Orders of the Day — Rates

Part of the debate – in the House of Commons at 12:00 am on 5th May 1965.

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Photo of Mr Peter Walker Mr Peter Walker , Worcester 12:00 am, 5th May 1965

My hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis) has touched on a very important point, as many hon. Members have during the debate. This illustrates how very right the Opposition were to decide to devote one of their Supply days to this very important topic.

The Joint Parliamentary Secretary, in his opening remarks, suggested various reasons why we should have decided to debate this topic. There are three very good reasons why we decided upon it. First, there was the very important Report of the Allen Committee, which is full of interesting statistical detail pointing out the many problems that exist under the present rating system. Secondly, we thought that we had reached a time when all the major parties were agreed that there was a need basically to reform our system of rating. Certainly, I think it is rather fortunate that we have had the debate, because, as the Joint Parliamentary Secretary made perfectly clear, the Government do not have any ideas on this subject. Indeed, they very much asked for suggestions. During the afternoon we have had many constructive suggestions, particularly from my hon. Friends the Members for Brentford and Chiswick (Mr. Dudley Smith) and Chichester (Mr. Loveys).

We have also had the suggestions of the Liberal Party. As is typical of it, the Liberal Party went back to the old proposals of Lloyd George and suggested that what is good for Lloyd George and Whitstable is good for the country. The Liberal contribution dwelt for a long time on the subject of site value rating and the rating of open spaces and vacant premises. Throughout the debate the most obvious open space has been the Liberal benches. Therefore, it was surprising that the Liberals raised this topic.

The third reason for the debate—a perfectly correct one for an Opposition—was that we wished fully to expose the blatant manner in which the Government have failed in any way to keep their election promises. Let us make it perfectly clear that in the Labour Party manifesto there were two promises. One was that the Government would review the rating system and bring in some appropriate reform. But the Government have pleaded, quite reasonably, that within six months of coming to power and looking into this very complicated problem—as has become obvious throughout the debate—it became clear that it was unreasonable to expect them to have come to their conclusions already. This we agree.

But the second part of the Labour Party's election manifesto stated quite clearly that they would seek to give early relief as an interim measure to the ratepayers concerned. I shall seek to show that they have done nothing of the kind. In fact, rather than give relief to the taxpayers concerned they have added to the burden.

The Joint Parliamentary Secretary suggested as the main reason for the debate that we were going vote-catching on this issue. If ever there was a case of evil thinking as evil does, it was this. There was no topic other than mortgage interest rates on which the Labour Party endeavoured more to obtain votes at the election than that of taking immediate action about the rates.

The speech of the Joint Parliamentary Secretary was divided into three parts. The first part was devoted to the plea that this was a vote-catching exercise. The second part dealt with the problems of London. He pointed out that there had been a far steeper rise in rates in London than elsewhere, and he gave certain reasons for it. The reason that he preferred was that the reorganisation of London local government had added considerably to the burden on London ratepayers. He also agreed that some of the treasurers concerned had over-budgeted and added to their resources. This is probably true. But the hon. Gentleman failed to explain why of the 16 boroughs in London with the biggest increases only two were not Socialist-controlled, bearing in mind that more than a third of the boroughs in London are held by the Conservatives or the Conservatives and other parties jointly.

In its election manifesto the Labour Party said that it was going to give early relief to the ratepayers. If it had so desired, and decided that such was the burden on the London ratepayers, it could have given a special grant to them. It could have decided that as it had said it was going to give them early relief, it was going to transfer some of the burden from the ratepayers to the taxpayers and that as these particular ratepayers had such a burden it was going to give them some form of immediate relief. It has not done this.

The last part of the Parliamentary Secretary's speech started with the words "Now, to deal with the future …" and we all waited and hoped to hear what we thought were going to be the policies in pursuance of this election manifesto. But the next words he uttered were "I have no announcement to make", and that, of course, sums up the future as far as this Government is concerned. The right hon. Gentleman accused the Opposition of making a quite unreasonable suggestion that all promises have not been redeemed in six months. We do not complain that the promises have not been redeemed in six months. All we complain of is that in those six months nearly all the promises have been reversed.

During the course of the debate the Parliamentary Secretary suggested that during the 13 years of Conservative Government nothing had been done for the ratepayers. I completely repudiate this charge and would like to spend a few minutes reminding the Committee of the changes that took place as far as home owners were concerned during the period the Conservatives were in power. As far as rates are concerned, it must be realised that in 1951 there had not been a revaluation for 17 years. Industry was receiving a 75 per cent. relief on the rates and little was known of the detailed effects of the rating system upon the individual. During our period of office there was a complete revaluation on all properties throughout the United Kingdom. Industry was made to pay a fairer share of the rate burden. As my hon. Friend the Member for Chichester pointed out, there has been an important interim rating measure designed to assist those local authority areas inhabited by a large number of retired persons.

The Allen Committee was set up and was close to reporting on the detailed effects of the rating system. We have also started a major inquiry into the whole future structure of local taxation. In respect of rating we must remember that when we came into office there were three forms of taxation relating directly to the ownership of a house. There was first the 2 per cent. Stamp Duty charge upon the value of the house at the time of purchase; secondly, the Schedule A tax, andthirdly, the local authority rate. At the end of the period of Conservative Government two out of these three taxes had been abolished and a person purchasing a house at the end of this period would therefore, over the first 10 years as owner of a £3,000 house, pay £60 less in taxation as a result of the abolition of Stamp Duty and something like £100 less in taxation as a result of the abolition of Schedule A. These two measures alone would have given him considerable tax relief compared with the total tax burden of Stamp Duty, Schedule A and the rates that existed when we came into power.

Since hon. Gentlemen opposite have been in power there has been no relief at all. I hope that the Minister of Housing and Local Government will give some details of the relief that has been given in the last six months, for he has a lot to answer for and it is a very important occasion for him. In the Sunday Citizen of last Sunday it was reported: Housing Minister Richard Crossman will have a chance to repolish his speech-making reputation in the Commons this week. Subject—rates. The article said: The Tories plan an attack on the Government's record. Mr. Crossman's Parliamentary image is slightly tarnished after a poor performance in the home loans debate. I must confess that I thought that his speech of last week was certainly of his usual standard. It is not the speechmaking of the Minister which is tarnishing his reputation, but his lack of action and his failure to fulfil the promises of the Labour Party. One always listens to the Minister with interest and to the lucidity of one who benefited from and had the advantages and perhaps the disadvantages of a Winchester education. [Interruption.] I say this full of admiration, because it is interesting that in this Cabinet there are two people who have had the benefits of such an education and I remember the right hon. Gentleman writing about the other Wykehamist in the Cabinet, the present President of the Board of Trade, and saying that he had a masochist love for high taxation. We are wondering whether this Wykehamist has a masochist love for high rates.

If the record of these two Ministers is examined, it will be seen that the result of their achievements in six months is that one of the Wykehamist members of the Cabinet has put up the cost of our imports by 15 per cent. and the other has put up the cost of rates by 14 per cent.

On examining the right hon. Gentleman's remarks on the subject of rates over recent weeks, we discover that he has been complaining about the manner in which he was left with a rising rate bill. In his speech in the Prime Minister's constituency in February—a remarkable speech for the fact that it disclosed that the Minister of Housing did not really know what was going on with rates, because he suggested that he had inherited from the Tories a position whereby rates would be rising by 9 per cent. per year and then, two months later, we found that rates had risen by 14 per cent. this year—he complained that it was the Tories who had committed us to all this future expenditure and that therefore rates were bound to rise.

Of course, he did not suggest to which of the expenditures to which the Tories had committed the nation he objected. He did not suggest that he had any objection to expenditure upon services for old people, or health services, or the other increasing programmes which he mentioned in his speech.

Another interesting thing is that he made no comment at all upon the one item of increased expenditure which he knows to be more important than any other, namely, education. One can understand the right hon. Gentleman being a little nervous about stating the reason for the position in which the Tories left us, in which rates were liable to rise by 9 per cent. per year, when the main reason for that calculation was the expenditure on education, because the right hon. Gentleman is the last person who can criticise the future planned expenditure on education. He used to be the shadow Minister of Education and he may well remember that passionate party political broadcast which he made 10 days before polling day when he said: This year for example, the local authorities submitted school building programmes worth £170 million, and every school in their programme was absolutely essential or it wouldn't have been included. The Minister cut them back from £170 million to £50 million. In fact, he forebade the councils to build two-thirds of the schools they desperately needed and which they could build if they hadn't been prevented from doing so. I call that rationing even if another name is used today. There is no sign of the rationing being ended. None of the local authorities has been told that they will be allowed the £120 million worth of schools which were not allowed last year. To the contrary; not only is the Minister of Education complying with the school building programme prepared by the Conservatives, but the programme of minor improvements has been cut. So, to use the right hon. Gentleman's expression, the rations have been reduced.

In these circumstances, there are three things which the Government could have done. First, they could have increased expenditure to meet their election promises and put an additional cost on the ratepayer. Secondly, they could have increased expenditure to meet their election promises and put an increased cost on the taxpayer. Thirdly, they could have decided, irrespective of their election promises, to switch some of the burden from the ratepayer to the taxpayer as they outlined in their election manifesto. In fact, they have achieved an incredible treble. They have not increased expenditure to meet their election promises, but they have managed to increase both taxes and rates.

I apologise for referring back to the debate on mortgage interest charges, but there are so many similarities between that debate and today's debate. First, both debates were on the subject of broken Government promises. Both debates illustrate that the Government have no action in mind to tackle the real problems involved. Both debates have resulted in the Government being exposed for having increased hardship and not eliminating it. In that debate, the Minister of Housing and Local Government boasted that the mortgage interest rates promises had gained the Labour Party many thousands of votes. Doubtless that is a boast which he will be able to repeat in this debate, because certainly its pledges on the rates gained it many thousands of votes.

I should like to examine in some detail the action which has been taken to fulfil these promises. Let me give a round-by-round commentary—or rather a blow-by-blow commentary—on the "relief" which the Government have given during the last six months. On 11th November they announced an increase of 6d. a gallon in the petrol tax. This involves considerable expenditure by local authorities and is bound to increase the rates. On 23rd November they announced that Bank Rate was to be increased to 7 per cent.

It is true that the Minister of Housing implied a few weeks later that this would be for only a very short time; but in fact, it has continued ever since.

Let us be perfectly clear that the increase in Bank Rate to 7 per cent. and the considerable increase in the cost of local government borrowing is a major factor in the increase which is taking place in the rates and is a very heavy burden on local authorities. It is remarkable that neither the Joint Parliamentary Secretary nor any hon. Member opposite who has spoken today made any point of the heavy burden of the 7 per cent. Bank Rate and of increased local government cost of borrowing as having been a major issue in the 14 per cent. increase in rates. They used to consider that it was the only issue in increased rates.

The Prime Minister, in his opening television programme in the last election campaign, used these words: The Government, as a matter of policy, have raised interest rates"— he was referring to the Conservative Government— and this is why council house rents and building society mortgage repayments, and rates, have gone up". If we examine the speeches of the Prime Minister, the first Secretary and the then shadow Minister of Housing throughout the election campaign, we find that the only reason which they gave for the high burden of rates under the Tories was the high Bank Rate.

When the Prime Minister made this speech on 28th September Bank Rate was 5 per cent. It had been 5 per cent. or less for the previous two years. If after two years, the Bank Rate being at 5 per cent. or less, the Prime Minister can tell the country that this is the main reason for the rise in rates, what will he tell the country when for virtually the whole of his party's period of office Bank Rate has been at 7 per cent?

That is only part of the story. Let me continue my round-by-round commentary. I hope that we will not get tonight the rather weak excuse given by the Chief Secretary last week that it was because of the terrible economic crisis. [Interruption.] If we are to have that excuse, let me say in advance that hon. Members opposite should read the speech made by the Prime Minister in New York, where he boasted to the Americans that the reason why there would be no devaluation of sterling was that he inherited from the Tories £11,000 million worth of overseas investments.

Continuing this sad story for the ratepayer, on 15th December the Minister of Housing and Local Government dashed all hopes that he would fulfil the election promise of immediate relief by announcing the general grant for the next two years and that it would be identical in proportion to the general grant of the previous Government. Therefore, at this stage, people began to realise that not only would the Government not keep their election pledge, but that rates were going up because of various actions by the Government.

On 25th March, there was an increase of 33⅓ per cent. in the cost of postage, another burden upon local authorities and upon ratepayers. [HON. MEMBERS: "Why?"] The best reason I can give is that the right hon. Gentleman who is now Postmaster-General holds that position. On 29th March, continuing this blow-by-blow commentary, National Insurance contributions by the local authorites were increased by 3s. 3d. a week for each employee, another important burden upon local authorities.

On 6th April the Chancellor presented his Budget, the second Labour Budget without any relief for the ratepayer. I say "without any relief", but I must confess that there was some relief. Although in the Budget speech there was no mention of the election promise to transfer the burden from the ratepayer to the taxpayer, and although there were certain proposals affecting local authorities, the only one that can really be said to be a relief is contained in Clause 6(1) of the Finance Bill, where we find the happy news that to the list of vehicles which are to be exempted from the vehicle excise duty are to be added local authority watering vehicles, a concession which, I believe, will help the average ratepayer by ld. over the next 30 years.

Contained in that same Finance Bill, however, are two other blows to local authorities and to the rates. The first is the 50 per cent. increase in the cost of licences for many local authority motor vehicles, adding a quite substantial sum to their costs. The second is the manner in which the Capital Gains Tax has been calculated to apply to local authority redeemable stocks. This will certainly increase the cost of local authority borrowing in the future.

Almost exactly 12 months ago, in a party political broadcast prior to the local elections, the First Secretary—Mr. Three Per Cent.—referred to the misery of those who had to pay high mortgage repayments and coupled with this the following comment upon the rates: Rates have now become a dreadful burden on countless millions of families in this country. If last year's rates were a dreadful burden on millions of families, after six months of a Labour Government the burden has been increased by 14 per cent.

The technique of the party opposite is a simple one. It is one at which the Minister of Housing and Local Government is particularly skilful. Doubtless, we shall see his type of performance tonight. We saw it last week. It was a performance whereby they say with great enthusiasm and great energy, "We still believe in all the promises which we have broken." What one finds with this Government is that the more a promise is broken the more enthusiastic they become about the original promise. Last week we heard from the right hon. Gentleman that there is to be no early relief through mortgage interest rates. This week we hear there is to be no relief for the ratepayers.

The hon. Member for Orpington (Mr. Lubbock)—obviously tonight not an effective Whip—said that the Joint Parliamentary Secretary really had no need to make his speech this afternoon because he said nothing at all except that he wanted suggestions. I think that the Minister himself delivers this type of speech, the type of speech he made last week about mortgage interest rates. He could, in fact, just ask the Whips to make the speech for him, because they are used to saying what the Minister always says, namely, "Tomorrow, Sir." In fact, this is a "Tomorrow, Sir" Government. For anybody who wants lower mortgages it is, "Tomorrow, Sir". For anybody who wants lower rates it is, "Tomorrow, Sir." For anybody wanting lower taxes it is "Tomorrow, Sir." For anybody wanting lower prices it is, "Tomorrow, Sir."

People are beginning to realise, however, that for this Government tomorrow never comes, and it is for this reason that when the final day of reckoning does come—[HON. MEMBERS: "Ah."]—their tomorrow will be spent on these benches, finally defeated.