Community Charge Targets: Inflation Basis (Hansard, 7 March 1990)

§ The Parliamentary Under-Secretary of State, Department of the Environment (Lord Hesketh)
My Lords, the illustrative community charge figures which were published on 11th January assume that, in aggregate, local authorities spend at the level of total standard spending for 1990–91; some £32.8 billion. This is the amount of expenditure which the Government think it appropriate for local authorities to incur to provide a standard level of service.

§ Lord Donoughue
My Lords, I thank the Minister for that statement. Perhaps I may repeat my Question and ask him what was the assumption of the rate of inflation? Is it not true that it was 4.6 per cent? Is the Minister aware that current City forecasts for inflation in the coming year are double that at 9 per cent? Is the Minister further aware that about three-quarters of local government expenditure is on labour costs, and that about three-quarters of that is settled by central negotiations and formulae? Does he not therefore agree that it is unfair to blame local authorities for all the difficulties arising from the poll tax?

§ Lord Hesketh
My Lords, total standard spending in 1990–91 is 11 per cent. higher than the equivalent figure for 1989–90. The Government have thus recognised that it is reasonable for local authority expenditure to increase from year to year in response to increased costs and increased pressures.

§ Lord McIntosh of Haringey
My Lords, the Minister now has a third opportunity to answer the original Question. Why does he not answer in regard to the inflation rate?

§ Lord Hesketh
My Lords, the noble Lord, Lord Donoughue, referred to a figure of 4.6 per cent. I believe the actual figure was 3.8 per cent. However, the overspend that occurred for the previous year results in a net effect of 11 per cent., which is above inflation.

§ Lord Boyd-Carpenter
My Lords, is my noble friend aware that, notwithstanding the criticism made by the noble Lord, Lord Donoughue, a number of well-run local authorities have managed to put forward a community charge that is below the target proposed by the Government? I refer, notably, to Westminster and Wandsworth. Is not that good example one to be followed?

§ Lord Hesketh
My Lords, as always, I am deeply indebted to my noble friend Lord Boyd-Carpenter. With regard to inflation, it would be appropriate to suggest to the House that although the rate in January was 7.7 per cent., for local government expenditure it would be entirely reasonable to remove the mortgage interest rate component, which reduced it to 6.1 per cent.

§ Lord Grimond
My Lords, are not the Government entirely justified in ignoring this Question? A year ago they assured me that they would abolish inflation. If so, it would be absurd for them to take it into account! When is inflation to be abolished?

§ Lord Hesketh
My Lords, like Christianity, great struggles can last for two millenium.

§ Lord Harmar-Nicholls
My Lords, is my noble friend aware that even if the assumed rate of inflation was replaced by the actual rate of inflation, many local authorities are still well above what their expenditure should be, based on past experience? Is he further aware that many people in this country are disturbed at the consequences of that and expect such authorities to be capped without undue delay?

§ Lord Hesketh
My Lords, as always, I am grateful for the contribution of my noble friend. I must remind the House of the facts recently produced in another place by my right honourable friend the Prime Minister; that is, current community charges as they appear to be at the moment equate to a 35 per cent. increase in the rates.

§ Lord Stoddart of Swindon
My Lords, is the noble Lord aware that people like myself who live in Tory-controlled Berkshire feel oppressed in two senses: first, by a Tory Government who have brought in a most vicious and absurd individual tax, and, secondly, by a profligate Tory-controlled county council? Does the noble Lord not realise and understand that places like Maidenhead and Windsor are hardly likely to be described as red, militant areas, though they have had overflow meetings to protest at this disgraceful charge against the residents, their children and relatives? Does the Minister not understand that at the next general election the map of Berkshire will turn red from blue?

§ Lord Hesketh
My Lords, if the noble Lord, Lord Stoddart, would like to table a Question on Berkshire I should be more than happy to answer it.

§ Lord Ellenborough
My Lords, can my noble friend the Minister say whether the Government have now grasped the simple reality that if they must have a universal flat rate tax it must be a very low one well below the Government's own target estimate of £278 and covering purely local services? Otherwise the tax will be politically unacceptable and it will become—as it has already become—a recruiting agency for the Labour Party.

§ Lord Hesketh
My Lords, my experience at this Dispatch Box, for as long as I have been representing the Department of the Environment, is of constantly being accused by Members on the Benches opposite of not allowing local accountability. I believe that the community charge will do that.

§ Earl Russell
My Lords, I ask the Minister to comment further on the question asked by the noble Lord, Lord Boyd-Carpenter. The noble Lord used the phrase "a well-run local authority". Does the Minister agree that a low community charge is not a sufficient definition of a well-run local authority? One must also think of the quality of the services delivered.

§ Lord Hesketh
My Lords, I always find it encouraging, when I drive into Wandsworth, to see flower baskets hanging from the public lighting system. The combination which the noble Earl requires is a combination of a low charge and a well-run authority.

§ Lord Gisborough
My Lords, did my noble friend read in the press—

§ Lord Jenkins of Putney
My Lords—

Noble Lords
Order!

§ Lord Belstead
My Lords, we cannot have two noble Lords on their feet at the same time. As there has been a slight altercation between myself and the noble Lord, Lord Jenkins, I invite him to rise to his feet now.

§ Lord Jenkins of Putney
My Lords, I thank the Leader of the House. I always knew that he was good-hearted. Is the Minister aware that if he lived in Wandsworth, as I do, he would take a very different view of Wandsworth Borough Council? He would know that one pays for low expenditure by having poor services. That is the situation in Wandsworth.

§ Lord Hesketh
My Lords, I can only repeat my previous answer, in that I have always found it most encouraging when I arrive in Wandsworth.

§ Lord Gisborough
My Lords, did my noble friend read in the press a report to the effect that there had been a directive to Labour-run councils that they should increase their expenditure to the maximum amount this year?

Noble Lords
Where?

§ Lord Hesketh
My Lords, I do not have the evidence which my noble friend presents. However, I am sure that the local voters will take that matter into account when they have time to consider excessive charges.

§ Lord McIntosh of Haringey
My Lords, it required asking three times to get a simple, straightforward reply to the simple, straightforward Question from my noble friend Lord Donoughue. Does the Minister not agree that that indicates, as regards the assumptions about inflation, as in all matters relating to the calculation of the poll tax, that the Government have got the answer very badly wrong indeed?

§ Lord Hesketh
My Lords, I was very clear in my answers and they equated to a simple fact: the level of expenditure is nearly double the level of inflation.

§ Lord Stallard
My Lords, I wish to return to the question of accountability. The noble Lord said that the main aim of the poll tax is to make local authorities accountable. Is it not a fact that three-quarters of the expenditure is controlled by central government? Does the Minister not agree that there is no accountability from local authorities on three-quarters of the total expenditure?

§ Lord Hesketh
My Lords, according to the remarks made by the right honourable gentleman in another place who speaks on behalf of the Labour Party—maybe I am under a misapprehension, though I do not believe I am—an even greater part of expenditure on local government will be controlled by central government if that party has its way.

§ Baroness Carnegy of Lour
My Lords, if the House is in any doubt about the increase in answerability 1174 that has been brought about by the poll tax, is my noble friend aware that in the Angus district of Tayside the poll tax has gone up by only 2.7 per cent. and that this year is election year?

§ Lord Hesketh
My Lords, that is encouraging news. I have to draw your Lordships' attention to these disappointing facts: in the post-electoral years for county councils, for example, in 1982 the rates rose by 15 per cent.; in 1986 by 18 per cent; and this year by 15 to 20 per cent.

§ Lord Hatch of Lusby
My Lords, the noble Lord was unable to answer the question asked by the noble Lord, Lord Grimond, as to when inflation will be abolished as the Government have promised to do for many years. Is the Minister aware that the poll tax itself is calculated to add over 1 per cent. to the present rate of inflation?

§ Lord Hesketh
My Lords, all great undertakings take time. The fact is that if this Government were willing to judge their future entirely on the basis of one single influence, they would not be a government fit to run the country.

§ Lord Howie of Troon
My Lords—

Noble Lords
Order, order!