I beg to move,
That this House believes that the Government should take immediate action to bring help to hard-pressed poll tax payers this year and backdate it to the introduction of the poll tax in Scotland, and should seek to change the tax so that from next year it is directly related to each individual's ability to pay.
It would have been a tragedy had you not, Mr. Speaker.
I welcome the Minister for Local Government and Inner Cities to his first debate on this important topic. I have been engaged in debates on the subject for a long time, having represented the Social and Liberal Democrats when the Local Government Finance Bill went through the House and subsequently. I hope that the Minister will find it an interesting topic, though it will be a difficult one for him.
The Minister was appointed to his new post at a time when the local elections were a topic of immense debate among all parties. People were greatly influenced by the impact of the poll tax and believed that the Government were to blame for it. In the vast majority of cases, votes fell away from Conservative candidates, though not from all: it is interesting to note what happened in London.
In the post-election period, as we survey the wreckage, it is important to consider what the Government said immediately before the elections about the need for change, and what is happening. Certain Conservative Members, such as the right hon. Member for Henley (Mr. Heseltine), had a lot to say on the subject before the local elections. They are noticeable by their absence today. I hope that that is not a reflection of opinion within the Cabinet. We are told that a special Cabinet committee has been set up to consider what urgent amendments to the poll tax need to be made to bring order and fairness to a system which, only two months after coming into force, has proved itself to be unaccountable, unfair and inefficient. According to reports last week in The Times, in some areas as many as 50 per cent. of those liable have not yet paid any poll tax. That is a measure of the difficulties and problems that face the Government.
According to figures published by the Government and others, money has been transferred from those who could least afford it—the majority of the poor who have lost out—to the majority of the already rich who have gained from the imposition of the poll tax. However, when I spoke to people on their doorsteps during the local elections, I found that those who have gained are often the most embarrassed about the effects of the poll tax and that they do not support it. That is remarkable. I have heard Conservative Members say that that has also been their experience. It is unusual for a tax to cause embarrassment and to be rejected by those who have gained from its imposition.
The motion provides the House with an opportunity to consider the alternatives that may be put before the Cabinet committee and to debate them, rather than that a decision should be taken be the committee and sprung upon the House. The problems and drawbacks connected with some of the alternatives can now be aired.
The official Opposition are supposedly taking the lead in suggesting alternatives to the British public. It is therefore worth turning to the Labour party's alternative, or lack of it, to the poll tax.
I shall give way to the hon. Gentleman when I have dealt with the Labour party's alternative, or lack of it. He must first listen to what I have to say on the subject.
The Labour party's alternative has proved sketchy in the extreme. No figures and no details have been given. Throughout the local election campaign no facts were put forward by the Opposition. It is at least an improvement that they have now put forward some general ideas, which is more than they did throughout the entire proceedings on the Local Government Finance Bill in 1988.
I wanted to intervene on the matter that the hon. Gentleman raised a moment ago. He talked about substantial reductions in the rates paid by people in various parts of the country. Is he aware that the rates bill of thousands of households in Westminster, Kensington, Chelsea and central London has fallen from £2,000 or £3,000 last year to but a few hundred pounds and that it is not uncommon for their new poll tax bill to be only 10 or 20 per cent. of their rates last year? Is not that quite shocking?
It is certainly shocking. I have made the point that the poll tax transfers money from the already poor to the already rich.
The Labour party's lack of an alternative is a genuine cause for concern as the Cabinet committee would undoubtedly consider an alternative had the Labour party produced one but it did not. In the Evening Standard on 6 April, the hon. Member for Birmingham, Perry Barr (Mr. Rooker) mentioned a floor tax. We have heard about the possibility of a roof tax, which is seen as a modernised version of the rates, but it may be based on the cost of rebuilding houses and flats. In The Independent on 6 April the hon. Member for Dagenham (Mr. Gould) stated:
We are proposing a modernised version of the rating system, a locally based property tax in which the poundage will be set by the local authority in accordance with local property values, as with rates, but updated and made fairer by being related to ability to pay"—
but he does not tell us how. He also confirmed that Labour was considering basing the valuation on the square footage multiplied by regional rebuilding costs as an alternative to house prices.
Labour is still undecided about whether bills would apply to individuals or to households. All that is in addition to its rejection of its 1988 plans for a mixture of a local income tax system and a property system. Nobody could understand how that would work. It simply amounted to an attempt to impose two taxes where one would do.
Is not it the clearest demonstration of the Labour party's embarrassment at its inadequacy in producing an alternative that there are only nine hon. Members on the Labour Benches—the same number as are on the other Opposition Benches? The Labour party cannot produce the Members to put forward the alternatives.
I suspect that the Labour party prefers to stick with only nine different views rather than putting forward any more.
I am afraid that there is no consistency among Conservative Members either. I suspect that most Conservative Members take the view that some change needs to be introduced. I have scarcely heard a Conservative Member who has not argued that the poll tax needs amendment. Some argue rather more than others and I shall concentrate on those who have put forward the most interesting or the most widely publicised alternatives.
Certainly the most publicised alternative recently has been that put forward by the right hon. Member for Henley. He said:
most people in my party now agree that it"—
meaning the poll tax—
needs considerable modifications.
He outlined an extremely complicated set of amendments which few people believe to be practical. He argued for a fundamental reform of the local government system, including directly elected mayors and value-for-money audits. He suggested that local authorities would be free to set their own budgets, but that if those budgets exceeded a sum set by the Government they should immediately be subject to election. One wonders what would happen immediately following an election putting a local authority in power and it subsequently set a budget on the basis of that election. Would it go straight into another election? If the same council or one even more likely to exceed the Government's calculation of the need to spend is elected, does that solve the problem? I suspect that the Treasury would not feel that that was adequate simply because the electorate had put a high-spending council back in power. What action does the right hon. Member for Henley suggest should be taken when the electorate casts votes one way, but the council that is elected does not reflect the majority opinion in the council chamber as a result of the electoral system?
More interestingly, the right hon. Gentleman also proposes specific changes to the poll tax itself. He makes suggestions about the transitional arrangements. Our motion refers to "immediate" short-term help to those in desperate need. The right hon. Member for Henley says that there should be no withdrawal of safety net support next year. He says that the transitional relief scheme must be improved and expanded, and calculated with greater reference to actual charges, not notional figures of assumed spending. I entirely support his comment that the Government's standard spending assessments must reflect reality in a wider range of authorities. We were told by Ministers when the SSAs were first developed that they were intended to simplify and make visible the local government support system, and to get away from the complications of the old rate support grant. We were told that, under that system, one fed in figures and got them out until the computer came up with a set acceptable to the Government, and that no one knew how the figures were generated. The standard spending assessment has not achieved its aim, as the right hon. Member for Henley was right to point out.
The most crucial element of the right hon. Gentleman's argument—and several other important Conservative Members have put the same argument—is for a form of banding and for a move towards a system that pays some attention to ability to pay above the very basic level of those who are entitled to rebates under the present system. The right hon. Member for Henley says:
Banding upwards can in practice, in the short term, only be based on income. There are no insurmountable obstacles, although there will be crudities and criticisms … The Government should instruct its civil servants to work up proposals based on the assumption that everyone will pay something, but that the significantly better off, by which I mean top rate taxpayers, will contribute more.
Is the right hon. Gentleman suggesting that that is a long-term or a short-term solution? He says that a banding system should be used only in the short term. If it is not his long-term solution, what is?
The fundamental problem with a banding system is, by definition, that it goes up in jumps. It is far closer to our proposals for a local income tax system than the Government's proposals, but it would go up in jumps in the same way as the national insurance scheme. If one is unfortunate enough to cross the barrier between one level of income and another, a pay increase will make one worse off. That is the inherent problem of a banding system.
A banding system is only roughly related to ability to pay because no attention is paid to the variation in income within each band. The right hon. Member for Henley seems blissfully unaware of those problems, or perhaps he simply dismisses them as "crudities" and "criticisms". If the right hon. Gentleman believes that a system should be tied to the ability to pay, why does not he simply adopt a policy for a local income tax system, which is the logical extension of that position?
I am sure that the hon. Member for Truro (Mr. Taylor) will never hesitate to bow to the experience of my right hon. Friend the Member for Henley (Mr. Heseltine). We accept the hon. Gentleman's expertise in the matter. Will he tell the House therefore, when he is considering the available alternatives, where his party stands on unitary local government and where it stands on the ability of the electorate to get its hands on county councils through the introduction of a third rotating annual election? Those matters are crucial for my constituents in Shrewsbury, who have been handled in a most duplicitous way by his party's supporters. They want to know where the parliamentary Liberal party stands because they have been unable to find out where the local Liberal party stands.
We are about to publish a document that will answer the hon. Gentleman's question about local government tiers, and I recommend that he reads it. There is only one way of making local authorities accountable, and that is proportional representation. In numerous areas, although the majority of people voted for one party, another party is running the local authority, and while that remains the case, no one can argue that there is genuine accountability, because the wishes of the people are not being reflected in the way in which the local authority is constituted.
I think that the hon. Gentleman will accept that that is not the case in Cornwall, which is his county and mine. In effect, the Liberal Democrats are the leading party on the county council. Does he really think that the Liberal Democrats were accurately reflecting the wishes of the people in Cornwall when they increased their budget by more than 18 per cent., with all the consequences that that brought for the charge payers of Cornwall?
The hon. Gentleman knows very well that we have one of the lowest poll tax rates in the country—substantially lower than in neighbouring Conservative-controlled Plymouth and Devon. Moreover, it is pretty rich for the hon. Gentleman, who only a few days ago shared a platform with me and argued that we needed to spend more on our local schools, to press for cuts in the local authority's budget, which would have meant school closures in our area. The hon. Gentleman knows that I would love to have a debate on Cornwall, but now is not the time for it.
Two Other Conservative Members have argued for banding.
I want to make progress, if I may. The hon. Member for Hampshire, East (Mr. Mates) tabled the amendment which almost succeeded in introducing a banding system when the poll tax arrangements were originally debated. He said:
To tinker at the margins will only make a bad situation worse.
I agree with him. The hon. Member for Ealing, Acton (Sir G. Young), who is in his place at the moment, said:
If one believes the concept is structurally flawed, as I do tinkering does not tackle the problem. The basic problem is that it is not a charge for services at all; it is a tax.
I agree with him, too.
Both hon. Members have argued for a graduated or banded tax.
I will give way to the hon. Lady when I have finished my point.
The hon. Member for Acton is present. Why does he argue for a banding system, which would create poverty traps and all the difficulties that we now have at the low end of the national insurance scale, when we have the opportunity to introduce a local tax system? I heard what the hon. Gentleman said in an interview on the radio this morning, in which I was also involved. He suggested that there would be no accountability because a local income tax would be levied through the tax system. But under the system that we propose, at the end of the year every local income tax payer will either receive a rebate, if he lives in a low-spending area or pay the difference, if he lives in a high-spending area. Few things are more likely to make a local authority accountable than a system that resulted in a local income tax payer in one area receiving a bill while his next-door neighbour in another received a rebate.
Does the hon. Gentleman agree that sheer bureaucracy adds much to the costs of extravagant councils such as Lancashire county council? Is he aware that, although Hampshire county council has 125,000 more people in its area, it manages to run it with 10,000 fewer staff? Does not that highlight the appalling burden on the people of Lancashire, whose Labour-controlled county council has increased its expenditure by 176 per cent. since 1981? This year alone, the council has increased its budget by £123 million, or £81 per inhabitant.
The hon. Lady pleads a special case, and I do not want to comment in detail on that part of the country. However, she should consider the needs of those areas and the services that are provided. She should also consider the support among the public for what is happening there. She must remember that the cost of introducing and administering the poll tax, including the tens of thousands of people required to implement it, amounts to between £650 million and £750 million.
I want to consider the options available under the Government's review of the poll tax. The Government have canvassed the possibility of increasing central Government's grants to local authorities. However, an extra £1 billion would save each adult only £28. It would also miss those people most in need of help. It is hard to believe that the Government will follow that route. The cost of making that option effective on any scale would put the Government off.
The Government could also consider transferring the control and financing of the police, education and fire services. However, that would have a knock-on impact on income tax levels nationally. It would also centralise education, which is a service that most hon. Members believe should remain at the discretion of local authorities and be able to respond to local needs.
The Government could also improve the transitional relief scheme which is currently very limited in its application. If that relief were extended now and retrospectively in Scotland, it would target money more effectively than increased grants. When the Government announced the transitional relief scheme, they said that no one would be more than £3 a week worse off. That has not happened because local authorities have not been able to set poll tax levels at the level that the Government argued that they should. If the Government are to respond to the needs of the most hard up, they should consider extending transitional relief. They could also extend it to all adults.
The Government have also considered improving the benefits system which targets money, although less efficiently. Under that option, the minimum poll tax payable could be reduced from 20 per cent. to 10 per cent. However, the problem is that all those options simply tinker at the margins and do not tackle the fundamental problem, as the hon. Member for Acton has said.
I do not want to apologise for the standard spending assessment system of which I have been critical in my constituency, particularly with regard to its impact in the shire counties. I am sure that Cornwall and Somerset have similar problems with the SSA system. However, will the hon. Member for Truro (Mr. Taylor) acknowledge that both the noble Lord who initially made the statement in another place and my right hon. Friend who is now the Secretary of State for Wales, but who previously had responsibility for the community charge, made it clear that the £3 a week limit extended only in so far as local authorities spent in terms of the somewhat fictitious SSA limits?
The problem is that, when the public heard the announcement, they did not see the fine details. That was inevitable. Whether intentionally or otherwise, they were grossly misled and that is one reason why hon. Members have been attacked by the public, who have said that they thought that they would be protected. The public did not understand what was happening. Moreover, as the hon. Member for Taunton (Mr. Nicholson) said, the SSAs are fictitious and very few of us believe that they amount to anything more than that.
The Government could also relate the poll tax to income in some form, perhaps through a banding system. However, I have already explained why I believe that that option would not be effective.
The motion that the hon. Member for Truro (Mr. Taylor) moved asks the House to relate the poll tax to ability to pay from next year. He must know that in no way could the kind of system that he advocates be introduced next year. However, it is possible to move away from the present system, with the flat rate, to a banded rate from next year. Whatever the arguments against the scheme put by the hon. Member for Truro—and there are powerful ones—there are strong arguments in terms of realism for accepting the present position and changing that instead of trying to turn the whole system upside down and starting again with the hon. Gentleman's proposal. We can overcome the objections to which the hon. Gentleman referred by having more than three bands to remove the discontinuities in the system.
The more bands there are, the closer we get to a local income tax system. However, as we move from one band to the next there is a problem in that people end up worse off. That may be to a lesser degree, but that problem remains. Nevertheless if the hon. Member for Acton is right and a local income tax system could not be in place for next year, the Government should consider that option. However, our advice is that setting aside the legislative process—of course, in Scotland with the UBR it was done extremely quickly—the introduction of local income tax and providing absolutely accurate income figures district by district would take only about six months. The process is not as long as the Government have claimed.
The final alternative canvassed by the Government is the capping of most or all authorities. On average, 1 per cent. of local spending would reduce the charge by 3 or 4 per cent. To reduce the total poll tax bill to the £10 billion suggested would require cash cuts of about 7 per cent. in local budgets in 1990. Cuts in real terms are nearer 15 per cent. Such capping would be a disaster for local services and would take away the very principle that local government exists to defend—local flexibility—and would be a grotesque centralisation of power.
I have referred to several matters that we could introduce in the short term. I was interested in the point raised by the hon. Member for Acton, but let me now tackle the local income tax system and the specific criticisms that have been made about it. I do not wish to go into great detail, but I shall refer to the four or five criticisms that have commonly been made and say why I believe that they are based on a fiction of what a local income tax system would be.
I assume that a local income tax system would be based on a person's income or ability to pay, just as the national income tax system is. If the hon. Gentleman does not believe in equalisation rates, how do we come to terms with the problems of an area such as mine where there is low earning and high unemployment? A local income tax system without equalisation rates would be disastrous.
My answer is very simple. As with the present poll tax system or the old rates system, we would have a central Government grant system that would be specifically tailored to a local income tax system, the major element of which would be to ensure that we levied the same levels of income tax to provide the same levels of service in different areas. In other words, we would take account of income levels in each district. That is what our figures are based on. The calculation could be refined further by an expanded Inland Revenue survey of 500,000 individuals to make sure that the basis was accurate. That is not difficult to do and it is similar to the present grant support system.
After allowances. The basis of the local income tax system that we propose—it is not the one that the Government talk about, which comes as no surprise, because ours makes more sense—is that we would set a local income tax rate to provide services. Under our system, the range is between 3 and 8 per cent., and the average is 4·7 per cent. across the nation. We would then levy nationally a standard local income tax of 5 per cent., the nearest full figure to the average. That would be collected through the existing PAYE taxation structure with no local variation at all. It would simply be collected at the national rate. At the end of the year, on the basis of the tax paid and the relevant local area details that are already held by the Inland Revenue—people would receive a letter saying, "You live in an area that has a higher than average income tax, and this is the amount that you owe," or, "You live in an area with a lower amount, and here is your rebate cheque." That is the basis of the system.
Is not there a flaw in that? I did not realise that there might be a flaw of this nature. The flaw is that one is taxing income after one has been able to use all one's allowances on the great number of Government schemes that have been introduced, such as small business investment or whatever, after those tax allowances have been taken into account. Is there a danger that, in effect, people might fix their income after tax by way of using all those mechanisms to reduce their ability to pay local income tax to local authorities?
That is a criticism of the income tax system and the allowances that operate under it, and it applies equally to national and local income tax. It is for the Government to decide the allowances, and a Government run by the hon. Gentleman would set different allowances from a Government run by Conservative Members or by me.
It is said that our system would drive people out of the inner cities. That is not a relevant criticism because the grant support system would ensure that it did not happen. It is said that the administration costs would be unduly high. We would use the existing Inland Revenue structure and save the £750 million that is involved in the bureaucracy of the poll tax, and in the process get rid of all the bureaucrats involved. The extras needed for the Inland Revenue would be small because the basic structure already exists.
Sweden and Canada already operate such combined systems. The collection costs in terms of the tax take are 30 per cent. in one case and 50 per cent. in the other—lower than the costs in this country because of the introduction into the system of an incentive for individuals to make their own tax returns.
I will tackle some of the likely questions that hon. Members may have, and then give way if they still wish to intervene.
It is said that the system of collection would be complex. But our proposed method is already being used simply and cheaply in many countries. Moreover, it is also already being used simply and cheaply in this country for national income tax, so that a new complex system would not need to be introduced.
It is claimed that local income tax would be difficult to enforce. Those who are introducing the poll tax can hardly argue along those lines because they have allowed for much higher default rates than occurred under the old rating system, for example, and we are experiencing the much higher default rates that are occurring in Scotland.
I have listened with interest to the hon. Gentleman's argument thus far, but two points arise. First, he has not addressed his remarks to anything concerned with the efficiency of local government. In Lancashire, for example, we identify the fact that the community charge would be £60 a head lower if the local authority had pursued a prudent and efficient budget. What pressures would the hon. Gentleman's party bring to bear on a local authority to improve its efficiency?
Secondly, the hon. Gentleman says that under his system people would get a supplementary bill if a council overspent. How could somebody plan a domestic budget with such an open-ended commitment to spend? Let us remember that some Labour authorities love to spend public money.
People will not receive a supplementary bill if a local authority overspends. The amount is taken from the local income tax rates, so people know the amount in advance, because they know at what rate the local income tax has been set. If one is paying 5 per cent. and the local income tax rate is 5·3 per cent., one will have to pay that 0·3 per cent. of taxable income at the end of the year, a bill which for most people will not be nearly as significant as the poll tax bill.
An example of that is that in the Minister's constituency of Enfield, Southgate the average household is currently being asked to pay a poll tax bill of £658. Under our system of local income tax, which has been fully set out, that same household with average income would pay in total £356. In Southampton, ltchen, an average household poll tax bill of £614 would become a local income tax bill of £303.
Those figures show the advantages that would accrue to people, although some would, of course, pay more. Hon. Members would pay more and the Minister would pay a lot more, but he can afford to pay. Judging from the smile on his face, he, too, thinks that he can afford it. That is the nature of a system which is based on ability to pay. We ask for less from those who can afford less and more from those who can afford more. We retain local accountability through end-of-year adjustments, as I have explained, and at a stroke we get rid of the bureaucracy of the system that has been introduced by the poll tax.
I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
'believes that most adults should contribute towards the cost of local services with relief for the less well off; welcomes the embodiment of those principles in the community charge and notes in particular that 10 million people have received bibs reduced by rebates whilst 7·5 million have been protected by transitional relief; welcomes the willingness of the Government to listen to constructive suggestions for further improving the new arrangements; and contrasts the fairness and clarity of the community charge with the injustice and impracticability of a local income tax favoured by the Social and Liberal Democrats and the total lack of any clear proposals from the Labour Party.'.
I begin by saying a warm "thank you" to the hon. Member for Truro (Mr. Taylor), both for his kind words of welcome and introduction and for what I thought was a thoroughly entertaining speech. I also thank the hon. Member for Sheffield, Brightside (Mr. Blunkett) for writing to me to welcome me to this new subject.
The title of this debate, chosen by the Social and Liberal Democratic party, invites the House to consider amendments to, and alternatives to, the community charge. I am glad to do both. I intend to demonstrate that the community charge is the best of the options for raising that part of local authority funding that should be raised locally. Moreover, the House will know that the Government are considering whether any amendments to the operation of the charge should be made to improve its working.
I should like today to take the House through the options for raising local authority finance. Our discussion must begin with the rates. Labour is supposedly against the rates. The SLD describes them in an early-day motion as an "injustice"; I thoroughly agree—and we have abolished them.
Perhaps on a subject where we are unanimous I need not dwell too long, except to make a couple of points. First, the rates were grossly unfair. I make that point because it may help us to colour our view of the fairness. of the community charge. Secondly, the unfairness of the rates derived mainly from the fact that property values are no proxy for wealth or income and any system based on property will repeat the injustice of the domestic rates.
Many of us, especially those of us from the north of England, remember my hon. Friend's success in saving the Settle-Carlisle line, so we take an optimistic view of his new appointment. One reason that hon. Members such as myself, who represent constituencies in the north-west, are particularly unhappy about the present community charge is the gap between the amount that a household may pay collectively under the community charge, despite transitional relief and the safety net, and the very low rates that we have paid historically. I hope that my hon. Friend will consider that aspect, during his speech, but especially during the review.
I intended to continue by telling my hon. Friend that we shall, of course, listen to suggestions that are made to us. Indeed, I have been listening to suggestions already. My hon. Friend well knows that part of the problem in Pendle, which has a community charge of about £299, is that Lancashire increased its spending by 20 per cent. and Pendle increased its income by 22·8 per cent. I know that my hon. Friend understands that, and recognises that it has added to the problems that his area faces.
When he is considering amendments to the community charge, will my hon. Friend bear in mind the fact that it is absolutely no good giving more money to extravagant councils such as Lancashire county council? Does he accept that any money that is dispersed must go direct to the charge payers, such as pensioner wives or the mothers of young children, so that they get the benefit because, if it is not, those bandits in county hall in Preston will simply swallow the loot and will not give any abatements whatsoever in community charge? The benefit must go directly to the charge payers.
I understand my hon. Friend's point. As she has said, Iancashire has increased its spending by about 20 per cent. My hon. Friend knows that Lancaster has increased its income by nearly 28 per cent. by comparison, the other council with which my hon. Friend deals, Wyre, which is under Conservative control, has been more moderate in its increase, which was just under 14 per cent.
Should we not be fair and put the figures in the proper perspective? The Minister has referred to Lancashire and to the increases there. If the standard spending assessment for Derbyshire had been calculated on the same basis as that for Westminster, we would not have had any poll tax in Derbyshire; we would have handed out £309 to every single poll tax payer. We would not have been collecting money. Because of the different political complexion in Derbyshire, our poll tax is much higher than Westminster's. Let us all have the same calculation as the one that resulted in the bribery at Westminster and Wandsworth; then there will be no complaints.
I do not know what the hon. Gentleman is referring to. The standing spending assessments were worked out on the same basis throughout the country, and, as he will know, in Bolsover the SSA is nearly 15 per cent. higher than the grant-related expenditure figure under the old system. The increase in income in Derbyshire is 19·5 per cent., while Bolsover has increased its income by 17·3 per cent. That is what has made the difference.
Is not the point that, in local government, as in national government, the Labour party is always highly profligate with public money? The rates in Ealing in 1987 increased by 65 per cent.—
It was spent on, for instance, homosexual activities and parties for lesbians. Certainly no letters to the town hall were answered. While the rates and the community charge have increased in Ealing under Labour—[Interruption.] Labour Members may shout, but, despite those increases, efficiency went down, the streets were not properly swept, expenditure on education was reduced and people had a disgraceful deal. They always do from Labour.
My hon. Friend makes his point extremely well. The latest increase in income in Ealing appears almost moderate in comparison, at some 14·5 per cent. My hon. Friend does well to point out that that increase was on top of the horrendous increase in the previous year's rates, which resulted in a community charge in Ealing of £435. My hon. Friend will be satisfied that those who were responsible for those increases have received their come-uppance.
My hon. Friend the Minister made his reputation in the Department of Health and Social Security by targeting public assistance on those most in need. Many people in low-spending areas such as the one that I represent, who are just above the line of eligibility for rebates but by no stretch of the imagination well off, now have substantial difficulty in paying their community charge because of low rateable values leading to their previous light contributions. Surely that has major implications for transitional relief, and for next year's rebate. Can we look to the Minister to help those people, who are finding it difficult to make ends meet?
I assure my hon. Friend that I shall weigh carefully what he has said. I shall continue to listen to him, and to other hon. Members who intervene. He referred to targeting. I ask him to go to his local authority and target this point on it: at present his local charge payers are contributing £44 a year each to the safety net. It would be excellent if that money could be used to bring the community charge down next year, which would greatly help all Chichester's community charge payers.
The Minister should ignore the blandishments of his hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman), who is the only hon. Member for Lancashire who publicly advocates cuts in public services in her constituency, and stands condemned throughout the community for so doing.
I have done some work on the question of the Westminster settlement. Why was that settlement inflated by a substantial amount of money for flood relief? Is not the calculation on enhanced population for Westminster grossly inflating its central Government grant? Would not an inquiry reveal that the Westminster settlement was nothing but a fix to get Lady Porter out of a corner?
The criteria used for flood relief works were applied nationally. It is true that, in the first year, the criteria are particularly helpful to Westminster. They will not be particularly helpful to Westminster in the second year. The criteria were given to us by local authority associations and certainly were not skewed to any particular authority. That still leaves the hon. Gentleman with a great deal of explaining to do about why other Conservative authorities that did not have the benefit of flood damage relief, such as Wandsworth, set such low community charges and are so commended for their good management.
It is time that the Labour lie was nailed. It is undeniable that both Wandsworth and Westminster received substantially less external aggregate grant than any other inner-London borough. The net result was that an authority such as Lambeth, which is Labour-controlled, and which received grant of £324 a head more than Wandsworth, set a community charge of £350 more than Wandsworth.
My hon. Friend is right that Wandsworth and Westminster were towards the bottom of the list of the amount received from Government by inner-London boroughs. That is a perfectly valid point and I am glad that my hon. Friend has made it.
The Minister knows that I have respect for him. I ask him to think of a new way of calculating standard spending assessments. Could he not suggest that, instead of the Government coming up with the formula—which would be open to the allegation of fixing, whoever was in government—they could offer the local authorities the chance to agree it? If they can agree on a formula, that should be the one by which grant is given to local authorities. If they cannot agree, the Government will, as always, have to make the decision. Would that not be a fairer system, less open to allegations that the Government had distorted the figures?
The method that the hon. Gentleman suggests is that which we attempt to use. We get together with all the local authority associations and try to agree the criteria with them. The hon. Gentleman will recognise that different local authorities have different views. Even the local authority associations, which represent different sorts of local authorities, have different views. We do our best to agree on the criteria. I am listening to representations made to me about standard spending assessments that seem to fall short of expectations or perceived reality in some way.
The problem with the rates was that 40 per cent. of those in properties above average rateable value had incomes below the average. A person on low income could, and often did, pay more to the local authority than other people on higher incomes in the same area. Under community charge, that simply cannot happen.
Furthermore, the rates were paid by only half the adult population and that half was selected arbitrarily—so arbitrarily that it consisted largely of widows and pensioners, but excluded many wage and salary earners. It was therefore possible for some local authorities to follow expensive, and expansive, policies knowing that they would be paid for by that ill-chosen minority of the population.
The second major option for local government funding which I ask the House to consider is the community charge, with any amendments which the Government may propose. The basic principle of the community charge is that nearly every adult should contribute to the costs of local services. As the charge has settled down in Scotland and is settling down in England and Wales, I believe that that basic principle that everyone should contribute is well accepted. We do not seek that the charge payer carry all the costs of the local services provided. In principle, we look to the charge payer in England, for example, to contribute only about a quarter on average. The balance comes from revenue support grants, the uniform business rate and the £2·75 billion worth of community charge rebate, transitional relief and income support payments, all funded from central Government. So businesses and national taxpayers meet three quarters of the cost. That is the measure of the subsidy from the common pot to the individual.
Does the Minister accept that the tax has settled down in Scotland to be a costly, ineffective, bureaucratic mess which is hated by the population and not paid by almost I million Scots? If he is worried about the burden of extra costs on poll tax payers, should he not worry about the burden of the poll tax itself? In Scotland last year, there were about 2 million changes in the register in one year alone. That is a foretaste of what is to come in England. In London, annually updating the register will be a bureaucratic mess. That puts extra unnecessary costs on poll tax payers.
Yes, for last year—is comparable with the number of people who paid rates. Collecting the rates was no easy matter either in Scotland. The extra burden of expenditure for collecting the community charge is well worth it, as we have achieved a fairer and more widespread system.
First, will the Minister clarify the statistics that he just gave on the amount of local authority spending met from the poll tax? He said that it was a quarter. The figures that I have been given in written answers show that it is almost a third. Secondly, he said that three quarters of the spending is funded from central Government, but he has included the aggregate external funding, which is part of the uniform business rate.
My response to the hon. Gentleman's second point is explicit in what I said. On his first point, I said that we sought that the charge payer should contribute a quarter. I recognise that, with the overspending which has occurred among local authorities and which has raised community charges, the percentage is a little higher than the Government looked to raise from the community charge payer.
We have often made the point that the citizen who pays income tax and full community charge can pay many times more towards local authority spending than his neighbour on maximum rebate for the community charge who pays no income tax. We have repeated that a household in the top 10 per cent. of income will pay 15 times as much as a household in the bottom 10 per cent. of income.
I am sorry that my hon. Friend the Member for Surrey, North-West (Mr. Grylls) is not in his place today. He suggested a most fruitful and graphic way of illustrating my point in an article published recently in the Daily Mail. In the article, he showed what various typical people in our society would contribute to local government finance, on the assumption that part of income tax is used to finance the local authorities.
Of course, the figures cannot be exact. However, I have no reason to believe that they are far from the truth. My hon. Friend found that the student paying a 20 per cent. contribution would pay £57·20 if the full charge were £278. The gasman earning £12,000 would contribute nearly £1,000 in tax and community charge. The airline pilot on £50,000 salary would pay in about £3,250. The barrister on £100,000 would pay more than £7,500. The advertising agency chief on £200,000 would contribute more than £15,500.
The Minister knows that this is a good debating point. Is it not equally the case that local government central support grant comes out of VAT and Customs and Excise payments? In that case, the figures would show that those on the lowest incomes paid rather more than they appeared to pay under the poll tax.
My hon. Friend the Member for Surrey, North-West made an allowance for the proportion of Government revenue represented by income tax. He included only those figures. If he went on to include VAT, on the assumption that people who are better off buy more goods, the proportion that came from the better-off would tend to rise. Certainly the absolute cash sums would tend to rise. That would support my point, rather than the hon. Gentleman's.
I firmly believe that the community charge fulfils the widely recognised need for a system in which nearly everyone contributes. With its rebate system, which is much more generous than the predecessor which applied to rates, it provides for 10 million people on the lowest incomes. With transitional relief, it softens the change for 7·5 million people. With the contributions from the taxpayer and non-domestic rates, providing a large subsidy to the community charge payer out of the national graduated tax systems, I believe that we have a system which is soundly based.
The Minister has had a great deal of advance publicity about being a whiz kid. Can he explain how a 20 per cent. minimum payment of the community charge can be more generous than a 100 per cent. rebate on the rates that some people once got? That was the scheme previous to the scheme introduced by the Minister's predecessors, which allowed for a 20 per cent. minimum rebate on the rates. Why is an 80 per cent. rebate more generous than a 100 per cent. rebate?
On a point of order, Madam Deputy Speaker. Earlier in the debate, I asked Mr. Speaker about speakers from the Front Bench. I know that Opposition Members are extremely flexible, but how can an expert in foreign affairs who speaks from the Opposition Front Bench suddenly become an expert on local government finance when sitting on the Back Benches?
Some time ago, we changed the maximum rebate on rates from 100 per cent. to 80 per cent., as we rightly recognised that everyone should make a contribution to local authority finance. At the same time, we made a contribution to the income support system—from memory, an extra £500,000 went into the income support system—to cover the average 20 per cent. of rates.
The community charge will succeed too in its aim of establishing local accountability. That has already happened, mainly in those places where there are unitary authorities, where the councils faced elections and where Conservatives offered a low community charge to their electorate. Such local accountability was also established in one area, where the SLD offered a reasonable community charge to its electors in Tower Hamlets.
Local accountability has moderated community charge increases in the second year in Scotland. As the workings of the charge are better understood, it will bring improved accountability everywhere. Next year in England and Wales, with none of the distractions that we have had this year in changing the system, the electors will know that the level of community charge imposed by their local authorities is down to those local authorities alone.
As the Minister is talking about the electorate, he should consider my area. The council stands for election every year, so it is accountable. Every councillor attends his surgery each Saturday and is therefore accountable. That council ran its election campaign against the poll tax and poll tax capping—and it won 22 seats out of 22.
Because the authority of which the hon. Gentleman speaks is subject to a capping proposal, I must be careful about making any comment about it. The hon. Gentleman and the council have had the opportunity to make representations to us about that proposal and I am glad that they did so. When the people voted, they knew about the proposal to impose a cap on the authority. One simply cannot know what effect that had on the electors.
It takes a lot more than the hon. Gentleman to upset me. We ran the council election campaign against poll tax capping and we won 22 seats out of 22. Such is the effect of poll tax capping.
I enjoyed my opportunity of discussing this subject with the hon. Gentleman when he visited me, but I do not want to be drawn further into a debate about an authority for which a capping proposal has been made.
The introduction of the community charge, the uniform business rate, the standard spending assessments, the transitional reliefs and the entire new structure represents a major new change—a change from something that all parties in the House argued was wrong, but which only the Government have been willing to put right. I am not surprised that in such a major upheaval there are many who think that there are things that need to be adjusted and put right. I have listened to what my hon. Friends, as well as those in local government, have said about that. I shall listen again today, and in doing so I shall attempt to distinguish between those points that are just a symptom of change, which can and should sort themselves out, and those points which represent genuine anomalies. I thank my hon. Friends for their help in that process.
The third option for local authority finance is not to pay the community charge, and to break the law. That policy is espoused by 28 hon. Members in the Labour party. How legislators in a democracy can advocate breaking the law is beyond my comprehension. I understand one thing, however: non-payment by some will mean higher payments by others Those who do not pay will often not be the poorest, and those who must pay more will often not be the richest. If there is any concern about justice, that cause will not be advanced by non-payment, because non-payment is the biggest injustice of them all. When the hon. Member for Sheffield, Brightside (Mr. Blunkett) comes to speak for the Labour party, I would appreciate it if he set out his party"s attitude to non-payment, to those non-paying Members of Parliament and to those hon. Members who attend rallies organised by the Anti-Poll Tax Federation.
The fourth option for local government finance is the roof tax. The House and the country are waiting upon Labour's alternatives to the community charge. Before the hon. Member for Brightside gets up to tell me that it is a modern property tax related to the ability to pay or whatever other sugar-coated, all-things-to-all-men phrase is currently in vogue, what we are looking for today from him is detail. I do not mean complicated details, but simple ones such as who is meant to pay it.
The last time that that question was posed to the hon. Member for Dagenham (Mr. Gould), he replied enigmatically that that would be a matter of "maximum choice". Suppose the hon. Gentleman and I went out to dinner, the bill arrived and we tried to decide who would pay it. If that was left to a matter of maximum choice, we would be there all night trying to decide who would pay. [Interruption.]
Order. The wording used by the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) is unacceptable to me, and I am sure that he will rephrase his remark.
Someone who gets elected as a Labour Member of Parliament, who then leaves the Labour party and refuses to allow a by-election is here under false pretences, and "traitor" seems to be a perfect description. Because of my respect for you, Madam Deputy Speaker, I shall certainly withdraw that remark, but I know you understand what I mean.
When the hon. Member for Brightside speaks, I hope that he will tell us about the Labour party's proposal for the roof tax. Will he explain how it will be related to ability to pay? What is the Labour party's way out of the obvious pitfalls such as the burden that will fall on pensioner widows, the effect of home improvements or the simple fact that the value of a person's home is a wholly unreliable indicator of the owner's means?
In Scotland in the non-domestic sector, the Government have drawn up a scheme to give some relief on revaluation. However, when it comes to improving property in the non-domestic sector, whoever owns the business will have to pay the full amount of the new rate imposed as a result of those improvements. What is the difference? I do not understand why the Minister has made a difference between the new rates in the non-domestic sector and the old rating system in the domestic sector.
Order. I think that Mr. Speaker dealt with all that earlier. We should be able to continue the debate now. The hon. Member for Dunfermline, West (Mr. Douglas) is being disruptive, and unnecessarily so.
Further to that point of order, Madam: Deputy Speaker. It is well and clearly defined: we have institutionalised opposition. What I ask you to do—perhaps after further consultation with Mr. Speaker—is to get as clearly defined as it is for the Government who may speak from the Opposition Front Bench. Already we have had, from the Back Benches, interventions from an expert on foreign affairs, a Scottish Opposition Front-Bench spokesman. May the matter be cleared up for the benefit of those of us who are eternal Back Benchers?
I do not want to delay the House much longer. If the hon. Member for Brightside cannot deal today with the matter that I have put to him, it may appear in the policy document which the Labour party is to produce later this week. Unfortunately, the rumours suggest that it will not be in the policy document. If it is not, we shall consider ourselves swindled out of an explanation to which we feel entitled.
In reply to the point made by the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes), the great unfairness about a roof tax is that a person whose means do not change at all could find that the value of his or her property suddenly rises because the area around it goes up in value; perhaps it becomes yuppified. That is a wholly different position from a business seeking to invest in its own premises and improving the premises thereby.
The fifth option for local government finance is the local income tax put forward by the SLD. I congratulate the party on putting it forward consistently but not on the proposal itself. I do not know how the hon. Member for Truro can explain the fairness of a system which would allow one third of the adult population to make no contribution at all. The burden of the contribution that millions of people would otherwise make would have to fall on the unlucky two thirds.
Not only has the SLD come up with a policy; it has also come up with figures. Unfortunately, those figures are badly flawed. They have to be flawed in order to support the fantasy contention that most people would be better off under a local income tax than under the community charge. Anyone who looks carefully at the SLD figures will see the basic flaw. The amounts of money that the SLD seeks to raise are a year out of date. They are based on the 1989–90 figures. Since then, local authorities have chosen to increase their spending by £4·5 billion; therefore, the figures considerably underestimate what would need to be raised.
The SLD's figures have been set to raise just £7·2 billion in England, whereas councils in England this year are raising £10-·4 billion from community charge payers, after allowing for the contribution from central Government via benefit and transitional relief.
As it happens,we have set out the correct figures in an answer to my hon. Friend the Member for Fylde (Mr. Jack). They show that a person in Yeovil on average male earnings would pay a local income tax bill of £955 compared with a community charge of £363; that is over two and a half times as much. Even a single person on £5,000 of taxable income, which I think most of us would agree is not excessive, would pay more in local income tax than in community charge in Yeovil.
In Truro, the story is similar. A person on national average male earnings would pay £888, which is two and three quarter times the current community charge. A person on £5,000 of taxable income—say, a farm worker—would still have to pay more if his own Member of Parliament got his way. It is at the level of average earnings and above that the local income tax really begins to do its damage. The author of the original SLD proposals admitted that couples with a joint income of £12,000 or above would be worse off under local income tax than with the community charge.
I do not want to detain the House too long on a local income tax, but I should like to address one point raised by the hon. Member—namely the cost of administration.
He used a figure of £750 million for the community charge. I do not recognise that figure. The correct amount is nearer £400 million; £750 million would be right for collecting a local income tax. The Inland Revenue has estimated that it would take 55,000 more staff to administer it. As my hon. Friend the Member for Fylde said very accurately, the great problem with a local income tax, like a roof tax, is that it would do nothing to increase local authority accountability, the absolutely vital point which we have addressed in bringing in the community charge.
In considering what improvements we can make to the community charge, we will not dilute its effect on local accountability. To do so would not be an improvement. It would be bad for the national economy, for local government and, above all, for the people who had to pay the bill. None of the alternatives that I have mentioned—not rates, not a roof tax, not a local income tax—can match the community charge in fairness, simplicity or accountability. I urge the House to reject the motion and to support the Government amendment.
I repeat my welcome to the Minister on inheriting a bed of nails. All his predecessors have been promoted, one of them out of what we might describe as mad cow disease into mad cow disease in terms of what he has inherited. I apologise to the House because I shall have to leave shortly and return later in the debate.
There is no doubt that the issue of the next two months will be the alternative to the poll tax, whether it is the version that the SLD has chosen to adopt and to which it is sticking through thick and thin—mostly thick—or the adaptation that the Government are seeking to introduce while maintaining the principle that they claim is the fundamental basis of the poll tax.
I should like to take up the question of what the principle is. The Government amendment suggests, as the Minister did, that the real principle is that most people should contribute something to local services. But we all know that that is not the basis of the poll tax. Its basic principle, to which we object, is that we have a flat-rate tax that does not take account of ability to pay above rebate levels. A large and growing number of the Government's Back-Benchers also object to that principle. That is why only a fair and progressive alternative could meet the myriad of anomalies that present themselves as the Government attempt to dig themselves out of the hole which all Opposition Members—Labour, SLD and others—spelled out as the poll tax went through its parliamentary stages.
Whatever the Government do in the next two months, they will make administrative matters worse and they will cause even greater confusion. Let us take the statements over the weekend about the sudden resurgence of a commitment to the family and to the community. Let us assume that the Government introduce an exemption for non-working wives and mothers looking after children. All Opposition Members would welcome that. It would be a progressive and sensible step that the Government should not tax people who do not have income. It is such a common sense step that it is blindingly obvious to anyone who is the least caring about what the Government are doing. It would be right because it would encourage parents to stop at home to look after their children, rather than having nannies or sending the children to private schools—something, of course, of which Tory Members know nothing. Having established that there is a sudden resurgence of commitment, with parents looking after their children at home, which we welcome, we have to ask—who pays for it?
Under a progressive tax that takes into account the ability to pay, takes more from the better off, exempts those with no income and relieves those with little income, it is fair to exempt people who stay at home. However, would it be fair to retain a flat rate tax that took exactly the same from everyone above rebate levels? That would mean that a person on two thirds of average income would be treated the same as the person with five times the average income. It would mean that a wife looking after the children of a very rich man with £100,000 a year coming in would be exempt, whereas the woman living next door, who looked after her children at home, went out to work part time and earned wages that took her—or jointly her and her partner—above the rebate level, would not be exempt. It would mean that the person who got up early in the morning, went out cleaning to keep the bread on the table and make ends meet and ensured that the family were not entitled to benefit but stood on their own two feet, would be penalised by the poll tax, whereas the rich woman in a detached house nearby would be exempt. What nonsense there would be under a flat rate charge.
The same anomalies arise in the cry—which is understandable from those who know nothing about holiday cottages and second homes—that those who have second houses should also be exempt. They say that the standard poll tax, which is really a property tax, should be lifted from the shoulders of those struggling to maintain two homes.
All Opposition Members—including, I presume, those in the minority parties—accept that there is a good case for alleviating the second charge of standard poll tax where people are obliged by their job to be in residence as part of their employment contract. We accept that where people are attempting to sell their homes, their tax should be alleviated. There are anomalies. However, we can never accept that those who can afford weekend cottages should have their dustbins emptied, roads maintained, streets lit and communities protected for them at the weekend, or the occasions when they visit their homes, at the expense at the rest of the community. It would not be right if everyone else paid more so that they paid less.
Will the hon. Gentleman give the House an estimate of the percentage of the average community charge that goes on the services he has just mentioned? Does he agree that the vast proportion of community charge goes on education and social services, which are paid for the area in which a person lives? Therefore, someone with a second home would be paying a much bigger contribution for services that he will not use.
Even with the Government making a 50 per cent. contribution for protection services such as the police, the fire and road maintenance services which notch up a large percentage of the revenue spent by local government—[HON. MEMBERS: "What about education?"] Conservative Members shout, "What about education?" but this is supposed to be some sort of charge for services received. That is what the Government have said in the past three years. Most of us accept that education should be met through a tax.
We accept that the quality, availability and provision of education and training for the children of our neighbour and our community is as important to our well-being, as well as of moral importance, as it is to the children that we bring up ourselves. Therefore, it is not a charge for services received for ourselves and our family, but an obligation, a responsibility, for the whole of society. That is why we believe in tax, not this notional charge.
I feel particularly strongly about second homes, given my constituency. I found the remarks of the hon. Member for Wellingborough (Mr. Fry) extraordinary. There are many villages in my part of the country where 50 per cent. of the homes sold are second homes. It is bad enough for local people to lose the opportunity to be housed locally, without losing the money for the local school, bus service and the rest, which is, effectively, what he suggested.
That is a helpful intervention because it reminds me that £5 million of this year's income of the well-known London borough of Westminster came from the standard poll tax. That says a great deal about the flats of business people in Westminster, and about what the relatively poor would have to pick up if the standard poll tax were abolished. Therefore, it is an interesting point—[HON. MEMBERS: "What is the Labour party going to do?"] Conservative Members shout, "What is the Labour party going to do?" We made it clear that we believe that it is necessary to have a tax that takes into account the property that people occupy and therefore, as I have already spelt out, the service that they receive when occupying that property.
There is a range of potential anomalies which the Government, if they stagger into them, will regret at leisure. It is helpful for us to be able to read the articles printed in right-wing newspapers like the Sunday Express that spell out the sort of shambles that we are in for in the months ahead if the advice given by Conservative Back-Benchers is taken.
That raises the issue of the meaningful alternative to the poll tax that replaces unfairness with equality and justice, and ensures that the anomalies that we can all see round us are swept away once and for all. The alternative cannot be a local income tax, which the hon. Member for Truro (Mr. Taylor) attempted to persuade us was a good idea. That is not because such a tax is not progressive or does not have attractions. It is partly because it does not take into account the provision of services to property, even if only partly occupied. It is partly for the very reasons that the hon. Gentleman's speech illustrated. If this debate could only be seen on television tonight, I think the issue about having a single, local income tax as a replacement for the poll tax would go by the board for ever. The idea of having a percentage flat rate, adjusted at the end of the year so that people received a penalty while facing an increase in their tax—as a buoyant tax, a percentage would automatically increase their liability—would be a killer for people. It would penalise those who fell just inside the tax threshold.
If Conservative Members are trying to peddle the idea that the fact that most people pay is a key principle, they will not find us unreceptive. We accept that it is important that people who have an income that entitles them to pay tax, or which can be shown to be of a sufficient level to enhance their earnings to a point where they should pay tax, should pay. Only those who have no income or a low income should have an amelioration in their tax.
Will the hon. Gentleman clarify the position? If I understand correctly, the Labour party is in favour of a property tax plus an additional element that takes into account ability to pay. How long would it take to bring that into operation, given Layfield's estimate of five years?
The Layfield committee, operating in 1976, did not have a great deal to say about the technology 14 years—by the time we are able to implement our taxes, more like 17 or 18 years—later. Clearly it will take time to change the position that we inherit.
My hon. Friend the Member for Dagenham (Mr. Gould) has spelt out clearly the timetable that we would adopt after taking office. I give the pledge that the introduction of our alternative tax will not only be more speedily implemented than the poll tax has been, as it has been foisted on the people of Britain, but we shall ensure that the anomalies that we are now debating week after week, in the press as well as in the House—which all Conservative Members know exist—will not be present. We shall consult about it first, listen to what people are saying, iron out those anomalies and ensure that, whatever happens, people's poll tax burden will be alleviated as quickly as is humanly possible. We shall welcome the aid of all hon. Members in the speedy introduction of an alternative tax.
All Conservative Members who want banding; all who want to maintain safety nets, as they will when they discover what will happen to their seats if they do not; all who believe in fairness: and all who have an inkling that if they do not change their minds the electorate will help them to do so will be reminded by the next Labour Government that we want their assistance in getting rid of one of the most unfair and unprincipled inventions that has ever been inflicted on the British people.
Will the hon. Gentleman confirm or deny that the Labour party did not adopt a local income tax not because of its inherent defects, not because there is not a huge body of support for it, but because the hon. Member for Dagenham (Mr. Gould) and the Labour party's environment team received an instruction from the Leader of the Opposition that a local income tax had to be excluded from their alternatives because it had already been proposed by another party?
It is difficult to take seriously a question which presumes that the Labour party operates in the same way as the Social and Liberal Democratic party where, when an instruction comes down from above, everyone jumps to adhere to it. No one could ever accuse the Labour party of not engaging in full and open debate on its policies. We are notorious for that. We have lost the past three elections in our endeavour to engage in open and democratic debate. We shall certainly not engage in it again. We have every intention of uniting behind a fair and just alternative which does not have the disadvantages of the poll tax, the anomalies of a single income tax or the inanity of those hon. Members who leave the party and think that it is great fun to have a few jokes about who should be sitting on the Front or the Back Benches.
Those who pose the question "What about the non-payment of tax?" must address themselves to their own friends and supporters. How can Conservative Members have the audacity, in the media or through their summer offensive today, to accuse a handful of Labour Members of breaching the law by not paying their poll tax when the National Audit Office has just issued a report showing that the Government are allowing £5 billion—not million—of tax to remain uncollected and encouraging such evasion by cutting the inspectorate which should be preventing that? They should put their money where their mouth is and increase the inspectorate so that that uncollected income tax can be chased up.
The hon. Gentleman makes an extraordinary point. Is he aware that the Labour-controlled Ealing council, so summarily dismissed by the electors a few days ago, has not had a single year's accounts passed by the district auditor since it was elected in 1986?
I imagine that it is taking steps to ensure that it collects all its income, which is more than can be said of the Inland Revenue. The hon. Gentleman may be euphoric about the result in Ealing, and I make no bones about it being a bad one for the Labour party, but he should bear it in mind that the Labour party polled more votes than the Conservative party in Ealing on 3 May.
Yes, it is.
The Conservative party, which preaches about being a low-tax party but does not collect tax and national insurance, causing the rest of us to pay more, has this year increased the amount of tax which we pay as a nation from 33·8 per cent. to an estimated 37·6 per cent. of gross domestic product. The Government have the cheek of the devil to proclaim themselves the tax reliever of the poor and the benefactor of those who are badly off. The Conservative party has taxed the poor more, hit middle-income earners harder, assisted the rich and ensured, through the poll tax, that there has been a transfer of income from the poor to the wealthy; from those who can least afford to pay to those who can afford to pay more. That is the scandal of the Conservative party's tax policy. That is why we are not only against it but will replace it with something which will receive universal support for its fairness and equity.
The hon. Member for Sheffield, Brightside (Mr. Blunkett) sought, rather oddly and illogically, to justify a campaign of breaking the law by complaining that in another area the law was not being carried out effectively. Despite the Leader of the Opposition's statement dissociating the Labour party from the anti-poll tax campaign, it is evident to anyone who knows the leading members of the anti-poll tax campaign in his locality where their political allegiance lies. They are composed of Labour party supporters and are even headed by at least one hon. Member. It is high time that those Labour Members who feel so strongly at least resigned their seats and offered themselves for re-election on that basis.
However, I do not want to spend too much time talking about the Labour party, for the simple reason that we have considered what it intends to do for a length of time which can be compared with the gestation period of an elephant, except that it has not even produced a mouse. Therefore, we are talking about a void.
It is much more important this afternoon to debate the policies of the Social and Liberal Democrats. It is interesting that once again the hon. Member for Truro (Mr. Taylor) and his party have got their figures wrong. Their figures and estimates are based on last year's expenditure. That is hardly surprising, because the Social and Liberal Democrats spend all their time dealing with the world as they would like it to be, rather than as it is, which is the Government's province.
The crucial point, which has not been made often enough, is that it is completely wrong to equate the level of the rates last year with what the level of the rates would have been this year if there had not been a change. Wellingborough district council has a modest community charge of £288, but even its spending showed an increase. A comparison of its rates last year with what its rates would have been this year shows a 22 per cent. increase. Northamptonshire is not a tremendously high spender, but throughout the county the rates would have been about 30 per cent. higher. If many of those who write to hon. Members realised that their rates would have been 30 per cent. higher, they would not have been so critical of the community charge.
But that is not the only point that I want to make about the proposal. It is interesting that it is assumed that a local income tax will give the accountability that is claimed for it. It is true that some European countries have a local income tax. I was fascinated to hear an interview with a Danish person. He was asked, "How do you pay for your local government services?" The answer was, "By means of a local income tax." The next question was, "How much is your local income tax?" The answer amounted to the Danish equivalent of 28p in the pound.
If local authorities were to be given the right to impose a local income tax, costs would escalate before we knew where we were. If the argument is then advanced that central Government must cough up the money in the form of grant in order to ensure that the local income tax is not too high, local accountability would become very difficult to enforce.
Rates were a most unsatisfactory form of local government taxation. I entered politics because I could see no justification for the rating system. Can those Opposition Members who say that the community charge is unfair tell me why it was fairer for one person living alone in a house to pay the same in rates as four or five people earning money in the house next door? The rating system was totally discredited.
A sinner who repents is better than one who never repents.
Neither the official Opposition nor the other Opposition parties have said anything this afternoon that makes me believe that the system that the Government have introduced is wrong. However, as with all great innovations, there are defects in the Government's proposals. I, and most of my hon. Friends, accept that there are defects. Therefore, we welcome the amendment tabled by my right hon. Friend the Prime Minister and others, which demonstrates that the Government are prepared to listen to sensible proposals. The main point of the debate is to air a number of alternatives. I give the hon. Member for Truro credit for listing some of them. Some of the other contributions have been less helpful.
I was about to do just that. I trust that the hon. Gentleman will listen to what I am about to say.
Mention has already been made of the fact that the sudden imposition of the full community charge on married women with no income of their own can have a drastic effect on the family's finances. I am aware of the fact that transitional relief and other benefits are available, but many people live in what was comparatively low-rated property. Therefore, when the community charge was introduced, they found that the bill increased sharply and that they could not obtain transitional relief.
All people should, in principle, contribute towards the cost of local government services, but the Minister ought to consider whether married women with no income should pay the full community charge. The cost or complete exemption would be exorbitant, but the community charge bears heavily upon the mothers of small children who have no income of their own. All hon. Members would welcome anything that the Minister could do to help them.
Under the rating system, the husband paid for his wife and himself. We are talking about an additional amount of transitional relief for married women who do not go out to work. I said that I did not believe that full exemption could be afforded, but some exemption could, and it ought not to fall on the other community charge payers. The money would have to come from central Government.
The hon. Member for Brightside did not fully appreciate the extent to which the community charge is bearing heavily on people of comparatively modest means who have second homes. He suggested, as did the hon. Member for Truro, that everyone who owns a second home is exceedingly wealthy.
A constituent came to see me in my surgery at the weekend and told me that he had bought a chalet in Wales which has no electricity, gas or water. He is disabled and earns £79 a week. The rates on the chalet were £140; he is now being asked to pay two standard community charges. The system does not enable him to qualify for transitional relief. He is in receipt of no community charge rebate. Ought not that anomaly to be corrected?
I am grateful to my hon. Friend. I had intended to refer to a similar case in my constituency. People who have worked hard all their lives and whose incomes are modest may choose not to have Mediterranean holidays but to invest their money instead in seaside chalets. They feel that they are being penalised.
All those hon. Members with Scottish constituencies who had the poll tax and all the other anomalies inflicted on them a year ago, just because of votes cast for the hon. Gentleman and his hon. Friends, find it quaint to hear them squealing about all these problems. The hon. Gentleman has referred to a number of poll tax concessions. Would he go a step further and say that such concessions should be made retrospective by the addition of a further year for Scotland?
I strongly support what the hon. Gentleman says. I have had more trouble with second homes in my constituency than I have had about the rest of the poll tax put together. I have written to the Prime Minister and the Minister giving details of specific cases and requesting that they should be part of the review. The council in my constituency has decided to charge twice the rate of poll tax on second homes—about £800. I am delighted that the Government have rate-capped Rochdale. The council has indulged in gross extravagance.
A constituent of mine, a woman of 91, went to live with her daughter four years ago. She said, "I'm only coming so long as I can keep my home." The daughter kept her mother's home for four years rather than upset the old dear. Suddenly the daughter was faced with having to pay 800 quid, although she is caring for her mother and keeping her home going.
A fortnight ago, a full-time officer in the Royal Air Force told me that he had bought a second home in Rochdale ready for when he comes out of the RAF and he has suddenly been faced with an 800-quid poll tax. I strongly support the hon. Gentleman.
My hon. Friend is as interested as I in the remarks of the hon. Member for Rochdale (Sir C. Smith). I put it to him that a number of my constituents are also suffering because they own second homes. They are not beautiful holiday homes; they are second homes for work, or other reasons. My constituents have to pay two community charges. May I suggest that the hon. Member for Rochdale has a word with his colleagues, the Liberal councillors of Chelmsford borough council who have imposed two community charges on second homes?
No. If we go on like this, my hon. Friend may know where she is, but I shall not.
One of the greatest problems is that many councils which never previously rated empty properties too readily accepted the formula of imposing two standard charges, so people who were paying nothing suddenly had to pay two standard charges. I know that allowances are supposed to be made for the first three months and that then charges on a rising scale from nothing up to two standard charges could be imposed. However, certain categories of people have been badly caught when councils have imposed the full charge.
One such category comprises young people who have bought old properties because they could not afford a new property or one in a good state of repair. A young man and woman who want to get married in a year's time and have bought an old property now discover that they are being charged a standard charge where they live and a double charge on the empty property which they are repairing and renovating. Instead of having to pay one charge each, they are having to pay four charges between them.
I assume that it was never intended that people who are trying to help themselves and who could not afford to buy a house in good repair should be penalised. The present safeguard of three months is totally inadequate; even a year would probably be inadequate. Local authorities need to apply much greater discretion in taking such cases into account.
I wish to draw attention to two particular cases. First, somebody who loses an elderly parent may subsequently receive an immediate community charge bill. There is no three months' leeway. Secondly, empty farm cottages are relieved of community charge in Scotland but not in England. However, the cases involving deceased parents are really quite tragic.
The three-month period started at the beginning of the year, so it was over before the community charge came into force.
I am sure that my hon. Friend the Minister has the ability to put right the anomalies that have been raised. The injustice that has been outlined by hon. Members on both sides of the House causes deep resentment. People on modest incomes who can pay their own community charge strongly resent being asked to pay more.
I am sure that my hon. Friend the Minister will be delighted to know that I do not propose to read out a list of suggestions for him to follow.
Is my hon. Friend aware that there is another anomaly, involving farm workers? Those who suffered a large increase in their community charge compared with the rates that they paid will be eligible for concessions, but that applies only to those who previously paid rates. Farm workers in tied cottages did not pay rates, so they are not eligible for the concession. I hope that my hon. Friend will realise that that is another anomaly which should be drawn to the attention of my hon. Friend the Minister.
I am coming to the end of my remarks and from now on hon. Members will have to interrupt someone else. I have suggested two main concerns and no doubt hon. Members will make other suggestions. However, in all seriousness, I stress that the two anomalies that I have mentioned this afternoon will make a great difference to the ultimate acceptance of the community charge. The electorate are fully aware that the Government intend to do something, but what they do will decide how that electorate will react.
I am aware that there is not untold money to throw at the problem, and I am not suggesting it, but when my hon. Friend completes his deliberations and produces a number of sensible proposals that do away with the worst anomalies, he will receive not only the gratitude of Conservative Members and perhaps some Opposition Members, but the thanks of the electorate.
Finally, even when the worst anomalies have been removed, I am sure that my hon. Friend the Minister is fully aware that that will not be the end of the story. The major problem is that the charge is too high. Whether the community charge is £288, as in my constituency, or £350 or £400 as in other parts of Northamptonshire, anyone who has to pay more than they paid in rates will regard it as excessive. Will my hon. Friend re-examine the way in which central Government grants are distributed? For example, in Northamptonshire we have many of the costs that arise in the south-east of England, but those extra costs were not recognised in the grant that the council received. I hope that my hon. Friend will consider that factor, as it could make a considerable difference in future.
Local authorities must examine their budgets. We are often told that no savings can be made and that there can be no more cuts. After the introduction of local management of schools, are the Government determined to ensure that local education authorities cut their central administration? Certainly real savings could be made and passed on to the community charge payers. We should ensure that county councils initiate thorough cost investigation exercises, because ultimately county councils are the deciding factor.
I am sorry that the hon. Member for Bolsover (Mr. Skinner) is not here, as he had so much to say about Derbyshire. One of the most interesting local election results was not Westminster but Derby. Derby was marginally held by the Conservative party and everyone thought that it would be lost, but it was not, because anyone who has been to Derbyshire recently knows that Derbyshire county council is clearly marked out as a mighty overspending authority. When the electorate can clearly identify the overspenders, people will vote accordingly. In my view, that justifies the Government's policy.
Before I sit down, I must tell my hon. Friend the Minister that he has a mighty task ahead of him. I welcome him to his new position, knowing how well he did in his previous post in the Department of Transport, and I wish him well, but the hopes of many Conservative Members and the hopes of our party rest heavily upon his shoulders.
I welcome the Minister to his new post. Let me say with some diffidence that when he was elected to the House he was one of the younger Conservative Members that I marked out for stardom. I do not want to condemn him by saying that. I recognise that he has enormous ability, but he has an enormous task because he has to attempt to reconcile the irreconcilable.
The criteria that the Government adopted for the poll tax were accountability, fairness and efficiency. However, the more one tries to achieve fairness, the more one moves away from accountability. Therefore, I do not apologise for referring particularly to the Scottish experience.
It is probably difficult to carry out a policy of a local income tax for the whole of Britain. I recognise the administrative difficulties, as did Layfield a long time ago. However, in Scotland, it is perfectly possible to have a local income tax. If the proposals accepted by the Opposition parties for a Scottish Parliament are carried out, it is eminently desirable that that Parliament is elected on proportional representation, and that it carries out discussions on how we reform local government in Scotland and how we apportion taxation, on both a Scottish and a local authority basis. If we cannot do that for 5 million people in Scotland, we had better give up advising people on how to govern themselves. The basic difficulty for the Opposition parties is how we should move towards that position. The Labour party especially has got itself on the horns of a dilemma.
The Government talk about accountability and say that everyone has to pay. If one accepts that, extreme problems are encountered, as in Scotland. What does one do about the mentally handicapped? One has to make concessions. We were told repeatedly that concessions could not be made for those with Alzheimer's disease, yet concessions were made. There is an enormous anomaly in relation to care of the aged. The hon. Member for Rochdale (Sir C. Smith) gave an illustration of it. He spoke about a lady who had left her home temporarily to be cosseted in the bosom of her family. The family had to pay their own poll tax and twice the standard charge for the home that the old lady had vacated, although they were looking after an aged parent. I have many experiences of such cases in my own family. If our elderly parents had been put into nursing homes, they would not have paid the poll tax, yet they would have made a greater charge on local government services. Those are considerable anomalies, but they relate to fairness.
It is a farce that we loosely speak of "local government finance". There is no such thing, as the Minister reveals in his speeches. If local government finance means anything, why does the poll tax account for 25 per cent. to 30 per cent. of local revenue in England and Wales, whereas in Scotland it accounts for 15 per cent? The reason is that the Exchequer transfers resources in one form or another from central Government revenue to local government on a basis that is not, and cannot be, equitable. In Scotland, the poll tax accounts for 17 to 18 per cent. of local revenue in some authorities, whereas in others it accounts for as little as 4 per cent.
Some have referred to accountability in electoral terms. I defy any Scottish Member—and I must be careful as there are four here at present—[HON. MEMBERS: "There are five "] Yes, there are five if I include myself. I defy any Scottish Member to go out into the street in his authority and to ask 100 electors which authority—district or regional—is responsible for the various services. They would not know.
I stood in a local election. I now have stabs in the front from the Labour party instead of stabs in the back. For me, the issues in the local election were the poll tax and fighting the Tories. The issue for the Labour party was fighting Dick Douglas. I have been called a traitor in this House. I was called far worse by so-called Labour supporters in the election campaign. However, as my old mother used to say in Govan, "Sticks and stones will break your bones, but names will never hurt you." If that is all that will happen to me here and elsewhere, it will not worry me too much.
There is a problem of distinguishing between the services and between the responsibility of local authorities for those services. In a system where 75 to 90 per cent. of revenue is redistributed by central Government, it becomes a farce to talk about local government finance. In Scotland, it is eminently suitable and desirable that we move towards a system of local income tax. There is no gainsaying that. We have had the poll tax for 14 months. All the Conservative Members, such as the hon. Member for Pendle (Mr. Lee), who pronounce for Scotland on the poll tax, who now cavil about having to pay it because it has hit their constituencies and who walked through the Government Lobby should now recognise that, if we call ourselves a United Kingdom Parliament, we must have regard to national circumstances—and Scotland is a nation. As was illustrated yesterday over Ravenscraig, this House and the Tory Government are putting great strains on the Union, and nothing is putting greater strains on the Union than the issue of the poll tax and local government finance.
I want to deal with the Labour party's so-called alternative. The hon. Gentlemen who were calling me names are absent now. The hon. Member for Glasgow, Garscadden (Mr. Dewar), that great whiz kid—and I have called him a dunderhead, which is a term of endearment—and others propose that we should have a roof tax. A roof tax is just the rates in another guise. We have had some answers from the hon. Member for Sheffield, Brightside (Mr. Blunkett), but they were guarded and cryptic non-answers. It would take by any estimate three to five years to introduce such a tax. What will happen to this great party, the guardian of the Scottish people?
A few months ago, we all signed the "Claim of Right" and said that we believed in the sovereignty of the Scottish people—a valuable and historic concept. If one believes in that, the votes of the Scottish people count not only in British terms but in Scottish terms. The overwhelming majority of the Scottish people, in regional and general elections, voted against the poll tax, yet it was still imposed on us.
Labour Members have been careful to say that they will repeal the poll tax, but that may take three to five years if and when there is a Labour Government. What happens in the interim? Will the poll tax roll on? I predict that the vast majority of the Scottish people will cease to pay the poll tax the Monday after a Labour Government are elected. What does one do then? What are the contingency plans of the right hon. Member for Islwyn (Mr. Kinnock) and the right hon. and learned Member for Monklands, East (Mr. Smith)? They have a dilemma. Having marched us up to the top of the hill and having said how much they disliked the poll tax, they are being very careful.
I am called a traitor by the Labour party because I say that I will stand beside those who cannot pay. I am proud to be a traitor on that ground. When the leader of the Labour party came to Scotland in January 1988, he said, "Pay up." He said that for good reasons from his electoral point of view, but he was neglecting the history of the Labour party in defending the poorer sections of the population. We must have cognisance of that. The great party of idealism now says, "You can have a conscience clause and you can refuse to pay, but, for goodness sake, do not tell anyone you are doing it. Keep it secret. If you appear on a platform with other supporters and say that you are not paying, that is a terrible crime." That is a great position for the party of idealism to adopt, is it not?
There is no way that we can reform the poll tax. We can ameliorate it and, in all humility, I shall suggest some ways in which we might do that which have occurred to me since I was elected honorary president of the students' union at Stirling university. Students are especially severely handicapped by the tax. If we start pursuing students for non-payment of the poll tax, we will lose more money than we collect. The Government should realise that. I am not necessarily pleading; I am fulfilling a responsibility by suggesting that the Government might consider excluding all students, and certainly all those under 21.
There is a good democratic reason for that suggestion. My hon. Friend the Member for Derbyshire, North-East (Mr. Barnes) has taken time to analyse these matters and has discovered that young people do not want their names to appear on the electoral register because they see a correlation, which the Government do not see, between registering for electoral purposes and registering for poll tax purposes. That is a persuasive argument for saying that—
My hon. Friend argued that the tax could not be reformed. The reason for that is that there is a relationship between the electoral register and the poll tax register. Current figures show that at least 600,000 people over the age of 18 are missing from the electoral register. The average is 1,000 per constituency, although the distribution is uneven. Nearly 10 per cent. of those eligible are missing in Finchley, the Prime Minister's constituency. Whatever banding arrangements we introduce, we shall not alter that. The tax bills are directed to individuals in their homes and that links the poll tax and electoral registers.
I accept what my hon. Friend says. That is why I plead for a local income tax in Scotland and why I have made my feelings clear. But I am being cautious and my concern at present has to do with the interim period and what the Government might do. I realise that certain sections of the population are severely imperilled by the poll tax, and students are certainly among them. Theirs is a pressing need for which the Government could cater more quickly and easily than they could cater for non-working spouses.
The Minister has an enormous task ahead of him. The Government have a self-inflicted wound which he must heal. No one asked the Government to introduce the poll tax. What makes the poll tax such a farce is that it does not result in the collection of more revenue. No one forced it on the Government; they panicked about Scotland. I suggest that the Minister is wrong in thinking that opinion about the tax is settling down in Scotland. It is not. It is difficult to get hold of the figures because local authorities are not clear about them, but it appears that we may have between half a million Scots who have not paid and who have been in default for a whole year and 1 million who have not paid part of the tax. Personally, I have not paid for 14 months. I do not know what will happen to non-payers—it may be the arrestment of wages, the poinding of furniture or warrant sales—but the Scots are resisting, and will continue to resist the poll tax.
In the end, Labour-controlled local authorities will have to decide between poinding and warrant sales to enforce the legislation. What will Labour councillors do then? Should they echo the words of the Labour leader and say that the non-payers are terrible and are embarrassing local authority workers, or should they stand up and be counted? I do not know which way it will go, but I can assure the Minister that resistance in Scotland will not disappear. If hon. Members such as the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) call me a traitor for continuing to stand my ground, I will take the epithet from them. I know that the view by which I stand is the view that will have support in the long run. I suppose it will be said that, in the long run, we are all dead, but in the long run the people of Scotland will certainly respect those who stand by their view on this issue of principle.
I did not intend to follow the hon. Member for Dunfermline, West (Mr. Douglas) down the ways and glens of Scotland, but I agree with him on one point. The Government should have introduced the community charge in England and Wales at the same time as it was introduced in Scotland—at least a year ago and, as my hon. Friend the Member for Wellingborough (Mr. Fry) suggested, perhaps even four or five years ago. We were in error in not introducing the tax earlier across Great Britain. With his wise and disparate views, the hon. Member for Dunfermline, West seems to have spent his time in the wrong party. Had he been a Conservative Member he could have held those views and no one would have noticed; he would not have ended up being called a traitor at all.
In introducing the debate, the hon. Member for Truro (Mr. Taylor) said that the Liberal Democrats had tabled the motion so that the Government would not spring anything on the House—unlike the Liberal Democrats, who sprung the motion on us. Twenty-four hours ago, the motion was not even written; they had no idea what they wanted to say. They crept into the Table Office at dead of night and tabled the motion because if they had tabled it earlier I should have been able to report its contents to people in my area and we should have been able to win more than the two seats that we won from the Liberal Democrats in the local elections.
The hon. Member for Normanton (Mr. O'Brien) asks for aid with future policies. Had the Government had help from Labour Members and local government representatives at all levels during the past three years—the gestation period for the community charge—we should have had a stronger and better community charge now. Instead, they have ruthlessly taken every opportunity to terrorise those sections of the community about whom they bleat the most—the old, the sick, the disabled and the young.
No, I shall not give way.
Labour Members have gone about their constituencies exaggerating the effect of the charge and minimising the effect of rebate. The amendment to the motion states that
10 million people have received bills reduced by rebate whilst 7·5 million have been protected by transitional relief".
In my constituency there have been bitter rows about rates ever since I began serving in local government. Since 1967, the issue on every doorstep at every election has been the rating system and its unfairness. The same applied to elections for the county councils—God bless their absence; we ought to get rid of them if we possibly can as, like Caesar, they are remembered only by their misdeeds—and to local elections. We have heard nothing from the Opposition about what they would put in place of the rates.
I am not giving way.
Having said that, I express my genuine thanks to the officers in Calderdale—Malcolm Fearnley and his team—for their efficient implementation of the community charge in my constituency. They have managed to deal with 32,000 applications for rebates and 40,500 applications for transitional relief. They have done that efficiently and speedily and they have also dealt with extra help. [HON. MEMBERS: "They are poll tax capped."] It is not a poll tax—it is a community charge, and it provides the biggest cushion to help the old and the disabled that we have ever had.
My hon. Friend said that his local council had processed 32,000 rebates and some 40,000 transitional reliefs. How many staff were required to process that work? My local council is asking for extra staff because it claims that it is behind with claims. I should like to be able to tell my local council that it ought to have been able to cope without extra staff. How many staff were needed in my hon. Friend's constituency?
Quite honestly, I cannot answer that and I do not wish to give a dishonest answer. Whether or not extra staff were recruited, the council had the foresight to act as it did rather than sulking, and the chief officer told me today that the money is rolling in.
I want to translate what my hon. Friend the Minister of State has said about the vast amounts that we are spending in local government support into what happens in a local government area. My figures are taken from the minutes of a meeting of the metropolitan borough of Calderdale in March 1990. For the year 1990–91 in my area the total expenditure per person on the Labour budget would be about £1,020. On the Conservative budget it would be £969 per person. The revenue support grant from general taxation is £277 per head—not an inconsiderable sum. The unified business rate from the business community is £293 per head. That gives a real community charge under the Labour figures of £450 per head and under the Conservatives of £398. However, the Government in their wisdom have left a safety net of £137 less a low rateable value grant of £25. That reduces the real community charge to £296 under Labour and £245 under the Conservatives.
The hon. Member for Normanton asked me about capping. The £245 is the figure that the Government expect under a capped system.
I raised a couple of anomalies with the hon. Member for Calder Valley (Mr. Thompson) in a discussion on Radio Leeds a few weeks ago and he said that they would be amended. I am sure that the hon. Gentleman will recall that I asked about properties not connected to a main sewer, which received a concession under the rates system but no concession under the poll tax system. People in those properties will have to pay the full poll tax in addition to charges for entering the sewer. I also asked about corner shops where the person living above the shop will have to pay poll tax as well as paying the business rate for the shop. The hon. Member for Calder Valley said that those anomalies would be amended. What has happened about those anomalies?
I have put those points to my hon. Friend the Minister. I am pleased that in this new spirit of glasnost Labour Members are now making sensible and reasonable suggestions. Had they done that three years ago, we should have had a much better tax. It is a shame that Labour Members are not in the Chamber tonight—they have run away from this debate in their masses, leaving only the Labour Whips.
If the hon. Gentleman cares to examine the reports of the Committee stage of the Local Government Finance Bill which introduced the poll tax, he will discover that all those amendments were suggested, but the Government arrogantly refused even to consider them.
I think not, Sir.
I hope that Calderdale council will accept one of the two budgets to which I have referred. Unfortunately, the safety net—£137 this year—will be unwound perhaps over three or more years. Although the business rate will rise with inflation and we expect revenue support grant to increase in the same way, the safety net will unwind giving us less and less.
Therefore, it is imperative that all councils should do as the hon. Member for Rochdale (Sir C. Smith) suggested and constantly re-examine spending that in the past they have taken for granted without having regard to the ratepayer who seems to have been a hidden person.
Reference has been made to married women who do not work and the poll tax. How do people budget their accounts? Surely couples sit down together and say, "Look, love, we've got the electricity bill to pay, the rates bill to pay, the water bill and then there's the car—are we going to Malaga or Malta or are we going to our pal's little place in Bridlington?" Apparently it is a revelation to Labour Members to learn that that is how people budget their accounts. One wonders whom Labour Members are visiting at the moment.
The safety net and the rebates have left anomalies which are difficult to explain to people in our surgeries and advice centres. There is a sewing shop in Todmorden in which every lady pays a different community charge. They told me that they had thought that they would all pay the same but because of transitional relief and rebates they all pay a different charge. Anomalies will crop up everywhere.
We have already heard about farms. I received a letter today from Mrs. Janet Nelson of Todmorden asking me about Methodist ministers and the way in which they receive remuneration. I will pass the letter to my hon. Friend the Minister and discuss it with him. Indeed, I have several hundred other letters to give him and I am sure that we shall be able to reach some kind of accommodation.
The double rating of holiday homes seems to be causing a great deal of distress, as the hon. Member for Rochdale explained, but my hon. Friend the Minister should not let local authorities off in relation to their void houses. Local Government should not be allowed to avoid being charged twice, three times, four times or even five times for those houses. They should be charged as much as possible for the empty houses that have led to so much homelessness.
The hon. Member for Dunfermline, West referred to students and my hon. Friend the Member for Wellingborough mentioned double charging. Much still remains to be done to get this revolutionary new community charge right, and we shall press on and do it.
The hon. Member for Calder Valley (Mr. Thompson) believes that the poll tax can be reformed. I do not agree. It cannot be reformed; it can only be abolished. The poll tax is fundamentally flawed and is not based in any shape or form on the ability to pay. Any such taxation must be unfair and must throw up a series of anomalies. That is precisely what the poll tax has done.
The Government had no mandate to introduce the poll tax in Scotland. It is one of the most hated taxation systems of modern times. The Government have not learned from the Scottish lesson and England is now adjusting to the fact that the chickens have come home to roost. There have been a series of demands for changes or improvements in the poll tax. Those calls come as a great irony to the Scots who have had to live with the tax. There was no talk of improvements when Conservative Members inflicted the ghastly tax on the Scottish people more than a year ago. Now that the reality is dawning in England, Conservative Members will feel the full force of public opinion as people discover exactly what the tax is and what it does.
Scotland has been the guinea-pig for the poll tax and it has proved it to be wrong-headed and disastrous. It is callous and unfair for all the people on whom it is imposed, and it does absolutely nothing to assist local government funding or finance. The Scottish National party warned that the tax would be a bureaucratic nightmare. In Scotland, staff morale is low and there is stress among those who must impose the tax.
The poll tax is unworkable. The people in local government are paying the penalty for it. In Scotland there have been more than 2 million changes in the registers. That will be as nothing when the tax is imposed on English cities such as London, which has a large transient population. The tax is bureaucratic and expensive to implement. Computers in Scotland have been spewing out ever-increasing numbers of poll tax books and other bits of paper. The rebate application forms are massive and their demands for information about private citizens are impertinent and deter people from applying.
The poll tax is costly, inefficient and massively bureaucratic. The SNP warned about in-built expense and the difficulties of collection. It cannot be otherwise with annual updates and clumsy rebate systems to try to iron out the inherent unfairness of the tax. Again, my party warned about anomalies and unfairness in a tax that is not based on ability to pay. Scotland has suffered—
It cannot be said enough, as the hon. Gentleman will find in his own constituency as anti-poll tax feeling in England grows. The hon. Gentleman helped to inflict this tax upon my country and did nothing to change the anomalies in it. That is what I find objectionable. It is well worth repeating that.
Anomaly after anomaly was thrown up by the tax as it was implemented in Scotland, as English hon. Members have been finding out. There are problems for students, student nurses, people who suffer from Alzheimer's disease and other diseases, housewives who are fully charged and are unable to earn income, and so on. That circumstance could have been foreseen by the Government as they introduced the tax over a year ago in Scotland.
This taxation system is riddled with unfairness and anomalies. The Scottish experience gives fair warning of the problems to Wales and England. Annually updated registers have been a bureaucratic disaster. It is a highly expensive tax to collect. If Conservative Members are worried about expense to poll tax payers, they should think about that very expense of the collection of the tax being imposed on poll tax payers.
Again. the scope for poll tax non-payment campaigns, which have led to about 1 million Scots paying little or nothing in protest against this ghastly tax, will be as nothing compared with the effect of and the opportunities for non-payment in English cities. No amount of ministerial mumping or accusations about law breaking will prevent that from happening as people take the protest into their own hands in the only way that is open to them as free citizens in a free country to protest against a tax that they totally abhor. The poll tax is not based on ability to pay and merely transfers the unfairness of rates. Rates were unfair in terms of property, and the poll tax is unfair in terms of people. Both taxes are levied without reference to ability to pay, and the Government must tackle that problem. No amount of banding or any other messing around will replace the need for a local income tax.
I contrast the anomalies, unfairness and callousness of the poll tax with our belief that ability to pay must be the criterion of any taxation system. On all counts, a local income tax scores. It has a low cost of collection. Unlike the poll tax, it would use the existing tax collection machinery. If a person has little or no income, he or she will pay little or no income tax, which is fair. Assessed on the same basis as national income tax, local income tax could easily be integrated into the existing system. With LIT there would be no need for the present Government's panoply of sheriff officers, warrant sales, local bureaucrats, annual registers, and a complicated structure of rebates. Indeed, there would be no need for massive collection costs and the other paraphernalia of the poll tax or of the roof tax.
We believe that people should pay for public services according to their means and be able to use them according to their needs. People who are too poor to pay income tax would not have to pay local income tax either. Local income tax would also guarantee civil liberties because there would be no registration forms, no Tory snoopers checking the value of a person's house, and no means-tested rebate applications. All the information required for local income tax is already collected by the Inland Revenue. There would be no need whatsoever for council officials to know the financial circumstances of an individual. A local income tax system would not need to be implemented from scratch because relevant information on employment and wages is already stored in national income tax records. Certainly an SNP Government would abolish the poll tax immediately, as indeed could a Labour Government if they had the courage of their convictions and the will to do so.
Our calculations show that a basic local income tax would be about 5·5p, and the higher rate of about 10p in the pound would be sufficient to replace current poll tax levels. No amount of fiddling with gross amounts and the other aberrations that the Government have tried to introduce into the debate will change the fact that local income tax is cheaper to collect, efficient and fair.
With the figures that I have mentioned-5·5p and l0p in the pound, the higher rate level. They are maximum figures. They reflect a situation in which this Administration have slashed their contribution to local authorities from 75 per cent. down to 55 per cent.
We propose major changes in central Government support for local authorities, which would substantially reduce the burden on local taxation. Our proposed responsibility grant, needs element and equalisation grant would mean that local income tax contributions would focus on purely local expenditure and would obviously mean minimal variations in local income tax levels throughout Scotland. Unlike other parties—the exception is the SLD, which has done something on these lines—the SNP proposes a package of local government finance measures allied to the reform of the structure of local government, and in-built guarantees of the independence, status and standing of local authorities in Scotland.
Too often those problems have been viewed in isolation. Finance is reformed without any thought of the structure or status of local authorities. Structure Is reformed without any thought of the finance or status of authorities. It is time that local authorities were given their due standing, status and importance within our society and given a package of measures that considers them in the round and within their context as part of the democratic process of providing services for the people.
Our income tax system would take Scotland into the mainstream of European local government finance, along with countries such as Sweden, Denmark, Switzerland and West Germany. In joining with Labour Members in opposing local income tax, the Tories have taken us into the mainstream of only one other comparable country', Papua New Guinea, and even that country is now retreating from the poll tax. The SNP proposes that, by adopting a local income tax, the United Kingdom and Scotland would join the mainstream of European methods of financing local authorities. We propose a package of measures to restore local government to independence, status, structure and finance, which will let it do its proper work on behalf of the people of Scotland. Anything less would be a betrayal of Scotland's interests. That is precisely what the Labour and Tory parties have been doing for too long.
It is about time that local government finance were treated properly, with a sensible, fair system for domestic local taxpayers and a much-needed reform of business taxes. The Government have got themselves into a massive fankle over local government finance, which is not good for local authorities or for the people whom they serve. Let Wales and England be warned. The Scottish example clearly shows what a disaster the poll tax is. Be warned and dump this unwanted and unfair tax.
Will my hon. Friend the Minister consider exempting people under 25 from the community charge? [Laughter.] Perhaps that is a radical suggestion. Up to the age of 25, young people are getting married and are required to save money and to establish themselves. That often entails the purchase of a home. Additionally, such people are new in their jobs and are usually on low pay and therefore are not equipped to make the contributions to local expenditure that people over 25 can. We should do all we can to encourage people at all ages, but certainly up to the age of 25, to take time out to improve their qualifications. The exemption of under-25s from the community charge would greatly assist youngsters to improve themselves in that way.
I have told the Minister in writing that I welcome the separation of husband and wife for taxation purposes, but that we should carry that principle into the community charge. We could do that in terms of savings by couples and individuals. For example, a man and wife could be assessed separately for savings and not have them amalgamated. I appreciate that such a system might be difficult to implement and could be open to abuse, but savings should be assessed separately because husband and wife are charged separately for the community charge. While I envisage difficulties in applying my suggestion, the principle of it is right and fair.
Difficulties lie in the way of any form of local taxation, bearing in mind the way in which local expenditure generally is administered by Labour compared with Conservative authorities, leaving aside any SLD-controlled authorities. Local taxation, like national taxation, as implemented by the Labour party is always high. Indeed, Labour supporters pride themselves on that, and to illustrate it one need only consider what has happened in my borough of Ealing.
Up to 1986, the Labour party was describing Ealing's rates as a disgrace, since they were the lowest in west London. We were proud of that, and the services provided in Ealing were as good as those provided anywhere. The Labour party was ashamed of the fact that on one side, the Conservative represented side, of Whitton avenue east, in my constituency, the rates were half those levied on the other side of the road, which then lay, as it still does, in the then Labour-controlled borough of Brent.
I remind my hon. Friend that the hon. Member for Workington (Mr. Campbell-Savours), who is not in his place, said it was shocking that people were now getting much lower bills. In other words, the desire for increased charges is still part of Labour philosophy. Ratepayers or charge payers in Labour-controlled areas must remember to vote accordingly at the next elections.
The nation must heed the attitude of Labour supporters, who expect the community charge and local taxation to be high. They will see that it is high. In Ealing, from 1986 until Labour was rejected a few days ago, that was their attitude, and they would continue to adopt it nationally if they were elected to government.
The Labour party, while in control in Ealing, increased the rates by 65 per cent. at a stroke in 1987. Happily, the authority was rate-capped by the Government, following a campaign conducted by my hon. Friend the Member for Ealing, Acton (Sir G. Young), who I am glad to see in his place, and me. That obliged the authority to reduce the rates in 1988 by 25 per cent. But the authority put the rates up again last year by 32 per cent.—the moment it got the opportunity to take such a step—and Labour's community charge in the area this year represents an increase, in the view of most of my constituents, of about 55 per cent. in rates equivalent. In other words, Labour is always high-spending and high-charging.
The same Labour council increased industrial rates in 1987 by 57 per cent., and it is worth considering the effect of that. It meant, for example, that Taylor Woodrow had to pay £315,000 more in rates. The company had to earn an extra £15 million simply to stand still, providing no extra profits or jobs.
That Labour council added £450,000 to the rates of Ealing hospital—so much did it care for the sick and disabled. About £750,000 extra in rates was charged to the Lyons group of companies, which employs 2,500 people. That increase resulted in some of them losing their jobs because the company had to find the money to pay that extra sum to the local Labour council. The company's prices were forced up, with all that that entailed.
When industrial rates were increased by 57 per cent., people locally had to pay more in the shops for everything, including haircuts. Domestic rates having also gone up by 65 per cent., no wonder my pensioner constituents either could not pay or were having to go without food to finance the high rates forced on them by the then Ealing Labour council.
I cannot understand why Labour supporters are so inhumane as not to care about the matters that I have described. They go on forcing up rates and charges. But this year, in the local elections, they paid the price, having forced on my constituents a community charge of £435. Its own estimate was that last year the community charge equivalent to the rates was about £300, but despite that it forced on the local people a community charge of £435.
The Labour authority wanted to inflict a community charge of about £500, but happily, having campaigned strongly against that, we managed to force the authority to reduce it to £435, which is still an outrageous charge for my constituents, who are being forced to pay 250 per cent. more in local taxation than they were paying under the former Conservative council four years ago. No wonder the people of Ealing threw out that Labour council with such relish.
We are invited in this debate to consider the system. In doing that, I must highlight an abuse of the system by Ealing Labour council. It did not send out people's rebates at the same time as the demands for £435. It sent out a full demand for that sum, thereby causing consternation to many people. Some of them came to my surgery and said in effect, "Harry, I have been asked to pay £435. Look at my building society book. I have £1,500 saved and I am on income support. Surely I am entitled to a rebate."
I discovered, as a result of careful questioning of staff at the town hall, that 6,000 rebates in the area would not be processed until after 3 May. Let us remember that the elections took place on 3 May. The Labour party, then in control of Ealing, wanted to frighten the people of Ealing into believing that the community charge would be higher for everyone than it needed to be for many of them. That was a nasty and wicked abuse. It was totally heartless and showed that Labour does not care. I am happy to say that rebates are now being processed fast by the new Conservative administration in Ealing, and many of my constituents will receive good news.
While Labour was in control in Ealing, services deteriorated in many respects. Many letters went unanswered by town hall officials, and I was repeatedly told, "I have written to the town hall and not received an answer." The quality of street cleansing, the expenditure on education and the regularity of refuse collection services have all be reduced. In no way have extra services been provided commensurate with the additional charges that people were asked to meet.
It is reasonable to ask where all the money went. Some of it went on an equal opportunities unit which, I am happy to report, is now being abolished. It must have been wrong to put money into race equality and women's committees of various types, because such steps advantage only a section of the community. The same applies when money is put into committees concerned with gays and lesbians: it seeks to advantage, as the Labour council did—this happened not only in Ealing but in many parts of the country—some sections of the community compared with the rest. Lord Justice Scarman described that as the surest way to cause unrest, for such actions take away any sense of fairness that people have. Not only is such mis-expenditure of money wrong, but it causes social unease.
What happened in Ealing is typical of the Labour party, nationally and locally. The way in which the Labour council acted was appalling. Consider, for example, appointment panels for head and other teachers. A headmaster seeking to appoint a teacher would have a representative of the local women's committee on one side of him and another from the race unit on the other. They would sit there on either side of the headmaster marking the interviewer for such things as bad body language or any other action or comment by which he might display prejudice.
Prior to the election of the Conservative council, Labour-controlled Ealing council had established 44 steps that had to be followed to secure the appointment of a head teacher. No wonder it took so long to fill such posts and no wonder so many posts were vacant, not only in schools, but in the borough's departments as a whole. It was an absolutely hopeless and impossible system. That sort of abuse had to come to an end, and it is now ending.
Finally, Opposition Members might like to know that the new Conservative Ealing council has, among the other flags that used to be run up above the town hall, the flag of the African National Congress, which it wants to sell cheap. The Labour council used to run up flags in support of causes in which the Ealing ratepayers and now the community charge payers have no interest whatsover. That sort of abuse is now ending—thank God.
This has been a productive and interesting debate, not least because of the number of Conservative Members who have pleaded for changes to the poll tax in a way that has helped to emphasise the stupidity of it and of the way in which it operates.
My hon. Friend the Member for Truro (Mr. Taylor) welcomed the Minister to his first appearance at the Dispatch Box in this capacity. In the circumstances, I do not blame the Minister for speaking almost entirely from a prepared text. When dealing with this subject, it is extremely wise for a Minister to ensure that he has first received advice from his lawyers. However, the Minister made a fair point about the injustice of the rating system and the need for it to be reformed. For many years, my party and the Conservative party have agreed that the rating system should be changed, but we do not agree with the Government's solution.
The Minister then referred to the various options that have been put forward. In seeking to discredit local income tax, he made some play of the calculation of equalisation grant, as if the equalisation grant would be calculated differently for a local income tax than for rates or the poll tax. The equalisation grant will apply in all cases and will be drawn from the same source in every case—from general taxation. It is therefore disingenuous of the Government to try to attack one form of local government financing on a basis that could be considered valid for every other form in exactly the same way.
No, I cannot give way, because I have only a few minutes in which to speak and I should like to reply to many points.
The Minister made the reasonable—although not entirely fair—point that everyone should pay for local government services. The principle that people should pay is generally accepted, but surely everyone should pay according to their ability to pay. People who do not have an income cannot reasonably be expected to contribute but, of course, they are unreasonably expected to do so by a Conservative Government. They expect people to pay even if they do not have the means to do so. The Government have failed to address that point. They have created a rebate scheme which is extremely cumbersome and bureaucratic, and which approaches the problem from the wrong end. It would be much better if income was the first factor to be taken into account.
The Minister then drew out what we are now quite familiar with from the Government—a load of bogus figures about local income tax to try to discredit that idea. Anybody can produce any figures out of the air to try to discredit any tax. I remind the Government that, when they first proposed the introduction of the poll tax, we were all expecting to have to pay less than people are having to pay. The Government are therefore in no position to lecture any other party about the inaccuracy of its forecasts. I digress a little by referring to the Government's failure accurately to forecast the rate of inflation, the balance of payments or the level of interest rates. We need no lectures from the Government on how our system should be determined.
Local income tax is a simple system. The mechanism that we propose is based on a year-end settlement, the level to be determined by equalisation grants that would be calculated in exactly the same way as for rates and the community charge.
With a local income tax, we are effectively talking about persuading central Government to give up some of the tax they take and to allow the local authorities to take that tax directly to ensure that they have access to the revenue from the public at large—[HON. MEMBRS: "Oh."] Yes, certainly—rather than the money being transferred back from central Government, who then pretend that it is their money. It is the people's money that is being recycled by central Government who want to have absolute control over every form of public service in the country. That is a matter of principle for them.
No hon. Member has referred to the buoyancy that would be produced by a local income tax or to the total lack of buoyancy that exists with the poll tax. The hon. Member for Lancaster (Dame E. Kellett-Bowman) made absolutely clear what she thinks of local government, which is basically that it should be abolished and that central Government should control everything—
Over 10 years, the lack of buoyancy of the poll tax will destroy all effective local government. The Conservative party knows that that is true—and that is its fundamental objective. I believe that the buoyancy of an alternative system is far to be preferred.
The Minister's other argument related to accountability. He appeared to argue that a local income tax would not make the local authorities accountable to their taxpayers. That is extraordinary. One of the great planks upon which the Conservative party has campaigned around the country during the past 10 years has been their commitment to lower the standard rate of income tax. If Conservative Members do not believe that income tax is a tax based on accountability, why have they spent so much time campaigning for such a reduction? They know that income tax is by far the most accountable form of tax. A local income tax seems to us to be a good and fair system. If it is good enough for central Government, it should certainly be good enough for local government.
The hon. Member for Sheffield, Brightside (Mr. Blunkett) spoke on behalf of the Labour party. I waited with interest to hear Labour's answer to the problems, but I continue to wait, because the answer never came. The question that is left hanging in the air is: if the Labour party were to win the next election—which is by no means certain yet—what would be its first measure to try to deal with the poll tax? Would it not be to reintroduce the rates? Is that not what we really expect the Labour party to do? If that is not the case, the Labour party should explain what it would introduce to carry it through the first Parliament. The hon. Member for Brightside did not give us an answer to that point.
The Labour party has two policies—one for England and Wales, and one for Scotland. There is nothing wrong with that in principle, but from what we have heard of the roof tax, I must conclude that it is a roof that is full of flaws. I do not believe that that idea will gain much support. Indeed, opinion polls in Scotland have shown that it is even more unpopular than the poll tax, which is some achievement for the Labour party.
The hon. Member for Wellingborough (Mr. Fry) called for temporary relief from the poll tax for married women who do not work. That is all very well, but why should the relief be only temporary? Either married women have an income and can pay, or they do not have an income and should not pay. To suggest that they should not pay the poll tax for a year but that thereafter they should pay seems simply a plea for some device to get the Conservative party through a general election—nothing more, nothing less. If the Government are seriously considering such a relief, they should remember what happened in the Budget in relation to Scotland and the poll tax. Married women in Scotland who do not work have been paying the poll tax for 14 months.
The hon. Member for Dunfermline, West (Mr. Douglas) made the fair point that there is no effective local system for financing local government and that we should be addressing a means of securing that for the future. He also said that local income tax was about getting central Government to give up some of their revenue to local authorities. I agree with that.
The hon. Member for Calder Valley (Mr. Thompson) referred to rebates and to transitional relief. He boasted about his local council's efficiency in administering them, but the figures that he gave demonstrated that the poll tax is an absurd system. He mentioned the Government amendment, which refers to some 10 million people receiving rebates and 7·5 million receiving transitional relief. If they were assessed on the basis of a local income tax, that bureaucracy would not be necessary.
In his peroration, the hon. Member for Ealing, North (Mr. Greenway) made the extraordinary plea for all people under the age of 25 to be exempted. That takes no account of their income. If they were working in the City and earning £100,000 a year, they would not pay the poll tax. What an absurd idea. Does he want to exempt them from income tax as well?
Everything that I have heard from Conservative Members proves that they know that this is a lousy poll tax that will destroy their political base in this country. The only fair system to deal with the problems to which they have alerted us is a local income tax.
I believe in giving credit where credit is due. Today the Social and Liberal Democrats have taken the opportunity provided by a debate initiated by them to publicise and subject to scrutiny their policies for paying for local government. What a contrast that is with the Labour party which, in a full-day debate on 25 April, refused to discuss its alternative of a roof tax. The Labour party had another chance today to lift the veil on its policy and perhaps give us a glimpse preview of what is to be revealed on Thursday, but where are the Labour Members? Has Labour taken that opportunity? No, it has not. Will it reveal its full alternative on Thursday? We think not. Will it ever reveal its alternative policy on what opinion polls tell us is one of the major issues of the moment—how to control and pay for local authority spending?
Clearly, if the Labour party is to have any credibility with the electorate, it must come clean with its policy. As early-day motion 1028 makes clear, the pressure is now on from both sides of the House for the Labour party to announce its proposals. Is it that it cannot say, that it will not say, or that it dare not say? I think—particularly after listening to the speech of the hon. Member for Sheffield, Brightside (Mr. Blunkett)—that the truth is that it dare not say. It is as frightened of disclosing its alternative to the community charge as it is of condemning unequivocally the 28 Labour Members who are refusing to pay.
To deal with what was said by the hon. Member for Gordon (Mr. Bruce), the debate has shown major flaws in the proposal for a local income tax. In Scotland, 44 per cent. of adults would not pay a local income tax, so it would be a soft option for them, but for everyone else it would he a crippling burden. Those unfortunate enough to bear the remaining burden would face unacceptably high and punitive tax bills. Taking the hon. Gentleman's district in Grampian as an example, this year's community charge is £252, whereas the local income tax bill for a single person on average earnings would be no less than £732—almost three times as much. Across Scotland, local income tax levels of 10·4p in the pound would be necessary to maintain the revenue from community charges this year. Clearly, a local income tax would be a direct attack on the ordinary working people whom Conservative Members seek to protect.
My hon. Friends the Members for Calder Valley (Mr. Thompson), for Ealing, North (Mr. Greenway) and for Wellingborough (Mr. Fry) made useful contributions—
I am intrigued by the inter-relationship between the hon. Member for Calder Valley (Mr. Thompson) and the Conservative Front Bench. He gave the impression that conversations between himself and Front-Bench spokesmen could solve virtually everything. Can the Minister enlighten the House as to how that mysterious process takes place?
My hon. Friend the Member for Calder Valley commands massive respect on the Conservative Front Bench. I am sure that that explains the position. He made a witty and informed speech to the House today, and everyone listened to it with interest.
My hon. Friend the Member for Ealing, North reminded us how awful the previous Ealing council had been. He must take much of the credit for ridding Ealing of that council. He reminded us how heartless that administration was.
My hon. Friend the Member for Wellingborough also participated in the debate. I was to have visited his constituency today, and I am disappointed that I could not keep the appointment. My consolation is to have heard my hon. Friend's thoughtful and forceful contribution, his ideas for improvements in the community charge system and his unequivocal rejection of the alternatives—local income tax and domestic rating.
My hon. Friend referred particularly to the problem of high-spending local authorities. He said that in his area of Northamptonshire community charges this year represented the equivalent of a 30 per cent. increase in the rates. It is the level of the community charge which causes most concern, but some community charges are high because local authorities have massively increased their spending this year. There has been a 20 per cent. increase in net revenue spending by local authorities in real terms between 1979 and 1989, but between 1989–90 and 1990–91, there has been a 7 per cent. increase in real terms. That is why community charges are so much higher than we would have wished and why, if the domestic rating system were still in place, rates would have soared. That is why we hope that local authorities will start getting a grip on their expenditure and will try to make the real savings that are possible.
The debate has again shown how cynical the Labour party is. A former Labour Member, Mr. Kilroy-Silk, said only about three weeks ago:
Today's Labour party has no ideological purpose, no philosophy, no coherent policy and, sadly, no principles…It is instead motivated almost exclusively by a ruthless drive for power that has compelled its leaders to twist and turn, to duck and dive, to wheedle and weave".
In no area of policy is that more apparent than it is in local government finance. The Labour myth is that high community charges cannot be avoided; fortunately, recent evidence shows that they can. If that is true, how is it that in Hillingdon the incoming Conservative administration can cut its charge by no less than £77 per adult—£24 more than the cap proposed by the Government? In Ealing the Conservatives have managed to make massive savings in a. short time by cleaning out the Augean stables—and what trash they have uncovered! In Merton, where the local electors chose a Labour council, they have already been given notice by the new Labour leader of the council of the price that they will have to pay for that decision—an additional £255 per adult. That is just for a start. While blaming the previous Conservative administration for the necessity for such a charge, the new Labour council is busy
increasing the bureaucracy, with more committees, more staff, an expanded press and publicity department, and more editions of the council newspaper, but it will need more than editions of the council newspaper to justify the massive increases in spending that are proposed. Labour's local government policies have never changed—they are in favour of high and frivolous expenditure. Only today, a report in one of our most widely read national newspapers stated:
Loony councillors were under fire last night after forking out poll tax money on a party for deaf lesbians".
Do we need to conduct a poll about which councils were responsible for that? Labour's Hackney council has contributed £10,000 and Haringey and Camden are chipping in £3,000 each.
In some respects, the Labour party is changing. Certainly, it is trying to change its image. In general, however, it is back to its old evil ways, wasting the community charge payers' money. We have seen—
|Division No. 221]||[7.00 pm|
|Alton, David||Jones, Ieuan (Ynys Môn)|
|Ashdown, Rt Hon Paddy||Kennedy, Charles|
|Barnes, Mrs Rosie (Greenwich)||Kilfedder, James|
|Beggs, Roy||Livsey, Richard|
|Beith, A. J.||Maclennan, Robert|
|Bruce, Malcolm (Gordon)||Smith, Sir Cyril (Rochdale)|
|Campbell, Menzies (Fife NE)||Smyth, Rev Martin (Belfast S)|
|Carlile, Alex (Mont'g)||Taylor, Matthew (Truro)|
|Cartwright, John||Wallace, James|
|Douglas, Dick||Welsh, Andrew (Angus E)|
|Ewing, Mrs Margaret (Moray)||Wigley, Dafydd|
|Forsythe, Clifford (Antrim S)|
|Howells, Geraint||Tellers for the Ayes:|
|Hughes, Simon (Southwark)||Mrs. Ray Michie, and Mr. Ronnie Fearn.|
|Johnston, Sir Russell|
|Alexander, Richard||Bowden, Gerald (Dulwich)|
|Alison, Rt Hon Michael||Bowis, John|
|Amess, David||Braine, Rt Hon Sir Bernard|
|Amos, Alan||Brazier, Julian|
|Arbuthnot, James||Brown, Michael (Brigg & Cl't's)|
|Arnold, Jacques (Gravesham)||Buck, Sir Antony|
|Arnold, Tom (Hazel Grove)||Budgen, Nicholas|
|Ashby, David||Burns, Simon|
|Aspinwall, Jack||Burt, Alistair|
|Atkins, Robert||Butcher, John|
|Baker, Rt Hon K. (Mole Valley)||Butler, Chris|
|Baker, Nicholas (Dorset N)||Butterfill, John|
|Baldry, Tony||Carlisle, John, (Luton N)|
|Banks, Robert (Harrogate)||Carlisle, Kenneth (Lincoln)|
|Batiste, Spencer||Carrington, Matthew|
|Bendall, Vivian||Carttiss, Michael|
|Bevan, David Gilroy||Chalker, Rt Hon Mrs Lynda|
|Blackburn, Dr John G.||Channon, Rt Hon Paul|
|Blaker, Rt Hon Sir Peter||Chapman, Sydney|
|Body, Sir Richard||Chope, Christopher|
|Bonsor, Sir Nicholas||Churchill, Mr|
|Boscawen, Hon Robert||Clark, Hon Alan (Plym'th S'n)|
|Boswell, Tim||Clark, Dr Michael (Rochford)|
|Bottomley, Mrs Virginia||Clark, Sir W. (Croydon S)|
|Bowden, A (Brighton K'pto'n)||Clarke, Rt Hon K. (Rushcliffe)|
|Conway, Derek||Knight, Greg (Derby North)|
|Coombs, Anthony (Wyre F'rest)||Knowles, Michael|
|Coombs, Simon (Swindon)||Lamont, Rt Hon Norman|
|Couchman, James||Lang, Ian|
|Cran, James||Lawrence, Ivan|
|Critchley, Julian||Leigh, Edward (Gainsbor'gh)|
|Davies, Q. (Stamf'd & Spald'g)||Lightbown, David|
|Davis, David (Boothferry)||Lilley, Peter|
|Day, Stephen||Lloyd, Sir Ian (Havant)|
|Devlin, Tim||Lloyd, Peter (Fareham)|
|Dickens, Geoffrey||Lord, Michael|
|Dorrell, Stephen||Lyell, Rt Hon Sir Nicholas|
|Douglas-Hamilton, Lord James||Macfarlane, Sir Neil|
|Dover, Den||MacGregor, Rt Hon John|
|Dunn, Bob||MacKay, Andrew (E Berkshire)|
|Evans, David (Welwyn Hatf'd)||Maclean, David|
|Evennett, David||McLoughlin, Patrick|
|Fairbairn, Sir Nicholas||McNair-Wilson, Sir Michael|
|Fallon, Michael||Madel, David|
|Favell, Tony||Major, Rt Hon John|
|Fenner, Dame Peggy||Malins, Humfrey|
|Finsberg, Sir Geoffrey||Mans, Keith|
|Fishburn, John Dudley||Maples, John|
|Fookes, Dame Janet||Marland, Paul|
|Forsyth, Michael (Stirling)||Marlow, Tony|
|Forth, Eric||Marshall, John (Hendon S)|
|Fowler, Rt Hon Sir Norman||Martin, David (Portsmouth S)|
|Fox, Sir Marcus||Maude, Hon Francis|
|Franks, Cecil||Mayhew, Rt Hon Sir Patrick|
|Freeman, Roger||Mellor, David|
|French, Douglas||Miller, Sir Hal|
|Fry, Peter||Mills, Iain|
|Gale, Roger||Mitchell, Andrew (Gedling)|
|Gardiner, George||Mitchell, Sir David|
|Garel-Jones, Tristan||Montgomery, Sir Fergus|
|Gill, Christopher||Moore, Rt Hon John|
|Glyn, Dr Sir Alan||Morris, M (N'hampton S)|
|Goodson-Wickes, Dr Charles||Morrison, Rt Hon P (Chester)|
|Gorman, Mrs Teresa||Moss, Malcolm|
|Gorst, John||Moynihan, Hon Colin|
|Gow, Ian||Neale, Gerrard|
|Grant, Sir Anthony (CambsSW)||Nelson, Anthony|
|Greenway, Harry (Ealing N)||Neubert, Michael|
|Greenway, John (Ryedale)||Newton, Rt Hon Tony|
|Gregory, Conal||Nicholls, Patrick|
|Ground, Patrick||Nicholson, David (Taunton)|
|Grylls, Michael||Nicholson, Emma (Devon West)|
|Hague, William||Norris, Steve|
|Hanley, Jeremy||Onslow, Rt Hon Cranley|
|Harris, David||Oppenheim, Phillip|
|Haselhurst, Alan||Page, Richard|
|Hawkins, Christopher||Paice, James|
|Hayes, Jerry||Parkinson, Rt Hon Cecil|
|Hayward, Robert||Patnick, Irvine|
|Hicks, Mrs Maureen (Wolv' NE)||Patten, Rt Hon Chris (Bath)|
|Hicks, Robert (Cornwall SE)||Pattie, Rt Hon Sir Geoffrey|
|Higgins, Rt Hon Terence L.||Pawsey, James|
|Hill, James||Peacock, Mrs Elizabeth|
|Hind, Kenneth||Porter, David (Waveney)|
|Howard, Rt Hon Michael||Portillo, Michael|
|Howarth, Alan (Strat'd-on-A)||Powell, William (Corby)|
|Howarth, G. (Cannock & B'wd)||Price, Sir David|
|Howe, Rt Hon Sir Geoffrey||Rathbone, Tim|
|Howell, Rt Hon David (G'dford)||Redwood, John|
|Hughes, Robert G. (Harrow W)||Renton, Rt Hon Tim|
|Hunt, Sir John (Ravensbourne)||Rhodes James, Robert|
|Hurd, Rt Hon Douglas||Riddick, Graham|
|Irving, Sir Charles||Ridsdale, Sir Julian|
|Jack, Michael||Rifkind, Rt Hon Malcolm|
|Jackson, Robert||Roberts, Wyn (Conwy)|
|Janman, Tim||Roe, Mrs Marion|
|Jessel, Toby||Rost, Peter|
|Johnson Smith, Sir Geoffrey||Rowe, Andrew|
|Jones, Gwilym (Cardiff N)||Rumbold, Mrs Angela|
|Jopling, Rt Hon Michael||Ryder, Richard|
|Kellett-Bowman, Dame Elaine||Sackville, Hon Tom|
|Key, Robert||Sainsbury, Hon Tim|
|King, Roger (B'ham N'thfield)||Sayeed, Jonathan|
|Kirkhope, Timothy||Scott, Rt Hon Nicholas|
|Knapman, Roger||Shaw, David (Dover)|
|Shaw, Sir Michael (Scarb')||Townsend, Cyril D. (B'heath)|
|Shelton, Sir William||Tracey, Richard|
|Shepherd, Colin (Hereford)||Tredinnick, David|
|Shepherd, Richard (Aldridge)||Trippier, David|
|Sims, Roger||Trotter, Neville|
|Smith, Sir Dudley (Warwick)||Twinn, Dr Ian|
|Soames, Hon Nicholas||Viggers, Peter|
|Speed, Keith||Waddington, Rt Hon David|
|Speller, Tony||Wakeham, Rt Hon John|
|Spicer, Sir Jim (Dorset W)||Walden, George|
|Stanbrook, Ivor||Walker, Bill (T'side North)|
|Stanley, Rt Hon Sir John||Walker, Rt Hon P. (W'cester)|
|Steen, Anthony||Waller, Gary|
|Stern, Michael||Ward, John|
|Stevens, Lewis||Wardle, Charles (Bexhill)|
|Stewart, Allan (Eastwood)||Watts, John|
|Stewart, Andy (Sherwood)||Wheeler, Sir John|
|Stokes, Sir John||Whitney, Ray|
|Sumberg, David||Widdecombe, Ann|
|Summerson, Hugo||Wiggin, Jerry|
|Tapsell, Sir Peter||Wilkinson, John|
|Taylor, Ian (Esher)||Wilshire, David|
|Taylor, John M (Solihull)||Wolfson, Mark|
|Taylor, Teddy (S'end E)||Wood, Timothy|
|Tebbit, Rt Hon Norman||Woodcock, Dr. Mike|
|Thompson, D. (Calder Valley)||Yeo, Tim|
|Thompson, Patrick (Norwich N)|
|Thorne, Neil||Tellers for the Noes:|
|Thurnham, Peter||Mr. Alastair Goodlad and|
|Townend, John (Bridlington)||Mr. Tony Durant.|
|Division No. 222]||[7.13 pm|
|Alexander, Richard||Chope, Christopher|
|Alison, Rt Hon Michael||Churchill, Mr|
|Amess, David||Clark, Hon Alan (Plym'th S'n)|
|Amos, Alan||Clark, Dr Michael (Rochford)|
|Arbuthnot, James||Clark, Sir W. (Croydon S)|
|Arnold, Jacques (Gravesham)||Clarke, Rt Hon K. (Rushcliffe)|
|Arnold, Tom (Hazel Grove)||Conway, Derek|
|Ashby, David||Coombs, Anthony (Wyre F'rest)|
|Aspinwall, Jack||Coombs, Simon (Swindon)|
|Atkins, Robert||Couchman, James|
|Baker, Rt Hon K. (Mole Valley)||Cran, James|
|Baker, Nicholas (Dorset N)||Davies, Q. (Stamf'd & Spald'g)|
|Baldry, Tony||Davis, David (Boothferry)|
|Banks, Robert (Harrogate)||Day, Stephen|
|Batiste, Spencer||Devlin, Tim|
|Bendall, Vivian||Dorrell, Stephen|
|Bevan, David Gilroy||Douglas-Hamilton, Lord James|
|Blackburn, Dr John G.||Dover, Den|
|Blaker, Rt Hon Sir Peter||Dunn, Bob|
|Body, Sir Richard||Evans, David (Welwyn Hatf'd)|
|Bonsor, Sir Nicholas||Evennett, David|
|Boscawen, Hon Robert||Fairbairn, Sir Nicholas|
|Boswell, Tim||Fallon, Michael|
|Bowden, A (Brighton K'pto'n)||Favell, Tony|
|Bowden, Gerald (Dulwich)||Fenner, Dame Peggy|
|Bowis, John||Field, Barry (Isle of Wight)|
|Brazier, Julian||Finsberg, Sir Geoffrey|
|Brown, Michael (Brigg & Cl't's)||Fishburn, John Dudley|
|Buck, Sir Antony||Fookes, Dame Janet|
|Burns, Simon||Forsyth, Michael (Stirling)|
|Burt, Alistair||Forth, Eric|
|Butler, Chris||Fowler, Rt Hon Sir Norman|
|Butterfill, John||Fox, Sir Marcus|
|Carlisle, John, (Luton N)||Franks, Cecil|
|Carlisle, Kenneth (Lincoln)||Freeman, Roger|
|Carrington, Matthew||French, Douglas|
|Carttiss, Michael||Fry, Peter|
|Chalker, Rt Hon Mrs Lynda||Gale, Roger|
|Channon, Rt Hon Paul||Gardiner, George|
|Chapman, Sydney||Garel-Jones, Tristan|
|Gill, Christopher||Moss, Malcolm|
|Glyn, Dr Sir Alan||Moynihan, Hon Colin|
|Goodson-Wickes, Dr Charles||Neale, Gerrard|
|Gorman, Mrs Teresa||Nelson, Anthony|
|Gorst, John||Neubert, Michael|
|Gow, Ian||Newton, Rt Hon Tony|
|Grant, Sir Anthony (CambsSW)||Nicholls, Patrick|
|Greenway, Harry (Ealing N)||Nicholson, David (Taunton)|
|Greenway, John (Ryedale)||Nicholson, Emma (Devon West)|
|Gregory, Conal||Norris, Steve|
|Ground, Patrick||Onslow, Rt Hon Cranley|
|Grylls, Michael||Oppenheim, Phillip|
|Hague, William||Page, Richard|
|Hanley, Jeremy||Paice, James|
|Harris, David||Parkinson, Rt Hon Cecil|
|Haselhurst, Alan||Patnick, Irvine|
|Hawkins, Christopher||Patten, Rt Hon Chris (Bath)|
|Hayes, Jerry||Pattie, Rt Hon Sir Geoffrey|
|Hayward, Robert||Pawsey, James|
|Hicks, Mrs Maureen (Wolv' NE)||Peacock, Mrs Elizabeth|
|Hicks, Robert (Cornwall SE)||Porter, David (Waveney)|
|Higgins, Rt Hon Terence L.||Portillo, Michael|
|Hill, James||Powell, William (Corby)|
|Hind, Kenneth||Price, Sir David|
|Howard, Rt Hon Michael||Rathbone, Tim|
|Howarth, Alan (Strat'd-on-A)||Redwood, John|
|Howarth, G. (Cannock & B'wd)||Renton, Rt Hon Tim|
|Howe, Rt Hon Sir Geoffrey||Riddick, Graham|
|Hughes, Robert G. (Harrow W)||Rifkind, Rt Hon Malcolm|
|Hunt, Sir John (Ravensbourne)||Roberts, Wyn (Conwy)|
|Irving, Sir Charles||Roe, Mrs Marion|
|Jack, Michael||Rost, Peter|
|Janman, Tim||Rowe, Andrew|
|Jessel, Toby||Rumbold, Mrs Angela|
|Johnson Smith, Sir Geoffrey||Ryder, Richard|
|Jones, Gwilym (Cardiff N)||Sackville, Hon Tom|
|Jopling, Rt Hon Michael||Sayeed, Jonathan|
|Kellett-Bowman, Dame Elaine||Scott, Rt Hon Nicholas|
|Key, Robert||Shaw, David (Dover)|
|King, Roger (B'ham N'thfield)||Shaw, Sir Michael (Scarb')|
|Kirkhope, Timothy||Shelton, Sir William|
|Knapman, Roger||Shepherd, Colin (Hereford)|
|Knight, Greg (Derby North)||Shepherd, Richard (Aldridge)|
|Knowles, Michael||Sims, Roger|
|Lamont, Rt Hon Norman||Smith, Sir Dudley (Warwick)|
|Lang, Ian||Soames, Hon Nicholas|
|Latham, Michael||Speed, Keith|
|Lawrence, Ivan||Speller, Tony|
|Leigh, Edward (Gainsbor'gh)||Spicer, Sir Jim (Dorset W)|
|Lightbown, David||Stanbrook, Ivor|
|Lilley, Peter||Steen, Anthony|
|Lloyd, Sir Ian (Havant)||Stern, Michael|
|Lloyd, Peter (Fareham)||Stevens, Lewis|
|Lord, Michael||Stewart, Allan (Eastwood)|
|Lyell, Rt Hon Sir Nicholas||Stewart, Andy (Sherwood)|
|Macfarlane, Sir Neil||Stokes, Sir John|
|MacKay, Andrew (E Berkshire)||Summerson, Hugo|
|Maclean, David||Tapsell, Sir Peter|
|McLoughlin, Patrick||Taylor, Ian (Esher)|
|McNair-Wilson, Sir Michael||Taylor, John M (Solihull)|
|McNair-Wilson, Sir Patrick||Tebbit, Rt Hon Norman|
|Madel, David||Thompson, D. (Calder Valley)|
|Major, Rt Hon John||Thompson, Patrick (Norwich N)|
|Malins, Humfrey||Thorne, Neil|
|Mans, Keith||Thurnham, Peter|
|Maples, John||Townsend, Cyril D. (B'heath)|
|Marland, Paul||Tracey, Richard|
|Marshall, John (Hendon S)||Tredinnick, David|
|Martin, David (Portsmouth S)||Trippier, David|
|Maude, Hon Francis||Trotter, Neville|
|Mayhew, Rt Hon Sir Patrick||Viggers, Peter|
|Mellor, David||Waddington, Rt Hon David|
|Miller, Sir Hal||Wakeham, Rt Hon John|
|Mills, Iain||Walden, George|
|Mitchell, Andrew (Gedling)||Walker, Bill (T'side North)|
|Mitchell, Sir David||Walker, Rt Hon P. (W'cester)|
|Montgomery, Sir Fergus||Waller, Gary|
|Moore, Rt Hon John||Ward, John|
|Morris, M (N'hampton S)||Wardle, Charles (Bexhill)|
|Morrison, Rt Hon P (Chester)||Watts, John|
|Wheeler, Sir John||Woodcock, Dr. Mike|
|Whitney, Ray||Yeo, Tim|
|Widdecombe, Ann||Younger, Rt Hon George|
|Wilkinson, John||Tellers for the Ayes:|
|Wilshire, David||Mr. Alastair Goodlad, and Mr. Tony Durant.]|
|Abbott, Ms Diane||Howells, Dr. Kim (Pontypridd)|
|Alton, David||Hughes, Simon (Southwark)|
|Ashton, Joe||Janner, Greville|
|Banks, Tony (Newham NW)||Johnston, Sir Russell|
|Barnes, Harry (Derbyshire NE)||Jones, Ieuan (Ynys Môn)|
|Barnes, Mrs Rosie (Greenwich)||Kilfedder, James|
|Barron, Kevin||Lofthouse, Geoffrey|
|Battle, John||Loyden, Eddie|
|Beith, A. J.||McFall, John|
|Bell, Stuart||McKay, Allen (Barnsley West)|
|Bennett, A. F. (D'nt'n & R'dish)||Maclennan, Robert|
|Bermingham, Gerald||Mahon, Mrs Alice|
|Blunkett, David||Martlew, Eric|
|Bruce, Malcolm (Gordon)||Meale, Alan|
|Campbell, Menzies (Fife NE)||Michie, Bill (Sheffield Heeley)|
|Campbell-Savours, D. N.||Michie, Mrs Ray (Arg'l & Bute)|
|Carlile, Alex (Mont'g)||Morris, Rt Hon A. (W'shawe)|
|Cartwright, John||Mullin, Chris|
|Corbyn, Jeremy||Nellist, Dave|
|Cousins, Jim||O'Brien, William|
|Cox, Tom||Patchett, Terry|
|Cunliffe, Lawrence||Quin, Ms Joyce|
|Dixon, Don||Rogers, Allan|
|Douglas, Dick||Skinner, Dennis|
|Eastham, Ken||Spearing, Nigel|
|Evans, John (St Helens N)||Taylor, Mrs Ann (Dewsbury)|
|Ewing, Mrs Margaret (Moray)||Taylor, Matthew (Truro)|
|Fearn, Ronald||Walley, Joan|
|Foot, Rt Hon Michael||Welsh, Andrew (Angus E)|
|Foster, Derek||Wigley, Dafydd|
|Godman, Dr Norman A.||Winnick, David|
|Golding, Mrs Llin||Wise, Mrs Audrey|
|Griffiths, Win (Bridgend)|
|Hardy, Peter||Tellers for the Noes:|
|Haynes, Frank||Mr. Graham Allen and Mr. George J. Buckley.|
|Home Robertson, John|
That this House believes that most adults should contribute towards the cost of local services with relief for the less well off; welcomes the embodiment of those principles in the community charge and notes in particular that 10 million people have received bills reduced by rebates whilst 7·5 million have been protected by transitional relief; welcomes the willingness of the Government to listen to constructive suggestions for further improving the new arrangements; and contrasts the fairness and clarity of the community charge with the injustice and impracticability of a local income tax favoured by the Social and Liberal Democrats and the total lack of any clear proposals from the Labour Party.'.