Local Government Finance

Part of Opposition Day – in the House of Commons at 7:33 pm on 25th April 1990.

Alert me about debates like this

Photo of Mr Bill Walker Mr Bill Walker , North Tayside 7:33 pm, 25th April 1990

I shall not follow the example of the hon. Member for Leigh (Mr. Cunliffe) and I shall not challenge any ruling that you give me, Madam Deputy Speaker. I intend to speak about Scotland. I hope that the hon. Member for Glasgow, Hillhead (Mr. Galloway) was not suggesting that Conservative Members knew nothing about work. I am sure that he will agree that that is not so.

There is a good reason why we should consider Scotland. In the first year of operation of the community charge in Scotland, the added increase in local authority expenditure was more than double the inflation rate. That followed substantial increases in local government grant settlements. I expect that sounds vaguely familiar to hon. Members from England. The community charge is in its second year in Scotland, and this year is the year of regional elections in Scotland, and 20 councils have spending plans which are the same, or below, those of last year, and the remainder have estimates at about, or just below, the inflation rate. That shows that at least the local accountability element is working. Therefore, a major aspect of the community charge in Scotland can be said to be working.

On Monday 19 March, the Scottish Grand Committee met in Edinburgh. The matter for debate that day was local government finance—the community charge, or poll tax as it has come to be known. That was the first day that the Scottish Grand Committee was televised, and not one individual came to demonstrate about a matter that, according to some of the interventions that we have heard, has been inciting people to lawlessness. Even more interesting, that was the first and only occasion on which there had not been a demonstration when the Grand Committee was meeting in the old high school building in Edinburgh. At every previous sitting of the Committee in Edinburgh there had been demonstrations outside, but there were no demonstrations against the poll tax.

That is concrete evidence that the people of Scotland have substantially accepted, as much as people ever accept the payment of tax, that the community charge is the best means of paying for the top-up figure of local government expenditure. The bulk of such expenditure is paid by central taxation and non-domestic ratepayers. We are talking about a top-up figure, not total expenditure.

It seems that, certainly in Tayside, the regional assessors—those responsible in Scotland for the non-domestic rates—have produced valuations in my constituency that lack consistency and fail to make sense. There is nothing new about that; we had the problem before, which led us to the community charge. That problem, combined with the rates and the rate valuation, made it impossible for the Government of the day to continue with that.

In an answer given to me today, I note that in Angus the combined rate poundage of district and region in 1989–90 is 72·2p, and in 1990–91 it should be—note the reduction—53·6p. In Perthshire, the respective figures are 72·7p and 54p. Therefore, provided the valuations are sensible, the cash paid for non-domestic rates in 1990–91 should not be penal. I shall wait and see because I know from experience that the valuations are, once again, likely to have gone bananas.

What of the alternatives? Today the hon. Member for Dagenham (Mr. Gould) failed to answer the question that I put to him, deliberately avoiding it and saying that he would discuss Scotland later. He did that because Labour's proposals for Scotland—the roof tax—have been clearly outlined. The hon. Member for Cunninghame, North (Mr. Wilson) keeps telling us that we will get the details long before 3 May, but we got part of the details today. Not only did the hon. Member for Dagenham not tell us about Labour's proposals for England and Wales; he failed to endorse the statement made by Labour in Scotland today, which is not surprising. He had probably been advised about the shambles in Scotland, where the only figure given was for a typical couple in an average house—it would have been £487 last year. Any inspection of this figure will show that, allowing for inflation, let alone anything else, it is complete nonsense relative to last year's rates. So much was made clear at the meeting.

As reported on the tapes, when questioned about other properties, the Labour party in Scotland could give no answers because it has not thought through or worked through the proposals. So the Leader of the Opposition tells the world that there is little support for a tax based on property values, while the shadow Secretary of State for the Environment fails to explain or endorse the statements made in Scotland. All this means that Labour is determined to use Scotland as a guinea pig. Add to that Labour's plans for the rural economy in Scotland and its hidden agenda, which includes rates on farmland, on woodland and on farm buildings, and the compulsory purchase of estates and holiday homes, and it becomes clear how exciting the prospects for Scotland are. Property values will plunge and firms will be run at a loss to avoid payment of non-domestic rates. And there is more to come.

I turn now to local income tax, which is the SNP's and Liberal Democrats' recipe for the top-up figure. I note that not a single representative of those parties is present in the Chamber. I have an admission to make: for two years I tried to make a local income tax work and I could not make it work in Scotland at that time because I did not live and work in the same place. For example, I live in Blairgowrie, I work in London and my tax office is in Cardiff. Not all tax offices are computerised so that they can swap information.

This was only one of the problems. Sparsity of population in Scotland was another. The latest figures published in column 1023 of the Official Report on 19 April clearly show what that means. A single person on Scottish average earnings would be required to pay in local income tax £812 in Angus and £828 in Perthshire. He would be required to pay £900 in Dundee. If such a tax were ever introduced, it would clear the highlands of Scotland in a way never achieved during the clearances.

I know that there are flaws and weaknesses in the Government's proposals, but I have spent most of my life in Parliament dealing with anomalies in the rates. It would be astonishing if we brought in a local government tax that did not contain anomalies. One of our jobs is to ensure that they are removed, and I have every confidence that Treasury Ministers will do just that.