Orders of the Day — Local Government Finance Bill

Part of the debate – in the House of Commons at 8:19 pm on 16th December 1987.

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Photo of Mr Roger Knapman Mr Roger Knapman , Stroud 8:19 pm, 16th December 1987

I am grateful to you, Mr. Deputy Speaker, for giving me the opportunity to make my maiden speech during this important debate.

In the course of a few minutes how does one pay tribute to my predecessor who sat for Stroud for a total of 32 years, given that I have known him for only 18 months? Sir Anthony Kershaw was one of that band of honourable and gallant Members. He had a distinguished war career and, in recognition, he was awarded the Military Cross. Thereafter, in the 1950 and 1951 elections, he contested Gloucester, a Labour stronghold. In 1955 he successfully contested the constituency of Stroud and, from then on, he increased his majority.

As has already been said today, politicians are largely concerned with people's perception of them. Some constituents are unhappy unless their Member is on television or on radio every night. Others imagine that we are glued—today we might be—to the green Benches from half past two to some unspecified, but generally considered anti-social hour. Others are not happy unless their Member is a Minister or, better still, a Secretary of State. Others want a good constituency Member. Sir Anthony was all of those things. He achieved a successful balance and I believe that that, to a large extent, accounted for his success.

For some years Sir Anthony was Parliamentary Private Secretary to my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath). In 1970 he became Under-Secretary of State at the Ministry of Public Building and Works. Thereafter, he became Under-Secretary of State at the Foreign and Commonwealth Office. In 1973–74 something went wrong and he was Under-Secretary of State at the Ministry of Defence. Sir Anthony developed an extensive and unrivalled knowledge of foreign affairs. As a result of conversations that I have had in this House I believe that, in recent years, he was a popular and effective Chairman of the Select Committee on Foreign Affairs.

With such extensive knowledge, I am sure that Sir Anthony has much to offer public life in the country. Hon. Members may be interested to know that Sir Anthony's predecessor, Sir Robert Perkins, is now 94 years old. He represented the Stroud constituency from 1931 to 1945 and from 1950 to 1955. A few weeks ago Sir Anthony had one of his many retirement parties—a spirited affair—and Sir Robert wrote to him to congratulate him on his 32 years in the House. Sir Anthony will do the same for me when I have been here for 32 years, but there will be one or two small problems, not least Sir Anthony's handwriting, because by that time he will be 105. I know that right hon. and hon. Members on both sides of the House will join with me in wishing Sir Anthony and Lady Kershaw a long and happy retirement. [HON. MEMBERS: "Hear, hear."]

On 11 June it became my privilege to represent Stroud. That constituency covers nearly 200 square miles of varied and beautiful countryside. It represents much of the green bit—geographically rather than politically — between Gloucester and Bristol. The constituency extends from the level reaches along the Severn vale through steep, wooded embankments to the Cotswolds. My constituency consists of the wide open spaces that are much favoured by royalty and commoners.

Apart from agriculture, there are many active local firms in my constituency, mainly engaged in textiles, engineering and hi-tech. I am pleased to report that, in general, prosperity is increasing in the area and that is largely attributable to the proximity of good communications, not least to the M4 and M5.

I am a chartered surveyor and, for the past 20 years, I have disliked the ever-increasing complexity of local government finance, as witnessed by the pile of documents on the Dispatch Box. I especially dislike the present rating system. If we understand capping, penalties, targets, recycling, hold-backs, slopes, thresholds and all the other jargon, do we understand the way in which they interact? No doubt in common with many hon. Members, what I do not fully understand I do not fully trust.

Many people outside the House assume that rateable and rental valuations—they mean the same thing—are somehow based on capital values. They are not. They are merely based on a notional rental value assuming a free market in the private rented sector. That calculation may have been easy enough some 50 years ago, but after decades of Rent Acts and civil Acts — however well-intentioned—there is now no extensive private rented sector. From experience I can tell the House that valuations that were always more of an art than a science are now more of a farce.

We have already heard that the present rating system is not related to an ability to pay. This afternoon we heard again from the Secretary of State about the much-publicised two semi-detached houses. There could be similar houses in any street, avenue, cul de sac or whatever in any constituency. In one house lives the widow, in the other a family of four or five, all perhaps of working age. It is quite wrong that the widow and the others should pay similar amounts. However, let us suppose that in each house there is a family of four or five—would the situation be any more equitable? Do we assume that because there are the same number of people in each property their circumstances are comparable? We do not know enough to make that assertion. Household A may have a 100 per cent. mortgage, but household B may have no such worries. However, whatever else this may prove it is clear that the ability to pay in each case is different.

On several occasions since June we have considered how important it is to maintain the housing stock of the nation. A great defect in the present rating system is that it discourages people from maintaining that stock. When people are retired they must, in general, anticipate some reduction in their income. Perhaps they consider that they need a new central heating system—that is important to older people—and they want to spend the necessary money. However, not only do they have to pay for the central heating, but soon after there will be a tap on the door and it will be the rating valuation officer. Because that heating system is an improvement the rates increase. At a time of life when one faces the prospect of decreasing income it takes a brave person to take on increasing overheads. For that and other reasons I shall not lament the passing of the present rating system.

I support the Bill in its present form. I do not know whether the community charge should be called the Tory tax, but I know that there is no popular way of raising taxes. I support the principle of that charge because it is right that all who receive the benefits of local government should make some contribution, however small. The community charge — I have not heard this said this afternoon — will not pay for local government expenditure; it will pay only for a tiny part of it, because 50 per cent. of local government expenditure comes from central Government, which derives its income from income tax, which is a progressive tax. A further 28 per cent. is derived from industrial and commercial properties, leaving 22 per cent. only to come from the community charge.

The rebates for low-income groups are well designed and will be effective. We should not assume that just because someone lives in a larger house they are better off without knowing whether they have a mortgage. That person will be paying a progressive tax on the 50 per cent. that they pay through central taxes, so why should they pay extra on the further 22 per cent?

I favour the provisions in the Bill for non-domestic rating. It is scandalous that department stores in Edinburgh or Glasgow should pay two or three times the rate per square foot of a similar property in London. We have heard much about Ravenscraig steelworks, and it is equally scandalous, although I am unaware of the figures, that it is paying more in rates than it would if it were 300 or 500 miles south and closer to its natural markets.

Initially the central rating lists will produce some tremors in some areas, but over a period of time company directors will be able to budget in line with inflation and will know their liabilities for years to come. That will create stability, which creates confidence and, with a bit of luck, confidence creates success. What a chance the Bill gives to businesses that we hear so much about in certain parts of northern England and Scotland, which will be able to compete once again on an equal footing.

There is a saying, no taxation without representation, which is a good maxim. The Bill will go far to reestablishing that principle and accountability in local government.