I beg to move amendment No. 131, in page 32, line 14, at end insert—

'(1A) Where a levying authority are satisfied that a person liable to pay a community charge in respect of a financial year has (for whatever reason) not been issued with a demand notice in respect of that liability they shall, notwithstanding that the date prescribed under sub-paragraph (1) above in relation to that year has passed, cause a demand notice to be issued to him.'.

This amendment corrects an omission from the Bill. Subparagraph (1) of paragraph 2 of schedule 2 to the Bill provides for the issue of demand notices in respect of community charge liabilities before such date in relation to each financial year as may be prescribed. This provision is adequate for the ordinary case of demand notices issued in relation to a liability starting on 1 April for payment for one of the community charges by a person who is already registered as liable at the prescribed date. However, there will be circumstances in which it will not be possible for an authority to issue demand notices at the prescribed date — most obviously, in relation to liability for the personal community charge which only arises later in the financial year as someone moves into the area from elsewhere. The amendment therefore provides that where a person liable to pay community charge has not been issued with a demand notice after the prescribed date a demand notice should nevertheless be issued to him.

This is a reasonable amendment and I hope that the House will support it.

I beg to move amendment No. 134, in page 33, line 36 leave out sub-paragraph (9) and insert—

With this it will be convenient to take the following amendments: Government amendment No. 135,

Amendment No. 168, in page 33, line 47 leave out paragraph 5 and insert—

'(5) The levying authority may make arrangements with any housing body for the community charge of a tenant and spouse to be collected by that housing body.'.

Government amendments Nos. 136 and No. 137.

The first and fourth of these amendments, Nos. 134 and 137, relate to sub-paragraph (9) of paragraph 4 of the schedule. The paragraph gives those liable to pay the community charge a right to pay by 12 monthly instalments. The effect of sub-paragraph (9) is that where an individual is three months in arrears he loses the right to pay by instalments and becomes liable to pay the whole of the amount outstanding both for the period of arrears and for the remainder of the financial year. This provision parallels the present situation in regard to rates, where individuals have the right to pay by 10 monthly instalments, five in the first half of the year and five in the second. If an individual is four months in arrears at the mid-point of the financial year—that is, at the end of September—he loses the right to pay by instalments and becomes liable to pay the whole amount.

In consultation with the Convention of Scottish Local Authorities officials last summer, the need to maintain this provision and adapt it to the circumstances of the community charge was clearly identified. It was argued that it would be unrealistic to provide that, where substantial arrears arose and the local authority had to go to the trouble and expense of taking legal action to recover the debt, it could proceed only for the precise sum outstanding. It would often be fairly clear that recovery of that amount, while at the same time securing normal payment of the remaining instalments, was simply not a practical proposition. In such circumstances, as happens with rates at present, the first step would be for the local authority to offer rescheduled payment arrangements aimed at recovering the sum outstanding and the amount of community charge due for the remainder of the year by somewhat higher instalments.

Only if that approach failed would the authority normally take legal action and once again it makes sound common sense for the relevant warrant to refer not just to the arrears but to the sum due for the remainder of the year so that a sensible schedule of payments can be worked out. The advice of COSLA officials was that in the circumstances of the community charge it would be more appropriate to have a shorter period of delay than under the rating system where, effectively, nothing can be done until the half-year stage.

So much for the background to the provisions of paragraph 4(9). When this was considered in Committee the point was made that it was unreasonable to take action on the lines implied in the sub-paragraph without giving people due warning. On consideration, the Government accept that there is a valid point here, and the amendments seek to meet it. Thus, amendment No. 134 provides that the local authority must give notice in writing and that the provisions of the sub-paragraph shall not become operative until one week after that notice has been given. It is a matter of judgment how long the period of notice should be, and in considering the adequacy of the proposed period of one week account must be taken of the fact that the existence of arrears will, in most normal cases, not be news to the individual involved—nor, indeed, in most cases will the consequences of not paying up be news to him or her. On the other hand, it is important that local authorities should not be unduly handicapped in their attempts to get the money in. We consider that one week strikes a reasonable balance.

Amendment No. 137 sets out to achieve the same result in relation to housing bodies collecting the community charge from those resident in houses which they own. In such cases, the responsibility for taking legal action for debt recovery will rest not with the housing body but with the levying authority — that is to say, the regional council. But since day-to-day contact with the community charge payer, — or, in this case, non-payer — will be a matter for the housing body, it seems sensible to provide that it is the latter who should give notice. The technical difference between amendment No. 137 and amendment No. 134 is that, because the collection arrangements by housing bodies are not tied to 12 monthly instalments but are designed to provide greater flexibility, the amendment cannot simply refer to three monthly instalments, but refers instead to one quarter of a year's liability for the community charge. I consider that these amendments represent a sensible response to a reasonable point raised in Committee which I recall undertaking to reflect on, and I commend them to the House.

Amendment No. 135 addresses a problem which was identified in Committee. It has always been envisaged that where some difficulty was encountered with the normal instalment arrangements for payment of a community charge the remainder of the charge could be rescheduled by agreement between the person liable and the levying authority. Thus, if someone started to pay a personal community charge by 12 monthly instalments, but got into arrears, it should be possible for the authority to reach agreement with him to reschedule the outstanding debt before any question of formal recovery procedures arose.

Concern was expressed in Committee that the Bill as drafted would not allow for this. The amendment meets the point by providing that sub-paragraph (10) of paragraph 4 of schedule 2, which suspends the ordinary instalment arrangements in cases where agreement to that effect has been reached between the person liable and the levying authority, applies to cases not only of a community charge for the whole year but to any outstanding balance of it. It thus puts beyond doubt the fact that levying authorities will be able to enter into informal arrangements for debt rescheduling with persons liable for community charge payments.

Amendment No. 136 remedies an omission in the Bill. It has always been intended that housing bodies, when they collect personal community charge payments from people resident in the houses they let, should determine the instalment arrangements which will apply. The ordinary instalment arrangements for community charge payment are disapplied in these cases by sub-paragraph (10)(b) of paragraph 4 of the schedule. In the Bill as drafted, however, there is no explicit provision for instalment arrangements when a personal community charge is payable to a housing body. The amendment remedies this omission. It will be for housing bodies to determine what instalment arrangements are most appropriate. In the case of tenants, it may well be that they will wish to collect personal community charges at the same time as rent, and institute parallel arrangements for the collection of personal community charges from non-tenants who are resident in the houses they let. But that will be a matter for them to decide in the light of operational considerations.

First, I welcome amendment No. 134, as it is in line with what we said in Committee. Normally, if a Minister has anxieties he expresses them in Committee and does something about them on Report. My memory may be shorter than the Minister's, but I do not recall him saying anything at that time.

Amendment No. 168 deals with paragraph 5 of schedule 2 which lays on the district authority and other housing bodies — the Scottish Special Housing Association and the new town development corporations — the responsibility for collecting the personal community charge from all who are resident in houses that they own. It is worth spelling out what that means.

At present housing bodies collect rent and rates from their tenants or joint tenants. In other words, someone who rents a house from a local authority pays rent and rates at the same time. That is provided for under the Housing (Amendment) (Scotland) Act 1976 and it is a duty laid on housing bodies. However, there is a clear difference between a personal community charge and rates.

The Bill seeks to set up a different tax system from the present one. The whole idea is to break the link between tax and property. It is justifiable to say that rent, which is a charge on a property — one pays rent for the use of the property—and rates, which are a charge on the property for the services provided to that property, may be collected together, and it is perhaps right that they should be paid by the tenant in one bill. Indeed, if there are rent and rate arrears, a local authority may take the tenant to court on both sets of arrears jointly. However, what the Government are doing is completely different. They are saying that a personal community charge is the responsibility of each individual and has nothing to do with the house in which he lives. Individuals will pay it wherever they live. Therefore, in principle it seems wrong, especially if the Government are to be consistent, to keep this link between tax and property.

This measure will create enormous administrative problems for the district authority and other housing bodies. In Committee the Minister made it absolutely clear that the housing authority could not collect this sum with the same bill, even from its tenants and those paying rent, but had to send two separate bills. The Minister is nodding. Therefore, the housing authority must set up a collection service for this particular community charge.

My hon. Friend must not look for consistency in the Government's position. Has he managed to elicit from the Minister any indication of the extra cost that will fall on local authorities, the Scottish Special Housing Association and other housing bodies because of administration?

No. Throughout the whole Committee stage we kept pressing for the costs of collection. We found it impossible to get an answer. The Ministers said they had to consult the local authorities and other bodies before they would know exactly the final cost. My hon. Friend is right. There will be great expense.

First, the housing authority will have to establish a collection service for the personal community charge separate from collection of rents. We are talking about not just tenants or joint tenants and their spouses but about every person who lives in a local authority house—the children, grandparents, grandchildren of tenants, lodgers, and other people as well. The Government estimate that 350,000 or 400,000 people live in local authority housing who are not responsible for paying rent or rates but from whom the local authority will have to collect. Over half the people who live in council houses at present are non-ratepayers, and the Government will have to collect from them by a totally separate system.

That will be very expensive. The housing authority is being given no powers to take action against anyone who falls into arrears. Collection of arrears goes immediately to the levying authority, which is the regional authority. There is a clear differentiation between people who live in council houses and those who live in other types of housing. The Minister, explaining this in Committee, said that part of the community charge goes to the district anyway, so it is right that the tenants and those who live there should be responsible for payment.

I pointed out that everyone, whether living in a council house or not, pays a portion of the community charge to the district. No one except council house occupiers will pay anything else directly to the district. They pay to the regional levying authority. The Government admit that for the regions to establish machinery to collect the personal community charge will be much more expensive than the collection of rates.

The Minister is shaking his head. I have never heard any denial that this process will be a much more expensive procedure to establish than the collection of rates—[Interruption.] I thought that the hon. Member for Stirling (Mr. Forsyth) wanted local government costs to be kept down. It would be cheaper to make the region responsible for the collection of all community charges and not create a second tier of bureaucracy for the collection of the community charge from people in district authority housing.

Two separate authorities will have to be established with their own systems of bureaucracy to collect this tax. That is part of the administrative nightmare that has emerged in debate on the Bill, which I am delighted to see reinforced by a document published by the Tory Reform Group, which has used that same expression. Part of the administrative nightmare is the peculiarity of having the district collecting the tax. The district authority does not have responsibility for anybody but its own tenants; therefore, it should not be asked to take on the job of collecting the tax.

Following the Government's logic behind the Bill, why not introduce legislation to enable the local authority to collect electricity bills for the electricity board, gas bills for the gas board, telephone bills for the telephone companies, or TV licences? I could go through a whole list of housing-related services, the bills for which, on the logic of this measure, could very well be collected by the local authority.

The amendment at least allows local authorities to take that decision whether or not tenants and their spouses might pay the community charge jointly with their rent. That is something for local authorities only to decide. The Government make great play of wanting to see bureaucracy reduced in local government. They ought to look again at this part of the Bill and consider my amendment seriously.

I was delighted to hear that the hon. Gentleman seemed to be advocating the whole concept of contracting out of services where that would be most effective.

I draw attention to the fact that since the Committee stage we have had what I regard as one of the best submissions on the Bill from the Rating and Valuation Association, representing the views of the Scottish branch, which includes housing authorities, local government and people in the business of valuation. I do not suppose the Minister will accept the amendment, even at this late stage of the proceedings. Whether the amendment is defective or not I do not know, but I cannot understand why the Government do not take on board the philosophy of trying, wherever possible, to make a clean break from the established practice of collection of rates. This is a whole new tax.

This is not a region versus district argument, but why not use a wee bit of imagination and leave to it to the regional authorities, which are the levying authorities? They would obviously consult district authorities if that was thought to be desirable. Why not leave to those bodies the decision on the best way of levying and collecting this tax. I hope the Minister has read the submission. The worst aspect of dealing with two Ministers is that we are never sure who is dealing with it or who has done all the homework. — [AN HON. MEMBER: "Do not be patronising."] I am not being patronising. I know the difficulty only too well when one is not entirely in charge of a Bill.

Paragraph 15.3 of the document, which I assume has been read by the Minister, states:

"The collection of community charges from residents in Housing Body houses generated considerable debate among Forum members. Presumably, the Government's intention in placing a duty on housing bodies to collect rates from residents in their houses is that the tenant's charge would be collected with rent and a separate bill (the demand notice) would be issued to non-tenants. This intent is surprising in the light of the Government's philosophy that Community Charges are personal taxes as opposed to property taxes."

That seems to fit in with my idea. Whether the Government will have the power over the next two or three years to change this is a matter for debate; but if they do have that power, why not use it and take the opportunity to make a clean break from the existing practice of the collection of rent and rates by housing bodies? This is a new tax with a different purpose. It will be levied on more people directly and individually. Therefore, this seems a good opportunity to make a clean break.

My hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) has referred to the electricity boards. I am just guessing, but I do not suppose that there is a single house in Scotland that does not have electricity and an electricity bill to pay. [Interruption.] The hon. Member for Dumfries (Sir H. Monro) is muttering something. Have I said something wrong?

Not all houses have electricity.

Some of the hon. Gentleman's farm cottages still have oil lamps, and I suppose that is a reflection on rural landlords. My hon. Friend the Member for East Lothian (Mr. Home Robertson) had better not say anything, although I suppose all his tenants have an electricity supply. Why not use the electricity boards to collect this money? The boards cover all houses. That would be an easier way of doing it than having more than 40 housing bodies in Scotland involved in collecting the money.

From whom will the money be collected? Will it be collected from the tenant, the tenant and his wife jointly, and severally from other individuals as well? I do not think that this has been thought out.

The hon. Gentleman makes an interesting and exciting suggestion. If the responsibility is on the regional authority, on his reading of the Bill what objection would there be if it decided to contract out the service to the electricity board? Surely there would be nothing to prevent the authority from doing that?

I have an open mind on the matter. I cannot see any ideological reason—if that is what the hon. Gentleman is trying to extract from me — or practical reason why the levying and collecting authority should not use any means that it wants to use to collect the money. I am saying that it is not the responsibility of a housing authority. The Government should make a clean break with the existing practice. I think that the Convention of Scottish Local Authorities wants it left to the discretion of local authorities. I do not know whether I am right in that, because I have forgotten whether we got submissions from COSLA about that. I hope the Minister will at least give some assurance that in consultation he will be willing to look at this.

It is almost impossible to go back over all the suggestions that I and other Committee members made. The Bill might go through, but, even at this late stage, will he consider with the relevant authorities whether there is merit in the suggestion of leaving it entirely to the levying and collecting authority to decide, after consultation, the best way to approach the matter?

The hon. Member for Glasgow, Cathcart (Mr. Maxton) spoke about what I had or had not said in Committee when dealing with matters covered by the earlier Government amendments. By implication, he accused me of discourtesy for failing to show a degree of understanding of his point. For the sake of the record, I draw his attention to column 1155 of the Committee proceedings on 12 February. Admittedly not in response to arguments by him but in response to my hon. Friend the Member for Cunninghame, North (Mr. Corrie), I said:

"My initial resistance to the amendment was diffident, as there is something in the case of the hon. Member for Cathcart. Mine was perhaps a probing resistance.

If the hon. Member for Cathcart will withdraw his amendment, I shall reflect on the points that have been made and see whether it is possible to find a form of wording that will ensure that a person is made fully aware of his debt." — [Official Report, First Scottish Standing Committee, 12 February 1987; c.1155.]

I do not think that I could have trailed my sympathy for his case more clearly than that.

I unreservedly withdraw any remark that I made against the hon. Gentleman. It was said in the Committee that the hon. Gentleman had considerably more grace than his hon. Friend the Member for Edinburgh, South (Mr. Ancram)

I hope that my subsequent remarks in the debate will not ruin my record. I might even suffer the fate that I suffered from the hon. Member for Caithness and Sutherland (Mr. Maclennan), who said that he could do business with me.

Will the Minister say whether he or any of his Front Bench colleagues are now or ever have been associated with the Tory Reform Group?

I am a broad member of a broad church in this party. I am not a member of the Tory Reform Group.

Amendment No. 168 would change the arrangements whereby housing bodies, district councils, the Scottish Special Housing Association and new town corporations would be required by the Bill to collect the personal community charge payable by residents in houses let to them. The amendment would make such arrangements subject to the discretion of the levying authority, and would restrict them to the collection of the personal community charges of tenants and their spouses. As the hon. Member for Cathcart said, these issues were fully debated in Committee and I accept that he persists in a different view from that expressed by the Government at that time.

At present, housing bodies are responsible for collecting the rates along with the rent on houses let by them. In considering the arrangements for the collection of personal community charges from people living in council houses and similar accommodation, it seems sensible that housing authorities should continue to deal with the personal community charge liability of the present rateable occupiers of their houses and the spouses of such people.

The amendment raises three questions — whether these arrangements should be mandatory, or, as the amendment proposes, at the discretion of the levying authority, and whether housing bodies should be required or enabled to collect the personal community charge from people living in the houses which they let, other than tenants and spouses. On the question whether the arrangements should be mandatory or discretionary, we think that the advantages of certainty about how the system should operate outweigh the argument that some flexibility would be desirable.

As I shall mention again later, the arrangements that we propose broadly allow for the equal division of the burden of collection of personal community charges between districts and regions. There is clear advantage in that provision being set up throughout the country. The hon. Member for Cathcart spoke about administrative complications. It was precisely with that in mind that we decided on a sensible approach. I am reluctant to accept that different arrangements should apply in different areas.

Ministers have always said that this is a personal tax and not an in-house tax. They do not accept that there are likely to be more administrative difficulties under the new system than there are under the existing system. Therefore, why is he so resistant to a discretionary arrangement in this instance?

Administrative simplicity and certainty are better secured by the approach that we are taking. The Opposition constantly raise the bogy of administrative difficulties. They are overstating those difficulties and in Committee it became increasingly apparent that the administration will not be as complicated as they fear.

The Minister will admit that housing authorities cannot use exactly the same system to collect the personal community charge as they use to collect rents. Therefore, each housing authority will have to establish a collection service for the personal community charge. If that is the case, how can he possibly say that there will not be a large administrative cost and large numbers of people employed to administer the scheme?

The hon. Gentleman raises undue difficulties. Of course the system is different and is not a direct parallel to the collection of rents. In administrative terms it is sensible to take the approach that we are taking, because it will be less complicated than the hon. Gentleman anticipates and there will be far greater overlap in the administration than he suggests.

The right hon. Member for Glasgow, Govan (Mr. Millan) asked about the Rating and Valuation Association's submission. I should certainly be willing to consider further the association's comments to see whether there is substance in them. On the matter of whether all residents in local authority and similar houses should have the personal community charge collected by housing bodies, we must consider, first, the extent to which this would as a matter of principle be a sensible arrangement, and certainly we would need to consider the caseload involved.

As a matter of principle, a decision must be taken as to whether non-dependants who are living in council houses should be dealt with, for community charge purposes, by the levying authority—the regional council in the two-tier areas — or the housing bodies. In all cases, these people will represent a new group, since they will not, at present, be responsible for making any payment towards local taxation.

We have taken the view that it would be sensible for housing bodies, rather than the regional council, as levying authority, to have the responsibility for collecting the personal community charge in such cases. There are two main reasons for that. First, it would be strange if non-dependents in council houses were to receive community charge bills from a different authority from the tenants and their spouses, and they then had to pay the personal community charge by a different instalment system from that which applies to tenants and their spouses. That would lead to confusion in people's minds as to what the personal community charge was and when payments became due.

Secondly, housing bodies will already have some information — I accept, not comprehensive information—on non-dependants living in houses, since they are already responsible for administering housing benefit. The presence of non-dependants is relevant to the assessment for housing benefit purposes of the tenant. If an argument is a good one, it bears repetition, but obviously it has not got through to the hon. Member for Glasgow, Cathcart (Mr. Maxton).

I accept that these arguments, although strong, are not conclusive, and I would have been prepared to consider whether the personal community charges of non-dependants in council houses should be collected by the levying authority if it had been clearly shown that the other arrangement would have radically altered the balance of responsibility for collection of local tax payments as between the two tiers of local government. That is not the case at present.

Of the 2 million ratepayers in Scotland, slightly fewer than 1 million live in council houses and have their rates collected by housing bodies. We estimate that, of the total number of non-dependents in Scotland from whom the personal community charge will have to be collected, about half live in council houses. Thus, if the responsibility for collection is to be divided in the manner that we propose, housing bodies will continue to be responsible for just under half of the total caseload. We consider that that is fair and equitable. It reinforces our conclusion that the division that we have proposed is right.

I must resist the hon. Gentleman's amendment and urge the House to support the Government's amendment.

I beg to move amendment No. 169, in page 35, line 20, leave out paragraph 7.

As the House will have gathered — this is not a complex matter — this amendment deals with the collection of the community charge. We tabled the amendment because we wish to ask some questions and get some further advice from the Minister about the recovery of arrears, which is a controversial matter and one which has raised a good deal of foreboding among many people who have a good deal of experience in this sector. Clearly we do not expect the Minister to remove the power to collect arrears; that would be going a little too far, although a more adequate measure might be put in at another stage if this amendment were accepted.

Our main purpose is to find out a little about a subject which is fraught with difficulty. I do not say that in a sarcastic manner, but there are problems involved.

The main way in which community charge arrears will be gathered is by use of the summary warrant. The Minister will say, almost certainly, that that is a well-tried procedure which has been used in the case of rates arrears for a long time and which has led to few problems. As the Minister will appreciate, the community charge is a substantial matter. It is difficult to make estimates, but the Society of Messengers-at-Arms and Sheriff Officers, in a memorandum, considered that the increase in warrants would be fourfold. We shall be talking about a large number of warrants. Summary warrants will be flying around all over the place. The question is, once they have been issued, can and how will they be enforced?

The Minister would make great virtue of the fact that an enormous number of people are being brought into the local taxation system for the first time. Not only are they large in number; they are mobile in a sense that a householder is not. One of the virtues of rates—even those who are glorying in the possibility of the domestic rates system being abolished will accept this—is that they are easy to collect because they are a tax on property, which, by and large, is static. Therefore, the number of people involved is limited to the householder, who is tied to the house. The amount of money involved is likely to be higher in each case than with the community charge.

The community charge will have a scatter effect which, I suspect, will produce a large number of cases of arrears, some of which will involve extremely small amounts. We are thus in a completely different situation in terms of practicalities. That destroys the perhaps too easy answer that we are creating fears where they need not be because we are using an existing system which is familiar to all rating authorities.

I want to stress the point about the amount of the community charge. It is not just that the community charge will be smaller than the average rates bill but paid by a larger number of people, but in many cases—not necessarily because of this reform but because of the activities of the Department of Health and Social Security — people will face the prospect of paying only 20 per cent. of the community charge. No one knows the exact figure, but that is the rule of thumb that even Ministers have been using for illustrative purposes. Therefore, it is not unfair to advance that example.

In my constituency, probably more than 50 or 60 per cent. of the adult population will qualify for some form of rebate, and many of them will be paying as little as 20 per cent. Therefore, we are looking at a proliferation and multiplicity of debts that may, in the early days of the community charge system, the early 1990s, merely be debts of £30, £40 or £50. The problems that that will create will be considerable.

It may be even more complicated than that. The Minister will recognise that, and I hope that he will say how he expects it to be dealt with. I am sorry to take a parochial example, but it is one that is familiar to me. I represent and live in a constituency on the edge of Glasgow. It is often referred to as a peripheral housing estate. There is an enormous amount of coming and going between, for example, the Drumchapel housing estate and Clydebank. That takes the form of social movement and, in the good old days, it used to take the form of employment movement. A large number of my constituents used to work for Singer sewing machines, for example, and in the yards at Clydebank, UIE and John Brown.

It is not unusual—I frequently come across this—for families to be split between Clydebank and my part of Glasgow. It is not uncommon for a youngster to move, for no sinister purpose—I am not trying to construct a conspiracy to avoid the poll tax — between his grandparents in Clydebank and his parents or other members of the family in Garscadden. The result of that may be that someone will be due to pay 20 per cent. of his poll tax for two thirds of the year in Glasgow and one third of the year in Clydebank.

We are thus talking about the apportionment of a small percentage of only part of the poll tax in each area. Presumably the debt still has to be honoured. It may be, for various reasons, that the debt will not be honoured. That may be more due to inattention and carelessness or a failure to have due regard to the provisions of section 20 of what will by then be the Act. That will throw up substantial problems of recovery, which the Government have brushed aside with the suggestion that we are squawking a little too much about something which, with a little ingenuity, could be handled comfortably. However, I want to make it clear now that I do not think that it will be handled very comfortably indeed. I invite the Minister to look at these matters again with some care, and, I hope, some sympathy.

I was not a member of the Committee which considered the Bill. Inevitably, someone in that position tends to drop out of the day-to-day developments in the argument and I make no apology for that. However, problems still remain and it would be useful if the Minister addressed himself to some of them.

As I understand it, it is proposed that a summary warrant will be applied for. The levying authority will apply to the sheriff asserting that there is a debt. It will have to establish, presumably by means of recorded delivery slips and so on, that written notice has been given to the debtor requiring payment within 14 days and that that period has expired without payment being made before it can go ahead.

5.30 pm

That is rather more plausible as a method when talking about one householder in a house which is his residence. It is much more difficult to be satisfied that that message has been delivered to the 19 or 20-year-old who may be working on a building site but whose home may originally have been, and may nominally still be, 15 Smith street or 63 Brown street, or wherever the bill has been sent. There will be considerable difficulties in establishing beyond doubt and satisfactorily that written notice has reached the young person concerned. No doubt the Minister dealt with that point in Committee, but I am not entirely happy that that will be as watertight as some of us would like.

There is little doubt that the summary warrant will be issued if application is made, but then there will be the problem of enforcing it and what diligence is used. The methods are:

"(a) a poinding and sale;

(b) an arrestment and action of furthcoming or sale."

I can remember—this was referred to in our debates before the Bill was discussed in Committee — that considerable reservations were expressed by the Society of Messengers-at-Arms and Sheriff Officers about the present legal situation. The Minister may be able to assure me that those have been fully dealt with, but they are worth mentioning in passing. The practical one is simply identifying the goods that can be poinded. It is not always immediately obvious what is owned by a householder and what may be owned by the rest of the family — the young man concerned or by his siblings. It will be extremely difficult for the sheriff officers to act in such circumstances.

A further point occurs to me, which may have been dealt with in Committee. Under the present rating system, if a summary warrant is sought the jurisdiction for the sheriff granting that is heritable property within his jurisdiction. As the community charge is a personal matter, has the hon. Gentleman or the Minister given any thought to what the basis of jurisdiction will be if the person upon whom the community charge is exigible as levied is no longer within the shrieval jurisdiction?

That is the sort of exchange that makes me regret that I was not a member of the Committee. I probably have not given enough thought to that. It is an interesting point. It puts rather more neatly what I was fumbling towards when I referred to the difficulties of ensuring that the 14-day notice has been served on someone who may not be at home or may be moving between a variety of different premises.

Furthermore, there is the problem, as I said, once we get to that stage, of identifying the goods. No doubt the sheriff officers' point has been answered, but I remember that they had some doubts about their legal right forcibly to enter premises. That was based upon the fact the debtor was the householder. I am not sure whether that point has been adequately met, but I have no doubt that the Minister will be able to reassure me on that.

Let me move on to one of the main issues that I wish to raise. I agree with my hon. Friend the Member for Glasgow, Provan (Mr. Brown) that we had a useful memorandum from the Rating and Valuation Association quite late in the day—it was dated 13 February. I know that the Government will not dissent from that because the Secretary of State was praying it in aid yesterday as an example of support for his amendment introducing the clean break and getting rid of the transitional period.

In its memorandum the Rating and Valuation Association raises several general and specific points about the collection and recovery of arrears which we are entitled to put to the Minister because they arise in the paragraph that the amendment seeks to excise. Let me remind the Minister that paragraph 16(5) of the memorandum says:

"The Government should be in no doubt that the relative yield from Community Charges will be considerably less than that from Domestic Rates. Community Charges will be easily avoided and considerably more expensive to collect than domestic rates."

We should always bear that point in mind because it strikes at the certainty of revenue expectation for the local authority and it adds considerably to the administrative costs.

Many of the calculations that Ministers have been making, assuming that the community charge was in operation in the current year, have, I suspect, been based on optimistic assumptions of what the yield and collection will be. I suspect that a considerably higher community charge would have to be imposed to allow for the almost inevitable shortfall given the sort of complications and difficulties to which I have been referring. Certainly the Rating and Valuation Association has no doubt that that is a considerable problem.

In paragraph 15(4) of its memorandum, the Rating and Valuation Association says:

"It is considered that recovery of Community Charges will be considerably more difficult than recovery of rates, particularly from non-tenants/owners (especially those in receipt of unemployment and supplementary benefit, many of whom will have little or no poindable assets. The Government's stated intention is that everyone will be expected to pay a minimum of 20 per cent. of the charge; if this is truly the intention, local authorities will require the power to arrest unemployment, supplementary and other state benefits or alternatively statutory provision being made to allow, at the request of the local authority, deduction at source of community charges from state benefits. If either of these alternatives are not acceptable it is considered that recovery of community charges from such cases will prove to be virtually impossible."

"Virtually impossible" is strong language from a rather sober group of people.

I had correspondence with the Secretary of State on this matter at the beginning and he made it clear to me—I presume that there has been no change in the official position—that there was no question of, for example, compulsory deduction from benefit at the request of the local authority; that any such arrangement would have to be voluntary, entered into after arrears had arisen, and there would be no question of it being done unilaterally by the local authority on the basis of a summary warrant. I also understand that there would be no possibility either of arrestment of benefit which would clearly be an extraordinarily serious matter given the financial circumstances of people who are dependent upon benefit.

I am not trying to misrepresent the Minister's position. I presume that he is taking the sensible view that both those requests from the Rating and Valuation Association cannot be granted, although we all understand why that has been raised. The association is saying that if those doors are closed, in its view the collection of the community charge from a large number of people will be virtually impossible.

That is something which the Minister must take seriously. The amendments invites the Minister to go away and think about the matter ab initio. Given those comments, he should consider his position carefully.

The Rating and Valuation Association continues:

"The administrative costs falling on local authorities in implementation of the Bill will be considerable and authorities must be given sufficient additional resources which will enable them to implement the provisions of the Bill."

I fear that that is knocking at a door that is firmly bolted and barred, but it is a fair point for the Minister to consider.

There are two other minor points. One relates to the main issue that I raised, the association's view that a local authority should have the right to waive collection — I would call it the introduction of a de minimis rule—if the debt is below a certain amount.

My final point is a small detail. In the association's document there is an inquiry about the provision for the repayment of community charges paid in error. As the Minister knows, there is such a provision in the Local Government (Financial Provisions) (Scotland) Act 1963. I am informed that there is no apparent parallel provision in the legislation. I should be interested to hear the Minister's comments on that. I say that with some feeling, having been fortunate enough to have had returned to me by post two £12 cheques for parking tickets that had apparently been paid twice. I am unlikely to make that mistake with my community charge, but if I did so I should' like to think that I could get the money back. I commend! that point to the Minister.

However, the serious point that I am making concerns the spread of debt that is likely to result from this measure and the problem of properly getting a summary warrant. The undoubted view of the Rating and Valuation Association is that that will not be possible without powers which this House would be unwilling to grant and that, to be fair, Ministers would be unlikely to want. However, without those powers, it would not be possible to administer the system. I put that point to the Minister because it is important that he gives some thought to it.

I have also been reading — it is interesting that it should come from this source—the now well-known memorandum that was published today by the Tory Reform Group. I have no doubt that this will crop up later—

The English group.

Yes. I am glad to see that the Minister is such a strong devolutionist when expediency drives. Perhaps that is a reversion to first principles. I agree that the Scots have different views. I do not for a moment dispute their right to those different views, but the arguments, the biting analysis from that particular source, cannot easily be shrugged off. The point that I was about to make was that they too express grave doubts about the way in which these matters will work in practice. They express doubts especially about the 20 per cent. rule. They make the simple point — with which I certainly have some sympathy as it restates the point that I have been hammering during the past 10 minutes—that, in effect, the 20 per cent. amount will be so small that the administrative cost of recovery will be larger than any conceivable yield that would be forthcoming. I quote that additional source as something that the Minister may wish to consider.

I have raised one or two of the many points that could have been raised under this amendment, but I have given a flavour of the doubts that we have about its practicality. I hope that the Minister can say something to reassure me that a little more thought has gone into this Bill in general political principles than is apparent and that he can deal with some of the real and substantial technical objections which are still there for all to see and are being pressed upon him by sources that he may feel are slightly less partial than me.

I am glad that this amendment has been moved by the hon. Member for Glasgow, Garscadden (Mr. Dewar) because it enables us to return to matters that were considered at some length in Committee. As they were considered at length in Committee, it is not necessary to expatiate on them and to cover the same ground today, but I wish to take the opportunity that this amendment offers to ask the Minister whether he has given any further thought to whether the clause which the amendment seeks to delete, which provides a permissive power to the levying authority to pursue the recovery of arrears, is adequate to meet needs and whether the permissive power can be used to enable a local authority to pursue a policy of not seeking to recover arrears from classes of people who are liable to pay the community charge, and to whom a notice has been issued?

Perhaps the hon. Gentleman, like myself, was slightly surprised, following the debate in Committee, that there was not an amendment from the hon. Member for Stirling (Mr. Forsyth) replacing the word "may" with the word "shall", as he expressed considerable concern that local authorities might opt out of taking people who owed them £50 to a sheriff's court.

I am surprised at that, in view of the debate that we had in Committee. I am also rather surprised by the absence of the hon. Member for Stirling (Mr. Forsyth) from our deliberations today. However, I am more concerned with the attitude of the Government and their view on this.

I wish to put to the Minister a point that was not made in Committee. Earlier, he argued that there might be a fiduciary duty on the other payers of a community charge to seek to recover a debt even though only a permissive power is given by the Bill. However, because of the extreme complexity of the task and the difficulty of administering a tax of this sort, when so many of those to whom it applies are mobile, there must be cases in which it would be unreasonable for a local authority to seek to pursue the debt because the cost of pursuing the arrears would rapidly exceed the amount owed.

Is the Minister prepared to say that the procedures set out in paragraph 7 are not expensive in view of the sums of money at stake? Not having been a practitioner at the Scots Bar, I should be interested to know what it would cost to go through the full procedure of diligence described, the seeking of a summary warrant and the pursuance by diligence of "a poinding and sale" or

"an arrestment and action of furthcoming or sale."

How much will it cost to go through all that for one defaulter who has failed to pay an instalment of community charge?

I appreciate the hon. Gentleman's point, but what the Bill involves in relation to collection already happens in relation to non-payment of rates. The unfortunate factor is that if someone defaults on payment and poindings and sales are carried out, the costs are borne by the debtor.

Yes, they are borne by the debtor, but that presupposes that it is possible to track down the debtor. I fully defer to the professional expertise of the hon. Gentleman, but—

The hon. Member for Dundee, East (Mr. Wilson) is right. When the sheriff's officer goes to poind, collect and sell the goods, he must write his own expenses out of that. In many cases, especially with young people, the sort of goods that they have will not even cover the community charge that they owe, let alone any costs that may be involved in that process. Therefore, the local authority will have to bear the cost.

That is precisely the point. Many young people moving around the country, sometimes from one family home to another, have no more than what they stand up in, and they will not yield arrears because they have nothing to yield. I should very much like to know what is supposed to happen in those circumstances. What duty is there on a local authority to pursue such people? Was it to cover this situation — to allow the local authority not to pursue arrears—that the paragraph was originally couched in permissive rather than mandatory language?

I do not wish to labour the point after the speech by the hon. Member for Glasgow, Garscadden (Mr. Dewar), but what will be the basis of jurisdiction for the sheriff in any such case? My hon. Friend the Member for Caithness and Sutherland (Mr. Maclennan) referred to the costs of diligence being executed, and the costs having to be borne by the defender. I am sure that it will come as no surprise to hon. Members to know that in my constituency it can often be a considerable cost when one takes into account not only the fees but the outlays. On occasion, there have been complaints—usually from the creditor rather than from the debtor—of the infrequent visits by sheriff officers and messengers-at-arms to the islands communities.

In pursuing one such case I was made aware that in the 1960s some form of diligence was proposed which would have made enforcement easier in remote rural communities. I have not been able to track down the report, and I do not expect the Minister to reply to this now, but I should be grateful if he would agree to consider ways of making the enforcement of community charge debts simpler in remoter communities. At present, particularly when one takes into account the outlays that might be incurred, the outlays could be greater than the community charge that gave rise to the initial debt. If the Minister will consider ways in which the outlays and expenses might be reduced, I should be grateful.

I am sorry that the hon. Member for Glasgow, Garscadden (Mr. Dewar) has left the Chamber for the moment. I shall try to leave my response to his questions until he returns.

The hon. Member for Caithness and Sutherland (Mr. Maclennan) raised again on the Floor of the House the same point that he raised with some force in Committee. He referred to the duty on a levying authority to recover outstanding community charges. In Committee, during consideration of schedule 2(7), the question arose as to whether a levying authority was under a duty to recover arrears of community charge. The point was made, and accepted, that there is no express provision in the Bill to that effect, nor is there any express statutory provision in relation to the recovery of rates under section 247 of the Local Government (Scotland) Act 1947. But there is well-established case law, which starts with the case of Roberts v. Hopwood in 1925 — to be found in All England Reports 2, page 24—that a local authority is under a duty to carry out its functions in a businesslike manner, with reasonable care, skill and caution and with a due and alert regard to the interests of its ratepayers. That is what is normally referred to in England as the fiduciary duty. The levying authority is required to comply with its duty in exercising its functions to collect rates, and of it fails to do so, the ordinary remedy against a local authority for failing to comply with its duties will be available—judicial default action and audit control.

I see no reason why a levying authority would not be required to comply with a similar duty in exercising its function to collect the community charge. The levying authority will be required to discharge that function with reasonable regard to the interests of the community charge payers and, obviously, its ratepayers in a businesslike manner and with reasonable care and skill. For that reason, I am satisfied that there is no need to include any provision in the Bill on that point. Arguments were put forward in Committee that there should be a firmer provision requiring an authority to recover outstanding community charges, but as I said at the time, the effect would be either declamatory—I am not keen on seeing declamatory provisions in legislation and I doubt whether many others are—or it would impose an absolute duty—[Interruption.] The hon. Member for Dunfermline, West (Mr. Douglas) apparently finds something funny in the idea of declamatory provisions. If he wishes to intervene, I shall be delighted to give way. I think that he is enjoying a recollection of some other matter. Perhaps he will let us into the secret later.

The only other option would be to have an absolute duty. I do not believe that any hon. Member would think that that was the right course because there may be occasions when it is clear that recovery would be impossible and an absolute duty would require an authority to pursue impossible debts regardless. Therefore, relying on what is referred to in England as a fiduciary duty appears to be the right way to proceed.

The hon. Member for Garscadden said that this matter might come up on other occasions today, so I do not want to go into detail. I have not had time to read the document fully, but the recommendations of the English Tory Reform Group—

English? It does not say that.

If the hon. Gentleman reads the document, he will find that it refers to England and Wales.

Earlier, from a sedentary position, the hon. Member for Garscadden said that he thought that the document was splendid stuff and that it had cheered him up. That shows how easy it is to cheer him up and how much he needs to be cheered up. It struck me as slightly surprising because of the premise upon which the whole document is based, as far as I could see, and which appears on page 2. The document states that one of the reasons why the system needs reform is as follows:

"The decay of local government can be traced to the loss of democratic accountability and the disintegration of the traditional Labour Party."

The document also states:

"the Labour Party fell into decline and decay. As its local membership and vigour fell away, it came more and more under the control of tightly knit bands of left-wing extremists. This became very true of the inner cities, where Labour was strongest, and the old traditional Labour Party was at its most vulnerable."

I am glad that that cheers up the hon. Member for Garscadden. It shows his views on the behaviour of certain Labour councils in Britain today.

I return to the specific point about England and Wales. It may interest the House to know that the Scottish Tory Reform Group this afternoon issued its own statement, in which it avers its support for the community charge, as it always has done, and dissociates itself from the England and Wales report.

When did the Minister contact Conservative Central Office with the request for it to issue an immediate disclaimer?

If the hon. Gentleman follows Conservative politics in Scotland, he will find that the Scottish Tory Reform Group is in favour of the Bill. It always has been and has previously expressed concern about the line taken by the Tory Reform Group down south, which, equally, has always been against the community charge. There is nothing particularly new in the proposals or in the positions north and south of the border. If the hon. Member for Garscadden wishes to raise that matter later, I have several other interesting passages that I am sure he would like to hear about.

Reference was made to the repayment of sums not due. Government amendment No. 138, to which I spoke yesterday, made the provision that is sought. Government amendment No. 138 would put at the end of schedule 2 the heading:

"Repayment of sums not due"

and the words:

"A levying authority to whom there has been paid by way of any community charge any sum which (for whatever reason) is not due shall repay that sum or arrange for its repayment."

So that covers that particular point.

6 pm

Turning to the general debate, into which I think the question of the hon. Member for Orkney and Shetland (Mr. Wallace) fell, I quite understand the concerns of hon. Members as to the effectiveness of the procedures proposed for the recovery of the arrears of community charges, particularly in relation to debts incurred by people who at present have no liability for taxation payments. However, I think that those concerns have been considerably exaggerated and I do not expect serious difficulties in those areas.

The first point that has to be made is that the system that we propose will discourage people from getting into significant arrears in the first place. The provision for the standard method of payment of the community charge to be 12 monthly instalments will mean that each payment will be a modest amount of money. In cases in which people on low incomes may nevertheless find difficulty in meeting the full community charge payment, the availability of rebates will further reduce the net payment to be made. In addition, each payment will be immediately due in the month in which it is incurred. This contrasts with the present arrangements for rates, whereby in many cases the date upon which payment becomes due is unclear and in practice authorities tend not to start recovery action in relation to any arrears until September of the financial year in which the rates are payable. This inevitably means that where arrears have built up they have already reached a considerable sum before recovery action can be taken. Under the community charge system, levying authorities will be able to initiate earlier and thus, by definition, more effective recovery action.

I take the Minister's point in that somebody who is rebated may well be only £12 or £15 in debt at the end of, say, three months, but once that three months point is reached he may well be still in arrears under the terms of the Minister's Bill. Then, of course, the total amount for the whole year becomes liable to payment.

The hon. Gentleman misses the point, which is that the simplicity of the system in many ways, compared with that which now exists, is more likely to ensure that people pay on a regular basis. I pay tribute to the hon. Member for Garscadden for not putting the argument that somehow we would find vast numbers of people deliberately setting out to avoid payment of the community charge, because I would find that very hard to accept. I genuinely believe that in Scotland people by and large are prepared to pay what is due from them. The hon. Member for Garscadden puts his hands on his head, but I am sure that he would not suggest that the bulk of the Scottish people would deliberately set out to avoid paying the community charge.

We must therefore look at this in perspective. I shall not pursue the mystery, as far as I am concerned, of the hon. Member's parking tickets, but I am sure that on another occasion he will explain to me how that arose.

I referred to the estimates of the community charges for current years on the assumption that the system was in being. Was any calculation built in for under-collection, for under-achieving, and the likely gap between the percentages achieved under the rating system and under the community charge system? Do the Government have any view on that?

I do not think that it is possible to give definitive figures on a matter of that sort — I am sure that the hon. Member would be surprised if I tried to do so—but it is important to note that the new system is relatively simpler than the present system and thus more likely to be understood. There is a more regular system of payment, and so on, and this is likely, if anything, to reduce the estimates of default which were put forward by the Society of Messengers-at-Arms and Sheriff Officers and referred to by the hon. Member for Garscadden. I do not think that they took that strictly into account, but it is a valid point and we are having a serious debate, so it is important that we accept that fact.

In the relatively rare cases, therefore, in which people fall into arrears, the provisions that we propose will allow flexible response by the levying authority. There is provision, of course, for informal reminders, followed by final notices to people who still have not paid. and I believe that these are likely to secure payment in the majority of outstanding cases. In the remainder, the summary warrant procedure which, as the hon. Member for Garscadden admitted, is already well precedented for the recovery of rates debts, is a cheap and effective way of seeking payment. In only a few cases is it necessary to go through the full series of steps leading up to poinding and the possibility, in the last instance, of a warrant sale. A high proportion of those debts still outstanding will be settled as soon as a summary warrant is granted without the necessity for further steps. I should perhaps remind the House that last night when we dealt with the amendment on joint and several liability I made it clear that the summary warrant procedure would not be operated in those cases.

The assertions that I am making are not simply pious hopes because all the evidence from the rating system shows that the informal stages of debt recovery—reminders and follow-up action—together with the early formal procedures through the use of summary warrants will secure payment in the vast majority of cases. The evidence for this is contained in the Scottish Law Commission's report on diligence and debtor protection, which says that in Lothian and Strathclyde in 1979–80 and 1980–81, of the 7,500 cases in Lothian and the 38,500 in Strathclyde in which a summary warrant was obtained against a debtor, only seven cases in each region led to a warrant sale being executed. That shows that those preliminary stages are, by and large, effective. It is backed up by more recent evidence from Strathclyde suggesting that, of the 131,000 ratepayers who fell into arrears in 1985–86, 82,000 paid the bill at final notice stage and a further 25,000 settled when summary warrants were obtained.

It would, of course, be wrong of me to suggest that there will be no problems in this area. It is one of the major objectives of the Bill to spread the local tax base, and that inevitably means that larger numbers of people will face local taxation bills. In the nature of things there is likely to be a larger number of people falling into community charge arrears than into rate arrears. But while nobody in the House can make a confident prediction of how large these numbers will be, I seriously contend that the fact that each bill will be considerably smaller than the average rates bill makes it most unlikely that the increase in numbers of cases will be very large.

A number of specific points were put to me and I will try to answer the main ones.

First, the hon. Member for Orkney and Shetland intervened on the hon. Member for Garscadden to ask a question about jurisdiction. The bases of jurisdiction under the Civil Jurisdiction and Judgements Act 1982 are the debtor's domicile and the place where the debt was incurred. There will, therefore, be no difficulty even if the debtor changes his residence. That is an established form of jurisdiction which will continue to apply.

Secondly, there can be problems in the area of the ownership of goods. There are problems in this area at the moment, but I do not think that that would lead the hon. Member to suggest that the system for the recovery of rates is wrong. All sheriff officers in general poindings face the problem of identification of the owners of the goods. Basically, where this happens, I understand, the procedure is to ask those present who owns what, and by and large that produces a satisfactory response.

I just want to clarify the position. Is it domicile "arid" the place of the debt or is it domicile "or" the place of the debt? Domicile really relates to a country—one can be Scots domiciled or English domiciled. Are we talking about domicile in relation to a particular sheriffdom?

They are alternatives, because it would otherwise be restrictive rather than expansive in terms of providing a base. Domicile in the sense in which I used it refers to the place where the person lives, particularly under this Bill. The registration of sole or main residence forms the basis of the Bill and will be taken, presumably, to be the place where the person lives.

Thirdly, the power of entry under a summary warrant is there and is for the purpose of executing a poinding. So sheriff officers can enter a third party's premises for that purpose.

There is a great deal of detail in the way in which summary warrants and so on are to be operated. As time is restricted, it is worth reminding the House that this whole area will be debated very soon when the Debtors (Scotland) Bill comes before the House, when the adjustments being made to the present system can be well canvassed and aired. Obviously, those procedures will be provided by that legislation and will form the basis of recovery under this Bill. I hope that the House will agree that, rather than go into the detailed aspects of how it operates, those matters should be raised when we debate legislation.

Does the Minister agree with the point raised by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) about the possible arrestment of social security benefits and the recovery of arrears through that source?

The hon. Member for Glasgow, Garscadden (Mr. Dewar) made it clear that he had already received a reply from my right hon. and learned Friend the Secretary of State, and the position is as he set out in that reply. The answer is no, as the hon. Gentleman suggested.

It is inevitable that some people will slip through the net when the community charge is collected. It is difficult to think of any system of taxation that is 100 per cent. effective in either full collection or full recovery. We accept that there is a problem and that it may be slightly larger than that with the present rating system. The Bill provides a mechanism whereby recovery can be effected. Some of the assertions that have been made are exaggerated, and I am confident that the principles of the Bill will be effective in securing recovery of the community charges due. Therefore, I ask the hon. Member for Garscadden to withdraw the amendment—as I am sure that he will, in view of what he said in his speech.

I do not wish to delay my hon. Friends. I shall withdraw the amendment, although I still feel unconvinced and somewhat gloomy about the prospects. No doubt there will be other occasions on which to argue these matters.

I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn.

I beg to move amendment No. 170, in page 20, line 4, leave out clause 24.

With this we shall take the following : Amendment No. 171, in page 36, line 23, leave out schedule 3.

Government amendments Nos. 139 to 143.

The effect of amendment No. 170 is to delete clause 4, which in turn would delete schedule 3. The amendment deals with a mechanism whereby the Secretary of State can claw back grant and effectively take control of the budgets of local authorities in Scotland. At the same time, we are debating Government amendments Nos. 139 to 143, which represent a minor concession to points that were made in Committee. They remove the provisions in the clause which would enable the Secretary of State:

"for the purposes of giving full effect to"

this paragraph

"by order modify any enactment … in its application to the determination, calculation, levy, collection or payment of a community charge."

That seems an extraordinary power to put into the hands of the Secretary of State, let alone this Secretary of State. There should not be such open-ended enabling powers in any legislation. I am glad that the Minister is prepared to think again about that point. I suppose that we should be grateful for small mercies.

The intolerable basic principles of schedule 3 remain intact. I refer to powers that were established in the Local Government (Miscellaneous Provisions) (Scotland) Act 1981, which have been made more and more draconian by a series of subsequent Acts, and which are being further refined in the Bill as they will affect the new community charge system.

Those powers strike at the very heart of the principle of local democracy in Scotland. The Secretary of State began by putting Scottish local authorities into a statutory straitjacket of guidelines. He then cut the rate support grant in successive years, up to a total cumulative value of Tory cuts in rate support grant since 1968 of £1,750 million. That is equivalent to more than a full year's rates bill for every ratepayer in Scotland. The Secretary of State left our local councils with an intolerable choice of either forcing up their rates or cutting important services, such as education, support for old people and the disabled and so on. It is humbug for the Government to suggest that they are protecting the ratepayers or the future poll tax payers, while year after year they cut the rate support grant.

6.15 pm

When some local authorities decided that they were not prepared to cut services and therefore had no option other than to increase the rates, the Secretary of State intervened to close that door. He gave himself the power to put orders through Parliament to fix the budgets of individual Scottish local authorities. That raised the rather bizarre prospect of this multinational Parliament turning itself temporarily into a town hall to strike the rates for individual local authorities.

Those ludicrous forays by the Secretary of State in pursuit of his vendetta against local authorities have been played out in this Chamber. Stirling district council was the first authority to catch it. Its rate support grant was cut on 20 July 1982. Then there was the night of the long knives on 21 July 1983, when the Lothian regional councils and the district councils of Stirling, and Kirkcaldy were subjected to collective action and asked to adjust their rates regardless of the wishes of the people who elected them. The Secretary of State has the power to ride roughshod over locally elected councils, and that power is now being transplanted into this poll tax Bill.

The whole selective action machinery turns on an assessment by the Secretary of State of whether a local council's budget is excessive and unreasonable. As the Minister keeps reminding us, those terms originated in the Act introduced by a Labour Government in 1966.

Tell us about it.

The Minister challenges me to tell him about it. Section 5 of the 1966 Act allowed the Secretary of State to take action against a local authority when he felt that its expenditure was excessive or unreasonable. The Act has other powers. It states that the Secretary of State could also take action if he was satisfied

"that a local authority…has failed to achieve or maintain a reasonable standard in the discharge of any of their functions".

At least that was even-handed legislation, which is more than can be said for the way that the Government have handled this subject.

Of course, I do not suppose that back in 1966 anybody considered the possibility of there being in office such an excessive, unreasonable and unrepresentive Secretary of State as there is today.

Is the hon. Gentleman saying that his party accepted in 1966—it must have, or it would not have passed the legislation—that there could be occasions when expenditure was excessive and unreasonable, and that therefore the Secretary of State should take action against that authority?

That was the case then and that was the principle for which we legislated. Obviously, there is a need for such residual powers. However, I do not think that anyone envisaged that the powers would be exercised in the sort of circumstances in which the Government have exercised them.

I look forward to the day—although I hope that it will not be necessary—when a Labour Secretary of State for Scotland can intervene to ensure that local authorities that are defaulting on the standards of provision for their people come up to scratch. Let us consider all the circumstances—

I do not understand the logic of the hon. Gentleman's case. He has just criticised the Minister for saying that he would intervene to reduce unreasonable expenditure against the wishes of the local electorate. Is he saying that he would choose to intervene against the wishes of the electorate?

I was simply drawing attention to the terms of the 1966 Act. I deplore any intervention, other than in the most extreme circumstances, against locally elected authorities. My party stands for democratic accountability and local democracy in Scotland.

rose—

This Bill is guillotined and I am determined to continue with my speech in my own way.—[Interruption.] We are having some difficulty. I hope that the hon. Member for Edinburgh, Central (Sir A. Fletcher) will control himself. He is aware that, as the Bill is subject to a guillotine, we do not have as much time as we would like.

Let us consider the circumstances of the selective action taken by the Secretary of State against Glasgow district council in July 1983. It started with the report to the House that led to the reduction of Glasgow district council's budget. Initially, the Secretary of State claimed in his report that in his—possibly biased—opinion Glasgow district council's budget was "excessive and unreasonable". The district council responded and, in due course, both report and response were laid before the House. The debate on the Floor of the House lasted one and a half hours and the outcome was decided by a vote. The Division list for that vote makes very interesting reading.

The debate concerned the internal affairs of Glasgow district council. Not one Glasgow Member voted in favour of the report, and 10 voted against. Only 17 Scottish Members of Parliament voted for it, and 42 voted against. The report exclusively affected Scottish interests—specifically Glasgow interests—yet it was approved by a majority of 45, thanks to the intervention of 203 Tory Members—whose informed interest in Scottish local affairs is well known.

Such action can serve only to undermine the principle of democracy. The Secretary of State for Scotland, who has no mandate in Scotland, is abusing this Parliament to suppress democratic local government in Scotland. That is the sort of irresponsible action that makes it more necessary than ever to establish a democratically accountable and evolved Scottish Assembly to deal with Scottish affairs.

I hope that the hon. Gentleman will join it.

So do I.

The Secretary of State keeps telling us that the new poll tax will be such a masterpiece of accountability that there will never again be cause for central Government interference in local affairs. Indeed, such is his confidence that he is doing away with the somewhat inappropriately named guidelines that have been built into the system.

We shall have an opportunity later to consider the comments of the Tory Reform Group, which certainly rejects the belief that accountability will be achieved by this legislation. If the Minister really believes that the poll tax will provide such an effective check on the affairs of local government in Scotland, why has he left the clawback machinery in the Bill? Indeed, why has he taken the opportunity to make that machinery even easier to operate?

The right hon. and learned Gentleman has done that in three ways. First, he has removed the right of the targeted local authorities to make their side of the argument known to the hon. Members who will vote on their budgets. Instead, he can take the liberty of summarising local council's representations in his terms. Secondly, in fixing a new level of poll tax for an authority, he can take into account all aspects of that council's finances, rather than simply that expenditure that is alleged to be excessive and unreasonable. Thirdly, the charade of comparing the target authority with other councils will become even more farcical because the Secretary of State is now to relieve himself of the statutory obligation to make the comparison with authorities that are "closely comparable" or as closely comparable as possible with the authority concerned. The important words "closely comparable", which appeared in the Local Government (Miscellaneous Provisions) (Scotland) Act 1981, are now to be removed.

The Government are completely indifferent to public opinion in Scotland. They are dismantling our economy and devaluing our democratic institutions. Even the so-called Tory moderates have a remarkably cavalier attitude towards Scotland. [HON. MEMBERS: "Name them."] They are scuttling at a great rate just now, but there is still the marvellous organisation called the Tory Reform Group, which is to publish an interesting document that comprehensively rubbishes the idea of a poll tax. The concluding paragraph states:

"In an ideal world Ministers would have canvassed other ideas more comprehensively and studied first the results of the new system being introduced in Scotland."

That means, before introducing a poll tax in England and Wales. There we have it: Scotland is being used as a guinea pig for this disgraceful experiment. The introduction of the tax would be bad enough, but the continuation of the clawback mechanism would be intolerable.

I urge my hon. Friends to support the amendment and to remove this abhorrent provision from the Bill

With characteristic candour, the hon. Member for East Lothian (Mr. Home Robertson) made it clear that the phrase "excessive and unreasonable", which is critical to the whole exercise, first appeared in legislation enacted by the Labour party and, I may say, voted for by the hon. Member for Caithness and Sutherland (Mr. Maclennan).

It appeared in 1929.

Does the hon. Gentleman wish to intervene?

The hon. Gentleman used the word "first". The phrase first appeared in the 1929 Act.

I am grateful to the hon. Gentleman for telling us that the first use of the phrase was in 1929. But that does not mean that we can get away from the fact that it was used again in the 1966 Act, which was introduced by the Labour party and supported by the hon. Member for Caithness and Sutherland, who now seeks to distance himself from it.

The concept has been important in local government as a reserve power for the Secretary of State.

It is interesting that during the speech of the hon. Member for East Lothian the right hon. Member for Glasgow, Govan (Mr. Millan) decided to leave the Chamber. We all understand why he did more to cut local government expenditure by diktat from the Scottish Office than any other right hon. Member. The right hon. Gentleman cut the staff of local government by 6,000 in one year, so it is not surprising that he should have left the Chamber when the hon. Member for East Lothian was suggesting that if the Labour party were in office it would allow all local authorities to spend as much as they liked at any time. The Labour party is out of office, and will remain out of office for a long time because of the double standard enunciated by the hon. Gentleman.

The hon. Gentleman talked about mandate, and I take it that he would apply the same principle to Fife regional council. There is not one Labour councillor in north-east Fife. Should Fife regional council never do anything in north-east Fife that is not approved of by the councillors from north-east Fife? That is the logic—if logic there is—in the hon. Gentleman's comments on mandate, and I hope that he will realise how foolish his argument is. He should not forget that one in six Labour candidates in Scotland lost their deposits at the last election. In my constituency the Labour candidate polled less than half the number of votes polled by the most disappointed Conservative candidate in the area of Glasgow with the strongest Labour support. When Labour Members talk about mandates in Scotland, they should remember that there is gy little of the geography of Scotland where their writ would run.

The two old political parties rival each other in their commitment to the centralisation of Government. It is hard to pick and choose between the arguments that have been deployed by both Conservative and Labour speakers in this debate. Both parties would seek to intervene in the affairs of local government when it suited their political book to do so.

When I supported the 1966 Act 20 years ago, it never occurred to me that the power written into that Act could be so abused as it has been by the right hon. and hon. Friends of the hon. Member for Fife, North-East (Mr. Henderson). I do not believe that it was abused, to be fair to the Labour party to which I once was proud to belong.

6.30 pm

The reality is that all governments of whatever hue engage in the business of cutting local authority power, imposing their views on people, and erecting a constitutionally obnoxious principle, despite the fact that Parliament has empowered local authorities to carry out the services that it has specified, and has made arrangements for the democratic election of their members. The judgment of local electors must be supplanted by the judgment of the Government.

Will the hon. Gentleman give way?

If the hon. Gentleman wishes to take up the time of the House, I shall give way.

Is it alliance policy to give local government a blank cheque to allow it to raise the rate to any level and to take money from old people without any parliamentary responsibility? That is the impression that the hon. Gentleman gave by saying that the Government should not interfere in local government. It would be dangerous if the hon. Gentleman were to give local government a blank cheque. We have seen what local authorities will do.

It is the purpose of the alliance to seek to increase local accountability. Throughout the debate the Minister has alleged that that is the purpose of the Bill I am trying to point out that far from achieving that end, by reducing the amount of money available to local authorities by the introduction of the poll tax, which reduces the amount of money available to local government to a mere 13 per cent., the Minister will massively reduce local accountability. By increasing the proportion of grants that local authorities have as a result of the measure and their reliance upon grant, the Minister is taking away local accountability. That is a reversal of proper priorities. The consequence cannot be undone save by moving towards the introduction of a more broadly based, genuinely local tax. That is why the alliance party supports local income tax. Of course we recognise that there will be a need for a grant element to equalise resources; otherwise the system would be unfair.

Although I have some sympathy for the Minister and for the move, the difficulty is that the Bill will reduce finance at the hands of local authorities to such a small proportion of total expenditure that, by the gearing effect, any change in the level of service provisions will require a substantial increase in the tax rate. The Minister has constantly argued that, by a marginal increase or reduction, a local authority will be more responsive to public opinion. We shall have to wait and see whether that is so.

It is quite clear that local authorities will have little control over their own priorities and that real accountability is not about expenditure at the margin. Real local government is about policies, major issues and the provision of important services. It is not about adjustments at the margin, and that is what the Bill will achieve. It will destroy accountability, and that is one of the reasons of principle why we oppose it.

The amendment seeks to make sure that local accountability is not only damaged by a direct reduction in the amount of tax available to a local authority but is further eroded by an additional provision that enables the Secretary of State to intervene at his discretion to axe expenditure if he so chooses. It is a belt-and-braces provision that throws considerable doubt upon the Secretary of State's assertion that he believes that the introduction of the tax will increase local accountability. The truth is that he thinks that some local authorities will be prepared to accept the ratchet effect and accepts the fact that a local authority may wish to increase spending to, say, 10 per cent. above average and will need a tax rate of three times that amount to achieve it. It is perfectly possible that there are such local authorities, but it will be iniquitous if, in the circumstances, the Secretary of State seeks to substitute his judgment for the judgment of a local authority. That kind of action erodes local accountability and brings local authorities into disrepute.

If the Secretary of State is genuinely concerned to bring about a responsible attitude to spending and to curb extremism, he would long ago have thrown his full weight behind the growing movement towards electoral reform. That would, at a stroke, end extremism. That is beyond the scope of the amendment. All I can do is to commend the purpose of the amendment moved by the hon. Member for East Lothian (Mr. Home Robertson) and express the hope that he does not push too hard the idea that such interventions as were encompassed in the 1966 Act are acceptable. There is a balancing power to enable central Government to intervene to require local authorities to do certain things. It should be a matter for their discretion, under the arrangements that Parliament has set down. It is an important amendment that merits careful scrutiny and should be accepted by the Government.

The hon. Member for Caithness and Sutherland (Mr. Maclennan) started his speech by referring to issues to which the Labour party and the Government are committed. It became clear that all that he is committed to is the continuing production of hot air. When asked a simple question by my hon. Friend the Member for Derbyshire, West (Mr. McLoughlin)—[AN HON. MEMBER : "Where is her?"] My hon. Friend has been called out to see a constituent.

When asked by my hon. Friend what the SDP's position was on whether central Government should have a reserve power in relation to local authority expenditure, the hon. Gentleman ducked. He referred to the fact that the alliance is sometimes in favour of local income tax and that there would have to be a central Government grant.

I answered the hon. Member for Derbyshire, West (Mr. McLoughlin) at some length. Perhaps I did not go to the point as quickly or as clearly as I should have done. If that is the case, let me now make it clear that my hon. Friends and I do not believe that such a power is necessary.

I am grateful to the hon. Gentleman. He has made the matter absolutely clear. Let people, not only in Scotland but south of the border, be absolutely clear that the Social Democrats do not believe that central Government should have any reserve powers in relation to local authority expenditure, no matter how unreasonable, excessive or irresponsible. That is a principle, but it is not one with which most people would agree.

I should like to know whether my hon. Friend is as puzzled as I am. We are not hearing about the position that was taken by Liberal councillors in Liverpool who were rescued from the antics of the Labour party.

Order. The hon. Member for Eastwood (Mr. Stewart) should not be tempted to stray away from the amendment.

I am grateful to my hon. Friend the Member for Stirling (Mr. Forsyth) for his intervention. Liverpool, of course, is south of the border, and we are talking about Scotland. It is not unusual for the Social Democratic and Liberal parties to have different views.

The hon. Member for East Lothian (Mr. Home Robertson) became almost hysterical at times in what has been generally a well considered and moderate debate. However, he advanced the only good argument that I have heard in favour of a Scottish Assembly—his personal commitment to attend such an Assembly instead of this place.

The hon. Member for Lothian missed one of the essential features of schedule 3. It is not proposed that under the community charge central Government would have the same powers as now exist over local authority expenditure. The major power over local authority expenditure in Scotland is the system of guidelines and penalties, but that system will not be necessary after 1 April 1989. I think that the hon. Gentleman accepted the need for some reserve powers in respect of local authority expenditure. At least, that is what I understood him to say. In Committee, he said :

"There may be circumstances in which there is a need for the Government to take steps to restrict local Government expenditure."—[Official Report, First Scottish Standing Committee; 17 February 1987, c. 1198.]

It is surprising, therefore, that the hon. Member for Glasgow, Cathcart (Mr. Maxton) should have made several broadcasts in Scotland clearly stating that the next Labour Government will sweep away all controls on local government expenditure. I am only sorry that the hon. Member for Glasgow, Garscadden (Mr. Dewar) is not in his place. I hope that he will be able to act as mediator to establish precisely what Labour party policy in Scotland is. Either it is in favour of a reserve power or it is not. The Opposition's two leading spokesmen during the passage of the Bill through the House are taking entirely different positions on a central issue.

My hon. Friend may have explained why the hon. Member for Glasgow, Cathcart (Mr. Maxton) is out of the Chamber at the same time as the hon. Member for Glasgow, Garscadden (Mr. Dewar).

Indeed. They may be meeting to try to establish the Opposition's policy.

Under any system—a community charge, the present rating system or a rating system as amended—central Government must have ultimate responsibility for the control of public expenditure. That will be so under any system, but I do not believe that the intention behind schedule 3 is to use the powers within it to the same extent as the present powers. It is clear that the accountability argument would come into force. The policy of succesive Governments has been to maintain a reserve power to take action in exceptional circumstances, and it is sensible that that position should be maintained.

This has been an interesting debate, and I wish to put only a few questions to the Minister about schedule 3. I accept that in terms of fiscal management there is an argument for some form of Government control over the expenditure of subordinate authorities within a unitary state.

I should tell the hon. Member for Caithness and Sutherland (Mr. Maclennan) that I was somewhat intrigued by a remark made by the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) during a debate in the Scottish Grand Committee. We were discussing the government of Scotland. The right hon. Gentleman suggested—I thought he did so with some merit—that one of the ways of reassuring the public that a Scottish Assembly with tax-raising powers, which is what we desire, would not "abuse" those powers, would be to make it clear to the Assembly that there could be no public sector borrowing requirement. I am not sure whether the right hon. Gentleman wanted that provision .to be placed in legislation or to introduce it by other means. I accept that that would be a means of introducing a form of fiscal discipline.

Nations have a fiscal discipline imposed upon them in the international arena—

Will the hon. Gentleman give way?

Before the hon. Gentleman intervenes to talk about the International Monetary Fund, I wish only to say that that reflects the fear of pain and the hope of gain that is to be found in the international arena. The Labour Government of 1966 introduced reserve powers, and my recollection is that they were never used.

The first concept that we are considering is the production of a report. It seems that the Secretary of State will receive a report

"proposing a reduction in the amount of personal community charge determined by the authority".

We are told now that there will be criteria for the report, and these will be extremely interesting. Who within the Secretary of State's office will prepare the report? Which civil servants will undertake this task? I suggest that it will be an onerous job. We are told in paragraph 1(3)(a) that

"the Secretary of State…shall have regard to the financial and other relevant circumstances of the area of the authority".

The provisions in schedule 3, subject to one or two minor variations, are identical to those which now exist for selective action to be taken in respect of rates. That procedure has been examined on a number of occasions in the House. The problems that the hon. Gentleman seems to be envisaging have not emerged.

In this instance it is proposed that a report will be produced. We are being asked to have regard to general economic conditions. Paragraph 1(3)(c) (iii) refers

"to such other financial, economic, demographic, geographical and like criteria as he"—

the Secretary of State—

"considers appropriate; and (d) may leave out of account such categories of estimates expenses as he thinks fit."

If anywhere in Scotland any body of reasonably objective opinion started to produce a report on any local authority in Scotland, it would provide that, on the basis of any revenue that was to be raised, it could not be expected to be constrained by considerations relating to "general economic conditions". I shall refer to my constituency as an example. I became the Member for Dunfermline, West in 1979, when the Tories came into power. I can tell the House that there are 18-year-olds who were unemployed, and still are, because of the "general economic conditions". We have seen the decimation of the mining industry, which was the result of "general economic conditions". My hon. Friend the Member for Dunfermline, East (Mr. Brown) and I saw the Prime Minister, the Head of the House. It was pleasant meeting her and we had a nice wee cup of tea. What did we get out of our meeting with the the right hon. Lady? We were told that the Scottish Development Association has to have regard to "general economic conditions". I am still waiting for the report that I asked for in November 1986.

If the Minister were objectively to draw up a report and were to consult any body of opinion within the Scottish Office or anywhere else, I submit that, even to Members such as the hon. Member for Stirling (Mr. Forsyth), having regard to "general economic conditions" in Scotland, he could not say that local authorities were spending too little.

The thrust of the argument is that the Secretary of State will ignore economic conditions and the strains on local authorities. Effectively, he is saying that if a local authority exceeds its estimates and revenue-raising powers, the Government will intervene. That undermines all the arguments about accountability, and that is the thrust of the Bill. The lie is in the Government's mouth. Do they believe that this is a measure of accountability?

I accept that there must be certain forms of constraint if overall fiscal management is to be achieved—I am an unreformed Keynesian—but the Government do not accept that. The Government argue that the market will know best and they follow monetary policies. If we judge the Government's argument at face value, they do not require this provision. There may be some room for constraint, but it is not embodied in the schedule that we are being asked to support.

It may help the House if I briefly cover the Government amendments. I do not believe that we need to linger over them. The only two amendments of significance are amendments Nos. 139 and 140. They are exactly the same as amendments tabled by Labour Members in Committee. They remove four subparagraphs which simply translate into community charge terms present legislation concerning rate reductions. The sub-paragraphs were intended to enable the necessary changes to be made to the various procedures in the Bill concerning the community charge so as to implement community charge reductions. At the time, concern was expressed at the constitutional principles involved and I undertook to reconsider whether the amendments were absolutely necessary. I am now satisfied that the Bill as it stands can accommodate community charge redeterminations without further amendment. Therefore, the four subparagraphs are no longer needed.

Amendment No. 141 corrects an error in the wording of the Bill. Amendments Nos. 142 and 143 are intended to require authorities with a redetermined community charge to repay any sum paid to them in response to a liability to pay the original charge. The repayment is subject to procedures that may be prescribed by the Secretary of State. I hope that the amendments will find favour with the House, especially as the main amendments reflect the line taken by the Opposition in Committee.

I believe that we have had an interesting debate. From the hon. Member for Caithness and Sutherland (Mr. Maclennan) we have learnt that a future alliance Government would exert no form of control whatever on local authority expenditure. Whatever the level of expenditure undertaken by a local authority, there would be no form of control. It is also significant that, during the course of the Bill, the hon. Gentleman has made it clear that the proportion of rate support grant, the central taxpayers' contribution, should be maintained against expenditure. Therefore, the hon. Gentleman has given us a picture not only of expenditure going sky high if so desired by authorities, but also—similar to a blank cheque—the central taxpayer will automatically have to put more money into the central grant pot to keep the proportion of grant against expenditure the same.

I am perfectly happy to stand by what I have said, but the Minister has misrepresented what I said about grant. I made it clear that grants should not remain constant as a proportion of expenditure, but should be related to resources. If we move to a system of local income tax, that will reduce the amount of grant. Instead of money being paid as income tax to the Exchequer and then back to local authorities, it will go straight to the local authorities.

We still have to hear from the hon. Gentleman the details of such a local income tax scheme.

I understood that the hon. Gentleman's remarks about controls did not merely apply to local income tax, but represented a general alliance principle. The hon. Gentleman also raised a previous argument when he referred to the 13 per cent. of expenditure from domestic tax. He asked how there could be accountability when we propose to destroy present accountability. Before the hon. Gentleman makes such statements, he should wait and see precisely what will be destroyed in terms of present local accountability.

Eventually, we shall remove local businesses from the local government tax-raising system. What accountability do such businesses possess? Local businesses have no vote and cannot influence the spending decisions of local authorities. However, the hon. Gentleman has argued that by removing them from this Bill accountability has somehow been lessened. If the hon. Gentleman examined the situation more carefully he would discover that the present lack of accountability lies with those who pay domestic local taxes. Of the total electorate in Scotland, only 39 per cent. pay rates. This Bill will mean that the vast bulk of those who vote in Scotland will pay some contribution towards the spending decisions of their councils. The scheme that we are proposing is far more democratic than any system proposed by the hon. Gentleman.

The new arrangements proposed in the Bill, as discussed in Committee, will improve the accountability of local authorities by widening the net of local taxpayers and hence the degree of oversight exercised by the electorate. The increased pressure for sensible budgeting allows us to abandon the system of grant penalties and tighter guidelines that presently exist. I hope that all hon. Members welcome that, because, although such controls were necessary, they were not something that any of us wished to see operating in an ideal world. We need to be sure that there is adequate pressure to keep local authority spending within reasonable bounds, but we must also ensure that local taxpayers are protected against the risk of unreasonable behaviour by individual authorities.

We have felt able to get rid of the general rate-capping measures that were adopted in legislation two years ago because we believe that they will not be necessary under the new system. At the same time, we believe that there must be some last resort power to enable the Secretary of State to propose a reduction of community charges in cases where an irresponsible authority decides to undertake expenditure in any particular financial year that is "excessive and unreasonable". Effectively, the clauses under discussion will achieve that. We are translating into community charge terms the present powers to effect a reduction in an authority's rate contained in section 5 of the Local Government (Scotland) Act 1966.

Opposition Members have made it clear that they oppose the provisions, but I do not believe that individual local taxpayers will agree, especially those who have been subjected in the past to the consequences of excessive and unreasonable expenditure in various areas of Scotland. It will interest hon. Members to know that one of the points made to me in recent questions about the community charge is that there is a general fear that, because there will he no controls, local taxpayers will be left at the mercy of irresponsible councils especially in the first year of a four-year term. I have been able to say that the Government have recognised that possibility, however remote, and as a responsible Government we believe that a last resort power should be returned.

The provisions in schedule 3 largely mirror the existing provisions for proposing a reduction in rates. First, the test that has to be applied is whether the authority's total estimated expenses are "excessive and unreasonable". That is a strict test and precisely mirrors the provisions in the present legislation. Of course, were the Secretary of State to exceed those criteria he would be subject to a judicial challenge. Secondly, the considerations that the Secretary of State either has to or may have regard to, as set out in paragraph 1, sub-paragraph (3), are again the same as apply at the moment to proposed rate reductions. Thirdly, the procedures are virtually the same as at present. The hon. Member for East Lothian (Mr. Home Robertson) raised a number of points that were altered in Committee and I repeat that they are only cosmetic changes of detail. They do not alter the way in which the provisions will operate. We went into the full details of the provision in Committee. There will always be a need for a full report to Parliament, and in due course, the need for parliamentary approval.

The basis for this schedule is that any Government must make sure that they provide against circumstances, however unlikely those circumstances may be. We believe that a reserve power is required. One of the most interesting things to come out of the debate was the remark of the hon. Member for East Lothian, speaking for the official Opposition, when challenged as to why the 1966 Act had contained these powers. He has said that he believes that there is a "need" for such residual powers. That was the position that he took today and it is the position that we take in the Bill. On that endorsement from him, I am confident that my hon. Friends will reject the amendments.

With the leave of the House, I shall reply to the debate. The trouble with the so-called residual powers that the Minister keeps talking about is that the Government have used them not as residual powers but far more liberally. I am fed up with hearing the Minister going on about irresponsible local government, when we all know that it is irresponsible and unrepresentative central Government who have been forcing up rates and cutting local authority services in Scotland. The Minister says that this new tax is all about accountability, but he cannot have much confidence in it or he would not leave schedule 3 in the Bill.

The hon. Member for Caithness and Sutherland (Mr. Maclennan) was getting himself into a bit of a lather when I was explaining the background to the powers in the 1966 Act, for which he voted. It was introduced under a Labour Government and it re-enacted powers that had been built into local authority legislation for a long time before. The residual powers were intended to be used only in the most exceptional circumstances, but the Government have been deploying them with monotonous regularity year after year when they are not justified. The Minister knows that he has no mandate to exercise such powers in Scotland.

There was no case for this central interference under the old system, and we know from bitter experience that these powers have been abused. There is even less justification for such powers with a poll tax, so I urge my right hon. and hon. Friends to support amendment No. 170.

I beg to move amendment No. 175, in page 20, line 11, at end insert—

'(3) The level of any rate support grant or revenue support grant payable to any local authority for any financial year shall be not less than 70 per cent. of the authority's eligible expenditure for that financial year.'

With this is will be convenient to consider amendment No. 181, in schedule 4, page 40, line 45, at end insert—

'(5) Notwithstanding sub-paragraph (4) above, the Secretary of State shall not reduce any amount produced under sub-paragraph (2) or (3) above on account of revenue received by a local authority from the non-domestic rate levied on oil or petro-chemical installations'.

The Government are always complaining about rates increases, and no doubt many people in some areas in Scotland have suffered big rates increases in recent years. However, the Government have tried to play political games by pinning the blame entirely on local authorities in the hope of discrediting those local authorities, especially Labour-controlled authorities, which are fighting desperately to maintain and improve services that they were elected to provide.

The truth of the matter is that the real blame for big rates increases in recent years lies fairly and squarely at the Government's door. The Government have cut their share of support by way of rate support grant. I fear that under this Bill, once the rate support grant system is changed to revenue support grant, that trend will continue. My amendment is intended to stop that trend and to restore a realistic level of minimum rate support grant or revenue support grant, as the case may be, if and when this terrible Bill is implemented.

It is interesting to consider the trend in recent years of the Government's percentage of rate support grant in terms of a percentage of reckonable expenditure. There was a time when the rate support grant in Scotland was as high as 75 per cent. That was way back in 1975–76—the golden days of a Labour Government, some people might say. However, there were special circumstances then because of local government reorganisation. It is still interesting that, when the previous Labour Government left office, rate support grant was still 68·5 per cent. of reckonable expenditure. Since this Government came to power, they have cut the percentage of rate support grant almost every year. It is now down to 55·5 per cent. In other words, from meeting two thirds of local authority expenditure, the Government are now meeting just over a half. That is a drop of 13 percentage points since the Government took office. For the coming financial year alone I calculate that there will be a loss to local authorities of about £250 million. Over the years, literally billions of pounds have been taken away from local authorities by the Government. No wonder local councillors are faced with difficult financial decisions.

There must be many councillors, and the people they represent, asking, "Where is this trend going to end? What is the Government's target?" Perhaps the Minister can answer that when he replies. Does he really want to get the ratio down to 50: 50, 40:60 or 30 : 70, or does he foresee a day when local government will have to raise all of its money for expenditure purposes? He should come clean in that respect. It would certainly help people in local government if they knew where they stood.

These statistics speak for themselves. The result of the massive cut in rate support grant over the years, particularly since this Tory Government came to power, means that many councils have no option but to levy significant rates increases or to reduce drastically the important services that they were elected to provide for the people they represent.

My amendment would at least ensure a minimum rate support grant of 70 per cent. of eligible expenditure. Once we move to the new system of revenue support grant, that basic minimum will continue. The Government may not accept my figure of 70 per cent., and I accept that the figure that they inherited from the previous Labour Government was a little smaller than that, at 68·5 per cent. But it would be of tremendous help to councillors and officials in local government—and those whom they serve—if the Government accepted the principle of a minimum. How on earth can a councillor or council official do any forward planning if he does not know what the minimum percentage of rate support grant will be? My amendment would help forward financial planning. I therefore ask the House to accept it.

I shall speak to amendment No. 181. I want to draw attention to two problems—one which could be transferred to the new system from the present one, and another which could arise if the Government develop their proposals for non-domestic rates.

Amendment No. 181 would fetter the almost unlimited discretion that the Secretary of State would have in fixing the amount of revenue support grant payable to each local authority. Paragraph 2(4) of schedule 2 says :

"The Secretary of State may, by reference to such factors as he determines, alter any amount produced"

under the formula above. Amendment No. 181 would not allow him to reduce the amount of revenue support grant by reference to the amount of revenue that a local authority receives from the non-domestic rate levied on oil and petrochemical installations.

I fully admit that the amendment is based on a constituency interest. There is considerable dissatisfaction now because the client group approach which the Government have adopted, and which helps to fix the needs element of rate support grant, has not been applied fully in respect of Shetland Islands council or Orkney Islands council. The same also applies to other local councils, but I shall restrict myself to those of which I have first-hand experience.

This year, instead of receiving grant of £20·3 million, Shetland has had it restricted to £10·7 million. Orkney has received £8 million instead of £10·3 million. The shortfall in Shetland is equivalent to a 20p rate on all ratepayers, including commercial ratepayers, who were badly hit by the revaluation, and Shetland's main ratepayer, the Sullom Voe terminal. They would save a great deal if the Government paid the full amount.

The criticism goes even further. It was accepted when the client group approach was first adopted that it would be impossible to apply it fully at the outset. There was an understanding that every effort would be made to bring authorities into line and that authorities which would gain would increasingly receive the full assessed amount. That has not happened this year. The gap has not been narrowed, and if the limit on gains had been applied to Shetland it would have had a further £600,000, which would have been a further saving for ratepayers.

When we debated the Rate Support Grant (Scotland) Order two weeks ago, the Minister said that one of the reasons for the lack of narrowing was the high rate revenue base of the islands, principally because of the oil terminals. I do not deny that there is a high revenue base which reduces domestic and commercial rates, but the burdens imposed by the oil terminals must be borne in mind. Substantial capital expenditure has been incurred for new housing, new schools, improved roads and harbour facilities.

Moreover, the oil installations have produced higher rateable values on domestic and commercial property. The benefits of the terminals should not restrict payment of the full amount of rate support grant. The gap must be narrowed. I do not want the present considerable shortfall to continue when rate support grant is replaced by revenue support grant.

I want also to flag up the problem which would arise if the Government introduced their national pooling of the non-domestic rate. That aim was set out in the Green Paper, but it is not included in the Bill. The Minister might say that, by leaving it out here, he is to some extent acknowledging the difficulties that pooling would pose for islands councils. He is, however, postponing the day when the special considerations mentioned in the Green Paper have to be implemented.

Some 80 per cent. of the rating revenue for Shetland comes form the Sullom Voe terminal and 60 per cent. of the rating revenue in Orkney comes form the Flotta terminal. If they were lost to a national pool, that would have a devastating effect on the level of community charge in Orkney and Shetland. That is one reason why we have asked for special consideration.

The amendment gives the Minister an opportunity to say what special considerations he has in mind. I know that he intends to meet representatives of the islands councils next week to discuss such issues and I am grateful for that, but it is a little late in the day as the Bill will have left the House by then.

What I have described could be a serious problem for the islands' finances, not least because they have to plan ahead and it is uncertain what arrangements will be in place after 1992 or when the Government, if they are still in office — God forbid — go ahead with a pooling arrangement.

I do not apologise for taking up a couple of minutes on this important amendment. It gives us an opportunity to discuss clause 25, albeit far too briefly.

This is the second time that the financial basis of support from the Government to local authorities has been caught by a guillotine. I believe that we spent about 15 minutes on it in Committee. I am sure that the Minister is desperate to put on the record a lot more about how it will work.

I should like to ask a couple of questions regarding additional commitments that the Government have taken on since we discussed this matter in Committee. I refer to the formula for giving relief to sports clubs. If the Minister does not think that 70 per cent. is a reasonable figure, will he say what level of support the Government are contemplating? Will it be more or less than it is now? He must hazard a guess, if not in actual amounts or in real terms, in percentage terms. Is it a long-term aim of the Government to have no central Government contribution to local authorities? I must point out to the Minister that, although a minor amount, this is an additional item of expenditure of which the Government have taken commitment.

7.30 pm

I am suspicious about what was said last night as to how the system will operate. Strathclyde regional council prepared a formula which, I hope, has been sent to the Scottish Office in which it identified a rates liability of £2·6 million for the 434 clubs in the region. Therefore, 50 per cent. relief would cost £1·3 million. However, under the formula that Strathclyde produced—I must say that it is a workable formula—if all clubs applied and the formula was applied, the formula means that there is a variation depending on the income and turnover of the club to try to take account of the problem of sports clubs that are licensed. The total relief could be £0·9 million, of which Strathclyde regional council would be liable for £0·;6 million. The rest would be a district liability.

The Government suggested that that was a considerable concession. I am sorry that not one Conservative Member was interested enough to seek clarification of it. This is the most important clause in the Bill so far as central Government support is concerned. My hon. Friend the Member for Falkirk, West (Mr. Canavan) has rightly drawn attention to the level of support that would be desirable. That is not a commitment by the Opposition, but it gives us the opportunity to consider clause 25.

I should like to direct the Minister's attention to what was said last night. I shall not quote extensively because of the time constraint, but the Secretary of State said :

"if a local authority uses its discretion it will not lose a penny of its income."

We are talking about what will happen after 1989, about the new proposal, not the interim period. The Secretary of State continued :

"I can confirm that the effect of these proposals will be that any individual local authority which may lose revenue which it would otherwise have received from a sports club, but for the relief that it will provide, will receive additional rate support grant commensurate with the revenue forgone."

I presume that he means the revenue support grant, because we are still discussing 1989. Therefore, he is saying that there will be no loss. However, replying to the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), the Secretary of State said :

"The only change will he that if a good proportion of authorities were to exercise that relief, they would lose revenue from clubs, which would not result in any improvement in their grant from central Government." — [Official Report, 4 March 1987; Vol. 111, c. 963–4.]

I do not know whether that is a misprint. That is the only situation that would change. Would the Minister care to clarify that? I ask him briefly and concisely to explain how the mechanism will operate. What is the amendment that will be used in the other place to enable local authorities to know precisely that, within future calculations, if they give rate relief, they will receive full compensation? I do not doubt the word of the Secretary of State or the Minister. However, I am suspicious about the whole arrangement because the Secretary of State knows—and we all know—that the Government decide how much support they will give to local authorities. They then say, "Fit that into the formula, whatever it is." If one authority gives more relief, it will either come out of the other part of the grant from that authority or it will come from some other authority.

indicated dissent.

The Minister shakes his head. However, he does not have the confidence of the local authorities. That is like saying, "Yes, we are giving a special allocation to Glasgow"—or somewhere else—"for dampness." That does not mean a thing. It means only that the Minister hopes that Glasgow will spend or borrow that additional amount and that it will be used to tackle dampness. However, it still comes out of the same housing budget, and the same restrictions on expenditure that apply in housing will apply to local authorities, given the powers that he has.

I know that it is a little unfair to raise that point now, but I hope that the Minister will respond because, unless there is an amendment—no doubt the Government will table an amendment in the other place—in which case we may be able to debate it when the Bill comes back, there is a need to clear up exactly how the relief will be given to local authorities, and whether it will affect the level of general support that central Government will give to local authorities.

I should like to deal first with the point raised by the right hon. Member for Glasgow, Govan (Mr. Milian), to the extent that I can do so in general terms, not having received notice that he wished to raise it now. First, as a matter of fact, I should like to see say that my right hon. and learned Friend the Secretary of State made it clear last night that he wished to compensate local authorities who take decisions to relieve sports clubs for the loss of revenue that they incur in so doing. In relation to the amendments considered by the House last night, it is worth reminding the hon. Member for Glasgow, Cathcart (Mr. Maxton) that where mandatory relief was required I understood that there was no provision that any compensation should be made to the local authorities for that. It would have fallen instead upon their ratepayers, so there is a major distinction between the two sets of proposals that were before the House last night.

In overall terms, the Secretary of State said in an answer to the hon. Member for Glasgow, Garscadden (Mr. Dewar):

"When each year Government decide on the aggregate of rate support grant, they will take into account all the circumstances and they will have to include—"

Unfortunately, the record reports an [Interruption.] at that point. From his later comments, it is clear that the hon. Gentleman was saying that that would have to include the consequences of the mechanism that he had enunciated. He continued :

"This is not some new principle. It is exactly the way in which rate support grant is determined by every Government, and that is the proper way to do it. I have told the House that no authority will lose a single penny by a decision to grant relief of the kind that we have outlined."—[Official Report, 4 March 1987; Vol. 111, c. 965.]

So far as the mechanism is concerned—I do not wish to discuss it in detail—once the Bill is in operation, in 1989, there will only be the needs element through which it can be operated effectively. The non-domestic revenue will be considered and its loss in each authority, based on the authority's certification in the autumn of the number of reliefs that will be given. will be deducted from the domestic rates and compensated in terms of the needs element, so that each authority does not lose as a result of having taken those decisions and does not have to increase its community charge to meet them. That is quite simple after 1989, because then there will only be the needs element.

At present there is already an element of compensation built into the system, through the resources element, but not all authorities are in resources elements, so whether an authority has some comeback through the grants system for taking a decision to relieve sports clubs at present depends whether it is in a resource element. My right hon. and learned Friend said last night that he wanted to ensure that for 1988–89, which is the year before the provisions in the Bill come into operation, there would be as fair a system as would exist after the Bill came into operation. That requires a minor legislative change, which we intend to move in another place, to allow a similar mechanism, through the needs element, to operate before the Bill becomes operative in terms of the new revenue support grant.

I hope that the hon. Gentleman will accept that as a general explanation. I know that he has a suspicious mind — he is continually reminding me of that fact —but I hope that on this occasion he will see that not only have the sports clubs welcomed what was said this morning but that once the local authorities have studied it they will see that we have provided a mechanism that is fair to them as well.

I am aware of time constraints, but I should like to say a word about the proposals because in Committee I could not do so at the end of our debates. The amendment in the name of the hon. Member for Falkirk, West (Mr. Canavan) is wholly unacceptable. First, given the present grant rate of 55·6 per cent., the amendment would imply a substantial immediate increase in the taxpayers' contribution to local services. It would be instructive to know the hon. Gentleman's views on where that money was to come from. What other services or expenditure programmes would he like to see reduced?

rose—

Perhaps the hon. Gentleman will allow me to develop my argument. I did not interrupt him, although on some occasions I was sorely tempted to do so. Would the money come from increases in taxation? We already know that Labour's programme would involve either 43 per cent. VAT or a local income tax of more than 50p in the pound. Is he suggesting that those figures are not enough and that he wishes to see taxation increased?

The hon. Gentleman went on to make the point, as he has done before, that reductions in rate support grant had somehow increased rates. Presumably the corollary is that if one holds the proportion of rate support grant steady, rates will hold steady, and if one increases the proportion of rate support grant, rates will decrease. In the four years when grant was held steady at 68·5 per cent., expenditure rose by £260 million in real terms and rates rose by 79 per cent. in cash terms or 17 per cent. in real terms. The grant proportion was being held steady, but it did not help ratepayers because the rates increased in real terms. In July 1986, my right hon. and learned Friend the Secretary of State, announced an aggregate Exchequer grant for 1987–88 which maintained the percentage of grant in 1986–87. We can look at Scotland now to see whether the hon. Gentleman's argument is working and whether rates are holding steady, but if he considers the proposed rate increases, I doubt whether he can sustain that argument.

The hon. Gentleman asked me what the Government's position was on rate support grant, and the same question was asked by the hon. Member for Provan. I must tell both hon. Gentlemen that they cannot expect me at this stage to predict what is essentially a decision taken each year in the light of the needs and circumstances of the time. However, I can make this comment about this year. When we maintained the grant proportion, we made it clear that it was in recognition of the fact that at long last expenditure in 1986–87 was marginally below that in 1978–79 in volume terms and that this was the first time that that had happened since 1979. That was the reasoning behind the aggregate which we announced.

Finally, the amendment is wholly unacceptable because it would compel the Government to provide grant at a rate of 70 per cent. or, as the hon. Gentleman fairly said, possibly less of an authority's actual expenditure even if that expenditure was grossly extravagant. The hon. Gentleman is effectively asking the Government to give a blank cheque to the local authority saying, "Spend what you like." The hon. Gentleman knows that he has removed the controls that we were discussing in the last set of amendments. He is saying to local authorities, "Fill in 70 per cent. of whatever you want to spend."

The amendment refers to "eligible" expenditure.

The hon. Gentleman might like to describe what he believes to be eligible expenditure. Obviously, it is not relevant expenditure because we have been setting out guidelines for relevant expenditure and the hon. Gentleman has said that we have been holding local authorities back. His suggestions are unworkable and, once again, show the sort of view of local authority spending that many Opposition Members have.

Amendment No. 181, proposed by the hon. Member for Orkney and Shetland (Mr. Wallace), deals with oil and petrochemical installations. The hon. Gentleman will not be surprised to learn that I cannot accept his amendment, but I can offer some reassurance on the points that I believe concern him. I shall deal only with those affected by the Bill. For constituency reasons, he may have wanted to make other points in the debate, but in fairness I should stick to the effects of the Bill.

In the period before the establishment of a national non-domestic rate, with pooling of non-domestic rate income, we intend that for the purposes of apportioning revenue support grant on the basis of the respective needs of authorities, those needs will be assessed in the normal way, as they are at present, and non-domestic rate income will then be netted off. For an authority like Shetland or Orkney, the netting off will include the rate income from Sullom Voe or Flotta, which I think are the hon. Gentleman's main concern. The purpose of this procedure is to equalise among authorities, so that after grant all authorities will have to impose the same level of community charge for the same standard of service. That is an important principle.

However, schedule 4, paragraph 2(4) allows us to make special arrangements which we have described as safety netting—that is, the Secretary of State will be able to adjust the amount of grant arrived at under the earlier procedures, so as to avoid or to moderate any change in grant entitlement, from one year to the next. Paragraph 2(4) provides us with an adequate vehicle to avoid any odd or quirky results which otherwise might be expected to arise, particularly for the Islands councils. On present estimates we would expect all the Islands councils to benefit substantially from the safety netting carried out using paragraph 2(4). Indeed, Shetland Islands council has made submissions setting out the importance to it of safety netting.

7.45 pm

I am aware of Shetland's concern in particular about the decline of business for Sullom Voe in the 1990s and the need for a non-domestic rate at that time pitched at a level which will not discourage the oil companies from continuing Sullom Voe's operation. To that kind, I am aware that the council is aiming to pay off its oil-related debts by 1992–93 and I am aware of its concern about the possible effect of a national non-domestic rate thereafter on the oil companies' decisions for the future of Sullom Voe. Indeed, those points were raised with me when I visited the islands in the summer. There are two points to make in response to that. First, the immediate issue as perceived by Shetland Islands council is that it should be able to continue to pursue its debt-free policy between now and 1992–93. There is nothing in our proposal to prevent or inhibit that.

Secondly, our interim proposals to determine maximum annual increases in non—domestic rates are intended simply to do that. It will be open to individual authorities to charge less than the maximum, as I understand that Shetland would like to be in a position to do. I will be meeting representatives of Shetland Islands council next week, and I hope then to discuss the matter further with them. These discussions will cover not only the position in the next few years under the system of grants and non—domestic rates established by this Bill, but the long term under the national non—domestic rate. On that basis I hope that the hon. Gentleman will not press his amendment.

I shall briefly outline how the revenue grant proposals are intended to work, because it is important. Paragraph 1(4) of schedule 4 effectively repeats the existing provisions but in a simplified form. The Secretary of State first determines aggregate Exchequer grant—that is, the total grant to be paid to local authorities in support of their relevant expenditure, which is, broadly, all their expenditure except housing and water. The first call on this is for entirely specific grants. These are the grants which are paid for particular services. The biggest specific grants are for the police, housing improvement and urban aid. The rest of the AEG is then to be paid as revenue support grant. Having established the total of revenue support grant, paragraph 2 sets out how the grant to each authority is to be established.

The first step in distributing grant will be to look at the expenditure need of each authority. At present we use client group assessments of expenditure need to do this in needs element calculations. In the new system we shall take these assessments but deduct from them non-domestic rate income. The grant required to compensate for differences in expenditure need will then he calculated. For example, if Central region has an expenditure need of £445 per adult and Fife £420. Central needs £25 per adult in grant to compensate for that difference. Once differences in need have been calculated, the rest of the grant will be distributed proportionately to the adult population. To use 1986–87 figures, for example, regions might get £316 per adult; districts, which have traditionally received a lower share of rate support grant, £1 per adult; and the Islands authorities £317 per adult.

The new grant system is being introduced for two reasons. First, the rate support grant system has become too complicated and few people understand it. Having considered rate support grant orders in the House, most hon. Members will agree with that. The needs element is complicated enough, but there are also the resources and domestic elements. The subject has even developed a language of its own with such entities as actual penny rate products, standard penny rate products, and the national standard amounts. Secondly, the grants system must match the system of taxation, since one of its aims is a fair distribution of the tax burden between residents in different authorities.

The new grant system will cause fairly small changes in grant entitlement at regional level but rather larger shifts for some small districts. To ease the transition to the new system, there will be a safety net. In future, revenue support grant orders will be straightforward documents listing for each authority how much grant it will receive. The report on an order will set out how the grant figures were arrived at and local authority associations, which at present mean COSLA, will be consulted before an order is laid. Section 2.6 allows variation orders to be made changing grant distribution and, if necessary, the aggregate. In the present grant system it is necessary to make several variation orders for grant each year. I hope that such changes will be kept to a minimum in the new system and that in many years it may be possible to dispense with variation orders altogether. Certainly, the new system will give local authorities much greater certainty to their grant entitlement. I believe that that will be a major improvement on the present situation.

That is the background to the amendments that we have been discussing. I hope and trust that the hon. Members for Orkney and Shetland (Mr. Wallace) and for Falkirk, West (Mr. Canavan) will not press their amendments. If they do, I must ask my hon. Friends to resist them.

I beg to move amendment No. 160. in page 20, line 24, after 'charges', insert

'(including payments of standard community charge contributions under section 12 and collective community charge contributions under section 13 of this Act).'.

The purpose of this amendment is to clarify and place beyond doubt the coverage of the proposed community rebate scheme. It has always been the Government's intention that collected community charge contribution provided for in clause. 13 should be able to be included within the provisions of the community charge rebate scheme. Our advice when the Bill was being drafted was that reference to rebates being in respect of payments made by way of community charges was sufficient to secure this. Doubt has now been cast, however, on whether the words "by way of" are sufficiently clear. The purpose of this amendment is to remove that doubt. I trust that the House will approve the amendment.

I beg to move amendment No. 174, in page 20, line 25, at end insert

'such regulations shall ensure that 100 per cent. rebates may be granted where the level of income of a person warrants it.'.

The whole rebate scheme in this Bill has aroused concern ever since the publication of the Green Paper and then of the Bill, with no White Paper in between, which would have been normal in these circumstances. Concern has been expressed about the lack of detail in the Bill on the rebate scheme. If what the Minister has said so far in Committee and elsewhere is right, we are certain that he intends to operate the Social Security Act that will be coming into force in April 1988. In other words, every person who is entitled to pay the community charge will pay 20 per cent. of it. Whatever their income or means, however poor they are, if they are over the age of 18 they will have to pay 20 per cent. of the community charge.

The Minister's initial reaction to objections to that tended to be, "It is in the Social Security Act and there is not much I can do about it." It was pointed out to him that constitutionally in this Parliament, as in any previous piece of legislation, we are entitled to put in this Bill a 100 per cent. rebate scheme. Is he prepared to say that every single person should pay 20 per cent. of the charge? The Minister and the Government are saying that widows and single parents, about whom the Government have expressed great concern, are going to be better off as a result of having to pay £40 or £50 per year. Every unemployed youth over the age of 18 will have to pay the charge. The poorest in our land will be asked to pay on average £1 a week for their so—called local services. That is what the Government are about. We object to the basic immorality of asking the very poorest in the land to pay.

Of course, £1 a week is not a large sum for any of us in this House. However, there is something immoral in hon. Members, particularly on the Government side, voting to reduce their own tax burden in order to put it on to widows, old-age pensioners and the unemployed. That is what the Government are doing in this Bill.

The hon. Gentleman is sloganising.

The Minister says I am sloganising. I will give him one more slogan. I will tell him what may very well happen under this measure. I have said before, and I say again, that if this Bill ever comes into force, elderly pensioners living alone in council flats will have a difficult choice to make in the middle of a hard winter. Their choice will be between paying their electricity bill to heat their homes and keep themselves alive or paying the community charge. If they make the wrong choice, they die. If they choose not to pay the community charge, the sheriff's officer will go after them and take their television set in payment.

I have heard the descriptions "emotional" and "over the top" from the Minister, but never once has he denied that that may happen as a result of what he is doing. He cannot argue against it, because he knows it could happen.

We are talking not only of the immorality but of the practicality of the Bill.

The famous Tory Reform Group document that came out at 1 o'clock in the morning, referring to accountability, makes the point :

"The Government's final fall—back position is that all low-income electors may be"—

or "shall be", which is what it ought to be—

"required to pay 20 per cent. of their local community charge. This idea will not last long in practice. The administrative cost of collecting such sums will often outweigh the income and the social security system (through housing benefit) will be adjusted by a future Government to meet the 20 per cent. charge in full for low—income groups. In these circumstances, the 20 per cent. charge will be effectively redundant."

The Tory Reform Group in England does not believe that the 20 per cent. charge will stick, because it is such a small sum of money. The cost of collecting the charge and chasing people to get it will be such that the Government will appreciate very quickly that it should be scrapped altogether. Once the 20 per cent. charge is abolished and a full 100 per cent. rebate system is instituted, the Government's accountability argument will go out the window. That is why the Government are so miserly and mean in insisting on the very poorest in our society having to pay that sum of money. I ask the Minister to support my amendment and to give the poor of Scotland at least the chance of a 100 per cent. rebate.

This amendment goes to the very crux of the Bill. People of very limited means will be obliged to pay out 20 per cent. of their income. That will not matter very much to most people but, as the hon. Member for Glasgow, Cathcart (Mr. Maxton) has just said, to many others it will mean the difference between a reasonable existence and doing without the very essentials of existence. The Government have made great play in the past about the means test. This will not even be subject to a means test. Everybody, however small their income, will be obliged to pay 20 per cent. of their income towards this new poll tax.

8 pm

In 1979, in a document that the Conservatives issued in Scotland, they said :

"In the future programme of priorities we will ease the rates burden, first by transferring to central Government the cost of teachers' salaries"—

no doubt that is due in the next century—

"…by abolishing domestic rates and replacing them by taxes related to people's ability to pay."

This charge goes against that, and most hon. Members would regard that policy statement as fundamental whether or not they agree with this poll tax or community charge.

This charge will fall heavily on Scottish crofters. The hon. Member for Caithness and Sutherland (Mr. Maclennan) put down a marker in Committee about that. Since 1956 crofters have enjoyed rate benefits because of their remote location, higher costs of living and lack of amenities. Their circumstances have not changed in any way.

The National Farmers Union of Scotland, which is not often regarded as a friend of the crofters, has come out in their support. It says :

"£1·7 million extra will be taken from Scotland's crofting households."

My constituency has the benefit of the integrated development programme but it will all have gone for nothing because of this swingeing poll tax. All the input from the Common Market will disappear because of this charge. It negates entirely the benefits of the community programme in the Western Isles. Mrs. Betty MacDonald, the convenor of the NFU's Scottish commission, said :

"For a household of two I will pay over three times the amount payable under the existing system."

The Government must face that. Scotland's crofters do not have the resources to pay these charges and the Crofters Holdings Act 1886 will have been passed for nothing. The social effects will be damaging in parts of the islands and on the mainland of Scotland where, because of derating in the past, crofters have a reasonable cost of living. They will come to the towns, and the rural areas will be totally depopulated. For that reason, quite apart from the question of morality and justice, this amendment should be accepted by the Government and backed by the House.

We had a long debate in Committee, so I shall not rehearse all the arguments that I deployed then to draw attention to how this measure will affect a constituency like mine with a high proportion of people receiving social security benefits. I have had two letters containing representations. One is from the Scottish Council for Voluntary Organisations and the other is from the Scottish Society for the Mentally Handicapped. I assume that the Minister has received similar letters. The Scottish Council for Voluntary Organisations is probably one of the most influential and well-respected bodies in Scotland. Speaking on behalf of 11 other voluntary bodies, it says :

"The bill, in its present form, will have serious effects upon the clients and members of voluntary bodies."

The Scottish Society for the Mentally Handicapped says:

"So mentally handicapped people would presumably be liable for about £50, which would have to come out of their Social Security benefits. While there may be some adjustment of benefits nationally, the Community Charge would be fixed locally and the two might well be incompatible. Many families will feel that they are being taxed for having a mentally handicapped dependant."

It is appalling that, under the guise of some kind of accountability, the Government are being miserly and putting the boot into the poorest and most handicapped people in our society by way of a 20 per cent. charge. I have written to both organisations, I hope diplomatically, and told them that in one case Her Majesty the Queen Mother is the patron and the president is Lord Mackay of Clashfern. The patron of the other organisation is Her Royal Highness the Duchess of Kent and the vice-president is the Duchess of Buccleuch and Queensberry. When talking about noble families I am never very sure whether I am talking about the Lothian or the Hamilton family or whether they are just related. I hope that my little effort in drawing attention to the power that still remains in the House of Lords to do something for the poor will be noted by the Minister. It is ironic that in this society we have to hope that the Lords can do something that the Government have failed to do.

The right hon. Member for the Western Isles (Mr. Stewart) is right when he says that this matter has been debated at length—and it is right that it should have been. The proposals by the Government to impose 20 per cent. of the community charge on those who are destitute is an abomination and ought never to have been the subject of legislation. It is an appalling commentary upon the attitude of the Government to the poor, who grow in number the longer this Government remain in office, that there is no provision in the Bill to help these people avoid an appalling impasse.

The Government have sought to justify the poll tax by saying that it is a charge for services, but it will not fall upon people according to the extent to which they use services. The Government know that local government services are most used by the elderly and by young people with families. For the most part it is the single unemployed who will have to bear this appalling burden. They are the very people in Scotland who receive least assistance from local authorities. The alliance parties were firm and clear from the beginning that local taxation ought to be based upon ability to pay. The Government have rejected that principle and we regard their attitude to the poll tax as retrograde, medieval and wholly inappropriate in a civilised society. I support the amendment.

In Committee questions were asked about whether there would he a rebate scheme and a number of hon. Members did not think that there would be. The hon. Member for Glasgow, Cathcart (Mr. Maxton) tabled an amendment but did not move it so we had better leave that matter aside.

I should like to quote from a letter written by my right hon. Friend the Prime Minister on 2 March to Councillor Layden, the chairman of the Association of Metropolitan Authorities. I hope that the letter will put this matter beyond doubt. It says:

"The Government's intention is that there should be community charge rebates throughout Great Britain, though each person liable would be required to make some community charge payment; the Social Security White Paper suggested that each household make at least a 20 per cent. contribution towards domestic rates. You will have seen that Clause 26 of the Abolition of Domestic Rates Etc. (Scotland) Bill provides the power to pay such rebates in Scotland. We envisage a similar power when the legislation to introduce the community charge in England and Wales is put before Parliament."

If the hon. Member for Cathcart does not wish to rely on my statements, perhaps he will rely on that one.

The right hon. Member for Western Isles (Mr. Stewart) spoke about the amendment put forward in Committee by the hon. Member for Caithness and Sutherland (Mr. Maclennan). Those who know the area that the right hon. Member for Western Isles represents are not unanimous in thinking that the amendment put forward by the hon. Member for Caithness and Sutherland was correct. A certain Mr. Brian Wilson, who I believe is still a member of the Labour party and a candidate, on 27 February, wrote in the West Highland Free Press, a journal which I suspect the right hon. Gentleman sometimes reads :

"The arguments raised against the solution, …"—

that is, the solution proposed by the hon. Member for Caithness and Sutherland—

"…notably by Mr. Hugh Brown, are formidable. It simply is not on to introduce in 1987 a new scheme which gives the well-paid schoolteacher with crofting status a 25 per cent. tax rebate while the pensioner next door in a non-croft house is hit for the full whack."

If the right hon. Member for Western Isles is not prepared to listen to the arguments that. I put forward in Committee, he might at least listen to the arguments of Mr. Brian Wilson.

I agree that probably only 1 per cent. of crofters are schoolmasters who have inherited their croft or bought one. But that does not apply to 99 per cent. of the crofted area, either in the islands or on the mainland.

If the right hon. Gentleman looks at the number of owner—occupier crofters, he will find that the percentage of them who have other jobs or professions is rather larger than that.

The point that is being made brings us directly to the question of rebates. The moment that we make exemptions for certain categories, we give to those who do not need help as well as to those who do. The purpose of the rebate scheme is to target help to those who need it.

The Minister has almost made out the case for a local income tax. He says that, by trying to introduce exemptions, one cannot necessarily target those who are in need as opposed to those who are not. The reason for these exemptions is that his Bill does not allow for the fundamental principle of fairness, which any tax system must have. He almost accepted that and put forward a good case for a local income tax.

I wish that we had time to go into the question of a local income tax. I have been longing to go into the details of a local income tax. The hon. Member for Caithness and Sutherland (Mr. Maclennan) told me that I should not expect him to produce any details of his scheme, and I can only suspect that that is because he realises that were he to go into the details of it he would see that it hits at those whose support he is trying to gather.

This amendment would require the rebate scheme to provide for rebates of up to 100 per cent. of the community charge levels. Here again we are dealing with an issue which has been debated at length not only in the course of the Bill but, more appropriately, by both Houses during the passage of the Bill which became the Social Security Act 1986. The proposition that all those liable for the personal community charge should be required to make some contribution towards it is already embodied in the housing benefit scheme for rates which will be introduced from 1 April 1988 under the provisions of the 1986 Act.

In view of the amount of discussion that we have already had on this point, I shall limit myself to a brief summary of the justification for our policy. There are two reasons for the proposal. The first is that the primary purpose of rates, and in due course the community charge system, is to finance the provision of local authority services. Since all ratepayers, and subsequently all community charge payers, have access to local authority services, it seems right that all should make at least some contribution to the costs. The second justification is to increase the accountability of local authorities to their ratepayers, or community charge payers, for the costs of the services that they provide.

As was clearly established during the passage of the Social Security Act 1986, there needs to be a relationship between the services that local authorities provide and the willingness of their local taxpayers to meet the cost of these services. If a significant proportion of local taxpayers bear none of the burden of meeting the costs of local services, that relationship is broken.

The provision for a minimum contribution is therefore an essential part of the improvements in accountability which the new system will bring. It will, indeed, already have been included, in principle, in the rating system before the community charge is introduced. The carryover of the principle into the community charge arrangements will reinforce the improvements in accountability that the broadening of the tax base will bring. The amendment therefore strikes at one of the main principles of our policy, and I cannot accept it.

The rebate scheme which we offer is a generous one. It takes account of high levels of gross income at the top end of the taper and it depends on income support levels at the bottom. It will give protection where it is required, while maintaining the principle of accountability.

On that basis, I ask my hon. Friends to reject the amendment.

In the last 30 seconds before the guillotine comes down on the debate, I should like to say that the 80 per cent. rebate and the paying of 20 per cent. by every person—the mentally and physically handicapped, the elderly and the young unemployed — is the most immoral part of what is a very immoral Bill. I ask my hon. Friends to join me in the Lobby in voting for a 100 per cent. rebate.