§ 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 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 642 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 643 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".
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. 645 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 646 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.
647 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 648 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 649 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 650 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, 651 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 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.
652 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 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.
653 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 654 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' 655 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. 656 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.
657 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.
658 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 659 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 660 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 661 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.
§ 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 662 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, 663 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.
665 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 667 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 668 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 669 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.
670 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.
671 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 672 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.
§ 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.
673 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 674 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.
§ 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 675 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.
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.
§ 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 677 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 678 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.
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.
§ 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 680 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.
681 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.
682 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 683 £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 684 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—
§ 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.
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, 317.688
|DIVISION NO. 1|
|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.|
|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.|
|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.|
|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.|
|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.|
|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.|
|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.|
|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.|
|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.|
§ Resolved in the negative, and amendment disagreed to accordingly.
§ 6.12 p.m.
§ [Amendments Nos. 2 and 3 not moved.]689
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 694 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.
695 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 696 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.
697 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 698 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.
§ 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.
700 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 701 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.
702 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 703 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 704 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 705 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 706 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.