§ Mr. CouchmanTo ask the Secretary of State for the Environment what are his latest estimates of the distributional impact of the community charge on household finance.
§ Mr. GummerI have today placed in the Library a note updating figures on the impact on household finances of the community charge. The new figures show that: when fully implemented 58 per cent. of households (11.1 million) will gain from the introduction of the community charge; 83 per cent. of single pensioner households and 75 per cent. of other single adult households will gain from these proposals; percentage gains in net income are largest for the lowest income households; community charges on average would be less than domestic rates in all bands up to £200 per week.
728WThe community charge will reduce the burden on the poorest. The lowest income group will pay less for local government. On average, their rates after rebates account for 3.9 per cent. of net income, whereas the community charge accounts for 3.0 per cent. Of course there will be gainers and losers in any change but these figures show that the community charge with its rebate system cuts the direct cost of local government on the poorest (those households with less than £50 a week) by nearly 25 per cent.
Many poorer people pay more in rates than those who are better off, even in the same local authority, because there is no necessary connection between rateable value and ability to pay. Generally, people buy their homes while they are working, when their incomes are at their highest, but remain in the home and have to continue paying the same rates when they retire with reduced incomes. So it is no surprise that 41 per cent. of households living in homes with above average rateable values have below average incomes.
These figures demonstrate that the majority of households will in fact gain from the community charge; that the poorest households stand to gain; and that domestic rates do not reflect ability to pay.
The revised figures take account of amendments made during the passage of the Local Government Finance Act 1988, local authorities budgetted spending levels in 1988–89, the 15 per cent. community charge rebate taper announced on 14 April and incorporate the uprating of social security benefits announced for 1989–90.
§ Mr. Simon HughesTo ask the Secretary of State for the Environment if he can estimate the average community charge in 1990 for(a) all adults and (b) income support claimants.
§ Mr. GummerThe Government have made no estimates of future community charges. Illustrative figures were published on 23 June showing what the community charge would have been in each area had the new system been in force in 1988–89. Those illustrative figures assume existing levels of spending and existing local authority responsibilities.