heard expressions of great concern over ability to pay in the past when some Left-wing authorities were imposing on people rate increases at horrendous levels—even up to 100 per cent. — and were relying on the fact that so many ratepayers would receive rebates. I wonder whether my noble friend Lord Carr would care to consider those people who were then just above the threshold and did not have the ability to pay.
There are always people who come just above any threshold. For the very poorest of families—those with incomes of up to £50 a week whom I think one would include in that category—it is not an opinion but a fact that in the future under the community charge their net income contribution will be 3.4 per cent. Today, under the present system it is 4.1 per cent. They will not be worse off or disadvantaged under the new system but will be better off. If we do not mean them when we speak of "poor people", whom do we mean?
Let us consider the gainers under the Bill. I repeat that 53 per cent. of all households will gain. Who are those people? They are the nine out of 10 one-parent family households; the more than four out of five single pensioners living alone; the households with an income of less than £150 a week. Then there will he the end of rates that are at present incorporated in council rents. I shall not go through the whole list of
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gainers; it is quite a long one. What about all those who in the future will be better off under the community charge and who are not to be disadvantaged? Are they not the very people about whom we are talking when we refer to ability to pay?
What about poor people who live in areas of high rateable values and who subsidise the richer people who live in areas of low rateable value? It is assumed that anyone who lives in a house in a high rateable value area has a high income. But it is just not so.
At Second Reading my noble friend Lord Chelwood said that the Bill's proposals were not consistent with some of the Conservative Party principles with which he was brought up. They are consistent with Conservative principles as I have always known and believed in them. As I hope that I. and certainly others, illustrated during the Second Reading of this Bill, the most needy in the community will be better off and, through the national taxation system, the higher earners will pay not six times but 15 times more than the lower earners towards the cost of local services. To me that is very much what Conservative principles are about. To say or imply otherwise is not to disregard—
Lord Monson: Surely the noble Lord is referring only to direct taxation. When indirect taxation is taken into account, the differential between the high and low earners is very much less than 15 times.
Lord Bellwin: Whichever way we consider it, we are talking about who pays for the cost of local services. Under the present proposals 50 per cent. of that cost will come from the national exchequer; that is, the taxpayers in general.
I want simply to say that no one has a monopoly on compassion or caring for other people. I believe that the total package in this Bill, containing as it does an unprecedented list of rebates, phasing, exemptions, safety nets and so on, is concerned with ability to pay. If it is not, I do not know what is. At Second Reading my noble friend Lord Chelwood said:
"The Bill cocks a snook at public opinion".
He also said:
"the Bill is virtually friendless". [Official Report. 9/5/88: col. 866.]
He is wrong on both counts. Millions of gainers are in favour of it. The single person household and pensioners are in favour of it. Those who are treated so unfairly under the present system are not against the Bill. Ironically, one of the most powerful cases for the community charge has been made by the Labour Co-ordinating Committee, which is a group within the Labour Party. Referring to the community charge in a paper called Local Councils in the Cold, published in January this year, it states:
"Ordinary local people will foot the entire bill on any local spending above the Government norm. When the local council wants to carry out a programme of service expansion local people will no longer be cushioned by increased business rates and rate support grant. They will want to know that increased expenditure is well spent".
Quite so, my Lords.
5.30 p.m.
Lord Chelwood: Since my noble friend has put a number of points to me perhaps I may ask this. How does he feel about two old age pensioners who have only their pension but both of whom have saved £9,000 and, because they have been thrifty all their lives, can get no rebate?
Lord Bellwin: I feel about that in exactly the same way as I have always felt in the past about those people who come just above the threshold: that they always receive the worst end of the stick. But at least under this system we are able to look at the very instances that my noble friend has mentioned.
I am sure that the Minister will give the Government's position on how flexible these numbers are. But the point that my noble friend Lord Nugent made was the relevant one: namely, that if local authorities will be concerned about those people they will ensure that the charges which they impose are charges which those people can afford to pay. Surely that is the answer to that point.
I do not wish to drag the debate on any longer.
Noble Lords: Hear, hear!
Lord Bellwin: I was sure that noble Lords opposite would approve of that statement. However, I wish to say this. When one looks at the positive side of the proposals, considers the fact that accountability at last is restored to local government, and that more or less everyone will be paying at least something towards the cost of local services, and one then considers the end to the long-standing patent unfairness of rates, the amendment seeks to put the clock back. It is nothing more than a recipe for vacillation, and that is where we ran into all our trouble in the 1970s. We cannot go back. I urge my noble friends and even—who knows—some members of the Committee opposite, to reject the amendment.
Lord Pym: There is no dispute about the need to get rid of rates and to replace them with something else. There are many good features about this Bill, including the extent to which the community charge improves accountability. But long before this debate began it was obvious that the ability to pay factor in the community charge is a very controversial and difficult issue.
I feel that the vehemence of the Government's resistance which we have seen recently to the possibility of any change has put the issue somewhat out of perspective. I think that the debate about the constitutional issue relating to it has contributed to this. But I cannot see that further consideration of the ability to pay factor—which is of critical importance to many people—should threaten the Government, as has been alleged, or threaten this Chamber.
I listened with great respect and interest to my noble and learned friend Lord Hailsham, and my noble friend Lord Whitelaw— with whom I have had the privilege of working for so many years. But I find difficult to accept the argument that an amendment to this Bill will confront another place in an especially hostile way. It must be a subjective judgment and my
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noble friend has made his position clear in his characteristic way. However, for me there is a principle at stake here over the ability to pay that affects millions of people in a very direct sense. It is a principle upon which I should have thought noble Lords would have wished to express a view.
On any broad assessment of our affairs, things are going very well for us in this country at present. That is in large measure thanks to the strong and effective leadership of this Government. But I do not want that success to be overshadowed or checked by the manner in which the community charge is introduced. The Government have already amended their original ideas more than once. I hope that their mind is not finally closed on this aspect. After all, as has been said, the ability to pay aspect was the basis of our original commitment to abolish the rates.
In promoting this Bill the Government have placed great weight on their manifesto commitment. My support for this amendment—or perhaps, more accurately, the principle behind it—is based on the same criterion. The commitment was to introduce a fairer community charge and, as the Bill stands at present, in my view that commitment has not been fulfilled. Some Members of the Committee have criticised my noble friend Lord Chelwood, and others, for not having brought forward detailed alternatives. But I also note that none of the Members of the Committee, so far at any rate, have upheld the community charge on the ground of
The greatest benefit from the charge goes to those with higher incomes and the greatest disadvantage will be felt by many of those with lower incomes. We know that to mitigate this there is in place a system of exemptions and rebates. Welcome though that is, it still does not in my view fulfil the commitment to fairness because there will still be many people, both within the 9 million and beyond, who will have to find additional money for the charge for which they have never budgeted. There are people whose circumstances make it difficult or even impossible for them to find that money without disturbance or distress. I do not see any social justice in that. There are also many people who pay less under the community charge: the gainers under the Bill. These include, among others, the majority of single pension households. I am grateful to my noble friend Lord Caithness for writing to me on that point. However, many pensioner couples will be worse off.
Glad though I am at the good fortune of the gainers, surely we must be mindful of the impact on this Bill on the losers. Many of those will be people who have saved, who have a small amount of extra resources, and have become independent and self-reliant, as we should like everyone to be. They will be above the line where any rebate is available and will have to find the full charge for every member of their household. They may have liabilities to meet which are manageable under present arrangements but which become extremely difficult under the Bill, and without doubt that will lead to hardship and anxiety in many cases. I cannot think that the Government wish to inflict such hardship and anxiety on any of our citizens. I believe that we have a responsibility here to foresee the effects of the Bill on all our people and to try to protect those whom it will damage.

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This amendment requires the Government to take into account the ability to pay factor. I find it difficult to see why they should refuse because it cannot be denied that the harshest impact is on those just above the line where rebates are available. If the Government were to come forward with new ideas of their own on this matter, or would prefer some different approach that can be considered at a later stage in the Bill, I should be content to wait and see what they come up with. In the absence of that, I think that the point about the ability to pay has to be made. To ask the Government to look again at this aspect of the Bill seems to me to raise no constitutional issue. Surely it is an entirely appropriate and fitting act of revision which is the essential role of your Lordships' House.
In supporting the principle of the ability to pay, so far from being a rebel I believe that I am speaking and acting in accordance with the tradition and practice of the Conservative Party over a century and more. I believe that I am also speaking and acting in support for the Conservative manifesto.
The Earl of Caithness: This debate has centred on fairness and on the ability to pay. After a long and comprehensive debate it would be wrong for me to make a long speech, for Members of the Committee will want to reach a conclusion to the matter. First let me turn briefly to the amendment of my noble friend Lord Chelwood. He asks the Government to think again, but I have to say that we have considered with the utmost care all the alternatives to the discredited rating system and believe our solution to be the best and fairest. My noble friend has doubts but clearly cannot think of an alternative which he could justify, otherwise he would surely have brought it before the Committee. He did just that when he argued and voted against the Government on the Rates Bill 1984 and the Local Government Bill 1985. I know my noble friend would not have shrunk from his duty today if he could propose a better system than that in the Bill.
There are alternatives and we shall soon be discussing proposals for a local income tax and a capital rating system. However, I can say now to the Committee that some of the criticisms made by the Chartered Institute of Public Finance and Accountancy, known as CIPFA, against the community charge, are even more potent against the alternatives and a banded charge. They prove that the alternatives that will be put forward today will be costlier to collect, harder to administer and, more important perhaps, will cost most payers, particularly those on modest incomes, a great deal more.
As my noble and learned friend Lord Hailsham said, we must be precise when we are legislating so that those who have to implement the provisions of the Bill know where they stand. My noble friend's amendment fails to do that. That is hardly surprising because, among other things, the equivalent Scottish Act has already been passed and preparations are well advanced for it to take effect next year. It was amended by your Lordships, but that Act established the principle of a flat rate community charge.
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Moreover, I cannot believe that my noble friend thinks his amendment would enable us to change the nature of the community charge just like that. A large number of other wide-ranging amendments would be needed to the Bill. These would be essential, for example, to set out from whom the information about income was to be obtained, how it was to be verified and what should happen if false information was given. That would be a nightmare of detail which my noble friend Lord Chelwood has made no attempt to solve.
I also agree that my noble friend Lord Whitelaw had every justification in saying that this amendment, and by implication subsequent amendments, would wreck the Bill. So what do the Government propose? I want to set out in the clearest possible terms for the Committee the Government's strongly held view that the community charge will be fair and that the new system as a whole will be clearly related to ability to pay.
It is entirely fair that every adult should make a direct contribution to the cost of local services, from which all of us benefit. It is one of the great failings of rates that only about half of those adults who use local services, and who can vote in local elections, are required to make any direct contribution—even now that we have introduced 20 per cent. minimum payments for rates.
Under the system we propose, the cost of providing a standard level of services will be the same everywhere in England—£178 last year. With rates, one area can have bigger bills than another, even though its services are being provided to a lower standard. With rates, a poor person can pay more than a richer person in the same local authority area, and more than an even richer person living in another area, for the same standard of local services. None of these unfair outcomes will be possible with the community charge.
With the community charge the cost of extra services, or the price to be paid for inefficiency, will be a £1 rise in the community charge for each £1 per head increase in spending. At present, because of the odd relationship with grant and with non-domestic rates, the cost is well below £1 in some areas; in others it is more than £1. Thus, where there is in future a charge above the standard level each adult in the area will be able to ask what he or she is getting in terms of better services for the extra money that is being spent, and will be able to form a view as to whether those services are worth the increased charge. The new system will provide a "ready reckoner" to give the payer much needed accountability which is lacking now.
I would particularly like to draw attention to the situation for those often associated with lower incomes. It is right that the needs of particular groups must be taken into account, and indeed they will be. Rebates will be particularly generous for the pensioners, for those with children, and for the disabled. As a result of the considerable effort that has been made to tailor our proposals to meet ability to pay, a pensioner couple in an area with a community charge of £5 a week would still receive a rebate if their income—net of any income tax— was

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£6,120 a year. We estimate that over half of all pensioners will be eligible for a rebate. Over the past months I have listened to noble Lords who are concerned with single pensioners and single parent families. What does the charge do for them? We expect at least 80 per cent. of single pensioner households and single parents to be better off than they are now. In summary, we are sure that we have provided well for those on lowest wages, for on average households with incomes up to £150 a week will be better off with the community charge than they are with rates.
A number of noble Lords who have spoken this afternoon made it clear that the arrangements under which local services are paid for should be progressive; that the rich should pay more towards local spending than the poor. The new system set out in the Bill—and I emphasise the word "system"; it is surely right to look at the system as a whole—will be progressive. That is because half the cost of local government services is met by central government grant. In other words, it is paid for using £13 billion of national taxation—particularly income tax. The rich, rightly, pay far more in income tax than the poor.
As a result by introducing the Bill we shall achieve a situation where the households with the top 10 per cent. of earnings will pay around 15 times as much towards the cost of local services as the bottom 10 per cent. The ratio of contributions between the richest and the poorest will be greater with the community charge than it is with rates.
Within a system that is undoubtedly progressive overall there is absolutely no need for every single element to be progressive. After all, we all pay the same for our television licences, and the same vehicle excise duty for our cars, whatever their size or value. What I certainly accept, however, is that no part of the system should require someone on a lower income to pay more than someone on a higher income for the same level of services. Here I must repeat that that is not possible with the community charge, but it is with rates. The fact that the Labour Party can, apparently, support the retention of rates in some form and yet argue that the system must be related to ability to pay confirms their lack of a coherent policy on this subject.
I turn to what I am sure is common ground among Members of the Committee and that is that no one should be required to pay more than he is able. The community charge also meets that test of fairness. For a quarter of the population the community charge itself will be directly related to ability to pay. That is because in England rebates will be available to 9 million people.
The 4 million people on income support—the successor to supplementary benefit—could contribute nothing out of their own income. They will not only receive the 80 per cent. rebate, but in addition— this is the point that my noble friend Lady Faithfull admitted—for the balance of 20 per cent., they will already have received an increase in income support equivalent to 20 per cent. of the average
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community charge for the country. Thus, those in areas where the community charge is below average will be slightly in pocket; those where it is above average will pay slightly more, but this will provide the necessary element of accountability for those on the lowest incomes.
Let me make it clear that rebates will not be restricted to those on income support. The rebate will be tapered as the income increases. We shall provide more generous provisions than rebates for ratepayers by reducing the amount of rebate by only 15p for every £1 of income above the income support level instead of the current 20p. This means that a further 5 million people on low earnings or with small occupational pensions will receive rebates of up to 80 per cent. Our proposals have also been designed so that the rebate system will be related to the level of the community charge in the area concerned. Thus, rebates will extend further up the income scale in areas where community charges are high than they do where community charges are low.
Concern has been voiced about the young or the old being forced out by the rest of the family. I must emphasise that rebates will be calculated separately for each individual or couple. That means that young people living with their parents, or elderly people living with relatives, will be entitled to rebates on their own account—irrespective of the earnings of others in the household.
Finally, a further advantage of our new system will be clarity. In future when a charge bill is received it will for the first time be clear exactly what the authorities are spending and what needs to be spent to provide a standard level of service. As my noble friend Lord Nugent of Guildford so clearly pointed out, accountability for overspending will be clearcut.
I should just say to my noble friends Lord Carr of Hadley and Lord Pym that I look forward to discussing details of our proposals with them. I agree with them that some details are not right. That is why I have already tabled amendments to exempt some groups of people and to make changes in regard to others. Rebates will protect those in need and the system as a whole will reflect ability to pay. The proof of those statements is in the fact that the community charge will mean lower bills for many more people. My noble friends' concern is met because the richest households will pay far more towards the cost of local services than those whose incomes are less.
Lord McIntosh of Haringey: There is in the science of rocketry a useful and succinct word. It is the word "failsafe". It means that if something goes seriously wrong with the firing mechanism or the control system, the system shuts down and can be repaired rather than exploding. I suggest to the Committee that my amendments and those of the noble Lord, Lord Chelwood, and his noble friends achieve that. Something has gone seriously wrong, as is evidenced by the contributions which have been made unanimously from this side of the Committee and by a majority of speakers from the Conservative Benches—
Noble Lords: No!
Lord McIntosh of Haringey: I say by a majority of speakers from the Conservative Benches. I believe strongly that this reflects the view not only in the Committee but in the country as a whole. If that is correct the failsafe action for the Committee to take is to give the Government an opportunity to think again, to reject the amendment if it thinks proper—and that may well be the right action to take—and allow them to put something fairer in its place. The Committee has an opportunity to do so by voting for the noble Lord's amendment.
Lord Chelwood: I believe that all Members will agree that we have had an excellent debate which reached the high standard set in your Lordships' House. We have a three-line Whip. When I first joined another place the late Lord Stuart of Findhorn told me that a three-line Whip was an invitation to attend. In other words, one would attend and hopefully, as far as he was concerned, vote for the Government, but it was an invitation to attend. There have been many invitations to attend, and one of the nicest features is that one meets so many old friends whom one has not seen for many years.
I ask Members of the Committee to support the point of view put forward in our amendment. It is that the Government must think again in order to relate the unfair poll tax to people's ability to pay. It must be borne in mind that such a poll tax, as a sole source of revenue for local government, is unknown anywhere else in the world.
This morning I was made an honorary member of the Tufty Club, of which I am very proud. It is a very good club. I thought that it was a night club in Soho but apparently it does splendid work in helping children to cross the road with safety. Its literature includes the words, "Stop, look and listen". I am asking my noble friends who may be thinking of supporting the Government for some reason to "Stop, look and listen". I commend the amendment to the Committee.
5.53 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 183; Not-Contents, 317.

DIVISION NO. 1

CONTENTS

Airedale, L.

Boston of Faversham, L.

Aldington, L.

Bottomley, L.

Alport, L.

Brain, L.

Amherst, E.

Brentford, V.

Ardwick, L.

Briginshaw, L.

Attlee, E.

Brooks of Tremorfa, L.

Auckland, L.

Bruce of Donington, L.

Avebury, L.

Buckmaster, V.

Aylestone, L.

Burton of Coventry, B.

Bancroft, L.

Caldecote, V.

Banks, L.

Callaghan of Cardiff, L.

Barnett, L.

Campbell of Eskan, L.

Basnett, L.

Canterbury, Abp.

Beaumont of Whitley, L.

Carmichael of Kelvingrove, L.

Bernstein, L.

Carr of Hadley, L.

Birk, B.

Carter, L.

Blackstone, B.

Chelwood, L. [Teller.]

Bolton, L.

Chichester, Bp.

Bonham-Carter, L.

Chitnis, L.

686

Cledwyn of Penrhos, L.

Mar, C.

Cocks of Hartcliffe, L.

Masham of Ilton, B.

Cromartie, E.

Mason of Barnsley, L.

Cudlipp, L.

Mayhew, L.

Darcy (de Knayth), B.

Meston, L.

David, B.

Milford, L.

Dean of Beswick, L.

Milner of Leeds, L.

Delacourt-Smith of Alteryn, B.

Mishcon, L.

Molloy, L.

Denington, B.

Monson, L.

Diamond, L.

Morris of Kenwood, L.

Dickinson, L.

Morton of Shuna, L.

Donaldson of Kingsbridge, L.

Mountevans, L.

Donoughue, L.

Mulley, L.

Dormand of Easington, L.

Murray of Epping Forest, L.

Ellenborough, L. [Teller.]

Nicol, B.

Elwyn-Jones, L.

Northfield, L.

Ennals, L.

Ogmore, L.

Ewart-Biggs, B.

O'Neill of the Maine, L.

Faithfull, B.

Onslow, E.

Falkender, B.

Oram, L.

Fisher of Rednal, B.

Parry, L.

Fitt, L.

Pender, L.

Flowers, L.

Peston, L.

Foot, L.

Pitt of Hampstead, L.

Gallacher, L.

Ponsonby of Shulbrede, L.

Galpern, L.

Prior, L.

Geddes, L.

Prys-Davies, L.

Gifford, L.

Pym, L.

Gladwyn, L.

Rathcreedan, L.

Gloucester, Bp.

Rea, L.

Goodman, L.

Ritchie of Dundee, L.

Graham of Edmonton, L.

Robertson of Oakridge, L.

Gregson, L.

Robson of Kiddington, B.

Grey, E.

Rochester, L.

Grimond, L.

Roll of Ipsden, L.

Hampden, V.

Ross of Newport, L.

Hampton, L.

Russell, E.

Hanworth, V.

Ryder of Warsaw, B.

Harris of Greenwich, L.

Sainsbury, L.

Hart of South Lanark, B.

Scanlon, L.

Hatch of Lusby, L.

Seear, B.

Hayter, L.

Sefton of Garston, L.

Houghton of Sowerby, L.

Serota, B.

Howie of Troon, L.

Shackleton, L.

Hughes, L.

Shaughnessy, L.

Hunt, L.

Shepherd, L.

Hylton, L.

Soper, L.

Ingleby, V.

Stallard, L.

Irving of Dartford, L.

Stedman, B.

Jacques, L.

Stewart of Fulham, L.

Jay, L.

Stoddart of Swindon, L.

Jeger, B.

Strabolgi, L.

Jenkins of Hillhead, L.

Taylor of Blackburn, L.

Jenkins of Putney, L.

Taylor of Gryfe, L.

John-Mackie, L.

Taylor of Mansfield, L.

Kagan, L.

Thurso, V.

Kearton, L.

Tordoff, L.

Kilbracken, L.

Turner of Camden, B.

Kilmarnock, L.

Tweeddale, M.

Kirkhill, L.

Underhill, L.

Kirkwood, L.

Wallace of Coslany, L.

Leatherland, L.

Walston, L.

Leicester, Bp.

Warnock, B.

Listowel, E.

Wedderburn of Charlton, L.

Llewelyn-Davies of Hastoe, B.

Wells-Pestell, L.

Lockwood, B.

Whaddon, L.

Longford, E.

White, B.

Lovell-Davis, L.

Wigoder, L.

Lytton, E.

Williams of Elvel, L.

McCarthy, L.

Wilson of Rievaulx, L.

McIntosh of Haringey, L.

Winterbottom, L.

McNair, L.

Young of Darlington, L.

NOT-CONTENTS

Abercorn, D.

Ampthill, L.

Abinger, L.

Annaly, L.

Ailesbury, M.

Annan, L.

Ailsa, M.

Arran, E.

Airey of Abingdon, B.

Ashbourne, L.

Alexander of Tunis, E.

Astor, V.

687

Astor of Hever, L.

Eden of Winton, L.

Balfour, E.

Effingham, E.

Barber, L.

Elibank, L.

Bath, M.

Elles, B.

Bathurst, E.

Elliott of Morpeth, L.

Bauer, L.

Enniskillen, E.

Beaverbrook, L.

Erne, E.

Belhaven and Stenton, L.

Erroll of Hale, L.

Bellwin, L.

Fairfax of Cameron, L.

Beloff, L.

Fairhaven, L.

Belstead, L.

Fanshawe of Richmond, L.

Bessborough, E.

Ferrers, E.

Bethell, L.

Ferrier, L.

Biddulph, L.

Forbes, L.

Birdwood, L.

Forester, L.

Blakenham, V.

Forte, L.

Blatch, B.

Fortescue, E.

Blyth, L.

Fraser of Kilmorack, L.

Boyd-Carpenter, L.

Freyberg, L.

Brabazon of Tara, L.

Gainford, L.

Braye, B.

Gardner of Parkes, B.

Bridgeman, V.

Gibson, L.

Brocket, L.

Gibson-Watt, L.

Brookeborough, V.

Gisborough, L.

Brougham and Vaux, L.

Glenarthur, L.

Bruce-Gardyne, L.

Glendyne, L.

Buccleuch and Queensberry, D.

Goold, L.

Gormanston, V.

Buckinghamshire, E.

Gowrie, E.

Burnham, L.

Gray, L.

Burton, L.

Gray of Contin, L.

Butterworth, L.

Greenway, L.

Buxton of Alsa, L.

Gridley, L.

Caccia, L.

Grimthorpe, L.

Caithness, E.

Haddington, E.

Camden, M.

Haig, E.

Cameron of Lochbroom, L.

Hailsham of Saint Marylebone, L.

Camoys, L.

Campbell of Alloway, L.

Halsbury, E.

Campbell of Croy, L.

Hanson, L.

Carnegy of Lour, B.

Hardinge, V.

Carnock, L.

Hardinge of Penshurst, L.

Cathcart, E.

Harmar-Nicholls, L.

Cayzer, L.

Harris of High Cross, L.

Chalfont, L.

Harrowby, E.

Charteris of Amisfield, L.

Harvington, L.

Chelmer, L.

Hastings, L.

Chilston, V.

Havers, L.

Coleraine, L.

Hawke, L.

Colnbrook, L.

Henley, L.

Colville of Culross, V.

Hertford, M.

Colwyn, L.

Hesketh, L.

Congleton, L.

Hives, L.

Constantine of Stanmore, L.

Home of the Hirsel, L.

Cork and Orrery, E.

Hood, V.

Cottesloe, L.

Hooper, B.

Cowley, E.

Hunter of Newington, L.

Cox, B.

Huntly, M.

Craigavon, V.

Hylton-Foster, B.

Craigmyle, L.

Ilchester, E.

Craigton, L.

Inchcape, E.

Cranbrook, E.

Ingrow, L.

Cranworth, L.

Ironside, L.

Crickhowell, L.

Jenkin of Roding, L.

Croft, L.

Jessel, L.

Cross, V.

Johnston of Rockport, L.

Cullen of Ashbourne, L.

Joseph, L.

Dacre of Glanton, L.

Kaberry of Adel, L.

Daventry, V.

Kemsley, V.

Davidson, V. [Teller.]

Keyes, L.

De Freyne, L.

Kimball, L.

De L'Isle, V.

Kimberley, E.

Deedes, L.

King of Wartnaby, L.

Denham, L. [Teller.]

Kinnaird, L.

Digby, L.

Kitchener, E.

Dilhorne, V.

Knutsford, V.

Donegall, M.

Lauderdale, E.

Donoughmore, E.

Layton, L.

Dormer, L.

Leathers, V.

Drogheda, E.

Lindsey and Abingdon, E.

Dudley, E.

Liverpool, E.

Dundee, E.

Lloyd-George of Dwyfor, E.

688

Long, V.

Rodney, L.

Lothian, M.

Rollo, L.

Loudoun, C.

Romney, E.

Lovat, L.

Rootes, L.

Lucas of Chilworth, L.

Rotherwick, L.

Luke, L.

Roxburghe, D.

Lyell, L.

Rugby, L.

McAlpine of Moffat, L.

Russell of Liverpool, L.

McAlpine of West Green, L.

Sackville, L.

McFadzean, L.

St. Aldwyn, E.

McFadzean of Kelvinside, L.

St. Davids, V.

Mackay of Clashfern, L.

St. John of Fawsley, L.

MacLehose of Beoch, L.

Saint Oswald, L.

Macleod of Borve, B.

Salisbury, M.

Macpherson of Drumochter, L.

Saltoun of Abernethy, Ly.

Sanderson of Bowden, L.

Malmesbury, E.

Sandford, L.

Mancroft, L.

Selborne, E.

Manton, L.

Sempill, Ly.

Margadale, L.

Shannon, E.

Marsh, L.

Sharples, B.

Marshall of Goring, L.

Sherfield, L.

Marshall of Leeds, L.

Shrewsbury, E.

Massereene and Ferrard, V.

Shuttleworth, L.

Merrivale L.

Skelmersdale, L.

Mersey, V.

Slim, V.

Middleton, L.

Somers, L.

Milne, L.

Southborough, L.

Milverton, L.

Stanley of Alderley, L.

Monk Bretton, L.

Stevens of Ludgate, L.

Montagu of Beaulieu, L.

Stockton, E.

Montomery of Alamein, V.

Stodart of Leaston, L.

Moran, L.

Stokes, L.

Morris, L.

Strange, B.

Mottistone, L.

Strathcarron, L.

Mountgarret, V.

Strathcylde, L.

Mowbray and Stourton, L.

Suffield, L.

Munster, E.

Swansea, L.

Murton of Lindisfarne, L.

Swinfen, L.

Nathan, L.

Swinton, E.

Nelson, E.

Taylor of Hadfield, L.

Newall, L.

Terrington, L.

Norfolk, D.

Teviot, L.

Norrie, L.

Thomas of Gwydir, L.

Northbourne, L.

Thomas of Swynnerton, L.

Northesk, E.

Thorneycroft, L.

Nugent of Guildford, L.

Thurlow, L.

Orkney, E.

Torphichen, L.

Orr-Ewing, L.

Torrington, V.

Oxfuird, V.

Townshend, M.

Peel, E.

Trafford, L.

Pennock, L.

Tranmire, L.

Penrhyn, L.

Trefgarne, L.

Platt of Writtle, B.

Trevethin and Oaksey, L.

Plummer of St. Marylebone, L.

Trumpington, B.

Tweedsmuir, L.

Plunket, L.

Vaux of Harrowden, L.

Portman, V.

Vestey, L.

Portsmouth, E.

Waldegrave, E.

Radnor, E.

Ward of Witley, V.

Rawlinson of Ewell, L.

Walkinson, V.

Reay, L.

Weinstock, L.

Redesdale, L.

Whitelaw, V.

Rees, L.

Wigram, L.

Reigate, L.

Willoughby de Broke, L.

Reilly, L.

Windlesham, L.

Remnant, L.

Wise, L.

Rennell, L.

Wolfson, L.

Renton, L.

Wrenbury, L.

Renwick, L.

Wyatt of Weeford, L.

Ridley, V.

Young of Graffham, L.

Rippon of Hexham, L.

Zouch of Haryngworth, L.

Rochdale, V.

Resolved in the negative, and amendment disagreed to accordingly.
6.12 p.m.
[Amendments Nos. 2 and 3 not moved.]
Lord Mulley Lord Mulley moved Amendment No. 4:
Page 1, line l2, at end insert—
("( ) Community charges shall be based on the capital values of all properties in the areas of the respective charging authorities.").
The noble Lord said: I realise that this is something of an anti-climax following the amendment that has just been discussed. I venture to suggest to the Committee that this is the only practical alternative that has been put forward to the proposals contained in the Bill.
The Committee has decided inter alio that one cannot legislate by enunciation of a principle, or that it is not a contradiction in terms, as I believe it to be, to argue that a poll tax in any sense can be a fair or broadly-based tax. The noble Lord, Lord Chelwood, in moving his amendment, referred to the origins of all the arguments about the replacement of rates. In a sense this goes back to the October 1974 election when the right honourable lady the present Prime Minister was the Shadow Environment Secretary. No doubt at the behest or certainly with the approval of the then Prime Minister, the right honourable Mr. Heath, the election manifesto proposed that the rating system should be abolished and be replaced by a broader-based, fairer tax.
The noble Lord, Lord Chelwood, also referred to the fact that at that time the central government contribution to local authorities was around 60 per cent. The implication was that that was insufficient, because the commitment in 1974 was that the whole of teachers' salaries should be met by the Exchequer and that there should be increased grants for police and fire. One of the problems about rates in recent years has been the enormous increases, due, I suspect, to the fall-back in central government support.
The Minister recently gave me the figures in a parliamentary Answer. In 1978–79 the proportion of local government expenditure funded by the Exchequer was 61·5 per cent. On a completely comparable basis he told me that in the last financial year it was 47 per cent. There may have been times in the intervening years when that gap was even greater. While I deplore some of the extravagances in which some local authorities may have indulged, they are minuscule compared with the loss of Exchequer revenue to local authorities, which has been a deliberate policy by the Government.
I have therefore proposed an alternative tax or community charge in a term which is meaningless and emotive. Almost anything could be called a community charge. Indeed, if someone was proposing to replace what is in the Bill by the existing rates system, no doubt that could be sold as a community charge. Certainly I propose to introduce a community charge and abolish the existing rating system.
Amendment No. 4 is a paving amendment because I have produced in 12 short clauses a complete alternative to the present Bill. For reasons which I do not understand, it was not possible for them all to be on the Marshalled List, but I am sure that there are sound reasons for that. I am sure all noble Lords would agree that we are very well-staffed and helped by the Clerks of the House, not least those in the
690
Public Bill Office, and that there are very good reasons why only some of my 12 clauses are on the Marshalled List. If, as I suspect, my proposals do not find favour with the Committee, I shall not move the amendment; I shall immediately withdraw the others on the list because they are entirely consequential.
I propose a tax on the capital values of all properties in the areas concerned for two reasons. First, it would be a very much more economic method of administration because market values are very widely known. The hypothetical rent situation, even if it were brought up to a more modern valuation, is a nonsensical term, as any of us who have tangled with valuation officers or tribunals understand. It very largely depends on what your neighbour's house has been rated at rather than on any attempt to obtain factual evidence of the rent paid in 1972. That is not acceptable as a basis of appeal.
I have a feeling that on my proposal there would not be many appeals at all. A large saving could be made there. I do not see many property owners going to the tribunal and saying that their property has been overvalued. I am extremely concerned about the enormous administrative costs that the proposals now before the Committee involve. I believe that they amount to an administrative nightmare. The honourable and gallant Member in the other place, Mr. Mates, attempted to link them with the rates of tax. The Layfield Report of 1976 is perhaps the most thorough study of local government finance that there has been. Unhappily, it did not come up with any convincing recommendations, although it spoke rather favourably of the proposal that I am now putting before the Committee. I do not know until, belatedly, I send in my income tax return and, even more belatedly, I receive my assessment, whether I am in this or that particular tax bracket. Anything to do with income tax being linked to the poll tax would be akin to an administrative nightmare in a padded cell. Therefore, I cannot recommend this measure to the Committee.
While I had the privilege of occupying Mr. Gladstone's room in the House in Canterbury Quad for a year, I cannot claim that I had any nightly visitations by a ghost giving me any guidance as sound financial proposals. I was very much impressed by that great man's doctrine that it was nonsense to impose any kind of tax, a substantial part of which was to be involved in its collection. We have already heard the figures; namely, that setting up the present system will cost about three times the Government estimate—not £80 million a year but £266 million a year—and a very substantial additional cost each year in collecting the tax.
The possibilities for evasion are enormous, whereas my system would be simple, cost-effective and, I believe, fair. At present landlords can collect rates on behalf of their tenants and pass on the element of rates that the tenants are paying on rented property. I make a provision to give effect to that.
I object very strongly to the enormous amount of money which will be frittered away in administration which could be spent on better local services, housing, the environment and social provision

691
instead of on the bureaucratic imposition that this Bill provides. For simplicity, I am bound to say that I have relied very heavily on delegated legislation, but no more so than the Bill which is before the Committee. The Secretary of State has existing powers which are much wider than necessary because they cover everything that could possibly be thought of and anything that may occur to him in the future. I see no reason why all these measures are necessary.
My amendment so provides that Parliament has full powers and orders that are laid in draft form in the affirmative rather than in the negative procedure. I believe this to be a very practical and proper alternative which would meet the commitments that the Government understandably feel that they have in the light of their 1987 commitment for a fairer community charge. Without unduly treating the word "fair" as a piece of elastic, I do not believe anyone can pretend that the present proposals amount to any such thing. As I have said, I object very strongly to the money being frittered away. It reminds me of a very old story of two learned counsel talking after what had promised to be a lengthy dispute about a large will which surprisingly came to an end. One said to the other: "Well, it is a sad day. It looks as though practically the whole estate will be frittered away on the beneficiaries". I believe that the Bill before us is doing that with public money. I beg to move.
Lord Rippon of Hexham: I did not feel that I could support the first amendment, not only on constitutional grounds but because I believed, like others of my noble friends, that it was not merely nonsense but nonsense on stilts. However, this is a much more serious amendment and one which I believe it is right that the Committee should consider as an alternative. My own view is that it is not an alternative which is practicable at the moment. As I said at Second Reading, I have a fear that the community charge—whatever arrangements are made about rebates or exemptions—will not in the long run provide a sufficient base for local government expenditure to be independent. It will raise only a quarter of the money required.
Therefore I believe that the Government would be wise to keep an option open for review in the future. There is a strong case to be said for a revaluation based upon capital values. That, of course, should have taken place years ago and is one of the reasons why we have this Bill. I hope the Government will indicate that both for business and domestic premises any revaluation for any purpose in the future shall be on capital rather than rental values.
In saying that I do not believe that the community charge will be an adequate base. I have in mind that that was the view originally taken by Her Majesty's Government. The Conservative Campaign Guide of 1983 states:
"If a poll tax were used to supplement another tax … the tax rate would obviously be lower, and it is in this way that a poll tax is most likely to be able to contribute to a system of local revenues."
The campaign guide later continued:
"A local sales tax or local income tax, combined with either a poll tax or domestic rates retained at a lower level of yield, could replace
692
the present system, but would entail correspondingly higher administrative costs".
It has been contemplated by the Government that there ought to be, as it were, a combination of the present rateable system and the community charge. I accept that it cannot be done at the present time and that it would be quite a lengthy process. It will also need consultation with the local authorities.
I should like to have a discussion of the possibility of having a combined community charge and restoration of the old system of rateable values carried out on the principles set out by the Prime Minister when, in opposition, she spoke on 27th June 1974 at col. 1759 on the need for a fundamental reform of local government. On that occasion she said:
"First, any fundamental changes must be considered in conjunction with the powers of local authorities, their degree of independence and the nation's philosophy on the distribution of power. Local authorities carry out their tasks better than Whitehall could, although many of us may have criticisms of the way that some of them discharge their duties from time to time.
Second, before adopting major changes local authorities would have to be consulted. That is obvious. To do otherwise would be high-handed and arrogant."
I believe that one of the reasons why the Government have run into difficulties on the reform of the rates is that there has not been sufficient real consultation with the local authority associations. I know that they are very apt to criticise everything and to find the difficulty that we all have in finding an alternative system. However, I hope that the Government will give some consideration to the concept put forward by the noble Lord, Lord Mulley, and leave the way open for amendments in the scheme. As the noble Earl, Lord Halsbury, said in the earlier debate, one does not always anticipate the difficulties that may arise when it comes to the time of implementing a scheme.
6.30 p.m.
Lord Dean of Beswick: The noble Lord said that he thought in this particular matter that the Government had been high-handed and that there had not been sufficient consultation. Surely the noble Lord must be aware that since the time of his distinguished tenure as Secretary of State for the Environment, when I was part of a local government delegation that met him on the Housing Finance Act, successive Secretaries of State of his own party—including his colleague the noble Lord, Lord Jenkin—have almost completely denied and denuded local government of some of its major responsibilities. Without any consultation whatsoever, local government has been butchered year after year by his successors.
Lord Rippon of Hexham: I have certainly not been uncritical of previous legislation on local government introduced by Conservative governments. I opposed the 1981 Act, which I said was unworkable and disastrous: and so it has proved. That is why we need to have this Bill, with all its imperfections. I did not say I thought that the Government had been arrogant and high-handed. I only said that the Prime Minister herself has emphasised how important it is that they should not be. Therefore, although I know well that local authority associations do not feel that all consultations have been as good as they ought to

693
be, I feel that the Government should keep options open in regard to this Bill, and certainly be receptive to the concept that it may be necessary to buttress the community charge by some other form of taxation within the framework of local government, if we are to have truly independent local government in this country.
Lord Houghton of Sowerby: It is not very clear at the moment whether we can discuss any of this subject usefully, after the decision taken by the Committee a few moments ago. I think it is a great pity if we cannot spend just a little time, not perhaps on the possibility of an alternative now or a substantial alteration of the present scheme now, but on something to be borne in mind if things go wrong, or if there is an emergence of fiscal considerations which require attention.
I believe that the combination scheme which was referred to apparently in the manifesto, so the noble Lord, Lord Carr, said, had its attractions. It avoided putting the whole weight of local tax revenue upon the community charge. The difficulty about the community charge is that nobody really knows how much it is going to be; and all theories about taxation systems are difficult if people are not told what the charge is likely to be.
I well recall my noble friend Lord Callaghan, in 1965, when he was Chancellor of the Exchequer, putting out a paper on his proposals for the corporation tax. That paper went into a great deal of detail on the nature of the tax, how it was to be constructed, what the reliefs from it would be, and so on. But the cry went up from the whole of industry, "How much will it be?" And my noble friend could not proceed with the discussion because he was met with this demand of, "Tell us what it is going to be". In the end he was driven, in order to get discussion on the merits of the structure of the tax, to say, "It will not exceed 45 per cent". Then of course everybody began to consider that Bill on the basis that it would be 45 per cent. Actually it was a little less.
I am mentioning this only in order to show how difficult it is to get people to approach a novel project realistically without rising anxieties, when they are not told what it will be. This is the pig in the poke; and people would like to see it a little more clearly.
Another thing we have to bear in mind about the community charge is the element in the concept of that charge which I would call a combination of social responsibility and financial discipline. We have heard a great deal during the debate just now of how everybody will be watching, as well as paying, the community charge and the level of the charge. There will be an accountability by the local authority to the citizens to a degree that is not present under the existing rating system. I think, if the Government are going to be satisfied with the scheme they propose, it must have that element in it.
Instead of saying that all ratepayers shall pay all, the Government say all shall pay. Bearing in mind the concessions and rebates that are being allowed, there will be a charge of 20 per cent. of the community charge which will rest even on the beneficiaries of
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social security. If their income is not enough to enable them to pay on social security, the social security benefits will be increased to cover the minimum which they will have to pay on the 20 per cent. basis.
The point is that the Government want this to have a moral content; they want this to have something to do with the attitude of people towards their local authorities and of the attitudes of the local authorities towards their taxpayers. So when I raised the question: "Can we not have a general tax deduction scheme since everybody has it for pay as you earn, however large or however small the salary?" the response of the Leader of the House, when it came, was: "We want people to dig into their pockets for the money." They do not want to make this painless; they want it to be most noticeable. I think that this element in the matter is going to be of very great psychological importance. People will probably put up a great deal of resistance to it.
A combined scheme to include capital values of domestic dwellings has considerable attractions, because one thing that is widely known is house prices. The difficulty about the rating system is that it is based on a hypothetical annual value to let, and there is no market in lettable houses. Rent restrictions with famine prices, for example, make it very difficult to get an annual value, but house prices are there for all to see and the Inland Revenue have more information on house prices than anyone else in the country. Indeed, they issue information in connection with an allowance which is given in the Civil Service, which is called the additional housing costs allowance. We know what the average rise in house prices has been over a period. There is computerised information available in the hands of the valuation officers of the Inland Revenue which could give a valuation of house prices within a matter of weeks. It could be adjusted every year, every 18 months or every two years in order to bring in a new basis of assessment.
Some payment by people who are enjoying the benefit of these very large capital appreciations surely is necessary. The Chancellor of the Exchequer will have to tap this source of revenue sooner or later; if local authorities do not get it he will want it. He cannot let it go very much longer because for owner-occupiers with subsidised mortgages to be benefiting as they are from the capital value of their houses, to be able to pass them on to their spouses without paying inheritance tax, and to have the exemption limit of inheritance tax raised in such a way as to give them a bigger proportion of their gains tax free, is something in capital appreciation which is not being tapped. It is really scandalous that workers and pensioners should be charged income tax on their actual earnings or income while these hidden capital gains are not being caught at all.
The prices that terraced houses are fetching in different parts of the country are absolutely out of this world. For example, a terraced house in Tonbridge commands £55,000. Conditions are similar all over, right from beginning to end, regarding the price of all properties. In Watford £84,000 is the average price of all houses. This is where the capital gains are coming in and they could have been a supplement to the community charge.

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In fact, I think we still have to face the fundamental problem, whether the rate of the community charge will be regarded by those who have to pay it as being one within their means and one with which they are prepared to come to terms. It would have been very useful indeed, I think, to have had a fall-back or a partner in regard to the change in local government taxation. When I visited a tribal gathering of tax gatherers and valuation officers last week this scheme was impressed very strongly upon me together with the ability of the administration to produce all the information to make it possible. It is not just a little idea in the wind; some people have been thinking about it. I should not be surprised to see The Times soon giving prominence to a detailed scheme of this kind. I submit that we cannot do anything practical about it now. I do not think that the Government should get impatient if they are given a little addition to their thoughts or some fresh considerations. They may need them one day soon.
One realises what is envisaged for the defaulter. Members of the Committee should bear in mind that under Schedule 4 the local authority has only to go to court with a list in default and the court confirms the list in default. It does not have to listen to anyone. The local authority can go straightaway to the employers and demand attachment of wages. Are there to be tens and hundreds of thousands of workers with attachments on their wages and little or no opportunity to go through the normal process of the law?
This we shall come to on Schedule 4. One has no idea how the normal protection processes of going to court will be invaded before a person's wages can be grabbed or a distraint put upon him. That is why the noble Lord the Leader of the House was saying that local authorities will have ample means of enforcement—what a means of enforcement!—if there is any degree of resistance to it. I do not know what the end of people's patience may be on this. If there is a strike on the community charge, both the local authorities and the Government will be powerless. We are then faced with a serious social situation. If the Government are legislating against public opinion and against better advice in many quarters, then they run a very serious risk. They must bear that in mind all the time. We shall see what happens when the next by-election comes.
6.45 p.m.
Lord Thorneycroft: I should like to say a word in answer to the debate so far. I do not want us to continue debating the community charge. The Committee has just had a long and valuable debate upon it.
I join in paying a compliment to the noble Lord, Lord Mulley, for having put a proposal before the Committee. The last amendment was not really a proposal at all; it was that we should go away and think of something. The noble Lord, Lord Mulley, squared his shoulders and said, "Look, I'll put something on the table. Here is a proposal."
My record in this area is appalling. I have about the worst record of anybody. I clung to the rates
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when the party was saying that it wanted to abolish them. I said that the consequences would be appalling because of the immense difficulties of any alternative. I am old enough to be able to say these things. I realise that I must have been wholly wrong. But there were elements of truth in what I was saying. I was chairman of the Conservative Party, and I was a politician. One would have to be a pretty dumb politician not to realise that to abolish the rates without having a very clear idea what one was going to do next was likely to land one in a certain amount of political trouble. That is the view I took at the time.
The noble Lord, Lord Jenkin of Roding, in a brilliant exposé of the problems and of the situation at Second Reading, mentioned that there was a moment when the Conservative Party backtracked and put into its manifesto that rating was likely to remain for a considerable time in the future an important source of revenue in local government. I confess to Members of the Committee that that was my doing. I do not write history but I write, so to speak, the footnotes to history. I am rather good at that. The footnotes are interesting, and sometimes quite important. For a time, I held the field. I thought, as I had been of great service to my party, that we could tinker with the rates a bit. Indeed, I was very near to the position of the noble Lord, Lord Barnett, in the earlier debate: he was feeling rather the same way. I hung on to it, but it would not last.
The noble Lord, Lord Jenkin—he did much better than I—became Secretary of State for the Environment and had direct responsibility for dealing with these matters. He looked at the question very closely. In a speech of great power, he convinced the House. I think that the whole Committee would say now that only a madman would suggest that we hold on to the rates. I read the Layfield Report. It seemed to me that all the proposals were frightful. The noble Lord, Lord Mulley, is right. It is true that the report included as an option a widespread property tax including agriculture. It was very emphatic upon that. It said that we had ruined the rating system by taking agriculture out of it and then by excusing most people from paying rates. It wanted a property tax that everybody would have to pay. I ask the Committee to go a little slowly. We have just imposed a community charge on people. Before we think of imposing a property tax on them as well, we ought to hesitate a little. There is a limit to what the public are prepared to pay.
Moreover, while there may be something to be said for a property tax including agriculture, I am not quite clear that this is what the Opposition will urge. It is the first time that I have heard it. I do not know how lonely the noble Lord, Lord Mulley, is. No doubt someone on the Opposition Front Bench will say what they intend. If it be the official policy of the Labour Party that there should be a widespread property tax bringing in all farms in the country and if the bishops feel the same—they too have an important role in these matters—and are of a mind to support it, I think that they ought undoubtedly to say so. However, I warn them that if they do, they will be in even worse difficulties than the Government in the last debate. They will find great opposition to it.

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In the circumstances, I believe the principle to be followed is that everybody ought to pay something and the rich by far the most. If one sticks to that principle, one is doing fairly well. That is exactly what the community charge, combined with income tax, does. Let us stick to that. It has only just been approved. Let us not go scouring round for other horrible taxes, all of which raise even more political difficulties.
Lord McIntosh of Haringey: I have been enjoying the speeches so much that I hesitate to intervene. I am looking forward to the interventions of the noble Lords, Lord Boyd-Carpenter, Lord Jenkin of Roding and Lord Renton, and of any other noble Lord who feels like joining in. Having been challenged by the noble Lord, Lord Thorneycroft, I think I have to make it clear that it is not the policy of the Labour Party to replace the community charge with capital value rating. I am sorry to have to say that to my noble friend Lord Mulley, but we are allowed at least the same degree of dissent about the means to be adopted as that which exists within the Conservative Party. I happen to think that the method proposed by the noble Lord, Lord Chelwood, and myself in our amendments was the right method. I think that we were right to attempt to put the responsibility on the Government of the day, with all the resources at their disposal, to find the correct solution to this problem. I recognise that this is the alchemist's stone anyway, but attempts to do it from the Back-Benches of either side of the Committee are not likely to achieve success.
However, there are a number of myths about the differences between the various methods of collecting revenue for local government. One of those myths was clearly in the mind of the noble Lord, Lord Marsh, when he thought that, because the capital value of domestic properties had gone up in particular parts of the country, capital value rating would somehow automatically mean a huge increase in the amount collected from those properties. As I tried to point out to him, without success, if the total capital value of properties in a given rating authority increases and yet the amount of money which is required for local services does not increase then the rate poundage will go down and we shall find ourselves in a zero sum again. There will be gainers and losers, of course, but it will not be anything like as dramatic as has been suggested.
Having said that, I think that the proposals of my noble friend Lord Mulley deserve serious attention, and I shall say why and to what extent. The reason they deserve serious attention is that, unlike non-domestic rating, in domestic rating the concept of a rental value for domestic property is now exploded. It has been disappearing over the years, as the percentage of owner occupation has increased. It has now reached the stage where it is a totally artificial construct which could not be the basis for a revaluation of domestic property of the sort that we had in the past.
One of the reasons that there have been fewer revaluations has been the recognition that the rental system is not an appropriate way of doing it. To that
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extent, my noble friend is certainly right. What I want to say to him—and I say it in the presence of a number of very alert noble Lords on the Government Benches—is that in the ultimate solution to paying for local government, capital value rating will play a part. If I go on to say, in response to the amendments to be moved by the noble Lord, Lord Taylor of Gryfe and Lord Ross of Newport, that in the ultimate solution to the system of financing our local government, local income tax will also play a part, noble Lords may well deduce that I am being dragged, kicking and screaming, into the position where I am stating some part of the Labour Party's policy for local government finance. There is no formal Labour Party policy for local government finance.
Noble Lords: Oh!
Lord McIntosh of Haringey: I do not think that there is any secret about this. A lot of play was made of it as the Bill went through another place and my honourable friends and right honourable friends stuck by the position that we were still consulting with the relevant authorities and with people generally. I think that that is an honourable position to stick to.
I am saying what I think will finally come out of this period of consultation which is now drawing to a close. I am not saying the exact form in which these things will take place. I am not saying even as much as my right honourable friend Roy Hattersley said in a speech in April when he explained much more clearly than I am able to what the final solution will be. But we shall have to go into the next election with a policy which will be positive and realistic. I think that the basis of that policy will follow the lines of the wise words of the noble Lord, Lord Carr of Hadley, in our previous debate. He said that there are huge difficulties in any single solution to local government finance and that, even though it sounds more complicated, a combination of taxes may well prove to be a necessary alternative to a single solution.
I am as firmly as ever of the view that the single solution of the community charge is not only unfair and unjust but electorally disastrous for the Conservative Party, as the noble Lord, Lord Carr of Hadley, himself thought. Some combination of local income tax and capital-based rating will, I am sure, form a major element of my party's policy in the next election.
I could not ask the rest of my noble friends to support the amendment of my noble friend Lord Mulley because I think that it is over-simplified. It contains great difficulties, some of which were pointed out by the noble Lord, Lord Thorneycroft. However, it is a valuable and necessary contribution to the debate, as no doubt will be the debates on local income tax which we shall have later on this evening. It is important that we should ventilate these matters when we are considering the Bill in Committee. I do not think it at all likely that we shall reach the ultimate solution, but I congratulate and thank my noble friend for moving his amendment.
Lord Boyd-Carpenter: I imagine that the noble Lord, Lord Mulley, is feeling a little lonely after that speech—lonely and abandoned. But I think he can take consolation that the debate on his amendment has been made fully worth while as producing that admirable statement from the Dispatch Box by the noble Lord, Lord McIntosh of Haringey, to the effect that the Labour Party has no policy for local government finance. We have often suspected that. Now we have it, if it does not sound discourteous to put it that way, from the horse's mouth. Indeed, he might have gone a little further and dropped words "local government", because the Labour Party really has no policy for finance at all.
I am sure that Members of the Committee enjoyed, as I did, the reversion to type of the noble Lord, Lord Houghton of Sowerby, when he could not resist expressing his indignation that there should be any form of wealth which was not taxed. That comes so well from the former very distinguished general secretary of the Inland Revenue Staff Federation and shows how strong the instincts acquired in earlier life remain later on.
I do not think we need waste very much time on this amendment, particulary in view of what the noble Lord, Lord McIntosh of Haringey, said. Apart from anything else, it is completely in conflict with the decision of the Committee taken a short time ago on the amendment of my noble friend Lord Chelwood. It is clear that the Committee favours the community charge and it registered that by a very, very large majority.
This amendment would substitute a totally different form of tax. Indeed, it is also subject to a rather stronger degree to the constitutional objections expressed to the earlier amendment by my noble and learned friend Lord Hailsham. If this Committee were to legislate into the Bill a totally new tax, I cannot but believe that the Commons would regard that as an invasion of their privileges. I do not recall any occasion on which this has been done—I speak subject to correction—but I have very little doubt what the reaction of the Commons would be.
Finally, there is this great objection, as contrasted with the community charge: this different form of tax does not involve the establishment of accountability. The essence of the community charge is that people shall pay, sometimes in limited amounts, for the policies for which they vote. Under this amendment we should go back to the old, evil situation of rates, where people could vote at local authority elections for high expenditure in the happy consciousness that they would not have to pay for it.
7 p.m.
Lord Jenkin of Roding: I listened with gratitude to the kind remarks of my noble friend Lord Thorneycroft only to have murmuring in my ear my noble friend Lord Kaberry of Adel saying that I shall never make another speech on this Bill. But I shall because of course a number of issues will arise on which I wish to speak. However, I sense that the Committee wishes to reach a conclusion on the amendment of the noble Lord, Lord Mulley.
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I only wish to make one point about the amendment and address it to those of my noble friends who would still like to flirt with property taxes as a source of revenue for local government. I shall not repeat what I said in my Second Reading speech about the complexity and the obscurity of the resource reallocation mechanism that has to be written into the rate support grant under the present system because the rateable resources of different authorities vary widely.
If we go to capital values as the noble Lord, Lord Mulley, is suggesting, that problem will be greatly exacerbated. The resource reallocation that it would be necessary to apply through the grant mechanism is now wholly dispensed with because it does not apply under the community charge which the Committee has recently approved in the Division. Any element of capital values as a source of revenue would involve reintroducing what to my mind and what in the eyes of many of those who had to administer the system both in central and local government is the most obscure system of the lot. That was the system whereby areas with higher than average rateable values subsidised areas with lower than average rateable values. As the disparity in capital values is very much wider than the disparity in annual values that are used to establish rateable values that problem could only be made worse.
To my noble friend on the Front Bench I say hearken with care to the words of my noble friend Lord Rippon. I think that we need to be very cautious before we contemplate adding new property taxes. After all, one of the strongest arguments which was made by many speakers in the previous debates on the attractions of the community charge is that it is essentially a people tax to finance people services. Property taxes date from the time when only property owners had votes. That is not the case now. We need a radical reform and we seem to be well on the way to getting it. I for one am very pleased.
Lord McIntosh of Haringey: Before the Minister replies I hope that he will be prepared to reply to the quite extraordinary assertion made by the noble Lord, Lord Jenkin of Roding, that there will no longer be any resource reallocation problems between local authorities if the community charge comes into effect.
It is certainly true that the Bill as drafted does not specify at all in which way the rate support grant, which is to be introduced when the community charge is in effect, will work. It leaves it all to regulation, and we shall have many things to say about that in Committee as the Bill proceeds. However, the noble Lord cannot seriously be saying that the community charge resolves the resource allocation policy and that the needs of local authorities are related directly without any need for adjustment to the number of people paying the full community charge.
Lord Jenkin of Roding: I shall take the noble Lord's address as an intervention and respond. I think that he is confusing needs with resources. Of course the new grant will take full account, hopefully on a rather clearer and more rational basis than the existing rate

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support grant, of the differing needs of different authorities. That is part of the beauty of the tripartite system.
That system comprises the grant based substantially on needs as measured by a number of indicators: for instance, the number of one-parent families, the number of pensioners, the miles of roads and other factors; the non-domestic rate redistributed on the basis of population—those being as it were the flywheel of finance for each local authority—and then the community charge of about a quarter coming in on top. But it would mean that for every extra £1 of expenditure above the standard amount that £1 per head is met by the community charge.
I stand by what I said. It is quite clear that the more one debates this subject the more one realises that this measure represents such a revolution that even so perspicacious a person as the noble Lord, Lord McIntosh of Haringey, still has not quite grasped the sheer beauty of the new system.
I was impressed by the speech of the noble Lord, Lord Harris of High Cross, on Second Reading. He had addressed his extremely agile and perspicacious mind in detail to the Bill shortly before the Second Reading. He would like to see more direct charges for services, but he too came to the Chamber and recognised the ingeniousness of this system and the way that the three parts of this means of financing local government actually hold together and will constitute for the first time a system to provide accountability, as my noble friend Lord Boyd-Carpenter has said.
A property-related tax does not impose accountability on any more people at all. There is no increase whatever in accountability with that tax. I believe that we would need to look at a capital values tax with extreme caution. I hope that my noble friend on the Front Bench will be able to reassure us on that.
Lord McIntosh of Haringey: I was specifically complimented so I hope that the Committee will forgive me for intervening again. I now understand why I disagreed so violently with the noble Lord's rate support grant settlements when he was Secretary of State. If he did not understand then and does not understand now that needs and resources are a seamless robe and he does not understand that the distinction he is making between them is a totally false distinction, then he does not understand what will happen to rate support grant under the new system and we shall have some very interesting debates later on in Committee.
The Earl of Caithness: Although I too must congratulate the noble Lord, Lord Mulley, on coming forward with an alternative to the community charge, I must confess to the Committee that I was rather surprised by his amendments which seek to introduce a system of domestic rates based on capital values. I am surprised because I thought until just now that he was introducing the policy of the Labour Party.
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Some of the Members of the Committee may remember that before the local elections in 1987 the Labour Party declared itself to be in favour of capital value rates. Then during the general election campaign both the Leader of the Opposition and his local government spokesman said that they had absolutely no intention of introducing a system of capital value rates. The Committee may perhaps recall that the Opposition spokesman said at the time that the Labour Party needed capital value rates as much as it needed a hole in the head. With the Committee's permission, I shall probe a little further into the history of the Labour Party's policy—or lack of a policy—on capital value rates. After the general election—
Lord Mulley: I gave no suggestion that I had any authority or desire to present a Labour Party policy. Everything I said, as always in this Chamber, is said on my own personal responsibility.
The Earl of Caithness: That is exactly why I phrased my words "until just now", because it is clear that the noble Lord, Lord McIntosh, disowned the policy of the noble Lord, Lord Mulley. After the general election, despite having disowned capital values, the Opposition appeared to be moving back towards some degree of support for capital value rates, but this time combined with a local income tax. In a speech last month, the right honourable Member for Birmingham Sparkbrook, the Deputy Leader of the Opposition, announced his party's support for this dual approach. My right honourable friend the Secretary of State immediately wrote to him, pointing to the vacuity of his proposals and asking for further details, so that we could produce exemplifications showing how such a system would affect bills for local services. That letter was sent on 13th April. As of today, I regret to say that we have received no reply. Can I ask the noble Lord, Lord McIntosh, when we can expect a reply?
Lord McIntosh of Haringey: I doubt whether the Secretary of State can expect a reply at all. I made it quite clear when I spoke a few minutes ago that the final policy of the Labour Party to be put forward at the next election had not been finalised; nor has the final policy of the Conservative Party on a large number of issues presently facing this country. The press is full of discussions of options available to the Conservative Party for policies on major matters of state. In that, the Labour Party is no different from the Conservative Party or any other party. We should be quite foolish to give precise details of the legislation we shall introduce after the next election in the period before a general election.
The Earl of Caithness: I am grateful for that clarification that the hard work done by my department to help the honourable gentleman the Deputy Leader of the Opposition will not receive a reply.
I need hardly add that the Government take a much firmer, clearer and more decisive view of the matter. We have consistently pointed out the unfairness of a system of rates based on capital values. We are unwavering in our opposition to such

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a system. On the face of it. I admit that capital value rates sound rather attractive. Everyone knows more or less the capital value of their own home. It is important not to be carried away by that superficial and illusory advantage. Changing one detail of the rating system will do nothing to solve its fundamental flaws. Capital value rates would still be paid by a minority of the electorate. There would be no improvement in the accountability of local authorities to voters. A single pensioner would still pay the same rates bill as four wage earners living next door in an identical house.
The more closely one looks at capital values, the more apparent it becomes that the advantages are superficial. Capital value rates would be even less closely related than rental values to people's ability to pay. Capital values vary far more across the country than either rental values or average incomes. Therefore I must say to my noble friend Lord Rippon that we believe that rental values should remain the basis for non-domestic rating.
Furthermore, my noble friend Lord Jenkin of Roding put his finger on the most important point, which is that we should still need resource equalisation. That would leave us in the same iniquitous position as we are in with rental value rates, where poor people in areas with high house prices would subsidise wealthier people in low cost areas. That cannot happen with a flat rate payment such as the community charge.
It would also mean that the grant system could not be simplified. People would be left in the same situation that they currently find themselves in, with no clear idea why their rates bill is at a particular level and why it changes. That would thwart any attempt to introduce genuine accountability into the system.
I ask the Committee to bear in mind that house prices frequently rise much faster than incomes, particularly if a householder is retired. It would be grossly unfair to tax tenants on the capital value of their homes if they can never benefit from that value. I need hardly add that a revaluation on the basis of capital values would cause massive disruption. A million households would face increases of over 80 per cent.; over 2½ million households would face increases of 50 per cent. or more. Such turbulence would be impossible to justify when the end result would be a system which, as I have said, would continue to be both unfair and unaccountable. Whereas the unfairness and complexity would remain, fresh disruption would occur every time there was a revaluation because capital values would increase at different rates in different areas and between different types of property. Each revaluation would therefore change the relative rates burden people face, which would not necessarily be reflected in changes in income.
Baroness Seear: Perhaps I may intervene briefly. Is there confusion here? If the local authority wants a total sum of money, it wants that total sum of money. The amount that people pay is not affected by the valuation. Given that the authority wants to raise a total sum of money, it wants that total sum of money. The amount that people pay is not affected by the
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relation to B. The total sum will be the same. An increase in the valuation will not increase the amount that is paid. It will alter the relationship between what you pay and what I pay. It will not go up. The amount paid will fall. This is a matter of arithmetic and not a matter of politics.
7.15 p.m.
The Earl of Caithness: I beg to differ. Having been a surveyor and having implemented the revaluation of 1973, I can assure the noble Baroness that despite the revaluation people paid more entirely because of it. If she casts her mind to Scotland, where there was a revaluation two years ago, she will find exactly the same thing happened. In theory the noble Baroness is right; in practice it does not work out like that.
For all those compelling reasons, capital values must be rejected by the Committee as a fundamentally unfair basis for taxation. I have no hesitation in urging the Committee to reject the amendments.
Lord Mulley: To make it abundantly clear, I repeat that my proposals and my speech today, and indeed all my observations in this Chamber, are my personal responsibility. I appreciate that we have had a good debate on what I believe to be an important matter.
While I normally have great admiration for the speeches of the noble Lord, Lord Boyd-Carpenter, I was surprised that he, with his vast experience, thought that the vote on a previous amendment was an endorsement of the community charge as drafted. As regards that amendment, the Committee decided not to add a rider which would probably have been difficult if not impossible to fulfil. Until Clause 1 stands part of the Bill, no one can say that the Committee has at this moment in time decided to proceed with the community charge. My proposals would replace the present proposal by a community charge—that is an emotive and meaningless phrase in any case—of a different character. In no sense is it meant to be additional to the proposals in the Bill. I shall give way to the noble Lord.
Lord Boyd-Carpenter: Perhaps the noble Lord will allow me. He is quite right to speak of the terms of the previous amendment. However, if he had listened to the debate as closely as I did he would realise that practically all the proponents of the amendment were arguing against the community charge. They were using the amendment simply as a vehicle to try to reverse the community charge. The Committee spotted that and reversed them.
Lord Mulley: I am even more surprised if the noble Lord believes that the decisions of the Committee are someone's interpretation of a debate rather than the text of the amendments which are proposed and passed or turned down. I am old-fashioned enough to believe that the process of clause stand part is what matters rather than what may or may not be said. However, I shall not detain the Committee further, beyond saying that in no sense is my proposal additional to what exists in the Bill. I have no motive of a personal kind. I suspect that if my proposals were to be adopted I should be paying more in local taxes

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than I would under the proposals contained in the Bill.
If I were a more partisan politician, I should welcome the Government's determination to commit political suicide. That is what I believe they are intent on doing. Having suffered the agony of watching my own party trying to cut its throat with a blunt razor, I do not think, seeing the present Government in the first year of a new Parliament embarking on a similar course, that that can be in the national interest. They ought to reconsider what is being proposed.
At a later stage, I shall propose the abolition of the rate support grant and any related grants. I think they are a bad system. As a Labour Member of another place, I remember spending a great many hours voting against the introduction of the rate support grant. When I became Secretary of State for Education at a later stage and had occasion to study the great Butler Act of 1944, I found that practically all the powers which I had under that Act had been taken out by a series of asterisks that referred to the introduction of the rate support grant.
The simplest method is a local tax of the kind which I have proposed, coupled with a greater provision (as was proposed in the Conservative manifesto of October 1974) from national revenues which we hope would be based rather more than they are now on the ability to pay. One could devise a grant system which would give a sufficient amount of local independence and also a sufficient amount of central government provision. I sense a lack of enthusiasm on the part of noble Lords to grasp the nettle of reality at the present time. I suspect that that means a determination and dedication to go though many days and nights on the 151 pages of the Bill before us. While I admire such a dogged approach I confess that I shall not be sharing very much in those deliberations.
I believe this to be one of the worst drafted Bills to have been sent to us in recent years. I know that that is a very extravagant claim but I put it forward as a serious candidate for that doubtful distinction. While I could find many examples, I should like to refer briefly to Clause 16. I suppose in this day and age it is necessary to say that a marriage must consist of a man and a woman. Also, since social trends dictate, I can well understand that it is necessary to say that if they are cohabitating in a household, for the purposes of the Act they will be regarded as being married.
What puzzles me is that the Bill goes on to say that in order for a marriage to qualify as a marriage under the Act it has to subsist for one whole day. I imagine that it would be possible to evade the community charge if a couple could say that at breakfast every day they had a dispute and were never sure that the other party would return for the evening meal. Then their so-called marriage would not have existed for the whole of the day in question. There are many similar examples in the Bill and I wish noble Lords well in going through them.
I should like to add one final remark. I hope that the Minister, whose masterly approach to his earlier briefs has impressed me, will have himself briefed on
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the way the rating system works, the relationship between the rateable value and how the amount payable is worked out on a poundage basis. I expect that as a surveyor he knows that the penny rate used to be a very good standard of comparison. Quite clearly it would mean that in those areas where capital values have gone up substantially the rate in the pound would be lower than, for example, in the North of England where through adverse economic circumstances they have risen less sharply and the rate in the pound would be greater. While I do not say whether that should be domestic or commercial, I am proposing that it should be both but with provision for the Secretary of State, if he thinks fit, to vary it by order.
I understand that noble Lords want a pause in what will be a very long deliberation. Therefore I ask leave to withdraw not only this amendment but also all the other amendments standing in my name on the Marshalled List.
Amendment, by leave, withdrawn.
Lord Hesketh: Perhaps I may suggest that now would be a convenient moment to break for an hour for dinner. I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
Lord Ponsonby of Shulbrede: My Lords, before we take the next business, perhaps the noble Lord will indicate that we shall not return to the Local Government Finance Bill before 8.25 p.m.
Lord Hesketh: Yes, my Lords.

Protection of Animals (Amendment) Bill
7.25 p.m.
Lord Houghton of Sowerby: My Lords, I beg to move that the Bill be now read a second time.
It is purely a coincidence that I have the honour to introduce the Bill in the middle of the Government's morality drive, which is rapidly gaining momentum. I hope that as the movement continues for a higher standard of ethical conduct and religious belief we shall hear something about the relations between people and the animal kingdom and their pets, and about cruelty. I think that there are other sins against the light than those which relate wholly to human beings.
It is not without relevance that we read of a testator who left £7 million to three cat charities. Together with the large bequest made to the RSPCA recently, that is an indication that those with large sums of money to leave think about animals as well as their relatives and others to whom something may normally be left.
This Bill was introduced in another place by Mr. John Brown, Member of Parliament for Winchester, who was successful in the ballot and introduced what I should describe as a model Private Member's Bill.

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It is short, non-controversial, and deals with a fairly narrow issue but one of some importance. I believe that the Bill has government support, because it implements undertakings given by the Home Secretary to the RSPCA on representations made by them about inadequacies or gaps in the law.
Clause 1 strengthens the powers of the courts to disqualify a person from holding any kind of animal after conviction on grounds of cruelty under the Protection of Animals Act 1911. As it stands at present, the law does not enable a court to disqualify a person from keeping an animal (unless it is a dog) until a subsequent conviction. It can never do so on the first conviction. In some cases of dreadful cruelty it seems ridiculous that the offender cannot be disqualified from owning any kind of animal for a period determined by the courts. Clause 1 deals with that situation. Disqualification may now be imposed by the courts on the first conviction.
Clause 2 deals with the penalties under earlier Acts of Parliament relating to fighting between animals. Such fights have been a curse and a blot upon our society for many years. Acts of Parliament of 1839 and 1847 imposed very small penalties for offences in connection with promoting animal fights and making animals fight each other. Clause 2 updates the amount of fines that may be imposed from the present maximum of £50 to a maximum of £1,000. Those penalties are referred to in Clause 2(1).
Clause 2(2) deals with a gap which has been discovered in the provisions relating to the prosecution of persons in connection with setting up fights between animals. Hitherto the law has dealt only partially with those who take part in such fights. It deals with those who organise them, but it does not deal with those who go to look at them. The spectator can plead that he had nothing to do with what was happening; he was there simply as a spectator. Apparently no charge can be made against him.
Clause 2(2) deals with attendance at animal fights. It states:
"A person who, without reasonable excuse, is present when animals are placed together for the purpose of their fighting each other shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale".
Level 4 is £1,000. That might keep some people away, especially if they expected to be raided and spectators could be grabbed and held equally with those who were promoting the fights.
Clause 2(3) deals with Scotland. It introduces into the Scottish law the proviso to which I have just referred. It will be made under the Protection of Animals (Scotland) Act 1911, which is the Act that corresponds to the 1912 Act for England and Wales. The offence of being present at an animal fight, carrying a maximum fine of £1,000, shall also apply to Scotland. The Short Title, repeals, commencement and extent are dealt with in Clause 3.
There is only one other matter arising on this Bill to which I need refer at the moment and that is the question of forfeiture. On conviction for certain types of animal abuse, misuse and so on, an order can be made to forfeit the equipment that may be used in an unlawful operation. I think in particular of badger
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baiting or any such activity in which equipment that contributes to the cruelty of the occasion may be forfeited. There was a great deal of debate on this issue during the discussions on the Wildlife and Countryside Act several years ago, when it was debated whether one could confiscate lorries, motor cars and such vehicles as well as other equipment.
Forfeiture is dealt with under the Criminal Justice Bill which has been to your Lordships' House once, if not twice, and is now awaiting Report stage in another place before making its final journey to this Chamber. Clause 68 of that Bill deals with forfeiture. In that connection some animal welfare people have been considering the question of property—that is the term used—which may be seized from an offender and which was in his possession or under his control at the time that he was apprehended for the offence. Those are the words used in the Bill. Does the term "property" include animals? If someone is discovered digging for badgers and that person has a Jack Russell dog which he is using in order to get badgers out of the set, is the dog the offender's "property"? In other words, is an animal the offender's property and in those circumstances can the dog be seized and forfeited?
When this Bill was under discussion in another place the Minister dealt with this matter up to a point. He thought first of all that forfeiture would be dealt with in the Criminal Justice Bill in general; that it would deal with forfeiture not only in relation to this particular offence but other offences for which forfeiture may be a part of the penalty imposed on an offender. Would that include animals? Apparently there is some doubt. I informed the Minister about this matter in case he had some comment to make on Second Reading, but the House may care to bear in mind when we reach the Committee stage of the Bill whether anything further need be done. I think that the question of forfeiture remains in doubt. I am not sure even when the matter is debated that it will be made very clear whether an animal can be seized and, if so, what should happen to it. However, in some circumstances when people are caught doing a particularly dirty job it may be that the only thing to do is to seize their animals as well as their equipment.
I think that that is all I need to say on Second Reading. This is a small spearhead of attack upon the large volume of animal cruelty and misuse. On all animal legislation one must be content with a step-by-step approach. Sometimes it may be a very small step, and this is one of them. At any rate, with dog fighting in particular on the increase it is very important to plug the gaps. In fact, the general rise in offences of cruelty must lead us to want to strengthen the penalties in the hands of the courts. So the first clause of the Bill which deals with disqualification on first conviction is an important provision. Some dreadful acts take place and the court is told that the accused had no previous record of delinquency or cruelty and that he could not understand how it had happened and so on and so forth. In whatever way things happen, if they are particularly serious it should be possible to disqualify persons from having an animal, bird, or other living creature for some time to come. I beg to move.
Moved, That the Bill be now read a second time.—(Lord Houghton of Sowerby.)
7.36 p.m.
Lord Somers: My Lords, I apologise to the House for not putting my name on the list of speakers, but as that list is not a very lengthy one I hope that I shall be forgiven.
I agree with everything that the noble Lord has said. I do not think that there can be much doubt about an animal being its owner's property. He has paid for it and is responsible for its upkeep. Therefore, it seems to me that it is his property and as such its proper upkeep is his responsibilty.
Some people snigger somewhat at the idea of protecting animals or on issues of anti-cruelty, as it were, but cruelty is nothing to laugh about. After all, one of the first moral principles is that one should not unnecessarily do harm to those who are unable to protect themselves. This is a very good instance of that principle. Dog fights which have taken place in Epsom have been very nasty affairs. I only hope that the police will be given some weapon with which they can attack the perpetrators of such "sport", if it can be called that, and so enable those concerned to receive their due punishment.
7.37 p.m.
Lord Northfield: My Lords, I too apologise because I did not put down my name on the list of speakers. I can only plead the expected shortness of the debate. There is only one issue about which I wish to speak and that concerns the forfeiture of dogs. I do not know whether my noble friend Lord Houghton of Sowerby is aware of it, but when the Deer Acts were reformed by legislation which I introduced earlier in this decade, there was a similar problem to consider: if there is forfeiture of dogs, what is to happen to them? That is how the noble Lord put the question.
It is worth making the point that in the course of the passage of that legislation we reached agreement with, I think it was, the Canine Defence League that if any dogs were forfeited they would take them and find them a good home. In other words, it would avoid, as the only alternative, the necesssity of their being put down.
The issue of forfeiture should not be judged on what happens to the dogs. We have taken care of that generally. We tried at that time to get the Home Office to send a circular to magistrates drawing attention to the fact that, because we had reached this agreement, they should not be deterred from ordering the forfeiture of dogs by fear of what might happen to them. I do not know whether that became widely enough known. It ought to be, because the forfeiture of the animal is a good punishment, and, in the case of poaching of deer, the forfeiture of lurcher dogs is a very good deterrent indeed. I would therefore hope that this issue will not be ducked. I hope that some way will be found of including possible forfeiture of the dogs, and that the agreement we reached in the case of the Deer Bill will be happily stretched to include any dogs forfeited under this Bill.
7.40 p.m.
Baroness Ewart-Biggs: My Lords, my noble friend Lord Houghton has presented and explained this Bill very well and very clearly. I do not think that there is
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anything to add in that regard. Obviously, any legislation that improves the lot of animals in this country is welcome; and this Bill certainly does that.
I regret the need for this Bill. It is a very sad comment on our times that although we are thought to be a nation of great animal lovers, in fact animal cruelty is growing. My noble friend Lord Houghton has given some examples. I am appalled that according to an RSPCA leaflet the latest figures for 1986 show that in the two preceding years animal cruelty had increased by more than 75 per cent. The greatest increase in animal cruelty was in the South-East where cautions and convictions had increased by 1778 per cent. I find these figures very alarming indeed.
We know that dog fights are organised in very great secrecy. That is one of the problems in dealing with them. It is therefore very important that the message from this Bill is that there is to be a greater deterrent. There are stiffer penalties for those organising and attending these dreadful fights. Perhaps this will be a way of bringing them to an end.
My noble friends have spoken about the new forfeiture powers. I hope that the Minister will respond to the points that they made on this important issue.
I am sure that this Bill will greatly improve the ability of the RSPCA and other organisations, and ordinary citizens, to bring prosecutions, by creating an offence of attendance at animal fights under the Protection of Animals Act 1911. This is a most important part of the Bill. As my noble friend said, the Bill will extend to Scotland the offence of attending animal fights. The maximum penalty will be a fine of £1,000.
I fear that these measures are needed. The figures of increases in both dog fights and in animal cruelty generally warrant them. It has been said many times that one of the tests of a civilised society is the way in which it treats its animals. I fear that all the signs are that our society is not as civilised as we would wish, judged by this test alone. I believe therefore that the changes included in the legislation will be welcomed by all those who are truly concerned for the welfare of animals. I congratulate both the mover in another place and my noble friend for introducing this Bill. I wish it a safe passage to the Statute Book.
7.45 p.m.
The Earl of Arran: My Lords, I should first like to thank the noble Lord, Lord Houghton, on taking up this Bill and bringing it forward for the consideration of your Lordships' House. We are therefore obviously very pleased to have this opportunity to make clear the Government's wholehearted support for this important Bill. Such support is a clear indication of the Government's continuing commitment to improve the welfare of animals in our society and to protect them against mistreatment.
We believe that the courts must be able to punish and deter those who might engage in acts of cruelty by inflicting deliberate suffering on animals. This Bill contains several improvements in their ability to do so. First, it aims to allow courts to disqualify a person from having custody of an animal following

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conviction for an offence of cruelty under the Protection of Animals Act 1911 or the Protection of Animals (Scotland) Act 1912. At present, under the Protection of Animals (Amendment) Act 1954, the power of disqualification is available to courts only on a second or subsequent conviction, except in the case of cruelty to a dog when disqualification may be imposed on a first conviction. This position seems muddled and unhelpful to the courts. Although there have been reservations in the past, we now see no reason why the courts should not be able to disqualify a person from having custody of any animal on first or subsequent conviction for an offence of cruelty against animals.
The second change which this Bill proposes concerns penalties for attendance at animal fights. It raises the maximum penalty available for this offence in England and Wales from a fine not exceeding level 1 on the standard scale (currently £50) to a fine not exceeding level 4 on the standard scale (currently £1,000). It also reintroduces into Scotland the offence of attendance at an animal fight and provides for the maximum penalty to be the same as in England and Wales, that is a fine not exceeding level 4 on the standard scale.
It is right and in keeping with the abhorrence with which animal fighting is viewed for those who attend these barbaric activities, as well as those who are involved in their organisation, to receive a substantial punishment. This Bill will provide for that.
Then the Bill aims to facilitate the prosecution of those who unlawfully attend animal fights. At present in England and Wales only the police may do so as the offence is contained in various local police Acts. By the introduction of the offence into the Protection of Animals Act 1911, however, it will be possible for any individual or group to institute proceedings against spectators. This is surely right. It is often the case that other agencies or persons in addition to the police are involved in the investigation of these evil practices. In this context the invaluable and continuing work of the RSPCA is particularly to be applauded. It is clearly in the best interests of all concerned therefore (except the perpetrators of animal fights) to enable the RSPCA or any other body or person to bring to justice all of those who organise or unlawfully attend these activities.
The noble Lords, Lord Houghton and Lord Northfield, have both mentioned the subject of forfeiture. As the noble Lord, Lord Houghton, has said, Section 68 of the Criminal Justice Bill extends the general powers of the courts to order the forfeiture of property used or intended for use in the commission of offences to all offences, including offences of animal fighting. It has been questioned whether the term "property" in this context will apply to an animal used, or intended for use, in the commission of an offence. The Government's firm advice is that animals are so included.The Government's view therefore is that no special provision needs to be made, or should be made, in this Bill to provide for the forfeiture of property, animals or otherwise, used or intended for use in the commission of animal fight offences.
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Finally, the Government welcome the changes proposed in the Bill. We consider the Bill as now presented to be a valuable and important measure which deserves the full support of your Lordships' House. I sincerely hope, therefore, that your Lordships will concur with this view.
Lord Somers: My Lords, apropos what the noble Earl has said, what is the position with regard to private guard dogs at someone's house?
The Earl of Arran: My Lords, I shall need notice of that question. I shall be in touch with the noble Lord before the next stage of the Bill and, if necessary, the matter can always be brought up at the Committee stage.
Lord Houghton of Sowerby: My Lords, I am very grateful to all noble Lords who have spoken. What my noble friend Lord Northfield said is of great interest. In another place the Home Office Minister said that the department would consider including in a future Home Office circular, when the Criminal Justice Bill became law, an indication to those concerned that the word "property" included animals.
I am grateful to the noble Earl whose emphatic style on this subject I find most attractive. One can easily waffle on about animals, but up to now (and I am sure it will continue) what he has said he said as if he believed it and carried conviction at all times. That is very pleasing in the kind of semi cynical atmosphere of political activity that we meet so frequently. May I, with profound respect and warm thanks, say how I appreciate what the noble Earl has said.
Concerning forfeiture of animals, I see the point that if we include in the Bill a reference to the effect that property includes animals, it might be inferred that if the Criminal Justice Bill remains as it is animals will not be included in that legislation. We want to be sure that if property includes animals, it includes animals in other senses besides cruelty to animals. I believe we can give consideration to this matter before the next stage.
I am sure that the sponsor of the Bill—who was at the Bar until he was called away to a Division—was observing our proceedings with satisfaction. I am sure he will be pleased with the reception given to the Bill and that it is well on its way to the Statute Book. Together with the police, who deal with these terrible activities—and they are terrible—we shall consider the societies concerned. One should never overlook the extent and the depth of original sin. It really comes out in many cases when one is dealing with animals. I am grateful to the House and to the Minister for accepting the Bill.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
Viscount Long: My Lords, I beg to move that the House do now adjourn during pleasure until 8.25 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.53 until 8.25 p.m.]

Local Government Finance Bill
House again in Committee on Clause 1.
Baroness Robson of Kiddington Baroness Robson of Kiddington moved Amendment No. 5:
Page 1, line 12, at end insert—
("( ) This section is subject to section (Exempt Dwellings) below.").
The noble Baroness said: In moving this amendment I should also like to speak to Amendments Nos. 9, 36 and 53. These amendments address themselves to a collective community charge as regards short-stay hostels. In the debate on the first amendment the noble Lord, Lord Carr, briefly addressed himself to the problem. I listened with great care to the speech made by the noble Viscount, Lord Whitelaw, in respect of the first amendment. He said that the Committee was entitled to do certain things. In my view, the Government may see fit to accept the amendment in the end.
Short-stay hostels, run by voluntary organisations such as the Salvation Army or Crisis at Christmas, cater for thousands of people without shelter. The levy of a collective community charge on such hostels, with residents not paying a community charge elsewhere and being expected to pay the daily cost of the charge, is administratively unworkable and politically insensitive. It will certainly hinder the provision of these vital services. With an increasing number of homeless people that would be tragic.
The amendment proposes what I consider to be a most reasonable solution. It is the exemption from the charge of individuals in collective-charge properties run by voluntary organisations, leaving the properties subject to a non-domestic rate. If we proceed with a collective community charge, the structure of such a scheme will disadvantage some of the poorest sections of society. The problem with levying the charge on such hostels is that people staying for a few nights or a week must pay the personal community charge. Only afterwards will they be able to claim a rebate to reduce the charge to 20 per cent. It does not take much imagination to see that there will be quite a time lag between the payment of the charge and tile reimbursement from the DHSS, leaving many people even poorer.
We must also consider the 80 per cent. rebate for such people. That will still leave 20 per cent. of the charge to be found by the hostel resident. Members of the Committee know as well as I that the hostel residents, on the whole, do not have any money. I believe that it will be a disincentive for these people to take up the provision, and in the same way it will increase the hostel's rent and force some of the people back on the street.
Therefore this becomes an enormous problem for people running the hostels and half-way houses because they will face the choice of exacting the community charge from residents or paying the charge themselves. However, if they do—and I believe a large number of them will elect to do that—it means that they are using to pay the collective community charge tax those resources raised voluntarily which would have gone to provide more help for these people.
This problem can be vividly illustrated by the charity Crisis at Christmas, of which I am very proud to be a trustee. I am sorry that the noble Baroness, Lady Macleod of Borve, is not here because her husband started that charity and she has devoted 21 years of her life to supporting it. Above all, it is famous for the six days of shelter it provides for homeless people over the Christmas period—all paid for by voluntary donations and all the work done by volunteers. That charity has estimated that the collective charge for its six days' operation each Christmas, which looks after 600 people over six days, could be as high as £4,000. The cost of providing those six days for 600 people over Christmas is £17,000. They could not conceivably collect that £4,000 from the people who come in for six days over Christmas and it will therefore mean that Crisis at Christmas will have to find another £4,000 for that exercise.
Apart from having to find more money which would not go directly to those people who need the help, it would also impose a burdensome and irksome administrative duty. It would increase the cost of administration, detailed records would have to be kept and the charity would become the form of tax collector that the new charge demands.
The other matter which worries me even more is that the nature of open Christmas would be radically altered. The Crisis at Christmas organiser would be forced to ask everyone who they were, whether they wanted to stay one night, whether they were over 18 or paying the personal community charge elsewhere. Therefore even if the whole cost is met open Christmas would not survive in its current form. It is essentially a place where anybody who is homeless can turn up.
There is another problem that could be created. Every Christmas we are loaned free of charge a building in which to house and feed those 600 people. However, if Crisis at Christmas defaulted the person technically liable for the charge in the end could be the authority or person who had loaned the property that we were using. Therefore it would become increasingly difficult for us to find a building.
I have talked about Crisis at Christmas, but during the rest of the year Crisis at Christmas undertakes fund raising for over 100 other organisations, funding about 30 all-year-round hostels as well as group homes and other services. This year it expects to raise £700,000 or £800,000. All those hostels and many other homes will be subject to the collective community charge and will face the same sort of problems all year round, deducting from the voluntary contributions that should go to the people who need help.
For voluntary hostels this promises to be an administrative nightmare. The only solution that we can see is to abolish altogether the charge for these kinds of homes, leaving the residents exempt while living in the voluntary hostels and with the voluntary organisations paying non-domestic rates for the properties. I believe that these amendments are something which the Government must accept as fair. We live in a society where homelessness is increasing. We do not want to make the conditions

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worse and I hope that the Government will be able to accept the amendments proposed.
The Lord Bishop of Gloucester: I also dare to hope that the Minister may come to see, if he has not already done so, that the Bill as it stands without this amendment is a triumph of logic over reality because I do not believe that it will work in its present form.
The noble Baroness, Lady Robson, has already indicated how it would affect a charity such as Crisis at Christmas. Perhaps I may turn to something rather different and declare a personal interest. It so happens that, because of where we live in Gloucester, between six and twelve homeless men and occasionally a homeless woman turn up at our front door every day. We have come to know a few of them well enough to realise that their lifestyle is such that the idea of their having any kind of responsible participation in local government is simply farcical.
In a letter which the Minister's colleague in another place, the Minister of State for Local Government, wrote to the Salvation Army he said:
"Such people"—
that is, the people we are talking about here—
"should nonetheless be involved in the process of accountability".
It is very difficult to recognise the reality behind those words. He continued:
"It would not be appropriate simply to exempt them".
I understand and entirely support the main thrust of this Bill—namely, to increase the base of accountability of local government—but I believe that there is no reality in trying to extend that to the homeless men who are in and out of short-stay hostels. We in Gloucester over the last few years have created a night shelter for such travelling and shiftless people. It takes about four years of local money-raising and the accumulation of a responsible committee to get such a project in operation. It lives from hand to mouth financially, always trying to raise enough money locally.
As explained by the noble Baroness, the imposition of the system outlined in the Bill is bound to make the cash flow and money-raising problems of such local projects much more difficult and painful. Who is going to charge these men up to £1 a day in addition to the amount they already pay for their board and lodging? Who is going to ensure that they obtain a rebate if they are entitled to one? I believe that before this Bill is enacted, at the very least somebody responsible should share the experience of running and administering such a system. I believe that this must have been conceived in offices a long way away from reality.
My experience is that very few of the men we are talking about will ever vote in local elections. Therefore it is totally unrealistic to expect them to register and to pay the community charge. They simply will not be there when you want to collect it. I believe that the voluntary societies are almost unanimous—certainly judging from my own postbag—in asking that the proposal should be dropped and that they should simply be asked to pay the non-domestic rate, as they do at the moment. I find it difficult to believe that the Government wish to
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press on, considering the comparatively small numbers involved and the painful effect not only on the men themselves but upon those voluntary bodies and individuals who work so hard to care for a particularly vulnerable part of our population.
Baroness Faithfull: In supporting this amendment, I ask my noble friend the Minister for some advice. Who is to collect the money? Members of the Committee have referred to the letter from the Salvation Army on the issue of collection. I refer to the whole sphere of hostels: the Simon Hostel, the Church Army hostels, the Salvation Army hostels, the shelters for battered wives. All of those organisations take in people who are in trouble for a short or longer time. At the time when they are taken in, they are insecure and aggressive. Those of us who have worked with such vulnerable people know how very difficult it is to establish a relationship with them. And until you establish a relationship with them you cannot possibly make any effort to rehabilitate them.
The person who asks for their community charge will represent to those people, as the Salvation Army calls it, "the Government". Most of these people are "agin" the Government, not necessarily rightly so but because of their circumstances. They are against authority. Anyone on the staff of these hostels collecting the money will represent authority. That is immediately going to make it very diffcult to establish relationships with this wide spectrum of people. My worry is not only that expressed by the noble Baroness and by the right reverend Prelate: the question of the money. There is also the matter of who is to collect it. If it is to be the hostels, they will empty because people will feel that the staff represent authority.
8.45 p.m.
Viscount Thurso: I support my noble friend Lady Robson and the right reverend Prelate the Bishop of Gloucester in the amendmdent. I fear the provision because it will in effect turn each of us into a vicarious Scrooge. We shall be extracting money from people who get nothing from us except what is given to them by charity. They are people who are so disadvantaged that they do not know how to use the system in order to get anything out of taxes and local government. We will either have to extract it from them or extract it from the charities that are set up to look after them when they are in desperate need.
I have had experience of sending desperate people to places like a Salvation Army hostel; I have seen how they have been cared for and put on the right lines. I realise how important the relationship of these hostels with these disadvantaged people is. It is important that we realise that by turning such hostels as the Crisis at Christmas hostel and Salvation Army hostels into agencies for the collection of even local taxes, it is going to create a feeling in the minds of people that they are going into a hostel that is a kind of government agency. The very delicate relationship built up by charities like the Salvation Army and Crisis at Christmas with these very disadvantaged people will be damaged. We shall do damage out of all proportion to the principles which the Government may be striving to establish. I cannot

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believe any principle of taxation makes it desirable to take from somebody something he does not have or stops people giving what they would willingly give to people who are totally disadvantaged.
Therefore, I beg the Government to look at this amendment with sympathy and to see whether they cannot do something to alleviate injustice by removing these hostels from the obligation of collecting taxes and of turning themselves into collectors of tax from thoroughly disadvantaged people.
Baroness Ryder of Warsaw: I agree entirely with my noble friend Lady Robson, the right reverend Prelate the Bishop of Gloucester and the noble Baroness, Lady Faithfull.
I declare my interest with the voluntary foundations, the Ryder Homes and hostels which I represent as founder, auxiliary nurse and social worker, nursing and caring for over 2,000 people of all age groups suffering 18 different kinds of disability and also the homeless and destitute. In 1987 we were privileged to nurse 907 patients who died in our care. As always, especially in the large cities and elsewhere, we have thousands more on waiting lists or arrivals in various parts of Britain. I am exceedingly concerned and shocked that our work for these brave and silent sufferers in society, and indeed the foundation as a whole, should be so penalised. I therefore seek an assurance from the Minister that all our sick patients, residents and the homeless will be exempt.
The foundation depends on voluntary contributions and it has to raise several million pounds each year through the tireless efforts of fund-raising teams. Naturally they want encouragement not only from the public but also from the Government. Moreover, resident staff, of whom there are about 160, must be present in each home and hostel to give essential cover for 24-hour day and night nursing and care.
There are also dozens of part-time nurses and volunteers. Therefore, I ask the Minister—I implore him—to offer some reassurance that the people and patients, nurses, auxiliaries and volunteers to whom I have referred will be protected.
Lord Taylor of Gryfe: Perhaps I may encourage the Minister to intervene at this stage since the case which has been made appears to the Committee in general to be so overwhelming. I wonder whether he is convinced and therefore is prepared to make some concession. I seem to recall when we were discussing the Scottish Bill that the same ground was covered and I believe that some concessions were made. If I remember rightly, some concessions were made, for example, in the case of homes for battered wives. The Minister may recall that. As some concessions were made in that regard, perhaps the Minister would care to intervene at this stage and tell us the Government's view.
The case for the homeless and the drifters, if you like, who have to go to these hostels, is appreciated by all Members of the Committee. I remember the noble Lord, Lord Ross of Marnock, making a cynical
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comment when the subject was debated here that the tax could be collected on an American Express card. I believe that he was trying to prove that the people who drafted the legislation had little knowledge of the conditions of the people who are affected by this legislation. I encourage the Minister to intervene.
Lord McIntosh of Haringey: I echo the hope of the noble Lord, Lord Taylor of Gryfe, that the Minister will intervene quickly. Therefore, I shall intervene only briefly because I believe it is my duty, on behalf of my noble friends, to say how strongly we support these two amendments. We have had an afternoon of high drama but perhaps, as the right reverend Prelate said, the drama was somewhat divorced from reality. We now have a whole series of cases of common or garden tragedy affecting real people of the kind of whom I suspect a large number of the 317 noble Lords who voted against the amendment this afternoon can have no experience whatever.
I am sorry, I did not want to make this into a party political point. However, the case that has been made for a compassionate view of the community charge as it affects people in these hostels is so overwhelming that I very much hope that the Minister, and the Government, will be able to find it in their hearts to make meaningful concessions, otherwise we shall be forced to follow the noble Baroness into the Lobbies.
Baroness Masham of Ilton: Before the Minister intervenes, perhaps I may bring to the attention of the Committee another subject which has not been mentioned this evening. I chair an organisation called Phoenix House which has residential homes for drug addicts. Most of these people are on social security and the homes survive with DHSS grants. Often the staff feel most insecure through not knowing whether the grants will arrive. The work is very demanding. We have homes in many parts of the country and we are trying to expand.
Many of our residents are now HIV-positive. To get the residents free of drugs and rehabilitated is without doubt the safest solution for the community. Drug addicts with AIDS in the community provide the quickest way of spreading the disease. The strain of running these homes with the extra community charge may be the last straw that breaks the camel's back. The rich who live in comfort will be very much more at risk with drug addicts at large and a great number of people having to seal to finance their addiction. In many areas the crime rate is increasing. I have great admiration for the many voluntary organisations such as Phoenix House, the Salvation Army, the Sue Ryder Homes and many others. I hope that the Government will realise what they are doing before it is too late. If the Government do nothing now, they will show that they do not understand homelessness and our over-filled prisons will become even fuller.
Lord Glenarthur: I must begin by saying that of course I very much appreciate the enormous amount of work which is done by all those charities to which Members of the Committee have referred this evening. I fully understand the strength of feeling that lies behind these amendments, as explained by the

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noble Baroness, which are intended to exempt those who live in charity-run hostels from making any contribution towards the costs of local services.
Having said that, this amendment has some undesirable qualities because it would severely undermine the principle of local accountability.
Noble Lords: Oh!
Lord Glenarthur: If I may be allowed to develop beyond just a phrase, perhaps I can explain why that is so and also what is being done to try to meet the concerns which have been raised. Like it or not, we had this discussion during the Scottish Bill, to which the noble Lord, Lord Taylor of Gryfe, referred. It is a principle, stated on many occasions during the passage of that Bill, that as many adults as possible should make some contribution towards the costs of the local services from which to some extent they benefit.
Of course, there are already a number of exceptions and they are set out in Schedule 1. I believe that the noble Baroness, Lady Ryder of Warsaw, will see from paragraphs 7 and 8 of Schedule 1 that hospital patients and those in homes—to take up a point made by the noble Baroness Lady Masham—are covered in the way in which she would wish them to be covered. In particular, the noble Baroness quoted the case of Phoenix House and the work done with drug addicts. As far as I can tell, if they are residential, they would be covered by the exceptions set out in paragraph 8. As matters stand, those exemptions apply to groups, such as the severely mentally handicapped and the residents of hospitals and homes, as I have described. I am sure that Members of the Committee will agree that those are the people for whom the process of accountability cannot be said to operate properly. There does not seem to be any difference between us on that.
However, the same arguments do not apply to people who live in properties designated for the collective community charge. People staying in dwellings designated for the collective charge make use of local services to some extent just as others do. My noble friend Lady Faithfull was a little concerned about hostels where people live who may be disturbed and with whom the owners of the hostel find it difficult to establish the necessary close relationship. I must point out to my noble friend that the Government have already undertaken to exempt those who stay in hostels which provide a substantial degree of care. That provision is also taken care of in paragraph 8 of Schedule 1. The collective charge will not be raised on hostels of that kind but on general purpose hostels where people come and go and where little or no "care", in the normal sense of that word, is provided.
The noble Baroness, Lady Robson, appeared particularly concerned about Crisis at Christmas, which offers accommodation to down-and-outs for one week in the year. I must say it seems most unlikely that a property which is used for one week in the year would be designated for the collective community charge. That charge, which we have not
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yet had time to debate fully but which will be dealt with tomorrow, has been designed with permanent hostels in mind—those whose business it is to provide accommodation on a continuing basis.
All that I have said does not mean that those who stay in collective charge properties should necessarily have to pay the full community charge. I agree that many of them, particularly those who stay in charity hostels, have little or no income. The Government have taken account of that by providing that they should receive rebates of up to 80 per cent., and no one whose income is low and stays in a charity hostel will have to pay the full amount of the charge. I think it is worth pointing out that individuals who are eligible for an 80 per cent. rebate in their contributions will also be eligible for income support. Their income support payments, like everybody else's, will have been increased to reflect the average 20 per cent. payment which would be required; so I do not think there is quite as much justification as may be implied in the remarks of the noble Baroness, for saying that those who stay in hostels would be unable to pay the reduced charges which many of them would face.
I fully appreciate that it is one thing to say that rebates will be available and another to ensure that rebates are actually paid to the kind of people who stay in these hostels. That is, again, a point made by the noble Baroness. So we have been examining, and are examining at the moment, a number of options with the DHSS and local authority associations for ensuring that the rebate system operates smoothly and effectively in these circumstances.
One option is to offer 80 per cent. vouchers to the people concerned. Another option would be to provide that people in charity hostels will pay only one-fifth of the normal collective charge contribution. The noble Baroness, Lady Robson, expressed concern that charity landlords might be out of pocket and might therefore impinge upon the funds which have been donated in connection with the charity, if they decide they cannot collect a contribution from the poorest of their visitors.
In that connection I should like to make two points. The first is that the poorest people will have to pay only one-fifth of a contribution. I think we have to get that into proportion. The right reverend Prelate the Bishop of Gloucester suggested £1 a day. In fact, in the average area it is just over 12 pence a day. Secondly, in answer to my noble friend Lady Faithfull, the charity landlord, who will be responsible for collecting the charge, will be allowed to keep 5 per cent. of the contributions he collects to cover his costs. Those would be such things as the cost of the administration of the scheme, collecting the money, maintaining records, handing over the money and so on. I suppose another feature of it could be said to be bad debts. I think it is also important to bear in mind that there are those who already attend such hostels as the Salvation Army hostels, who already contribute, as I understand it, towards some of the services that are provided. No doubt that money comes to them in the first place through the social security system.

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The noble Baroness suggested another idea, which is that charity hostels should be subject to non-domestic rates. I wonder whether the noble Baroness really appreciates quite what that would mean. She may have got it slightly wrong, when one realises that these properties are not non-domestic. They are by definition domestic because they are used for residential purposes. I have to say that it is perhaps a little odd, on the one hand, to say that the collective charge will impose a burden on charities and at the same time to suggest that charities should pay non-domestic rates. I believe it would be more of a burden for charities to pay full non-domestic rates than it would be for them to pay a certain number of collective charge contributions on behalf of a visitor, if that visitor has no money.
Therefore, in answer to the point the noble Baroness is making—and she has received support on this—I hope your Lordships will agree that this amendment is unnecessary, particularly in the light of the assurances I have given that we will provide for people on low incomes to meet only one-fifth of their collective charge contribution and that we are looking at the mechanism in the way I described just now.
I suggest that the correct way to help people staying in charity hotels, rather than giving a complete exemption, would be to proceed along the lines I have stated. I think that is fair and it does not in any sense fly against any principle of the Bill. At the same time I appreciate the very real concerns expressed and the dedicated work that goes on. However, I suspect that there is some lack of knowledge among some of your Lordships who have made contributions to our debate today as to what is taken care of in Schedule 1 to the Bill. I hope that the noble Baroness, Lady Ryder of Warsaw, will study that matter.
Lord Jay: The Minister's reply on this amendment seems to me extraordinary: indeed, almost incredible. Here we are talking of a number of homes and of people who are almost destitute. Incidentally, let us remember that the great increase in homelessness that has come about in the last few years has arisen largely because of the Government's own housing policy. Therefore they must accept a special responsibility in this case.
The Government are now apparently asking the charities, who are about the only people in the community trying to help with this acute problem, to act as tax collectors on behalf of the local authority and the Government, in order that these small amounts of revenue may be collected. Can the Minister make clearer what the legal position is? Is there a legal obligation on the staff of the charity to extract these sums from the homeless people staying in hostels? If so, how can that be enforced? The Minister's argument for this extraordinary, almost inhumane arrangement is that these people have to be made accountable for their use of local services. To be accountable in any significant sense one must not only make some use of the services but have some
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means from which to contribute. As many of these people—probably a large proportion—are destitute, how can this be done in practice?
The Minister made great play of the fact that the people concerned would be in receipt of the rebate of 80 per cent., about which we have heard so much in the debates, and that that would go far to solve the problem. I presume that this is in the Bill. Can the Minister say precisely where one finds mention of the rebate of 80 per cent., or of 20 per cent., if one wishes to put it that way? If it is not in the Bill, the case would seem to fall to the ground. If it is, perhaps he can say precisely where.
Lord Renton: I do not deserve to be forgiven for intervening now, not having heard the earlier part of the debate, but I have listened with great care to the Minister's statement and I am trying to understand its full implication in relation to the amendments. I should welcome some clarification. The Minister referred twice to paragraph 8 of Schedule 1, in which we find an expression that occurs frequently elsewhere in the schedule:
"A person is an exempt individual on a particular day if at any time on the day—

(a) he has his sole or main residence in a residential care home, nursing home or hostel, and

(b) he is receiving care or treatment (or both) there".

On the face of it, one might assume that that is intended to cover the very cases mentioned of short stay. I shall be grateful if the Minister can say whether that is so.
Baroness Seear: Is it the intention to charge people who are sleeping in cardboard boxes under the arches on the embankment? If it is not, as I hope, this will obviously discourage them very much from moving out of their cardboard boxes to go into hostels—a move that most of us would welcome—where they would become liable for the charge.
Lord Dean of Beswick: The Minister in his reply referred to people who are accommodated substantially in hostels. What does "substantial" mean? Many of the people concerned go to a hostel for one night only and then go back on to the street.
It is a little dangerous, although I do not carp about this, for the Minister to make reference to the Scottish Bill. Those of us who have been involved in housing and hostels know that nowhere in the United Kingdom has a problem equal to that of central London. People come to the centre of London from all the major cities, which have their own problems. The problem in the centre of London calcifies and hardens. I walk from my flat in London week after week and month after month, and I see the same people sleeping in doorways. Occasionally they disappear for a few nights when they probably go to a hostel. Can the Minister say what he means by "substantial"?
Lord Glenarthur: To reply first to the noble Lord, Lord Jay, about legal obligation, we have yet to reach the part of the Bill that commences in Clause 5, which

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deals in depth with the collective community charge. Clause 6 details the setting up of the community charges register. We have not yet reached the point where there is a legal obligation on the part of anyone to collect it. The purpose of the Bill is to establish that, and we shall come to it in due course.
As for the question that the noble Lord, Lord Jay, posed about how the money could be raised in practice by these poor people in order to pay the community charge, I think that that is more a feature of the social security system than of this Bill. The two run hand in hand. That is why he came to the next point which was where in the Bill we could find the elements which go to show how the 80 per cent. rebate is achieved. Further, how it is possible, as we agreed following the Scottish Bill last year, that the income support payments would be increased to reflect the average 20 per cent. payment. The answer is to be found in Clause 133 of the Bill. If the noble Lord looks at Clause 133 on page 74, he will find that Schedule 13, which amends the Social Security Act 1986, will have the effect for which he is looking. My noble friend Lord Renton—
9.15 p.m.
Lord Jay: Will the noble Lord permit me to intervene? I have read Schedule 13. It may be my fault for not being a sufficiently trained lawyer, but I cannot find any reference either to 20 per cent. or to 80 per cent. in that schedule. Since so much of the Government's argument for the Bill rests on this, I think that we ought to know where it can be found.
Lord Glenarthur: That will be done by order under that schedule and it does not feature in the schedule. However, Clause 133 paves the way for that part of the schedule to take effect. My right honourable friend has stated that orders would be made under the schedule.
Lord Jay: So the noble Lord is telling us that this rebate on which the whole case for the Bill on Second Reading and in the debate this afternoon rested is not in the Bill at all but will perhaps—we do not yet know—appear in some order to be made at some later unspecified date. Is that correct?
Lord Glenarthur: I seem to have been down this path before with the Scottish Bill last year, when the same arguments were put forward. The fact is that the same applied there, and there is absolutely no suggestion that the appropriate orders will not be made. I am sure that the noble Lord is not suggesting for a minute that that is not the case. Of course the orders will be made. That is the correct place to make the orders to bring into effect this 80 per cent. rebate. That is why it is being done in this way and is not put on the face of the Bill itself.
Lord Jay: I am merely saying that clear words in an Act of Parliament are one thing, but the promise from a Minister to introduce an order at some future date, although it may be fulfilled in practice, is quite different.
Baroness Carnegy of Lour: Perhaps I may ask the Minister whether it is the case in England and Wales, as I think it is in Scotland, that this arrangement is already under way in that all those concerned are paying 20 per cent. of their rates which are being made up through social security now, so that this proportion is established. That is one question I wanted to ask.
I am so sorry that I did not hear the beginning of this discussion. It is extremely important both that the Committee understands it and that we make sure that arrangements are as good as they possibly can be. In the great blockbuster debate it was not possible to go into these things, but the nature of the community charge is such that, as I see it, it is an attempt to bring everybody in to contributing to society, to feel that they are part of it and to make sure that the poorest have the money to do it so that they will not be worse off. It is the physical action of paying one's way that is so important, and in which I personally believe. I already see it beginning to be understood in Scotland.
It is easy to laugh and make faces, but if we say that and if we commit ourselves to it, we then have to find a way for all the difficult cases. I do not think that the difficult cases make the main argument invalid but nevertheless they are difficult. I am delighted to hear that the Government are looking at various options for doing this because it is a very sensitive matter. It is important that it should be right for the people concerned who are doing the paying and also right for the people, for example, running hostels and doing a marvellous job. We have to look at it extremely carefully, but in my view that does not invalidate the whole idea. It is extremely important to keep the matter in context and find the right way to do it. I hope that the Government will take a lot of trouble about this.
Baroness Masham of Ilton: Before the noble Baroness sits down, may I ask: does she not realise that many of these people have completely dropped out of society and the charities are striving very hard to get them back into society, but it is the process of rehabilitation that is so difficult? Those charities need encouragement and motivation to be able to do this job. Having to find the money for this collective charge is going to be the last straw for the bodies who are trying to bring these very unfortunate people back into society.
Baroness Carnegy of Lour: If those remarks were addressed to me, I would say that this is a question of getting to grips with the whole idea that will gradually develop. In five years' time this will all be understood by everybody. It is easy for Members of the Committee to make faces, but this provision could be the thing that more than anything else helped people who had dropped out of society. If one thinks this matter through and talks positively with people who are running such organisations—I am as involved as anybody else with the organisations—I think that this provision can, and will, be seen to be of value. This is one of the most difficult aspects of the whole exercise and it must be dealt with by the Committee.
Earl Russell: It is not necessary for the Government to accept 90 per cent. of the arguments put in favour of this amendment in order for them to accept it. Even if they do not sympathise with the arguments of social conscience which have been put forward, they might consider that they are setting themselves an immense administrative nightmare. This is not only a point about trying to collect money from people who have no money; it is much more important than that.
When the Minister talked about these hostels as being residential he was under a fundamental misapprehension. The central point about the homeless is that they are of no fixed address. They are here today and gone tomorrow. When someone comes to collect the poll tax from them they will have to consider whether they are dealing with John Smith or with somebody else of the same name.
In these circumstances it is really rather difficult to talk about accountability. The telling of tall stories by people in this situation is a well known phenomenon. It goes back to the 1620s and appears in Folkestone's churchwardens' accounts. A man recorded in those accounts was obtaining poor relief under the title of "one who came from the land of Babylon". How are we going to identify these people, track them down and make them eligible for the poll tax? There has not been an attempt to keep track of mobility such as this since the Tudor vagrancy laws. They did not work. If I could make an appropriate comment on the Minister's response it would be signed "Autolycus".
Viscount Thurso: I must say that we are not here talking about the general principle of the Bill. We are talking about exceptional cases. So to get up and say that we are in some way talking about the principle of paying one's whack is not so; it is not the matter under discussion in these amendments.
It seems to me that the Minister is seeking to appease those who want to be charitable about this particular problem by drawing our attention to Schedule 1 paragraph 8(4) which states:
"A hostel is anything which falls within any definition of hostel for the time being prescribed by order made by the Secretary of State under this sub-paragraph".
This may be the sub-paragraph under which the Minister or his right honourable friend will give to these hostels the exemption which we are seeking. However, I wish that the Minister would tell us whether that is going to be so, because in the case of the Salvation Army, for instance, there are about 50 short-stay hostels where shelter is given to disadvantaged people throughout England and Wales. They provide for the casual needs of about 4,500 short-stay residents throughout the country. That is hardly a number of people that will break the system. It is hardly a sum of money that will matter to the Revenue or to any local authority, but it will matter enormously to the Salvation Army if we turn those who run its hostels into publicans. It is wrong that we should not receive a clear assurance in relation to that type of hostel. I beg the Minister to give a clear assurance that that will be done.
Lord Hylton: I take it that the amendment which we are now discussing is a paving amendment for Amendment No. 9. I therefore apologise for not having been in the Chamber when the amendment was moved. Amendment No. 9 refers to people coming into residence for short periods of time. I have received representations from two voluntary bodies which are concerned with people who come into residence for quite long periods. The first is from Community Service Volunteers. It is concerned about volunteers who work for periods of one to two years and occasionally longer. The second is an organisation called L'Arche which provides permanent dwellings and community settings for mentally handicapped people, most of whom are not severely handicapped.
I understand that the severely mentally handicapped will be altogether exempt. However, the less seriously affected will get rebates but will still be called on to pay 20 per cent. of the community charge. L'Arche estimates—whether rightly of wrongly, I do not know—that the cost will be £30,000 per year for a variety of communities and hostels spread throughout England and one or two in Scotland. That is a very large sum of money for that kind of organisation to find each year, over and above what it must find from charitable and voluntary sources. Therefore, there is a wider problem than simply the question of short term hostels.
Baroness Seear: Perhaps I may intervene very briefly. If we are insisting on the principle of paying your whack and making your contribution, surely there is an element of fancy about it. People on social security are not paying their whack. They are passing on the whack that social security has paid to them. That seems to undermine the principle from the start.
Lord Glenarthur: With respect to the noble Baroness, I am not sure that that is the case. If we had not uprated benefits by the average amount, I am sure that we would have been criticised for not going as far as we have indicated we shall do. As regards the point which was made about cardboard boxes, I believe that that is the subject of Amendment No. 11. I know that my noble friend Lord Caithness will wish to speak on that amendment.
I very much take the point which was made by my noble friend Lady Carnegy of Lour. She is right to say that the 20 per cent. is reflected now so far as rates are concerned. My noble friend Lord Caithness made that plain earlier this afternoon.
As for the point made by the noble Viscount, Lord Thurso, with reference to paragraph 8 of Schedule 1 and patients in homes, sub-paragraph (1) of paragraph 8 states:
"A person is an exempt individual on a particular day if at any time on the day … he has his sole or main residence in"
and the sub-paragraph goes on to qualify the provision. That is the relevant point when it comes to a consideration of sub-paragraph (4) as well. The word "hostel" appears in sub-paragraph (1).

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Having listened to the discussion today and noted the points raised by the noble Earl, Lord Russell, I think that there is probably much which has been said in the debate which deserves close study. I fully realise that the point is one of real concern and I accept the expertise of the noble Baronesses, Lady Ryder and Lady Masham, as well as others who have a particular interest in charity. The noble Baroness, Lady Robson, described her involvement with one of them.
If the noble Baroness will agree to withdraw her amendment I should like, without commitment, to take this away and study carefully what has been said and discuss it with my noble friend and my right honourable friend to see where we stand. I hope that with that assurance the noble Baroness will see fit not to press her amendment.
Baroness Robson of Kiddington: I should like to thank the Minister for agreeing to take this matter away and look at it. While I was sitting here, during many of the interventions and part of his original reply, I was boiling because I felt that the amendments had been misunderstood. They deal with homeless people, the itinerant population, who move from one place to another. The Minister said that local accountability is necessary. What have those people to thank society for? The only people in society they can thank are the volunteers who run hostels such as the ones we described.
I am extremely grateful to the Minister for taking this amendment away. I shall do the same. I shall study what he has said very carefully and reserve my right to come back at Report stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9.30 p.m.
Lord Taylor of Gryfe Lord Taylor of Gryfe moved Amendment No. 6:
Leave out Clause I and insert the following new clause:
("Local income tax.
1. A scheme for local income tax shall be established in a manner determined by the Secretary of State after consultation with interested parties.").
The noble Lord said: We return to more controversial territory with this amendment. This afternoon we had a splendid debate. It was suggested that the rejection of the amendment of the noble Lord, Lord Chelwood, was an endorsement of the community charge. As I listened to the debate I got the impression that the rejection of the amendment was to some extent due to the fact that the noble Lord had not produced an alternative to the community charge. That point was made repeatedly. The purpose of this amendment is to repair that omission and to offer an alternative to the charge, which is regarded as unfair.
In the discussion of the alternatives to the community charge I was interested that the Labour Party quite honestly and with courage said that it had not yet made up its mind on that matter but that no doubt its policy statement, when it emerged, would contain some element of a local income tax. I seem to recall that when we discussed this matter in relation to the Scottish Bill the Labour Party went into the Lobby with us in that connection.
This afternoon there were divisions within the Conservative Party just as there were obvious divisions in the Labour Party. At least I can say from these Benches, speaking for the Social Democrats and my colleagues and friends in the Liberal Party, that we are united in suggesting the alternative to the community charge. I commend the arguments which will be produced tonight to the Labour Party in the hope that they will carry some weight in ultimately resolving its problem.
For a long time I have been convinced of the desirability of a local income tax as an alternative and fairer form of taxation. Fifty years ago as a very young man—I think as the youngest city councillor in the history of the city of Glasgow—I entered Glasgow town council. I was anxious at that stage to do something quite dramatic, as one always is as a young man entering a somewhat austere body such as Glasgow City Council. So my first act was to press a motion that the city of Glasgow should petition the Government for the establishment of a local income tax as an alternative to the rating system. Whatever my friends in the Labour Party may think of my subsequent inconsistencies in politics, at least I have maintained a record of 50 years' consistent support for a local income tax.
In earlier discussions the noble Lord, Lord Thorneycroft, suggested that we should not debate again the poll tax or the community charge since we had done that all afternoon. However, it is difficult to support an alternative system without proving its validity against the community charge which is before us. The suggestion was made that if a fundamental change of this kind were accepted we should be disuniting the United Kingdom because the Scottish Bill has already been passed and is
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operative. I should like to point out that acceptance of this legislation, especially in view of the large turnout that it took to accept these provisions today, makes some contribution towards disuniting the United Kingdom.
When the Scottish Bill went through this Chamber there was no large gathering of Peers to ensure its passage and there was very little excitement in the press. Who can blame the Scots if they feel that something only hurts when it hurts England and that in the case of Scotland, which has been used as a guinea-pig, this matter is of no consequence at all? When the same question was put before this Committee in the Scottish Bill, the vote was 93 to 139 and not 183 to 317 as was the case this afternoon. Can one blame people in Scotland for feeling that they do not matter? If anything is making a contribution to Scottish nationalism and disunity of the United Kingdom it is that general indifference.
Perhaps I ought to cite experience in Scotland since the passing of the Scottish Bill. When the Bill was under discussion I think there was a general assumption that the amount involved might be around £250 per annum. Discussion centred around a couple in a household who might pay £550 as an alternative to their rates. The finance director of Glasgow City Council calculated recently that the sum is more likely to be £500 and not £250 in that city. I mention that point because it indicates that we are legislating for something when we are not yet sure of the cost. We know quite well in Scotland what will be the cost to the Government of implementing the Bill. We do not yet know what it will cost the people who have to pay, and that point is germane to this discussion.
In this Chamber, on 25th February last, I asked a question about the cost of implementing the legislation. In the first year the Government had to give local authorities £6 million in order to buy some of the hardware necessary for implementation. This year an additional £15 million has been approved by the Government, and there will be an additional £12 million added to the rate support grant for that purpose. When calculating the costs the normal formula used by the United Kingdom Government is a figure multiplied by 10. That is based on the Goschen formula of 10 times the population. It means that in preparation for this move some £60 million will be involved, followed by a further £150 million and then a rate support grant increase of another £120 million. Is that really a sensible expenditure at the present time when there are constraints on local authorities providing very essential services?
We have our priorities wrong in making this kind of unfair change at such public expense. Even when we implement it, it is generally accepted that the costs of implementing and running the system will be at least double the present cost of collection of rates. I would therefore suggest to the Committee that they should estimate what it will cost to implement these procedures and to consider whether there is an alternative and better system.
At that stage we come to the point that there ought to be serious consideration given to the local income tax. People have said to me, "But you cannot work the local income tax. It is foreign to our system". It works in a large number of European countries, and it works in the United States. I was in Switzerland yesterday. It seems to work perfectly well in that very well-ordered society. There seems to be no logical, mechanical or even ideological reason, so far as I can see, against the implementation of a local income tax. I commend to the Committee a statement that was made by the noble Lord, Lord Ellenborough. He is chairman of the ratepayers' association. He said:
"I believe that the Government would be wise to think again if then the replacement of rates is to be carried out without endless friction and rancour. It must be based on the ability to pay and some form of local income tax is required".
This was the noble Lord, Lord Ellenborough, speaking in his capacity as chairman of the ratepayers' association. He continues:
"Many countries have such a system".
Repeatedly in the debate today reference was made to the Layfield Report. I commend it to the Committee for perusal, before this legislation passes. It is 500 pages of serious discussion of this matter. On listening to the debate it is apparent that not many noble Lords have read the detail of the Layfield Report. However, the report states that local income tax is a runner and a much fairer system than the proposed poll tax. Unfortunately, Sir Frank Layfield is not a member of this House, but he is a very independent assessor in these matters and is totally objective and totally non party. If the Layfield Report comes to that conclusion then Members of the Committee are entitled to take it into consideration. It ways that local income tax is a runner. At the time when that recommendation was made, the tax authorities were rather hostile to the idea. It was a difficult thing to do. But now that they are totally computerised, it is relatively simple and cheap to operate a local income tax.
People may say, "But that destroys the principle of accountability". Does it? If your taxes are too high, do you not feel that you will do something about it? If one uses the basis of income tax for collection, and local authority distribution of that tax, then certainly one could interpret the system as being an accountable system—and just as accountable and less remote than the community charge now before us.
For all these reasons therefore, those of us on these Benches, and I shall be supported by my Liberal friends, support the principle of a local income tax. I commend it to the Labour Party in its discussions on future policy on this matter. I beg to move the amendment.
9.45 p.m.
Lord Boyd-Carpenter: The noble Lord, Lord Taylor of Gryfe, brought up the old, rather hackneyed subject of a local income tax, but adorned it with an almost paradoxical new argument. It was rather surprising, when one contemplates the administrative problems which such a tax would
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involve, that he sought to commend it to the Committee on the ground that the proposals for the community charge will be administratively expensive.
I do not know whether the noble Lord has studied what will be involved administratively in introducing a local income tax and whether, if he has done so, he believes that it could be economically, efficiently or cheaply done. In the first place we have to face the problem. Is it his idea that the local income tax should be collected by the Inland Revenue, or that it should be collected by the local authority, as the community charge will be? If it is his idea that it should be collected by the Inland Revenue, the first difficulty is that the Inland Revenue has no information about the home addresses, the places of residence, of the very large numbers of people from whom it collects tax.
It would be necessary either for the Inland Revenue or the local authorities who have an interest in the matter in some form or another to assemble the addresses and to keep a check on changes of address so that the local income tax is collected in the interests of the place where the taxpayer lives. If, on the other hand, it is proposed that it should be collected by the local authority, the local authority would have to set up a kind of miniature Inland Revenue with a view to examining the exact income of each potential taxpayer in its area.
Is it proposed to apply the same rules as to liability of income tax as the Inland Revenue applies? Is there to be the same point of entry? Are there to be the same levels, as one moves into a higher level of tax? All those kinds of problems have to be decided. Who will decide? Are these problems to be decided by the local authority, which might decide on a quite different basis from the Inland Revenue, with all the complexities that that would involve?
These are real, solid administrative problems. Whatever else may be thought about them they completely negative the noble Lord's illusion that the introduction of such a tax would be administratively economical. It would obviously be a matter of years before local authorities could acquire a sufficient register of the incomes of people in their area.
Then there is the reaction of this upon the economic policies of central government. If this were enforced today, local authorities would be able to negative the reductions in income tax which the Government are putting into effect this year. Some noble Lords opposite may think that that is splendid. It is a great argument in their favour. But is it, when one comes to think of it seriously? Central government are responsible for the management of the economy and the level of taxation, especially direct taxation, is a major factor in the management of the economy. Some people, like noble Lords opposite, rather like high direct taxation. Other noble Lords point out that high direct taxation has had a crippling effect on enterprise and has been responsible for a great many of the problems.
Earl Russell: The noble Lord—
Lord Boyd-Carpenter: If the noble Earl will resume his seat for a moment, I am in the middle of what I am afraid promises to be a very lengthy sentence. I apologise for my grammar. As I was saying, the question would be that of the whole economic policy of the Government, whether one believes in direct taxation being on a high level, as noble Lords on the Labour Benches believe (despite the consequences of it in the past) or whether one believes that it is important to reduce that in order to stimulate enterprise in the economy. The noble Earl may now intervene if he wishes.
Earl Russell: I was wondering whether the degree of central control over the economy that the noble Lord, Lord Boyd-Carpenter, is invoking is something which in times past he would have described as socialism?
Lord Boyd-Carpenter: Will the noble Earl repeat that question?
Earl Russell: Is it something which in times past the noble Lord would have described as socialism?
Lord Boyd-Carpenter: The central management of our economy has occasionally been disastrously conducted. I am sorry that the noble Lord, Lord Callaghan, is not present but it was so conducted during his time in office. I should like to say to the noble Earl, Lord Russell, that that is not an argument for depriving central government of any possibility of managing the economy. It must be a basic function of central government to manage the economy. If they manage it well, as it is at the moment, public opinion will be in their favour, as it is at the moment. If they make a mess of it, as the Labour Party did during the 1970s, the public will vote them down. It must surely be absolutely wrong to give central government an alibi and enable them to say, "We tried to manage the economy but we are afraid that local government would not let us". That would reduce to chaos the management of this country and its economic affairs. I hope that the noble Earl will appreciate that—
Baroness Seear: Does the noble Lord agree that the total failure to manage commercial credit, which is obvious at the present time, has exactly the same effect?
Lord Boyd-Carpenter: I am sorry, will the noble Baroness repeat that question?
Baroness Seear: Does the noble Lord agree that the total failure to manage commercial credit, which is so obvious at the present time, has much the same effect?
Lord Boyd-Carpenter: As the noble Baroness will appreciate, that question is not wholly relevant to this amendment; but I know that that never worries the leader of the Liberal Party. It is an unfair comment and problems of commercial credit are real. Surely she will accept that one cannot seek to remedy those
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problems by depriving central government of any power to deal with them. That is what the amendment proposes.
Therefore I regard a local income tax, first, as being expensive to administer. Secondly, it encroaches upon the economic power of central government when one has a situation in which local authorities could negative the decreases in tax which central government are, in my view, wisely proposing. Thirdly, there is the general constitutional point. Whatever one may think about the desire of certain Members of the Committee to modify the community charge as legislated by another place, at least there is an argument, which I do not wish to repeat, that this is the modifying of a tax. However, regardless of the events of 1909 and 1911, for the Committee to seek to impose a totally new income tax would quite plainly be unacceptable to another place, and rightly so.
There is the final point which was touched upon by the noble Lord, Lord Taylor of Gryfe. If one wishes to introduce accountability, one must ensure that most people pay something and therefore have a motive in voting in the local authority elections for high or low expenditure. Unless one is to apply a totally different form of income tax in the local zone in which the point of entry is far lower than in the case of national income tax—and I do not know whether that is suggested—one does not have the accountability which the Government and many Members believe to be the real remedy to the abuses in local government which have been taking place in this country over the past few years.
In this Chamber and outside local income tax has been discussed almost ad nauseam but at least we have fully discussed it. It has not so far been accepted and I hope that the Committee will not accept it tonight.
Lord Ross of Newport: I support the amendment already moved and I speak also to Amendment No. 7 which is in my name. That takes local income tax further down the path towards the sort of tax which we have it in mind to introduce into this Bill.
We have heard the speech from the noble Lord, Lord Boyd-Carpenter, who has raised the usual objections. First he said that it is not for this Chamber to introduce or play around with any form of taxation. It is all very well to throw that at us, but earlier in the debate today we were being criticised by the Opposition Benches for not offering any alternatives, yet when we offer alternatives we are told either that it is out of order or irrelevant.
Secondly, the noble Lord raised the question of making councillors more accountable to their ratepayers and taxpayers. May I again refer to page 300 of the Layfield Report quoted earlier by the noble Lord, Lord Taylor:
"There is a strongly held view amongst us that the only way to sustain a vital local democracy is to enlarge the share of local taxation in total local revenue and thereby make councillors more directly accountable to local electorates for their expenditure and taxation decisions. On balance, we consider that the administrative cost involved in introducing a local income tax for this purpose would be justified. After many decades of uncertainty in the realm of local government finance the time has come for a choice on the issue of responsibility".

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That committee was satisfied that it gave greater accountability to local councils; and having served in local government for a number of years I am satisfied in my own mind that the community charge will have the opposite effect.
The noble Lord raised the old point about addresses and cost. If he has read the statement which has been sent to most Members today from the AMA, at the time of the Layfield Committee it was reckoned that the Inland Revenue would need 12,000 more staff, and according to the AMA it is now at a figure of about 30,000 merely to implement the community charge. Therefore I put that back to him. Perhaps the noble Lord can answer that point.
Lord Boyd-Carpenter: The noble Lord has asked me to answer that point. I do not accept the AMA's figures for the Inland Revenue.
Lord Ross of Newport: Most people did not accept the Inland Revenue figures, but I believe that the noble Lord will agree that the figure of 12,000 has been quoted on many other occasions in many other Bills and is a common number to quote. It was not accepted by the National Union of Ratepayers, which also did not understand the idea of the difficulties of a place of residence, because in 1976 it said:
"We are puzzled by the difficulties raised by the Inland Revenue over place of residence for the purposes of a local income tax. The Inland Revenue send to each taxpayer who is taxed under PAYE a new notice of coding, whether or not it differs from that of the previous year. For this purpose they need to have, and to keep up to date, the taxpayer's private address. It is agreed that in some instances this Notice is sent via the employer … but it is understood that this is very seldom necessary".
The union also had grave doubts about the 12,000 extra staff; and now, 12 years on, with the Inland Revenue largely computerised, I also doubt that figure.
We are not only in good company in moving this amendment—we jointly fought the last election on the issue and stated quite clearly that we would replace domestic rating with a local income tax—and not only do we support Layfield but also the late Graham Page, who I am sure the noble Lord will remember was a Minister in local government in the Heath administration between 1970 and 1974. He was a strong believer in introducing new forms of revenue into local government, and in one of the Bills he brought in as a private Member on 3rd May 1974 in another place, he raised a number of points which he thought local government should have the ability to charge for; namely, planning charges and a bed tax which did not go down very well in my part of the world. However, he said:
"I have no doubt that in the pretty near future we shall have to abolish household rates and replace them by a local income tax. But that is too big a subject for a Private Member's Bill … Of course, if the House accepts the Bill those benefits would continue for the relief of the local income tax payer when he takes the place of the local ratepayer".
That was the thinking of a former Minister at that time, supported more recently by the then Prime Minister the right honourable Edward Heath. We think that we are in quite good company. I thought I heard the Minister, who I presume will reply to this
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debate, quote CIPFA earlier today, saying that it was opposed to a local income tax. I am not sure how he lines that up with a remark by Noel Hepworth, the Director of CIPFA in a letter, I assume, to The Times on 30th January 1986 in which he says that:
"LIT ensures tight accountability … it would also be equitable. We believe the Green Paper has got it wrong. LIT is feasible and fair."
We have described to the Committee the way in which we should wish to see LIT introduced. The rate of LIT would be determined locally. Each district authority would give notice of the rate it set to the Inland Revenue, which would collect the tax. Collection would happen like this: wherever they live initially, people would pay a uniform rate of LIT—for example, 5 per cent. I think the Minister will say that it should be 6 per cent. We in our paper went up to 5·6 per cent. At the end of the year each taxpayer would make an end-of-year return from which his actual liability is assessed. Those living in areas where the LIT rate is below 5 per cent. would receive a refund and those living in areas with higher rates would pay the difference. In practice, 70 to 80 per cent. of people would probably receive refunds. Local autonomy could be further strengthened by reducing the amount currently paid out in grant-related expenditure, and allowing the local authority to raise those funds through LIT. The money saved nationally would be reflected in a corresponding cut in national income tax. Taxpayers would pay no more than before but the cash would go straight to the local authorities.
I suspect that in reply the noble Earl will say that his Secretary of State wrote a letter to the leader of my party, the noble Lord, Lord Jenkins of Hillhead, earlier this month in which he criticised some of the points which we sent to him. We sent him the document and he replied and made certain criticisms. I can tell the Minister that we have answered those criticisms and that a reply is on the way. I do not intend to delay the Committee for too long. One comment made was that the Government estimated that the average rate of LIT would be 6p in the pound as opposed to 4·5p, which was in our document. We say that the average rate of LIT depends principally on two estimates: the amount of domestic rate revenue to be replaced by LIT and the income tax yield per percentage point. We obtained our assumptions from a Written Answer from Mr. Norman Lamont in the Treasury on 14th March 1988.
Another point made by the Secretary of State was that in calculating a "needs" grant for local authorities a large extra element for inner London has been added which has no basis in an objective assessment of need. That raises the whole question of grants from central to local government and the basis on which need is assessed. We have included inner London weighting. We make no apology for helping local authorities like Tower Hamlets to tackle unprecedented levels of homelessness. I think that the Secretary of State himself has done just that quite recently.
We have made no attempt, we are told, to equalise between authorities for the differences in the income tax base or non-domestic rate bases. We find it difficult to understand what the Secretary of State

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means by that because his proposal could hardly be more unfair. His scheme will effectively redistribute wealth from poorer areas to richer ones. We comment on that in detail.
Finally, there is the point about local authorities which have to keep a register of income tax payers, with details of their main residences. That is not true and I have already answered that by quoting the National Union of Ratepayers' Associations.
Unlike a poll tax, collecting LIT would not involve registering every adult locally; nor would it involve searching through sensitive records to trace individuals or hiring snoopers to mount surveillance operations. Current methods of countering tax evasion would be sufficient.
As the noble Lord, Lord Taylor, said, the fact is that local income tax works perfectly satisfactorily in many other states where there is great autonomy, particularly in Switzerland. In Canada it seems to be very simple. I have a copy of the form here. All they have to do is fill up about one line when they make their tax returns. It is as simple as that. It is self-assessment. Why can we not do the same here? I beg to move.
Baroness Carnegy of Lour: Before the noble Lord sits down, can he tell the Committee how the ordinary elector knows whether his council is doing well or badly or how it compares with another council? Can the noble Lord answer that question in a sentence, because that is the crux of the matter?
Lord Ross of Newport: He would know what he was spending because the money would be taken from his weekly pay packet if he was a PAYE earner. He would also know by comparison. I am sure that the Government would be only too pleased to publish comparisons between one authority and another on the 5 per cent. or 6 per cent., and which authorities were keeping the lid down at a reasonable level and which were going above. We have those tables now so I cannot foresee any difficulty about that. They will see the rest of the situation with their own eyes. They will see the state of their roads and the state of their education, street sweeping, and so forth.
Lord Jenkin of Roding: The noble Lord, Lord Ross of Newport, has tempted the Committee with this tantalising picture of the perfect tax. However, he has left out a great deal, as indeed did the noble Lord, Lord Taylor of Gryfe. I do not know whether it is recognised, but a local income tax would actually have a devastating effect on the inner cities. Perhaps I need to illustrate that with a couple of figures.
If a local income tax were to be introduced now, and if one started with the borough of Camden, that borough would have to charge a local income tax of 25p in the pound. Of course that would be on top of national income tax. Yet if one moved just next door to the London borough of Barnet, which runs its affairs rather more sensibly, the local income tax rate would be under 6p in the pound—5·9p. If one takes the simplest case, a single adult would save over £1,500 a year simply by moving over the boundary from Camden to Barnet. That is infinitely more than
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would be likely to happen if he merely changed house to the same kind of house under the present system. That change would be wholly absent, or virtually absent, on the community charge. By moving from my own borough of Lambeth, where I have a residence, to Bromley or Croydon one could save over £1,000 a year on local income tax.
Perhaps Members of the Committee should think for one moment what the consequences of such a tax would be. In the inner cities there are now a growing number of professional, young business people who are beginning to bring back life and leadership to the inner cities. That is a trend that the present Government are seeking to encourage by a variety of policies. The local income tax which has been advocated from the SLD Benches would drive people completely in the opposite direction. I wonder whether the SLD have begun to appreciate the really appalling impact that a local income tax would have on our inner cities.
There are all kinds of other reasons that one could give, but I sense that the Committee wishes to come to a conclusion on this matter. If one is going to have a tax which depends upon widely different tax bases in different local authority areas, then inevitably one will have to reintroduce the resource equalisation amount about which I spoke on an earlier amendment and to which I referred at Second Reading.
I give an example. The system of income resource equalisation is best illustrated by the example of a high-spending inner city council such as Camden which may well set rates of LIT so high, as I have suggested, that a large number of residents move out. If there were no systems of resource reallocation the revenue which Camden would lose from driving out those residents, as it certainly would, would have to be made up by the transfer of resources from other less profligate councils. I say at once that I believe that to be a great deal more unfair even than the present rates system. Yet it would be even more impractical to assume no system of income resource equalisation because in that case the flight of the residents from the inner city borough of Camden would mean that the rate of income tax imposed on the remaining residents would need to be even higher in order to raise the revenue which the council would need. Therefore one would inevitably be in a vicious spiral which entirely set at nought the very considerably successful policies now being pursued in order to bring back life and vitality to the inner city.
Many references have been made to the Layfield Report. That report has always seemed to me a perfect example of a government referring to a body of the great and the good who are in many ways divorced from the realities of politics but who can bring their not inconsiderable intellects to bear upon a problem. They can then come up with a range of solutions to which governments feel no commitment and from which they can pick and choose. In the case of Layfield the Government have picked very little and rejected the rest.
This Bill is the product of an entirely different process. There has been a political element from the start which has continued right the way through. So,

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when proposals finally emerge, they are bedded deep in the realities of politics. There are other examples. Social security reform has been undertaken by the present Government under the same system. One could point to other major changes of direction. In most cases it is not very sensible to ask detached people to pronounce upon matters on which there are ultimately going to be highly political decisions. It is much better that the work should be done by the poeple who are going to carry the political responsibility for implementing proposals.
If I may say so, a local income tax could only be the product of people who, like the distinguished members of the Layfield Committee, are never going to have any responsibility for putting it into effect, or perhaps the members of the SLD who are never going to have any responsibility for anything. They are the only supporters of a local income tax and I hope my noble friend will have no hesitation in asking the Committee to reject the proposal.
Lord McIntosh of Haringey: The Committee has taken more than one hour on each amendment. I do not think the Committee would therefore welcome a long speech from me on this subject, despite the kind invitations from the Benches alongside that I expound further on Labour Party policy. I think I said all I wish to say about the matter in response to the amendment moved by my noble friend Lord Mulley.
It seems to me that the next election—the community charge will not work, so we shall have to do something about it at the next election—will be fought by the Labour Party, which is going to win, on the basis that local income tax will be a part, though certainly not the whole, of the solution to the financing of local government by local people. I repeat only for form's sake that I was profoundly impressed by the speech of the noble Lord, Lord Carr of Hadley, who said that the solution would be a combination of taxes. I still believe that to be the case. There will be some form of property tax and some form of local income tax, the difficulties of which have been grossly exaggerated by speakers from the Government Benches. However, the precise form and balance between the two have yet to be worked out in detail and will be worked out in due course.
10.15 p.m.
The Earl of Caithness: We had a long and interesting debate on the amendment moved by my noble friend Lord Chelwood and we have now, to some extent, gone over the same ground in talking about a local income tax. I think that before I deal with the very many fundamental objections to a local income tax I should first deal with one or two misconceptions about the particular version of a local income tax advocated by the SLD party—the party of the noble Lord, Lord Ross of Newport.
The proposals on which the SLD rests its case were actually produced by the Association of Liberal Councillors at the beginning of April. We have examined those proposals carefully and discover that the figures simply do not add up. First, the SLD
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report significantly underestimates the amount of revenue that needs to be raised by a local income tax. The average rate of 5·4 pence in the pound which it puts forward is simply too low to raise the amount now being raised by domestic rates.
Secondly, the SLD proposals involve arbitrary changes to the existing system of needs assessments, with the aim of holding down local income tax rates in inner London. Not only does this amount to a rather dishonest massaging of the figures; it also means that low spending authorities are penalised in order to subsidise high spending inner London authorities. I was surprised to hear the noble Lord, Lord Ross of Newport, supporting the extravagances of some Labour authorities. It was because of those extravagances that some noble Lords, including the leader of his party, left the Labour Party. How ironical to throw them the lifeline that they need!
Thirdly, the SLD proposals fail to achieve full equalisation of taxable resources, with the result that for the same level of services areas with high average incomes could charge lower local income tax rates than areas with low average incomes.
There are many other defects in the SLD figures which I shall not go into in detail now. My right honourable friend the Secretary of State set out the inadequacies in full in a letter to the noble Lord, Lord Jenkins of Hillhead, earlier this month. I regret that he has had no reply. The Committee heard earlier that the honourable Member for Birmingham, Sparkbrook will not be replying to his letter. I am delighted to hear that the noble Lord, Lord Jenkins of Hillhead, will be more courteous. I hope that his reply is on the way and is not in the same category as that infamous cheque that is always in the post. We shall study the reply with care.
In the circumstances, we have no option but to rely on the Government's exemplifications of the effect of a local income tax. I am absolutely confident that these are indeed the local income tax rates authorities would have to levy. I am sure the Committee will be interested to have a few examples of what those figures would mean in terms of bills paid by ordinary people. In the highest spending areas, local income tax would produce crippling tax bills. The rate needed to finance 1987–88 spending would be 25·6p in the pound in Camden, 20·9p in Lewisham, and 16·7p in Lambeth. A single person on national average earnings, £10,500, would have to pay £2,066 a year in Camden, £1,687 in Lewisham, and £1,347 in Lambeth. Not even the noble Lord, Lord Jenkins of Hillhead, who I regret is not present, when he was Chancellor of the Exchequer contemplated a basic tax rate of ten shillings in the pound.
The consequences would be utterly ruinous. Even those on moderate incomes would flee from high spending areas to nearby areas with lower local income tax rates, accelerating the spiral of inner city decline. For example, a single person on national average earnings could save nearly £1,600 a year by moving from Camden to next door Barnet; or £1,300 by moving from Lewisham to Bromley; or £1,000 by moving from Lambeth to Croydon. The result of those local brain drains would almost certainly be plummeting house prices in the high spending areas.

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So, in addition to being crippled by local income tax payments, home owners in those areas would suffer large, arbitrary capital losses.
Even in the areas with relatively low local income tax rates, tax bills would be unacceptably high. Student nurses would, in many cases, pay more in local income tax than in community charge, and a single, newly qualified nurse would pay more in local income tax than in community charge in every local authority in the country. On average, a single man on national average earnings would pay £482, compared with an average community charge of £224. I am sure the Committee will agree that this would be a devastating price to pay for a system that would completely fail to restore local accountability since only 20 million people in England would pay a local income tax out of an adult population of 35 million.
I shall conclude by referring briefly to the administrative and civil liberties implications of a local income tax. The practical difficulties would be immense: a complex system of resource equalisation would be needed, as would a new register showing the sole or main residence of all taxpayers. Despite the claims made by advocates of local income tax, the information needed to run a local income tax is not currently available, either in local authorities or at the Inland Revenue. I think it is clear that many people would object in the strongest terms to having to supply details of their incomes to local authorities. Considerable concern has been expressed about the civil liberties implications of the community charge. But I ask your Lordships to consider which represents a greater infringement of one's rights—to have one's name and address passed to a local authority under the community charge, or to have one's financial affairs exposed to the authority? The answer is clear. Local income tax represents a much greater and more worrying intrusion into people's private lives.
The noble Lord, Lord Taylor of Gryfe, yet again said that we treated Scottish legislation indifferently. I could not agree with that; we spent many hours, as noble Lords will recall, discussing Scottish legislation last year. When I had the privilege to be a Whip for the Scottish Office, I remember full well the lengthy debates that we had. It can never be said that Scottish legislation is treated indifferently in this House.
The noble Lord said that the size of the community charge would not be known. Of course it will not be known in England and Wales for a while yet, but on last year's figures, that is on spending and need, an adult would have paid £125 in Wales and in England it would have been £178. Of course, it will vary depending on how profligate the local authority is. Last year in Camden it would have been £782 per adult.
But let me take the noble Lord, Lord Taylor of Gryfe, nearer to home, to Edinburgh. If the community charge had been in operation during the financial year 1988/89, the budgets proposed by the three political groups on Lothian regional council and Edinburgh district council would have produced these figures. Labour would have charged £401 per head; the SLD would have charged £357·50 per head; and the Conservative Party would have charged £310
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per head. In comparison with those in Camden and in other high-spending districts in England, all I can say is, lucky Scots!
I fear that the noble Lord, Lord Ross of Newport, misquoted me on what I said about CIPFA's figures. I said that their arguments would prove that the alternatives—and that includes the local income tax—would be costlier to collect and harder to administer. As I have already said, they would cost more to the average payer.
For all of the reasons I have outlined, I have no hesitation in urging your Lordships to reject out of hand proposals to introduce a local income tax. Local income tax can only result in crippling tax bills and local brain drains, coupled with severe administrative difficulties and an infringement of civil liberties. By contrast, the community charge is simpler, fair, accountable and, when the whole picture is considered, closely related to the ability to pay.
Lord Taylor of Gryfe: It is extremely difficult to reply in detail when so many figures are thrown about which are speculative as to what this would cost here and there. It costs so much to run local government. That money must be found from somewhere. Local income tax is based on the ability of a citizen to pay for these services, and therefore as a method it is preferable to the system which is proposed in the Bill and which has nothing to do with ability to pay.
If there is one voice which I have missed in this debate today it has been the voice of Lord Ross of Marnock. I have no doubt that the debate would have been lengthened somewhat by his interventions, but nevertheless they would have been effective and relevant. I recall him standing in the corner there and drawing the subject to the attention of the noble Duke, the Duke of Atholl, whom I see in his place tonight. The noble Lord, Lord Ross, said that the noble Duke lived in a very handsome castle in Scotland. As a single person he would be paying less than his forester or his bailiff or his man, wife and child or youngster and so on. That is quite unfair. If I may say so, it is quite inconsistent with the preaching to the Scottish General Assembly which took place at the weekend and which suggested some kind of mutual responsibility for people in society.
To throw the figures around as the Minister has just done, takes no account of the fact that the Layfield Committee spent a long time—two years—in looking at this issue. They were the great and the good. I have just been checking and I do not see their qualifications mentioned in the report that was submitted, but I notice that the noble Viscount, Lord Ridley, who is certainly a distinguished Member of this Chamber and one who has had great experience in local government in the North, was one of the signatories to that report.
So this is not a report that was removed from reality. It is not a report compiled by a group of academics studying this matter in an academic way. This was a group of people experienced in this field who took an objective view of the system. I cannot believe that these responsible people could have recommended a system which would be rejected so

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readily and out of hand as has happened tonight. I do not propose to divide the Committee tonight. We shall continue to advocate a local income tax; we shall return to the subject from time to time because I am convinced, based on my experience of the last year—one of the lucky Scots, if the Committee likes—that the community charge will not work. I say quite seriously to Members of the Government that this will be the factor which will ensure the defeat of this Government. However, I am not proposing to press this matter to the vote.
I take the simple statistic that in Glasgow every night there are 30,000 people homeless. How can one cater for such people in this kind of legislation? It will not work. There will be a certain amount of mass disobedience to the legislation which I would not support. But I say to the Committee that it will not work, and that the local income tax has a good deal more to commend it than the proposition that is before the Committee in this Bill. I beg leave to withdraw the amendment.
The Deputy Chairman of Committees (Lord Ampthill): The Question is, That the amendment be withdrawn.
Noble Lords: No!
On Question, amendment negatived.
[Amendment No. 7 not moved.]
Clause 1 agreed to.
Lord Underhill Lord Underhill moved Amendment No. 8:
After Clause I, insert the following new clause:
("Duty to report annually on impact on individuals of personal community charge.
—(1) It shall be the duty of the Secretary of State to lay before Parliament in each financial year following that in which the personal community charge becomes payable in a report setting out the number of persons estimated to have experienced an improvement and a decline respectively in their personal financial circumstances as a consequence of the levying of the personal community charge.
(2) The report shall be debated in each House of Parliament.").
The noble Lord said: I trust that the Committee will appreciate that the fact that I shall be rather brief in moving Amendment No. 8 does not mean that this is not a very important amendment. The amendment proposes the insertion of a new clause after Clause 1 which will provide that in each financial year there shall be presented to Parliament and debated in Parliament a report which will indicate those individuals who believe they have had an improvement as a result of the individual community charge and those who believe to the contrary.
Why do we believe we require this information? Any Member of the Committee who has read the reports in another place will appreciate that constituency Member after constituency Member enumerated the problems in their own constituencies and the gainers and the losers. Who can say quite definitely tonight which authority they are going to quote regarding the numbers of gainers and losers? The CBI quotes one figure, the Ministry quotes another figure and other people quote others.
We believe it is important that Parliament should know each year the state of improvement or falling in financial circumstances as a result of the introduction of the community charge. What is the other reason why we require this? It is vital to acquire the actual information. In the previous debate some have said that the community charge will not be the last word; others have said it may not be the last word.
If one looks at events over the past decade, since this Government have been in office, one can see the number of changes that have occurred in rating procedure and in local government finance. Very few of the Committee can put their hands on their hearts and say that the community charge is the final matter concerning local government finance. Therefore we must be ready. We must have information. Who will say what the future relationship between central and local government is to be? We know what the Secretary of State said in his pamphlet. We know that he wants to see a change in the status of local government. We do not know what the changes will be.
I think we can be sure that consideration will be given in not too distant years to changing the financial structure and support for local government once again. That is why we need information and that is why we want an annual report to be presented to Parliament and debated. I beg to move.
10.30 p.m.
Lord Monson: I am greatly attracted in principle to the amendment. I would have gladly added my name to it if I had thought that it was correctly drafted. With regret, I do not think that that is the case. As the amendment stands it would oblige the Secretary of State to lay before Parliament in each financial year a report setting out the number of persons who have gained and lost as a consequence of the personal community charge. However, the amendment makes no mention of the effect of the abolition of domestic rates.
If the amendment were redrafted so that the last dozen or so words read,
"as a consequence of the replacement of domestic rates by the personal community charge"
that would make sense. If it were redrafted in that way, I would support it wholeheartedly. As the amendment stands, I cannot.
Lord Jenkin of Roding: I regard the amendment as nonsense. It assumes that there is some magic, some holiness, some sanctity about the present impact of local government rates on individuals and families. In fact, I do not think that a single Member has dared to raise his head above the parapet and say that we ought to keep the rates. Why are we getting rid of the rates? The answer is that they are well known to be a very unfair and improper tax.
What is the report that the amendment proposes? I accept the point that was made concerning the drafting. However, what if a report showing the change was produced? That would seem to me to be absolutely valueless. Many people are worried about the expense of introducing the community charge. Why add to it by asking that a totally valueless report

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should be produced? There may well be information which the Government will want to have on the efficiency of collection and so on. But the idea of producing a list of gainers and losers when we are moving from a thoroughly unfair and discredited system seems utterly pointless.
Lord Renton: The key word in the amendment is "estimated". The Secretary of State would be required to get his officials to make an estimate of how millions of people will be affected. That seems a pointless exercise. We all know and it is admitted that many people will be better off. We also know perfectly well that everyone, whether or not they are better off, will have to pay a charge which will give them a closer feel for the way in which their local authority is conducting its finances.
In any event, if such an estimate were to be made, it could only be guesswork. Where would that get us? It would probably reveal what is already well understood and perfectly clear. If we wish to see political consequences drawn as a result of the introduction of the system, no doubt the electorate can do that at a general election.
Lord Harmar-Nicholls: Noble Lords may remember that I have always opposed this kind of amendment, quite apart from the Bill and the reasons connected with the Bill that have already been given. It is easy for the Committee to pass a measure setting out by statute the need for a report, whether or not there is anything to report, and for that to become an Act. Once that measure is on the statute book it means that people have to produce such a report. That entails expense and manpower. It entails all kinds of investigations from which nothing will be produced.
If there is information which Parliament should know about so that the situation can be amended because something is thought be wrong, we do not need reports. There are all kinds of sources for such information. Only the tiniest thing needs to go wrong and it is known. We can deal with it through all the other powers available to Parliament. There is Question Time and there are debates and all the other facilities available. To lay down by statute that we have to use money and time to produce an annual report is, I believe, a bad principle to follow. I think that it is particularly bad in relation to this Bill, as has already been explained.
Lord McIntosh of Haringey: I intervene only briefly on one technical point. I do not want to intervene in the amendment so ably moved by my noble friend Lord Underhill, but the noble Lord, Lord Renton, referred to the word "estimated" as if it were a defect in the drafting. That is far from being the case.
Lord Renton: I did not refer to it in that context. I said that it is the operative word in the amendment.
Lord McIntosh of Haringey: Perhaps I may explain what the word "estimated" means in this case. If the word "estimated" were not there, the investigation would have to be of every single payer of the community charge. The cost, as the noble Lord, Lord
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Harmar-Nicholls, has said, could be very substantial. I think that it could raise legitimate questions as to whether the cost was justified. The use of the word "estimated" makes it possible for the Government to use perfectly legitimate, well-established techniques of sampling which have been used by governments and local authorities for many years for such purposes.
As a result of the report we want to know whether the accusation which I and many others made at the outset of the Bill is correct: has the Bill made the rich richer and the poor poorer? If noble Lords are resisting having even that information, it leads one to think that they are afraid of the answers to the question.
Lord Boyd-Carpenter: There is a further eccentricity about the amendment. In the second subsection it states that:
"The report shall be debated in each House of Parliament".
It is quite usual to provide that a report should be laid before, and indeed approved by, each House of Parliament, but to provide in legislation that each House shall debate, whether or not it wants to, a report that is laid before it I think is a novelty. It may be that another place would regard it as perhaps a little aggressive on the part of noble Lords if we were to put into legislation a measure compelling them to debate something which they might not wish to debate.
Lord Renton: I wonder whether my noble friend, with his long parliamentary experience which is about the same as mine, would agree that debates can vary between about five seconds and five hours.
The Earl of Caithness: I am grateful for the clarification which the noble Lord, Lord McIntosh, has been able to give in relation to the word "estimated". I am not certain that everyone would agree with his interpretation because there is another interpretation. In order to comply with what the amendment proposes the report would have to be compiled by finding out the size of the bills paid by every adult in the country in 1990 and each subsequent year. Even to provide an estimate one would have to obtain those figures. As even the noble Lord realised, that would be massively bureaucratic and also a more than somewhat intrusive task.
Nor I fear would the result tell us very much unless the reports contained a good deal more information that the amendment seems to imply. Say, for example, that in 1991 the figures showed that a certain number of people were paying more in community charges than they had in 1990, what would that prove? Some would be paying more because they had reached 18. Some would be paying more because local spending had risen in their area. Some would be paying more because they had been unemployed the previous year and had now found well paid jobs. One thing that the Government cannot be accused of in relation to the community charge is failing to provide estimates of how people might be affected. The Green Paper contained several pages of tables setting out the effects on different

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types of household in different parts of the country earning different amounts. We have regularly expanded on and updated those tables.
Of course some people will pay more with a community charge than they do now. Too many individuals pay nothing at all in rates, including many with good incomes. Equally, however, many households will be better off as a result of the community charge. Those include over 80 per cent. of single pensioner households and single parents, as I said before. I have no doubt that when the community charge is in place people will pay very close attention to the effect of the new system.
The results from the sample family expenditure survey, for example, will show the amounts that are being paid by different types of households. I do not think that an annual report to Parliament of the kind suggested in this amendment would be either useful or appropriate.
Lord Underhill: Obviously there are some deficiencies in the wording of the amendment; after the short debate that we have had, I am prepared to accept that. I am grateful to the noble Lord, Lord Monson, for saying that he would readily accept the principle of this amendment, provided that it were worded somewhat differently.
It is very easy to rubbish an amendment of this kind, as was done by the noble Lord, Lord Jenkin of Roding, by suggesting that I am not raising my head above the parapet to talk about rates. I have not done so deliberately. I want to deal with the introduction of the community charge and consider the effect that it will have on individuals when it comes into operation.
The Minister referred to the Green Paper, which we all have read. The Government have used figures of gainers and losers to justify the introduction of the community charge, but other people have challenged those figures and said that they are not correct. The CBI has challenged them. I am not dealing with the position as advanced in the Green Paper. We on these Benches want to know what will be the position when the community charge actually takes effect and in subsequent years. As the Minister rightly said, there will be a change in people's circumstances: some people will become 18; other people will die. We ought to have information, which surely it will be quite easy for the statistical departments to obtain, so that it can be decided whether or not the community charge is something that should remain unchanged in the form that it is in this Bill.
Members opposite who have spoken seem to be taking the view that the community charge will be the complete answer to local government finance. We want to see the effect of the decision that has been taken this afternoon as the year goes by and in the following years. It may well be that people will come to realise that the community charge is not the way out. There are still things to think about and other changes to make in local government finance. That was the purpose of the amendment and I think that it was most reasonable. However, in the light of the
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debate, I beg leave to withdraw it. We may come back to this point in some other form at a later stage.
Amendment, by leave, withdrawn.
[Amendment No. 9 not moved.]
10.45 p.m.
Clause 2 [Persons subject to personal community charge]:
[Amendment No. 10 not moved.]
Lord Hayter Lord Hayter moved Amendment No. 11:
Page 2, line 6, leave out subsection (3).
The noble Lord said: This is an amendment to help the homeless. On the face of it Clause 2(3) of this Bill is one of the silliest sentences that I have ever seen in a Bill. It reads:
"In deciding whether a person has his sole or main residence in an area, the fact that he does not live in a building is irrelevant".
I want to get rid of that subsection. But if that is left out, we have to insert the wording of my Amendment No. 33 to Schedule 1:
"A person is an exempt individual on a particular day if at any time on the day his sole or main residence is not a building, caravan or houseboat".
It would be quite reasonable to ask what on earth caravans or houseboats have in common with the Local Government Finance Bill. Members of the Committee will find the answer on page 3, line 26, in Clause 4(3). The Bill describes a building which is used "wholly for the purposes of living accommodation" as a building, caravan or houseboat. But then one discovers something rather curious. It occurred to me that perhaps Mother Teresa may have tipped off the Prime Minister. Not everybody, even in this country, lives in a building, caravan or houseboat. They sleep in parks, under bridges or in a shelter sometimes made of cardboard, as has been mentioned already tonight. So the Government had to insert into Clause 4(3) the phraseology that I have just read. How silly can one get when one tries to clobber with a poll tax these people sleeping rough, who are sometimes called the visible homeless?
I hope that no one will talk about this as a wrecking amendment. We are trying to help the Government with an amendment that seeks to correct an anomaly in the legislation instead of leaving it unworkable in practice. I shall try to explain.
The difficulties of definition make it hard to put a figure on the total number of visible homeless people in this country. I understand that a report from the London housing unit published earlier this year estimated that at any one time at least 2,000 people in London alone had no shelter whatever—or residence, as the Government prefer to call it. It is the plight of these people under the community charge scheme that my amendment seeks to redress. The Government insist that every person in a local authority area must be assessed for and charged a personal community charge. In fact they go to extraordinary lengths in the Bill to make clear that it

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is habitation of space and not a property in an area that makes one liable for the charge. Clause 2(3) states:
"In deciding whether a person has his sole or main residence in an area, the fact that he does not live in a building is irrelevant".
That is their phrase—"irrelevant". I consider the fact that someone does not live in a building to be highly relevant in placing a local tax on them because one can work out for oneself the services that the national or local government provide for these wretched people.
Let us consider for a moment what the Government propose. Local authority employees will be expected to seek out these residents on their park benches, or the occupants of space under bridges, with a view, first, to assessing them for the community charge liability on a daily basis and then to extracting the charge—the full charge, I suppose—from them. This will presumably be done at night for it is only at that time that homeless people are to be found on the relevant bench or under the relevant bridge in their residence. My guess, and yours, is that they simply will not do it.
This is plainly an absurd proposition, and not only with regard to the local authority. Homeless people are not in a position to pay these bills. They could not afford them even if the local authority could find a way of charging them. The more the Government protest that rebates will be available, the more sensible it is to get rid of the charge altogether.
A more sinister thought is that local authorities already overburdened in terms of claims on housing, especially in London, will, in the course of trying to charge homeless people, simply succeed in forcing them to move from one park to another or from one side of Westminster Bridge to the other, thereby changing the local authority area of residence and escaping liability for the charge from the local authority which is looking for them.
My amendment does the Government a great favour. Not only does it improve the Bill but it also saves them from engaging in this phoney war against the homeless. No one, least of all the Department of the Environment, expects its charges to be levied, and, least of all, paid. More importantly, the amendment will provide the right immunity to a notably impoverished sector of our population.
A cynic of course might put forward the argument that our two amendments would encourage people to join what I call the visible homeless. I can only answer that by saying that such a person has not seen or has not realised the appalling conditions under which some of these people live or he would understand that that suggestion does not make sense.
I said in my Second Reading speech that the Government could not ignore this problem or rely on evasion of the charge. I still believe that to be the case, and by these two amendments we should be relieving the luckless citizen and the equally luckless local official. I hope that the amendments find favour with the Committee and the Government as they are inspired by charity, compassion and, above all, common sense.
Lord Shaughnessy: In associating myself with the amendment proposed by my noble friend Lord Hayter I hope that there will not be any implications of constitutionality involved, because the proposed amendment is simple and humane.
The question of homelessness is ever present. We have heard from the Government on many occasions about the steps being taken to alleviate this noxious problem. Amendment No. 33 is a substantive amendment. I hope that the Government and the noble Earl will not reject these two amendments on the grounds that homelessness cannot be legally defined. There must be ways to establish the terms that constitute homelessness, which is a stark and horrifying situation.
Homelessness cannot be measured with a piece of string, to mention an earlier metaphor used by the noble and learned Lord, Lord Hailsham. It can only be measured in terms of misery, disillusionment and degradation. If the provisions of the Bill stand, these homeless people with nothing but perhaps a cardboard box to shelter them will not only be disadvantaged as they are—and that is a most horrifying situation, with all its implications—but because they will be unable to pay the community charge and unable to appeal to any tribunal they will, in addition to the degradation and misery that they already experience, become outlaws, outwith the law.
In speaking to the amendment and asking the Committee to consider it seriously, I hope that in an affluent society which should be able to provide minimum shelter for every one of its citizens—we are constantly reminded how affluent this society is—this simple and humane amendment will recommend itself to the Government. I hope that the noble Earl will give us some comfort in that respect.
Lord Dean of Beswick: I rise on behalf of Members on these Benches to support the amendment so ably moved by the noble Lord, Lord Hayter, and supported by the noble Lord, Lord Shaughnessy. It seeks to exempt any person whose sole or main residence is not a building, caravan or houseboat. We believe that to be an obvious and important solution to the difficulties posed by the community charge for a particularly impoverished and deprived section of the community.
The subject was touched upon in a debate to an earlier amendment moved this evening. In conjunction with a number of Members from all parties, over the past 25 years I have had an interest in homelessness. I believe that all Members are concerned about the matter. A Member from the other side—perhaps the Minister—said that nobody has a monopoly on compassion. I approach the subject from that point of view and I certainly have not. However, I believe that in order to understand homelessness one must see it at its worst. Then one may understand what the Bill will do if it is passed without the Government accepting some of the proposed amendments and coming back with offers of their own.
The noble Lard, Lord Jenkin, has been cast in or has adopted the role of the Government's fallback spokesman, saying what he believes to be good about

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the Bill. He makes the mistake of assuming that, because today a massive turnout was engineered to support the main principles of the Bill, it proves that a standard poll tax charge will be a success as against the present rating system which, admittedly, is unpopular. Only time will prove who is right. If this side is proved right, then in two or three years' time the noble Lord may be prepared to admit that he was wrong.
In this amendment we are dealing with people, and one must see the appalling situation of the homeless to know what we are talking about. Approximately 10 years ago I had the luck to draw a high place in the ballot for Private Member's Bills in another place. I promoted an all-party Bill, sponsored on behalf of CHAR which has an all-party grouping in another place. The Bill tried to provide protection for homeless people affected by the incidence of fire and some of the appalling tragedies that had then and have since taken place. In order to acquaint themselves with homelessness, some Members toured parts of London. The situations in which people find themselves in hostels were, in some respects, beyond belief.
The Bill mistakenly assumes that most of the hostels cater for the same people each night. They do not. People tend to move on because they do not want an identification. Although I am not asking the Minister for the information because I know that it would be impossible to compile, it would be interesting to know how many people in such accommodation stay one night, one week, one month or one year. I believe that the figure would be alarming in that it would show the number of people who stay only one night and the next night move on somewhere else.
I should like to tell a story to illustrate what I am trying to convey to the Committee. During the attempted passage of that Bill, which unfortunately the Government of the day killed, we petitioned Downing Street, and a delegation accompanied quite a number of homeless people there. I was in the company of my noble friend Lord Stallard. As we were leaving Downing Street after presenting the petition, an elderly lady came to us. She was quite presentable and clean, but obviously not dressed in the height of fashion, and was carrying two bags. It was the first time that I, as a comparatively new provincial Member of Parliament from the North, saw the depths of what was taking place in London. She obviously knew my noble friend Lord Stallard better than I, as he was a London MP. She said, "I think this is a marvellous thing that you are doing for those of us who have nowhere to live." We said, "Where do you live?" She said, "Last night I slept in a car park." We said, "Where are you going to sleep tonight?" She said, "I might get in a hostel, but it might be the car park again."
That is going back to 1980, and I assure the Committee that, even on the Government's own statistics, matters have grown worse. Until about five years ago I was able to rent a flat in Artillery Mansions, along Victoria Street. Most members of the Committee will know where that is. In Victoria
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Street, on coming towards the Palace of Westminster, there is a brand new building opposite New Scotland Yard. At the time of which I am speaking there was an older group of buildings with shop fronts. An elderly lady lived in one of the doorways and she was there every night and every morning when I passed by. Wherever one went in that part of London—I do not say that there was someone in every doorway—people had a particular identification with a particular building where they used to sleep. I suppose that if accommodation was obtained for a night under a roof that was considered to be a luxury.
Those people are not in those areas where there is redevelopment. However, they are not living in anything which this Bill could identify as accommodation. Therefore, how are they supposed to comply with the Bill as it stands? I regret to say that most of them have passed the stage where any form of rehabilitation is possible.
I said earlier that it is dangerous for the noble Lord, Lord Glenarthur, to compare this Bill with the Scottish Bill because, in demographic terms, we are dealing with two completely different parts of the United Kingdom. I am a Mancunian and a former chairman of housing in Manchester and I know the problems that they had, and have, in inner Manchester. However, they are minuscule compared with how this problem will affect London.
The noble Lord, Lord Jenkin, said quite rightly that a local form of income tax would devastate the inner cities. I should tell the noble Lord, Lord Jenkin, that inner cities such as Manchester and Liverpool have been devastated without the local income tax. Most of that is due to depopulation by the younger people and retention of a far higher than average of pensioners, deprived people and underprivileged people.
I hate to play politics, but it is the present Government which have withdrawn the resources from those inner cities in massive amounts. When it is said that people will know immediately who is to blame when they are paying high local income tax, in my experience—and I was in local government for a long time—it was always accepted, even by people from the North, that the average Londoner had to bear an unfair share of the social consequences of being a Londoner. It is a well known fact that various authorities in different parts of the country which had a housing problem, have given youngsters the fare to go to London. I have waited at stations in London with Conservative Members of Parliament and seen young boys and girls from the north of England get off the train, yet having nowhere to go. They come from the north to try to start some form of a life in London. They had nowhere to go but for the people from voluntary associations who were waiting to take them into care, to give them a warm bed to sleep in and to look after them.
I agree with the noble Baroness who moved the earlier amendment that the Government are making a profound mistake in trying to apply a standard charge to people in these particular categories. There is no way in which collection can be regulated. In my opinion it will do immense damage to people who are trying to grapple with the situation in the inner cities,

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especially in London, and who, despite the Government announcements a few weeks ago of increased funding for homelessness, are still tragically and pathetically short of resources to do the job they do, with little praise, in their own time and with very great effort.
Unless the Government look at this amendment moved by Lord Hayter and come back with something positive, the most appalling damage will be done to one of the worst and most deprived sections of our community. That is why I am pleased and proud to speak in respect of this amendment.
The Earl of Caithness: I am grateful to the noble Lord, Lord Hayter, for raising this important matter. I have listened with great care, as indeed I did earlier this evening, when we had an extensive debate on the position of hostels for the homeless and hostels run by charities and other voluntary organisations. My noble friend Lord Glenarthur agreed to take the matter away and to reconsider the Government's position. Your Lordships will recognise that the position of people who sleep rough is very closely linked, as the noble Lord, Lord Dean of Beswick, has just intimated, to the question of people who live in hostels and night shelters. We are really dealing with two sides of the same coin.
Having agreed to look again, without commitment, at the treatment of people who stay in hostels, I believe it would be sensible if I made a similar offer in respect of people who sleep rough. I think it would also be right for me to say at this stage that it is not clear that the aim of the amendment as described by the noble Lord, Lord Dean of Beswick, is achieved by the amendment as tabled; but perhaps that is something we can discuss between now and another stage. Therefore, with your Lordships' permission, I shall take this matter away and consider both this and the earlier amendment in the light of the debate tonight. On that understanding, I hope the noble Lord, Lord Hayter, will withdraw his amendment.
Lord Hayter: I am grateful to the Minister. I am delighted that he is prepared to have second thoughts about this amendment and I ask permission to withdraw it.
Amendment, by leave, withdrawn.
The Earl of Caithness The Earl of Caithness moved Amendment No. 12:
Page 2, line 8, leave out from beginning to first ("premises") in line 9 and insert ("If a person's sole or main residence at a particular time consists of").
The noble Earl said: My Lords, this is a purely technical drafting amendment. I beg to move.
On Question, amendment agreed to.
The Deputy Chairman of Committees (Earl Cathcart): In calling Amendment No. 13 I should say that, if it is agreed, I cannot call Amendment No. 14.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 13:
Page 2, line 13, leave out subsection (5).
The noble Lord said: I hasten to say that this amendment, which formally appears to leave out
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exemption for students, is a probing amendment. It is the only way which we could find of raising this matter with the Government at this stage of the Bill. There is a serious issue here. There are other issues which will be dealt with later. However, this issue has not found itself on the face of the Bill and repeated attempts in another place failed to force it into the Bill. It concerns the 20 per cent. liability and whether student grants will be increased to compensate for that liability. If that is not the case and there is no compensation in student grants there will be a severe diminution in the standard of living of students, which has been going down for a number of years.
I am well aware of the arguments which have taken place between the Department of Education and Science and the Department of Health and Social Security about the different responsibilities for students' income. I believe that, rightly, there has been some attempt to tighten up the DHSS regulations, but that is only right if the DES takes on the responsibility of giving students, particularly those whose means test shows that there is a need, adequate income on which to live. It has been a principle of our involvement in the financing of higher education that, subject to a means test, the state has taken responsibility for providing students with enough to live on. Until now we have never taken the view that it is desirable for students to build up debts, although that is undoubtedly what is happening at the moment. I am also well aware that the question of student loans is being floated in Government circles, but possibly that is something for the future.
In the meantime, we have a system of student grants and I ask the Government to confirm that there will not be an irrational, unnecessary and extremely damaging reduction in the standard of living of ordinary students by forcing them, without compensation, to be responsible for 20 per cent. of the community charge. If the Government can give that assurance there need be no further debate on this matter. If not, we shall have to find perhaps a more rational way of bringing this matter forward at a later stage. I beg to move.
The Earl of Caithness: I believe that the noble Lord, Lord McIntosh of Haringey, was speaking also to Amendment No. 27.
Lord McIntosh of Haringey: Yes.
The Earl of Caithness: These amendments would exempt full-time students from the personal community charge. There are, however, in our view no good reasons why students should not be subject to the community charge in the same way as all other adults. Like other adults, they make use of local services and vote in local elections. The accountability arguments are therefore just as strong for students as for anyone else.
We recognise, however, that full-time students are in a unique position because of their financial circumstances and their mobility. They will therefore have to pay only 20 per cent. of the community charge; that is, only 85p a week on average. Many students, of course, already pay rates, either directly

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or as part of their rent. Indeed, if I cast my mind back to not so long ago I remember doing exactly that. The results of a recent survey carried out for the Department of Education and Science as part of the review of student finance which is being headed by my honourable friend Robert Jackson, suggested that over 60 per cent. of students contributed towards the rates, and that the average amount they contributed was around £70 a year.
The Jackson review, which I understand will produce proposals for consultation in due course, is considering how account should be taken of the discounted community charge liability in setting future levels of student support. The report will be concerned with all items of student expenditure and the extent to which the system already makes provision towards them.
Our proposals strike the right balance between extending accountability to full-time students as active members of the community, who make full use of local services, and taking proper account of their particular circumstances. I believe that they meet the concerns of the noble Lord, Lord McIntosh of Haringey.
11.15 p.m.
Earl Russell: I cannot say I heard that reply with any great satisfaction. This is a matter of quite general concern in university circles and, among others, to the Committee of Vice-Chancellors and Principals. Student life financially is very tight now. In fact, trying to organise inter-collegiate teaching arrangements in London we find it difficult from time to time to get people to go to lectures or classes at another college because they simply cannot afford the fares. I appreciate, as the noble Lord, Lord McIntosh, said, that there is a review under way, but it is not concluded. The noble Earl, Lord Caithness, may say that it is only a mere straw he is laying on the students. But the camel's back is very near to breaking. I hope that the Government will think further.
Baroness Carnegy of Lour: I too raised this matter during Second Reading. It is clearly very important. I agree that some students are very tight financially. I understood my noble friend to say that account was going to be taken of students' costs of living and their expenses when their grants are considered. It is important that the 20 per cent. community charge should be accepted from now on as part of the living expenses of students, as it will be for everybody. If my noble friend has said that, I am content. Can he please confirm what he said in the second part of his reply?
Lord Morton of Shuna: Before the noble Earl replies, perhaps he would consider the situation in Scotland. Students there, in the next financial year, will pay the community charge and also the community water charge. They have to pay the full community water charge but only 20 per cent. of the personal community charge. There has been no increase whatever in their grant which makes one doubt whether this review has any validity at all.
Lord Harmar-Nicholls: I should not like to give the impression of being mean regarding students' financial problems. Most of us appreciate the position. I certainly do, based on the experience of polytechnic students in the Wolverhampton and West Midlands area. If they are not adequately funded for all sorts of things, that ought to be looked at. It ought to be separate.
However, I should not like it to be done this way. I do not think it is a good thing to immunise a student from the problems and commitments that everybody has. If we want students to become good leaders in the community—and that is what we hope students will develop into—it is rather important that they should feel directly the impost of the sort of problems that everybody has to meet. I should not like to feel, on the community charge or anything else, that we give them complete immunity which puts them outside understanding the real problems everybody else has to meet.
If the financial situation of students, with their grants and everything else, is such that it is impossible for them to meet whatever the impost might be, that is another matter and we ought to look at it. But I would not tie the two points together. I think it is a good thing—with students, above all others, who will be the future leaders of this country—that they should have practical contact with the quirks and problems that everybody has to meet. Therefore I would suggest that this amendment is not the way in which to face up to the problem as regards the community charge affecting students.
The Earl of Caithness: I am grateful for the added contributions that have been made. I would say to the noble Earl, Lord Russell, that of course I recall that student life is always hard. I am sure it is no different today to what it was in my day, and indeed in the noble Earl's day. I would however repeat what I said earlier. The review which my honourable friend has carried out shows that over 60 per cent. of students are already contributing towards rates, with an average contribution of around £70 a year, which is considerably more than the average of 20 per cent. of the community charge. The noble Baroness, Lady Carnegy of Lour, put her finger on it when she said that the report must include all items of student expenditure and the extent to which the system already makes provision for them. I confirm that the report will do just that. As it considers rates, it will doubtless also consider the effect of the community charge.
With regard to students in Scotland and water charges, I am sorry that I cannot at present answer the noble Lord, Lord Morton of Shuna. As he knows, water charges in Scotland are assessed on a different basis from that in England and Wales, and water is provided by the local authority.
Lord Morton of Shuna: That is true. However, there is such a thing as a water charge under the abolition of domestic rates legislation, with which I should have thought the Minister would be fully acquainted.
The Earl of Caithness: I am indeed acquainted with it, but it seems to have slipped my mind at present.
My noble friend Lord Harmar-Nicholls was right to say that we must not isolate students totally from the realities of society. We understand the points that the noble Lord, Lord McIntosh of Haringey, has made, and the Jackson review will take into account what has been said in the debate.
Lord McIntosh of Haringey: I am grateful to the Members of the Committee who have taken part in the debate, notably for the general agreement that students have a very bad time financially if they are living on the grant available, and their conditions have been getting worse.
The noble Lord, Lord Harmar-Nicholls, seemed to suggest that I was proposing that students should be insulated from society. That was not my intention. I made clear that I want to make sure that the Jackson study, which is now taking place, should take full account of any additional cost that would arise from the community charge. The Minister has given some indication that this will be taken into account. I therefore beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Underhill Lord Underhill moved Amendment No. 14:
Page 2, line 16, leave out from ("where") to end of line and insert ("he chose to qualify as having such a residence between the area in which he is resident for the purpose of undertaking the course and his home area").
The noble Lord said: The amendment does not seek to change the position of students with regard to liability for the individual community charge. Subsection (5) provides that a student shall pay the community charge in the area in which he is taking a full-time education course. The amendment suggests that the student should be given the opportunity of liability for payment of the community charge in the area in which he is taking a full-time education course or in the area of his normal home address.
Both the Minister and my noble friend agree that students should not be insulated from the community. The student is treated as a citizen in the education town and in his home area. If he is able to satisfy the electoral registration officer, he can be on the electoral register in the area of his normal home address and in the area in which he is taking a full-time education course. In a parliamentary election he has the option of which constituency he will vote in. It seems to us that the Government are giving away nothing at all if they allow the student to have the option as to the area in which he should be liable for the community charge. That is the purpose of this amendment. I beg to move.
The Earl of Caithness: This amendment seeks to alter the special residence rules for students which are contained in Clause 2(5). Instead of being registered at their term-time address it would allow full-time students to choose whether they should be registered at their home address or at their term-time address.
This amendment would introduce an arbitrary and unfair element into the student residence rules which would give rise to resentment and, we believe,
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dissatisfaction at universities and colleges. The purpose of having special residence rules is to prevent students having to register and deregister and re-register for the community charge at the beginning and end of every term.
Clearly, if we are to impose special residence rules, the decision as to which area they choose—home address or term-time address—would be somewhat arbitrary. It is quite clear that the same rule must apply to all students. If students were allowed to choose where they were registered at every university or college, some students would be registered at the university town, while others would be registered elsewhere. A student who registered at the university town might well resent the fact that a colleague registered at home was paying a lower community charge.
Moreover, allowing students to choose would create just the kind of administrative confusion which the special residence rules are designed to avoid. The registration officer at a university town would be faced with the task of distinguishing between thousands of students, some of whom he would be obliged to register and others whom he could legitimately ignore. How would he know which was which? His only option would be to identify every student and then carry out a series of exhaustive cross-checks with registration officers all over the country, in order to ensure that they were all correctly registered.
We believe that this would be an administrative nonsense, and it is for the reasons that I have given that I cannot support the noble Lord's amendment.
Lord Tordoff: Does it not make the problem of accountability a little difficult if the student is paying in one local government area and voting in another? Does that not breach the principle of accountability?
The Earl of Caithness; No, because the student will be using the facilities provided by the local authority when he is in term and when he is at home. Likewise, some of us, alas, have to find somewhere to perch in London at night and we use the facilities in London, as one does if one is lucky enough to live in the country. Indeed the noble Lord, Lord Morton of Shuna, will use the facilities provided by the local authority in Scotland. We do not believe that it alters the accountability.
Lord Underhill: I am grateful to the Minister for his reply, because this was a probing amendment. We wanted to understand why the Government had put this in subsection (5). Having had the reasoning, we now have the opportunity to study it and decide whether or not to accept it. There is the point which the noble Lord, Lord Tordoff, raised which we shall have to look at very carefully. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Earl Cathcart: In calling Amendment No. 15, if it is agreed to, I cannot call Amendment No. 16.
Lord Harris of Greenwich Lord Harris of Greenwich moved Amendment No. 15:
Page 2, line 17, leave out subsection (6).
The noble Lord said: I beg to move this amendment. I understand that we are discussing Amendments Nos. 16 and 24 at the same time. The issues raised by these amendments relate to the question of those remanded in custody. When the issue was raised in the House of Commons at the Report stage on 19th April at column 702, Mr. Howard said:
"There was a vigorous Committee debate on this subject".
That refers to the question of remands in custody. He continued:
"Since then we have been reflecting on the arguments that were put to us and on the arguments that have been presented this afternoon. The case is not so clear-cut as has sometimes been suggested by the Opposition, but I accept that in some quarters there is considerable disquiet on the point. I shall therefore consider the points that have been made in the debate and will consult my colleagues and then report back to the House on the possibility of extending the exemption to cover prisoners on remand".
However, there is as yet no government amendment down on this point. I am bound to say that, in the light of what the Minister has said, I find that a little surprising, but no doubt the noble Earl will deal with the present position when he comes to reply.
I think that the case for change in the Bill on this particular issue is fairly obvious. First, convicted prisoners are already being exempted from the tax. That is obviously necessary because they are clearly in no position to earn any income. But what about those who are remanded in custody often for long periods? The number remanded in custody for between three to six months rose from 700 in 1979 to 1,800 in 1986. In the category of those remanded in custody for more than six months, the numbers rose from 300 in 1979 to 800 in 1986. Again that was a substantial rise.
What I find very difficult to understand is how it can possibly be right to distinguish between a man who is sentenced to, say, 18 months' imprisonment, who will not pay the tax, and another kept in custody on remand for over 12 months who will pay it.
As the noble Earl will be aware from his previous ministerial experience, the man kept in custody on remand for 12 months or more—there are many such men—will be kept in detention for a longer period than the man who is sentenced to 18 months, because the man who is sentenced to 18 months has the advantage, first, of remission and, secondly, of the possibility—the now strong possibility—of parole.
What happens, as is often the case, if the man on remand in custody for this substantial period of time is eventually acquitted? He will then have lost his liberty for a very substantial period of time—in many cases a year or more—and he will also have to pay the tax, whereas the man who is found guilty will be freed from the necessity of paying the tax and will also be in custody for a shorter period.
It seems to me to be quite astonishing that we are having to come back to this issue, it having already been raised in the House of Commons. I find it very hard to accept that there is any justification for quite
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such a ludicrous provision in the Bill, and I very much hope that the noble Earl will be able to indicate that the Government will be tabling an amendment to deal with this anomaly. I beg to move.
11.30 p.m.
Lord Morton of Shuna: I would strongly support this amendment because it seems to affect only those who are eventually acquitted. As I understand the position, somebody who is in the end convicted has his sentence backdated to the time he is remanded in custody and therefore he pays no community charge in respect of the period he is on remand.
All we are dealing with are the poor people who are remanded in custody although innocent, as they are eventually found to be, who are liable to pay the community charge while they are prevented from earning any income whatever and who usually lose whatever job they have. In England and Wales they do not have even the advantage that those under the Scottish system have, that on summary trials in Scotland they can be detained for only 40 days, and on indictment can be detained for only 110 days. Each of those periods is quite considerable for people who are trying to retain a job. But if the period goes beyond that it is quite impossible to retain a job. The situation really has to be dealt with because we are penalising, or the Government are attempting to penalise, the innocent and letting off the guilty. That really is a very odd position, even for this Government.
If this amendment is not to be accepted, I have to speak to Amendment No. 16 which is also down in the name of my noble friend Lord McIntosh, and which suggests that the Secretary of State:
"shall produce an annual report".
This is obviously necessary because, as the noble Earl will be well aware, the number of prisoners on remand for long periods is increasing, goes on increasing and nothing seems to be able to be done to stop the increase of remand prisoners. Therefore it is necessary that Parliament should know how many people are affected by this disaster.
The Earl of Caithness: I am grateful to the noble Lord, Lord Harris of Greenwich, for raising the matter. It takes my noble friend Lord Glenarthur and me back to our former Ministry and the work that we did there. As the noble Lord said, there was considerable debate on this matter during the consideration of the Bill in another place. In view of that, we agreed to consider in consultation throughout the Government the possibility of extending the exemption to cover those held on remand.
I am now able to inform the Committee of the decision we have reached in respect of that undertaking. We have decided that the exemption should be widened to include those held in legal custody, including, for example, those held on remand and those committed to prison for contempt of court. We also propose to exempt people detained under the provisions of the Mental Health Act 1983.

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We have decided on balance that accountability cannot reasonably be expected to operate properly for people who have no access to local services and are often held in a local authority area away from their homes. It also removes the anomoly that may have arisen where a remand prisoner is subsequently found guilty and where the time spent on remand is deducted from the custodial sentence. A person in those circumstances would be entitled to a retrospective exemption from the community charge for the period spent on remand, whereas a person who was found not guilty would be liable to pay the community charge for the whole period.
There are two exceptions to the general exemption for those held in legal custody. The first is fine defaulters. They differ from other prisoners in that they are able to obtain their release at any time simply by paying their fine, which will of course have been set by the court at a level which takes into account their means. The second exception will be those committed to prison for non-payment of community charges or residual domestic rates. A person can only be committed if his failure to pay results from wilful refusal or culpable neglect; in other words, if he had the money and could have paid but did not.
We have always made it clear that a person committed for refusing to pay the community charge will not, as a result, be exempted from the personal community charge. We shall bring forward a suitable amendment at Report stage. I hope that with that undertaking the noble Lord will feel able to withdraw the amendment.
Lord Morton of Shuna: Before the noble Earl sits down, perhaps he can tell us whether the amendment will cover the Scottish Act as well.
The Earl of Caithness: Yes, it will.
Lord Harris of Greenwich: I am delighted to hear that clear and unequivocal statement by the Minister as regards the Scottish provision. I am sure that there will be wild celebrations in Barlinnie tonight!
Perhaps I may ask one further question. I do not expect the noble Earl to deal with it tonight. Perhaps he will write to me regarding people who are sent to a bail hostel pending trial by order of a court. The hostel is often outside the area where their families live. I am not pressing for an answer tonight. Some questions involving hostels have already been raised and no doubt the Government will reflect on that matter. The Minister will realise that people are sent to bail hostels as a result of an order of a court.
Having said that, I welcome what the Minister has said. I wish to study carefully what he has said to see whether it meets all our concerns. However, at first sight it would appear that it does so. Subject to the qualification I have raised as regards bail hostels, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 16 to 19 not moved.]
Clause 2, as amended, agreed to.
[Amendments Nos. 20 to 23 not moved.]
Lord Hesketh: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Avon Light Rail Transit Bill [H.L.]
The Queen's consent signified, and Bill reported from the Unopposed Bill Committee with amendments.

Dartmouth-Kingswear Floating Bridge Bill
Bill reported from the Unopposed Bill Committee with amendments.
House adjourned at twenty minutes before midnight.