Local Government Finance (Wales)

– in the House of Commons at 4:24 pm on 20th July 1989.

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Photo of Mr Peter Walker Mr Peter Walker , Worcester 4:24 pm, 20th July 1989

With permission, Mr. Speaker, I should like to make a statement about local government finance in Wales for 1990–91.

From April 1990, as the House will know, the new local government finance system will be in operation. Domestic rates will have been replaced by the community charge; there will be a national non-domestic rate with a uniform rate poundage throughout the Principality, and there will be a new grant system. In order to assist local authorities in making their plans for the first year of the new system, I am today announcing my proposals for the overall level of support towards local authority revenue expenditure in Wales from grants and non-domestic rates.

My proposals must be seen in the context of local authority spending in 1989–90. For the current year Welsh councils have budgeted to spend £1,850 million—some £42 million, or 2·3 per cent., above the Government's plans. This year-on-year increase in spending of 8 per cent., although closer to plans than that of their English counterparts, is nevertheless too high.

I have taken account of the local authority associations' representations on the pressures for spending in 1990–91—I discussed their views with them in the forum of the Welsh consultative council on local government finance on 12 July—but I have also had regard to the need for authorities to seek and achieve efficiency savings, taking steps to control staffing costs and restricting budget increases to affordable levels.

In the light of all those considerations, I propose that for 1990–91 the total of standard spending—under the new system, this is the amount that I consider appropriate for local authorities to spend in order to deliver a standard level of services—should be set at £2,109 million. That is an increase of £182 million on the comparable figure for 1989–90, and represents an increase of £140 million on authorities' budgeted expenditure for the current year.

I propose to set the level of aggregate external finance—which comprises three component parts: revenue support grant, the distributable amount of national non-domestic rates and certain specific grants towards current expenditure—at £1,733 million. That is an increase of 8·6 per cent. on the equivalent figure for 1989–90, adjusted for changes in functions. In the autumn I shall announce details of the division of aggregate external finance into its three component parts.

Let me now deal with the consequences of the proposals for the individual community charge payer in Wales. The components of aggregate external finance, taken together, will represent some 82 per cent. of total standard spending. After account is taken of community charge benefits, only 15 per cent. of local government spending will be financed by community charges. That broadly maintains the relative shares in the present financial year.

The community charge for standard spending in Wales will be £175, only £4 more than the average rate bill per adult in 1989–90. That reflects my commitment that no resources would be lost to Wales as a result of the change to the new system. Charge payers will quickly understand the reasons for variations from this figure, which—subject to the transitional arrangements that I shall describe in a moment—is achievable by each and every authority that spends in line with the Government's standard spending assessment.

I have considered again the extent to which the effects on charge payers of the change to the new system should be phased in through an appropriate "safety net". In the light of the favourable settlement that I am proposing, I have decided that it would not be right to freeze the position as it was in 1989–90 by using a full safety net: that would delay the benefits of the greater accountability which the new system brings. Instead I propose to introduce a safety net which will move us substantially towards the new system in the first year.

That means that—on the basis of present estimates—in 1990–91 in the Rhondda, for example, charge payers would contribute some £50 less than the Welsh average of £175 towards their council's services. The arrangement will also benefit charge payers in areas such as Newport and Cardiff, who should contribute only around £20 to the cost of the safety net. The proposals strike the right balance between protection for those who, in moving to the new system, face the largest increases, and reasonable contributions from those who stand to gain.

I will inform the House about the position of individual authorities following further consultation with the local authority associations about grant distribution arrangements, including the precise details of the safety net. I agree with the associations that it would be misleading to produce illustrative figures for 1990–91 in advance of that.

Photo of Mr Allan Rogers Mr Allan Rogers , Rhondda

Speak more slowly.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I will speak very slowly, as the next passage is of great importance. It concerns the arrangements we have made to assist those on low incomes. Those on the lowest incomes in Wales who qualify for income support will be better off with the community charge than they were under the old rating system, because income support payments will include an amount—which will be the same throughout Great Britain—to help pay the community charge. Owing to the low levels of community charges in Wales, people would actually be better off than they would if they received a 100 per cent. rebate.

A couple on income support paying the community charge for standard spending of £175 each would get the maximum rebate of 80 per cent. leaving them with a combined liability of £70. To help them meet this their income support will have been uprated by an annual amount equivalent to £119·60, leaving them £49·60 in pocket. We estimate that over 300,000 community charge payers in Wales—about 14 per cent.—will qualify for the maximum assistance.

I will be bringing forward more detailed arrangements for all aspects of the settlement in the autumn, following discussions with the local authority associations. But the proposals I have announced today offer charge payers in Wales the prospect of community charges averaging £175 provided that their councils take responsible spending decisions. They offer authorities—particularly those who seek and achieve the efficiency gains which are available—a fair and realistic framework within which to set their budgets for 1990–91. If they budget sensibly, the rewards are self-evident.

Photo of Mr Barry Jones Mr Barry Jones Shadow Secretary of State

If the new system is so wonderful, why the eleventh hour acrobatics to alter and improve it? Are they not a tacit admission of its unpleasantness by delaying its impact?

Will the Secretary of State explain why there appears to be a shortfall on the aggregate external finance figure? We note a paucity of the detailed examples that were provided yesterday. On that basis the Secretary of State has made a defective statement. Has not the right hon. Gentleman made inadequate provision for inflation? With the RPI at 8·3 per cent. and pay awards well over 7 per cent., the Government's estimate of the effects of inflation this year is likely to be about 3 per cent. out at outturn. Therefore, many of our councils are cheated of a lot of money.

The statement fails to take full account of the high interest rates on local councils' capital charges. Regarding the Rhondda exemplification, of which the right hon. Gentleman made much in his statement, the House should know that professional opinion is that the right hon. Gentleman is engaged in a doubtful conjuring of the figures. A current ratepayer in the Rhondda faces an average bill of £183. An average poll tax payer in the Rhondda will be paying £50 less than the Welsh average, which amounts to £125. A couple will therefore be paying £250 which is considerably more than £183, and that is before the safety net is removed. The position next year will be bad and in future it will be even worse.

Does the Secretary of State realise that the cost of preparing for and eventually running the poll tax will be at least double that of the current system? Welsh councils expect millions of pounds more to help them over that hurdle.

The statement is a wretched milestone in the history of local government. Does not the poll tax represent reaction, not reform? It is a medieval tax which will hurt ordinary families in Wales. Is it not opposed by almost everyone, except the Government? Will not the poll tax shift the burden of local services on to those least able to pay? Ultimately, the poll tax will hammer the valley communities. It is all very well for the right hon. Gentleman to come here with a masking operation, but will not the poll tax bite most ferociously at the end of the transitional period?

This is a confidence trick. Did not the Scottish Office underestimate its eventual poll tax by 12·5 per cent.? Today we have heard fine words and clever packaging, but it is shaming to see a Secretary of State for Wales as an advocate of a poll tax. Is the right hon. Gentleman aware that what he proposes goes against the grain of Wales's concept of fair play? Where is the Government's mandate for this pernicious tax?

What of teacher shortages? Will there be additional funds to secure more modern language, science and maths teachers and more teachers in Welsh? Where are the additional major resources to cover the financial burdens of the Education Act 1988 and the implementation of the national curriculum?

This is the 10th year that a Conservative Secretary of State has stood before the House to make a statement on local government finance. The Government's record has been shabby, with a 12 per cent. real terms cut in money for our councils. In return for tax cuts to the rich, we have poorer services to our local communities, a demoralised education service, a housing crisis and social services stretched to breaking point.

We reject the poll tax even now. Will the right hon. Gentleman withdraw this unwanted tax?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I congratulate the hon. Member for Alyn and Deeside (Mr. Jones) on the thunderous cheers that he received at the end of those remarks. It is easy for someone in his position to say, "What a dreadful thing is being imposed on us." Wales is having 85 per cent. of all local government expenditure being financed by the Government and only 15 per cent. being put on the community charge. That would be the envy of England and Scotland, yet the hon. Gentleman says, "How terrible it is."

Let us consider what the local government associations have said about the talks and so on and about how disappointed they are at the figures. On every occasion—certainly in my lifetime, and I am sure the same is true of the hon. Gentleman—all local authorities under all Governments have been disappointed at the figures. I am sure that in the last few years they have been disappointed while we have been in power, when the support to local authorities has gone up by only a small amount in real terms, and I admit that.

But how they must have felt when the hon. Member for Alyn and Deeside was a Minister at the Welsh Office I cannot imagine. In 1976–77, the figure went down by 4 per cent. in real terms; in 1977–78 it went down by 8 per cent.; and in 1978–79 it went down in real terms by 4 per cent. If they are unhappy now, they must have been in tears when Labour was last in office. I suggest, therefore, that the hon. Gentleman should not concentrate on that aspect.

In terms of the retail prices index, it must be remembered that we are referring to the year 1990–91 and that we cannot be certain what the rate of inflation will be at that time. The hon. Gentleman referred to interest rates in relation to inflation. With house mortgage interest rates, it stands at 8·3 per cent., and without them it is 6 per cent.

In terms of local authority interest rates, a great volume of borrowing has been borrowing long, so the average increase in their interest rates is far lower than, for example, the average for house purchase. Thus, without that aspect they are much nearer the 6 per cent. than the 8·3 per cent. now.

I am the first to admit that the standard community charge, with the safety net, will mean an increase for the Rhondda. But I am glad to say that next year Rhondda will remain the lowest community charge authority in Wales—and, if it were in England, it would be the lowest community charge authority in England.

We appreciate that there are many people on low incomes in the Rhondda. The benefits under the rebate system will mean that in the coming year, with the safety net, the average payer in the Rhondda will obtain £72 more in rebate and service charge than he or she will pay in community charge. Therefore, instead of a rebate of 100 per cent. under the rating system, they will be getting a rebate of 130 per cent. under the new system. I hope that hon. Members will ensure that the people of Rhondda are aware of those benefits.

I am glad to say that it is estimated that businesses in the valleys will benefit as a result of the change in the business rate by about £10 million a year.

Photo of Sir Anthony Meyer Sir Anthony Meyer , Clwyd North West

Is my right hon. Friend aware that I regard the community charge as unfair, unworkable and unwise? However, is he further aware that there will be admiration and amazement throughout Wales at the skill with which he has managed to screw so much money out of the Treasury? There will be no advantage, indeed the reverse, for the poorest, though, and I am not clear what the position is for those just above the income support level. He has also managed to shoot the fox of the hon. Member for Alyn and Deeside (Mr. Jones). Is my right hon. Friend also aware that, by his skill in so lightening the burden, he has gone a long way to demolish the argument for the community charge—that it brings home to people the cost of local services?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

It will mean that any local authority that involves itself in extravagant expenditure will hit community charge payers in that locality. There will, therefore, be a degree of discipline. I am pleased to say that in Wales there is no doubt that low-income families will benefit from the change in the system.

Photo of Mr Ted Rowlands Mr Ted Rowlands , Merthyr Tydfil and Rhymney

Is the Secretary of State aware that, after all the fiddling and fudging, working people in Aberfan, Merthyr Vale and New Tredegar in my constituency, who are home owners but who do not receive benefits and are not likely to get rate rebates of the kind he mentioned, will face almost a doubling of their present rates bills as a result of the community charge?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

In those areas people will still have the enormous advantage of 85 per cent. of all local government expenditure being met by the Government. Because of that, the people the hon. Gentleman has just described, who are on low incomes and not able to take advantage of rate rebates. will be better off. The average for the community charge in Wales will be £175, compared with £275 in England and, last year, £280 in Scotland. The people of Wales should realise that they are considerably better off.

Photo of Mr Keith Raffan Mr Keith Raffan , Delyn

Is it not very revealing that, when my right hon. Friend reached the section in the statement that concerns the dramatic benefit that it will bring to the 300,000 people in Wales who are on income support, it met with silence from Opposition Members? Is it not also revealing that the hon. Member for Alyn and Deeside (Mr. Jones) is as churlish as usual, and cannot pay tribute to my right hon. Friend for what he has done for those who are in real need in our community? It is a tremendous achievement and the Secretary of State deserves our thanks for that.

Returning to the local situation in north-east Wales, I disagree with my hon. Friend the Member for Clwyd, North-West (Sir A. Meyer). Does my right hon. Friend agree that Delyn and Rhuddlan borough councils could end up with community charges that are significantly higher than the Welsh average, because Clwyd, which is under Labour control, is a high-spending, improvident and chaotically managed county council?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

As my hon. Friend says, during the past year Clwyd county council increased its expenditure, compared with its budgets and estimates, which was out of line with the majority of Welsh local councils. I hope that it will recognise that, if it continues to do so, that will be a considerable disadvantage to community charge payers in its county. I hope that it will budget and spend prudently during the coming year. As my hon. Friend says, this is a total settlement which is of considerable advantage to the lowest income people in Wales. I am as surprised as he is at the Labour party's reaction to the statement.

Photo of Mr Richard Livsey Mr Richard Livsey , Brecon and Radnor

Will the Secretary of State note that with the introduction of this iniquitous tax in my constituency—which is a rural area, like many other parts of Wales—the average poll tax of £175 per head will be an increase of £45 per head on the present rating system? Does he agree that his figure of £4 is way out for rural areas? It will be a case of paying Peter or robbing Paul. The non-domestic rate is forecast to increase by 15 per cent., which is double the rate of inflation, and will hit small businesses, which are the backbone of Wales.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

That is not so. Small businesses will not be adversely affected by at last having a system in which the business tax is kept within any increases in inflation. Small and large businesses will prefer to have that stability. I repeat that to have a system where 85 per cent. of all local government expenditure is paid for by the Government is of considerable advantage to rural and urban areas in the Principality.

Photo of Mr Gwilym Jones Mr Gwilym Jones , Cardiff North

I welcome the easing of the safety net arrangements which otherwise would have been more disadvantageous for the people of Cardiff. Can my right hon. Friend say whether, with the safety net, there will be lower transfers of funds between councils than there is with the existing rate equalisation mechanisms, that the safety net represents a lower amount of the help that will he received through income support, and that, at last, with the introduction of the far fairer community charge, every citizen in Wales will be able to measure his council against the all-Wales average of £175? If it comes to pass, as has been threatened in Cardiff, that we have a community charge of £275 or more, the responsibility will lie with the local councils who are making a direct attack on the least well off.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I think that it will have the result that fewer local authorities will be imprudent. In general, over the years, Welsh local authorities have been prudent compared with those in other parts of the United Kingdom. If individual local authorities decide to break with that, they will impose a considerable burden. Considering the system in terms of Wales as a whole, I decided to reduce the safety net provisions, and having obtained a settlement where 85 per cent. of finance comes from central Government, I considered it right to proceed as quickly as possible to get the full system into operation.

Photo of Mr Donald Anderson Mr Donald Anderson Shadow Spokesperson (Foreign and Commonwealth Affairs)

The Secretary of State gave the example of the relief to people on income support. Will he consider the gross injustice to those who are just above income support? I shall give him an example. In Landore, in my constituency, where the average rates are rather less than £200, a pensioner couple with a small private income from a works pension will probably have to pay more than double that. That has nothing to do with accountability. Surely the Secretary of State recognises that this is a gross injustice to people who are just above the level of income support.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

When we finally agree the specific needs element with the local authorities and the figures are finally published, couples in Swansea who have been paying rates, and who will pay the community charge, will, if anything, pay less than they do under the rating system. It is all very well to talk about injustice, but quite a few of the hon. Gentleman's constituents in that income bracket who have been widowed or who live alone have been adversely affected by the rating system.

Photo of Mr Nicholas Bennett Mr Nicholas Bennett , Pembroke

Is my right hon. Friend aware that there will be much envy among English colleagues about the fact that he has, once again, secured a much better settlement for Wales than is the case for the rest of the United Kingdom? I assure him that my constituents will welcome the community charge because it is workable and fair. At the moment, only 50 per cent. of my constituents pay towards the services provided by their local authorities which they all enjoy and for which they have a vote. Under the new system, everybody will look to local authorities to be truly accountable for the services that they provide.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I think that there will be a clearer indication of local authorities' performance. There are problems associated with changing any system. There is no perfect system of local government—none has been advocated by any political party. In Wales, we felt that this system, in which we have to meet 15 per cent. of local authority expenditure through the community charge, and which includes rebates for low incomes, will produce both accountability for local authorities and a better deal for people on low incomes.

Photo of Alan Williams Alan Williams , Swansea West

I now understand why the Secretary of State gabbled so much when he made his statement. Will he confirm that, on the figures that he just announced, our beleagured councils will receive £14 million less than is necessary just to manage the cost of living increase, and £50 million less than is necessary to match the increase in their costs? After all his fine words, does not this mean that our councils will have to impose cuts in services or increase the poll tax—not to the £175 that the right hon. Gentleman mentioned, but by at least £20 beyond that, so that the true figure will be nearer £200?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

If there is an increase of more than 7 per cent. on local governments' budgets for last year, it is very difficult to argue that they cannot prudently and sensibly meet their obligations.

I have already given the figures. Local authorities are treated much better now than they were during the time when the right hon. Gentleman was at the Welsh Office.

Several Hon. Members:

rose——

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. I say to the two hon. Members who have been rising and who represent English constituencies that this is the United Kingdom Parliament and that they will be called, but I propose to give precedence to Welsh Members because this statement primarily affects Wales.

Photo of Mr Allan Rogers Mr Allan Rogers , Rhondda

May I point out to the Secretary of State that the illustration he used—it was pointed out by his hon. Friend the Member for Delyn (Mr. Raffan)—of Clwyd county council concerned the budget for last year, which was set by a Conservative and independent-controlled council, and that a Labour authority took charge of the council only this year?

Local authorities in Wales will view this settlement of only £182 million in standard spending with dismay. As my right hon. Friend the Member for Swansea, West (Mr. Williams) said, it will mean real cuts in social services, education and housing.

I wish that the Secretary of State would not take the name of the Rhondda in vain. In Rhondda, a couple living with one child in a house will pay three times as much under the community charge as they would under the old rates system. It is wrong of the Secretary of State to suggest to the House and to the public at large that the people of the Rhondda will be better off: they will not be.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I am glad to say that next year the people of the Rhondda will have the lowest community charge of any area in England or Wales. I do not know how many of the hon. Gentleman's constituents are in receipt of full rate rebate now, but there are 300,000 such people in the whole of Wales, so I guess that there are at least 7,000 or 8,000 in his constituency. In view of all that the hon. Gentleman has said about the community charge, I hope that he will take great care to announce to the 7,000 or 8,000 people in his constituency on the lowest incomes that, instead of receiving 100 per cent. rebates under the rating system, they will receive 130 per cent. rebates under the community charge this year and 114 per cent. thereafter. I hope that the hon. Gentleman will communicate that improvement to his electors.

Photo of Mr Ieuan Wyn Jones Mr Ieuan Wyn Jones , Ynys Môn

It is a bit much of the Secretary of State to come to the Dispatch Box and give us the average figure for Welsh local authorities and then proceed to give us three examples of authorities that he says will benefit next year, since he gave us no examples of local authorities that will not benefit and in which consequently people will pay more than the average standard poll tax. The right hon. Gentleman should do his duty to the House and the people of Wales and publish a list, authority by authority, telling us how much people in each will pay—and how much people in the Anglesey borough council area will pay next year.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I have already published a list based on last year's, figures since when I have adjusted the safety net. We still have to agree the final distribution with the local authority associations, and I hope to do that in the near future. It was the local authority associations—they are not, in the main, under my party's political control—which asked that no indicative figures should be issued until the figures are finalised. When they are, I shall be delighted to send out the details.

Photo of Mr Donald Coleman Mr Donald Coleman , Neath

During the past two years, the right hon. Gentleman has had some association with us in Wales. In his reply to my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) he seemed to equate home ownership and owner-occupation with income. But many of those who live in these properties are in impoverished circumstances, and the right hon. Gentleman should recognise that.

What are the figures that will affect all of us in all our valley communities? Why has the right hon. Gentleman not brought them here, as his right hon. Friend the Secretary of State for the Environment did yesterday? Surely this is an incomplete statement. If the right hon. Gentleman does not have the figures, he should not have come here and made it.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I shall convey the hon. Gentleman's remarks to the leaders of the Welsh local authority associations, virtually all of whom are of his political persuasion. I shall tell them that they were wrong to demand what they did—if that is the substance of the hon. Gentleman's attack.

A few weeks ago, in reply to a parliamentary question, we published the best estimates available; they are in Hansard. As soon as we have agreed more detailed and accurate figures with local authorities, I shall be happy to issue them. They tell a good story: when the Government are paying 85 per cent. of all local government expenditure. that is something to be proud of——

Photo of Mr Rhodri Morgan Mr Rhodri Morgan , Cardiff West

On a point of order, Mr. Speaker.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. Would it not be better if the hon. Gentleman raised this in the form of a question? I shall take it if it is a point of order.

Photo of Mr Rhodri Morgan Mr Rhodri Morgan , Cardiff West

This is the fourth time since I have been in the Chamber that the Secretary of State—I am sure unintentionally—has misled the House by saying that 85 per cent. of grant will come from central Government. That is not what his statement says——

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. The Minister will have to deal with that.

Photo of Mr Roy Hughes Mr Roy Hughes , Newport East

Where are the high-spending, Labour-controlled authorities which the Government have been so busily criticising in recent weeks and months? I venture to suggest that, in Wales, they just do not exist. Our local authorities have had to contend, since the Government were elected in 1979, with the loss of no less than £990 million in rate support grant payments.

When will the right hon. Gentleman recognise that the poll tax is essentially regressive? The poorer sections of the community—people in low rateable value homes—will have to pay the main burden, and the right hon. Gentleman's safety net is not adequate.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

When the system has finally settled down and, at the next general election, the people of Newport are offered the choice of returning to the present rating system or sticking to the poll tax, I have a feeling that the hon. Gentleman will not be eager to proclaim a return to the rating system for Newport.

Three hundred thousand of the lowest income group will directly benefit by the proposals.

I have already paid tribute to Welsh local authorities. One of the important reasons why I have been able to negotiate the sort of settlement that I have is that I have been able to show that local authorities in Wales have acted responsibly and prudently under the system that they have enjoyed in the past.

Photo of Dr Alan Williams Dr Alan Williams , Carmarthen

How many gainers and how many losers will there be when the poll tax is introduced? In particular, who are the losers? I grant the right hon. Gentleman that the bottom 14 per cent., on income support, will benefit from the rebate, but the next 30 or 40 per cent., on below average pay, in low rateable value houses will be hit hard.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

The 80 per cent. rebate for 300,000 people goes to the lowest income group, but the rebate system deals with many more people on lower incomes than I have mentioned. Many single people, widows and so on will benefit. Households that include three or four adults will be at a disadvantage if they earn tolerable levels of income. That is the nature of the mixture.

Photo of Mr Neil Hamilton Mr Neil Hamilton , Tatton

As one born, bred and educated in Wales, and representing a constituency only 16 miles from the Welsh border, I congratulate my right hon. Friend on the characteristic dexterity with which he presented his statement today, and I counsel him not to be too savagely destructive of the hon. Member for Alyn and Deeside (Mr. Jones), because my right hon. Friend may be in danger of creating a residual sympathy for the hon. Gentleman which might not otherwise exist.

In due course, my right hon. Friend may face some criticism from authorities and from Members representing constituencies which will pay into the safety net during the coming year. I ask my right hon. Friend on the whole to disregard these criticisms because people in the vast majority of these areas will pay no more than they would otherwise have paid under the rating system, and by and large they will benefit significantly in the future.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I agree with my hon. Friend that, once the safety provisions have come to an end and the whole system is in operation, many parts of the Principality will have considerable benefits from the change in the system.

Photo of Mr Geraint Howells Mr Geraint Howells , Ceredigion and Pembroke North

Having listened to the comments of hon. Members on both sides of the House, does the right hon. Gentleman think that the Government made the wrong decision to impose the poll tax on the people of Wales?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

The measures and the terms of the settlement which we announced are good for Wales, Welsh industry and Welsh business.

Photo of Dr John Marek Dr John Marek , Wrexham

I hope that, on reflection, the Secratary of State will admit that he has done a disservice to the House by making a statement and allowing questions to be asked without the facts and the details being available to any Member. I hope that he will accept that this is not a good practice and that it should not be followed in future years.

Can the right hon. Gentleman tell me about the 100 per cent. rebate for people on income support? Are there any areas in Wales where the 20 per cent. increase that those on income support will have to pay will not be completely rebated?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I know that the hon. Gentleman will be delighted to hear that no one in Wales will be in that category. All the people will be net beneficiaries.

Photo of Mr Ron Davies Mr Ron Davies , Caerphilly

I hope, Mr. Speaker, that you have noted our complaints about the inadequacy of the statement. I hope that, when the detailed information is available on a district-by-district basis, you will be responsive to any requests for a further opportunity to question the Secretary of State—whoever it may be—on those arrangements.

Will the Secretary of State acknowledge that the safety net is nothing more than a temporary, hidden subsidy and that, when it is removed, the poll tax will be revealed as having a built-in mechanism to levy increases year by year on Welsh communities?

Will the right hon. Gentleman acknowledge a point that has been made by several of my hon. Friends? We obviously welcome the fact that 14 per cent. of the population will receive a full rebate, but that rebate will be raised at the expense of people on low incomes. Does the right hon. Gentleman recognise that he is making the poverty trap which applies to many of our low-income earners considerably greater? In publishing the district-by-district basis of the poll tax, will the right hon. Gentleman take it upon himself also to publish a table showing the impact of this new poverty trap on our Welsh communities?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

The information to which the hon. Gentleman refers has been made available in considerable detail in reply to parliamentary questions. The updated information has not been issued, at the request of local authority associations, and they were probably quite right to make that request. That information will not be available until the final settlement is reached.

The hon. Gentleman talked about the rebate. I cannot do this through the political party machine or through the Government machine, but I shall do my best to ensure that the Conservative party in the hon. Gentleman's constituency distributes to every household the leaflet on the poll tax which he issued and compares the outrageous predictions that he made to low-income people, which must have scared the life out of them, with what will happen.

Photo of John Smith John Smith , Vale of Glamorgan

Does not the Secretary of State recognise that the overwhelming majority of poll tax payers in Wales who will benefit are the people who need help the least? That is why this tax is so obviously unfair. That is why it was rejected so decisively in the Vale of Glamorgan, which is one of the most affluent constituencies in Wales.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

In fairness, I thought that at the time the hon. Gentleman gave a number of other reasons why he managed to succeed in the Vale of Glamorgan. If that was the reason, I hope that when the community charge is fully implemented in the Vale of Glamorgan he will make it clear to the electors well before the next general election that he would prefer to return to the present rating system or the system that the Labour party advocates. That will help us considerably in winning back the seat.

Photo of Mr Win Griffiths Mr Win Griffiths , Bridgend

To follow the theme of other questions that the Secretary of State has not yet answered successfully, will he confirm that the principal gainers will be those on high incomes and the principal losers will be those on low incomes but who are above any income support level? Many people on high incomes in my constituency are totally against the imposition of the poll tax, and I would be willing to say that in any election manifesto at the next election.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

When the hon. Gentleman meets those people, he should explain that at least in Wales 85 per cent. of local government expenditure is financed by the taxpayers. Therefore, the hon. Gentleman's argument does' not prevail when only 15 per cent. of all the costs are met out of the community charge and 85 per cent. are met by the taxpayer.

Photo of Paul Flynn Paul Flynn , Newport West

We have had another piece of meaningless trumpeting by the Secretary of State in his abuse of statistics again and his claim that those on income support will benefit in some way from the Government's actions. He says, wrongly, that payments will include certain amounts, but people on income support—it is a miserable level—already receive those amounts and have no idea that there is meant to be compensation.

It may be true that certain couples will gain, by a few pence, because of the quality of local government in Wales and their prudent and good running of local matters over the years. Where is the trumpeting when people on income support in Wales lose out more than those on income support in the rest of the country? Where was the trumpeting when there were cuts of £650 million in housing benefit and when people lost out on transitional payments? Half a million pensioners in this country, many of them in Wales, had not a penny increase in 1987 or 1988 and may well go on through the next year and the year after without a penny increase. It is an outrage for anyone to suggest that the Government's actions are helping people on income support, whose income has been cut year after year by the Government.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

The hon. Gentleman's argument that the 20 per cent. rebate has been paid before the community charge has been introduced and therefore should he discontinued gives us a good insight into how the Labour party will attempt to play this matter. As the hon. Gentleman knows, this system for people on low incomes is far better than the rating system.

Photo of Mr Tony Marlow Mr Tony Marlow , Northampton North

Speaking as the husband of a Welsh woman, should it not be a matter of shame to every decent Welsh woman and Welsh man that, when my right hon. Friend announces a settlement whereby a couple in the Rhonnda will pay signficantly less than the average individual in England and 7,000 or 8,000 people in the Rhonnda will pay about 70p a week and, as my right hon. Friend said, be better off, all that the Labour Front-Bench spokesman can do is whinge? Is it not the case that in Wales the average person will pay £3.50 a week and 300,000 people will pay a mere 70p a week for the whole range of local government services? Are they not getting an incredibly good buy?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

The people of Wales have a considerable advantage under this settlement, with so much of it centrally financed. Wales has considerable problems because a large number of people are on very low incomes. This will be a far better system for them than the rating system.

Photo of Alun Michael Alun Michael , Cardiff South and Penarth

I was interested in the right hon. Gentleman's answer to the question put by my hon. Friend the Member for Vale of Glamorgan (Mr. Smith). Does not the right hon. Gentleman accept that the poll tax is equally unpopular in Penarth, which is the other part of the Vale of Glamorgan and which falls in my constituency, because even gainers regard it as unfair and unacceptable? That is why we are not whingeing but winning.

The right hon. Gentleman is patronising and unfair to local authorities when he says that they are spending above the planned level. Does he accept that, with 4 per cent. inflation as the level projected when the budget was set, with poll tax preparation costs and with central Government decisions creating extra costs in preparing for education reform, increased demand on social services and so on, local authorities are showing remarkable restraint as well as making positive contributions to efficiency reviews in which the right hon. Gentleman, like Oliver Twist, is always asking for more?

Perhaps we should commiserate today with the Secretary of State who has had another bad afternoon. Will he accept that the statement lacks content, facts, figures and reality for those of us who have knowledge and experience of local government finance? Will he accept that under the smooth surface lurks a heavy burden for many of the low paid and especially for those who fall into the poverty trap, which is the Government's particular creation?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I only hope that I shall have many more afternoons as bad as this afternoon. The sight of Labour Members, having heard the degree to which those on low incomes in Wales will benefit, is a sight that I wish could have been televised. When, in a rather speedier time than anticipated, the system is operating fully in Cardiff, I shall be interested to see how many of the hon. Gentleman's constituents want to go over to the old system or the incredibly ridiculous system his party advocates at present.