Replacement of Rate Support Grants by Revenue Support Grants
Orders of the Day — Clause 25
Mr Dennis Canavan (Falkirk West)
I beg to move amendment No. 175, in page 20, line 11, at end insert—
'(3) The level of any rate support grant or revenue support grant payable to any local authority for any financial year shall be not less than 70 per cent. of the authority's eligible expenditure for that financial year.'
Mr Ernest Armstrong (North West Durham)
With this is will be convenient to consider amendment No. 181, in schedule 4, page 40, line 45, at end insert—
'(5) Notwithstanding sub-paragraph (4) above, the Secretary of State shall not reduce any amount produced under sub-paragraph (2) or (3) above on account of revenue received by a local authority from the non-domestic rate levied on oil or petro-chemical installations'.
Mr Dennis Canavan (Falkirk West)
The Government are always complaining about rates increases, and no doubt many people in some areas in Scotland have suffered big rates increases in recent years. However, the Government have tried to play political games by pinning the blame entirely on local authorities in the hope of discrediting those local authorities, especially Labour-controlled authorities, which are fighting desperately to maintain and improve services that they were elected to provide.
The truth of the matter is that the real blame for big rates increases in recent years lies fairly and squarely at the Government's door. The Government have cut their share of support by way of rate support grant. I fear that under this Bill, once the rate support grant system is changed to revenue support grant, that trend will continue. My amendment is intended to stop that trend and to restore a realistic level of minimum rate support grant or revenue support grant, as the case may be, if and when this terrible Bill is implemented.
It is interesting to consider the trend in recent years of the Government's percentage of rate support grant in terms of a percentage of reckonable expenditure. There was a time when the rate support grant in Scotland was as high as 75 per cent. That was way back in 1975–76—the golden days of a Labour Government, some people might say. However, there were special circumstances then because of local government reorganisation. It is still interesting that, when the previous Labour Government left office, rate support grant was still 68·5 per cent. of reckonable expenditure. Since this Government came to power, they have cut the percentage of rate support grant almost every year. It is now down to 55·5 per cent. In other words, from meeting two thirds of local authority expenditure, the Government are now meeting just over a half. That is a drop of 13 percentage points since the Government took office. For the coming financial year alone I calculate that there will be a loss to local authorities of about £250 million. Over the years, literally billions of pounds have been taken away from local authorities by the Government. No wonder local councillors are faced with difficult financial decisions.
There must be many councillors, and the people they represent, asking, "Where is this trend going to end? What is the Government's target?" Perhaps the Minister can answer that when he replies. Does he really want to get the ratio down to 50: 50, 40:60 or 30 : 70, or does he foresee a day when local government will have to raise all of its money for expenditure purposes? He should come clean in that respect. It would certainly help people in local government if they knew where they stood.
These statistics speak for themselves. The result of the massive cut in rate support grant over the years, particularly since this Tory Government came to power, means that many councils have no option but to levy significant rates increases or to reduce drastically the important services that they were elected to provide for the people they represent.
My amendment would at least ensure a minimum rate support grant of 70 per cent. of eligible expenditure. Once we move to the new system of revenue support grant, that basic minimum will continue. The Government may not accept my figure of 70 per cent., and I accept that the figure that they inherited from the previous Labour Government was a little smaller than that, at 68·5 per cent. But it would be of tremendous help to councillors and officials in local government—and those whom they serve—if the Government accepted the principle of a minimum. How on earth can a councillor or council official do any forward planning if he does not know what the minimum percentage of rate support grant will be? My amendment would help forward financial planning. I therefore ask the House to accept it.
Mr Jim Wallace (Orkney and Shetland)
I shall speak to amendment No. 181. I want to draw attention to two problems—one which could be transferred to the new system from the present one, and another which could arise if the Government develop their proposals for non-domestic rates.
Amendment No. 181 would fetter the almost unlimited discretion that the Secretary of State would have in fixing the amount of revenue support grant payable to each local authority. Paragraph 2(4) of schedule 2 says :
The Secretary of State may, by reference to such factors as he determines, alter any amount produced
under the formula above. Amendment No. 181 would not allow him to reduce the amount of revenue support grant by reference to the amount of revenue that a local authority receives from the non-domestic rate levied on oil and petrochemical installations.
I fully admit that the amendment is based on a constituency interest. There is considerable dissatisfaction now because the client group approach which the Government have adopted, and which helps to fix the needs element of rate support grant, has not been applied fully in respect of Shetland Islands council or Orkney Islands council. The same also applies to other local councils, but I shall restrict myself to those of which I have first-hand experience.
This year, instead of receiving grant of £20·3 million, Shetland has had it restricted to £10·7 million. Orkney has received £8 million instead of £10·3 million. The shortfall in Shetland is equivalent to a 20p rate on all ratepayers, including commercial ratepayers, who were badly hit by the revaluation, and Shetland's main ratepayer, the Sullom Voe terminal. They would save a great deal if the Government paid the full amount.
The criticism goes even further. It was accepted when the client group approach was first adopted that it would be impossible to apply it fully at the outset. There was an understanding that every effort would be made to bring authorities into line and that authorities which would gain would increasingly receive the full assessed amount. That has not happened this year. The gap has not been narrowed, and if the limit on gains had been applied to Shetland it would have had a further £600,000, which would have been a further saving for ratepayers.
When we debated the Rate Support Grant (Scotland) Order two weeks ago, the Minister said that one of the reasons for the lack of narrowing was the high rate revenue base of the islands, principally because of the oil terminals. I do not deny that there is a high revenue base which reduces domestic and commercial rates, but the burdens imposed by the oil terminals must be borne in mind. Substantial capital expenditure has been incurred for new housing, new schools, improved roads and harbour facilities.
Moreover, the oil installations have produced higher rateable values on domestic and commercial property. The benefits of the terminals should not restrict payment of the full amount of rate support grant. The gap must be narrowed. I do not want the present considerable shortfall to continue when rate support grant is replaced by revenue support grant.
I want also to flag up the problem which would arise if the Government introduced their national pooling of the non-domestic rate. That aim was set out in the Green Paper, but it is not included in the Bill. The Minister might say that, by leaving it out here, he is to some extent acknowledging the difficulties that pooling would pose for islands councils. He is, however, postponing the day when the special considerations mentioned in the Green Paper have to be implemented.
Some 80 per cent. of the rating revenue for Shetland comes form the Sullom Voe terminal and 60 per cent. of the rating revenue in Orkney comes form the Flotta terminal. If they were lost to a national pool, that would have a devastating effect on the level of community charge in Orkney and Shetland. That is one reason why we have asked for special consideration.
The amendment gives the Minister an opportunity to say what special considerations he has in mind. I know that he intends to meet representatives of the islands councils next week to discuss such issues and I am grateful for that, but it is a little late in the day as the Bill will have left the House by then.
What I have described could be a serious problem for the islands' finances, not least because they have to plan ahead and it is uncertain what arrangements will be in place after 1992 or when the Government, if they are still in office — God forbid — go ahead with a pooling arrangement.
Mr Hugh Brown (Glasgow Provan)
This is the second time that the financial basis of support from the Government to local authorities has been caught by a guillotine. I believe that we spent about 15 minutes on it in Committee. I am sure that the Minister is desperate to put on the record a lot more about how it will work.
I should like to ask a couple of questions regarding additional commitments that the Government have taken on since we discussed this matter in Committee. I refer to the formula for giving relief to sports clubs. If the Minister does not think that 70 per cent. is a reasonable figure, will he say what level of support the Government are contemplating? Will it be more or less than it is now? He must hazard a guess, if not in actual amounts or in real terms, in percentage terms. Is it a long-term aim of the Government to have no central Government contribution to local authorities? I must point out to the Minister that, although a minor amount, this is an additional item of expenditure of which the Government have taken commitment.
I am suspicious about what was said last night as to how the system will operate. Strathclyde regional council prepared a formula which, I hope, has been sent to the Scottish Office in which it identified a rates liability of £2·6 million for the 434 clubs in the region. Therefore, 50 per cent. relief would cost £1·3 million. However, under the formula that Strathclyde produced—I must say that it is a workable formula—if all clubs applied and the formula was applied, the formula means that there is a variation depending on the income and turnover of the club to try to take account of the problem of sports clubs that are licensed. The total relief could be £0·9 million, of which Strathclyde regional council would be liable for £0·;6 million. The rest would be a district liability.
The Government suggested that that was a considerable concession. I am sorry that not one Conservative Member was interested enough to seek clarification of it. This is the most important clause in the Bill so far as central Government support is concerned. My hon. Friend the Member for Falkirk, West (Mr. Canavan) has rightly drawn attention to the level of support that would be desirable. That is not a commitment by the Opposition, but it gives us the opportunity to consider clause 25.
I should like to direct the Minister's attention to what was said last night. I shall not quote extensively because of the time constraint, but the Secretary of State said :
if a local authority uses its discretion it will not lose a penny of its income.
We are talking about what will happen after 1989, about the new proposal, not the interim period. The Secretary of State continued :
I can confirm that the effect of these proposals will be that any individual local authority which may lose revenue which it would otherwise have received from a sports club, but for the relief that it will provide, will receive additional rate support grant commensurate with the revenue forgone.
I presume that he means the revenue support grant, because we are still discussing 1989. Therefore, he is saying that there will be no loss. However, replying to the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), the Secretary of State said :
The only change will he that if a good proportion of authorities were to exercise that relief, they would lose revenue from clubs, which would not result in any improvement in their grant from central Government." — [Official Report, 4 March 1987; Vol. 111, c. 963–4.]
I do not know whether that is a misprint. That is the only situation that would change. Would the Minister care to clarify that? I ask him briefly and concisely to explain how the mechanism will operate. What is the amendment that will be used in the other place to enable local authorities to know precisely that, within future calculations, if they give rate relief, they will receive full compensation? I do not doubt the word of the Secretary of State or the Minister. However, I am suspicious about the whole arrangement because the Secretary of State knows—and we all know—that the Government decide how much support they will give to local authorities. They then say, "Fit that into the formula, whatever it is." If one authority gives more relief, it will either come out of the other part of the grant from that authority or it will come from some other authority.
Mr Hugh Brown (Glasgow Provan)
The Minister shakes his head. However, he does not have the confidence of the local authorities. That is like saying, "Yes, we are giving a special allocation to Glasgow"—or somewhere else—"for dampness." That does not mean a thing. It means only that the Minister hopes that Glasgow will spend or borrow that additional amount and that it will be used to tackle dampness. However, it still comes out of the same housing budget, and the same restrictions on expenditure that apply in housing will apply to local authorities, given the powers that he has.
I know that it is a little unfair to raise that point now, but I hope that the Minister will respond because, unless there is an amendment—no doubt the Government will table an amendment in the other place—in which case we may be able to debate it when the Bill comes back, there is a need to clear up exactly how the relief will be given to local authorities, and whether it will affect the level of general support that central Government will give to local authorities.
Earl of Michael Ancram (Edinburgh South)
I should like to deal first with the point raised by the right hon. Member for Glasgow, Govan (Mr. Milian), to the extent that I can do so in general terms, not having received notice that he wished to raise it now. First, as a matter of fact, I should like to see say that my right hon. and learned Friend the Secretary of State made it clear last night that he wished to compensate local authorities who take decisions to relieve sports clubs for the loss of revenue that they incur in so doing. In relation to the amendments considered by the House last night, it is worth reminding the hon. Member for Glasgow, Cathcart (Mr. Maxton) that where mandatory relief was required I understood that there was no provision that any compensation should be made to the local authorities for that. It would have fallen instead upon their ratepayers, so there is a major distinction between the two sets of proposals that were before the House last night.
In overall terms, the Secretary of State said in an answer to the hon. Member for Glasgow, Garscadden (Mr. Dewar):
When each year Government decide on the aggregate of rate support grant, they will take into account all the circumstances and they will have to include—
Unfortunately, the record reports an [Interruption.] at that point. From his later comments, it is clear that the hon. Gentleman was saying that that would have to include the consequences of the mechanism that he had enunciated. He continued :
This is not some new principle. It is exactly the way in which rate support grant is determined by every Government, and that is the proper way to do it. I have told the House that no authority will lose a single penny by a decision to grant relief of the kind that we have outlined."—[Official Report, 4 March 1987; Vol. 111, c. 965.]
So far as the mechanism is concerned—I do not wish to discuss it in detail—once the Bill is in operation, in 1989, there will only be the needs element through which it can be operated effectively. The non-domestic revenue will be considered and its loss in each authority, based on the authority's certification in the autumn of the number of reliefs that will be given. will be deducted from the domestic rates and compensated in terms of the needs element, so that each authority does not lose as a result of having taken those decisions and does not have to increase its community charge to meet them. That is quite simple after 1989, because then there will only be the needs element.
At present there is already an element of compensation built into the system, through the resources element, but not all authorities are in resources elements, so whether an authority has some comeback through the grants system for taking a decision to relieve sports clubs at present depends whether it is in a resource element. My right hon. and learned Friend said last night that he wanted to ensure that for 1988–89, which is the year before the provisions in the Bill come into operation, there would be as fair a system as would exist after the Bill came into operation. That requires a minor legislative change, which we intend to move in another place, to allow a similar mechanism, through the needs element, to operate before the Bill becomes operative in terms of the new revenue support grant.
I hope that the hon. Gentleman will accept that as a general explanation. I know that he has a suspicious mind — he is continually reminding me of that fact —but I hope that on this occasion he will see that not only have the sports clubs welcomed what was said this morning but that once the local authorities have studied it they will see that we have provided a mechanism that is fair to them as well.
I am aware of time constraints, but I should like to say a word about the proposals because in Committee I could not do so at the end of our debates. The amendment in the name of the hon. Member for Falkirk, West (Mr. Canavan) is wholly unacceptable. First, given the present grant rate of 55·6 per cent., the amendment would imply a substantial immediate increase in the taxpayers' contribution to local services. It would be instructive to know the hon. Gentleman's views on where that money was to come from. What other services or expenditure programmes would he like to see reduced?
Earl of Michael Ancram (Edinburgh South)
Perhaps the hon. Gentleman will allow me to develop my argument. I did not interrupt him, although on some occasions I was sorely tempted to do so. Would the money come from increases in taxation? We already know that Labour's programme would involve either 43 per cent. VAT or a local income tax of more than 50p in the pound. Is he suggesting that those figures are not enough and that he wishes to see taxation increased?
The hon. Gentleman went on to make the point, as he has done before, that reductions in rate support grant had somehow increased rates. Presumably the corollary is that if one holds the proportion of rate support grant steady, rates will hold steady, and if one increases the proportion of rate support grant, rates will decrease. In the four years when grant was held steady at 68·5 per cent., expenditure rose by £260 million in real terms and rates rose by 79 per cent. in cash terms or 17 per cent. in real terms. The grant proportion was being held steady, but it did not help ratepayers because the rates increased in real terms. In July 1986, my right hon. and learned Friend the Secretary of State, announced an aggregate Exchequer grant for 1987–88 which maintained the percentage of grant in 1986–87. We can look at Scotland now to see whether the hon. Gentleman's argument is working and whether rates are holding steady, but if he considers the proposed rate increases, I doubt whether he can sustain that argument.
The hon. Gentleman asked me what the Government's position was on rate support grant, and the same question was asked by the hon. Member for Provan. I must tell both hon. Gentlemen that they cannot expect me at this stage to predict what is essentially a decision taken each year in the light of the needs and circumstances of the time. However, I can make this comment about this year. When we maintained the grant proportion, we made it clear that it was in recognition of the fact that at long last expenditure in 1986–87 was marginally below that in 1978–79 in volume terms and that this was the first time that that had happened since 1979. That was the reasoning behind the aggregate which we announced.
Finally, the amendment is wholly unacceptable because it would compel the Government to provide grant at a rate of 70 per cent. or, as the hon. Gentleman fairly said, possibly less of an authority's actual expenditure even if that expenditure was grossly extravagant. The hon. Gentleman is effectively asking the Government to give a blank cheque to the local authority saying, "Spend what you like." The hon. Gentleman knows that he has removed the controls that we were discussing in the last set of amendments. He is saying to local authorities, "Fill in 70 per cent. of whatever you want to spend."
Earl of Michael Ancram (Edinburgh South)
The hon. Gentleman might like to describe what he believes to be eligible expenditure. Obviously, it is not relevant expenditure because we have been setting out guidelines for relevant expenditure and the hon. Gentleman has said that we have been holding local authorities back. His suggestions are unworkable and, once again, show the sort of view of local authority spending that many Opposition Members have.
Amendment No. 181, proposed by the hon. Member for Orkney and Shetland (Mr. Wallace), deals with oil and petrochemical installations. The hon. Gentleman will not be surprised to learn that I cannot accept his amendment, but I can offer some reassurance on the points that I believe concern him. I shall deal only with those affected by the Bill. For constituency reasons, he may have wanted to make other points in the debate, but in fairness I should stick to the effects of the Bill.
In the period before the establishment of a national non-domestic rate, with pooling of non-domestic rate income, we intend that for the purposes of apportioning revenue support grant on the basis of the respective needs of authorities, those needs will be assessed in the normal way, as they are at present, and non-domestic rate income will then be netted off. For an authority like Shetland or Orkney, the netting off will include the rate income from Sullom Voe or Flotta, which I think are the hon. Gentleman's main concern. The purpose of this procedure is to equalise among authorities, so that after grant all authorities will have to impose the same level of community charge for the same standard of service. That is an important principle.
However, schedule 4, paragraph 2(4) allows us to make special arrangements which we have described as safety netting—that is, the Secretary of State will be able to adjust the amount of grant arrived at under the earlier procedures, so as to avoid or to moderate any change in grant entitlement, from one year to the next. Paragraph 2(4) provides us with an adequate vehicle to avoid any odd or quirky results which otherwise might be expected to arise, particularly for the Islands councils. On present estimates we would expect all the Islands councils to benefit substantially from the safety netting carried out using paragraph 2(4). Indeed, Shetland Islands council has made submissions setting out the importance to it of safety netting.
I am aware of Shetland's concern in particular about the decline of business for Sullom Voe in the 1990s and the need for a non-domestic rate at that time pitched at a level which will not discourage the oil companies from continuing Sullom Voe's operation. To that kind, I am aware that the council is aiming to pay off its oil-related debts by 1992–93 and I am aware of its concern about the possible effect of a national non-domestic rate thereafter on the oil companies' decisions for the future of Sullom Voe. Indeed, those points were raised with me when I visited the islands in the summer. There are two points to make in response to that. First, the immediate issue as perceived by Shetland Islands council is that it should be able to continue to pursue its debt-free policy between now and 1992–93. There is nothing in our proposal to prevent or inhibit that.
Secondly, our interim proposals to determine maximum annual increases in non—domestic rates are intended simply to do that. It will be open to individual authorities to charge less than the maximum, as I understand that Shetland would like to be in a position to do. I will be meeting representatives of Shetland Islands council next week, and I hope then to discuss the matter further with them. These discussions will cover not only the position in the next few years under the system of grants and non—domestic rates established by this Bill, but the long term under the national non—domestic rate. On that basis I hope that the hon. Gentleman will not press his amendment.
I shall briefly outline how the revenue grant proposals are intended to work, because it is important. Paragraph 1(4) of schedule 4 effectively repeats the existing provisions but in a simplified form. The Secretary of State first determines aggregate Exchequer grant—that is, the total grant to be paid to local authorities in support of their relevant expenditure, which is, broadly, all their expenditure except housing and water. The first call on this is for entirely specific grants. These are the grants which are paid for particular services. The biggest specific grants are for the police, housing improvement and urban aid. The rest of the AEG is then to be paid as revenue support grant. Having established the total of revenue support grant, paragraph 2 sets out how the grant to each authority is to be established.
The first step in distributing grant will be to look at the expenditure need of each authority. At present we use client group assessments of expenditure need to do this in needs element calculations. In the new system we shall take these assessments but deduct from them non-domestic rate income. The grant required to compensate for differences in expenditure need will then he calculated. For example, if Central region has an expenditure need of £445 per adult and Fife £420. Central needs £25 per adult in grant to compensate for that difference. Once differences in need have been calculated, the rest of the grant will be distributed proportionately to the adult population. To use 1986–87 figures, for example, regions might get £316 per adult; districts, which have traditionally received a lower share of rate support grant, £1 per adult; and the Islands authorities £317 per adult.
The new grant system is being introduced for two reasons. First, the rate support grant system has become too complicated and few people understand it. Having considered rate support grant orders in the House, most hon. Members will agree with that. The needs element is complicated enough, but there are also the resources and domestic elements. The subject has even developed a language of its own with such entities as actual penny rate products, standard penny rate products, and the national standard amounts. Secondly, the grants system must match the system of taxation, since one of its aims is a fair distribution of the tax burden between residents in different authorities.
The new grant system will cause fairly small changes in grant entitlement at regional level but rather larger shifts for some small districts. To ease the transition to the new system, there will be a safety net. In future, revenue support grant orders will be straightforward documents listing for each authority how much grant it will receive. The report on an order will set out how the grant figures were arrived at and local authority associations, which at present mean COSLA, will be consulted before an order is laid. Section 2.6 allows variation orders to be made changing grant distribution and, if necessary, the aggregate. In the present grant system it is necessary to make several variation orders for grant each year. I hope that such changes will be kept to a minimum in the new system and that in many years it may be possible to dispense with variation orders altogether. Certainly, the new system will give local authorities much greater certainty to their grant entitlement. I believe that that will be a major improvement on the present situation.
That is the background to the amendments that we have been discussing. I hope and trust that the hon. Members for Orkney and Shetland (Mr. Wallace) and for Falkirk, West (Mr. Canavan) will not press their amendments. If they do, I must ask my hon. Friends to resist them.
Earl of Michael Ancram (Edinburgh South)
I beg to move amendment No. 160. in page 20, line 24, after 'charges', insert
'(including payments of standard community charge contributions under section 12 and collective community charge contributions under section 13 of this Act).'.
The purpose of this amendment is to clarify and place beyond doubt the coverage of the proposed community rebate scheme. It has always been the Government's intention that collected community charge contribution provided for in clause. 13 should be able to be included within the provisions of the community charge rebate scheme. Our advice when the Bill was being drafted was that reference to rebates being in respect of payments made by way of community charges was sufficient to secure this. Doubt has now been cast, however, on whether the words "by way of" are sufficiently clear. The purpose of this amendment is to remove that doubt. I trust that the House will approve the amendment.
Mr John Maxton (Glasgow Cathcart)
I beg to move amendment No. 174, in page 20, line 25, at end insert
'such regulations shall ensure that 100 per cent. rebates may be granted where the level of income of a person warrants it.'.
The whole rebate scheme in this Bill has aroused concern ever since the publication of the Green Paper and then of the Bill, with no White Paper in between, which would have been normal in these circumstances. Concern has been expressed about the lack of detail in the Bill on the rebate scheme. If what the Minister has said so far in Committee and elsewhere is right, we are certain that he intends to operate the Social Security Act that will be coming into force in April 1988. In other words, every person who is entitled to pay the community charge will pay 20 per cent. of it. Whatever their income or means, however poor they are, if they are over the age of 18 they will have to pay 20 per cent. of the community charge.
The Minister's initial reaction to objections to that tended to be, "It is in the Social Security Act and there is not much I can do about it." It was pointed out to him that constitutionally in this Parliament, as in any previous piece of legislation, we are entitled to put in this Bill a 100 per cent. rebate scheme. Is he prepared to say that every single person should pay 20 per cent. of the charge? The Minister and the Government are saying that widows and single parents, about whom the Government have expressed great concern, are going to be better off as a result of having to pay £40 or £50 per year. Every unemployed youth over the age of 18 will have to pay the charge. The poorest in our land will be asked to pay on average £1 a week for their so—called local services. That is what the Government are about. We object to the basic immorality of asking the very poorest in the land to pay.
Of course, £1 a week is not a large sum for any of us in this House. However, there is something immoral in hon. Members, particularly on the Government side, voting to reduce their own tax burden in order to put it on to widows, old-age pensioners and the unemployed. That is what the Government are doing in this Bill.
Mr John Maxton (Glasgow Cathcart)
The Minister says I am sloganising. I will give him one more slogan. I will tell him what may very well happen under this measure. I have said before, and I say again, that if this Bill ever comes into force, elderly pensioners living alone in council flats will have a difficult choice to make in the middle of a hard winter. Their choice will be between paying their electricity bill to heat their homes and keep themselves alive or paying the community charge. If they make the wrong choice, they die. If they choose not to pay the community charge, the sheriff's officer will go after them and take their television set in payment.
I have heard the descriptions "emotional" and "over the top" from the Minister, but never once has he denied that that may happen as a result of what he is doing. He cannot argue against it, because he knows it could happen.
We are talking not only of the immorality but of the practicality of the Bill.
The famous Tory Reform Group document that came out at 1 o'clock in the morning, referring to accountability, makes the point :
The Government's final fall—back position is that all low-income electors may be"—
or "shall be", which is what it ought to be—
required to pay 20 per cent. of their local community charge. This idea will not last long in practice. The administrative cost of collecting such sums will often outweigh the income and the social security system (through housing benefit) will be adjusted by a future Government to meet the 20 per cent. charge in full for low—income groups. In these circumstances, the 20 per cent. charge will be effectively redundant.
The Tory Reform Group in England does not believe that the 20 per cent. charge will stick, because it is such a small sum of money. The cost of collecting the charge and
chasing people to get it will be such that the Government will appreciate very quickly that it should be scrapped altogether. Once the 20 per cent. charge is abolished and a full 100 per cent. rebate system is instituted, the Government's accountability argument will go out the window. That is why the Government are so miserly and mean in insisting on the very poorest in our society having to pay that sum of money. I ask the Minister to support my amendment and to give the poor of Scotland at least the chance of a 100 per cent. rebate.
Mr Donald Stewart (Na h-Eileanan an Iar)
This amendment goes to the very crux of the Bill. People of very limited means will be obliged to pay out 20 per cent. of their income. That will not matter very much to most people but, as the hon. Member for Glasgow, Cathcart (Mr. Maxton) has just said, to many others it will mean the difference between a reasonable existence and doing without the very essentials of existence. The Government have made great play in the past about the means test. This will not even be subject to a means test. Everybody, however small their income, will be obliged to pay 20 per cent. of their income towards this new poll tax.
In 1979, in a document that the Conservatives issued in Scotland, they said :
In the future programme of priorities we will ease the rates burden, first by transferring to central Government the cost of teachers' salaries"—
no doubt that is due in the next century—
…by abolishing domestic rates and replacing them by taxes related to people's ability to pay.
This charge goes against that, and most hon. Members would regard that policy statement as fundamental whether or not they agree with this poll tax or community charge.
This charge will fall heavily on Scottish crofters. The hon. Member for Caithness and Sutherland (Mr. Maclennan) put down a marker in Committee about that. Since 1956 crofters have enjoyed rate benefits because of their remote location, higher costs of living and lack of amenities. Their circumstances have not changed in any way.
The National Farmers Union of Scotland, which is not often regarded as a friend of the crofters, has come out in their support. It says :
£1·7 million extra will be taken from Scotland's crofting households.
My constituency has the benefit of the integrated development programme but it will all have gone for nothing because of this swingeing poll tax. All the input from the Common Market will disappear because of this charge. It negates entirely the benefits of the community programme in the Western Isles. Mrs. Betty MacDonald, the convenor of the NFU's Scottish commission, said :
For a household of two I will pay over three times the amount payable under the existing system.
The Government must face that. Scotland's crofters do not have the resources to pay these charges and the Crofters Holdings Act 1886 will have been passed for nothing. The social effects will be damaging in parts of the islands and on the mainland of Scotland where, because of derating in the past, crofters have a reasonable cost of living. They will come to the towns, and the rural areas will be totally depopulated. For that reason, quite apart from the question of morality and justice, this amendment should be accepted by the Government and backed by the House.
Mr Hugh Brown (Glasgow Provan)
We had a long debate in Committee, so I shall not rehearse all the arguments that I deployed then to draw attention to how this measure will affect a constituency like mine with a high proportion of people receiving social security benefits. I have had two letters containing representations. One is from the Scottish Council for Voluntary Organisations and the other is from the Scottish Society for the Mentally Handicapped. I assume that the Minister has received similar letters. The Scottish Council for Voluntary Organisations is probably one of the most influential and well-respected bodies in Scotland. Speaking on behalf of 11 other voluntary bodies, it says :
The bill, in its present form, will have serious effects upon the clients and members of voluntary bodies.
The Scottish Society for the Mentally Handicapped says:
So mentally handicapped people would presumably be liable for about £50, which would have to come out of their Social Security benefits. While there may be some adjustment of benefits nationally, the Community Charge would be fixed locally and the two might well be incompatible. Many families will feel that they are being taxed for having a mentally handicapped dependant.
It is appalling that, under the guise of some kind of accountability, the Government are being miserly and putting the boot into the poorest and most handicapped people in our society by way of a 20 per cent. charge. I have written to both organisations, I hope diplomatically, and told them that in one case Her Majesty the Queen Mother is the patron and the president is Lord Mackay of Clashfern. The patron of the other organisation is Her Royal Highness the Duchess of Kent and the vice-president is the Duchess of Buccleuch and Queensberry. When talking about noble families I am never very sure whether I am talking about the Lothian or the Hamilton family or whether they are just related. I hope that my little
effort in drawing attention to the power that still remains in the House of Lords to do something for the poor will be noted by the Minister. It is ironic that in this society we have to hope that the Lords can do something that the Government have failed to do.
Mr Robert Maclennan (Caithness and Sutherland)
The right hon. Member for the Western Isles (Mr. Stewart) is right when he says that this matter has been debated at length—and it is right that it should have been. The proposals by the Government to impose 20 per cent. of the community charge on those who are destitute is an abomination and ought never to have been the subject of legislation. It is an appalling commentary upon the attitude of the Government to the poor, who grow in number the longer this Government remain in office, that there is no provision in the Bill to help these people avoid an appalling impasse.
The Government have sought to justify the poll tax by saying that it is a charge for services, but it will not fall upon people according to the extent to which they use services. The Government know that local government services are most used by the elderly and by young people with families. For the most part it is the single unemployed who will have to bear this appalling burden. They are the very people in Scotland who receive least assistance from local authorities. The alliance parties were firm and clear from the beginning that local taxation ought to be based upon ability to pay. The Government have rejected that principle and we regard their attitude to the poll tax as retrograde, medieval and wholly inappropriate in a civilised society. I support the amendment.
Earl of Michael Ancram (Edinburgh South)
In Committee questions were asked about whether there would he a rebate scheme and a number of hon. Members did not think that there would be. The hon. Member for Glasgow, Cathcart (Mr. Maxton) tabled an amendment but did not move it so we had better leave that matter aside.
I should like to quote from a letter written by my right hon. Friend the Prime Minister on 2 March to Councillor Layden, the chairman of the Association of Metropolitan Authorities. I hope that the letter will put this matter beyond doubt. It says:
The Government's intention is that there should be community charge rebates throughout Great Britain, though each person liable would be required to make some community charge payment; the Social Security White Paper suggested that each household make at least a 20 per cent. contribution towards domestic rates. You will have seen that Clause 26 of the Abolition of Domestic Rates Etc. (Scotland) Bill provides the power to pay such rebates in Scotland. We envisage a similar power when the legislation to introduce the community charge in England and Wales is put before Parliament.
If the hon. Member for Cathcart does not wish to rely on my statements, perhaps he will rely on that one.
The right hon. Member for Western Isles (Mr. Stewart) spoke about the amendment put forward in Committee by the hon. Member for Caithness and Sutherland (Mr. Maclennan). Those who know the area that the right hon. Member for Western Isles represents are not unanimous in thinking that the amendment put forward by the hon. Member for Caithness and Sutherland was correct. A certain Mr. Brian Wilson, who I believe is still a member of the Labour party and a candidate, on 27 February, wrote in the West Highland Free Press, a journal which I suspect the right hon. Gentleman sometimes reads :
The arguments raised against the solution, …"—
that is, the solution proposed by the hon. Member for Caithness and Sutherland—
…notably by Mr. Hugh Brown, are formidable. It simply is not on to introduce in 1987 a new scheme which gives the well-paid schoolteacher with crofting status a 25 per cent. tax rebate while the pensioner next door in a non-croft house is hit for the full whack.
If the right hon. Member for Western Isles is not prepared to listen to the arguments that. I put forward in Committee, he might at least listen to the arguments of Mr. Brian Wilson.
Mr Donald Stewart (Na h-Eileanan an Iar)
I agree that probably only 1 per cent. of crofters are schoolmasters who have inherited their croft or bought one. But that does not apply to 99 per cent. of the crofted area, either in the islands or on the mainland.
Earl of Michael Ancram (Edinburgh South)
If the right hon. Gentleman looks at the number of owner—occupier crofters, he will find that the percentage of them who have other jobs or professions is rather larger than that.
The point that is being made brings us directly to the question of rebates. The moment that we make exemptions for certain categories, we give to those who do not need help as well as to those who do. The purpose of the rebate scheme is to target help to those who need it.
Mr Jim Wallace (Orkney and Shetland)
The Minister has almost made out the case for a local income tax. He says that, by trying to introduce exemptions, one cannot necessarily target those who are in need as opposed to those who are not. The reason for these exemptions is that his Bill does not allow for the fundamental principle of fairness, which any tax system must have. He almost accepted that and put forward a good case for a local income tax.
Earl of Michael Ancram (Edinburgh South)
I wish that we had time to go into the question of a local income tax. I have been longing to go into the details of a local income tax. The hon. Member for Caithness and Sutherland (Mr. Maclennan) told me that I should not expect him to produce any details of his scheme, and I can only suspect that that is because he realises that were he to go into the details of it he would see that it hits at those whose support he is trying to gather.
This amendment would require the rebate scheme to provide for rebates of up to 100 per cent. of the community charge levels. Here again we are dealing with an issue which has been debated at length not only in the course of the Bill but, more appropriately, by both Houses during the passage of the Bill which became the Social Security Act 1986. The proposition that all those liable for the personal community charge should be required to make some contribution towards it is already embodied in the housing benefit scheme for rates which will be introduced from 1 April 1988 under the provisions of the 1986 Act.
In view of the amount of discussion that we have already had on this point, I shall limit myself to a brief summary of the justification for our policy. There are two reasons for the proposal. The first is that the primary purpose of rates, and in due course the community charge system, is to finance the provision of local authority services. Since all ratepayers, and subsequently all community charge payers, have access to local authority services, it seems right that all should make at least some contribution to the costs. The second justification is to increase the accountability of local authorities to their ratepayers, or community charge payers, for the costs of the services that they provide.
As was clearly established during the passage of the Social Security Act 1986, there needs to be a relationship between the services that local authorities provide and the willingness of their local taxpayers to meet the cost of these services. If a significant proportion of local taxpayers bear none of the burden of meeting the costs of local services, that relationship is broken.
The provision for a minimum contribution is therefore an essential part of the improvements in accountability which the new system will bring. It will, indeed, already have been included, in principle, in the rating system before the community charge is introduced. The carryover of the principle into the community charge arrangements will reinforce the improvements in accountability that the broadening of the tax base will bring. The amendment therefore strikes at one of the main principles of our policy, and I cannot accept it.
The rebate scheme which we offer is a generous one. It takes account of high levels of gross income at the top end of the taper and it depends on income support levels at the bottom. It will give protection where it is required, while maintaining the principle of accountability.
On that basis, I ask my hon. Friends to reject the amendment.
Mr John Maxton (Glasgow Cathcart)
In the last 30 seconds before the guillotine comes down on the debate, I should like to say that the 80 per cent. rebate and the paying of 20 per cent. by every person—the mentally and physically handicapped, the elderly and the young unemployed — is the most immoral part of what is a very immoral Bill. I ask my hon. Friends to join me in the Lobby in voting for a 100 per cent. rebate.
|Division No. 111]||[8.15 pm|
|Abse, Leo||Cunliffe, Lawrence|
|Alton, David||Dalyell, Tam|
|Anderson, Donald||Davies, Rt Hon Denzil (L'lli)|
|Ashley, Rt Hon Jack||Davis, Terry (B'ham, H'ge H'l)|
|Ashton, Joe||Deakins, Eric|
|Atkinson, N. (Tottenham)||Dewar, Donald|
|Bagier, Gordon A. T.||Dobson, Frank|
|Beckett, Mrs Margaret||Dormand, Jack|
|Bell, Stuart||Douglas, Dick|
|Bermingham, Gerald||Eadie, Alex|
|Bidwell, Sydney||Eastham, Ken|
|Boothroyd, Miss Betty||Fatchett, Derek|
|Boyes, Roland||Faulds, Andrew|
|Bray, Dr Jeremy||Field, Frank (Birkenhead)|
|Brown, Gordon (D'f'mline E)||Fields, T. (L'pool Broad Gn)|
|Brown, Hugh D. (Provan)||Fisher, Mark|
|Brown, N. (N'c'tle-u-Tyne E)||Flannery, Martin|
|Brown, Ron (E'burgh, Leith)||Forrester, John|
|Buchan, Norman||Foster, Derek|
|Callaghan, Jim (Heyw'd & M)||Foulkes, George|
|Campbell-Savours, Dale||Fraser, J. (Norwood)|
|Canavan, Dennis||Freeson, Rt Hon Reginald|
|Carter-Jones, Lewis||George, Bruce|
|Clay, Robert||Gilbert, Rt Hon Dr John|
|Clelland, David Gordon||Golding, Mrs Llin|
|Cocks, Rt Hon M. (Bristol S)||Hamilton, James (M'well N)|
|Coleman, Donald||Hamilton, W. W. (Fife Central)|
|Conlan, Bernard||Hancock, Michael|
|Cook, Robin F. (Livingston)||Hardy, Peter|
|Corbett, Robin||Haynes, Frank|
|Corbyn, Jeremy||Heffer, Eric S.|
|Craigen, J. M.||Hogg, N. (C'nauld & Kilsyth)|
|Alexander, Richard||Clarke, Rt Hon K. (Rushcliffe)|
|Amess, David||Colvin, Michael|
|Ancram, Michael||Conway, Derek|
|Arnold, Tom||Coombs, Simon|
|Ashby, David||Cope, John|
|Atkinson, David (B'm'th E)||Couchman, James|
|Baker, Nicholas (Dorset N)||Cranborne, Viscount|
|Banks, Robert (Harrogate)||Crouch, David|
|Batiste, Spencer||Currie, Mrs Edwina|
|Bellingham, Henry||Dickens, Geoffrey|
|Best, Keith||Douglas-Hamilton, Lord J.|
|Biggs-Davison, Sir John||du Cann, Rt Hon Sir Edward|
|Blackburn, John||Dunn, Robert|
|Bonsor, Sir Nicholas||Durant, Tony|
|Bottomley, Peter||Dykes, Hugh|
|Bottomley, Mrs Virginia||Edwards, Rt Hon N. (P'broke)|
|Bowden, A. (Brighton K'to'n)||Fairbairn, Nicholas|
|Bowden, Gerald (Dulwich)||Fallon, Michael|
|Boyson, Dr Rhodes||Favell, Anthony|
|Bright, Graham||Fenner, Dame Peggy|
|Brinton, Tim||Finsberg, Sir Geoffrey|
|Bruinvels, Peter||Fletcher, Sir Alexander|
|Buck, Sir Antony||Forsyth, Michael (Stirling)|
|Bulmer, Esmond||Franks, Cecil|
|Burt, Alistair||Fraser, Peter (Angus East)|
|Butcher, John||Garel-Jones, Tristan|
|Butler, Rt Hon Sir Adam||Glyn, Dr Alan|
|Butterfill, John||Gorst, John|
|Carlisle, Kenneth (Lincoln)||Grant, Sir Anthony|
|Carlisle, Rt Hon M. (W'ton S)||Greenway, Harry|
|Carttiss, Michael||Grylls, Michael|
|Cash, William||Hamilton, Hon A. (Epsom)|
|Chope, Christopher||Hampson, Dr Keith|
|Churchill, W. S.||Hawkins, Sir Paul (N'folk SW)|
|Clark, Dr Michael (Rochford)||Hayward, Robert|
|Clark, Sir W. (Croydon S)||Heddle, John|
|Holland, Stuart (vauxhall)||Patchett, Terry|
|Home Robertson, John||Pike, Peter|
|Howarth, George (Knowsley, N)||Powell, Raymond (Ogmore)|
|Howells, Geraint||Prescott, John|
|Hughes, Robert (Aberdeen N)||Radice, Giles|
|Hughes, Roy (Newport East)||Randall, Stuart|
|Janner, Hon Greville||Redmond, Martin|
|Jenkins, Rt Hon Roy (Hillh'd)||Rees, Rt Hon M. (Leeds S)|
|Jones, Barry (Alyn & Deeside)||Richardson, Ms Jo|
|Kaufman, Rt Hon Gerald||Roberts, Ernest (Hackney N)|
|Kirkwood, Archy||Robinson, G. (Coventry NW)|
|Lambie, David||Ross, Ernest (Dundee W)|
|Lamond, James||Sheerman, Barry|
|Leadbitter, Ted||Sheldon, Rt Hon R.|
|Leighton, Ronald||Silkin, Rt Hon J.|
|Litherland, Robert||Skinner, Dennis|
|Livsey, Richard||Smith, C.(Isl'ton S & F'bury)|
|Lofthouse, Geoffrey||Smith, Rt Hon J. (M'ds E)|
|Loyden, Edward||Snape, Peter|
|McDonald, Dr Oonagh||Soley, Clive|
|McKay, Allen (Penistone)||Spearing, Nigel|
|Maclennan, Robert||Stewart, Rt Hon D. (W Isles)|
|McNamara, Kevin||Strang, Gavin|
|McTaggart, Robert||Straw, Jack|
|Madden, Max||Thompson, J. (Wansbeck)|
|Marek, Dr John||Tinn, James|
|Martin, Michael||Wallace, James|
|Maxton, John||Wardell, Gareth (Gower)|
|Maynard, Miss Joan||Wareing, Robert|
|Meacher, Michael||Weetch, Ken|
|Mikardo, Ian||Welsh, Michael|
|Millan, Rt Hon Bruce||White, James|
|Miller, Dr M. S. (E Kilbride)||Williams, Rt Hon A.|
|Mitchell, Austin (G't Grimsby)||Wilson, Gordon|
|Morris, Rt Hon A. (W'shawe)||Winnick, David|
|Morris, Rt Hon J. (Aberavon)||Woodall, Alec|
|Nellist, David||Young, David (Bolton SE)|
|Oakes, Rt Hon Gordon|
|O'Brien, William||Tellers for the Ayes:|
|O'Neill, Martin||Mr. Tony Lloyd and|
|Park, George||Mr. John McWilliam.|
|Henderson, Barry||Powley, John|
|Heseltine, Rt Hon Michael||Price, Sir David|
|Higgins, Rt Hon Terence L.||Proctor, K. Harvey|
|Hind, Kenneth||Raison, Rt Hon Timothy|
|Hordern, Sir Peter||Rathbone, Tim|
|Howarth, Alan (Stratf'd-on-A)||Ridsdale, Sir Julian|
|Howarth, Gerald (Cannock)||Rifkind, Rt Hon Malcolm|
|Hunter, Andrew||Rossi, Sir Hugh|
|Jackson, Robert||Rost, Peter|
|Jessel, Toby||Rumbold, Mrs Angela|
|Joseph, Rt Hon Sir Keith||Sainsbury, Hon Timothy|
|King, Rt Hon Tom||St. John-Stevas, Rt Hon N.|
|Knowles, Michael||Sayeed, Jonathan|
|Knox, David||Shaw, Giles (Pudsey)|
|Lamont, Rt Hon Norman||Shaw, Sir Michael (Scarb')|
|Lang, Ian||Shelton, William (Streatham)|
|Latham, Michael||Shepherd, Colin (Hereford)|
|Lawler, Geoffrey||Shepherd, Richard (Aldridge)|
|Lawrence, Ivan||Shersby, Michael|
|Leigh, Edward (Gainsbor'gh)||Silvester, Fred|
|Lennox-Boyd, Hon Mark||Sims, Roger|
|Lewis, Sir Kenneth (Stamf'd)||Smith, Sir Dudley (Warwick)|
|Lightbown, David||Soames, Hon Nicholas|
|Lilley, Peter||Speed, Keith|
|Lloyd, Sir Ian (Havant)||Spencer, Derek|
|Lloyd, Peter (Fareham)||Spicer, Michael (S Worcs)|
|Lord, Michael||Stanbrook, Ivor|
|Luce, Rt Hon Richard||Steen, Anthony|
|Lyell, Nicholas||Stern, Michael|
|McCrindle, Robert||Stewart, Allan (Eastwood)|
|McCurley, Mrs Anna||Stewart, Andrew (Sherwood)|
|MacGregor, Rt Hon John||Stokes, John|
|MacKay, John (Argyll & Bute)||Sumberg, David|
|Maclean, David John||Tapsell, Sir Peter|
|McLoughlin, Patrick||Taylor, John (Solihull)|
|McNair-Wilson, M. (N'bury)||Taylor, Teddy (S'end E)|
|Major, John||Temple-Morris, Peter|
|Malone, Gerald||Thomas, Rt Hon Peter|
|Marland, Paul||Thorne, Neil (Ilford S)|
|Marlow, Antony||Thornton, Malcolm|
|Marshall, Michael (Arundel)||Thurnham, Peter|
|Mather, Sir Carol||Townend, John (Bridlington)|
|Maude, Hon Francis||Twinn, Dr Ian|
|Mayhew, Sir Patrick||van Straubenzee, Sir W.|
|Merchant, Piers||Waddington, Rt Hon David|
|Meyer, Sir Anthony||Wakeham, Rt Hon John|
|Mills, Sir Peter (West Devon)||Walden, George|
|Moate, Roger||Walker, Bill (T'side N)|
|Monro, Sir Hector||? Waller, Gary|
|Morris, M. (N'hampton S)||Ward, John|
|Morrison, Hon C. (Devizes)||Wardle, C. (Bexhill)|
|Murphy, Christopher||Watts, John|
|Needham, Richard||Wells, Sir John (Maidstone)|
|Neubert, Michael||Whitfield, John|
|Nicholls, Patrick||Wiggin, Jerry|
|Norris, Steven||Winterton, Mrs Ann|
|Onslow, Cranley||Winterton, Nicholas|
|Osborn, Sir John||Wolfson, Mark|
|Page, Sir John (Harrow W)||Wood, Timothy|
|Page, Richard (Herts SW)||Yeo, Tim|
|Patten, J. (Oxf W & Abgdn)|
|Percival, Rt Hon Sir Ian||Tellers for the Noes:|
|Pollock, Alexander||Mr. Michael Portillo and|
|Powell, William (Corby)||Mr. Richard Ryder.|