Local Government Finance

Part of Opposition Day – in the House of Commons at 7:52 pm on 25th April 1990.

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Photo of Mr Den Dover Mr Den Dover , Chorley 7:52 pm, 25th April 1990

The community charge has my wholehearted support. The principle is accepted on the doorsteps in Lancashire, but we have to look carefully at the rules and regulations that apply to the charge. The first answer at Question Time today gave the impression that we are not considering any changes to the regulations. I hope that the Minister for Local Government and Inner Cities is following the debate and that he will look carefully at the rules and regulations before setting the rate of community charge for next year and the rules that apply to it. The main benefits of this debate are that it highlights the unfairnesses in the new tax and that we can make constructive proposals about what could or should be done.

We changed the taxation system this year so that women are taxed separately. I fully support that move. Therefore, why is it necessary to make husband and wife jointly and severally liable for the community charge? That does not make sense. Some people have said that it is related to housing benefit or social security payments, but when introducing a major tax such as this we should treat it as an individual charge and honour that treatment in all its terms. An unemployed wife who is taxed separately from her husband who may be earning £15,000 or £20,000 should receive the full 80 per cent. rebate. We sold this tax to voters as an individual charge on a person for the services from which he benefits, and we must honour that all the way through.

Second homes have been mentioned. I am delighted that the Government have given local authorities the flexibility to make a zero standard charge, a half charge, a full charge, a charge of one and a half times or twice the charge. A case similar to that which applies to one of my constituents has been mentioned. A teacher living away from my constituency and teaching down south pays the community charge there and has been levied twice the charge—£730—up north on a home that she is in for only a few weeks in the year. That makes no sense.

What system should apply if the husband and wife are to be treated separately and have a second home that they perhaps own? Can the woman opt to count one of them as hers, while the husband counts the other as his main home, in which case they would pay a single charge in each home? At it is, they pay two full charges for a main home and two charges—if the local authority chooses to levy the standard charge—for the second home. Under a separate charge system they could immediately have their community charge bill halved. That is open to abuse, but I raise it as a point of principle and I hope that the Government have thought it through.

The Government have said that the rebate system is generous. I admit that an 80 per cent. rebate is more generous than that which my hon. Friend the Member for Ealing, Acton (Sir G. Young) might employ. He might have people paying half the charge, the full charge or twice the charge, depending upon their highest rate of income tax. I am delighted that students will get the full 80 per cent. rebate. However, we must consider the low rates of income that enable one to qualify for that rebate. We must change the rules. A single person of 18, 20, 25 or 30 or more may earn perhaps £50 or £60 a week. That is not a high wage in today's economy, even in the north-west. I strongly recommend loosening the rules and regulations. There should be much more of a taper in the system.

The uniform business rate has been mentioned and the north-west will benefit most from that, which I welcome. Many businesses, and especially retailers, are small traders and there are many small country post offices. I have many such businesses in my constituency. They are paying, admittedly after revaluation, five or six times their original bill. The very large do-it-yourself stores such as B and Q pay a charge based on the depth of the store, while the small business or shop has only a small depth of property. District valuers should be asked to be more lenient to small businesses. We should treat the matter on a totally new basis. We could change the community charge, perhaps relating the residential charge to the uniform business rate on mixed premises. We should be able to examine the whole thing and see what is fair and reasonable in today's world.

Some 15 to 20 years ago, when the last revaluation took place, there were no large sheds housing do-it-yourself shops such as B and Q. Such shops give a very good service and excellent value for money, but the present system is to their benefit and to the disadvantage of the small business man who provides a local service in rural areas. I want to encourage such businesses, because without them rural communities will die.

What are we to do about local government finance? I have said that the community charge is fair, but how can we overcome the problem of a family of two adults and two children of, say, 18 or 20 years of age who have to pay four community charges? In the past, their rates bill may have been about £150 and they may now be asked for £1,500. That is not uncommon in my constituency. What can one say to such people? One can do more than tell them to claim the maximum rebate to which they are entitled.

There is much unfairness in the system. Chorley had a Conservative-controlled local authority—it is only a one-seat majority—and it spends exactly in line with the Government's guidelines, and all credit to it for that. However, the Labour-controlled Lancashire county council, which, again, has only a one-seat majority, has massively overspent. Its budget this year is so enormous that rates would have had to increase by 30 per cent. Instead of the standard community charge of £278, the charge in Chorley is £360, and the extra £80 is shown in each community charge form as being the result of the policies of the Labour-controlled Lancashire county council. Unfortunately, electors and voters do not read the forms carefully.

If we are to run United Kingdom Ltd. efficiently in a tight economy and difficult circumstances, we must find better means to control spending. In general, the Government's SSAs are accurate and fair. There are two years before the next general election and the Labour party has said that it will not tinker with the system immediately, so local authorities have three or four years to bring their spending down to a fair level. The SSAs take into account the needs and requirements of the population and its demography. We have had so many different systems that, by now, we should know what the spending levels should be.

We must change the rules and regulations. Rather than cut rate support grant to local authorities, the Government should have cushioned the blow and been generous. That would have ensured that the community charge was accepted as fair and reasonable, and there would have been wider support for it. We should have less tinkering to do now. We need to look carefully at how we change the system. I was interested to hear the genuine misgivings voiced by Labour Members, and Conservative Members share many of them. We want to see changes, and I am sure that the Government will get a strong message next Thursday which will ensure that in the next few years drastic changes will be made in the level of assessments and spending.