Poll Tax

Part of Opposition Day – in the House of Commons at 5:04 pm on 5th December 1990.

Alert me about debates like this

Photo of Malcolm Bruce Malcolm Bruce Shadow Spokesperson (Scotland) 5:04 pm, 5th December 1990

Given our modern systems of computerised technology, I do not accept that that is necessary. The Secretary of State made it clear that he was considering an overall review of local government. Many of us feel that we could simplify local government, and perhaps the two things could go together. The hon. Gentleman's suggestion may be helpful, but I do not think that it is necessary.

Let me put on record some of the changes to the poll tax which are urgently needed and which should be considered in the first phase. The poll tax has tipped the balance against rural areas in terms of where the money comes from and where the services are provided. Because it is a flat rate, which does not take account, as rates did, of lower valuations, people in rural areas are paying the same per head as those in urban areas without having access to the same range of services

All of us who represent rural areas could give examples. One of the more extreme examples, passed to me by my hon. Friend the Member for Caithness and Sutherland (Mr. Maclennan), is the community of Ardmore, to which access can by gained only be a two-mile footpath. With the possible exception of education, none of the normal services are accessible. Not even social work support services can easily be provided. A crofting couple who had to pay a rates bill of about £20 a year now have to pay more than £400 a year, even though the local authority is in no position to provide additional services. That anomaly should be addressed.

Hon. Members have referred to the immediate problem of the crisis in the Gulf. It has been suggested that local authorities should charge only 20 per cent. for those involved in training for service in the Gulf. That would cost local authorities with a high proportion of service men in their areas—Gosport, for example—a substantial amount. I hope that it will be recognised that those local authorities should be fully reimbursed, because such action, taken in the national interest, can fall very unevenly on local authorities.

The anomaly of second homes is still causing considerable problems. Let me cite an example from my constituency to emphasise the fact that there is a real injustice. More than a year ago, a lady moved to my part of Scotland from Peterborough, where she owned a flat in a sheltered housing complex. She has been unable to sell the flat at any price because of the state of the market, yet Peterborough council is treating the flat as a holiday home, on which she has to pay double poll tax in addition to the poll tax that she is paying to my local authority in Grampian. Peterborough council has offered to enter negotiations with her on the basis that the amount should not be paid until the flat is sold, but she has been in real distress about the level of debt that is accruing. She simply cannot pay.

One immediate relief for which everyone will be hoping is the abolition of the 20 per cent. requirement. If people's income is so low that they qualify for full social security benefit, it is anomalous to require them to pay. Full reimbursement is a nonsensical bureaucratic arrangement, but if people are not fully reimbursed, their hardship is aggravated further. That is the major step that the Secretary of State could take now to increase the acceptability of the tax—in that income range at least—not just to people on the receiving end but to the local authorities, which are finding it impossible to collect the money. Very often, the cost of collection outweighs the revenue that could be accrued.

According to the Government, the rates were abolished in favour of the poll tax to ensure a fairer system. I have here an election pamphlet produced by a certain John Major when he was a candidate in Holborn and St. Pancras constituency. It says: The Conservatives believe this"— the rating system— is unfair and will abolish domestic rates within a normal parliament. We shall replace them by a more broadly based tax, relating to people's ability to pay. The Prime Minister must now realise that the poll tax does not satisfy the criteria that he then identified.

It is worth reminding the House what happened. We had a rating revaluation in Scotland—something that Governments have not dared to do in England since 1973. The five-year review in Scotland caused such an outcry among Conservative voters in Scotland that the Scottish Office and Scottish Ministers approached the Cabinet and said, "Please give us an alternative." Scottish Ministers who now claim that the poll tax was imposed on them by their Cabinet colleagues will have difficulty in justifying that claim. We are waiting with interest to see how the Secretary of State will fare in the convoluted changes that he now faces.

When the present Secretary of State for the Environment was asked why he had not opposed or objected to the poll tax in Scotland although he opposed its introduction in England or Wales, he said, "Because I thought that Scotland wanted it." In future, the right hon. Gentleman and the Prime Minister will have to be very careful not to confuse the voice of the Conservative party in Scotland with the voice of the Scottish people. There is little correlation between the two. Had they recognised that in the first place, the difficulty might not have arisen.

On last year's poll tax, the Scottish local authorities face a shortfall of £142 million, or 14·7 per cent. Allowing for the amount that was budgeted for in respect of non-payment, the shortfall amounts to £98 million, or 11 per cent. We are talking not about this year but about last. This year, the local authorities have collected only 40·8 per cent. of what is due, although they calculated that they would manage to collect 57·6 per cent. by now. The shortfall looks as though it may be worse this year than it was last.

Let me make a comment in passing about non-payment. The vast majority of cases of non-payment have arisen because people have had difficulty in finding the money. I do not believe that there is a mass non-payment campaign—although some people are trying to claim credit for one. I can testify to the fact that there is considerable anger among those who have paid against those who can pay but have not paid. I do not accept that the "Can pay, won't pay!" campaign has been popular in Scotland. It has been deeply resented in many quarters, and it has not brought down the poll tax. The poll tax has been brought down by the fact that it is difficult to collect and administratively cumbersome.

The other problem, which I think the Secretary of State addressed, was that the poll tax is, by definition, a flat rate charge. One issue that must be taken on board is the fact that local authorities should have the right of access to funding which has natural buoyancy built into it. That is an important point of principle that needs to be established. The more enthusiastic right-wing members of the Conservative party were attracted to the poll tax simply because it did not have that buoyancy, and they thought that they could screw down the local authorities.

However, that is not compatible with what the Government are increasingly asking the local authorities to do. The Secretary of State acknowledged that the Government have asked the local authorities to take on more and more responsibility to deliver services locally, and to do so under statutes passed by this House. The Environmental Protection Act 1990 is the most recent example. As the Secretary of State again acknowledged, simply keeping pace with inflation in those circumstances leads to excessive increases in poll tax charges. It also puts pressure on the Government, who must at least acknowledge the problem and provide additional grants. Therefore, it is in the Government's interests to allow that a proportion of the income of local authorities—the poll tax accounts for only 20 to 25 per cent.—is buoyant and has a natural relationship to the overall increase in economic activity.

If the Government squeeze grants and control the business rate in such a way that it does not take account of inflation, and if the local authorities must provide additional services, their only source of flexibility, apart from increased efficiency, is the poll tax. Because it accounts for only 20 to 25 per cent. of their income, a 1 per cent. increase in revenue across the board for the council would require an increase of between 4 and 5 per cent. in the poll tax. That means that the poll tax is inevitably inflationary.

Furthermore, it does not have the effect that the Government think, because people have a relationship with their local authority and do not believe that it has simply been extravagant. People recognise the difficulties facing many local authorities. That is another factor that is contributing to the breakdown of the poll tax. Even the Government must recognise that denying any buoyancy to the local authorities is not ultimately in anybody's interest.

The Secretary of State and his predecessors have used extravagant Labour councils as their excuse for justifying their changes, but I can advise them only that the way to deal with the problem is to ensure that local councils are democratically and fairly elected. If proportional representation or some system—[Laughter.] The hon. Member for Hendon, South (Mr. Marshall) is laughing. However, if the local authorities were elected in proportion to the votes cast, most of the militant Labour authorities that the hon. Gentleman has used as a stick to justify the poll tax would never have got into power in the first place.

It is interesting that Conservative Members talk about the supremacy of Parliament and refer to what is, frankly, the humbug of the historic association of this Parliament, but fail to recognise that we have the most antiquated, corrupt and decadent political system in the western world. That is what they are presiding over when they fail to recognise the opportunities of a radical change that would make local authorities genuinely accountable, both financially and in terms of the way in which they are elected.

In conclusion, the Secretary of State has shown some recognition that this debate is not just about how we finance local authorities; it is about the proper place of local authorities in our society. I welcome that initiative. The right hon. Gentleman is right: that debate should unite all parties in the House. I have not been afraid to state where we differ from the Tory party or the Labour party. We will enter into a constructive debate on this matter as long as it i genuine and open, and as long as the views of the people in our local communities are taken into account, so that they can be assured that, in the future, they will have local authorities that they can trust, to which they can relate, which they can hold accountable, and which are financially secure.