I think that I should be marginally exaggerating if I suggested that the country, or the majority of Members of Parliament, were on the edges of their seats because of the nature of what I am about to say on these reports, despite the fact that their provisions will affect nearly every household in England and Wales and despite also the fact that the sums involved are substantial.
The purpose of the two reports is to provide grant support to billing authorities in England and Wales towards revenue expenditure incurred in the financial years 1991–92 and 1992–93 on preparation for the council tax. The grant underlines our firm commitment to helping authorities with the smooth implementation of the new tax and to ensuring that they are ready to issue the first bills by 1 April 1993.
For the convenience of the House, it might be helpful if I outlined briefly the advantages of the council tax, which is the subject of the preparations that we are considering. We believe that the council tax is fair and straightforward. It introduces a system of finance which will bring stability to local government.
The new tax is fair. It recognises that no household should have to pay an excessive amount towards the provision of local services. It makes provision for single adult households, and it is only right that they should pay less than households with two or more adults. It ensures that people on low incomes and vulnerable groups are helped through generous rebates of up to 100 per cent. of their liability. Owners of property that is no one's main residence will have to pay only 50 per cent. of the tax for the area.
In preparing the legislation and the rules that will enable a 25 per cent. reduction to be given to single-person households, will the Minister bear in mind the possibility of applying those rules to give a similar reduction for water charges which could be based on the same register?
I understand the hon. Gentleman's question, but I suspect that he is trying to lead me into matters that are rather wider than the reports. However, his question has been heard and I am sure that it will be noted by those who are considering such matters.
The council tax is straightforward. We firmly believe that it will be easier to administer than the community charge, and it will be more easily understood by the public. There will be approximately half the number of bills. Many people who are now liable for the community charge will have their liability removed under the council tax. The new bills will be based on properties, and collection difficulties should therefore be minimised.
s The council tax also has the considerable advantage for local authorities of not requiring them to compile and maintain a register of those who are liable to pay—[Interruption.] The hon. Member for Sheffield, Brightside (Mr. Blunkett) expresses doubt from a sedentary position, but I am sure that he will develop his ideas later.
Most households will receive and pay a standard bill. The local authority does not need to concern itself with the number or status of adults in each household. All it will need to know is the name of the liable person, and we have given authorities sufficient powers to ensure that they gain that information.
May I make a little more progress and then I shall willingly give way.
There is abundant evidence of market prices for most property types, and capital values are easily understood by most people. The council tax builds on those advantages and adds to them the benefits of a banded system. Banding will ensure that an excessive burden does not fall on a minority of properties, as happened under domestic rates. Banding also reduces the administrative task involved in maintaining a local finance system by obviating the need for precise valuations. With no attempt at such precision, the likelihood of disputes and appeals is greatly reduced. Capital values are related to ability to pay, but we recognise that it is not a perfect match which is why there is a 3:1 ratio between bills of properties in the highest and lowest bands.
What are the Government doing to speed up the extensive delays in outstanding appeals? When the new council tax is introduced, I envisage a string of appeals to local appeals tribunals and the delays will be substantial. What will the Government do to reduce the number of appeals?
I do not necessarily accept the premise behind the hon. Gentleman's question about the number of appeals, hut, as he knows, the independent body that runs the tribunals is aware of its responsibilities. The Government have recently stressed that we wish appeals to be settled as quickly as possible. The most recent figures that I have seen show that there has been a pick-up in the number of appeals being resolved.
The discount system is straightforward. Authorities will have a duty to try to establish the discount entitlement of each household in their area, but if that information is not forthcoming, authorities will be able to assume that the household is subject to a standard bill and it will then be up to the household to claim a discount and to supply the local authority with the necessary information to verify that claim.
The council tax will provide stability for local authorities. The tax base will remain fairly constant from year to year. The number of dwellings in any area is not usually subject to significant change. As the House knows, movements of people are far more volatile and they will not have such a great effect as under the community charge.
Should not the Minister be a little more hesitant in praising the virtues of the council tax? He will remember that when the poll tax was introduced he was a Back Bencher and, indeed, a critic. The Ministers who introduced the poll tax told us that it was excellent and that Labour was exaggerating the problems. We were told that it would work well, but we all know what happened.—it destroyed Mrs. Thatcher. Would not it be wise for the Minister, who was one of the few long-standing critics of the poll tax on the Tory Back Benches, to be more hesitant about the council tax's virtues and to bear in mind some of the criticisms that will be heard from the Labour Back Benches—and certainly from our Front Bench—about some of the defects of the new tax?
I shall take the hon. Gentleman's words of warning to heart—although I must add that a detailed study of the comments on local government finance of every hon. Member on both sides of the House over the past 10 years would prove an indigestible meal for anyone who chose to confront it.
I shall now deal with the preparations and the grants before us. My Department commissioned an independent firm of consultants—CSL Group Ltd.—to estimate the additional costs to local authorities of preparing for the council tax. It estimated that local authorities would need to spend £165.3 million in 1991–92 and 1992–93.
Will the Minister assure us that clarification will soon be issued on the treatment of the software costs of implementation of the council tax? I understand that CSL assumed that software costs could be capitalised, which would not be in accordance with the Local Government and Housing Act 1989. Local authorities urgently need clarification.
I shall try to cover that issue in my speech, but if I do not do so, I trust that my hon. Friend the Under-Secretary of State for Wales, who is to reply, will be able to supply the detailed answer that the hon. Lady seeks.
CSL estimates that, out of the sum that I have mentioned, English authorities would need to spend £156..1 million to introduce the new tax. That amount is divided between £114.6 million for revenue and £41.5 million for capital. CSL estimates that Welsh authorities would need to spend £9.2 million—almost £8 million in revenue expenditure and £1.24 million in capital expenditure. The Government have accepted the consultants' recommendations in full.
The special grant report authorises a grant of £85.97 million to English authorities to cover 75 per cent. of authorities' revenue costs. That amount is outside the total aggregate external finance set for local authorities in 1992–93. The grant is to be distributed on the basis of the number of domestic properties in each area, with an allowance for higher costs in the London area. The Welsh report authorises a grant of £5.985 million.
The number of dwellings used for that purpose is based on information supplied to the Secretaries of State for the Environment and for Wales, which has been validated with local authorities. Annex A of the English report and appendix 2 to the Welsh report detail the amount to be made available to each authority.
Will the Minister confirm that the grant will cover 75 per cent. of the revenue costs of the change and none of the capital costs, which may involve, for example, computer software? Bearing in mind the fact that, even viewed in the most charitable possible light, the poll tax was a Government mistake, why do the Minister and his Welsh counterpart think that local authorities, which have already been severely punished by the wasted costs of the poll tax, should now have to pay any part of the revenue or capital costs of the change?
I shall clarify the position. The Government will make available supplementary credit approvals to cover the full cost of the capital expenditure. The hon. Gentleman will have heard what I have just said, but I am not yet sure whether that fully answered the question asked by the hon. Member for Birmingham, Selly Oak (Dr. Jones). I shall return to the subject later.
The remaining 25 per cent of the revenue funds needed by authorities for council tax implementation will be supported through revenue support grant. If the House approves the report, a payment of 66 per cent. of an authority's grant will be paid on account on 1 November 1992 to authorities in England. Welsh authorities will receive 90 per cent. of grant in 1992–93 through three equal instalments in June 1992, November 1992 and March 1993. The remaining grant payable in 1993–94 in England and Wales is conditional on submission of a claim form by the authority. The CSL report identified a preference among Welsh authorities to fund computer-related costs from revenue sources. That has been taken into account in the Welsh payment arrangements.
The amount to be paid to each authority in respect of preparation costs cannot exceed the amount that the authority has spent on preparation. As a result, it is possible—if a little unlikely—that an authority will be entitled to receive less than the amount shown in the table at annex A and appendix 2 of the reports.
For the purposes of the reports, revenue expenditure is defined as expenditure which a billing authority incurs or has incurred in the financial years 1991–92 and 1992–93 solely for the purposes of preparation for the council tax, and which is not expenditure for capital purposes within the meaning of part IV of the Local Government and Housing Act 1989.
My Department will be issuing authorities with supplementary credit approvals totalling some £41 million to cover the cost of capital works. That answers the point raised by the hon. and learned Member for Montgomery (Mr. Carlile). The SCAs are not subject to a special grant report. They will be issued after 31 March 1993, on the basis of claims submitted by an authority and certified in the same way as the revenue claim form. It may be possible to issue higher SCAs to authorities spending above their allocations if claims from other authorities show spending below allocation. We shall consider the basis for doing that if it becomes clear that overall there is a significant underspend of the total allocation of £41.5 million. The SCAs for Welsh authorities in respect of capital expenditure were issued on 10 March this year.
Both my Department and the Welsh Office have liaised closely with the local authority associations about the level of grant and its method of distribution. The associations recognise the advantage of a formulaic basis for payment, as it will ensure speedy payment of the grant and, therefore, assist local authorities with their cash flow. I hope that the House will agree that the level of the grant is generous, and a very fair contribution to the necessary costs that local authorities will face in introducing the new tax.
The grants that we are considering are but one aspect —albeit a most important one—of the council tax implementation programme that we have in hand. Once the Local Government Finance Act 1992 received Royal Assent, we moved swiftly to make 10 key sets of regulations to let authorities know as quickly as possible the statutory framework within which they would be operating. Last week my right hon. Friend the Secretary of State for Social Security laid the council tax benefit regulations before the House, and we shall be presenting regulations governing the scope of the council tax transitional relief scheme very shortly. Meanwhile, both Departments are undertaking a comprehensive programme to disseminate information. The aim is to ensure that authorities know how the new system is structured, that they are kept abreast of developments and that they have all the necessary information to ensure a smooth implementation.
At an early stage—last November—both Departments issued all authorities with good practice guidelines and a model implementation plan. These offered authorities advice on the initial stages of setting up project teams and defining implementation targets, and were based on work by CSL. We subsequently asked CSL to do some follow-up work to assess community charge backlogs, and to offer advice on action that authorities might take to reduce them. The study, which is under way, has the support of the local authority associations, and is designed both to help authorities with their community charge work and to free resources for council tax implementation.
Our Departments have also sponsored a detailed council tax computer system specification produced by the local authority systems alliance. It offers advice on all identified user requirements and addresses the varied application needs of authorities for in-house computer development, software house systems and package evaluation. A copy was sent to all authorities, and will be updated as necessary.
With the local authority associations in England and Wales, we are preparing a series of practice notes offering advice on all practical aspects of the new tax. We have already issued three such notes to all local authorities—on valuation lists, liability, discounts and exemptions, and recovery and enforcement. We will issue remaining notes as quickly as possible. We shall produce additional practice notes as the need arises and supplement the existing ones to ensure that they remain of value to local authorities.
In addition to that written advice, my officials have embarked on a series of implementation monitoring visits to local authorities. We have selected more than 30 authorities which represent a broad cross-section of all authority types and locations. The object of the visits is to learn at first hand the practical issues that authorities face. We shall offer help where possible and, perhaps more important, gather information that we can use centrally to guide us in framing any necessary amendments to the regulations and also to identify subject areas on which additional general advice may be desirable.
That two-way exchange of information is not an isolated exercise. We plan to visit the authorities on a number of occasions over the coming months so that both my Department and the authorities can keep up to date with the current state of play.
Officials from both Departments have also embarked on a series of talks to local authority practitioners at seminars held by the Chartered Institute of Public Finance and Accountancy, the Institute of Rating, Revenues and Valuation and the local authority associations. They were booked for some 30 seminars throughout England and Wales, and I gather that more than half of these have already taken place. The aim is to offer an overview of the tax and answer any detailed points raised. More seminar dates will be added as the occasion arises and, as with the monitoring visits, we intend to ensure that that level of commitment is maintained for as long as local authorities feel it is necessary.
The House may also like to know that officials are liaising with such bodies as the National Association of Citizens Advice Bureaux and the National Consumer Council, and are keeping the computer suppliers closely in touch with developments.
I hope that the House will agree that all this shows our determination to co-operate closely with local government in the implementation of the new tax. The special grant reports are an important and tangible demonstration of our commitment to ensuring that local authorities have the necessary tools with which to do the job, and I commend them to the House.
I welcome the fact that the reports are before us today, albeit somewhat belatedly. Having issued them on 4 June under the wrong legislative power—the Local Government Act 1988 instead of the Local Government and Housing Act 1989—the Government had to withdraw and reissue them. We should all say a prayer for the Department's competence in finally managing to find the right legislation under which to issue the reports.
The way in which the council tax saga is unfolding, and the tardiness with which it is being handled, is very reminiscent of the poll tax shambles. I feel like saying, "Here we go again: another tax; another shambles in the making; another last-minute confirmation of information that is essential if local government is to do its job; and another chance for local government to bail out central Government by achieving the impossible within time limits which border on the ridiculous and which make it likely that, if things go wrong, local government will get the blame for the confusion, uncertainty and unpreparedness of the Government."
The truth is that, when the Government pushed the legislation through, they never really expected to have to implement this wretched tax. That is self-evident, and the Under-Secretary knows it.
Perhaps the fairest immediate response is to say that if, indeed, we are surprised—and I promise the hon. Gentleman that we are not—our surprise is as nothing compared with the relief that the Opposition must feel at not having to introduce a tax requiring four separate annual valuations,
As we never proposed a tax with four separate annual valuations, we do not have to feel relief at not having to implement it. If there was a bright spot on my horizon on 10 April, it was that I would not have to sort out the shambles that you created—the aftermath of the poll tax—or deal with the alterations that a Labour Government would have made to the council tax. We would not have implemented the tax in this form. We would not have used the way that you have chosen to restore a property tax —
I apologise, Madam Speaker. I still feel that I am on the hustings. My problem is knowing which hustings I am now on. For this afternoon's purposes, may I say that the Government did not believe that they would have to implement the council tax. We knew that, when in power, we would have to alter it to make it workable.
The Minister, rightly from his point of view, eulogised this afternoon about the reintroduction of a property tax. He was right to do that, because such a tax is simple, potentially much fairer than the poll tax, and can be made to work more cheaply. The problem is that the tax, the orders for funding the introduction of that tax and the necessary administration and computer arrangements, will be more costly than Labour's alternative and they are much more confusing in terms of implementation.
Part of the problem is that the council tax is expected to bear such a heavy load in terms of the failure to decentralise the business rate. With only 15 per cent. in England and a much lower percentage in Wales having to be picked up by a local tax of that kind, it is clear that the way in which it has to be implemented and its eventual outcome will be much more problematic. One need only read the leader in The Times today to understand the difficulty.
With such a tax, the powers and functions of local government must be reduced to accord with the ability of those authorities to sustain services instead of having a tax designed to sustain a range of services required by local people.
With regard to services, did the hon. Gentleman listen to the programme on BBC 2 last night about a town hall and hear the chief education officer of Labour-controlled Lewisham council in London bemoaning the fact that the council had so organised its school transport contracts that the council's National Union of Public Employees friends and the direct labour organisation could charge whatever they liked? There was no chance of a reduction even if the use of those services decreased. As a result of those ludicrous contracts, teachers' jobs had to be cut. Is the hon. Gentleman proud of those priorities and the efficiency of that flagship London Labour council?
I seem to recall that the PA Consulting Group, which investigated the operation of compulsory competitive tendering in the light of the Government's desire to extend CCT, recommended that community and school transport should be exempted on the ground that it was cheaper for the authority to organise its overall services to integrate the provision of school transport with its central transport operations and that it cost as much money to put the services out to tender as it did to operate those services. I am happy to refute the allegations of the hon. Member for Amber Valley (Mr. Oppenheim).
I have been diverted from the interesting leader article in The Times. The article referred to a speech made by the Minister for Local Government and Inner Cities yesterday to the Association of County Councils about the future. Obviously the future of local government is dependent on and bound up with the ability of local government to raise tax and spend money. The article stated:
For good measure, Mr. Redwood listed some of the activities that a modern Tory minister nowadays associates with subsidiary government in Britain. A county might see its identity reflected in an agricultural show, a cricket team and a lord lieutenant; a town might find expression in a football team, an arts festival and a mayor. Small wonder that councils are frantically campaigning against what they see as another assault on their surviving functions.
There could be any old tax if the functions of an authority were reduced to the point where a council meeting could be held in a telephone box with a taxi or Lewisham's school transport waiting outside to take people away. It is nonsense—we all know that it is—that a tax should not be able to bear the functions and activities which give local people an opportunity to express themselves at the ballot box and to get the services that they want.
Having had the poll tax, one unholy mess, perpetrated upon us, we now have the council tax. The reports offer 75 per cent. of expenditure, as the Under-Secretary of State for the Environment has spelt out—that is, 75 per cent. of CSL's estimate on revenue and the £41 million for England in terms of capital allowances.
My hon. Friend the Member for Birmingham, Selly Oak (Dr. Jones) asked whether the software provision that is absolutely vital in implementing the new proposals could be capitalised to ensure that they did not fall as a revenue charge which would divert from other administrative costs. I hope that the Under-Secretary of State for the Environment and his hon. Friend the Under-Secretary of State for Wales will be able to assure us that such costs can be counted for capital purposes to ensure that further damage is not done to services by having to find revenue from elsewhere, because those things matter greatly and authorities are having to do the planning and the work now. They cannot do them after April next year. They cannot simply put off the evil day or perhaps decide that they will find the expenditure from somewhere else, because they have to do so now. We will deal with capping orders which illustrate the delicate position in which authorities find themselves. Even an extra £3 a head on a poll tax bill has to be denied a tiny district authority in the interests of centralised government and new forms of autocracy.
It would be helpful if the Under-Secretary of State for the Environment and his hon. Friend the Under-Secretary of State for Wales could answer a few questions about exactly what we will have to face in the months ahead so that local government can take account of the problems and begin to plan to overcome them.
The Under-Secretary of State for the Environment suggested that it was not necessary to have a register to be able to operate the council tax; therefore, expenditure did not have to be found—that was the inference—to provide and maintain that register. It is only a week or two since the Government admitted that they will use the poll tax register for the coming year to assess the likely take-up of discounts and the way in which an authority would have to calculate the amount levied on the new valuation system to reach a base level for funding the authority in the year ahead.
Those are serious matters. If the poll tax register, with all its faults and failings, is to be used for that purpose, why not accept that there should be a maintained register over the years ahead? Why not accept that funding should be made available to sustain such a sensible register?
The Under-Secretary of State for the Environment said that there would be a standard council tax charge and that people would apply for their discounts once they knew what their bills would be. A bill will drop through the door, and the family or person living in the house will have to make an application. But that is a fat lot of use to the authority that is planning for how many people it will have to assess as living alone. It is a fat lot of use in determining exactly how grant, business rate and local council tax revenues are to be balanced to ensure that authorities can balance the books in the financial year ahead. It is a fat lot of use, Mr. Deputy Speaker—[Interruption.] I am sorry, Madam Deputy Speaker. It is a women's takeover. It is necessary to have that information in order to assess levy and the likely problems that will be experienced in dealing with council tax capping and the like.
Some serious issues arise out of the dismissal of a register in terms of the operation of the discount system. I should be grateful if the Under-Secretary of State for the Environment the Under-Secretary of State for Wales would tell us where the cash will come from to compensate for that.
We estimated that £780 million would be necessary to fund the discounts to people living alone. I assume that part of that will be trawled back from the reduction in the amounts claimed in benefits. We were not assured in Committee about that. I referred earlier to why we did not believe that the Government would implement the council tax. They had so few answers to reasonable questions about how the tax would be implemented.
One of our questions was how much it would cost the nation as a whole, or how much would have to be found by local taxpayers, to top up the amount lost by giving discounts to the wealthy who happened to claim that they lived alone. Once such claims are made, it is necessary to check them to ensure that the system works and is properly monitored. Then we are into the business of the register.
We are not sure how the valuation system is working out. We had a bland assurance this afternoon which the civil service had written into the Under-Secretary's speech that all was well on the valuation front. That is not the information or the signals that many of us have received about what is happening on the ground.
My hon. Friend the Member for Normanton (Mr. O'Brien) is one of the world's experts on valuation appeals. In the Committee which considered the poll tax legislation, he enlightened us about the number of outstanding appeals against the former rates and business rates valuations. The figure was 43,000 in West Yorkshire alone. That was only a few months ago. My hon. Friend will confirm, I am sure, by tapping my left leg that I have got it right.
We now face a valuation system that will not be completed until the end of the year. Information will not be given to authorities and individuals until the beginning of 1993. People will be expected to lodge appeals. You were not in the Chamber to hear it, Madam Deputy Speaker, but the Under-Secretary said that everything would be all right because, to paraphrase, the valuations would be so vague and inaccurate that no one would be able to appeal against them. That is what he said in effect. I thought that that was an interesting give-away.
If we had been able to operate a new property tax, the Labour party would have introduced definite valuations which took account of the real sale price of the house, adjusted by sensible measures. People would have the right to appeal because they would know exactly how their house compared with the neighbour's house or that of the person down the street who lived in slightly different circumstances. But, of course, no one will know that under the council tax valuation.
We can make a pretty good guess about what the valuation may be if a person does not have an extension on the back of the house, does not have a particularly enjoyable vista from the kitchen window or has a gasworks or fish and chip shop next door. I used to use the example of a fish and chip shop until the Secretary of State thought that I was referring to fish and chip shop owners and threatened me with an army of them parading outside the Palace of Westminster. So I shall stick to gasworks from now on.
Who wants a gasworks next door if the house is valued the same as the one that adjoins the local park? Of course, no one does. But presumably the Government believe that they will get away with it if the valuation is sufficiently vague to avoid a successful appeal. It all adds up to a shambles. As my hon. Friend the Member for Normanton reminds me, we had hot air balloons and helicopters passing overhead to take aerial photographs to make sure that people had told the truth about the size of their house and whether they had an extension.
Above all, the grant should ensure that local authorities can do the job well in advance. It is regrettable that a dozen key orders for the preparation and implementation of the council tax are still outstanding. We are only a few months away from D-day—or M-day, because it is a Michael tax rather than a David tax, in every sense of the word.
It is tragic that local government is expected to put the council tax together with so little information at such a late date. We do not know what provisions might be made for the standard spending assessments. We pray and hope that the Government will make some revisions so that authorities have some sense in their expenditure.
We hope for some clarification of the equalisation formula for the new grant structure after the reintroduction of a property tax. We know that at least the Under-Secretary of State understands the problems of equalisation. It was clear that other Ministers did not have a clue what we were talking about when we mentioned it in Committee and elsewhere.
A host of problems face us, and also a belated order before the summer recess, to assure local authorities that there will be some resources to help them to do the job. We should thank local authorities for the way that they are facing up to this further enormous change. We should applaud them for the way that they have tackled what they know to be another flawed tax. Once again we should accord local government the gratitude that it is so often denied by Conservative Members—gratitude for managing the impossible.
That is what we should be doing. Instead we are reading out briefs to tell local government that it will get 75 per cent. of the cost and that perhaps, under the other services element of the revenue support grant, it might get an unspecified extra 25 per cent. if it is not clawed back by the Treasury in negotiations with the Department of the Environment which amount to a battle to prevent the council tax from degenerating into the shambles that the poll tax was. We know that there is a battle and we know that the Government should spend hundreds of millions of pounds to introduce the tax rather than try to do it on the cheap.
We have no idea what the reduction scheme—the transitional help to protect people on transfer from poll tax to council tax—will cost. Perhaps we could be enlightened about that.
Answers to all those questions would help local government to do its job more effectively and to avoid being blamed when it is the Government's fault for introducing the tax too late, too shambolically, and without the necessary forethought or information to make it work properly.
Ever since I became involved with local government, each time that we have embarked on some new strategy or act, people have said that it was the end of local government as we knew it, and that if we did not get the legislation right, it would all be over. It is true that the credibility of both the Government and local government is on the line with the council tax. Everyone across the political spectrum in local government has a vested interest in ensuring that the tax succeeds.
I have always had an optimistic view of local government and, to a small degree, I share the views of the hon. Member for Sheffield, Brightside (Mr. Blunkett). Local government seems to be able to change its functions and structures quickly, and to absorb new types of finance, which shows how adaptable it is.
Before we pass the grant, it is reasonable to ensure that the amendment is sufficient. As my hon. Friend the Under-Secretary of State for the Environment said, the Government commissioned an independent report and, pleasingly and unusually, accepted its recommendations in full.
Two authorities make up the constituency of Brentwood and Ongar: Brentwood receives £131,000 in grant and Epping Forest receives £223,000. Opposition Members should realise that, on the whole, authorities are satisfied with their grants. Even the Association of Metropolitan Authorities has said that its members are largely happy with the size of the grant. That association is Labour controlled and, although I hold it in the highest regard, it is not renowned as an organisation which regards Government initiatives with any enthusiasm. Although it is not dancing in the aisles, it is satisfied with the sum that is available. It has reservations about whether the grant should be open ended, and I shall consider those later. The grant is intended to cover the sum of money expended.
The valuation process appears to have run smoothly. I do not know what signals Labour Members have been receiving, but it is a remarkable achievement to value 21 million properties by, roughly, the end of this month. It is remarkable that only 1 per cent. of firms performing those valuations were dismissed for repeated inaccuracies. I wish that that had been the case under the rating system, because, then, people would not have come to the House and spoken about the length of appeals. The Government appear to have done the job well.
I am also pleased to hear that the valuations of only 6.3 per cent. of properties were rejected as being inaccurate. That is the figure that we could have expected under the old rating system. I would not have regarded it as unusual if it had risen to 10 per cent. Therefore, it is not surprising that the Valuation Office is prepared to go on the record and state that the exercise has largely been performed satisfactorily.
The real test will come in December and January when the lists of valuations are displayed in town halls. A Labour Member suggested that many appeals might be lodged. It is pleasing to note that he is using slightly gentler language than that behind the ridiculous suggestion that the number of appeals would reach hundreds of thousands. Because of the small difference between the bands, I doubt whether many appeals will be lodged. I suspect that there will be more unhappiness about low valuations than about high ones. People will argue that their property is worth a lot more than the valuer suggests, but unless I am misjudging people's attitudes, I doubt very much whether people will appeal, saying, "Excuse me, but I am in a lower band and I would like to pay more council tax."
According to the spokesman for the Institute of Revenues, Rating and Valuation—an independent organisation—the number of appeals is likely to be minimal. I am sure that that will be the case.
We should pursue that point. Perhaps the hon. Gentleman will outline what will happen to the disabled person, who has been assured that he will be put into a lower band, if he is already in the lowest band? Will the hon. Gentleman explain what concession will be given to disabled people who are already in the lowest band?
It is clear from the legislation that for those in the lowest band, particularly the disabled, the necessary adaptations that go to make up the valuation —[Interruption.] I hope that hon. Gentlemen will allow me to answer the point. The substantive point is that adaptations to property, which enable a disabled person to live comfortably and reasonably in a house, are exempt from the valuation. There is no suggestion that higher valuations will be made. Individual and personal exemptions are available, which is perfectly reasonable.
It is spurious to suggest that many appeals will be made.
The hon. Gentleman's remarks are highly significant. He has introduced a new subject that we were not allowed to debate in Committee—disregards in the valuation of properties lived in by disabled people. If he is correct about that, I hope that that will be confirmed, because that point was not made in Committee. We should receive some assurances on the points made by the hon. Gentleman.
I think that the hon. Gentleman has misunderstood what I was saying. I was referring to disabled people in the lowest band. If their properties are adapted, they may face the prospect of being placed in a higher band. My substantive point was that, because of the legislation, those adaptations that increase the value of the property will be ignored when the banding is determined.
Given the way in which the valuation exercise has proceeded and the general satisfaction of various authorities, it is not surprising that Mr. Olding, the director of finance for Brentwood district council, wrote to me:
The introduction of the Council tax in Brentwood is proceeding smoothly and I am confident it will be a similar success story to our record on the Community Charge.
As the Under-Secretary suggested, the council tax will be much simpler to administer than the rates or the community charge. The most important factor about the new system is that it has been market tested and that it is based on valuations. People generally know the value of their home. The new system is not based on what a notional rent should be and, therefore, people will have a much clearer idea of whether they should appeal. The council tax is much easier to understand than the rates or the community charge. We need to make it clear that, because of the banding, the valuations will not be exact. As the director of the Institute of Valuers, Mr. Farrington, recently said, it is an
indication of the relative values against other properties in the same area".
I am pleased that, through the council tax, local councils' ability to raise their own revenue will be retained. That is essential to local democracy. It retains the link between when local government chooses to spend and what residents are prepared to pay. The revenue raised locally relates roughly to the level of discretion. I notice that the hon. Member for Brightside has just left the Chamber, but in a previous organisation, to which we both belonged, I used to listen to his long and persuasive arguments that local government was raising too much money locally and that the balance had shifted. He argued that central Government would have to raise more. The Government have taken his arguments on board and have drastically cut the amount that is raised locally by doing exactly what the hon. Gentleman suggested. He now tells us that we are wrong.
The level of discretion in local councils is roughly between 13 and 15 per cent., so we will have the opportunity to get better and more accountable local government through the introduction of the council tax. If a council decides to exceed its SSA—and it may have good reasons for doing so—local residents will have to pay. I do not want to trespass on the debate that will follow, but residents have the right to be protected when their council runs out of control and spends excessively.
The hon. Gentleman cannot have it both ways. He has spoken about local accountability and local democracy, but it is the Government and their civil servants who set the capping levels that appertain to all local authorities. It is nonsense to say that local authorities can do what their constituents want. They cannot, because there is a central and overbearing burden put upon them by central Government capping. I have no argument with the disappearance of the poll tax—I do not think that any hon. Member has, including Conservative Members. We are all glad to see the back of it. It is nonsense, however, to talk about the retention of local accountability when capping will still be retained after the introduction of the council tax.
I thank the hon. Gentleman for that comment. However, one of the strengths of the British constitution is, essentially, its pragmatism. When dealing with many councils that are elected on a four-year or "third out" basis, the electorate should be able to give a clear message. They gave us a clear message in April and May this year. There must be safeguards to ensure that individuals are protected. There must not be low increases or even no increases just before elections and then massive increases in the years when the electorate has no opportunity to protest. If the Government stand for anything, they stand for the protection of the individual, and those capping powers are to protect individuals against the excessive abuse of the state.
With careful management and foresight, the grants should be sufficient. The majority of information technology applications should now be in place. However, I was alarmed at a recent survey by the Society of Information Technology Managers, whose bizarre acronym is SOCITM. I have been a recipient of its bills and the acronym may be a reference to its charges. It showed that, at the end of April, only 52 per cent. of councils had signed contracts for information technology. Half of those have gone to outside contractors. Many people blame the uncertainty of the period before the general election, but it is lackadaisical and unacceptable not to have those information technologies in place now.
That brings me back to the point made by the AMA: if the amount of money is not sufficient, should not the Government underwrite that sum? By not having their information technology in place, those councils have effectively cut down their options. All that they can do now is to take proprietary packages, which will be more expensive with regard to adaptation. There should be no open-ended commitment to underwrite all the costs. It is no use complaining that the money is insufficient if councils have not taken the necessary action to minimise damage.
The grant that generates that sum must be sufficient to ensure that those packages can take care of the review of local government, whether local authorities are sized up or sized down. Many charging authorities will have to change in nature. They may be joined by other authorities or disappear completely.
We must still deal with arrears in rates and poll tax payments. The no-pay culture that stalks local government and the Labour party has done considerable damage to local government.
I am interested in the notion of a no-pay culture. Will the hon. Gentleman comment on the research in Nottinghamshire that shows that Labour-controlled councils have a far better collection record than Conservative-controlled councils?
I shall come to that matter in due course, because it is germane to the point.
I do not wish to use exaggerated language, but the Frankenstein monster of the no-pay culture, largely created by Labour councils, will haunt them for a long time. It will not be as easy for them to get rid of the monster as it was to allow their CND membership to lapse.
There should be a clear message that there will be no amnesty for defaulting poll tax payers and that those who use a service should be expected to pay. Either through inefficiency or encouragement, Labour-controlled authorities have failed to ensure that people pay their bills. My authority of Epping Forest has a collection rate of 95 per cent., and my authority of Brentwood has a collection rate of 102 per cent.—not because people there want to pay more but because the council has been prepared to ensure that people who have not paid do pay. People in Brentwood and Ongar do not all live on high incomes—plenty of people are on low incomes in my constituency —but they realise that paying the community charge is the law and people on low incomes are prepared to pay because they realise that if they do not, others will have to pay.
Compare that with the top 10 councils with the highest number of defaulters: Hackney with a collection rate of 52 per cent.; Newham with a collection rate of 58.6 per cent.; and Liverpool with a collection rate of 62.3 per cent. That is sheer incompetence.
Yes, Madam Deputy Speaker. The specific point relating to the reports is the use of the sums of money determined by them. That money must deal, essentially, with three things: first, poll tax defaulters; secondly, rates defaulters; and, thirdly, the introduction of the council tax. But no sensible council should try to use that money in that way. They should abandon rates arrears altogether and regard them as miscellaneous debt, thus making considerable sums available for information technology. They should now put out to competitive tender the collection of community charge non-payments, allowing revenue staff to work exclusively on the introduction of the council tax. The licensing of software could then be shared by those who contract out and space could be rented in software houses. That is a much more sensible way to proceed. It is not an ideological point, but a pragmatic and sensible one.
We employed extra staff for the introduction of the community charge, and those people know that they are not needed and that they must therefore go. Rather than keeping a dispirited staff together, it makes much more sense and is a better use of public money to contract the work out.
I am pleased that we shall use the electoral register. Now that we are adopting a system in which the applicant must prove, we should not be blind to other information available. The community charge register already exists. Just because we shall no longer apply that charge, it does not mean that we should not use the register for it. Why not use the electoral register, which exists as a method of proof? There is no need for a separate council tax register, and arguments for one are spurious.
In conclusion—[HON. MEMBERS: "At last."] Those hon. Members who wish to make speeches should not have interrupted me. The sums of money offered are reasonable, and local income tax will come out stronger from that process.
I shall depart from the line adopted by the hon. Member for Brentwood and Ongar (Mr. Pickles) and concentrate on the issue underlying the provisions. In most fairy tales or cautionary tales, goodness and morality win in the end; but this is a bit like a bad fairy tale, where badness and amorality win. It is as if a wicked witch in a lair on a central London street had mixed a magic potion called the poll tax and told everyone that they had to use it. Later, when it was realised that it was a thoroughly bad thing, along came a fairy godmother called Michael, his long, blond hair a-sparkle with magic charms, with a solution called the council tax. In the real fairy tale, goodness and morality would win to the extent that those who were good and deserved to have justice on their side would receive it free.
However, in the case of the council tax, the Government handed over the transfer process to a perfectly competent firm of consultants for whom they wrote a brief. The consultants drew up a report with recommendations that the Government accepted in full —I recognise that. But the bottom line is that up to 25 per cent. of the revenue cost of switching from the poll tax to the council tax may have to be borne by the local taxpayers in each district of England and Wales.
I was astonished to hear the hon. Member for Brentwood and Ongar (Mr. Pickles) say that there was overall satisfaction with the level of grant available. That is complete and utter nonsense. I have spoken to treasurers in both the districts in my constituency. In one case it is estimated that a sheer moiety of the grant will be payable—it will be 50 per cent. short. In the other case, the amount is about 45 per cent. Therefore, how the hon. Member for Brentwood and Ongar could make that assertion is beyond my comprehension. In any event, the mistake is central Government's and they should sort it out and fund their solution properly.
I am grateful to the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) who, unlike the hon. Member for Brentwood and Ongar, has stayed, fought and won in his community, where he is closely in touch with the views of both councillors and local government officers and has been for the past 20 or so years. He underlines my point that, in every district council area throughout England and Wales, residents in the local community will have to find money from their own pockets to meet the shortfall. The Parliamentary Under-Secretary of State shakes his head, but the Government have not undertaken to meet the revenue cost in full. If he wants to deny that, I shall give way with pleasure.
I was endeavouring not to interrupt the hon. and learned Gentleman's flow, but over and above today's report, the Government have undertaken to contribute substantial funds to the revenue support grant. The matter is not quite as black and white as the hon. and learned Gentleman makes out.
The Minister has, by implication, confirmed what I said earlier. I chose my words carefully and said that the consequence of the policy was that up to 25 per cent. of the revenue costs of the change may have to be met by local taxpayers. Nothing that the Minister has said so far would change that—and I suspect that nothing that the Parliamentary Under-Secretary of State for Wales says later will do so either.
No, I shall not give way as many other hon. Members want to speak.
The Government introduced the poll tax, which was nearly a complete political disaster for them and which has been accepted as being a mistake in tax terms. However, they have not done the decent thing and said that they will meet in full the cost of putting right their mistake.
In rural districts such as the constituency that I represent, Montgomery, and those of the hon. Members for Meirionnydd Nant Conwy and for Hemsworth (Mr. Enright), even a shortfall of a few thousand pounds will have tangible effects on the local community. For example, it may mean that small businesses will have to pay more for refuse collection and council houses will be maintained less efficiently than before.
I am sure that I speak for almost all my constituents when I say that I see no justice in me or any other taxpayer in Montgomeryshire having to pay a penny piece to put right a horrible mistake by the Government. I certainly regard it as outrageous that there should be a reduction in local services as a consequence of that mistake.
The matter extends further than the simple question of how to meet the cost of introducing the council tax. The poll tax will continue to haunt local councils while they attempt to collect unpaid poll tax. As I understand it, the orders make no allowance for the continuing cost of trying to collect the unpaid sums—a process that could continue for a long time. It has already wasted a tremendous amount of court time and money, and in some districts only a small amount of tax has been collected.
I hope that the Government will feel that, as they are not providing either a grant or an interest-free loan for the collection of outstanding poll tax, they will eventually say, "Enough is enough—we should stop our futile task of trying to collect the poll tax, which is now a residual sum that can never be collected." That time may well not yet have come, but I hope that the Government keep the matter under constant review. When the Parliamentary Under-Secretary of State for Wales replies, will he repudiate the suggestion that I believe was made by the hon. Member for Brentwood and Ongar that the last drop of poll tax should be collected, no matter how much it may cost local authorities to do so.
The figures set out in the orders seem to show anomalies between local authorities. For example, Richmond upon Thames has 64,400 households and a population of 167,200, and receives £340,000 grant; Kensington and Chelsea has 7,000 fewer households, 36,000 fewer people, and receives £61,000 more in grant. Bearing in mind that the grant structure for the whole country is supposed to be based on inner London figures, such anomalies are causing concern among local authorities and I make a genuine plea for information on how such anomalies have arisen.
Above all, however, England and Wales people are waiting with me for the Government to tell us why they should pay anything for the Government's mistakes.
My hon. Friend the Member for Brentwood and Ongar (Mr. Pickles) said that he was sure that all parties wanted the introduction of the council tax, and for that tax to succeed. Judging from the contributions that I have heard from Opposition Members, I wonder whether they truly want the council tax to succeed.
The grants that we are being asked to discuss and agree today are to be used for the implementation of the council tax. In the few weeks that I have been a Member of Parliament I have learnt that if people are really concerned about an issue the first thing they do is to write to their Member of Parliament. I have received no letters from constituents about the introduction of the council tax and I have had no representations from my local authority. Most of the local authorities appear to be satisfied with the amount that we are being asked to grant to them. I trust that the £184,000 for Erewash will be used properly for the purpose for which it is intended.
I am sorry that the hon. Member for Sheffield, Brightside (Mr. Blunkett) has left the Chamber. The hon. Gentleman said that local authority finance was a shambles. I spent five years as a member of Sheffield city council when the hon. Gentleman and the hon. Member for Sheffield, Attercliffe (Mr. Betts) were its leaders. If I had to attribute the word shambles to anything I would use it in connection with the way that that council was run, then and now.
There is a sad inevitability about the way that Labour councils are run, as those of us who have lived or still live in areas run by them are well aware. I had that experience not only as a member of Sheffield city council but as a resident in the area run by Derbyshire county council, which is notorious for the way in which it governs the area. Opposition Members mocked the Minister who said that counties should not just be known only by a cricket team. Derbyshire cricket team does the county far more credit than its council.
A recent article in Tribune, commenting on the local council elections, stated that several of the councils in which Labour fared worst did not deserve to do any better simply on the basis of Labour's dire record in office. I have seen the truth of that statement at first hand. I am glad to see that the hon. Member for Brightside has returned to his place.
The hon. Lady and I have crossed swords in the distant past. She speaks about competence. What did the Audit Commission say in 1985 about the running of Sheffield city council when I was its leader? Will she confirm that the chairman of the Audit Commission at the time, who is now taking over the Local Government Commission, said that Sheffield was a shining example and the most efficient council in Britain? Will she also confirm that for the first time in history Labour won the Broomhill ward in the Hallam constituency in July 1985 at the height of the conflict with central Government?
The hon. Gentleman has since lost the Broomhill ward not just once but twice. Perhaps there was one occasion on which Sheffield did not do everything wrong. However, I urge him to look at the reports for successive years on Sheffield city council by the district auditor and the Audit Commission. The hon. Gentleman should submit his evidence to the current inquiry by the district auditor into the World student games and the overall running of the local authority. For such reasons I welcome the council tax.
I have heard much concern expressed about the alternatives proposed by other parties. Rates have been mentioned, but my constituents are loath to have any sort of return to the rates. Mention has been made of the business rate. The business communities in the midlands, the north and Sheffield are united in their opposition to a return to a system in which the rate is set by the local authority. If Opposition Members spoke to their chambers of commerce, they would find, as I have, that that is their view.
Accountability is surely fundamental to local government. There must be a direct link between the amount that people pay and the implementation of the policies for which they voted. That link is retained in the council tax. I welcome the fact that people have recently started to pay great attention to local government. The council tax will be most acceptable to my constituents, but there is still a need to ensure that bills are correct and fair and are seen to be reasonable. A system under which people will not examine so much how we pay for local government will enable them to pay more attention to what local government is doing and the services that it provides. There is great concern in Derbyshire about that. One of the worries relates to the funding of Derbyshire police force and the report—
Order. I am sorry to interrupt the hon. Lady, but it is clear that her speech is straying wide of the subject of the debate. She must relate more closely to the order, which is fairly narrow.
The order deals with the granting of public money to local authorities. We are asking those authorities to spend that money wisely and advisedly. I am addressing that and the concern of many of my constituents about the use of public money and the services that are provided.
The council tax will lead to greater accountability because it will bring greater fairness, awareness and equity to local government finance. I am addressing those issues, which are surely important to all hon. Members. It is important for the grants to be made and for the council tax regime to be implemented so that equipment can be bought and wheels set in motion. The new tax must be introduced fairly and on time.
The fairness of local government finance is also a subject for debate. The unfairnesses in many local authorities such as mine are practised in what is called the name of the people. Those councils have not provided the services that people want. They have not funded the police in the way that people want. I understand that this is a narrow debate.
Order. I am sorry to interrupt the hon. Lady again. I have no doubt that the matters that she is raising are important to her, but they do not fall within the scope of the debate.
Thank you, Madam Deputy Speaker.
I applaud local government. I applaud many local councils for the efforts that they have made to ensure that services are delivered in the areas for which they are responsible. I applaud them for the efforts that they have continued to make during times of change, and we must change the ways in which local authorities are financed. Unfortunately, I cannot applaud all local authorities or councils, and some of the worst are those that are ruled by the Labour party.
I shall try to keep my remarks strictly within the terms of the orders.
The two most recent speeches that we have heard from the Government Benches had a profoundly depressing ring about them. The hon. Member for Brentwood and Ongar (Mr. Pickles), having failed to maintain control of Bradford city council for the Conservative party, decamped to another part of the country. He chooses now to use his seat in the House to berate local government in general and the part of it that would not continue to elect him in particular.
The same can be said of the hon. Member for Erewash (Mrs. Knight). Having failed on any occasion to take control of Sheffield city council, the hon. Lady decamped to Derbyshire. Having failed to listen to your strictures, Madam Deputy Speaker, she is now failing to follow the debate, but that is probably par for the course. It seems that she prefers to talk to her colleagues.
Order. I think it unwise for one Member to talk about the conduct of another. There is some unbecoming conduct in the Chamber, and I refer to the amount of conversation that appears to be taking place among those on the Opposition Benches. I am anxious to hear what the hon. Member says.
I am grateful to you, Madam Deputy Speaker.
I wish to say specifically that, having failed ever to take control of Sheffield city council, the hon. Member for Erewash had to find a seat that could accommodate her in Derbyshire. From that safe warren the hon. Lady attacks the city council of which she used to be a member and of which she could never take control.
The hon. Members for Brentwood and Ongar and for Erewash, having been rejected by their local authorities, have come to the House to turn the full heat of their hatred back on the electorate. It seems that it is to be punished for not electing them at local authority level.
I wish to talk specifically about the application of the council tax in Knowsley, part of which I am proud to represent. The first issue that I intend to raise was covered in part by my hon. Friend the Member for Normanton (Mr. O'Brien), when he intervened in the Minister's speech. I am concerned about how the council tax will bear on those whose properties have been adapted because of their disabilities. I spoke to officials of Knowsley borough council this morning, who told me that they are desperately concerned about the way in which the system will operate. They feel that it will be difficult to ensure that adapted properties are subject to appropriate banding. It seems that the onus has been placed on local authorities to seek out disabled people. The officials to whom I spoke feel that that is not necessarily the best approach. More to the point, they feel that there is much scope for disabled people being overlooked. Another consideration is that if a property is already on the lowest band and then it is adapted, there is no further band to which it can drop. That discriminates against those who live in properties that fall within the lowest band. There is no scope there for any improvement.
My second complaint is that the discount system seems incredibly difficult to operate. The onus is on the local authority to identify who is and who is not a single-person occupier. It seems that the Department of the Environment takes the view that the benefit of the doubt rests with the council tax payer. That is the advice that is being received by local authorities through the Department. I understand, however, that a recent Audit Commission circular states that the onus is on the occupier to establish his or her status as a single occupier. It seems that the Audit Commission has made that clear in recent contacts with local authorities. There is an area of confusion which needs to be clarified.
If I thought that informative circulars and guidelines were to be issued within the next few days or weeks, that would be all right. Unfortunately, that seems not to be the position. I was told this morning by officials of Knowsley borough council that, apart from the relevant legislation, only three practice notes have been issued. The practitioners feel that there are huge grey areas and overlapping confusion that still has to be cleared up. A vast amount of additional information will have to be made available if the practitioners are to be able to sort out the proposed system in time for its implementation.
I went some of the way with the hon. and learned Member for Montgomery (Mr. Carlile) when he made his measured remarks about non-payment and the aftermath of it. I do not think that any of my hon. Friends ever advocated non-payment. It was—[Interruption.] We never did. There were a couple of Members who did so, and it may have escaped the notice of some Conservative Members that they are no longer Members. The two things may not be entirely unconnected. Apart from a minority, my colleagues in the Labour party—in the House and elsewhere—were careful not to advocate non-payment. The problem arose—the Government were warned about this—because of the uncollectable nature of the poll tax. My colleagues and I never advocated the non-payment culture, a term which Ministers seem intent on using.
The local authority in my constituency and other Labour authorities throughout the country have taken determined measures to recover the tax that has not been paid. There must come a point, however—I do not know whether we have arrived at it yet—when the law of diminishing returns starts to operate. Local authorities are expected to pump in resources to collect sums that may prove to be uncollectable. The cost to the local authorities may outweigh whatever it is able to recover. I am not saying that recovery should not be sought where a person who should have paid the tax is clearly identifiable. There should not be a general amnesty, but perhaps there should be a more intelligent approach. Perhaps there should be greater co-operation between central Government and local government to decide what is reasonable and what is not in determining whether those who should have paid poll tax and have not should be pursued, and for how much longer.
The hon. and learned Member for Montgomery raised a matter that should be given thoughtful consideration by the Government. I hope that I have made it clear that we should adopt a measured approach to the problem. I am not advocating any wild action.
The council tax is an improvement on the poll tax. It would be miraculous if even this Government could come up with anything less acceptable than the poll tax. However, despite all their claims, the council tax is still not the best solution for the financing of local government. The test should be whether the tax will be with us for at least a generation. I believe that a future Government of another persuasion, or the present Government, will have to return to local government finance legislation, possibly annually. Indeed, that seems to have happened over the past 13 years or so. The Government do not have the right formula and the tax does not reflect the necessary balances. There is a need for accountability and there is a need for central Government to be able to adjust the formula to compensate for the different levels of poverty, for example, that are to be found in different areas.
I regret the fact that these reports make no contribution towards a long-term consensus on financing local government. The Government know that that is so. The pity of it is that they have been unwilling to consider a long-term solution. Instead, they have tried to find a short-term solution that will dig them out of a hole. It does not, however, provide a solution to the long-term problem.
I had not intended to make this point, but, having heard the point made by Opposition Members about community charge arrears, I really do think that local authorities must make every effort to collect them. One of the biggest complaints that constituents make to me is the additional amount that is added to their community charge bill because others have not paid their community charge. We know that under the old rating system people had to pay for those who did not pay the rates, but that was not visible. It was the visibility of the community charge which caused so much resentment. It is very important, therefore, to collect it.
The new council tax will be much fairer than the community charge. As a member of a local authority for 16 years and chairman of Croydon's finance committee for six years, I was pleased to play a part in that authority's efforts to ensure that the community charge was collected properly and efficiently. Many authorities decided not to do so but to make the biggest mess that they could of it and then to complain when they were unable to collect the amounts demanded. It is imperative that all local authorities do their best to collect the council tax. That is why I welcome the reports. They provide a proper basis for local authorities to set in train the procedures, computer systems and so on that are needed to collect the new council tax.
It is easy to argue that the Government ought to make more money available. I am not convinced that the Government ought to fund the full cost to local authorities. That would provide no incentive for authorities to ensure that they collect the council tax efficiently. It is too easy to say, "We need another 30 staff here and another 40 staff there if we are to collect the new tax." The truth, however, is that the new tax can be properly collected if efficient systems are set up. It can be collected for an amount significantly less than that which is needed to collect the community charge. Therefore, I welcome the proposals contained in the reports.
The hon. and learned Member for Montgomery (Mr. Carlile) suggested that the Government ought to pay more towards the cost, but where does the Government's money come from? It comes, in any event, from the taxpayer. It is taken from either one pocket or another.
It is not a bogus argument. The Government have no money of their own. They have to raise money. The problem with some Opposition Members is that they seem to think that the Government's money grows on trees. It does not. We have to exercise proper control over the nation's finances. We ought not to tax people any more than is needed. It is right to set targets for local government by making sure that central Government pays only a percentage of the cost. My hon. Friend the Member for Brentwood and Ongar (Mr. Pickles) said that most local authorities believe that the amounts that have been provided by the Government are fair and offer the proper way forward.
I have already said that I believe that the council tax will be easier to collect. There will be no need to have a council tax register. Opposition Members have repeatedly suggested that there will have to be a register. One reason for that suggestion is that they want to demonstrate that the council tax will be very difficult to collect. I have no doubt that one or two authorities will be determined to demonstrate that it is very difficult to collect, but there is absolutely no reason why it should be difficult to collect. I believe that the people of this country will judge it to be a fair tax and that it will prove to be easy to collect.
Fewer people will pay the council tax. That will make it easier to collect. There is no minimum 20 per cent. payment by everybody. Students will be exempt—
Order. I hope that the hon. Gentleman will not go too far down that path. As I said earlier to another hon. Member, we are not debating the principles of the council tax.
Thank you, Madam Deputy Speaker. I was trying to demonstrate that, because the council tax will be easier to administer, the amount required to collect it will be reasonable. The computer systems that will be needed will not be so costly. Fewer staff will be required, because not so many people will be paying the council tax. There will be a bonus for local authorities, for in future the revenue cost of administering the local tax will be significantly less than that required to administer the community charge. We ought not to forget that point when we consider the funds that are to be made available to local authorities by means of these reports.
This is the right way forward. The reports provide for sensible levels of funding. Some local authorities will complain that it is not sufficient to meet their needs. The challenge for them is to demonstrate to their local council tax payers that their proposals for collecting the tax in their area are reasonable, fair and efficient. These reports should enable them to do so at minimum cost.
The Minister said that these reports will enable local authorities to prepare for the introduction of the council tax. That statement may be consistent with the political convenience by means of which the Government hope to extricate themselves from the mess that they have created in terms of local government finance. However, it will add to the confusion of many of my constituents and, I suspect, will add to the confusion of many people throughout the country. Having listened to the speech of the hon. Member for Brentwood and Ongar (Mr. Pickles), I suggest that the Government may find themselves in a right old pickle.
Confusion grows on account of the fact that we are told that the council tax will be fairer and will be understood by everybody. I wonder. Recent reports suggest that no less a person than the Prime Minister is concerned about the effects of the Government's community care policy on the council tax. No Conservative Member referred to that, although between £500 million and £600 million will be required to implement that policy—if it ever is put into effect.
Confusion still reigns over the poll tax register. I am trying to be fair when I say that many hon. Members in all parts of the House have local government experience and know how difficult the situation is. Misleading and controversial statements are not what we require if we are to be clear about the Government's proposals.
It has been stated that the poll tax register will not be required. Before I became a Member of Parliament I read ministerial reports that suggested that if local authorities thought that they were going to use the poll tax register they were sadly mistaken; it would not be required and they should not use it. The same Ministers now say that the poll tax register will have to be used. However, some Conservative Members have said that there will be no need to use it. What are the Government saying? My constituents will want to know what they are saying. People throughout the country and local authorities throughout the country will also want to know exactly where the Government stand when it comes to the poll tax register.
It is clear that if the reports determine the basis of local authorities' expenditure, and if there is an individual input, a register will be required. In spite of what has been said and in spite of the denials, I submit that the poll tax register is the one that will be required. My constituents will want to know what it will cost. We have heard that it will be cheaper, but I suppose that anything would be cheaper than the poll tax, so the cost depends on the criteria on which the Government have based their conclusions. It occurs to me that if an organisation other than the Government were making such proposals and trying to maintain a sense of credibility while suggesting that they would be cheaper, it would be laughed out of court by the Government themselves. We should take what the Government are saying with a large pinch of salt.
The confusion is increased by the valuation process. I do not know how Ministers view it, but I shall respectfully suggest how my constituents view it. They have a picture in their minds of anonymous people wandering the streets, having a look at properties but not going inside or consulting anyone. They envisage those people then placing a valuation on a property and extending it to a number of properties in the same area. We are asked to believe that such an innocuous and ambiguous system— carried out by anonymous people using subjective rather than precise judgements, as the Government and the hon. Member for Brentwood and Ongar admitted—will reduce the number of appeals. Conservative hon. Members will know—
Order. Before the hon. Gentleman gives way, may I point out to him that he is beginning to debate the merits or otherwise of the council tax, whereas we are considering the funding of the changeover to the council tax.
I am responding to a point that the hon. Member for Stoke-on-Trent, South (Mr. Stevenson) made a moment ago, so I may be out of order. I was going to ask in what way he thought the Labour party's proposals, involving a formula with four different methods of valuing a property, were an improvement on the Government's proposals.
I am grateful for your advice, Madam Deputy Speaker, because you have saved me the trouble of answering that question.
We were told that £156.1 million will be available for the introduction of the council tax—75 per cent. to come from the Government and 25 per cent. from local authorities. I had intended to emphasise the fact that that will be an extra unfair burden on local authorities, but many hon. Members have said the same thing so I shall not take up the House's time by repeating it. However, it is important to underline other elements that were mentioned by the Minister when he spoke of the ability of local authorities to meet additional expenditure.
First, we are talking about local authorities that have consistently been subject to cuts in Government expenditure. The Government should take that fact into account. Secondly, as I understand the system, supplementary credit approvals may be available to local authorities in certain circumstances after the event. In other words, local authorities will have to find the money by borrowing or by some other means and only then might they receive supplementary credit approvals from the Government. That is hardly a realistic way for the Government to encourage local authorities to fund the changes. I urge the Government, even at this stage, to examine carefully the system of supplementary approvals so that it can be made to assist local authorities to meet the requirements of the introduction of the council tax. It is not good enough for the Government to say that there is a possiblilty that supplementary approvals may be available when, on the day and at the time the resources are required, they are not available. That is hypocritical and will not deal with the problems that local authorities will face.
I look at you, Madam Deputy Speaker, with fear and trepidation because I am about to refer to a crucial factor. It has been mentioned, although not in detail, so I hope that you will give me sufficient licence. I wish to mention the way in which the resources for the introduction of the council tax are tied to the overall standard spending assessments. It is nonsense to think that one can pigeonhole such resources or expenditure without considering the total sum that the Government are making available to local authorities, because they are closely interlinked.
I offer an example of how unfair and discriminatory the SSAs have been. The report states that the boroughs of Wandsworth and Westminster are likely to receive about £500,000 from the Government for the introduction of the council tax whereas my city of Stoke-on-Trent is likely to receive £432,000. I am not surprised that Stoke-on-Trent is likely to receive less because if it received 58 per cent. of what Wandsworth and Westminster receive in SSAs, it would not have to levy a poll tax—and that is a good Labour authority.
We must examine how the Government are applying the formula for the introduction of the council tax. If the formula is as discriminatory as the SSAs, local authorities —I suspect that they will be mainly Labour-controlled authorities—will be in greater difficulty, as a result not of their inefficiency but of the Government's discrimination. [Interruption.] I hear the hon. Member for Erewash (Mrs. Knight) whispering to her hon. Friend the Member for Croydon, North-East (Mr. Congdon), to whom I give way.
The hon. Member for Stoke-on-Trent, South (Mr. Stevenson) says that the proposals will favour Conservative authorities. How does he explain the fact that authorities such as Lambeth, Lewisham and Southwark benefit considerably simply because they are inner-London authorities?
If the hon. Gentleman examines the proposals as a whole he will see that a different picture emerges—it is a system as discriminatory as the SSAs. He did not challenge the example that I gave of my local Labour-controlled authority being so heavily discriminated against in terms of the SSAs, and nor did he challenge my contention that the attitude behind the SSAs is absolutely critical to our consideration today. I make that point to urge the Government to look carefully at that relationship.
I suppose that anything that replaces the poll tax must be welcome; nothing could be worse. However, in presenting the reports the Government are trying to give the impression that local authorities are to blame for the present situation. They are laying out the ground to try to convince the public to give local authorities the blame again if the council tax does not work—and it certainly will not work. That is disingenuous and does not relate to the Government's mishandling of local government finance over the past decade. I hope that the public will take note of what we say and will not be taken in by the Government's attempt to ensure that if the council tax creates problems it will be someone else's fault, not theirs.
I hope that the Government's attitude to the introduction of the council tax will give more encouragement than the Under-Secretary of State, the hon. Member for Hornchurch (Mr. Squire), gave us. I was staggered by his complacent attitude when he said that the Government were aware how important the subject was, and of the problems that local government might face—and then said what they were doing about that. Ministers visited 30 local authorities. Big deal! Wowee! Blimey! I wonder which authorities those were, and what their representatives said to Ministers. I hope that the Government will have a more positive approach to the subject than Ministers have so far shown.
Apparently, visiting authorities—no fewer than 30 of them—was not the only thing that the Government were doing. They were organising seminars, too, so that Ministers could go round the country telling intransigent, irresponsible, ineffective, inefficient local authorities how good poll tax mark 2 would be. I hope that the Government will show a more positive and constructive approach to the subject than that.
Local authorities need to know that the council tax will not be implemented at their cost. That tax is a reaction to the mess that the Government created with the poll tax, so the Government should shoulder the responsibility, and not seek to blame local authorities for their own incompetence.
I have been interested to see a certain amount of hand-washing going on among the Opposition. They are quick to take the credit when things go well with their councils, but as soon as league tables are produced showing how clever or otherwise councils have been about bringing in the money, they seem to wash their hands of all responsibility. They claim that that is not their problem but results from the Government's under-resourcing. That seems to be the knee-jerk socialist reaction. Whenever socialists see a table of grants available, they immediately scream for more to be able to do their jobs properly. In contrast, the culture that Conservatives are trying to create means that we are concerned not with the money coming in but with the services going out. I shall focus my attention on that.
If the grants are to be made for the implementation of the council tax, which we all support—Langbaurgh is to get £245,000, and Middlesbrough £243,000—it is right to ask what value for money people in those areas will get for those sums. That is a fair question. The last time that such special grants were made they were to assist with the introduction of the community charge. Councils said, "Give us the money; give us the resources. We shall introduce high technology, and collect the charge." Clearly they have failed in that objective. How many councils have failed to deliver?
My hon. Friend the Member for Erewash (Mrs. Knight) said that her postbag was not bulging with questions about the council tax, but perhaps it was bulging with letters from people wrongly accused of not paying the community charge, or people who have not been asked to pay. The information technology systems in place do not seem to offer value for money. I suggest that one way round the difficulties in which some Labour councils find themselves would be to go back to the suppliers of the information technology software and ask for a discount on the basis that its performance in dealing with the community charge over the past five years has not been too grand.
We need to focus on one key factor—accountability. That is what is needed in local government, and we seek to introduce it. To achieve accountability, a system needs to be easily understood. I am amazed at the nostalgia for the rating system. Hon. Members talk about complications, and claim that people cannot understand the capital value of their homes. Of course people understand that; it is manifestly easy to understand. Do the Opposition claim that people understood the system for calculating the rates —that notional system of applying some multiple to a rent that had been calculated for 1973? Of course people did not understand it. That is one reason why we introduced the community charge. People understood a flat rate charge for local services. That is why we are introducing the council tax, which is a further improvement, and an attempt to create even more accountability. It is important that we get that message across.
Order. I am not sure that the hon. Gentleman can, as he seems to be going wide of the subject under consideration. I have made that point before. The hon. Gentleman must look more closely at the reports.
I shall certainly bear those points in mind, Madam Deputy Speaker. However, given the amounts of money in the grants that will go towards the purchase of equipment to assist the smooth transition to the council tax, it is fair to examine the effectiveness of the staff and technology which is in place to run the community charge. Clearly, when 30 per cent. of the community charge for Langbaurgh remains uncollected, the system is not a great success—it costs individual charge payers an average of £37 each. That is why it is right to introduce the system that makes people aware of that fact, setting out on the charge bill the sum that people have to pay because other people sought to evade their responsibilities.
The Opposition have given assurances that there is no campaign to support non-payment, yet they will understand that there is a certain scepticism about that. The fact that 27 to 30 Labour Members of Parliament have yet to pay their full community charge is hardly a lesson or an encouragement to people to pay their full contribution for local services. It is shoving the burden and the responsibilty on to somebody else—a familiar tack.
That behaviour has not been accepted. The record was the subject of some elections in Langbaurgh last week. I am delighted to see that the hon. Member for Redcar (Ms. Mowlam) is present. I am sure that she, too, recognises the tremendous achievement of the two Conservative councillors who, by taking over Labour seats, returned a formerly Labour-controlled authority to an absence of overall control—if, that is, there can be said to be any real difference between an absence of overall control and Labour control.
No one welcomes a hung council, which presents additional problems of administration and management. I agree with the hon. Gentleman that the current high rate of non-payment and uncollectability of poll tax in Langbaurgh is unacceptable and does no service to the people, but will he tell us why that position exists? Is he saying that local government officers are incompetent? What is his explanation of this serious problem?
I am happy to answer that question. Should an authority claim that the collection of community charge is someone else's responsibility, or should it accept responsibility for the task? I think that, if an authority has been put in place to provide services and therefore to collect revenue, that authority is accountable for the collection of community charge. The chairman of the council and the leader of the ruling group are responsible for directing the council.
I can offer some sympathy to Langbaurgh on one ground: only 109 per cent. of the money paid to the district council stays there, because 90 per cent. is passed on to Cleveland county council. People feel that they are not directly accountable for the moneys that are raised and spent simply because they do not see the correlation between what is paid to Langbaurgh and the services provided by Cleveland.
The council tax is fair. To say that the grants are not sufficient is a knee-jerk reaction—a washing of hands and a cop-out. The amounts involved represent huge investments on behalf of the British taxpayer, and the British taxpayer will demand results.
I shall try to adhere more closely than other hon. Members to the strictures that you have placed on them, Madam Deputy Speaker, and relate my comments directly to the reports that we are discussing. I believe that I am the first Welsh Member to speak today—or, at any rate, the first Welsh Opposition Member.
Well, I am the first Welsh Labour Member to speak. Anyway, I wish to concentrate on the Special Grant Report (Wales).
The position of Wales in respect of central Government funding has always been different from that of England. The hon. Member for Langbaurgh (Mr. Bates) said that people did not understand the old rating system, but that is not really true of Wales. When Wales was subject to a rateable value-based system, the low capital values in the area clearly required a larger Government contribution to bring the quality of services up to the required England-and-Wales average. Under the poll-tax system, there was no formula that people could easily grasp as they grasped the link between lower property values and a larger Government contribution. A sword of Damocles was poised over Welsh local government finance: the only basis on which Wales could expect a larger contribution from central Government was the previous system.
Now, five years later, we find ourselves entering a second transitional phase. It can be seen from the figures included in the two reports that Wales needs a larger Government contribution to provide the same average level of services as we begin to return to a property-based —or semi-property-based—formula, including a new banding system.
In terms of property valuation, Wales is a different world. The Welsh do not move around so much; they do not expect to market their houses and thus to establish high property values, which makes a property-based local finance system very tricky. Let me illustrate that by means of an anecdote. I recall, in my younger and fitter days, running a half-marathon in the Cynon valley, which has perhaps the lowest average property values in the United Kingdom. At the halfway point I crossed the river and ran up the Mountain Ash side of the valley. As I crossed the river in a state of fearful exhaustion, a dogleg in the road revealed a house directly in front of me. A sign on it read "Asbestos prefab for sale: apply within".
Where in Brentwood and Ongar could such a simple description of a property asset be found? No marketing techniques taught at Harvard business school would be needed to extract the best price for such a house; if it is an asbestos pre-Fab, the vendor should say as much. He will thus secure a quick sale, perhaps within a couple of days. That house may have been of better quality than others in the area, but, in any event, properties are sold for £1,000 or £1,500 in parts of Wales. It is an entirely different world —which is why Wales still needs a larger Government contribution than England during the transitional period. I trust that the 90 per cent. contribution that obtained under the rating system will be returned under the new property-based system, although it became hard to justify under the poll tax. I hope that the Minister will give us a guarantee to that effect; otherwise, the level of services will fall.
The other problems involved have been mentioned many times, and, of course, they affect my constituents enormously. Morale is low in local authority treasurers' departments. They have invested in computers and staff training, and have got the magistrates courts tuned up to deal with the uncollectability of the poll tax. Now, suddenly, the Government are trying to approve transitional expenditure and to return to property valuation, albeit with a banding system, and all that work has been thrown into reverse. The magistrates courts have been told that they can go on short time in a couple of years, once the hangover of five years of the poll tax has been dealt with—five years of perhaps the biggest single mistake that any post-war Government have made: the Tory groundnuts scheme multiplied by 10. I suppose that that is what historians will refer to the poll tax fiasco as —if you do not mind my finishing a sentence with a preposition, Madam Deputy Speaker; I half expected to see you rise at that point.
The worst thing of all about the yo-yoing from property tax to head-based tax back to property-based tax with banding is the effect that it has had on our democracy. I shall not go into detail, but it is especially true in constituencies such as mine with large inner-city populations, numerous bedsits, a high turnover of rented accommodation and many people on social security living in bed and breakfast accommodation. Where turnover is high, many people have been lost from the electoral register, and that must have an adverse effect on the health of our democracy. I am sure that, whatever your doubts about its relevance to the reports, Madam Deputy Speaker, you will agree with the proposition that our first job as Members of Parliament must be to defend the efficacy of British democracy. The poll tax fiasco has done more to damage that than anything else that has been done in the past 100 years.
I have listened with interest to the speeches made by hon. Members on both sides of the House. I agree with the hon. Member for Stoke-on-Trent, South (Mr. Stevenson) that we must consider the money that we are being asked to give local authorities today in the context of the huge sums that our constituents, as taxpayers, contribute to local government yearly. They give local government no less than £39.9 billion—nearly one quarter of our total national expenditure.
I cannot help feeling—I may be wrong—that some Opposition Members think that the Conservative party does not care about local government or value its work. I have to tell them that I have often discussed local government matters with my hon. Friends and with ministerial colleagues and I have not detected any such feeling. I have served in local government for six years myself and I greatly value the work that local government does. It has a long and proud tradition and I pay tribute to the numerous councillors of all political persuasions who work very long hours for very little money and for the most part deliver very good services to those whom they represent.
My hon. Friends and I value the work of local government, but we are not uncritical. We think that the British people may not be getting quite such good value for money from local government as they might. I believe that there are too many councils, that they are too expensive and that, in some councils, there is a degree of incompetence which should not and cannot be tolerated and which certainly would not be tolerated in the private sector.
In England and Wales alone, there are 47 county councils, 333 non-metropolitan districts, 36 metropolitan districts and 33 London boroughs. Ours is a small island and, bearing in mind that we could add to that figure the hundreds of parish and town councils, we are perhaps the most over-governed country in the western world. As if that were not enough, Opposition Members talk about regional government, which would cost about £375 million a year. I can think of much better things to do with £375 million than to waste it on regional assemblies.
We must draw a clear distinction between local delivery of services and local political decision-making. I am sure that all hon. Members will agree that our constituents expect their services to be delivered locally through local offices to which they can go if something goes wrong and to have elected representatives to whom they can go if they do not get satisfaction. That does not mean, however, that we need a political decision-making body every 35 miles the length and breadth of the land.
My second point is that local government is too expensive. It follows from the fact that we have too many councils that we have too many councillors. Leaving aside parish and town councillors, we have no fewer than 25,087 councillors—
Order. The hon. Gentleman is falling into the trap into which many other hon. Members on both sides of the House have fallen. He must relate his remarks more closely to the reports.
I am grateful, Madam Deputy Speaker.
Let me, then, deal with some of the comments made by other Members on the specific matter to which the report relates. The hon. Member for Stoke-on-Trent, South said that a kind of poll tax register would have to be maintained for the purpose of administering the council tax. I do not believe that to be the case.
My hon. Friend the Member for Brentwood and Ongar (Mr. Pickles) must speak for himself. My opinion is that a register would not be needed. The hon. Member for Stoke-on-Trent, South will recall that, under the old rating system, the rate bill was sent to the household and the people in that household would work out among themselves how it would be paid. Those who thought that the rateable value of their property should be reduced had to apply for a reduction. Those who felt that they were entitled, by virtue of their personal circumstances, to have their bill reduced also had to apply. The council tax will be no different. Bills will be sent out to households on the assumption that two people live in them. If only one person lives in a household, that person must apply for a reduction.
The valuation system to be adopted will be the same rather rough-and-ready system that was used by the Inland Revenue to place properties in a rateable value category. I am glad to hear that the private contractors who have been entrusted with the task of valuing properties are using modern technologies such as hot air balloons to perform it more effectively!
The new system will be much simpler than the old rating system, because we shall not have to place on each house a specific value down to the last pound. We shall merely have to identify it as a band-C or band-D house, or whatever. That is a rough-and-ready approach. There will be—
I was simply responding to remarks that the hon. Member for Stoke-on-Trent, South was allowed to make, Madam Deputy Speaker.
I entirely agree with my hon. Friend the Member for Langbaurgh (Mr. Bates) about the need for information technology. The world of information technology has undergone remarkable changes in the past five years. I know that, because I am a consultant to a company in the information technology field—and I must declare my interest in that respect. It is now no longer necessary for any local or central government department to own any computers, to employ anyone to operate them or to lease or own any buildings in which to house them. Departments need only tell one of the many private-sector companies what data to put in at one end and what they expect out of it at the other. They can leave to the private sector the task—a task for which it is much better equipped than local government—of working out what computers to use, who to employ and how to do the job. I commend that way of operating to any local authority faced with the job of introducing the software and hardware that may be necessary for the administration of the council tax.
The hon. Member for Cardiff, West (Mr. Morgan) said that subsidies should be given to areas with low rateable values. I entirely agree with him that central Government subsidy is a legitimate function and that areas unable to raise sufficient money from their local people can rightly expect a subsidy from the rest of the country. My ministerial colleagues are aware of that point and give effect to it.
The hon. Member for Cardiff, West also referred to morale in local authority treasurers' offices. He would surely agree that morale depends on the quality of leadership that those people receive. If they are led by dismal Jimmies who can do nothing more than wring their hands and moan about lack of Government money, it is hardly surprising that they are demoralised. If, on the other hand, as is the case in most Conservative-led local authorities, those people are led by positive people with the attitude that they can do something, rather than that they cannot, I suspect that morale is higher.
I welcome the report and believe that the money should be given to local government and used for the specified purpose, but a great deal needs to be done before the people of this country receive the value for money from local government and the efficient delivery of local services which they are entitled to expect.
The hon. Member for Shoreham (Mr. Stephen) referred to proposals for regional government. He should check whether those are the proposals of the President of the Board of Trade and be careful that he does not direct criticisms at the Opposition Benches. Some of those proposals come from the Government.
Langbaurgh, to which reference has already been made, welcomes the special grant because we desperately need it. It is sad that it has come so late and in such a small amount. Many of the problems that we face will be compounded when the council tax is introduced. If the grant had been available when it could have been used to good effect by the local authority, we could have dealt with some of the problems of uncollectability mentioned by the hon. Member for Langbaurgh (Mr. Bates).
The special grant will arrive when we already have problems with implementation in Langbaurgh. It will add to the problems and it will take us longer to solve the difficulties. It will help, but it has not arrived at the right time or in the right amount to deal with the serious problems facing Langbaurgh.
Another problem that we will face as a result of the special grant is that it does not take account of the nature of households. There are many one-parent households in Langbaurgh. The special grant does not relate to the make-up of the constituency and will not be the right amount to deal with the extensive problems facing us.
The hon. Member for Langbaurgh referred to non-payment. I agree with him that it is unacceptable that others should pay, but he should be more straightforward and consider why that problem exists. There is a difficulty with non-payment, but we have a serious problem with collectability because of the nature of the poll tax. The Opposition have highlighted that problem on many occasions and it must be addressed. Langbaurgh had been caught by that problem.
No grant can take account of the difficulties that councillors and officers of local authorities have faced in trying to implement the poll tax in the transition to the council tax. The previous lack of funding has left morale very low. The hon. Member for Shoreham made a facile and silly point when he said that Conservative authorities are positive and dynamic and that the dismal Jimmies in Labour authorities caused the problems. That is not the case. It is clear from representatives of local authorities of both political persuasions and of representatives of hung authorities that there is a serious morale problem.
Some problems arise for political reasons with powers being removed. There is also a serious problem because both Labour and Conservative councillors have difficulties in doing their job. We must consider the issue of civic duty. That is not a party political point and the serious problem of morale must be addressed if we are to deal with the problems that local authorities will face.
I am interested in the point about uncollectability. What makes it easier for 400-odd councils to collect more community charge as a percentage of their budget than we do in Langbaurgh? What makes it more collectable in those areas?
If the hon. Gentleman had been in Langbaurgh a little longer with his predecessors from the Labour party or from his party, he would know that Langbaurgh council had had an on-going difficulty. Together with the hon. Gentleman's predecessor, we met Minister after Minister in cross-party delegations to consider the difficulties with standard spending assessments. The SSAs have taken money from the council year after year and the council has had to take money from Peter to pay Paul. There have been serious problems in relation to sufficient staffing across departments and having people who want to stay with a council with such serious problems.
We must consider the confidence of officers, and councillors from both parties acknowledge that we have a problem. I have addressed that problem in cross-party discussions and I hope that the hon. Member for Langbaurgh and I can consider it with the Department of the Environment and the Department of Trade and Industry in the future.
The hon. Member for Langbaurgh knows the geography of the area as well as I. Many people work outside the area on rigs and many work in London. We have a mobile population which is sometimes considered to be an inner-city problem. Our area has the second highest unemployment level in the United Kingdom. It is second only to Northern Ireland.
My hon. Friend is getting across the message very clearly that only a small part of the problem of collectability relates to the Tory mythology of the "Won't pay" extremist Trotskyite groups which are encouraged by Militant Labour Members. Any city treasurer would claim that the overwhelming majority of the difficulties of collection relate to the mobility of population, particularly among 18 to 25-year-olds who simply disappear or who go from one property to another every two or three months. They crash-pad out here, crash-pad out there, return home and then leave home again. No one really knows where they are. It is very difficult to discover someone's whereabouts during the three months that someone qualifies to pay the poll tax. That is why the Government have scrapped the poll tax five years after they introduced it.
I concur with my hon. Friend. We are not overwhelmed by Trots in Langbaurgh, as I am sure Conservative Members are aware. However, some people do not pay and I met one in my surgery on Saturday. That 82-year-old lady could not pay her poll tax or her electricity bill. She put the bills in front of me and asked me what she was meant to do. Some people are not paying because they do not want to; people on the Government's basic state pension cannot pay.
When he referred to the difficulties, the hon. Member for Langbaurgh said that the Labour party was interested only in the culture of grabbing money. He said that we always want more and that we are not interested in efficient expenditure. I can assure him that hon. Members on both sides of the House are very interested in efficient expenditure and a decent customer service. However, we need to know where the money is coming from and when so that we are not paying 1991 bills as a result of a late Government handout and afterthought in respect of computerisation. If we had known about the grant, we could have planned an efficient service. We cannot do that because of the short notice.
Because of the lottery of funding, whether that be through the assisted status scheme, city challenge, or a development corporation, we must fish from pond to pond to try to run an efficient local government service.
I am with the hon. Gentleman all the way. Yes, let us have efficient services, but let us have a culture that delivers public money to local authorities so that they can function efficiently. Local councillors at whatever level and of whatever party are finding it impossible to do an efficient job because of the incompetence of central Government.
It is always a pleasure to follow my hon. Friend the Member for Redcar (Ms. Mowlam). Opposition Members take to heart her comments about the culture of local government.
Before I comment on the debate proper, I make a technical point to the Under-Secretary of State for Wales about precisely which document we are dealing with. Some days ago, we obtained from the Vote Office the Local Government Finance (Wales) Special Grant Report No. 40 under section 88 of the Local Government Finance Act 1988. Earlier this afternoon, my hon. Friend the Member for Jarrow (Mr. Dixon), the Opposition Deputy Chief Whip, indicated that we are dealing with the Local Government Finance Special Grant Report (Wales) 1992, under section 146 of the Local Government and Housing Act 1989. The confusion over which document we are to use, coupled with other matters that have been mentioned in the debate, including the revelation that hot air balloons will be used to value the people of Wales, or at least their houses, do not inspire much confidence in how the Government will deal with the implementation of the council tax.
Although we are dealing with grants of £6 million paid to Welsh district councils to administer the new council tax, hon. Members talked about the adequacy of that settlement and the detailed nature of the implementation of the new council tax. In Wales, the figure is £6 million, so we are told—that figure is in both books, so I assume that it must be right—although local government treasurers in Welsh district councils still believe that that is not adequate to cover the various aspects of the implementation of the council tax. The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) said that his two district council treasurers are not happy with the settlement that they have received, and nor is the treasurer of my local authority. When we look at the various factors that make up expenditure for the implementation of the tax we can see why they are unhappy. It is not simply a matter of having the staff to administer in their offices. My hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson) and the hon. Member for Croydon, North-East (Mr. Congdon) both talked, although from different sides of the argument, about the need for a register. Whatever the Government say, a large number of billing authorities in Wales will have to establish some form of register to enable the council tax to work properly, and that will cost a great deal of money.
Reference has also been made to computers. If local authorities in Wales had not had the foresight to invest in computer hardware and software, they would be in serious difficulties in implementing yet another new local government finance system.
My hon. Friends the Members for Knowsley, North (Mr. Howarth) and for Cardiff, West (Mr. Morgan) referred to discounts, banding and benefits. All those aspects of the new local government finance system which we are to introduce in a year will cost a great deal of money. The Government—in this case, the Welsh Office —have calculated precisely how much they will give each local authority on a rule-of-thumb basis. That is not good enough. That system is based on the number of properties in a local authority area, not on the number of payers.
The hon. Member for Shoreham (Mr. Stephen) referred to the dismal Jimmies in the finance departments of our local councils. That is a slur on what they do. Staff in local government finance departments must, within two or three years, deal with an enormous number of unnecessary changes in local government financial systems. Next year, they will have to deal with the demise of the poll tax. They will have to wrap up that tax; introduce a brand new tax, the council tax; deal with the growing problem of arrears; and deal with the transitional relief of the non-domestic business rate. Combine all those things together and we see that the amount of work that has to be undertaken by our local council treasury departments is beyond the expectations of what they should normally do.
The whole package is ultimately unnecessary. The hon. and learned Member for Montgomery (Mr. Carlile) rightly said that most people in Wales will regard a penny spent on changing the administration of local government finance to be entirely the responsibility of the Government, because they caused the changes to come about and therefore should pay for their implementation.
If ever there has been an intolerable waste of public funds, it is what has been wasted on local government finance in just a few years. In Wales alone, £100 million has been squandered on the implementation and the sweetening of the poll tax. We must add to that the fact that most of our local councils will have to cut their expenditure in the coming year—although they have not yet been given the revenue support grant, which in itself is a scandal—and they will have to cut services, while the House of Commons will legislate to increase expenditure on administration.
The Conservative party has always said that it is the party of good management. If any local authority had mismanaged its finance in the way in which the Government have mismanaged theirs, they would have been in dire trouble indeed. The hon. Member for Erewash (Mrs. Knight) had the cheek to talk about wasteful Labour local councils when every penny of the £6 million of Government money in Wales alone was ultimately unnecessary. The Welsh council tax will not end that. My hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett) and, although in a different context, the hon. Member for Brentwood and Ongar (Mr. Pickles) mentioned gearing. The amount that Welsh local authorities can now raise by way of revenue is extremely small. The effect of that on what is left of local democracy in Wales is indeed very bad.
I regret that I was not present for the start of my hon. Friend's speech, as I was attending to House business. I am concerned about finance, particularly when it affects Ogwr borough council. The Under-Secretary of State for the Environment has mentioned the 4,609 council houses that were sold by Ogwr borough council between 1981 and 1991. I do not know whether my hon. Friend has referred to the amount that has been raised by such sales, what will happen to it, or whether it can be used to build houses for my constituents in Ogwr borough who are crying out for accommodation, yet the Government are failing to respond to their demands.
I agree with my hon. Friend the Member for Ogmore (Mr. Powell) that that money should be recycled into the local community to make new houses available for our people. However, that is another matter —but at least it would be using public money for good ends.
My point was that, necessary as the report might be, the money has simply been put into the administration of our Welsh local authorities. It has not gone to produce services for our people. One of the most tragic consequences is the instability and even chaos which have entered our local government system.
We have seen enormous changes during the past five years. We have seen value added tax increased to pay for the appalling chaos of the poll tax. The cost of implementing the council tax will lead to a tremendous lack of confidence among people in local government and in Wales as a whole in any regime of council finance that the House approves either today or in the weeks and months ahead.
Before my hon. Friend finishes his speech, will he refer to the applicability in Wales of the suggestion made by the hon. Member for Shoreham (Mr. Stephen) that major savings could be made by local authorities when they implement the new calculation procedure by following some new Tory slogan of, "Do your banding while you're ballooning" or, "Do your ballooning while you're banding"? Will he comment on the idea that if the hon. Member for Brentwood and Ongar (Mr. Pickles) was still the leader of Bradford city council he would probably hire Virgin Atlantic to do the ballooning because then it could be called the Branson Pickle?
I am not sure how I can incorporate that idea into my final remarks, hut, nevertheless, I found it enjoyable.
There is a special case for Wales. I address that case to the person who will speak last in the debate—the Under-Secretary of State for Wales. The changes in local government finance and the £6 million that we are approving this evening to implement the council tax have to be set alongside the changes in local government that the Welsh Office and the Government say will come about in Wales. Will the Minister assure us, and, indeed, Welsh local government, that they will implement their so-called reform of the structure of local government at the same time as they implement the council tax next year?
Will the county councils have to hold elections next year? Will they have to budget and plan? If the county councils have to set their budgets and the district councils have to collect the money for the county councils, all local government in Wales will effectively be in financial limbo. It will be frozen in the financial sense. Unless we know with some certainty what will happen to Welsh local government, all that we have dealt with this evening with regard to local government finance in Wales will be meaningless. I hope that the Minister will tell us, within the confines of the motion of course, whether implementation of the council tax will proceed alongside the reform of local government in Wales.
Of course, we shall not oppose the reports. By so doing, we would plunge many local authorities into penury. But we accept them with a certain reluctance based on the uncertainty and instability in the local government systems in both England and Wales. I hope that the Minister will give us a clear idea of how that instability can be overcome, at least in the Principality.
We have had a good and useful debate, especially because we have heard speeches from hon. Members on both sides of the House who have had experience of local government. As one who served on Cardiff city council for 13 years, I especially valued their speeches.
I must first respond to the query of the hon. Member for Torfaen (Mr. Murphy) about the reports. Due to a drafting error, the reports were originally laid under the wrong power. We immediately withdrew them and have relaid them under the correct provisions. The amounts of grant set out in the reports did not change.
The hon. Member for Sheffield, Brightside (Mr. Blunkett) fascinated me when he said that he had seen a bright spot on 10 April when he realised that he would not be practically involved in local government finance. It must have come as a blessed relief to him, and I suspect to every other member of the Labour party, that he would not be plunged into government with all the dreadful promises that the Labour party had made.
The hon. Member for Brightside went on to quote The Times. He suggested that councils were already engaged in a campaign against the threat to their survival. In the Principality there is the broadest agreement about the progress that my right hon. Friend the Secretary of State for Wales is making on the reform of local government. There is the broadest agreement that we should move to unitary authorities. That will be accomplished by 1995. I suggest that England might want to take a leaf out of Wales' book about how to make progress in that direction.
The hon. Gentleman pursued the need for a register. My hon. Friends—especially my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles)—effectively disposed of that. I suspect that the need for a register is being pursued only out of a socialist yearning to keep everything on a register. The community charge register will be used only to provide an estimate of each authority's revenue-raising power in the first year of the new council tax. It is clearly the best information available for that purpose. From the second year of the tax, the previous year's figures will be used as the basis of rate support grant. Thus, I emphasise that there will be no need for a register beyond the transitional phase.
The hon. Gentleman estimated that authorities would need much more cash. He should note that the reports before the House relate only to 1991–92 and 1992–93. Costs in 1993–94 will be taken into account in the RSG settlement for that year. I suspect that the figure that he quoted was for all three years. He complained that banding would be inaccurate. It is surely self-evident that a system which relies only on broad value bands will be less subject to error than a system based on precise valuations. As the hon. Gentleman advocates the latter type of system, he should be careful not to criticise the accuracy of our system.
The hon. Gentleman suggested that the regulations were late. We have already provided all the key regulations that the authorities need. Some regulations remain to be made. The absence of less critical regulations is not inhibiting local authorities' progress. The most important regulations which remain to be made are on transitional relief. The key figures in those regulations are linked to the RSG settlement. Obviously they cannot be made until the RSG settlement details are available. But we have already told local authorities the structure of the transitional scheme and we shall shortly issue our draft regulations. Local authorities will therefore have perfectly adequate information on which to base their computer systems.
Perhaps the Minister will tell us why the provisional grant settlement has been deferred from its usual slot at this time of the year to the autumn, thus causing the local authorities considerable problems in planning their financial strategy for 1993–94.
If the hon. Gentleman will be patient, I shall come to that in a moment. I am responding to the points that he made. He also referred to charge capping. As I have already said, council tax and transitional arrangements will be taken into account in the settlement for the forthcoming financial year.
It is essential that the Government retain a strong capping power to ensure that the introduction of the council tax is not used as an excuse for irresponsible and unnecessary expenditure. On the question about transitional reductions, the Government are committed to limiting the increase in bills which households will face as a result of changing to the council tax. The transitional scheme may vary with property bands. Details of the scheme cannot be decided until property valuation is completed.
The hon. and learned Member for Montgomery (Mr. Carlile) asked about interest on capital costs covered by supplementary credit approvals. They will be met through RSG. I was intrigued that the hon. and learned Gentleman congratulated the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd), who is not with us in the Chamber, on his local success and perseverance. I wonder whether the hon. and learned Gentleman would make the same comments about the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis). The hon. and learned Member for Montgomery objected to paying himself in Montgomeryshire. I have to ask him, as did my hon. Friend the Member for Croydon, North-East (Mr. Congdon), where he thinks that the money comes from. What dangerous naivety does he live in? As my hon. Friend said, the Government do not have any money of their own. It comes from taxpayers in Montgomeryshire and elsewhere. We all have to pay. The special grant arrangements and revenue support grant are the appropriate way forward.
Excuse me, but I must make progress.
The hon. and learned Member for Montgomery asked me to reject the notion that all community charge has to be paid. He seeks to rival the Labour party in being more extreme and more left-wing in that respect. The Government have repeated time after time that there can be no amnesty. I fully support—
The hon. and learned Gentleman knows that time is running out, and I wish to respond to everyone who has contributed.
My hon. Friend the Member for Erewash (Mrs. Knight) made an excellent contribution and gave us her experience of five years on Sheffield city council. It is little wonder that the hon. Member for Brightside wanted to dismiss his time there as the distant past. She was able to explain that, under the leadership of the hon. Gentleman and his hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts), Sheffield was in a shambles. I appreciated her argument that Derbyshire cricket club brings more credit to the county than Derbyshire county council. That would not be difficult.
The hon. Member for Knowsley, North (Mr. Howarth) was concerned that disabled people might be overlooked. I hope that they will not be. We are aiming to provide reductions for people who are substantially and permanently disabled, which will ensure that no disabled person pays a higher bill because they need more space as a result of their disability.
The hon. Member for Stoke-on-Trent, South (Mr. Stevenson) asked whether supplementary credit approvals were possible. They will be available up to a total of £41.2 million in England and will be provided against expenditure on preparation. Each authority will have a maximum allocation, based on the number of properties. As the Minister said at the outset, if any SCAs are not applied for they will be recycled to other authorities that may need them. The hon. Gentleman also alleged discrimination against Stoke-on-Trent. There is no discrimination against his authority. It receives less grant than other authorities because it has fewer dwellings. A common amount for each authority would be nonsense. Why should a small shire district get as much as Birmingham or Manchester?
My hon. Friend the Member for Langbaurgh (Mr. Bates) robustly advocated our progress in shouldering the burden of paying for local government finance. How right he was. The consequences of the "Don't pay" campaign advocated by Opposition parties was merely to shove the burden on to someone else. I was delighted to hear my hon. Friend say that Conservative successes in two local elections in his constituency were the logical outcome of that campaign.
The hon. Member for Cardiff, West (Mr. M organ)— my neighbour and an old school friend—mentioned the need for a higher level of grant support in Wales. I appreciate his point. The level of support in Wales is appropriate, and it will continue to be. We have taken that into account in setting different, lower property bands for the council tax in Wales.
My hon. Friend the Member for Shoreham (Mr. Stephen) related his six-year experience of local government. I agree with his tribute to many people in local government who give so much of their time to serve their electorates.
The hon. Member for Redcar (Ms. Mowlam) apologised for the fact that she could not be here for the winding-up speeches. I was glad of her welcome for the grant reports. I appreciate her desire to make the best case for her part of the world. That is the natural and imperative duty of all hon. Members, and I applaud her spirit in seeking to work with my hon. Friend the Member for Langbaurgh.
The hon. Member for Torfaen claimed, unsurprisingly, that some councils in Wales feel that the special grants that we have prepared are not enough. Generally, the special grants have been welcomed by Welsh local councils. Three Welsh local councils were used in the survey by CSL which helped us to introduce the grants—Delyn, Newport and Monmouth.
In his opening speech, my hon. Friend the Under-Secretary told the House about the considerable degree of work that is under way to ensure that preparations for the council tax proceed smoothly to its introduction on 1 April next. There is close collaboration between central Government, local government and key organisations such as the Valuation Office agency. I have been very heartened by the input made by all concerned and, speaking from my own experience in Wales, by the constructive and professional approach that local authorities are taking to preparing for the new tax.
The valuation banding exercise is nearly complete, and considerable progress has been made on other important aspects of implementation, including, on the Government's part, secondary legislation and practice notes. In Wales, provision has been made for the electronic transfer of valuation lists in a variety of formats that best suit the needs of each authority. Most Welsh councils will have lists sorted in community order. At all stages in the preparatory process we have taken care to consult local government and other interested parties and to consider their views carefully.
I know that the hon. Member for Cardiff, West has so much hot air to contribute—but not in the time left to me.
Final decisions on any transitional arrangements under the council tax cannot be arrived at until details of local tax bases are complete and have been analysed. We have not yet made a decision on whether transitional arrangements will be put in place for Wales. We will consider the need for transitional relief if significant numbers of households face large increases as a result of the new tax. If my right hon. Friend the Secretary of State for Wales considers, in all the circumstances, that a scheme of transitional relief is appropriate, he will consult the local authority associations on the arrangements and how to fund them. Draft regulations setting out a framework for the scheme—if there is to be one—have been issued.
The level of council tax and transitional arrangements will also have implications for total standard spending and aggregate external finance under the local government revenue settlement for 1993–94. The Government wish to take those implications into account and for that reason —this brings me to the point mentioned by the hon. Member for Brightside—they announced last month their decision to postpone the provisional settlement for 1993–94 until the autumn. I am sure that the House will agree that it is essential that we take into account the most up-to-date information in determining the settlement.
The Government's decision to make special grants available in respect of council tax preparation costs has been welcomed by local authorities. The grant allocations set out in the two reports before the House will he of considerable help to local authorities in their preparations.
Will the hon. Gentleman take up the suggestion made by the hon. Member for Shoreham (Mr. Stephen) about employing hot air balloons to conduct the valuation and handing exercise? If so, can he tell us how he will use some of the expense that that might save? He has spent a lot of Welsh Office money on changing the notepaper since he introduced his new title. He does not want to be called Parliamentary Under-Secretary of State; he wants to be called Parliamentary Secretary.
I am sorry that I gave way to the hon. Gentleman. It was a silly intervention and turned out to be nothing more than something out of his hot air department again.
For those authorities whose expenditure exceeds their grant allocation, by far the greater part of the excess will be met from central Government support within aggregate external finance under the local government revenue settlements for Wales and England.
The grant allocations and arrangements set out in the special grant reports for England and Wales are generous and fair. They clearly demonstrate the Government's commitment to facilitating the smooth and timely implementation of the council tax on 1 April 1993 which, contrary to the recent gloomy prognostications made by the hon. Member for Brightside, is firmly on course.
I apologise to any hon. Member if I have not replied to their questions in the short time available, and in the time spent dealing with interventions, some of which I should not have wasted my time on. I will endeavour to write to all the hon. Members to whom I have not replied. I commend the reports to the House.