HL Deb 23 May 1988 vol 497 cc713-62

House again in Committee on Clause 1.

Baroness Robson of Kiddington moved Amendment No. 5: Page 1, line 12, at end insert— ("( ) This section is subject to section (Exempt Dwellings) below.").

The noble Baroness said: In moving this amendment I should also like to speak to Amendments Nos. 9, 36 and 53. These amendments address themselves to a collective community charge as regards short-stay hostels. In the debate on the first amendment the noble Lord, Lord Carr, briefly addressed himself to the problem. I listened with great care to the speech made by the noble Viscount, Lord Whitelaw, in respect of the first amendment. He said that the Committee was entitled to do certain things. In my view, the Government may see fit to accept the amendment in the end.

Short-stay hostels, run by voluntary organisations such as the Salvation Army or Crisis at Christmas, cater for thousands of people without shelter. The levy of a collective community charge on such hostels, with residents not paying a community charge elsewhere and being expected to pay the daily cost of the charge, is administratively unworkable and politically insensitive. It will certainly hinder the provision of these vital services. With an increasing number of homeless people that would be tragic.

The amendment proposes what I consider to be a most reasonable solution. It is the exemption from the charge of individuals in collective-charge properties run by voluntary organisations, leaving the properties subject to a non-domestic rate. If we proceed with a collective community charge, the structure of such a scheme will disadvantage some of the poorest sections of society. The problem with levying the charge on such hostels is that people staying for a few nights or a week must pay the personal community charge. Only afterwards will they be able to claim a rebate to reduce the charge to 20 per cent. It does not take much imagination to see that there will be quite a time lag between the payment of the charge and tile reimbursement from the DHSS, leaving many people even poorer.

We must also consider the 80 per cent. rebate for such people. That will still leave 20 per cent. of the charge to be found by the hostel resident. Members of the Committee know as well as I that the hostel residents, on the whole, do not have any money. I believe that it will be a disincentive for these people to take up the provision, and in the same way it will increase the hostel's rent and force some of the people back on the street.

Therefore this becomes an enormous problem for people running the hostels and half-way houses because they will face the choice of exacting the community charge from residents or paying the charge themselves. However, if they do—and I believe a large number of them will elect to do that—it means that they are using to pay the collective community charge tax those resources raised voluntarily which would have gone to provide more help for these people.

This problem can be vividly illustrated by the charity Crisis at Christmas, of which I am very proud to be a trustee. I am sorry that the noble Baroness, Lady Macleod of Borve, is not here because her husband started that charity and she has devoted 21 years of her life to supporting it. Above all, it is famous for the six days of shelter it provides for homeless people over the Christmas period—all paid for by voluntary donations and all the work done by volunteers. That charity has estimated that the collective charge for its six days' operation each Christmas, which looks after 600 people over six days, could be as high as £4,000. The cost of providing those six days for 600 people over Christmas is £17,000. They could not conceivably collect that £4,000 from the people who come in for six days over Christmas and it will therefore mean that Crisis at Christmas will have to find another £4,000 for that exercise.

Apart from having to find more money which would not go directly to those people who need the help, it would also impose a burdensome and irksome administrative duty. It would increase the cost of administration, detailed records would have to be kept and the charity would become the form of tax collector that the new charge demands.

The other matter which worries me even more is that the nature of open Christmas would be radically altered. The Crisis at Christmas organiser would be forced to ask everyone who they were, whether they wanted to stay one night, whether they were over 18 or paying the personal community charge elsewhere. Therefore even if the whole cost is met open Christmas would not survive in its current form. It is essentially a place where anybody who is homeless can turn up.

There is another problem that could be created. Every Christmas we are loaned free of charge a building in which to house and feed those 600 people. However, if Crisis at Christmas defaulted the person technically liable for the charge in the end could be the authority or person who had loaned the property that we were using. Therefore it would become increasingly difficult for us to find a building.

I have talked about Crisis at Christmas, but during the rest of the year Crisis at Christmas undertakes fund raising for over 100 other organisations, funding about 30 all-year-round hostels as well as group homes and other services. This year it expects to raise £700,000 or £800,000. All those hostels and many other homes will be subject to the collective community charge and will face the same sort of problems all year round, deducting from the voluntary contributions that should go to the people who need help.

For voluntary hostels this promises to be an administrative nightmare. The only solution that we can see is to abolish altogether the charge for these kinds of homes, leaving the residents exempt while living in the voluntary hostels and with the voluntary organisations paying non-domestic rates for the properties. I believe that these amendments are something which the Government must accept as fair. We live in a society where homelessness is increasing. We do not want to make the conditions worse and I hope that the Government will be able to accept the amendments proposed.

The Lord Bishop of Gloucester

I also dare to hope that the Minister may come to see, if he has not already done so, that the Bill as it stands without this amendment is a triumph of logic over reality because I do not believe that it will work in its present form.

The noble Baroness, Lady Robson, has already indicated how it would affect a charity such as Crisis at Christmas. Perhaps I may turn to something rather different and declare a personal interest. It so happens that, because of where we live in Gloucester, between six and twelve homeless men and occasionally a homeless woman turn up at our front door every day. We have come to know a few of them well enough to realise that their lifestyle is such that the idea of their having any kind of responsible participation in local government is simply farcical.

In a letter which the Minister's colleague in another place, the Minister of State for Local Government, wrote to the Salvation Army he said: Such people"— that is, the people we are talking about here— should nonetheless be involved in the process of accountability". It is very difficult to recognise the reality behind those words. He continued: It would not be appropriate simply to exempt them". I understand and entirely support the main thrust of this Bill—namely, to increase the base of accountability of local government—but I believe that there is no reality in trying to extend that to the homeless men who are in and out of short-stay hostels. We in Gloucester over the last few years have created a night shelter for such travelling and shiftless people. It takes about four years of local money-raising and the accumulation of a responsible committee to get such a project in operation. It lives from hand to mouth financially, always trying to raise enough money locally.

As explained by the noble Baroness, the imposition of the system outlined in the Bill is bound to make the cash flow and money-raising problems of such local projects much more difficult and painful. Who is going to charge these men up to £1 a day in addition to the amount they already pay for their board and lodging? Who is going to ensure that they obtain a rebate if they are entitled to one? I believe that before this Bill is enacted, at the very least somebody responsible should share the experience of running and administering such a system. I believe that this must have been conceived in offices a long way away from reality.

My experience is that very few of the men we are talking about will ever vote in local elections. Therefore it is totally unrealistic to expect them to register and to pay the community charge. They simply will not be there when you want to collect it. I believe that the voluntary societies are almost unanimous—certainly judging from my own postbag—in asking that the proposal should be dropped and that they should simply be asked to pay the non-domestic rate, as they do at the moment. I find it difficult to believe that the Government wish to press on, considering the comparatively small numbers involved and the painful effect not only on the men themselves but upon those voluntary bodies and individuals who work so hard to care for a particularly vulnerable part of our population.

Baroness Faithfull

In supporting this amendment, I ask my noble friend the Minister for some advice. Who is to collect the money? Members of the Committee have referred to the letter from the Salvation Army on the issue of collection. I refer to the whole sphere of hostels: the Simon Hostel, the Church Army hostels, the Salvation Army hostels, the shelters for battered wives. All of those organisations take in people who are in trouble for a short or longer time. At the time when they are taken in, they are insecure and aggressive. Those of us who have worked with such vulnerable people know how very difficult it is to establish a relationship with them. And until you establish a relationship with them you cannot possibly make any effort to rehabilitate them.

The person who asks for their community charge will represent to those people, as the Salvation Army calls it, "the Government". Most of these people are "agin" the Government, not necessarily rightly so but because of their circumstances. They are against authority. Anyone on the staff of these hostels collecting the money will represent authority. That is immediately going to make it very diffcult to establish relationships with this wide spectrum of people. My worry is not only that expressed by the noble Baroness and by the right reverend Prelate: the question of the money. There is also the matter of who is to collect it. If it is to be the hostels, they will empty because people will feel that the staff represent authority.

8.45 p.m.

Viscount Thurso

I support my noble friend Lady Robson and the right reverend Prelate the Bishop of Gloucester in the amendmdent. I fear the provision because it will in effect turn each of us into a vicarious Scrooge. We shall be extracting money from people who get nothing from us except what is given to them by charity. They are people who are so disadvantaged that they do not know how to use the system in order to get anything out of taxes and local government. We will either have to extract it from them or extract it from the charities that are set up to look after them when they are in desperate need.

I have had experience of sending desperate people to places like a Salvation Army hostel; I have seen how they have been cared for and put on the right lines. I realise how important the relationship of these hostels with these disadvantaged people is. It is important that we realise that by turning such hostels as the Crisis at Christmas hostel and Salvation Army hostels into agencies for the collection of even local taxes, it is going to create a feeling in the minds of people that they are going into a hostel that is a kind of government agency. The very delicate relationship built up by charities like the Salvation Army and Crisis at Christmas with these very disadvantaged people will be damaged. We shall do damage out of all proportion to the principles which the Government may be striving to establish. I cannot believe any principle of taxation makes it desirable to take from somebody something he does not have or stops people giving what they would willingly give to people who are totally disadvantaged.

Therefore, I beg the Government to look at this amendment with sympathy and to see whether they cannot do something to alleviate injustice by removing these hostels from the obligation of collecting taxes and of turning themselves into collectors of tax from thoroughly disadvantaged people.

Baroness Ryder of Warsaw

I agree entirely with my noble friend Lady Robson, the right reverend Prelate the Bishop of Gloucester and the noble Baroness, Lady Faithfull.

I declare my interest with the voluntary foundations, the Ryder Homes and hostels which I represent as founder, auxiliary nurse and social worker, nursing and caring for over 2,000 people of all age groups suffering 18 different kinds of disability and also the homeless and destitute. In 1987 we were privileged to nurse 907 patients who died in our care. As always, especially in the large cities and elsewhere, we have thousands more on waiting lists or arrivals in various parts of Britain. I am exceedingly concerned and shocked that our work for these brave and silent sufferers in society, and indeed the foundation as a whole, should be so penalised. I therefore seek an assurance from the Minister that all our sick patients, residents and the homeless will be exempt.

The foundation depends on voluntary contributions and it has to raise several million pounds each year through the tireless efforts of fund-raising teams. Naturally they want encouragement not only from the public but also from the Government. Moreover, resident staff, of whom there are about 160, must be present in each home and hostel to give essential cover for 24-hour day and night nursing and care.

There are also dozens of part-time nurses and volunteers. Therefore, I ask the Minister—I implore him—to offer some reassurance that the people and patients, nurses, auxiliaries and volunteers to whom I have referred will be protected.

Lord Taylor of Gryfe

Perhaps I may encourage the Minister to intervene at this stage since the case which has been made appears to the Committee in general to be so overwhelming. I wonder whether he is convinced and therefore is prepared to make some concession. I seem to recall when we were discussing the Scottish Bill that the same ground was covered and I believe that some concessions were made. If I remember rightly, some concessions were made, for example, in the case of homes for battered wives. The Minister may recall that. As some concessions were made in that regard, perhaps the Minister would care to intervene at this stage and tell us the Government's view.

The case for the homeless and the drifters, if you like, who have to go to these hostels, is appreciated by all Members of the Committee. I remember the noble Lord, Lord Ross of Marnock, making a cynical comment when the subject was debated here that the tax could be collected on an American Express card. I believe that he was trying to prove that the people who drafted the legislation had little knowledge of the conditions of the people who are affected by this legislation. I encourage the Minister to intervene.

Lord McIntosh of Haringey

I echo the hope of the noble Lord, Lord Taylor of Gryfe, that the Minister will intervene quickly. Therefore, I shall intervene only briefly because I believe it is my duty, on behalf of my noble friends, to say how strongly we support these two amendments. We have had an afternoon of high drama but perhaps, as the right reverend Prelate said, the drama was somewhat divorced from reality. We now have a whole series of cases of common or garden tragedy affecting real people of the kind of whom I suspect a large number of the 317 noble Lords who voted against the amendment this afternoon can have no experience whatever.

I am sorry, I did not want to make this into a party political point. However, the case that has been made for a compassionate view of the community charge as it affects people in these hostels is so overwhelming that I very much hope that the Minister, and the Government, will be able to find it in their hearts to make meaningful concessions, otherwise we shall be forced to follow the noble Baroness into the Lobbies.

Baroness Masham of Ilton

Before the Minister intervenes, perhaps I may bring to the attention of the Committee another subject which has not been mentioned this evening. I chair an organisation called Phoenix House which has residential homes for drug addicts. Most of these people are on social security and the homes survive with DHSS grants. Often the staff feel most insecure through not knowing whether the grants will arrive. The work is very demanding. We have homes in many parts of the country and we are trying to expand.

Many of our residents are now HIV-positive. To get the residents free of drugs and rehabilitated is without doubt the safest solution for the community. Drug addicts with AIDS in the community provide the quickest way of spreading the disease. The strain of running these homes with the extra community charge may be the last straw that breaks the camel's back. The rich who live in comfort will be very much more at risk with drug addicts at large and a great number of people having to seal to finance their addiction. In many areas the crime rate is increasing. I have great admiration for the many voluntary organisations such as Phoenix House, the Salvation Army, the Sue Ryder Homes and many others. I hope that the Government will realise what they are doing before it is too late. If the Government do nothing now, they will show that they do not understand homelessness and our over-filled prisons will become even fuller.

Lord Glenarthur

I must begin by saying that of course I very much appreciate the enormous amount of work which is done by all those charities to which Members of the Committee have referred this evening. I fully understand the strength of feeling that lies behind these amendments, as explained by the noble Baroness, which are intended to exempt those who live in charity-run hostels from making any contribution towards the costs of local services.

Having said that, this amendment has some undesirable qualities because it would severely undermine the principle of local accountability.

Noble Lords


Lord Glenarthur

If I may be allowed to develop beyond just a phrase, perhaps I can explain why that is so and also what is being done to try to meet the concerns which have been raised. Like it or not, we had this discussion during the Scottish Bill, to which the noble Lord, Lord Taylor of Gryfe, referred. It is a principle, stated on many occasions during the passage of that Bill, that as many adults as possible should make some contribution towards the costs of the local services from which to some extent they benefit.

Of course, there are already a number of exceptions and they are set out in Schedule 1. I believe that the noble Baroness, Lady Ryder of Warsaw, will see from paragraphs 7 and 8 of Schedule 1 that hospital patients and those in homes—to take up a point made by the noble Baroness Lady Masham—are covered in the way in which she would wish them to be covered. In particular, the noble Baroness quoted the case of Phoenix House and the work done with drug addicts. As far as I can tell, if they are residential, they would be covered by the exceptions set out in paragraph 8. As matters stand, those exemptions apply to groups, such as the severely mentally handicapped and the residents of hospitals and homes, as I have described. I am sure that Members of the Committee will agree that those are the people for whom the process of accountability cannot be said to operate properly. There does not seem to be any difference between us on that.

However, the same arguments do not apply to people who live in properties designated for the collective community charge. People staying in dwellings designated for the collective charge make use of local services to some extent just as others do. My noble friend Lady Faithfull was a little concerned about hostels where people live who may be disturbed and with whom the owners of the hostel find it difficult to establish the necessary close relationship. I must point out to my noble friend that the Government have already undertaken to exempt those who stay in hostels which provide a substantial degree of care. That provision is also taken care of in paragraph 8 of Schedule 1. The collective charge will not be raised on hostels of that kind but on general purpose hostels where people come and go and where little or no "care", in the normal sense of that word, is provided.

The noble Baroness, Lady Robson, appeared particularly concerned about Crisis at Christmas, which offers accommodation to down-and-outs for one week in the year. I must say it seems most unlikely that a property which is used for one week in the year would be designated for the collective community charge. That charge, which we have not yet had time to debate fully but which will be dealt with tomorrow, has been designed with permanent hostels in mind—those whose business it is to provide accommodation on a continuing basis.

All that I have said does not mean that those who stay in collective charge properties should necessarily have to pay the full community charge. I agree that many of them, particularly those who stay in charity hostels, have little or no income. The Government have taken account of that by providing that they should receive rebates of up to 80 per cent., and no one whose income is low and stays in a charity hostel will have to pay the full amount of the charge. I think it is worth pointing out that individuals who are eligible for an 80 per cent. rebate in their contributions will also be eligible for income support. Their income support payments, like everybody else's, will have been increased to reflect the average 20 per cent. payment which would be required; so I do not think there is quite as much justification as may be implied in the remarks of the noble Baroness, for saying that those who stay in hostels would be unable to pay the reduced charges which many of them would face.

I fully appreciate that it is one thing to say that rebates will be available and another to ensure that rebates are actually paid to the kind of people who stay in these hostels. That is, again, a point made by the noble Baroness. So we have been examining, and are examining at the moment, a number of options with the DHSS and local authority associations for ensuring that the rebate system operates smoothly and effectively in these circumstances.

One option is to offer 80 per cent. vouchers to the people concerned. Another option would be to provide that people in charity hostels will pay only one-fifth of the normal collective charge contribution. The noble Baroness, Lady Robson, expressed concern that charity landlords might be out of pocket and might therefore impinge upon the funds which have been donated in connection with the charity, if they decide they cannot collect a contribution from the poorest of their visitors.

In that connection I should like to make two points. The first is that the poorest people will have to pay only one-fifth of a contribution. I think we have to get that into proportion. The right reverend Prelate the Bishop of Gloucester suggested £1 a day. In fact, in the average area it is just over 12 pence a day. Secondly, in answer to my noble friend Lady Faithfull, the charity landlord, who will be responsible for collecting the charge, will be allowed to keep 5 per cent. of the contributions he collects to cover his costs. Those would be such things as the cost of the administration of the scheme, collecting the money, maintaining records, handing over the money and so on. I suppose another feature of it could be said to be bad debts. I think it is also important to bear in mind that there are those who already attend such hostels as the Salvation Army hostels, who already contribute, as I understand it, towards some of the services that are provided. No doubt that money comes to them in the first place through the social security system.

The noble Baroness suggested another idea, which is that charity hostels should be subject to non-domestic rates. I wonder whether the noble Baroness really appreciates quite what that would mean. She may have got it slightly wrong, when one realises that these properties are not non-domestic. They are by definition domestic because they are used for residential purposes. I have to say that it is perhaps a little odd, on the one hand, to say that the collective charge will impose a burden on charities and at the same time to suggest that charities should pay non-domestic rates. I believe it would be more of a burden for charities to pay full non-domestic rates than it would be for them to pay a certain number of collective charge contributions on behalf of a visitor, if that visitor has no money.

Therefore, in answer to the point the noble Baroness is making—and she has received support on this—I hope your Lordships will agree that this amendment is unnecessary, particularly in the light of the assurances I have given that we will provide for people on low incomes to meet only one-fifth of their collective charge contribution and that we are looking at the mechanism in the way I described just now.

I suggest that the correct way to help people staying in charity hotels, rather than giving a complete exemption, would be to proceed along the lines I have stated. I think that is fair and it does not in any sense fly against any principle of the Bill. At the same time I appreciate the very real concerns expressed and the dedicated work that goes on. However, I suspect that there is some lack of knowledge among some of your Lordships who have made contributions to our debate today as to what is taken care of in Schedule 1 to the Bill. I hope that the noble Baroness, Lady Ryder of Warsaw, will study that matter.

Lord Jay

The Minister's reply on this amendment seems to me extraordinary: indeed, almost incredible. Here we are talking of a number of homes and of people who are almost destitute. Incidentally, let us remember that the great increase in homelessness that has come about in the last few years has arisen largely because of the Government's own housing policy. Therefore they must accept a special responsibility in this case.

The Government are now apparently asking the charities, who are about the only people in the community trying to help with this acute problem, to act as tax collectors on behalf of the local authority and the Government, in order that these small amounts of revenue may be collected. Can the Minister make clearer what the legal position is? Is there a legal obligation on the staff of the charity to extract these sums from the homeless people staying in hostels? If so, how can that be enforced? The Minister's argument for this extraordinary, almost inhumane arrangement is that these people have to be made accountable for their use of local services. To be accountable in any significant sense one must not only make some use of the services but have some means from which to contribute. As many of these people—probably a large proportion—are destitute, how can this be done in practice?

The Minister made great play of the fact that the people concerned would be in receipt of the rebate of 80 per cent., about which we have heard so much in the debates, and that that would go far to solve the problem. I presume that this is in the Bill. Can the Minister say precisely where one finds mention of the rebate of 80 per cent., or of 20 per cent., if one wishes to put it that way? If it is not in the Bill, the case would seem to fall to the ground. If it is, perhaps he can say precisely where.

Lord Renton

I do not deserve to be forgiven for intervening now, not having heard the earlier part of the debate, but I have listened with great care to the Minister's statement and I am trying to understand its full implication in relation to the amendments. I should welcome some clarification. The Minister referred twice to paragraph 8 of Schedule 1, in which we find an expression that occurs frequently elsewhere in the schedule: A person is an exempt individual on a particular day if at any time on the day—

  1. (a) he has his sole or main residence in a residential care home, nursing home or hostel, and
  2. (b) he is receiving care or treatment (or both) there".
On the face of it, one might assume that that is intended to cover the very cases mentioned of short stay. I shall be grateful if the Minister can say whether that is so.

Baroness Seear

Is it the intention to charge people who are sleeping in cardboard boxes under the arches on the embankment? If it is not, as I hope, this will obviously discourage them very much from moving out of their cardboard boxes to go into hostels—a move that most of us would welcome—where they would become liable for the charge.

Lord Dean of Beswick

The Minister in his reply referred to people who are accommodated substantially in hostels. What does "substantial" mean? Many of the people concerned go to a hostel for one night only and then go back on to the street.

It is a little dangerous, although I do not carp about this, for the Minister to make reference to the Scottish Bill. Those of us who have been involved in housing and hostels know that nowhere in the United Kingdom has a problem equal to that of central London. People come to the centre of London from all the major cities, which have their own problems. The problem in the centre of London calcifies and hardens. I walk from my flat in London week after week and month after month, and I see the same people sleeping in doorways. Occasionally they disappear for a few nights when they probably go to a hostel. Can the Minister say what he means by "substantial"?

Lord Glenarthur

To reply first to the noble Lord, Lord Jay, about legal obligation, we have yet to reach the part of the Bill that commences in Clause 5, which deals in depth with the collective community charge. Clause 6 details the setting up of the community charges register. We have not yet reached the point where there is a legal obligation on the part of anyone to collect it. The purpose of the Bill is to establish that, and we shall come to it in due course.

As for the question that the noble Lord, Lord Jay, posed about how the money could be raised in practice by these poor people in order to pay the community charge, I think that that is more a feature of the social security system than of this Bill. The two run hand in hand. That is why he came to the next point which was where in the Bill we could find the elements which go to show how the 80 per cent. rebate is achieved. Further, how it is possible, as we agreed following the Scottish Bill last year, that the income support payments would be increased to reflect the average 20 per cent. payment. The answer is to be found in Clause 133 of the Bill. If the noble Lord looks at Clause 133 on page 74, he will find that Schedule 13, which amends the Social Security Act 1986, will have the effect for which he is looking. My noble friend Lord Renton—

9.15 p.m.

Lord Jay

Will the noble Lord permit me to intervene? I have read Schedule 13. It may be my fault for not being a sufficiently trained lawyer, but I cannot find any reference either to 20 per cent. or to 80 per cent. in that schedule. Since so much of the Government's argument for the Bill rests on this, I think that we ought to know where it can be found.

Lord Glenarthur

That will be done by order under that schedule and it does not feature in the schedule. However, Clause 133 paves the way for that part of the schedule to take effect. My right honourable friend has stated that orders would be made under the schedule.

Lord Jay

So the noble Lord is telling us that this rebate on which the whole case for the Bill on Second Reading and in the debate this afternoon rested is not in the Bill at all but will perhaps—we do not yet know—appear in some order to be made at some later unspecified date. Is that correct?

Lord Glenarthur

I seem to have been down this path before with the Scottish Bill last year, when the same arguments were put forward. The fact is that the same applied there, and there is absolutely no suggestion that the appropriate orders will not be made. I am sure that the noble Lord is not suggesting for a minute that that is not the case. Of course the orders will be made. That is the correct place to make the orders to bring into effect this 80 per cent. rebate. That is why it is being done in this way and is not put on the face of the Bill itself.

Lord Jay

I am merely saying that clear words in an Act of Parliament are one thing, but the promise from a Minister to introduce an order at some future date, although it may be fulfilled in practice, is quite different.

Baroness Carnegy of Lour

Perhaps I may ask the Minister whether it is the case in England and Wales, as I think it is in Scotland, that this arrangement is already under way in that all those concerned are paying 20 per cent. of their rates which are being made up through social security now, so that this proportion is established. That is one question I wanted to ask.

I am so sorry that I did not hear the beginning of this discussion. It is extremely important both that the Committee understands it and that we make sure that arrangements are as good as they possibly can be. In the great blockbuster debate it was not possible to go into these things, but the nature of the community charge is such that, as I see it, it is an attempt to bring everybody in to contributing to society, to feel that they are part of it and to make sure that the poorest have the money to do it so that they will not be worse off. It is the physical action of paying one's way that is so important, and in which I personally believe. I already see it beginning to be understood in Scotland.

It is easy to laugh and make faces, but if we say that and if we commit ourselves to it, we then have to find a way for all the difficult cases. I do not think that the difficult cases make the main argument invalid but nevertheless they are difficult. I am delighted to hear that the Government are looking at various options for doing this because it is a very sensitive matter. It is important that it should be right for the people concerned who are doing the paying and also right for the people, for example, running hostels and doing a marvellous job. We have to look at it extremely carefully, but in my view that does not invalidate the whole idea. It is extremely important to keep the matter in context and find the right way to do it. I hope that the Government will take a lot of trouble about this.

Baroness Masham of Ilton

Before the noble Baroness sits down, may I ask: does she not realise that many of these people have completely dropped out of society and the charities are striving very hard to get them back into society, but it is the process of rehabilitation that is so difficult? Those charities need encouragement and motivation to be able to do this job. Having to find the money for this collective charge is going to be the last straw for the bodies who are trying to bring these very unfortunate people back into society.

Baroness Carnegy of Lour

If those remarks were addressed to me, I would say that this is a question of getting to grips with the whole idea that will gradually develop. In five years' time this will all be understood by everybody. It is easy for Members of the Committee to make faces, but this provision could be the thing that more than anything else helped people who had dropped out of society. If one thinks this matter through and talks positively with people who are running such organisations—I am as involved as anybody else with the organisations—I think that this provision can, and will, be seen to be of value. This is one of the most difficult aspects of the whole exercise and it must be dealt with by the Committee.

Earl Russell

It is not necessary for the Government to accept 90 per cent. of the arguments put in favour of this amendment in order for them to accept it. Even if they do not sympathise with the arguments of social conscience which have been put forward, they might consider that they are setting themselves an immense administrative nightmare. This is not only a point about trying to collect money from people who have no money; it is much more important than that.

When the Minister talked about these hostels as being residential he was under a fundamental misapprehension. The central point about the homeless is that they are of no fixed address. They are here today and gone tomorrow. When someone comes to collect the poll tax from them they will have to consider whether they are dealing with John Smith or with somebody else of the same name.

In these circumstances it is really rather difficult to talk about accountability. The telling of tall stories by people in this situation is a well known phenomenon. It goes back to the 1620s and appears in Folkestone's churchwardens' accounts. A man recorded in those accounts was obtaining poor relief under the title of "one who came from the land of Babylon". How are we going to identify these people, track them down and make them eligible for the poll tax? There has not been an attempt to keep track of mobility such as this since the Tudor vagrancy laws. They did not work. If I could make an appropriate comment on the Minister's response it would be signed "Autolycus".

Viscount Thurso

I must say that we are not here talking about the general principle of the Bill. We are talking about exceptional cases. So to get up and say that we are in some way talking about the principle of paying one's whack is not so; it is not the matter under discussion in these amendments.

It seems to me that the Minister is seeking to appease those who want to be charitable about this particular problem by drawing our attention to Schedule 1 paragraph 8(4) which states: A hostel is anything which falls within any definition of hostel for the time being prescribed by order made by the Secretary of State under this sub-paragraph". This may be the sub-paragraph under which the Minister or his right honourable friend will give to these hostels the exemption which we are seeking. However, I wish that the Minister would tell us whether that is going to be so, because in the case of the Salvation Army, for instance, there are about 50 short-stay hostels where shelter is given to disadvantaged people throughout England and Wales. They provide for the casual needs of about 4,500 short-stay residents throughout the country. That is hardly a number of people that will break the system. It is hardly a sum of money that will matter to the Revenue or to any local authority, but it will matter enormously to the Salvation Army if we turn those who run its hostels into publicans. It is wrong that we should not receive a clear assurance in relation to that type of hostel. I beg the Minister to give a clear assurance that that will be done.

Lord Hylton

I take it that the amendment which we are now discussing is a paving amendment for Amendment No. 9. I therefore apologise for not having been in the Chamber when the amendment was moved. Amendment No. 9 refers to people coming into residence for short periods of time. I have received representations from two voluntary bodies which are concerned with people who come into residence for quite long periods. The first is from Community Service Volunteers. It is concerned about volunteers who work for periods of one to two years and occasionally longer. The second is an organisation called L'Arche which provides permanent dwellings and community settings for mentally handicapped people, most of whom are not severely handicapped.

I understand that the severely mentally handicapped will be altogether exempt. However, the less seriously affected will get rebates but will still be called on to pay 20 per cent. of the community charge. L'Arche estimates—whether rightly of wrongly, I do not know—that the cost will be £30,000 per year for a variety of communities and hostels spread throughout England and one or two in Scotland. That is a very large sum of money for that kind of organisation to find each year, over and above what it must find from charitable and voluntary sources. Therefore, there is a wider problem than simply the question of short term hostels.

Baroness Seear

Perhaps I may intervene very briefly. If we are insisting on the principle of paying your whack and making your contribution, surely there is an element of fancy about it. People on social security are not paying their whack. They are passing on the whack that social security has paid to them. That seems to undermine the principle from the start.

Lord Glenarthur

With respect to the noble Baroness, I am not sure that that is the case. If we had not uprated benefits by the average amount, I am sure that we would have been criticised for not going as far as we have indicated we shall do. As regards the point which was made about cardboard boxes, I believe that that is the subject of Amendment No. 11. I know that my noble friend Lord Caithness will wish to speak on that amendment.

I very much take the point which was made by my noble friend Lady Carnegy of Lour. She is right to say that the 20 per cent. is reflected now so far as rates are concerned. My noble friend Lord Caithness made that plain earlier this afternoon.

As for the point made by the noble Viscount, Lord Thurso, with reference to paragraph 8 of Schedule 1 and patients in homes, sub-paragraph (1) of paragraph 8 states: A person is an exempt individual on a particular day if at any time on the day … he has his sole or main residence in and the sub-paragraph goes on to qualify the provision. That is the relevant point when it comes to a consideration of sub-paragraph (4) as well. The word "hostel" appears in sub-paragraph (1).

Having listened to the discussion today and noted the points raised by the noble Earl, Lord Russell, I think that there is probably much which has been said in the debate which deserves close study. I fully realise that the point is one of real concern and I accept the expertise of the noble Baronesses, Lady Ryder and Lady Masham, as well as others who have a particular interest in charity. The noble Baroness, Lady Robson, described her involvement with one of them.

If the noble Baroness will agree to withdraw her amendment I should like, without commitment, to take this away and study carefully what has been said and discuss it with my noble friend and my right honourable friend to see where we stand. I hope that with that assurance the noble Baroness will see fit not to press her amendment.

Baroness Robson of Kiddington

I should like to thank the Minister for agreeing to take this matter away and look at it. While I was sitting here, during many of the interventions and part of his original reply, I was boiling because I felt that the amendments had been misunderstood. They deal with homeless people, the itinerant population, who move from one place to another. The Minister said that local accountability is necessary. What have those people to thank society for? The only people in society they can thank are the volunteers who run hostels such as the ones we described.

I am extremely grateful to the Minister for taking this amendment away. I shall do the same. I shall study what he has said very carefully and reserve my right to come back at Report stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

9.30 p.m.

Lord Taylor of Gryfe moved Amendment No. 6: Leave out Clause I and insert the following new clause:

("Local income tax.

1. A scheme for local income tax shall be established in a manner determined by the Secretary of State after consultation with interested parties.").

The noble Lord said: We return to more controversial territory with this amendment. This afternoon we had a splendid debate. It was suggested that the rejection of the amendment of the noble Lord, Lord Chelwood, was an endorsement of the community charge. As I listened to the debate I got the impression that the rejection of the amendment was to some extent due to the fact that the noble Lord had not produced an alternative to the community charge. That point was made repeatedly. The purpose of this amendment is to repair that omission and to offer an alternative to the charge, which is regarded as unfair.

In the discussion of the alternatives to the community charge I was interested that the Labour Party quite honestly and with courage said that it had not yet made up its mind on that matter but that no doubt its policy statement, when it emerged, would contain some element of a local income tax. I seem to recall that when we discussed this matter in relation to the Scottish Bill the Labour Party went into the Lobby with us in that connection.

This afternoon there were divisions within the Conservative Party just as there were obvious divisions in the Labour Party. At least I can say from these Benches, speaking for the Social Democrats and my colleagues and friends in the Liberal Party, that we are united in suggesting the alternative to the community charge. I commend the arguments which will be produced tonight to the Labour Party in the hope that they will carry some weight in ultimately resolving its problem.

For a long time I have been convinced of the desirability of a local income tax as an alternative and fairer form of taxation. Fifty years ago as a very young man—I think as the youngest city councillor in the history of the city of Glasgow—I entered Glasgow town council. I was anxious at that stage to do something quite dramatic, as one always is as a young man entering a somewhat austere body such as Glasgow City Council. So my first act was to press a motion that the city of Glasgow should petition the Government for the establishment of a local income tax as an alternative to the rating system. Whatever my friends in the Labour Party may think of my subsequent inconsistencies in politics, at least I have maintained a record of 50 years' consistent support for a local income tax.

In earlier discussions the noble Lord, Lord Thorneycroft, suggested that we should not debate again the poll tax or the community charge since we had done that all afternoon. However, it is difficult to support an alternative system without proving its validity against the community charge which is before us. The suggestion was made that if a fundamental change of this kind were accepted we should be disuniting the United Kingdom because the Scottish Bill has already been passed and is operative. I should like to point out that acceptance of this legislation, especially in view of the large turnout that it took to accept these provisions today, makes some contribution towards disuniting the United Kingdom.

When the Scottish Bill went through this Chamber there was no large gathering of Peers to ensure its passage and there was very little excitement in the press. Who can blame the Scots if they feel that something only hurts when it hurts England and that in the case of Scotland, which has been used as a guinea-pig, this matter is of no consequence at all? When the same question was put before this Committee in the Scottish Bill, the vote was 93 to 139 and not 183 to 317 as was the case this afternoon. Can one blame people in Scotland for feeling that they do not matter? If anything is making a contribution to Scottish nationalism and disunity of the United Kingdom it is that general indifference.

Perhaps I ought to cite experience in Scotland since the passing of the Scottish Bill. When the Bill was under discussion I think there was a general assumption that the amount involved might be around £250 per annum. Discussion centred around a couple in a household who might pay £550 as an alternative to their rates. The finance director of Glasgow City Council calculated recently that the sum is more likely to be £500 and not £250 in that city. I mention that point because it indicates that we are legislating for something when we are not yet sure of the cost. We know quite well in Scotland what will be the cost to the Government of implementing the Bill. We do not yet know what it will cost the people who have to pay, and that point is germane to this discussion.

In this Chamber, on 25th February last, I asked a question about the cost of implementing the legislation. In the first year the Government had to give local authorities £6 million in order to buy some of the hardware necessary for implementation. This year an additional £15 million has been approved by the Government, and there will be an additional £12 million added to the rate support grant for that purpose. When calculating the costs the normal formula used by the United Kingdom Government is a figure multiplied by 10. That is based on the Goschen formula of 10 times the population. It means that in preparation for this move some £60 million will be involved, followed by a further £150 million and then a rate support grant increase of another £120 million. Is that really a sensible expenditure at the present time when there are constraints on local authorities providing very essential services?

We have our priorities wrong in making this kind of unfair change at such public expense. Even when we implement it, it is generally accepted that the costs of implementing and running the system will be at least double the present cost of collection of rates. I would therefore suggest to the Committee that they should estimate what it will cost to implement these procedures and to consider whether there is an alternative and better system.

At that stage we come to the point that there ought to be serious consideration given to the local income tax. People have said to me, "But you cannot work the local income tax. It is foreign to our system". It works in a large number of European countries, and it works in the United States. I was in Switzerland yesterday. It seems to work perfectly well in that very well-ordered society. There seems to be no logical, mechanical or even ideological reason, so far as I can see, against the implementation of a local income tax. I commend to the Committee a statement that was made by the noble Lord, Lord Ellenborough. He is chairman of the ratepayers' association. He said: I believe that the Government would be wise to think again if then the replacement of rates is to be carried out without endless friction and rancour. It must be based on the ability to pay and some form of local income tax is required". This was the noble Lord, Lord Ellenborough, speaking in his capacity as chairman of the ratepayers' association. He continues: Many countries have such a system". Repeatedly in the debate today reference was made to the Layfield Report. I commend it to the Committee for perusal, before this legislation passes. It is 500 pages of serious discussion of this matter. On listening to the debate it is apparent that not many noble Lords have read the detail of the Layfield Report. However, the report states that local income tax is a runner and a much fairer system than the proposed poll tax. Unfortunately, Sir Frank Layfield is not a member of this House, but he is a very independent assessor in these matters and is totally objective and totally non party. If the Layfield Report comes to that conclusion then Members of the Committee are entitled to take it into consideration. It ways that local income tax is a runner. At the time when that recommendation was made, the tax authorities were rather hostile to the idea. It was a difficult thing to do. But now that they are totally computerised, it is relatively simple and cheap to operate a local income tax.

People may say, "But that destroys the principle of accountability". Does it? If your taxes are too high, do you not feel that you will do something about it? If one uses the basis of income tax for collection, and local authority distribution of that tax, then certainly one could interpret the system as being an accountable system—and just as accountable and less remote than the community charge now before us.

For all these reasons therefore, those of us on these Benches, and I shall be supported by my Liberal friends, support the principle of a local income tax. I commend it to the Labour Party in its discussions on future policy on this matter. I beg to move the amendment.

9.45 p.m.

Lord Boyd-Carpenter

The noble Lord, Lord Taylor of Gryfe, brought up the old, rather hackneyed subject of a local income tax, but adorned it with an almost paradoxical new argument. It was rather surprising, when one contemplates the administrative problems which such a tax would involve, that he sought to commend it to the Committee on the ground that the proposals for the community charge will be administratively expensive.

I do not know whether the noble Lord has studied what will be involved administratively in introducing a local income tax and whether, if he has done so, he believes that it could be economically, efficiently or cheaply done. In the first place we have to face the problem. Is it his idea that the local income tax should be collected by the Inland Revenue, or that it should be collected by the local authority, as the community charge will be? If it is his idea that it should be collected by the Inland Revenue, the first difficulty is that the Inland Revenue has no information about the home addresses, the places of residence, of the very large numbers of people from whom it collects tax.

It would be necessary either for the Inland Revenue or the local authorities who have an interest in the matter in some form or another to assemble the addresses and to keep a check on changes of address so that the local income tax is collected in the interests of the place where the taxpayer lives. If, on the other hand, it is proposed that it should be collected by the local authority, the local authority would have to set up a kind of miniature Inland Revenue with a view to examining the exact income of each potential taxpayer in its area.

Is it proposed to apply the same rules as to liability of income tax as the Inland Revenue applies? Is there to be the same point of entry? Are there to be the same levels, as one moves into a higher level of tax? All those kinds of problems have to be decided. Who will decide? Are these problems to be decided by the local authority, which might decide on a quite different basis from the Inland Revenue, with all the complexities that that would involve?

These are real, solid administrative problems. Whatever else may be thought about them they completely negative the noble Lord's illusion that the introduction of such a tax would be administratively economical. It would obviously be a matter of years before local authorities could acquire a sufficient register of the incomes of people in their area.

Then there is the reaction of this upon the economic policies of central government. If this were enforced today, local authorities would be able to negative the reductions in income tax which the Government are putting into effect this year. Some noble Lords opposite may think that that is splendid. It is a great argument in their favour. But is it, when one comes to think of it seriously? Central government are responsible for the management of the economy and the level of taxation, especially direct taxation, is a major factor in the management of the economy. Some people, like noble Lords opposite, rather like high direct taxation. Other noble Lords point out that high direct taxation has had a crippling effect on enterprise and has been responsible for a great many of the problems.

Earl Russell

The noble Lord—

Lord Boyd-Carpenter

If the noble Earl will resume his seat for a moment, I am in the middle of what I am afraid promises to be a very lengthy sentence. I apologise for my grammar. As I was saying, the question would be that of the whole economic policy of the Government, whether one believes in direct taxation being on a high level, as noble Lords on the Labour Benches believe (despite the consequences of it in the past) or whether one believes that it is important to reduce that in order to stimulate enterprise in the economy. The noble Earl may now intervene if he wishes.

Earl Russell

I was wondering whether the degree of central control over the economy that the noble Lord, Lord Boyd-Carpenter, is invoking is something which in times past he would have described as socialism?

Lord Boyd-Carpenter

Will the noble Earl repeat that question?

Earl Russell

Is it something which in times past the noble Lord would have described as socialism?

Lord Boyd-Carpenter

The central management of our economy has occasionally been disastrously conducted. I am sorry that the noble Lord, Lord Callaghan, is not present but it was so conducted during his time in office. I should like to say to the noble Earl, Lord Russell, that that is not an argument for depriving central government of any possibility of managing the economy. It must be a basic function of central government to manage the economy. If they manage it well, as it is at the moment, public opinion will be in their favour, as it is at the moment. If they make a mess of it, as the Labour Party did during the 1970s, the public will vote them down. It must surely be absolutely wrong to give central government an alibi and enable them to say, "We tried to manage the economy but we are afraid that local government would not let us". That would reduce to chaos the management of this country and its economic affairs. I hope that the noble Earl will appreciate that—

Baroness Seear

Does the noble Lord agree that the total failure to manage commercial credit, which is obvious at the present time, has exactly the same effect?

Lord Boyd-Carpenter

I am sorry, will the noble Baroness repeat that question?

Baroness Seear

Does the noble Lord agree that the total failure to manage commercial credit, which is so obvious at the present time, has much the same effect?

Lord Boyd-Carpenter

As the noble Baroness will appreciate, that question is not wholly relevant to this amendment; but I know that that never worries the leader of the Liberal Party. It is an unfair comment and problems of commercial credit are real. Surely she will accept that one cannot seek to remedy those problems by depriving central government of any power to deal with them. That is what the amendment proposes.

Therefore I regard a local income tax, first, as being expensive to administer. Secondly, it encroaches upon the economic power of central government when one has a situation in which local authorities could negative the decreases in tax which central government are, in my view, wisely proposing. Thirdly, there is the general constitutional point. Whatever one may think about the desire of certain Members of the Committee to modify the community charge as legislated by another place, at least there is an argument, which I do not wish to repeat, that this is the modifying of a tax. However, regardless of the events of 1909 and 1911, for the Committee to seek to impose a totally new income tax would quite plainly be unacceptable to another place, and rightly so.

There is the final point which was touched upon by the noble Lord, Lord Taylor of Gryfe. If one wishes to introduce accountability, one must ensure that most people pay something and therefore have a motive in voting in the local authority elections for high or low expenditure. Unless one is to apply a totally different form of income tax in the local zone in which the point of entry is far lower than in the case of national income tax—and I do not know whether that is suggested—one does not have the accountability which the Government and many Members believe to be the real remedy to the abuses in local government which have been taking place in this country over the past few years.

In this Chamber and outside local income tax has been discussed almost ad nauseam but at least we have fully discussed it. It has not so far been accepted and I hope that the Committee will not accept it tonight.

Lord Ross of Newport

I support the amendment already moved and I speak also to Amendment No. 7 which is in my name. That takes local income tax further down the path towards the sort of tax which we have it in mind to introduce into this Bill.

We have heard the speech from the noble Lord, Lord Boyd-Carpenter, who has raised the usual objections. First he said that it is not for this Chamber to introduce or play around with any form of taxation. It is all very well to throw that at us, but earlier in the debate today we were being criticised by the Opposition Benches for not offering any alternatives, yet when we offer alternatives we are told either that it is out of order or irrelevant.

Secondly, the noble Lord raised the question of making councillors more accountable to their ratepayers and taxpayers. May I again refer to page 300 of the Layfield Report quoted earlier by the noble Lord, Lord Taylor: There is a strongly held view amongst us that the only way to sustain a vital local democracy is to enlarge the share of local taxation in total local revenue and thereby make councillors more directly accountable to local electorates for their expenditure and taxation decisions. On balance, we consider that the administrative cost involved in introducing a local income tax for this purpose would be justified. After many decades of uncertainty in the realm of local government finance the time has come for a choice on the issue of responsibility". That committee was satisfied that it gave greater accountability to local councils; and having served in local government for a number of years I am satisfied in my own mind that the community charge will have the opposite effect.

The noble Lord raised the old point about addresses and cost. If he has read the statement which has been sent to most Members today from the AMA, at the time of the Layfield Committee it was reckoned that the Inland Revenue would need 12,000 more staff, and according to the AMA it is now at a figure of about 30,000 merely to implement the community charge. Therefore I put that back to him. Perhaps the noble Lord can answer that point.

Lord Boyd-Carpenter

The noble Lord has asked me to answer that point. I do not accept the AMA's figures for the Inland Revenue.

Lord Ross of Newport

Most people did not accept the Inland Revenue figures, but I believe that the noble Lord will agree that the figure of 12,000 has been quoted on many other occasions in many other Bills and is a common number to quote. It was not accepted by the National Union of Ratepayers, which also did not understand the idea of the difficulties of a place of residence, because in 1976 it said: We are puzzled by the difficulties raised by the Inland Revenue over place of residence for the purposes of a local income tax. The Inland Revenue send to each taxpayer who is taxed under PAYE a new notice of coding, whether or not it differs from that of the previous year. For this purpose they need to have, and to keep up to date, the taxpayer's private address. It is agreed that in some instances this Notice is sent via the employer … but it is understood that this is very seldom necessary". The union also had grave doubts about the 12,000 extra staff; and now, 12 years on, with the Inland Revenue largely computerised, I also doubt that figure.

We are not only in good company in moving this amendment—we jointly fought the last election on the issue and stated quite clearly that we would replace domestic rating with a local income tax—and not only do we support Layfield but also the late Graham Page, who I am sure the noble Lord will remember was a Minister in local government in the Heath administration between 1970 and 1974. He was a strong believer in introducing new forms of revenue into local government, and in one of the Bills he brought in as a private Member on 3rd May 1974 in another place, he raised a number of points which he thought local government should have the ability to charge for; namely, planning charges and a bed tax which did not go down very well in my part of the world. However, he said: I have no doubt that in the pretty near future we shall have to abolish household rates and replace them by a local income tax. But that is too big a subject for a Private Member's Bill … Of course, if the House accepts the Bill those benefits would continue for the relief of the local income tax payer when he takes the place of the local ratepayer". That was the thinking of a former Minister at that time, supported more recently by the then Prime Minister the right honourable Edward Heath. We think that we are in quite good company. I thought I heard the Minister, who I presume will reply to this debate, quote CIPFA earlier today, saying that it was opposed to a local income tax. I am not sure how he lines that up with a remark by Noel Hepworth, the Director of CIPFA in a letter, I assume, to The Times on 30th January 1986 in which he says that: LIT ensures tight accountability … it would also be equitable. We believe the Green Paper has got it wrong. LIT is feasible and fair. We have described to the Committee the way in which we should wish to see LIT introduced. The rate of LIT would be determined locally. Each district authority would give notice of the rate it set to the Inland Revenue, which would collect the tax. Collection would happen like this: wherever they live initially, people would pay a uniform rate of LIT—for example, 5 per cent. I think the Minister will say that it should be 6 per cent. We in our paper went up to 5.6 per cent. At the end of the year each taxpayer would make an end-of-year return from which his actual liability is assessed. Those living in areas where the LIT rate is below 5 per cent. would receive a refund and those living in areas with higher rates would pay the difference. In practice, 70 to 80 per cent. of people would probably receive refunds. Local autonomy could be further strengthened by reducing the amount currently paid out in grant-related expenditure, and allowing the local authority to raise those funds through LIT. The money saved nationally would be reflected in a corresponding cut in national income tax. Taxpayers would pay no more than before but the cash would go straight to the local authorities.

I suspect that in reply the noble Earl will say that his Secretary of State wrote a letter to the leader of my party, the noble Lord, Lord Jenkins of Hillhead, earlier this month in which he criticised some of the points which we sent to him. We sent him the document and he replied and made certain criticisms. I can tell the Minister that we have answered those criticisms and that a reply is on the way. I do not intend to delay the Committee for too long. One comment made was that the Government estimated that the average rate of LIT would be 6p in the pound as opposed to 4.5p, which was in our document. We say that the average rate of LIT depends principally on two estimates: the amount of domestic rate revenue to be replaced by LIT and the income tax yield per percentage point. We obtained our assumptions from a Written Answer from Mr. Norman Lamont in the Treasury on 14th March 1988.

Another point made by the Secretary of State was that in calculating a "needs" grant for local authorities a large extra element for inner London has been added which has no basis in an objective assessment of need. That raises the whole question of grants from central to local government and the basis on which need is assessed. We have included inner London weighting. We make no apology for helping local authorities like Tower Hamlets to tackle unprecedented levels of homelessness. I think that the Secretary of State himself has done just that quite recently.

We have made no attempt, we are told, to equalise between authorities for the differences in the income tax base or non-domestic rate bases. We find it difficult to understand what the Secretary of State means by that because his proposal could hardly be more unfair. His scheme will effectively redistribute wealth from poorer areas to richer ones. We comment on that in detail.

Finally, there is the point about local authorities which have to keep a register of income tax payers, with details of their main residences. That is not true and I have already answered that by quoting the National Union of Ratepayers' Associations.

Unlike a poll tax, collecting LIT would not involve registering every adult locally; nor would it involve searching through sensitive records to trace individuals or hiring snoopers to mount surveillance operations. Current methods of countering tax evasion would be sufficient.

As the noble Lord, Lord Taylor, said, the fact is that local income tax works perfectly satisfactorily in many other states where there is great autonomy, particularly in Switzerland. In Canada it seems to be very simple. I have a copy of the form here. All they have to do is fill up about one line when they make their tax returns. It is as simple as that. It is self-assessment. Why can we not do the same here? I beg to move.

Baroness Carnegy of Lour

Before the noble Lord sits down, can he tell the Committee how the ordinary elector knows whether his council is doing well or badly or how it compares with another council? Can the noble Lord answer that question in a sentence, because that is the crux of the matter?

Lord Ross of Newport

He would know what he was spending because the money would be taken from his weekly pay packet if he was a PAYE earner. He would also know by comparison. I am sure that the Government would be only too pleased to publish comparisons between one authority and another on the 5 per cent. or 6 per cent., and which authorities were keeping the lid down at a reasonable level and which were going above. We have those tables now so I cannot foresee any difficulty about that. They will see the rest of the situation with their own eyes. They will see the state of their roads and the state of their education, street sweeping, and so forth.

Lord Jenkin of Roding

The noble Lord, Lord Ross of Newport, has tempted the Committee with this tantalising picture of the perfect tax. However, he has left out a great deal, as indeed did the noble Lord, Lord Taylor of Gryfe. I do not know whether it is recognised, but a local income tax would actually have a devastating effect on the inner cities. Perhaps I need to illustrate that with a couple of figures.

If a local income tax were to be introduced now, and if one started with the borough of Camden, that borough would have to charge a local income tax of 25p in the pound. Of course that would be on top of national income tax. Yet if one moved just next door to the London borough of Barnet, which runs its affairs rather more sensibly, the local income tax rate would be under 6p in the pound—5.9p. If one takes the simplest case, a single adult would save over £1,500 a year simply by moving over the boundary from Camden to Barnet. That is infinitely more than would be likely to happen if he merely changed house to the same kind of house under the present system. That change would be wholly absent, or virtually absent, on the community charge. By moving from my own borough of Lambeth, where I have a residence, to Bromley or Croydon one could save over £1,000 a year on local income tax.

Perhaps Members of the Committee should think for one moment what the consequences of such a tax would be. In the inner cities there are now a growing number of professional, young business people who are beginning to bring back life and leadership to the inner cities. That is a trend that the present Government are seeking to encourage by a variety of policies. The local income tax which has been advocated from the SLD Benches would drive people completely in the opposite direction. I wonder whether the SLD have begun to appreciate the really appalling impact that a local income tax would have on our inner cities.

There are all kinds of other reasons that one could give, but I sense that the Committee wishes to come to a conclusion on this matter. If one is going to have a tax which depends upon widely different tax bases in different local authority areas, then inevitably one will have to reintroduce the resource equalisation amount about which I spoke on an earlier amendment and to which I referred at Second Reading.

I give an example. The system of income resource equalisation is best illustrated by the example of a high-spending inner city council such as Camden which may well set rates of LIT so high, as I have suggested, that a large number of residents move out. If there were no systems of resource reallocation the revenue which Camden would lose from driving out those residents, as it certainly would, would have to be made up by the transfer of resources from other less profligate councils. I say at once that I believe that to be a great deal more unfair even than the present rates system. Yet it would be even more impractical to assume no system of income resource equalisation because in that case the flight of the residents from the inner city borough of Camden would mean that the rate of income tax imposed on the remaining residents would need to be even higher in order to raise the revenue which the council would need. Therefore one would inevitably be in a vicious spiral which entirely set at nought the very considerably successful policies now being pursued in order to bring back life and vitality to the inner city.

Many references have been made to the Layfield Report. That report has always seemed to me a perfect example of a government referring to a body of the great and the good who are in many ways divorced from the realities of politics but who can bring their not inconsiderable intellects to bear upon a problem. They can then come up with a range of solutions to which governments feel no commitment and from which they can pick and choose. In the case of Layfield the Government have picked very little and rejected the rest.

This Bill is the product of an entirely different process. There has been a political element from the start which has continued right the way through. So, when proposals finally emerge, they are bedded deep in the realities of politics. There are other examples. Social security reform has been undertaken by the present Government under the same system. One could point to other major changes of direction. In most cases it is not very sensible to ask detached people to pronounce upon matters on which there are ultimately going to be highly political decisions. It is much better that the work should be done by the poeple who are going to carry the political responsibility for implementing proposals.

If I may say so, a local income tax could only be the product of people who, like the distinguished members of the Layfield Committee, are never going to have any responsibility for putting it into effect, or perhaps the members of the SLD who are never going to have any responsibility for anything. They are the only supporters of a local income tax and I hope my noble friend will have no hesitation in asking the Committee to reject the proposal.

Lord McIntosh of Haringey

The Committee has taken more than one hour on each amendment. I do not think the Committee would therefore welcome a long speech from me on this subject, despite the kind invitations from the Benches alongside that I expound further on Labour Party policy. I think I said all I wish to say about the matter in response to the amendment moved by my noble friend Lord Mulley.

It seems to me that the next election—the community charge will not work, so we shall have to do something about it at the next election—will be fought by the Labour Party, which is going to win, on the basis that local income tax will be a part, though certainly not the whole, of the solution to the financing of local government by local people. I repeat only for form's sake that I was profoundly impressed by the speech of the noble Lord, Lord Carr of Hadley, who said that the solution would be a combination of taxes. I still believe that to be the case. There will be some form of property tax and some form of local income tax, the difficulties of which have been grossly exaggerated by speakers from the Government Benches. However, the precise form and balance between the two have yet to be worked out in detail and will be worked out in due course.

10.15 p.m.

The Earl of Caithness

We had a long and interesting debate on the amendment moved by my noble friend Lord Chelwood and we have now, to some extent, gone over the same ground in talking about a local income tax. I think that before I deal with the very many fundamental objections to a local income tax I should first deal with one or two misconceptions about the particular version of a local income tax advocated by the SLD party—the party of the noble Lord, Lord Ross of Newport.

The proposals on which the SLD rests its case were actually produced by the Association of Liberal Councillors at the beginning of April. We have examined those proposals carefully and discover that the figures simply do not add up. First, the SLD report significantly underestimates the amount of revenue that needs to be raised by a local income tax. The average rate of 5.4 pence in the pound which it puts forward is simply too low to raise the amount now being raised by domestic rates.

Secondly, the SLD proposals involve arbitrary changes to the existing system of needs assessments, with the aim of holding down local income tax rates in inner London. Not only does this amount to a rather dishonest massaging of the figures; it also means that low spending authorities are penalised in order to subsidise high spending inner London authorities. I was surprised to hear the noble Lord, Lord Ross of Newport, supporting the extravagances of some Labour authorities. It was because of those extravagances that some noble Lords, including the leader of his party, left the Labour Party. How ironical to throw them the lifeline that they need!

Thirdly, the SLD proposals fail to achieve full equalisation of taxable resources, with the result that for the same level of services areas with high average incomes could charge lower local income tax rates than areas with low average incomes.

There are many other defects in the SLD figures which I shall not go into in detail now. My right honourable friend the Secretary of State set out the inadequacies in full in a letter to the noble Lord, Lord Jenkins of Hillhead, earlier this month. I regret that he has had no reply. The Committee heard earlier that the honourable Member for Birmingham, Sparkbrook will not be replying to his letter. I am delighted to hear that the noble Lord, Lord Jenkins of Hillhead, will be more courteous. I hope that his reply is on the way and is not in the same category as that infamous cheque that is always in the post. We shall study the reply with care.

In the circumstances, we have no option but to rely on the Government's exemplifications of the effect of a local income tax. I am absolutely confident that these are indeed the local income tax rates authorities would have to levy. I am sure the Committee will be interested to have a few examples of what those figures would mean in terms of bills paid by ordinary people. In the highest spending areas, local income tax would produce crippling tax bills. The rate needed to finance 1987–88 spending would be 25.6p in the pound in Camden, 20.9p in Lewisham, and 16.7p in Lambeth. A single person on national average earnings, £10,500, would have to pay £2,066 a year in Camden, £1,687 in Lewisham, and £1,347 in Lambeth. Not even the noble Lord, Lord Jenkins of Hillhead, who I regret is not present, when he was Chancellor of the Exchequer contemplated a basic tax rate of ten shillings in the pound.

The consequences would be utterly ruinous. Even those on moderate incomes would flee from high spending areas to nearby areas with lower local income tax rates, accelerating the spiral of inner city decline. For example, a single person on national average earnings could save nearly £1,600 a year by moving from Camden to next door Barnet; or £1,300 by moving from Lewisham to Bromley; or £1,000 by moving from Lambeth to Croydon. The result of those local brain drains would almost certainly be plummeting house prices in the high spending areas.

So, in addition to being crippled by local income tax payments, home owners in those areas would suffer large, arbitrary capital losses.

Even in the areas with relatively low local income tax rates, tax bills would be unacceptably high. Student nurses would, in many cases, pay more in local income tax than in community charge, and a single, newly qualified nurse would pay more in local income tax than in community charge in every local authority in the country. On average, a single man on national average earnings would pay £482, compared with an average community charge of £224. I am sure the Committee will agree that this would be a devastating price to pay for a system that would completely fail to restore local accountability since only 20 million people in England would pay a local income tax out of an adult population of 35 million.

I shall conclude by referring briefly to the administrative and civil liberties implications of a local income tax. The practical difficulties would be immense: a complex system of resource equalisation would be needed, as would a new register showing the sole or main residence of all taxpayers. Despite the claims made by advocates of local income tax, the information needed to run a local income tax is not currently available, either in local authorities or at the Inland Revenue. I think it is clear that many people would object in the strongest terms to having to supply details of their incomes to local authorities. Considerable concern has been expressed about the civil liberties implications of the community charge. But I ask your Lordships to consider which represents a greater infringement of one's rights—to have one's name and address passed to a local authority under the community charge, or to have one's financial affairs exposed to the authority? The answer is clear. Local income tax represents a much greater and more worrying intrusion into people's private lives.

The noble Lord, Lord Taylor of Gryfe, yet again said that we treated Scottish legislation indifferently. I could not agree with that; we spent many hours, as noble Lords will recall, discussing Scottish legislation last year. When I had the privilege to be a Whip for the Scottish Office, I remember full well the lengthy debates that we had. It can never be said that Scottish legislation is treated indifferently in this House.

The noble Lord said that the size of the community charge would not be known. Of course it will not be known in England and Wales for a while yet, but on last year's figures, that is on spending and need, an adult would have paid £125 in Wales and in England it would have been £178. Of course, it will vary depending on how profligate the local authority is. Last year in Camden it would have been £782 per adult.

But let me take the noble Lord, Lord Taylor of Gryfe, nearer to home, to Edinburgh. If the community charge had been in operation during the financial year 1988/89, the budgets proposed by the three political groups on Lothian regional council and Edinburgh district council would have produced these figures. Labour would have charged £401 per head; the SLD would have charged £357.50 per head; and the Conservative Party would have charged £310 per head. In comparison with those in Camden and in other high-spending districts in England, all I can say is, lucky Scots!

I fear that the noble Lord, Lord Ross of Newport, misquoted me on what I said about CIPFA's figures. I said that their arguments would prove that the alternatives—and that includes the local income tax—would be costlier to collect and harder to administer. As I have already said, they would cost more to the average payer.

For all of the reasons I have outlined, I have no hesitation in urging your Lordships to reject out of hand proposals to introduce a local income tax. Local income tax can only result in crippling tax bills and local brain drains, coupled with severe administrative difficulties and an infringement of civil liberties. By contrast, the community charge is simpler, fair, accountable and, when the whole picture is considered, closely related to the ability to pay.

Lord Taylor of Gryfe

It is extremely difficult to reply in detail when so many figures are thrown about which are speculative as to what this would cost here and there. It costs so much to run local government. That money must be found from somewhere. Local income tax is based on the ability of a citizen to pay for these services, and therefore as a method it is preferable to the system which is proposed in the Bill and which has nothing to do with ability to pay.

If there is one voice which I have missed in this debate today it has been the voice of Lord Ross of Marnock. I have no doubt that the debate would have been lengthened somewhat by his interventions, but nevertheless they would have been effective and relevant. I recall him standing in the corner there and drawing the subject to the attention of the noble Duke, the Duke of Atholl, whom I see in his place tonight. The noble Lord, Lord Ross, said that the noble Duke lived in a very handsome castle in Scotland. As a single person he would be paying less than his forester or his bailiff or his man, wife and child or youngster and so on. That is quite unfair. If I may say so, it is quite inconsistent with the preaching to the Scottish General Assembly which took place at the weekend and which suggested some kind of mutual responsibility for people in society.

To throw the figures around as the Minister has just done, takes no account of the fact that the Layfield Committee spent a long time—two years—in looking at this issue. They were the great and the good. I have just been checking and I do not see their qualifications mentioned in the report that was submitted, but I notice that the noble Viscount, Lord Ridley, who is certainly a distinguished Member of this Chamber and one who has had great experience in local government in the North, was one of the signatories to that report.

So this is not a report that was removed from reality. It is not a report compiled by a group of academics studying this matter in an academic way. This was a group of people experienced in this field who took an objective view of the system. I cannot believe that these responsible people could have recommended a system which would be rejected so readily and out of hand as has happened tonight. I do not propose to divide the Committee tonight. We shall continue to advocate a local income tax; we shall return to the subject from time to time because I am convinced, based on my experience of the last year—one of the lucky Scots, if the Committee likes—that the community charge will not work. I say quite seriously to Members of the Government that this will be the factor which will ensure the defeat of this Government. However, I am not proposing to press this matter to the vote.

I take the simple statistic that in Glasgow every night there are 30,000 people homeless. How can one cater for such people in this kind of legislation? It will not work. There will be a certain amount of mass disobedience to the legislation which I would not support. But I say to the Committee that it will not work, and that the local income tax has a good deal more to commend it than the proposition that is before the Committee in this Bill. I beg leave to withdraw the amendment.

The Deputy Chairman of Committees (Lord Ampthill)

The Question is, That the amendment be withdrawn.

Noble Lords


On Question, amendment negatived.

[Amendment No. 7 not moved.]

Clause 1 agreed to.

Lord Underhill moved Amendment No. 8: After Clause I, insert the following new clause:

("Duty to report annually on impact on individuals of personal community charge.

—(1) It shall be the duty of the Secretary of State to lay before Parliament in each financial year following that in which the personal community charge becomes payable in a report setting out the number of persons estimated to have experienced an improvement and a decline respectively in their personal financial circumstances as a consequence of the levying of the personal community charge.

(2) The report shall be debated in each House of Parliament.").

The noble Lord said: I trust that the Committee will appreciate that the fact that I shall be rather brief in moving Amendment No. 8 does not mean that this is not a very important amendment. The amendment proposes the insertion of a new clause after Clause 1 which will provide that in each financial year there shall be presented to Parliament and debated in Parliament a report which will indicate those individuals who believe they have had an improvement as a result of the individual community charge and those who believe to the contrary.

Why do we believe we require this information? Any Member of the Committee who has read the reports in another place will appreciate that constituency Member after constituency Member enumerated the problems in their own constituencies and the gainers and the losers. Who can say quite definitely tonight which authority they are going to quote regarding the numbers of gainers and losers? The CBI quotes one figure, the Ministry quotes another figure and other people quote others.

We believe it is important that Parliament should know each year the state of improvement or falling in financial circumstances as a result of the introduction of the community charge. What is the other reason why we require this? It is vital to acquire the actual information. In the previous debate some have said that the community charge will not be the last word; others have said it may not be the last word.

If one looks at events over the past decade, since this Government have been in office, one can see the number of changes that have occurred in rating procedure and in local government finance. Very few of the Committee can put their hands on their hearts and say that the community charge is the final matter concerning local government finance. Therefore we must be ready. We must have information. Who will say what the future relationship between central and local government is to be? We know what the Secretary of State said in his pamphlet. We know that he wants to see a change in the status of local government. We do not know what the changes will be.

I think we can be sure that consideration will be given in not too distant years to changing the financial structure and support for local government once again. That is why we need information and that is why we want an annual report to be presented to Parliament and debated. I beg to move.

10.30 p.m.

Lord Monson

I am greatly attracted in principle to the amendment. I would have gladly added my name to it if I had thought that it was correctly drafted. With regret, I do not think that that is the case. As the amendment stands it would oblige the Secretary of State to lay before Parliament in each financial year a report setting out the number of persons who have gained and lost as a consequence of the personal community charge. However, the amendment makes no mention of the effect of the abolition of domestic rates.

If the amendment were redrafted so that the last dozen or so words read, as a consequence of the replacement of domestic rates by the personal community charge that would make sense. If it were redrafted in that way, I would support it wholeheartedly. As the amendment stands, I cannot.

Lord Jenkin of Roding

I regard the amendment as nonsense. It assumes that there is some magic, some holiness, some sanctity about the present impact of local government rates on individuals and families. In fact, I do not think that a single Member has dared to raise his head above the parapet and say that we ought to keep the rates. Why are we getting rid of the rates? The answer is that they are well known to be a very unfair and improper tax.

What is the report that the amendment proposes? I accept the point that was made concerning the drafting. However, what if a report showing the change was produced? That would seem to me to be absolutely valueless. Many people are worried about the expense of introducing the community charge. Why add to it by asking that a totally valueless report should be produced? There may well be information which the Government will want to have on the efficiency of collection and so on. But the idea of producing a list of gainers and losers when we are moving from a thoroughly unfair and discredited system seems utterly pointless.

Lord Renton

The key word in the amendment is "estimated". The Secretary of State would be required to get his officials to make an estimate of how millions of people will be affected. That seems a pointless exercise. We all know and it is admitted that many people will be better off. We also know perfectly well that everyone, whether or not they are better off, will have to pay a charge which will give them a closer feel for the way in which their local authority is conducting its finances.

In any event, if such an estimate were to be made, it could only be guesswork. Where would that get us? It would probably reveal what is already well understood and perfectly clear. If we wish to see political consequences drawn as a result of the introduction of the system, no doubt the electorate can do that at a general election.

Lord Harmar-Nicholls

Noble Lords may remember that I have always opposed this kind of amendment, quite apart from the Bill and the reasons connected with the Bill that have already been given. It is easy for the Committee to pass a measure setting out by statute the need for a report, whether or not there is anything to report, and for that to become an Act. Once that measure is on the statute book it means that people have to produce such a report. That entails expense and manpower. It entails all kinds of investigations from which nothing will be produced.

If there is information which Parliament should know about so that the situation can be amended because something is thought be wrong, we do not need reports. There are all kinds of sources for such information. Only the tiniest thing needs to go wrong and it is known. We can deal with it through all the other powers available to Parliament. There is Question Time and there are debates and all the other facilities available. To lay down by statute that we have to use money and time to produce an annual report is, I believe, a bad principle to follow. I think that it is particularly bad in relation to this Bill, as has already been explained.

Lord McIntosh of Haringey

I intervene only briefly on one technical point. I do not want to intervene in the amendment so ably moved by my noble friend Lord Underhill, but the noble Lord, Lord Renton, referred to the word "estimated" as if it were a defect in the drafting. That is far from being the case.

Lord Renton

I did not refer to it in that context. I said that it is the operative word in the amendment.

Lord McIntosh of Haringey

Perhaps I may explain what the word "estimated" means in this case. If the word "estimated" were not there, the investigation would have to be of every single payer of the community charge. The cost, as the noble Lord, Lord Harmar-Nicholls, has said, could be very substantial. I think that it could raise legitimate questions as to whether the cost was justified. The use of the word "estimated" makes it possible for the Government to use perfectly legitimate, well-established techniques of sampling which have been used by governments and local authorities for many years for such purposes.

As a result of the report we want to know whether the accusation which I and many others made at the outset of the Bill is correct: has the Bill made the rich richer and the poor poorer? If noble Lords are resisting having even that information, it leads one to think that they are afraid of the answers to the question.

Lord Boyd-Carpenter

There is a further eccentricity about the amendment. In the second subsection it states that: The report shall be debated in each House of Parliament". It is quite usual to provide that a report should be laid before, and indeed approved by, each House of Parliament, but to provide in legislation that each House shall debate, whether or not it wants to, a report that is laid before it I think is a novelty. It may be that another place would regard it as perhaps a little aggressive on the part of noble Lords if we were to put into legislation a measure compelling them to debate something which they might not wish to debate.

Lord Renton

I wonder whether my noble friend, with his long parliamentary experience which is about the same as mine, would agree that debates can vary between about five seconds and five hours.

The Earl of Caithness

I am grateful for the clarification which the noble Lord, Lord McIntosh, has been able to give in relation to the word "estimated". I am not certain that everyone would agree with his interpretation because there is another interpretation. In order to comply with what the amendment proposes the report would have to be compiled by finding out the size of the bills paid by every adult in the country in 1990 and each subsequent year. Even to provide an estimate one would have to obtain those figures. As even the noble Lord realised, that would be massively bureaucratic and also a more than somewhat intrusive task.

Nor I fear would the result tell us very much unless the reports contained a good deal more information that the amendment seems to imply. Say, for example, that in 1991 the figures showed that a certain number of people were paying more in community charges than they had in 1990, what would that prove? Some would be paying more because they had reached 18. Some would be paying more because local spending had risen in their area. Some would be paying more because they had been unemployed the previous year and had now found well paid jobs. One thing that the Government cannot be accused of in relation to the community charge is failing to provide estimates of how people might be affected. The Green Paper contained several pages of tables setting out the effects on different types of household in different parts of the country earning different amounts. We have regularly expanded on and updated those tables.

Of course some people will pay more with a community charge than they do now. Too many individuals pay nothing at all in rates, including many with good incomes. Equally, however, many households will be better off as a result of the community charge. Those include over 80 per cent. of single pensioner households and single parents, as I said before. I have no doubt that when the community charge is in place people will pay very close attention to the effect of the new system.

The results from the sample family expenditure survey, for example, will show the amounts that are being paid by different types of households. I do not think that an annual report to Parliament of the kind suggested in this amendment would be either useful or appropriate.

Lord Underhill

Obviously there are some deficiencies in the wording of the amendment; after the short debate that we have had, I am prepared to accept that. I am grateful to the noble Lord, Lord Monson, for saying that he would readily accept the principle of this amendment, provided that it were worded somewhat differently.

It is very easy to rubbish an amendment of this kind, as was done by the noble Lord, Lord Jenkin of Roding, by suggesting that I am not raising my head above the parapet to talk about rates. I have not done so deliberately. I want to deal with the introduction of the community charge and consider the effect that it will have on individuals when it comes into operation.

The Minister referred to the Green Paper, which we all have read. The Government have used figures of gainers and losers to justify the introduction of the community charge, but other people have challenged those figures and said that they are not correct. The CBI has challenged them. I am not dealing with the position as advanced in the Green Paper. We on these Benches want to know what will be the position when the community charge actually takes effect and in subsequent years. As the Minister rightly said, there will be a change in people's circumstances: some people will become 18; other people will die. We ought to have information, which surely it will be quite easy for the statistical departments to obtain, so that it can be decided whether or not the community charge is something that should remain unchanged in the form that it is in this Bill.

Members opposite who have spoken seem to be taking the view that the community charge will be the complete answer to local government finance. We want to see the effect of the decision that has been taken this afternoon as the year goes by and in the following years. It may well be that people will come to realise that the community charge is not the way out. There are still things to think about and other changes to make in local government finance. That was the purpose of the amendment and I think that it was most reasonable. However, in the light of the debate, I beg leave to withdraw it. We may come back to this point in some other form at a later stage.

Amendment, by leave, withdrawn.

[Amendment No. 9 not moved.]

10.45 p.m.

Clause 2 [Persons subject to personal community charge]:

[Amendment No. 10 not moved.]

Lord Hayter moved Amendment No. 11: Page 2, line 6, leave out subsection (3).

The noble Lord said: This is an amendment to help the homeless. On the face of it Clause 2(3) of this Bill is one of the silliest sentences that I have ever seen in a Bill. It reads: In deciding whether a person has his sole or main residence in an area, the fact that he does not live in a building is irrelevant". I want to get rid of that subsection. But if that is left out, we have to insert the wording of my Amendment No. 33 to Schedule 1: A person is an exempt individual on a particular day if at any time on the day his sole or main residence is not a building, caravan or houseboat".

It would be quite reasonable to ask what on earth caravans or houseboats have in common with the Local Government Finance Bill. Members of the Committee will find the answer on page 3, line 26, in Clause 4(3). The Bill describes a building which is used "wholly for the purposes of living accommodation" as a building, caravan or houseboat. But then one discovers something rather curious. It occurred to me that perhaps Mother Teresa may have tipped off the Prime Minister. Not everybody, even in this country, lives in a building, caravan or houseboat. They sleep in parks, under bridges or in a shelter sometimes made of cardboard, as has been mentioned already tonight. So the Government had to insert into Clause 4(3) the phraseology that I have just read. How silly can one get when one tries to clobber with a poll tax these people sleeping rough, who are sometimes called the visible homeless?

I hope that no one will talk about this as a wrecking amendment. We are trying to help the Government with an amendment that seeks to correct an anomaly in the legislation instead of leaving it unworkable in practice. I shall try to explain.

The difficulties of definition make it hard to put a figure on the total number of visible homeless people in this country. I understand that a report from the London housing unit published earlier this year estimated that at any one time at least 2,000 people in London alone had no shelter whatever—or residence, as the Government prefer to call it. It is the plight of these people under the community charge scheme that my amendment seeks to redress. The Government insist that every person in a local authority area must be assessed for and charged a personal community charge. In fact they go to extraordinary lengths in the Bill to make clear that it is habitation of space and not a property in an area that makes one liable for the charge. Clause 2(3) states: In deciding whether a person has his sole or main residence in an area, the fact that he does not live in a building is irrelevant". That is their phrase—"irrelevant". I consider the fact that someone does not live in a building to be highly relevant in placing a local tax on them because one can work out for oneself the services that the national or local government provide for these wretched people.

Let us consider for a moment what the Government propose. Local authority employees will be expected to seek out these residents on their park benches, or the occupants of space under bridges, with a view, first, to assessing them for the community charge liability on a daily basis and then to extracting the charge—the full charge, I suppose—from them. This will presumably be done at night for it is only at that time that homeless people are to be found on the relevant bench or under the relevant bridge in their residence. My guess, and yours, is that they simply will not do it.

This is plainly an absurd proposition, and not only with regard to the local authority. Homeless people are not in a position to pay these bills. They could not afford them even if the local authority could find a way of charging them. The more the Government protest that rebates will be available, the more sensible it is to get rid of the charge altogether.

A more sinister thought is that local authorities already overburdened in terms of claims on housing, especially in London, will, in the course of trying to charge homeless people, simply succeed in forcing them to move from one park to another or from one side of Westminster Bridge to the other, thereby changing the local authority area of residence and escaping liability for the charge from the local authority which is looking for them.

My amendment does the Government a great favour. Not only does it improve the Bill but it also saves them from engaging in this phoney war against the homeless. No one, least of all the Department of the Environment, expects its charges to be levied, and, least of all, paid. More importantly, the amendment will provide the right immunity to a notably impoverished sector of our population.

A cynic of course might put forward the argument that our two amendments would encourage people to join what I call the visible homeless. I can only answer that by saying that such a person has not seen or has not realised the appalling conditions under which some of these people live or he would understand that that suggestion does not make sense.

I said in my Second Reading speech that the Government could not ignore this problem or rely on evasion of the charge. I still believe that to be the case, and by these two amendments we should be relieving the luckless citizen and the equally luckless local official. I hope that the amendments find favour with the Committee and the Government as they are inspired by charity, compassion and, above all, common sense.

Lord Shaughnessy

In associating myself with the amendment proposed by my noble friend Lord Hayter I hope that there will not be any implications of constitutionality involved, because the proposed amendment is simple and humane.

The question of homelessness is ever present. We have heard from the Government on many occasions about the steps being taken to alleviate this noxious problem. Amendment No. 33 is a substantive amendment. I hope that the Government and the noble Earl will not reject these two amendments on the grounds that homelessness cannot be legally defined. There must be ways to establish the terms that constitute homelessness, which is a stark and horrifying situation.

Homelessness cannot be measured with a piece of string, to mention an earlier metaphor used by the noble and learned Lord, Lord Hailsham. It can only be measured in terms of misery, disillusionment and degradation. If the provisions of the Bill stand, these homeless people with nothing but perhaps a cardboard box to shelter them will not only be disadvantaged as they are—and that is a most horrifying situation, with all its implications—but because they will be unable to pay the community charge and unable to appeal to any tribunal they will, in addition to the degradation and misery that they already experience, become outlaws, outwith the law.

In speaking to the amendment and asking the Committee to consider it seriously, I hope that in an affluent society which should be able to provide minimum shelter for every one of its citizens—we are constantly reminded how affluent this society is—this simple and humane amendment will recommend itself to the Government. I hope that the noble Earl will give us some comfort in that respect.

Lord Dean of Beswick

I rise on behalf of Members on these Benches to support the amendment so ably moved by the noble Lord, Lord Hayter, and supported by the noble Lord, Lord Shaughnessy. It seeks to exempt any person whose sole or main residence is not a building, caravan or houseboat. We believe that to be an obvious and important solution to the difficulties posed by the community charge for a particularly impoverished and deprived section of the community.

The subject was touched upon in a debate to an earlier amendment moved this evening. In conjunction with a number of Members from all parties, over the past 25 years I have had an interest in homelessness. I believe that all Members are concerned about the matter. A Member from the other side—perhaps the Minister—said that nobody has a monopoly on compassion. I approach the subject from that point of view and I certainly have not. However, I believe that in order to understand homelessness one must see it at its worst. Then one may understand what the Bill will do if it is passed without the Government accepting some of the proposed amendments and coming back with offers of their own.

The noble Lard, Lord Jenkin, has been cast in or has adopted the role of the Government's fallback spokesman, saying what he believes to be good about the Bill. He makes the mistake of assuming that, because today a massive turnout was engineered to support the main principles of the Bill, it proves that a standard poll tax charge will be a success as against the present rating system which, admittedly, is unpopular. Only time will prove who is right. If this side is proved right, then in two or three years' time the noble Lord may be prepared to admit that he was wrong.

In this amendment we are dealing with people, and one must see the appalling situation of the homeless to know what we are talking about. Approximately 10 years ago I had the luck to draw a high place in the ballot for Private Member's Bills in another place. I promoted an all-party Bill, sponsored on behalf of CHAR which has an all-party grouping in another place. The Bill tried to provide protection for homeless people affected by the incidence of fire and some of the appalling tragedies that had then and have since taken place. In order to acquaint themselves with homelessness, some Members toured parts of London. The situations in which people find themselves in hostels were, in some respects, beyond belief.

The Bill mistakenly assumes that most of the hostels cater for the same people each night. They do not. People tend to move on because they do not want an identification. Although I am not asking the Minister for the information because I know that it would be impossible to compile, it would be interesting to know how many people in such accommodation stay one night, one week, one month or one year. I believe that the figure would be alarming in that it would show the number of people who stay only one night and the next night move on somewhere else.

I should like to tell a story to illustrate what I am trying to convey to the Committee. During the attempted passage of that Bill, which unfortunately the Government of the day killed, we petitioned Downing Street, and a delegation accompanied quite a number of homeless people there. I was in the company of my noble friend Lord Stallard. As we were leaving Downing Street after presenting the petition, an elderly lady came to us. She was quite presentable and clean, but obviously not dressed in the height of fashion, and was carrying two bags. It was the first time that I, as a comparatively new provincial Member of Parliament from the North, saw the depths of what was taking place in London. She obviously knew my noble friend Lord Stallard better than I, as he was a London MP. She said, "I think this is a marvellous thing that you are doing for those of us who have nowhere to live." We said, "Where do you live?" She said, "Last night I slept in a car park." We said, "Where are you going to sleep tonight?" She said, "I might get in a hostel, but it might be the car park again."

That is going back to 1980, and I assure the Committee that, even on the Government's own statistics, matters have grown worse. Until about five years ago I was able to rent a flat in Artillery Mansions, along Victoria Street. Most members of the Committee will know where that is. In Victoria Street, on coming towards the Palace of Westminster, there is a brand new building opposite New Scotland Yard. At the time of which I am speaking there was an older group of buildings with shop fronts. An elderly lady lived in one of the doorways and she was there every night and every morning when I passed by. Wherever one went in that part of London—I do not say that there was someone in every doorway—people had a particular identification with a particular building where they used to sleep. I suppose that if accommodation was obtained for a night under a roof that was considered to be a luxury.

Those people are not in those areas where there is redevelopment. However, they are not living in anything which this Bill could identify as accommodation. Therefore, how are they supposed to comply with the Bill as it stands? I regret to say that most of them have passed the stage where any form of rehabilitation is possible.

I said earlier that it is dangerous for the noble Lord, Lord Glenarthur, to compare this Bill with the Scottish Bill because, in demographic terms, we are dealing with two completely different parts of the United Kingdom. I am a Mancunian and a former chairman of housing in Manchester and I know the problems that they had, and have, in inner Manchester. However, they are minuscule compared with how this problem will affect London.

The noble Lord, Lord Jenkin, said quite rightly that a local form of income tax would devastate the inner cities. I should tell the noble Lord, Lord Jenkin, that inner cities such as Manchester and Liverpool have been devastated without the local income tax. Most of that is due to depopulation by the younger people and retention of a far higher than average of pensioners, deprived people and underprivileged people.

I hate to play politics, but it is the present Government which have withdrawn the resources from those inner cities in massive amounts. When it is said that people will know immediately who is to blame when they are paying high local income tax, in my experience—and I was in local government for a long time—it was always accepted, even by people from the North, that the average Londoner had to bear an unfair share of the social consequences of being a Londoner. It is a well known fact that various authorities in different parts of the country which had a housing problem, have given youngsters the fare to go to London. I have waited at stations in London with Conservative Members of Parliament and seen young boys and girls from the north of England get off the train, yet having nowhere to go. They come from the north to try to start some form of a life in London. They had nowhere to go but for the people from voluntary associations who were waiting to take them into care, to give them a warm bed to sleep in and to look after them.

I agree with the noble Baroness who moved the earlier amendment that the Government are making a profound mistake in trying to apply a standard charge to people in these particular categories. There is no way in which collection can be regulated. In my opinion it will do immense damage to people who are trying to grapple with the situation in the inner cities, especially in London, and who, despite the Government announcements a few weeks ago of increased funding for homelessness, are still tragically and pathetically short of resources to do the job they do, with little praise, in their own time and with very great effort.

Unless the Government look at this amendment moved by Lord Hayter and come back with something positive, the most appalling damage will be done to one of the worst and most deprived sections of our community. That is why I am pleased and proud to speak in respect of this amendment.

The Earl of Caithness

I am grateful to the noble Lord, Lord Hayter, for raising this important matter. I have listened with great care, as indeed I did earlier this evening, when we had an extensive debate on the position of hostels for the homeless and hostels run by charities and other voluntary organisations. My noble friend Lord Glenarthur agreed to take the matter away and to reconsider the Government's position. Your Lordships will recognise that the position of people who sleep rough is very closely linked, as the noble Lord, Lord Dean of Beswick, has just intimated, to the question of people who live in hostels and night shelters. We are really dealing with two sides of the same coin.

Having agreed to look again, without commitment, at the treatment of people who stay in hostels, I believe it would be sensible if I made a similar offer in respect of people who sleep rough. I think it would also be right for me to say at this stage that it is not clear that the aim of the amendment as described by the noble Lord, Lord Dean of Beswick, is achieved by the amendment as tabled; but perhaps that is something we can discuss between now and another stage. Therefore, with your Lordships' permission, I shall take this matter away and consider both this and the earlier amendment in the light of the debate tonight. On that understanding, I hope the noble Lord, Lord Hayter, will withdraw his amendment.

Lord Hayter

I am grateful to the Minister. I am delighted that he is prepared to have second thoughts about this amendment and I ask permission to withdraw it.

Amendment, by leave, withdrawn.

The Earl of Caithness moved Amendment No. 12: Page 2, line 8, leave out from beginning to first ("premises") in line 9 and insert ("If a person's sole or main residence at a particular time consists of").

The noble Earl said: My Lords, this is a purely technical drafting amendment. I beg to move.

On Question, amendment agreed to.

The Deputy Chairman of Committees (Earl Cathcart)

In calling Amendment No. 13 I should say that, if it is agreed, I cannot call Amendment No. 14.

Lord McIntosh of Haringey moved Amendment No. 13: Page 2, line 13, leave out subsection (5).

The noble Lord said: I hasten to say that this amendment, which formally appears to leave out exemption for students, is a probing amendment. It is the only way which we could find of raising this matter with the Government at this stage of the Bill. There is a serious issue here. There are other issues which will be dealt with later. However, this issue has not found itself on the face of the Bill and repeated attempts in another place failed to force it into the Bill. It concerns the 20 per cent. liability and whether student grants will be increased to compensate for that liability. If that is not the case and there is no compensation in student grants there will be a severe diminution in the standard of living of students, which has been going down for a number of years.

I am well aware of the arguments which have taken place between the Department of Education and Science and the Department of Health and Social Security about the different responsibilities for students' income. I believe that, rightly, there has been some attempt to tighten up the DHSS regulations, but that is only right if the DES takes on the responsibility of giving students, particularly those whose means test shows that there is a need, adequate income on which to live. It has been a principle of our involvement in the financing of higher education that, subject to a means test, the state has taken responsibility for providing students with enough to live on. Until now we have never taken the view that it is desirable for students to build up debts, although that is undoubtedly what is happening at the moment. I am also well aware that the question of student loans is being floated in Government circles, but possibly that is something for the future.

In the meantime, we have a system of student grants and I ask the Government to confirm that there will not be an irrational, unnecessary and extremely damaging reduction in the standard of living of ordinary students by forcing them, without compensation, to be responsible for 20 per cent. of the community charge. If the Government can give that assurance there need be no further debate on this matter. If not, we shall have to find perhaps a more rational way of bringing this matter forward at a later stage. I beg to move.

The Earl of Caithness

I believe that the noble Lord, Lord McIntosh of Haringey, was speaking also to Amendment No. 27.

Lord McIntosh of Haringey


The Earl of Caithness

These amendments would exempt full-time students from the personal community charge. There are, however, in our view no good reasons why students should not be subject to the community charge in the same way as all other adults. Like other adults, they make use of local services and vote in local elections. The accountability arguments are therefore just as strong for students as for anyone else.

We recognise, however, that full-time students are in a unique position because of their financial circumstances and their mobility. They will therefore have to pay only 20 per cent. of the community charge; that is, only 85p a week on average. Many students, of course, already pay rates, either directly or as part of their rent. Indeed, if I cast my mind back to not so long ago I remember doing exactly that. The results of a recent survey carried out for the Department of Education and Science as part of the review of student finance which is being headed by my honourable friend Robert Jackson, suggested that over 60 per cent. of students contributed towards the rates, and that the average amount they contributed was around £70 a year.

The Jackson review, which I understand will produce proposals for consultation in due course, is considering how account should be taken of the discounted community charge liability in setting future levels of student support. The report will be concerned with all items of student expenditure and the extent to which the system already makes provision towards them.

Our proposals strike the right balance between extending accountability to full-time students as active members of the community, who make full use of local services, and taking proper account of their particular circumstances. I believe that they meet the concerns of the noble Lord, Lord McIntosh of Haringey.

11.15 p.m.

Earl Russell

I cannot say I heard that reply with any great satisfaction. This is a matter of quite general concern in university circles and, among others, to the Committee of Vice-Chancellors and Principals. Student life financially is very tight now. In fact, trying to organise inter-collegiate teaching arrangements in London we find it difficult from time to time to get people to go to lectures or classes at another college because they simply cannot afford the fares. I appreciate, as the noble Lord, Lord McIntosh, said, that there is a review under way, but it is not concluded. The noble Earl, Lord Caithness, may say that it is only a mere straw he is laying on the students. But the camel's back is very near to breaking. I hope that the Government will think further.

Baroness Carnegy of Lour

I too raised this matter during Second Reading. It is clearly very important. I agree that some students are very tight financially. I understood my noble friend to say that account was going to be taken of students' costs of living and their expenses when their grants are considered. It is important that the 20 per cent. community charge should be accepted from now on as part of the living expenses of students, as it will be for everybody. If my noble friend has said that, I am content. Can he please confirm what he said in the second part of his reply?

Lord Morton of Shuna

Before the noble Earl replies, perhaps he would consider the situation in Scotland. Students there, in the next financial year, will pay the community charge and also the community water charge. They have to pay the full community water charge but only 20 per cent. of the personal community charge. There has been no increase whatever in their grant which makes one doubt whether this review has any validity at all.

Lord Harmar-Nicholls

I should not like to give the impression of being mean regarding students' financial problems. Most of us appreciate the position. I certainly do, based on the experience of polytechnic students in the Wolverhampton and West Midlands area. If they are not adequately funded for all sorts of things, that ought to be looked at. It ought to be separate.

However, I should not like it to be done this way. I do not think it is a good thing to immunise a student from the problems and commitments that everybody has. If we want students to become good leaders in the community—and that is what we hope students will develop into—it is rather important that they should feel directly the impost of the sort of problems that everybody has to meet. I should not like to feel, on the community charge or anything else, that we give them complete immunity which puts them outside understanding the real problems everybody else has to meet.

If the financial situation of students, with their grants and everything else, is such that it is impossible for them to meet whatever the impost might be, that is another matter and we ought to look at it. But I would not tie the two points together. I think it is a good thing—with students, above all others, who will be the future leaders of this country—that they should have practical contact with the quirks and problems that everybody has to meet. Therefore I would suggest that this amendment is not the way in which to face up to the problem as regards the community charge affecting students.

The Earl of Caithness

I am grateful for the added contributions that have been made. I would say to the noble Earl, Lord Russell, that of course I recall that student life is always hard. I am sure it is no different today to what it was in my day, and indeed in the noble Earl's day. I would however repeat what I said earlier. The review which my honourable friend has carried out shows that over 60 per cent. of students are already contributing towards rates, with an average contribution of around £70 a year, which is considerably more than the average of 20 per cent. of the community charge. The noble Baroness, Lady Carnegy of Lour, put her finger on it when she said that the report must include all items of student expenditure and the extent to which the system already makes provision for them. I confirm that the report will do just that. As it considers rates, it will doubtless also consider the effect of the community charge.

With regard to students in Scotland and water charges, I am sorry that I cannot at present answer the noble Lord, Lord Morton of Shuna. As he knows, water charges in Scotland are assessed on a different basis from that in England and Wales, and water is provided by the local authority.

Lord Morton of Shuna

That is true. However, there is such a thing as a water charge under the abolition of domestic rates legislation, with which I should have thought the Minister would be fully acquainted.

The Earl of Caithness

I am indeed acquainted with it, but it seems to have slipped my mind at present.

My noble friend Lord Harmar-Nicholls was right to say that we must not isolate students totally from the realities of society. We understand the points that the noble Lord, Lord McIntosh of Haringey, has made, and the Jackson review will take into account what has been said in the debate.

Lord McIntosh of Haringey

I am grateful to the Members of the Committee who have taken part in the debate, notably for the general agreement that students have a very bad time financially if they are living on the grant available, and their conditions have been getting worse.

The noble Lord, Lord Harmar-Nicholls, seemed to suggest that I was proposing that students should be insulated from society. That was not my intention. I made clear that I want to make sure that the Jackson study, which is now taking place, should take full account of any additional cost that would arise from the community charge. The Minister has given some indication that this will be taken into account. I therefore beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Underhill moved Amendment No. 14: Page 2, line 16, leave out from ("where") to end of line and insert ("he chose to qualify as having such a residence between the area in which he is resident for the purpose of undertaking the course and his home area").

The noble Lord said: The amendment does not seek to change the position of students with regard to liability for the individual community charge. Subsection (5) provides that a student shall pay the community charge in the area in which he is taking a full-time education course. The amendment suggests that the student should be given the opportunity of liability for payment of the community charge in the area in which he is taking a full-time education course or in the area of his normal home address.

Both the Minister and my noble friend agree that students should not be insulated from the community. The student is treated as a citizen in the education town and in his home area. If he is able to satisfy the electoral registration officer, he can be on the electoral register in the area of his normal home address and in the area in which he is taking a full-time education course. In a parliamentary election he has the option of which constituency he will vote in. It seems to us that the Government are giving away nothing at all if they allow the student to have the option as to the area in which he should be liable for the community charge. That is the purpose of this amendment. I beg to move.

The Earl of Caithness

This amendment seeks to alter the special residence rules for students which are contained in Clause 2(5). Instead of being registered at their term-time address it would allow full-time students to choose whether they should be registered at their home address or at their term-time address.

This amendment would introduce an arbitrary and unfair element into the student residence rules which would give rise to resentment and, we believe, dissatisfaction at universities and colleges. The purpose of having special residence rules is to prevent students having to register and deregister and re-register for the community charge at the beginning and end of every term.

Clearly, if we are to impose special residence rules, the decision as to which area they choose—home address or term-time address—would be somewhat arbitrary. It is quite clear that the same rule must apply to all students. If students were allowed to choose where they were registered at every university or college, some students would be registered at the university town, while others would be registered elsewhere. A student who registered at the university town might well resent the fact that a colleague registered at home was paying a lower community charge.

Moreover, allowing students to choose would create just the kind of administrative confusion which the special residence rules are designed to avoid. The registration officer at a university town would be faced with the task of distinguishing between thousands of students, some of whom he would be obliged to register and others whom he could legitimately ignore. How would he know which was which? His only option would be to identify every student and then carry out a series of exhaustive cross-checks with registration officers all over the country, in order to ensure that they were all correctly registered.

We believe that this would be an administrative nonsense, and it is for the reasons that I have given that I cannot support the noble Lord's amendment.

Lord Tordoff

Does it not make the problem of accountability a little difficult if the student is paying in one local government area and voting in another? Does that not breach the principle of accountability?

The Earl of Caithness

; No, because the student will be using the facilities provided by the local authority when he is in term and when he is at home. Likewise, some of us, alas, have to find somewhere to perch in London at night and we use the facilities in London, as one does if one is lucky enough to live in the country. Indeed the noble Lord, Lord Morton of Shuna, will use the facilities provided by the local authority in Scotland. We do not believe that it alters the accountability.

Lord Underhill

I am grateful to the Minister for his reply, because this was a probing amendment. We wanted to understand why the Government had put this in subsection (5). Having had the reasoning, we now have the opportunity to study it and decide whether or not to accept it. There is the point which the noble Lord, Lord Tordoff, raised which we shall have to look at very carefully. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Earl Cathcart

In calling Amendment No. 15, if it is agreed to, I cannot call Amendment No. 16.

Lord Harris of Greenwich moved Amendment No. 15: Page 2, line 17, leave out subsection (6).

The noble Lord said: I beg to move this amendment. I understand that we are discussing Amendments Nos. 16 and 24 at the same time. The issues raised by these amendments relate to the question of those remanded in custody. When the issue was raised in the House of Commons at the Report stage on 19th April at column 702, Mr. Howard said: There was a vigorous Committee debate on this subject".

That refers to the question of remands in custody. He continued: Since then we have been reflecting on the arguments that were put to us and on the arguments that have been presented this afternoon. The case is not so clear-cut as has sometimes been suggested by the Opposition, but I accept that in some quarters there is considerable disquiet on the point. I shall therefore consider the points that have been made in the debate and will consult my colleagues and then report back to the House on the possibility of extending the exemption to cover prisoners on remand".

However, there is as yet no government amendment down on this point. I am bound to say that, in the light of what the Minister has said, I find that a little surprising, but no doubt the noble Earl will deal with the present position when he comes to reply.

I think that the case for change in the Bill on this particular issue is fairly obvious. First, convicted prisoners are already being exempted from the tax. That is obviously necessary because they are clearly in no position to earn any income. But what about those who are remanded in custody often for long periods? The number remanded in custody for between three to six months rose from 700 in 1979 to 1,800 in 1986. In the category of those remanded in custody for more than six months, the numbers rose from 300 in 1979 to 800 in 1986. Again that was a substantial rise.

What I find very difficult to understand is how it can possibly be right to distinguish between a man who is sentenced to, say, 18 months' imprisonment, who will not pay the tax, and another kept in custody on remand for over 12 months who will pay it.

As the noble Earl will be aware from his previous ministerial experience, the man kept in custody on remand for 12 months or more—there are many such men—will be kept in detention for a longer period than the man who is sentenced to 18 months, because the man who is sentenced to 18 months has the advantage, first, of remission and, secondly, of the possibility—the now strong possibility—of parole.

What happens, as is often the case, if the man on remand in custody for this substantial period of time is eventually acquitted? He will then have lost his liberty for a very substantial period of time—in many cases a year or more—and he will also have to pay the tax, whereas the man who is found guilty will be freed from the necessity of paying the tax and will also be in custody for a shorter period.

It seems to me to be quite astonishing that we are having to come back to this issue, it having already been raised in the House of Commons. I find it very hard to accept that there is any justification for quite such a ludicrous provision in the Bill, and I very much hope that the noble Earl will be able to indicate that the Government will be tabling an amendment to deal with this anomaly. I beg to move.

11.30 p.m.

Lord Morton of Shuna

I would strongly support this amendment because it seems to affect only those who are eventually acquitted. As I understand the position, somebody who is in the end convicted has his sentence backdated to the time he is remanded in custody and therefore he pays no community charge in respect of the period he is on remand.

All we are dealing with are the poor people who are remanded in custody although innocent, as they are eventually found to be, who are liable to pay the community charge while they are prevented from earning any income whatever and who usually lose whatever job they have. In England and Wales they do not have even the advantage that those under the Scottish system have, that on summary trials in Scotland they can be detained for only 40 days, and on indictment can be detained for only 110 days. Each of those periods is quite considerable for people who are trying to retain a job. But if the period goes beyond that it is quite impossible to retain a job. The situation really has to be dealt with because we are penalising, or the Government are attempting to penalise, the innocent and letting off the guilty. That really is a very odd position, even for this Government.

If this amendment is not to be accepted, I have to speak to Amendment No. 16 which is also down in the name of my noble friend Lord McIntosh, and which suggests that the Secretary of State: shall produce an annual report". This is obviously necessary because, as the noble Earl will be well aware, the number of prisoners on remand for long periods is increasing, goes on increasing and nothing seems to be able to be done to stop the increase of remand prisoners. Therefore it is necessary that Parliament should know how many people are affected by this disaster.

The Earl of Caithness

I am grateful to the noble Lord, Lord Harris of Greenwich, for raising the matter. It takes my noble friend Lord Glenarthur and me back to our former Ministry and the work that we did there. As the noble Lord said, there was considerable debate on this matter during the consideration of the Bill in another place. In view of that, we agreed to consider in consultation throughout the Government the possibility of extending the exemption to cover those held on remand.

I am now able to inform the Committee of the decision we have reached in respect of that undertaking. We have decided that the exemption should be widened to include those held in legal custody, including, for example, those held on remand and those committed to prison for contempt of court. We also propose to exempt people detained under the provisions of the Mental Health Act 1983.

We have decided on balance that accountability cannot reasonably be expected to operate properly for people who have no access to local services and are often held in a local authority area away from their homes. It also removes the anomoly that may have arisen where a remand prisoner is subsequently found guilty and where the time spent on remand is deducted from the custodial sentence. A person in those circumstances would be entitled to a retrospective exemption from the community charge for the period spent on remand, whereas a person who was found not guilty would be liable to pay the community charge for the whole period.

There are two exceptions to the general exemption for those held in legal custody. The first is fine defaulters. They differ from other prisoners in that they are able to obtain their release at any time simply by paying their fine, which will of course have been set by the court at a level which takes into account their means. The second exception will be those committed to prison for non-payment of community charges or residual domestic rates. A person can only be committed if his failure to pay results from wilful refusal or culpable neglect; in other words, if he had the money and could have paid but did not.

We have always made it clear that a person committed for refusing to pay the community charge will not, as a result, be exempted from the personal community charge. We shall bring forward a suitable amendment at Report stage. I hope that with that undertaking the noble Lord will feel able to withdraw the amendment.

Lord Morton of Shuna

Before the noble Earl sits down, perhaps he can tell us whether the amendment will cover the Scottish Act as well.

The Earl of Caithness

Yes, it will.

Lord Harris of Greenwich

I am delighted to hear that clear and unequivocal statement by the Minister as regards the Scottish provision. I am sure that there will be wild celebrations in Barlinnie tonight!

Perhaps I may ask one further question. I do not expect the noble Earl to deal with it tonight. Perhaps he will write to me regarding people who are sent to a bail hostel pending trial by order of a court. The hostel is often outside the area where their families live. I am not pressing for an answer tonight. Some questions involving hostels have already been raised and no doubt the Government will reflect on that matter. The Minister will realise that people are sent to bail hostels as a result of an order of a court.

Having said that, I welcome what the Minister has said. I wish to study carefully what he has said to see whether it meets all our concerns. However, at first sight it would appear that it does so. Subject to the qualification I have raised as regards bail hostels, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 16 to 19 not moved.]

Clause 2, as amended, agreed to.

[Amendments Nos. 20 to 23 not moved.]

Lord Hesketh

I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.