I am obliged to my right hon. Friend for that answer, but does he share my view that although there will be an obligation to consult representatives of business and commerce before fixing the rate level, as suggested in the White Paper in paragraph 5.15, many Labour-controlled local authorities will continue to ignore those representations, as they have done in the past, without regard to the implications of so fixing the rate level?
There is a limit to how far we can go through legislation, but a great many local authorities now have satisfactory arrangements for consulting business opinion and find it a valuable help when they come to fix their budgets and rates. We intend to make it a statutory obligation to consult, and provisions to that effect will be brought forward in legislation which I shall present to the House at around the turn of the year.
In view of the considerable support for the principle of a local income tax as a fair and more effective way of paying for local services, will the Secretary of State give an assurance that the coming computerisation of the Inland Revenue will not be carried out in such a way as to make the introduction of a local income tax impossible?
That is a matter for my right hon. Friend the Chancellor of the Exchequer. There are three main drawbacks to the use of a local income tax for local revenue. The Government are committed to reducing the tax on incomes, but that proposal would only have the effect of increasing it. A local income tax would massively increase, even with the help of computers, the staffing required in the Inland Revenue. The option favoured by most supporters of a local income tax would mean deduction of the tax at source by the Inland Revenue and therefore there would be a thin nexus between the payment of tax by the taxpayer and the service that he gets from his local authority.
Does my right hon. Friend accept that until local authorities raise locally what they spend and spend no more than they raise this will always be a cliff-hanging operation?
My hon. Friend will know that my predecessors have successively reduced the proportion of local expenditure that is met by the rate support grant. That has been widely welcomed by many local authorities as increasing local accountability — [Interruption.] I am quoting what was said to me by the chairman of the Association of County Councils. The proposals which I shall discuss with the Consultative Council on Local Government Finance tomorrow provide for a small further reduction in the proportion met by the rate support grant.
The Secretary of State said that he had received a wide variety of opinions about his White Paper. Which does he regard as the more accurate description of it:
this misconceived piece of legislation",
which is the view of the chairman of the Association of County Councils, whom a moment ago the right hon. Gentleman quoted with approval, who is of course a Conservative, or
totally unacceptable … a major constitutional change which would be a fundamental breach of local democracy and accountability and be wholly unworkable in practice",
which is the view of the Conservative-controlled Association of District Councils?
Is my right hon. Friend aware that, to many Conservative Members, local government taxation based on property valuation is wholly unacceptable, and therefore it is unacceptable to increase the proportion of local government expenditure that is based on an unacceptable system?
I understand my hon. Friend's anxieties in this regard, but no Government have searched harder for an acceptable alternative to rates. As I said at a distinguished gathering in Blackpool a couple of weeks ago — it was a view that was accepted by the overwhelming majority of those present — we were unable to find a more satisfactory alternative to rates. It remains the least unsatisfactory local tax.