Community Charge: Cost Comparison (Hansard, 18 April 1989)

§ The Minister of State, Scottish Office (Lord Sanderson of Bowden)
My Lords, from information recently submitted by local authorities the estimated cost of administering the community charge and non-domestic rating system in Scotland in 1989–90 is £43.5 million. The cost of administering the rating system in 1988–89 was £31 million.

§ Lord Taylor of Gryfe
My Lords, does the Minister not agree that the additional capital expenditure is now £30 million which has to be borrowed by local authorities thereby incurring interest charges? Will he also agree that the administration of this tax involves 2,000 additional personnel? Finally, will the Minister accept that there are other and more pressing needs for local authority expenditure on sewerage, infrastructure and roads rather than on the administration of this tax?

§ Lord Sanderson of Bowden
My Lords, we have played a very considerable part in helping local authorities to prepare for the introduction of the community charge by providing additional capital allocations totalling £26 million in 1987–88 and 1988–89. On the question of additional personnel, perhaps I may refer the noble Lord to a Green Paper produced in 1981 where his preferred choice, which is local income tax, if administered independently by local authorities, would have cost roughly £500 million per annum involving 55 thousand people in the United Kingdom.

§ The Earl of Lauderdale
My Lords, does my noble friend the Minister not agree that the establishment of the new community charge is welcomed by all ratepayers who see their burden reduced and properly shared among the community?

§ Lord Sanderson of Bowden
My Lords, we had long discussions during the course of the Scottish Bill's progress through this House. I am happy to acknowledge that the cost of administration is lower than expected for the first year.

§ Baroness Seear
My Lords, does the noble Lord not agree, in giving the figure calculated in 1981 for the cost of local income tax, that technology has advanced considerably since then and that a new estimate should be made to see what local income tax would cost using modern equipment?

§ Lord Sanderson of Bowden
My Lords, it is for the noble Baroness to examine her own preferred choice and to tell the House what she arrives at. Although inflation has been running at a relatively low rate since 1981, those figures could well have been going up rather than down.

§ Lord Mowbray and Stourton
My Lords, having just completed my papers for the first monthly payment of the community charge in Scotland—due in three days' time if my memory is right—can my noble friend tell me why the form to be completed is so enormously complicated and difficult? There was I, a willing political supporter of the policy, having the utmost difficulty avoiding making a 686 mistake. It struck me that anyone not wishing to pay the charge could make—I shall not use the words I had in mind. I ask my noble friend whether the form can be simplified.

§ Lord Sanderson of Bowden
My Lords, I am certain that my noble friend, who I am sure is adept at filling in forms of all descriptions, will have completed his form correctly. However, it is such comments that we listen to. We are monitoring the First year of the tax most closely. I thank my noble friend for his remarks.

§ The Earl of Lauderdale
My Lords, is my noble friend aware that I received a booklet of paying slips and have found them perfectly simple to complete?

§ Lord Sanderson of Bowden
My Lords, perhaps I should ask one of my noble friends to talk to the other.

§ Lord Carmichael of Kelvingrove
My Lords, is the Minister aware that the figures he gave are not the total cost of this tax to local authorities in Scotland? There is still a large capital involvement in replacing some of the temporary accommodation that was required—Portakabins, and so on. Another hidden cost to local authorities is the considerable amount of work—confirmed by the Minister's noble friend sitting behind him—in helping people to complete their forms, particularly when social security and rebates are involved. Great distress has been caused. As for the noble Earl who said that the tax is welcomed in Scotland, when the bills begin to come through and, in some cases, sadly, the bailiffs are seen in the streets, the community charge will not be as popular as the noble Earl seems to think.

§ Lord Sanderson of Bowden
My Lords, the noble Lord mentioned higher running costs and capital expenditure. The Convention of Scottish Local Authorities is free to raise such matters in discussions with my right honourable friend the Secretary of State for Scotland. I am sure the convention will be doing that as we commence implementing this tax. The noble Lord referred to rebates—an aspect about which we are extremely concerned. But we are pleased that the number of applications received so far is around 75 per cent. of the estimated 1 million caseload we expect, with many more still arriving. We are conscious of the fact that most local authorities are, like Lothian, advising people either to wait or make a payment of 25 per cent. of the first month's instalment, which can be subsequently adjusted.

§ Lord Dean of Beswick
My Lords, is the Minister aware that if one uses the normal multiplier of population in England compared with Scotland and multiplies the figure of £40 million plus for Scotland we are speaking about nearly £500 million for England? Is the Minister aware that that is enormously in excess of the figures quoted during the passage of the Bill through this House? How have the Government got the figure so wrong? Cannot they do their sums?

§ Lord Sanderson of Bowden
My Lords, I shall not comment on what the noble Lord said about the English Act but I remind him that the figures in 1988–89, under the old system, have come out at £31 million. Under the new system the budget estimates are £43.5 million—a £12.5 million increase. I do not consider that excessive bearing in mind the discussions we had on the legislation for Scotland.

The Earl of Selkirk
My Lords, can my noble friend tell the House whether those entitled to some reduction in payment have completed their forms in the correct manner and in the correct number?

§ Lord Sanderson of Bowden
My Lords, it is too early to judge whether that is the case. As regards rebate forms, we are satisfied that about 75 per cent. of the estimated 1 million people have filled in their forms. We are also satisfied that the processing of those forms is going ahead as speedily as possible.

§ Lord Taylor of Gryfe
My Lords, the Minister has suggested that this measure is welcomed in Scotland. Is he aware that recent opinion polls have indicated that 80 per cent. of the voters of Scotland support parties opposed to it? Can the Minister also check the figures he has just given with the local authorities' association, CoSLA, who state that the running costs of the new system are £25 million more than the £20 million for the present system which suggests an increase of more than double?

§ Lord Sanderson of Bowden
My Lords, the figures that I gave the noble Lord are accurate. They are the February figures, the most recent to be published. The provisional outturn for 1988–89 was higher than we had expected and we are very pleased that the £43^.5 million is within the £44 million provision which we and CoSLA thought the figure would be. As regards the cost of the system, the noble Lord was keen to get rid of rates but is not so keen on the poll tax as he terms it. He has been very keen on local income tax. I have explained to the noble Lord that the cost of the administration of such a scheme would be quite excessive.

§ Baroness Seear
My Lords, the noble Lord has not explained; he is merely asserting. The Minister has not explained at all how it will cost more.

§ Lord Carmichael of Kelvingrove
My Lords, will the noble Lord accept that this tax has caused a great deal of distress in Scotland? There are long queues at the district and regional authority offices; there are people in great distress over how to fill in the forms; and there are people having to pay who have never paid before and who are in very seriously deprived circumstances. What is really annoying people is the whole question of the tax not being in any way related to the ability to pay.

§ Lord Sanderson of Bowden
My Lords, we covered this ground very considerably during the course of the Bill through your Lordships' House. The Government wish to ensure that those who have and take services from local authorities understand and pay 688 for them. That was the whole basis for the introduction of the Bill.

§ Baroness Blatch
My Lords, does my noble friend not agree— —

§ Lord Denham
My Lords, I wonder if my noble friend will allow me to intervene. We have spent 15 minutes on two Questions. My noble friend the Minister has, I believe, covered the points very thoroughly. Perhaps we can go on to the next question.