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Rating System

Volume 930: debated on Wednesday 20 April 1977

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asked the Secretary of State for the Environment what plans he now has for reforming the rating system.

The improvement of the rating system is one of the matters that I am considering in the light of the report of the Layfield Committee of Inquiry into Local Government Finance. The Government's conclusions will be announced in due course.

Does the Secretary of State agree that, given our continuing high rate of inflation and the considerable redistribution of income that has been brought about in recent years, the time is now right to move to a system that is more geared to people's ability to pay?

I am very much aware of the criticisms that have been made in all parts of the House about the domestic rating system. If I understood the hon. Member's remark correctly, this matter was very exhaustively considered in the Layfield Report, and the conclusions drawn by Layfield were that, whatever changes were made, the domestic rating system could not be, as it were, abolished. That view is shared by people throughout the country, except Members on the Opposition Front Bench.

Does my right hon. Friend agree that the reform of local government finance should have taken place before the reform of boundaries? Does he feel that the time is now opportune to give back to the towns and cities the powers that they lost as a result of the reorganisation?

My hon. Friend raised a very important question, but it is separate from the question of the reform of local government finance. The question of the structure of local government and the distribution of powers between the two tiers is one that should have, and deserves to have, continued study.

Is the Secretary of State aware that the present rating system is causing tremendous hardship to a large proportion of ratepayers—particularly elderly persons—and to small businesses? We seem to have been discussing reform for a long time. Will he expedite some proposals and let us know when he is coming forward with them?

I hope to report to the House in the next few weeks the conclusions that the Government have reached. Then the House will have ample time to discuss what we are proposing. However, I must point out that, in spite of the harshness with which the rates bear on people, it is true that about one-third of the ratepayers—certainly very many retired people—are in receipt of rate rebates, which are a great help.

It is right that we should take time to get the rating system right, but does my right hon. Friend agree that there are some grievous anomalies in the way in which the rate support grant works? Has my right hon. Friend reviewed the working of the rate support grant this year, and can he offer help to counties like Cambridgeshire, which suffered badly in the last round?

Always, under any system, there are anomalies. To some extent these result from the unpredictable effects of the particular rate support grant formula adopted. We are now considering the proper formula for 1978–79 and I am trying to take account of the many difficulties and criticisms that have been expressed in all parts of the House during the last 12 months.