§ Dr. CunninghamTo ask the Secretary of State for the Environment what is his estimate of the level of community charge for spending at needs assessment which would apply in 1988–89 if the proposed local government finance system were in operation; and what assumptions are made to arrive at that answer.
§ Mr. Ridley[pursuant to his reply, 13 May 1988, c. 267]I have today placed in the Library illustrative community charge figures for English authorities based on 1988–89 budgets.
The figures have been calculated on the same basis as those for 1987–88 and are subject to the same limitations. In particular they are not a prediction of the community charges which will apply in practice. Those will depend on the spending decisions of individual local authorities at that time.
The figures do, however, illustrate the community charge levels associated with current levels of overspending. The Government's proposals would allow all authorities to finance expenditure sufficient to provide a standard level of service for £202 in 1988–89. The extent to which the full community charge may exceed £202 is simply a measure of the overspending by local authorities in that area. Likewise, a full community charge of less than £202 is a measure of the economy of the authorities concerned. The level of the community charge in this way provides a ready reckoner enabling charge payers to compare the amount which their councils spend with what they need to spend and with the performance of other authorities.
I am pleased to say that compared with the figures based on 1987–88 expenditure levels published on 29 June last year, many of the highest community charges have been substantially reduced. This is largely the result of Government action to reduce the spending of the highest spending authorities in London through rate capping. In particular, the illustrative charge for Camden is £143 lower. For Hackney and Lewisham charges are £113 and £100 lower, respectively, than before. I hope these reductions will continue. There is still time for overspending councils to reduce their spending before the community charge is introduced in 1990 and before the safety net grant is withdrawn finally in 1994. In particular 708W authorities in inner London will have the opportunity to deal with the overspending of the ILEA and all authorities will be able to benefit from increased competitive tendering.
The published figures also include later estimates of the effect of moving to a uniform business rate, or NNDR, although estimates of the effects of the revaluation will not be available before the autumn. The latest figures suggest that 60 per cent. of non-domestic hereditaments would have benefited from the NNDR on its own. There will be particular benefits to businesses in the north and the inner cities. For example, poundages would reduce by 27 per cent. in Manchester, 31 per cent. in Sheffield and 26 per cent. in Liverpool. The NNDR will continue to be particularly good news for areas of above average unemployment where high rates have slowed economic regeneration.
Businesses generally will also benefit from the linkage of business rates to the RPI. Rate increases this year for some businesses were over 20 per cent.—five times the rate of inflation.
In those cases where there will be significant increases in rate bills arising from either the national non-domestic rate or the concurrent revaluation of non-domestic property, there will be generous transitional arrangements which will limit year-on-year changes in rate bills. The Government are also taking powers to provide for a lower annual limit on rate increases for small businesses.
I have also placed in the Library estimates of the impact of a local income tax and of the combination of a local income tax and capital value rates which have been revised in the light of the new expenditure information.