Local Government Finance

Oral Answers to Questions — Environment – in the House of Commons at 12:00 am on 21 February 1990.

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Photo of Matthew Taylor Matthew Taylor Liberal Democrat Spokesperson (Education), Chair of Communications, Liberal Democrat Party 12:00, 21 February 1990

To ask the Secretary of State for the Environment what is the latest estimated cost for collecting the community charge and the uniform business rate.

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

The estimates for these costs remain at approximately £400 million and £40 million a year respectively.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat Spokesperson (Education), Chair of Communications, Liberal Democrat Party

Does the Minister accept that the cost of collecting the community charge is even more in excess of the original figure put forward by the Government than the poll tax is in excess of the Government's estimate? Is the collection cost more than double the cost of collecting the rates in 1988–89? In my local authority the implication of that massive burden for poll tax payers is that £1 in £5 of expenditure will go on collecting this unfair tax. Might not the Government remove at least that unnecessary burden for which poll tax payers never voted?

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

The hon. Gentleman is wrong. The cost of collecting the community charge is 4p in the £1. Depending upon which local authority area people live in, the cost might be lower. The Government made available a generous amount of grant to help local authorities with the cost of collecting the community charge.

Photo of Mr Bob Dunn Mr Bob Dunn , Dartford

Is not it true that all significant political parties in the House are now committed to the abolition of the rating system? Should not the cost of collecting any alternative, especially the roof tax, be taken into account when debating the matter? Would not the roof tax be a very expensive burden on home owners, especially in the south-east, given the high capital values of properties there?

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

My hon. Friend is absolutely right. The roof tax would be an administrative nightmare and it would be incredibly unpopular. It would be a most unfair tax on home improvements.

Photo of David Blunkett David Blunkett Opposition Spokesperson (Local Government & Poll Tax), Member, Labour Party National Executive Committee

Will the Minister take this opportunity to correct the figures given a few moments ago by the Secretary of State, who said that the poll tax would amount to £3 billion more than the assumed level of spending? Does the Minister accept the professional advice that the Government underestimated actual spending by £2·5 billion and that, had they taken into account the true level of inflation, their figures might have been more sensible?

Will the Minister confirm that in reply to my hon. Friend the Member for Normanton (Mr. O'Brien), he showed that he disagreed with the Secretary of State in relation to poll tax capping by saying: Local authorities decide the level of their charges, and are accountable directly to their residents for their decisions at the ballot box."—[Official Report, 16 February 1990; Vol. 167, c. 433.] Will he confirm that any plans for poll tax capping have been scrapped, or was his reply last Friday incorrect?

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

I agree with everything that my right hon. Friend has said on the subject. When the legislation was discussed in the House it was clear that we were taking a reserve power to cap high-spending authorities, particularly during the transitional period. In view of the spending plans of some local authorities, most hon. Members will agree that it is just as well that we included a capping power in the legislation. Nevertheless, it is for each local authority to decide in the first instance what its budgeted expenditure should be. The best local authorities, where there is a will to keep expenditure under control, are coming forward with low community charges and low increases in expenditure.

Photo of Simon Burns Simon Burns , Chelmsford

Does my hon. Friend believe that the cost of collecting the community charge would be any different if my right hon. Friend the Secretary of State for the Environment amended sections 100 and 101 of the Local Government Finance Act 1988 so that district councils that intended to increase their expenditure excessively and tried to blame the Government for their profligacy could be capped if their expenditure was under £15 million a year?

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

I understand my hon. Friend's point. There is frustration because a number of district councils whose expenditure threshold is less than £15 million have proposed substantial increases in expenditure. I hope that my hon. Friend will not be slow to condemn them.