HL Deb 21 March 1991 vol 527 cc729-47

3.38 p.m.

Baroness Blatch

My Lords, I beg leave to repeat a Statement made in another place by my right honourable friend the Secretary of State for the Environment on the local government review. The Statement is as follows:,lb/> "The House will remember that when I announced the review on December 5th I explained the comprehensive nature of our review. For the first time we are looking at the structure, functions and finance of local government in the round.

"I should like to thank the very large number of people and organisations who have put forward their views. I do not need to tell the House that they have not always been compatible with one another.

"We took as our starting point our firm belief that the local delivery of certain services—many of them essential—is a central feature of a pluralist society. Local government must enable local people to exercise continuing influence over the quality and the range of the services which Parliament entrusts to them.

"Local government is responsible for the efficient delivery of these services. We need responsible elected local authorities not only to provide a check and a balance to Westminster but also to reflect the multiplicity of aspirations amongst local communities.

"But given the primary responsibilities of central government, local government cannot be a fully independent power in the land. It traditionally derives its power from Parliament, and it must complement and not compete with central government in its activities.

"Within this framework, we believe that councils should be accountable for their actions and that there should be a direct and visible relationship between the costs of services and the local bills to which they give rise. We believe that those bills should be spread widely and fairly throughout communities; that they should bear some relation to people's ability to pay; and that it should be possible to levy and collect them without difficulty.

"These principles are guiding our review. I am able to announce today some interim conclusions and in other areas to narrow the options so as to proceed to more detailed consultations.

"Many parts of England now have in effect unitary local government. The GLC and the metropolitan county councils were abolished in 1986. The ILEA went in 1990. There is little demand for their restoration. Indeed it is difficult now to perceive any real role that they played.

"But outside the main conurbations, leaving aside the valuable role played by parishes, the system of two principal authorities in each area still prevails. The usefulness of two tiers is being questioned. Also being questioned is the continued existence of certain of those authorities which were created by the local government reorganisation of 1974, but which have not succeeded in inspiring local loyalty. Another challenge is that the role of authorities is changing as they increasingly become enablers rather than direct providers of services.

"There is therefore now an opportunity to think afresh about the structure of local authorities. But the Government do not see this as an opportunity to impose a new pattern of local authorities according to a national prescription. Nor do we believe that it is necessary to have a uniform pattern of authorities in every part of the country. Local people should have an important role in determining what structure of local government best reflects their community loyalties. This does not mean therefore the wholesale abolition of either county councils or district councils, nor even unitary authorities everywhere. It means arriving at the right solution for each community. We intend to adopt a practical approach in response to local views and local conditions. But it seems likely that we shall move to a larger number of unitary authorities.

"We shall therefore be consulting on the proposition that a local government commission shall be charged with responsibility for evaluating the most appropriate form of local government for individual areas, taking account of the wishes of local people and putting forward proposals for reform. It will proceed area by area.

"The reduction in the local tax burden and correspondingly larger contribution from central taxation announced in my right honourable friend's Budget Statement implies a need to consider whether a number of functions should now be brought into or financed directly by central government. This would be without further changes to the balance between central and local taxation.

"My right honourable friend the Secretary of State for Education is bringing forward today proposals for such a transfer in one area of his responsibility.

"The issue of how local authorities are managed is no less crucial.

"The problems which local authorities face are compounded by the cumbersome internal arrangements for the management of councils. The committee system, which dates back to the Municipal Corporations Act 1835, requires that all the decisions are taken collectively by large numbers of councillors, in full council or committees. Too many councillors spend too much time achieving too little.

"Consequently it is difficult for local government to attract and keep enough men and women of the right calibre both to lead what are now multi-million pound organisations providing a range of key services, and to represent properly the interests of the people who elected them.

"We therefore believe that there should be a new look at the internal workings of local authorities to improve the decision-making process. I shall issue a consultation paper on these issues.

"Alongside that, we also want to develop further the idea of the enabling council. Many of the Government's policies have been designed to move power to individual members of the community; in particular the right to buy, the tenants' charter and local management of schools. Compulsory competitive tendering has also been part of this process and we will be looking at ways to make it more effective and to carry it forward. In particular, we will be looking at new areas where contracting out should be applied. These will include professional and technical tasks as well as manual tasks. Housing management, legal services and computer services could all be added to the list. The success of a local authority must be measured not by its size but by the quality of the services delivered, from whatever source; by its responsiveness to its clients and customers; and by the value it squeezes out of each pound of taxpayers' money.

"I now turn to the question of finance. A local tax base is essential if there is to be any meaning to the concept of local government. But local government services cost a great deal of money—more than £50 billion in the coming year—and the burden on local taxpayers has become too great.

"We have therefore decided to make a fundamental shift in the amounts which central and local taxpayers pay towards the cost of local government services. This change will take effect in 1991–92, and will reduce local taxation to a level that should be sustainable in the longer term.

"The first consequence of this was announced by my right honourable friend the Chancellor of the Exchequer on Tuesday. We have concluded that it is right to reduce the present average headline community charge of £392 in England for 1991–92 by £140 to £252. The average amount payable by charge payers, after allowing for the community charge reduction scheme and benefits, will then be considerably less than this. To secure this my right honourable friend is providing a further £4.25 billion from national taxation to local authorities.

"As a result, in 1991–92 the community charge will be raising less than rates in their last year. For the coming year locally raised finance will fund 22 per cent. of local government expenditure, compared to 34 per cent. this year. And these figures are before the substantial benefit of rebates and the community charge reduction scheme.

"To achieve these objectives my right honourable friends the Secretaries of State for Scotland and Wales and I are today introducing in the House a short Bill. If enacted, this will have broadly three effects.

"First, it will provide that the community charges which authorities have set for 1991–92 are replaced the day after the Bill's enactment by new charges £140 lower. Councils will not need to meet to set the new charges, but they will be treated in all respects as if they were set by authorities in the usual way.

"Secondly, my right honourable friends and I will be empowered to pay grants to charging authorities to make up the loss of income resulting from the reduction in charges brought about by the Bill's provisions. It is also our intention to pay grant to cover authorities' additional administrative expenses arising as a consequence of the Bill. "All this means that where authorities have already issued their charge bills for 1991–92-and I know that some authorities have done so-they will, after the Bill's enactment, need to issue fresh bills reflecting their new lower charges. We propose to amend the regulations on the community charge demand notice slightly to provide the basis for the new bills, but we believe not in ways that would result in significant changes to authorities' computing arrangements.

"We are revising the profile of payments from the non-domestic rates pool to ensure that our proposals have no significant effect on local authorities' cash flow.

"These proposals do not affect the operation of the community charges' reduction scheme or community charge benefits, though it will of course be necessary to recalculate entitlements under both schemes.

"My department has written to local authorities, and to the local authority associations, explaining the details of all these arrangements. Clearly it is desirable that the new charges should be in place at the earliest opportunity. Accordingly, we shall be looking to Parliament to consider the Bill as a matter of urgency.

"Having reduced community charges to reasonable levels, we will expect local authorities to restrain their spending to keep them at those levels. I shall therefore be prepared to use my capping powers rigorously again in 1992–93.

"Having achieved a reasonable balance between funding from local taxation we need to address the question of the local tax itself.

"I referred briefly in my opening remarks to the principles which I believe should underpin any form of local tax. Let me spell them out.

"First, accountability. As far as possible, a local tax should buttress the accountability of a local council to its taxpayers. People should be able to see some link between what they are being asked to pay and what their council is spending.

"Secondly, fairness. Nobody likes paying taxes. But in our society taxes have to be basically acceptable to taxpayers; and to achieve that they must be perceived to be fair.

"Thirdly, ease of collection. Any tax will require administrative arrangements to collect the revenue, including measures to chase up those who are late in paying. But if the tax is too difficult to collect the costs of collection become unacceptable.

"Fourthly, most people should make some contribution. We believe it is right that, as far as possible, any tax should take some account of the number of adults in each household, so that they contribute to the cost of services provided by the local councils which they elect. This principle has gained a wide measure of acceptance.

"Fifthly, restraint. No tax is acceptable if it is levied at penal rates either as a result of local authority overspending or because the burden on any individual or household is excessively high. We are adamantly opposed to excessively high bills for a minority of electors—a feature of the old rates system.

"In accordance with these criteria we have reached our conclusions about the future of the community charge. In spite of the comprehensive system of income related rebates and the reduction scheme we devised, the public has not been persuaded that the charge is fair. We have therefore decided that from the earliest possible moment the community charge will be replaced by a new system of local taxation.

"After a careful reappraisal of the options we have decided in principle to bring forward a new 'local tax' under which there will be a single bill for each household comprising two essential elements: the number of the adults living there and the value of the property. There are a number of ways of assessing values, on a capital or a rental basis, which require careful evaluation and extensive discussion and consultation. But it is our intention that the system we introduce should have the following features. It should reflect people's concern that the system is fair; the balance of funding as between central taxation and the new local tax should be broadly in line with that announced by my right honourable friend the Chancellor of the Exchequer on Tuesday. It will be essential to ensure that local taxpayers do not face undue changes in their bills as a result of the introduction of the new local tax arrangements. There will therefore need to be arrangements to protect them during the transition to the new system; it should ensure that regional variations in property values do not lead to disproportionate bills in high price areas; there should be rebate arrangements to protect people on low incomes from making a disproportionate contribution to local taxation; there must also be restraints to ensure that local taxpayers do not face excessive bills as a result of overspending by local councils, either before or after introduction of the new system. There are a number of ways—including capping —by which this may be achieved.

"I made clear at the beginning of this Statement my commitment to the institution of local government. But for its part local government has to recognise economic reality and the duty and responsibility of central government to manage the economy. Central government also has a duty to protect local taxpayers from excessive bills.

"1 intend to publish a consultative document after the Easter Recess setting out alternative approaches and dealing with these issues.

"The Government have no present intention to propose changes to the uniform business rate.

"My right honourable friends the Secretaries of State for Scotland and Wales will be making separate Statements about the outcome of the review as it relates to those countries.

"Let me summarise. We have already dealt with the burden of the local tax. I shall shortly publish consultation papers on structure, internal management and the new local tax. We will conclude the period of consultation in the summer. Depending on the outcome of that consultation, we intend to introduce legislation setting up the Local Government Commission and providing for the new local tax in the next Session of Parliament. We anticipate that the first of the new authorities could be in place by April 1994. We shall consult local authorities on the basis that the new tax could be in place in 1993–94.

"In conclusion, we believe that the proposals which I have outlined today will establish a system of local government which will carry through into the next century. These proposals are designed to end the sterile quarrel between supporters of central and local government. They should attract men and women of sufficient quality and commitment to restore authority to and confidence in local government. They should enhance the quality of services and give extra momentum to the pursuit of value for money. They should result in a local government which puts people first. I commend these proposals to the House. "

My Lords, that concludes the Statement.

3.56 p.m.

Lord McIntosh of Haringey

My Lords, the House will be grateful to the Minister for repeating that lengthy Statement. Unfortunately, what it gains in length it does not gain in precision. If we contrast it with the inspired leaks which came from the Department of the Environment on Monday of this week, we find that almost every single important issue which could be a bone of contention has now been fudged. This Statement has Cabinet blood all over it, on every page and in every paragraph.

I must start by questioning whether it is right for a Cabinet of this type to blame 40 million people for misunderstanding the purposes of the poll tax. I did not hear anywhere in the Statement a word of apology for the chaos which has been brought to this country over the past three or four years by the introduction of the poll tax. All we are told, blandly, is that the people of this country have not been persuaded that it is fair. Does it ever occur to the Government that it may be their fault that the poll tax is not fair and that the perception of people is right now and was right at the time when the poll tax was introduced?

We can spend relatively little time in discussing this Statement and in considering the questions to ask in looking at the structure element. Almost every one of the significant statements which were leaked on Monday has been withdrawn. We are now told that there will he consultation on the proposition, not that there should be a change, but that there should be a local government commission which will consider changes. The most we are told, in order to make sure that neither the county councils nor the district councils get up in arms about it, is that there may, at the end of this process, be a larger number of unitary authorities.

We are not told anything significant about the functions of local authorities, although we understand that there is to be a Statement in a few minutes which will affect those functions. One must ask the question: if the functions are to remain as they are, how can the financing system which is suggested here possibly be adequate to the task?

When we turn, as the Statement rapidly does, to the question of finance we must look first of all, again as the Statement does, to the proposals made in the Budget which are to be the subject of a Bill in your Lordships' House next week. It is not clear from the Statement that the £140 which is supposed to be applied to all people in this country will apply to less than half of the people in this country, because the £140 rebate will not apply to anybody who at the moment has a rebate; nor will it apply to anybody who is at the moment benefiting from transitional relief. Therefore it is simply not the case, as the Government have been claiming, that £140 will be taken off everybody's poll tax bill. I should like the Minister to indicate to the House exactly how many people will get the full £140 and in how many cases that £140 will be reduced by the incidence at present of the rebate and of the transitional relief.

That brings me to the question of transitional relief. How will the new transitional relief he calculated? Will it be added to the existing transitional relief, or will the existing transitional relief be allowed to run its course before the new system is introduced? We have here a recipe for chaos.

The Statement refers to the burden of the rates, and the burden of the poll tax and the burden of any new tax. Is it not the case that the rates, when they were abolished, took up on average 3 per cent. of household income on average earnings, whereas the poll tax, even after the Budget measures and even after the Bill is passed next week, will still take up 2.9 per cent. of average household earnings? In other words, there is no proposed change from the rates. The change is simply from the increased burden which has been a feature of the poll tax. Is it not the case that, at the same time, the burden of value added tax on a household on average earnings will rise from 2.7 per cent. to 5.8 per cent.? Ordinary people and those on lower incomes will be suffering particularly.

The Statement is also virtually silent on the valuation base. It leaves open the question of whether it will be on capital or rental values. No doubt that has been done to satisfy those in Scotland who feared another revolution if there were to be a further valuation and the possibility of moving over to capital values. But on what basis is the decision to be taken? After all, the issues have been well exposed over many months. Surely the Government should he giving some indication of what the basis will be.

More important, what is to be the second element of this new local tax? It has been described as being an element based on the number of people. However, will it be a higher tax on those households with more than two people or a lower tax on those households with fewer than three people? Whichever is the case, what is the basis upon which it will be collected? Will it not require a register rather like the one which was used for the poll tax, with all the inherent costs involved? Further, will it not also involve all of the problems of collection and of chasing payment which occurred with the poll tax but in this case for a smaller amount? Therefore, will it not be systematically more inefficient as a tax than the existing poll tax—even, I have to say, than an existing poll tax?

Moreover, who is to be responsible in a household for collecting this extra money from additional individuals? If it is to be the householder, does that not mean that we shall have 14 million individuals in this country—that is, heads of households —conscripted as involuntary poll tax collectors? I suggest that what the Government are proposing is the privatisation of the collection of the poll tax. They know that they cannot do it in the public sector, so they are now proposing to put that burden on every household in the country that contains more than one person.

In order to evaluate those suggestions we must know which functions are to be the responsibility of local government and which are not. There is no suggestion that there has been consideration of what functions are properly a matter for local discretion as opposed to those in which local authorities act as the agent for central government.

There is still a reference in the Statement to "capping ". How can that sit happily alongside the proposal for accountability? The Government have had all these years to establish a local government finance system which would achieve accountability. The test of accountability is that you do not need capping; you are able to trust local people because you have got the tax system right which enables them to make their own decisions as to what they want to spend in their area. Is it not a profound confession of failure that we have a continuation of capping under the proposed new regime?

There is no indication in the Statement about who gains and who loses. I suspect that that is deliberate. I say that because I believe that the very large number of people who gave their support to the poll tax because they agreed with it will now find that they are no better off at the end of the day.

What we have before us is claimed to be the abolition of the poll tax. However, what we have in practice is a property poll tax. The Government are claiming that this is a surrender; but in fact it is a demand for a ceasefire on inadequate terms. We on these Benches refuse to accept the surrender. We refuse to accept that the battle is over and that the poll tax has been abolished by these proposals. We shall continue to fight for a fairer and juster system of local government finance.

Lord Holme of Cheltenham

My Lords, we on these Benches are grateful to the Government and to the noble Baroness for the Statement, not least because it is a relief to have the proposals before us after they had been so extensively leaked and trailed in the press. However, it must be a surprise to the House to note how strangely incomplete the Government's proposals are, even for an interim Statement.

We in the Liberal Democrat Party have been glad to take part in the consultations to which the noble Baroness referred. On the question of the future structure of local government, I should like to think that our advice has had some effect. I notice that the Statement concluded with the longstanding Liberal slogan of "People first ". However, it is a shame that the Government did not feel it right to listen to our advice on the need for a regional level of government or to our proposals for a local income tax which the noble Baroness and I had the honour to discuss during the debate yesterday evening.

We agree with the Government's proposals on structure to switch to a patchwork of preponderantly unitary authorities. There is a welcome emphasis in the Statement on the wishes of local people. However, can the noble Baroness say how the wishes of local people will be ascertained on this very specific matter? In the Statement the Government say that they will proceed area by area in changing the structure of local government. But over what period of time do they envisage this happening before we have reshaped local government in Britain?

So far as concerns finance, the Statement talks of a "fundamental shift" from local to central finance. We should all acknowledge what that means. A fundamental shift in finance inevitably means a fundamental shift in responsibility. Is that not putting the cart of finance ahead of the horse of structure and function? Should we not first have addressed the question of structure and the functions of local government and then reached conclusions on the proper method of finance?

It seems that the hasty and last-minute switch of taxation will create considerable administrative problems for local authorities, and especially for their treasury departments. They are already bothered and bewildered, if not exactly bewitched, by the Government's chopping and changing. I am glad that the Government are proposing to recompense for the costs of the proposed changes. I am quite certain that a government of this financial prudence would not have entered into an open-ended commitment without having an idea of what the costs would be. I shall be most interested to hear from the noble Baroness what order and magnitude of costs we are talking about for this maladministration. How are local people who are paying their charges by direct debit or standing order to be treated over the coming months during this period of uncertainty? It would be most valuable if the House were to be given more information on that aspect.

I turn finally to the meat of the interim Statement; namely, the so-called local tax. I believe that the Government want to calculate liability on the basis of the value of the property weighted by the number of people living in it. But, alternatively, is it to be calculated by the number of people living there weighted by the value of the property? It is quite impossible to tell which aspect will fundamentally affect the nature of the way that the tax is calculated, collected and understood by local voters. The proposal sounds suspiciously like a poll tax plus. I notice that in the rather vague system proposed the need for rate capping will still apparently remain.

In conclusion, I believe that the poll tax can now be seen fairly and squarely for what it is: the most massive piece of maladministration of this century. Can the Minister tell us, from beginning to end of this unhappy saga, what the cost of the poll tax to Britain will have been? Before we close its eyes and say goodbye to it—and it sounds as though that will take an unconscionably long time—may we know what it has cost? I believe that this House and the country have the right to know the figure.

Baroness Blatch

My Lords, I am grateful to both noble Lords for responding so thoroughly to the Statement. However, perhaps I may point out to the noble Lord, Lord McIntosh of Haringey, that it is a bit rich to criticise the Statement as lacking precision. The Statement was as full as it ought to be at this stage. There would have been legitimate criticism if I had made an entirely definitive Statement without any consultation, following what has already been a collection of concerns and representations from individuals and organisations. My department has been presented with a great deal of information. In the circumstances, we think it entirely proper at present that the people of this country—that is, in England, Scotland and Wales—should have an opportunity to discuss the finer details so that we ultimately achieve a system which is agreeable to as many people as possible.

The noble Lord made the point that some people would not receive the full benefit of £140. The only people who will not receive the full benefit of £140 are those for whom less than £140 wipes out the community charge altogether. Anyone who is paying the community charge will be eligible to receive up to the full benefit of £140. The people of Wandsworth will reach zero before the full benefit of the £140 is felt.

Lord McIntosh of Haringey

My Lords, I am grateful for that response. Will the Minister say how many people fall into the category that she describes?

Baroness Blatch

My Lords, the noble Lord has merely to look at the local authority tables to see what the community charges are at the moment. We know that for Westminster the resultant figure is £36; for Shetland it is 93p. —Shetland has already taken the decision that there will be no charge for the people of Shetland—and that for Wandsworth it will be zero. It would be wrong for me at the Dispatch Box to go through each and every local authority's community charge. The point was also made about people paying a reduced community charge as a result of rebate, the community charge reduction scheme or transitional relief. Again, all those calculations will be done on the basis of the lower community charge. The £140 will be applied and the calculations will follow.

Lord McIntosh of Haringey

My Lords, this is critical to our evaluation of the £140 figure. Will the Minister tell the House how many people in this country are paying £140 or more and will therefore receive the full £140? That figure cannot include those for whom the rebate or transitional relief bring the theoretical poll tax of their local authority below £140. If the poll tax is £400, and they are paying 20 per cent., they are paying £80 only and will not receive £140 back.

Baroness Blatch

My Lords, £140 is deducted from the community charge. I know the point that the noble Lord is getting at, but if a student is paying, for example, 20 per cent. of £400 now, that £400 will be reduced by £140 and the student will pay 20 per cent. of the remaining sum.

Lord McIntosh of Haringey

My Lords, exactly.

Baroness Blatch

My Lords, therefore the full effect of the reduction of £140 will be of benefit to the charge payer.

Lord McIntosh of Haringey

My Lords, I rest my case.

Baroness Blatch

My Lords, the amount of money raised by local authorities by a local tax will be the equivalent in today's terms of £7 billion. That also answers the question asked by the noble Lord, Lord Holme of Cheltenham. The balance has been decided and all the details about functions and structure will follow. The balance has to be struck between the bill met by local people and that met by national taxation.

The noble Lord, Lord McIntosh, said that poorer people will be seriously disadvantaged by moving the money from local taxation to VAT. That is not entirely true. First, they would have to spend many thousands of pounds to discount the benefit of £140; and, secondly, because of the zero rating of the many fundamental goods and services that impact on lower income families, the change will not impact upon them as seriously as he suggested.

Many of the detailed questions I was asked are subject to consultation, and it will be for all noble Lords and the people of England, Scotland and Wales to become involved in that process. I hope that noble Lords opposite will feel able to participate in that process, in contrast to their decision not to participate in the review so far. I hope that they will change their minds.

Only yesterday the noble Lord appeared to be making fun about people in a house other than the house owner having to pay. Again only yesterday, the noble Lord, in answer to the noble Lord, Lord Monson, during the debate on the community charge, claimed that all adults, living anywhere in this country, paid their share of the rates. The unfairness of the old rates system was that it did not reflect whether one person or four, five or six lived in a house. The consultation process will take into account that unfairness.

The noble Lord's reference to capping leads me to ask noble Lords opposite a question. Are they saying, or will they say, to the country, that they believe that local government spending should go unfettered, and that there should be no limit on local government spending? That is what I deduce from what the noble Lord said. The noble Lord criticised the Government Statement for saying that there must be a limit on public spending. I rest my case on that.

The noble Lord asked for details about gainers and losers. That will be set out during the consultation process. It will depend upon the scheme that is adopted. I have no hesitation in saying to the noble Lord, Lord McIntosh, that the battle is enjoined and we shall enjoy it.

The noble Lord, Lord Holme of Cheltenham, also said that the Statement was strangely incomplete. Had we been entirely definitive at this stage, he would probably have been the first on his feet to ask why we were making final statements when we had not gone out to public consultation. The noble Lord was also forthcoming as to the details of the support that he and his noble friends would give to a local income tax which was described in some detail yesterday, and that they would support regional government as part of the restructuring of local government. I welcome his comments. The points were well spelt out yesterday by the noble Lord, Lord Hooson, who said that there might be a different solution for different parts of the country. I cannot be specific about time. If it is agreed that a local government commission should be set up, it will be for that commission to determine the pace and speed. We expect work to take place fairly quickly.

I believe that I have addressed the points about functions being dealt with first, and on the balance to be struck between local and national taxation. I accept that the issue of functions is important, and that functions should come before structure.

I have already said that the costs of administration will be met. I was asked how the change would impact on direct debits and bankers orders. I see much less of a problem with direct debits than with bankers orders. People paying by direct debit may have a difficulty with the first payment if an individual does not have time to stop it. The sum will be adjusted by the second payment. A person who has negotiated a direct debit arrangement with the bank will be informed of any change of deduction. The same goes for bankers orders. It will be up to individuals, if they wish, to withhold the first payment until they receive the new bills. We expect people to receive their bills during April and certainly no later than the early part of May.

I was asked about the value of property and the number of people living in it, and how the charge would be determined. Those points will also be subject to consultation. The final question I was asked related to the cost of implementing the poll tax from beginning to end. I do not have the figures now, but I shall write to the noble Lord with that information.

4.19 p.m.

Lord HaiIsham of Saint Marylebone

My Lords, perhaps I may ask my noble friend two simple questions. First, is she aware that all three Front Bench speakers fired their discharges into the air at approximately the speed as a Kalashnikov rifle fired in the streets of Baghdad, with the result that private Members of the House found it difficult to follow them?

My second question is rather different. Having regard to the fact that structure was at the heart of the review, have the Government considered, or will they consider, as part of the review and consultation, the repeated revival in every central government review of local government since Redcliffe-Maud of the suggestion of a wider system of regional government units which would make easier a solution to many of our problems—problems of quangos, with possible demands of Scotland, Wales and Northern Ireland, and a local income tax? Will the Government give consideration to that as part of their further examination of the matter?

Baroness Blatch

My Lords, on my noble and learned friend's first point, again I apologise to the House for the speed with which on the detail I responded to the questions of noble Lords opposite. In defence, however, I tried hard to make my initial Statement audible to all Members of the House. The answers to most of those detailed questions were contained within the main Statement.

Regional government does not feature in the Government's thinking in terms of restructuring local government. However, I have no doubt that my noble and learned friend has made sure that his views on that issue are well known in my department.

Lord Hatch of Lusby

My Lords, I wish to ask the noble Baroness two questions. As I understand it, the poll tax was always based on the Government's principle that everyone should pay it. In the summary of principles at the end of the section on the poll tax, the Statement said that most people should pay. Is that a change in the Government's policy? Has it been forced by practice or is it a reflection of the fact that the deduction of the £140 from certain poll taxes will mean that people like the residents of Wandsworth will apparently pay nothing?

Secondly, I feel that the noble Baroness has done no more than evade the question put to her by my noble friend from the Front Bench, Lord McIntosh. He asked how the Government equate accountability with capping. Are the Government saying that local electors should be entitled to control their own local councils, provided they do so in the way that the Government wish? If that is the case, are the Government saying that they know better than the electors how the councils are to be controlled and to what extent accountability will be accepted? If that is so, it is not accountability; it is merely limited accountability.

Baroness Blatch

My Lords, on the noble Lord's first point, I make no apology for saying "most ", because even under the poll tax it is most people who pay. Although the principle is that all people should be accountable and should pay, there is a series of exemptions. I shall not go through the list. The noble Lord is well aware that some people do not pay the poll tax.

Again, I must draw out noble Lords opposite on this point. We say that we want the maximum amount of autonomy to operate at local level. However, at the end of the day we take the view that the charge payers, the taxpayers, must be protected from irresponsible, high-spending local authorities. I reiterate the question publicly: is it right to deduce from what the noble Lord, Lord McIntosh, and other noble Lords said that those on the other side would allow unfettered, high spending from local government?

Lord Boyd-Carpenter

My Lords, as regards the review of the structure of local government, will my noble friend say a word about the Government's thinking on the situation in many parts of the country where top tiers of local authorities raise large sums? They do it not by imposing charges directly upon the citizens but by issuing a precept to a lower tier authority. That authority then has the responsibility, without any argument, of raising the money. Given the gap in accountability which that situation produces, will the Government give urgent consideration to putting it right?

My other question is this. I was extremely sorry to hear the Minister say that the Government were not thinking of doing anything about the uniform business rate. Is my noble friend aware that it causes great difficulty to a number of small companies, particularly in the South of England? It needs further examination.

Baroness Blatch

My Lords, my noble friend in his first point echoes a real concern that has come through in many of the representations made to my department. That issue will have to be addressed either through a movement towards unitary authorities or perhaps by making absolutely clear one local authority's accountability to its local electorate. For example, that could include separate billing. However, the issue will form part of the consultation process. I can say no more than I have said on the uniform business rate.

Lord Harris of Greenwich

My Lords, may I ask the noble Baroness what are the implications for the police service? She indicated that there would be no uniform pattern of local government and we very much welcome that. Is it suggested that people in a local community should make representations to the new Local Government Commission as to whether they wish to retain a county police force? Or does the Home Secretary propose to make some scheme or set up an inquiry? There is now great uncertainty in the police service as to what the Government have in mind and, in my view, it is highly desirable that the matter should be cleared up as soon as possible.

Baroness Blatch

My Lords, the noble Lord is absolutely right. He will also know that the Home Secretary has a large say both in financing the police forces and in operational control over them. I understand the noble Lord's point and we do not have it in mind to move to a national police force.

The Earl of Onslow

My Lords, I congratulate my noble friend from the bottom of my heart. I was one of those who thought that the poll tax was the taxation policy of Selim the Sot, and I said so. Perhaps I may blow my trumpet a tiny bit. I also suggested in your Lordships' House that there should be a human-weighted property tax. Nothing is more satisfactory for a humble Back-Bencher than to hear important Front-Benchers coming forth with the same idea. Therefore, I sincerely congratulate the Government.

I wish equally to congratulate them on going so far and then saying, "We must think the next stage through carefully. People must be allowed to have their say ". This is surely what accountability and democracy are all about. It is a vast improvement on what went before.

Finally, one minor point and one less minor point. First, when it comes to what we may call rates, for want of a better word, and the rate bills going out to council houses, we should make absolutely certain that it is correct that the bills for the rent and the bills for the rates are totally separate so that there can be no confusion. Furthermore, I wish to underline the point that my noble friend Lord Boyd-Carpenter made on the uniform business rate. Those authorities who previously tried to keep their business rates low in order to attract business felt very hard done by when their rates were greatly increased. Otherwise, the Government must be congratulated on showing courage and an ability to say so when they are wrong. That is something on which one should always be congratulated.

Baroness Blatch

My Lords, we know that there has been considerable concern on the noble Lord's small point about whether rent and rate bills will be sent out separately. That view has been put to my department and the issue will be addressed during the consultation.

I know how strongly my noble friends Lord Onslow and Lord Boyd-Carpenter feel about the uniform business rate. I have said that I cannot elaborate on what we have said. We have no plans for change. However, I must remind the House about the changes for businesses made in this week's Budget by my right honourable friend. There are considerable benefits for them and I suspect that in total they outweigh some of the disadvantages perceived by my noble friends in terms of the impact of the UBR on businesses.

I welcome my noble friend's comments about the Statement. We now look forward to hearing the detailed proposals of noble Lords opposite. They have criticised us for scanty information, but that is nothing compared with the scanty details we have received about their proposals.

4.30 p.m.

Lord Monkswell

My Lords, I wish to ask the Government two detailed questions which are important in terms of the administration of the arrangements in front of us. As we are all aware, the administrative costs of collecting the poll tax are incredibly high. We are grateful that the Government have realised that the poll tax is unfair, but we are a little sad that they do not seek to abolish it.

As regards administrative costs, I wish to pay tribute to the men and women who work in the treasury and benefit departments of local councils and who, over the past few weeks and months, have given an incredible amount of dedicated service to ensure that the poll tax bills are correct and are sent out in a timely fashion. I know that many of them have worked seven days a week and some of them have been on call 24 hours a day to encompass that job. Most of them have completed it. We should express our heartfelt thanks to them for having done so. Many of them plan to take a well earned rest, if not a holiday, over the next few weeks. However we now seek to impose a continuing administrative burden on them in terms of the £140 rebate. The Government have said they will reimburse local authorities the administrative costs involved. But will the Government reimburse administrative costs with a bonus for those dedicated men and women who will have to do their work virtually all over again over the next few weeks and months?

My second question relates to the public perception that no one needs to pay poll tax bills until July. That is the perception among the public and it will result in a reduction in local authority income and cash. To fund their services local authorities will have to borrow money. Even though interest rates have decreased slightly, local authorities will still have to borrow at high costs. Will the Government give us an assurance that all those extra costs of financing the reduction in income will be met by the Government?

Baroness Blatch

My Lords, the Government have no intention of reimbursing local authorities for foregone moneys that have not been paid by local residents. There is no question of the Government condoning withholding payment to local authorities until July. I am not sure where the noble Lord obtained his information on that point. We expect that most people in this country will know what their bill is in April, and we expect payment to follow. We would not expect to meet foregone moneys that have not been paid by people who refused to pay. We hope that local authorities will vigorously pursue those who have refused to pay so far. There is no intention on the part of the Government to pay costs plus a bonus. We shall certainly meet costs, but not any bonus. The cost of collection is £50 million. That is twice the amount that the former rating system cost to be collected. The Government have estimated that it would cost £50 million to collect a local income tax.

Viscount De L'Isle

My Lords, as regards capping, I express the hope that in considering expenditure by local government, the Audit Commission will install an audit system by which local authorities—irrespective of the way they may emerge under the terms of the commission—are made to adhere strictly to their responsibilities which should be well defined. Nothing has scandalised the people of this country, irrespective of the opinions they hold, more than the ways in which certain local authorities have spent public money on objectives which no one supports. Some former governments have appeared to allow local authorities discretion in the way they spend their money and that has brought local government into disrepute. I hope that strict audits will be carried out of local authorities to ensure that they adhere to their responsibilities.

Baroness Blatch

My Lords, we see no cause to end the work of the Audit Commission or that of the district auditor. We would expect that with clearer understanding on the part of people who are paying for services and with stronger accountability on the part of councils, the incidences referred to by my noble friend will be eliminated.

Lord Tordoff

My Lords, the noble Baroness replied to a point raised by my noble friend Lord Holme of Cheltenham on the subject of direct debits and bankers orders. Will the Minister go a little further and say whether the Government advise people to cancel their bankers orders and to stop their direct debits immediately until the proper amount is determined? In considering the rating element—I use that term for want of a better phrase—in the new system, has any consideration been given to that being based not on capital values or on the developed value of property, but rather on the site value of property?

Baroness Blatch

My Lords, all of those options will be considered in the course of the consultation to arrive at what we consider is the fairest possible assessment. It would not be the Government's intention to advise people to cancel their bankers orders. We envisage that the necessary information will be made available to people quickly, and soon after the beginning of the financial year. We would expect people who pay by direct debit simply to have an adjustment made by their banks. As regards bankers orders, we expect adjustments to be made very quickly after the first payment.

Lord Stoddart of Swindon

My Lords, the noble Baroness has repeatedly challenged this side of the House to declare our policy on this matter. However, this is not a debate about our policy; it is a debate about what the Government have done. What they have done is to impose, quite wrongly and against all advice, an administrative and financial nightmare on local authorities and a financial nightmare on the people of this country. That is why the Government have had to take the step they are now taking.

Noble Lords


Lord Stoddart of Swindon

My Lords, I shall come to my question. The figures that have just been published, which show a rise from 16 per cent. to 28 per cent. in the payment made by local taxpayers for local services, give the lie to all the criticisms that have been made of local government over the years. We now know whose fault it was that local government expenditure increased and local taxation increased. Does the Minister agree that what the Chancellor did on Tuesday was done not so much to mitigate the effects of the Government's policies, but rather to help the Tory Party win the next election? Is that not what it is all about? I repeat a question that was asked earlier as the noble Baroness did not reply to it. How will the population be consulted about the new local authority boundaries? In Wiltshire, for example, if Swindon wants to become an all-purpose authority, can it be overruled by the rest of the people in Wiltshire? People will want to know whether that is the case.

Baroness Blatch

My Lords, as regards the final question of the noble Lord, he will have to become involved in the consultation process to obtain detailed answers to his question. The noble Lord again falls into the trap of considering only what is collected locally when he considers the costs of local government. The costs of local government are met by a combination of local and national taxation. All that has happened is that the shift has gone back to 15 per cent. The figure rose to 28 per cent. but went back to 15 per cent.—

Lord Stoddart of Swindon

By the Government!

Baroness Blatch

My Lords, that was done by the Government. However, the noble Lord totally ignores the level of spending and the overall cost of local government. As regards the point about detail, I said that the public will be interested in the details of how the party opposite intends to impose a property tax linked to ability to pay. The public will be interested in the assumptions of that tax and the basis on which it would be conducted. I take it that the noble Lord's party is just as interested as we are in courting the electorate before the next election.