Order read for resuming adjourned debate on amendment to Question, That the Bill be now read a Second time— [16 December]—to leave out from "That" to the end of the Question and to add instead thereof:
`this House declines to give a second reading to the Local Government Finance Bill because of the absence of any grading in the rate of community charge in proportion to the ability to pay and because of the absence of a comprehensive rebate scheme which would also take account of ability to pay.'.
Question again proposed, That the amendment be made.
Before we resume the debate, may I remind the House that I have a very long list of right hon. and hon. Members who wish to take part in the debate? The hon. Member for Lancashire, West (Mr. Hind) drew attention to the fact that at the moment there is no limit on speeches, but it would help enormously, and would be to the great comfort and general convenience of the House, if speeches were limited to about 10 minutes. In that way, a large number of hon. Members could be called, as well as Privy Councillors.
On a point of order, Mr. Speaker. Does the Chair intend to have regard to those hon. Members who were here yesterday, and not only to those who have turned up today?
Those who sat through yesterday will certainly have some precedence in the debate today.
On a point of order, Mr. Speaker. I wonder whether it would be helpful to the House if the occupant of the Chair could inform a right hon. Member or an hon. Member who is speaking when he has reached 10 minutes? It is sometimes difficult when speaking to know how long one has taken.
The Chair has no authority to do that. There is no limit on speeches without the authority of the House. Until the motion has been put down and agreed, the occupant of the Chair cannot do as the hon. Gentleman requests.
The Bill extends to England and Wales, but provides for separate operations in the two countries. There are a number of important differences in the way in which the legislation will operate in Wales, which will reflect the particular needs and circumstances of Wales, and which I hope will be welcomed by Welsh Members on both sides of the House.I have been impressed by the good working relationship between central and local government in Wales. I have had a large number of meetings, both formal and informal, with representatives of local authorities at all levels. I know that they have views which are sometimes obviously in conflict with those of the Government, and these present proposals are no exception. But, despite differing views, there exists a constructive dialogue on the problems of Wales and ways in which they can be overcome. There is a readiness on the part of local authorities to approach problems in a constructive way. In the same way, they know that there is a readiness on my part to have meaningful consultations and to listen attentively to the points that they have to put across. Wales has had a separate rate support grant system since 1980, and I do not think that anyone involved in political life in the Principality would dissent from the view that that has been of enormous benefit to local government services and to the people of Wales. The Bill presently under consideration gives an even greater independence to Wales in local government finance, but I and my predecessor have already made it clear that no resources will be lost to Wales as a result of this legislation. The Bill provides for a separate and completely insulated system to operate in Wales. All the receipts of the community charge will stay in Wales and there will be an entirely separate grant system based on assessments of needs fully discussed with the local authorities. All the non-domestic rates will go into a separate Welsh pool to be redistributed to Welsh local authorities. The benefits that Wales enjoys from having its own separate system and separate consultations will be carried over into these new arrangements. I hope that the House and the people of Wales will recognise what a small proportion of local government expenditure in Wales will come from the community charge.
Will my right hon. Friend cover a point that was raised yesterday by my right hon. Friend the Member for Henley (Mr. Heseltine)? It is about the effect of the community charge in giving an incentive to people to put their grandmothers out to grass, to make them go into retirement. We have far too many retirement homes already.
I disagree with that analysis. One of the important points about the community charge is that many single elderly people, such as widows and pensioners living alone, will benefit from the legislation and will not be handicapped by it. I shall deal with that later.On present spending and grant patterns, the community charge would account for only 14 per cent. of local government expenditure in Wales; 19 per cent. would come from the non-domestic sector and 67 per cent. would come in the form of grants. Put another way, total local government expenditure per household in Wales comes to £35 per week. Of this, the Government will put up £24. The business sector contributes £6 and that leaves only £5 to find from the community charge. That is the amount that we are talking about today—not the £35 per household that goes out every week on local services in the Principality. However, many people would not even pay the small contribution that the community charge makes towards the funding of local government. The Government have gone to considerable lengths to ensure that those on low incomes will be protected.
I am trying to follow my right hon. Friend's argument and the Government's argument about accountability. We are told that the Bill will make local government more accountable to the voters. How will it be more accountable if only £5 out of £35 comes via any local charge? The Government will have at least 75 per cent. control over the money coming in. How will that make local government more accountable?
One of the ways in which it will be made more accountable is that more people than ever before will be paying this smaller contribution. At present, many people in Wales do not make any direct contribution to the local authority. Many people will not even have to pay the small contribution that the community charge makes to the funding of local government. As I have said, the Government have gone to considerable lengths to ensure that people on low incomes will be protected.A great deal has been said about the impact on the very poor in the inner cities and elsewhere. There is no doubt that in Wales many people depend upon social security payments and other state benefits. However, it must be clearly stated that these people will be paying the average of £5 per week per household and will benefit from very substantial rebates. At the moment, people on the lowest incomes qualify for 100 per cent. rate rebates. Almost all these people will qualify for income support under the new system. This means that they will get an automatic 80 per cent. rebate on their community charge. Therefore, instead of the average of £5 per week, they will pay £1 per week per household. In addition to the rebate, their income support levels will have been uprated by an amount to reflect the average minimum community charge payment for Great Britain.
I recognise some of the points that the right hon. Gentleman is making. How can he possibly justify a tax under which people on his income and people who have far more than the right hon. Gentleman will pay precisely the same as people on modest incomes, who will receive no rebate? Can he explain why the Tory Reform Group, of which he is very much a patron, has been so highly critical of the poll tax?
I have had the privilege to be a patron of the Tory Reform Group for many years. One of the privileges that I have had in that capacity is that I have never been consulted on any publication. I have not read the publication to which the hon. Gentleman alludes. The hon. Gentleman has taken a rather bad example, because three of my children are teenagers and are likely to continue to live at home for some time. It may be that under this system I shall pay more, rather than less.It is entirely appropriate to use Great Britain averages of the minimum community charge payment for the upgrading of the allowances. One of the fundamental principles of the social security system is that it should apply equally across the country. The effects of compensation on this basis will be that people in Wales in receipt of income support are likely to receive entirely adequate support towards the amount of the community charge that they will be called upon to pay.
Even the 20 per cent. that has to be found will be based on what happens locally. We are being told about the national average, but the people of Wales may well have to find more than the increase in the income support grant. How can that be fair?
The hon. Gentleman has chosen a bad example. It will almost certainly be the other way round. The rebate to those people will be rather higher, and that is likely to be beneficial to the people of Wales. Welsh Members will be pleased at that.
My right hon. Friend has described the rate rebate scheme that will be available to people on benefit. In the past the Government have described a system of rebates for people on moderate incomes that are just above benefit level. We have not heard anything about that rebate system, and I should like to know what plans the Governent have to help my constituents who do not enjoy benefit and who are on modest incomes. Many of them are pensioners.
A whole range of people such as those described by my hon. Friend will benefit under the rebate system. As my hon. Friend knows, many of the people in the category that my hon. Friend describes have a hard time under the present rating system. While there will undoubtedly be people who will have difficulties with the community charge or the present rating system, I do not think that the change in the system will make a great deal of difference to the people that my hon. Friend has described.
I have given way several times, and in view of Mr. Speaker's request for speeches to be brief f should like to continue with my speech.In Wales the average community charge will be £5 per week per household in return for £35 per week per household of local government expenditure, and there will be a substantial rebate and increased allowance scheme in operation. In those circumstances, it is difficult to see how the Opposition can maintain that the Government are not protecting people in Wales who are on very low incomes.
This is the last time that I shall give way.
In the light of the Secretary of State's claim about quite exceptional generosity in the treatment of low-income or no-income people in Wales, will he comment on the statement a month ago by the chief executive of Cardiff city council in his capacity as the electoral registration officer for Cardiff? He said that he was already perceiving through his clerks who a re collecting the electoral registration forms an incentive for people, and especially young people, in the inner-city areas, not to register. Can the Secretary of State say whether he thinks that there is now an inducement for people not to take part in the democracy of Britain because of fears about the poll tax even three years before its introduction?
There is no such inducement whatever. I certainly do not think that the pronouncement by one official in Cardiff proves a particular case in one direction or another.Concern has been expressed about the practicalities of collecting the charge. We have not tried to pretend that it would not be more expensive than the present system. In Wales we have just begun discussions with the local authority associations about the mechanics of implementing the new system and the inevitable costs that they will incur in working up to it. When I listened to the right hon. Member for Swansea, West (Mr. Williams) last night, I was surprised at his exaggerated account of the terrible difficulties that would be encountered in preparing the list. Far from being deterred by the task of collecting the community charge, the right hon. Member should be aware that there has been a major disagreement between the local authority associations in Wales. That disagreement is about who should have this responsibility. The disagreement is not about their not wanting it — they both want it. This is hardly an indication that the practitioners see major problems ahead. I have decided that it would be most appropriate for the districts to retain this function, but it was made quite clear to me that each tier was confident of its ability to make the new system work. Part III and schedules 3 to 6 deal with non-domestic rating. At the moment, formal responsibility for rating policy in England and Wales lies with the Secretary of State for the Environment, who makes all the relevant orders, which apply to both countries. It is anomalous that this sector of responsibility for local government finance does not at present lie with the Welsh Office. From 1990 responsibility for non-domestic rating in Wales will be transferred to the Secretary of State for Wales. I have no present plans to operate the rating system as it will apply to non-domestic properties in any way that is different from the proposed by my right hon. Friend, but the power will be there to enable me to make adjustments for particular circumstances in Wales should the situation arise. More fundamentally, this part of the Bill establishes a separate non-domestic rating pool for Wales. A separate poundage will be set for Wales, on the same basis as that proposed for England, but which will give a yield equivalent to the resources raised in Wales alone. Non-domestic poundages in Wales at the moment do not differ very greatly. There are unlikely to be major upheavals for business as a result of this change. The maximum increase, again on 1987–88 figures, would be 12 per cent. which would be in Cardiff. I am sure that the right hon. Member for Swansea, West will wish to know that the business sector in Swansea will gain the most from the proposals, with a decrease of 12 per cent. The overall contribution made by businesses in Wales to local authority spending will not change, and the move to a national poundage uplifted in line with inflation will be fairer to businesses and give them greater certainty about their future bills. No longer will they be subject to the turbulence and uncertainty that they have faced from the authorities' decisions. No longer will business in South Glamorgan be faced with a massive 24 per cent. increase at a time when inflation was running at around 3 per cent. No longer will business in Dyfed be faced with increases more than three times the rate of inflation. The revaluation will also result in a more equitable and up-to-date distribution of the rates burden. Taking those two measures together, it is likely that industry will gain in those areas most in need of economic regeneration. The revaluation should benefit older industrial premises, which are a feature of areas such as Mid Glamorgan. This will give a direct and significant boost to the economic regeneration of the valleys and boost employment opportunities. The move to a national poundage will reduce rate bills by 9 per cent. in Mid Glamorgan and reduce the burden on businesses in the valleys by £7 million a year. As in England, the resources from the non-domestic rating pool will be redistributed to local authorities as an amount per adult. The provisions for this are dealt with in schedule 5. However, separate provision for Wales is made in paragraphs 11 to 14 of that schedule. Unlike England, where the receipts will go into the collection fund, the proceeds of the pool will be paid separately to district and county councils. That part of schedule 5 therefore provides a mechanism for splitting the receipts between the two tiers before they are distributed on a per head basis. We propose to do so in the same way as grant is split, that is, on the basis of relative shares of expenditure. The reason for this different approach is to be consistent with the arrangements that I am making for the payment of grant. Part 4, which deals with residual rating, will not apply at all to Wales.
Will the hon. Gentleman give way?
I said on the last intervention that that was the last time I would give way. This is the last time.
I thank the Secretary of State for his courtesy. I followed closely what he was saying, but I do not understand how the uniform business rate would generate economic activity in the valleys. I wonder whether he would explain that further.
The redistribution of the business rate in Wales would result in benefit to areas which have older premises, so the valleys of Mid Glamorgan would benefit by the amount that I have given. I am perfectly happy to write to the hon. Member to explain in great detail how those calculations are made.Part 5, which deals with the precepting arrangements, and part 7, which establishes collection funds, will operate along the same lines in Wales as in England. The mechanics will be the same, but the flow of funds will be different. In addition, last week, the Committee of Wales District Councils put to me a paper proposing alternative precepting arrangements to those that we envisage. It felt that its proposals would be more suitable to the approach that I am taking in Wales. It is too soon for these proposals to have been studied in detail, but I will look very hard at them, and if I am convinced of their merits it may be possible later to amend this part of the Bill in its application to Wales. Part 6 makes provision for grants and here there will be some differences for Wales. In England, grant and the proceeds of the non-domestic rating pool will be paid into collection funds operated by district councils. There will be the same basic framework of a grant system in Wales; there will be a single revenue support grant, which is paid out each year on the basis of a distribution report. However, in Wales revenue support grant and non-domestic rates will be paid directly and individually to district and county councils. The arrangement reflects the different circumstances of Wales, where there is able to be a much less complex local authority structure and a simpler system of needs assessment and grant distribution. This has worked successfully up until now in Wales, and I do not propose to move away from it. It will get the right message across to voters in Wales. I am pleased to note that the approach has been welcomed by the Welsh Counties Committee. The Committee of Wales District Councils, to my regret, is not convinced yet, but I hope to persuade it. The introduction of the new system will inevitably mean relative changes in the resources that local authorities will need to raise locally to finance the same levels of expenditure. At the moment, some areas benefit disproportionately from the equalisation in the existing system on the basis of rateable values. It is difficult to defend the present influence of rateable values on the distribution of resources between areas. For example, local authority spending in the Rhondda is 3 per cent. above grant-related expenditure and in Cardiff it is 3 per cent. below, but average rate bills in Cardiff are more than double those in Rhondda. Of course, average incomes tend to be lower in Mid Glamorgan too, but they are only about 5 per cent. lower than in South Glamorgan. I wonder whether Opposition Members think it is fair that someone in Cardiff who may be on the same income as a person in Rhondda should pay double the local rate bill. Once we are through the safety net period of four years, the new grant system will instead provide full equalisation of spending need on the basis of objective assessments of need. I propose to base the new system on the present arrangements for grant-related expenditure assessment, which have been developed over the years in conjunction with the associations and generally provide a fair basis for distributing grant. The needs assessments will be an even more important feature of the new system than the old. They have to be fair and they have to reflect fully the different circumstances of different local authorities and different areas. The Committee of Wales District Councils has put to me some proposals for change. We will be carrying out a full review in the coming months, in conjunction with the local authority associations, of the formulae now used for assessing need. We will be looking particularly at the district council GREs and the proposals put forward by their association. My aim will be to ensure that grant allocations under the new system — and thus relative community charges—fully reflect the differing needs to spend in Wales.
The right hon. Gentleman may not have had the benefit of reading what I said last night, but this passage is crucial, because the whole argument that I advanced last night was that any distribution formula must have an equalisation element. Will the right hon. Gentleman spell out in greater detail how he intends to ensure that the more progressive aspects of the rate support grant will apply through the GRE experience of the new needs assessment?
Having made it clear in my speech that a total review of the needs assessment is fundamental to the new system, that is not an easy task. I cannot say that everybody will agree with the formula that comes out, but the district councils have presented me with a paper, and I have announced in my speech today that I intend to consult local authorities on the future method of needs assessment, so I hope that that will have a positive result.In the debate there has been a great deal of talk about the importance of the freedom of local government and the proper delegation to local government. I can only say that in the years that I have been priviliged to be a member of the House, under both Labour and Conservative Governments, there have always been occasions when central Government have considered that it is in the national interest to see that a particular form of Government policy is imposed on local government. I remember a long period when the Labour Government used their central powers to ensure that comprehensive education was introduced in this country, frequently against the wishes of the local education officers concerned. I remember when I had the privilege of being Secretary of State for the Environment and introducing housing legislation to ensure that the housing subsidies that were paid were totally devoted to rent allowances and rent grants. Although the Labour party strongly opposes that policy now, it adhered to it then. The great argument from Opposition Members is based on the degree of financial interference. A study of recent years shows that the peak of financial interference in local government was achieved in the year after the Labour Government had to be bailed out by the International Monetary Fund.
In that year capital expenditure was reduced in real terms by 18 per cent. in one year. Opposition Members continually claim that we increase the rate support grant only slightly ahead of inflation. In one year alone the Labour Government reduced the rate support grant in real terms by 9 per cent.Labour Members have no right to lecture the Government, when local government expenditure in Wales went down by 4 per cent. under a Labour Government. They have no right to lecture the Government over the way in which we have handled matters. Of course, many people can find objections to any form of local taxation. It was interesting to listen to the hon. Member for Copeland (Dr. Cunningham) yesterday. When the hon. Gentleman was interrupted by my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh) and asked whether he would support the idea of a docker in London having his rates increased by 80 per cent. under capital evaluation, the hon. Gentleman quickly used the phrase:
He was then interrupted by my hon. Friend the Member for Sheffield, Hallam (Mr. Patnick) who asked a similar question, to which the hon. Gentleman replied:"I shall come to his point later."
There were three more interventions, all of which were met by the phrase "I shall come to that later". We were eagerly anticipating the final passages of the hon. Gentleman's speech. We were waiting for the answers."I shall come to that later." —[Official Report, 16 December 1987; Vol. 124, c. 1130–32.]
The right hon. Gentleman was not in the Chamber.
Finally, the hon. Member for Copeland said, "Now I have reached the point." We waited and what did the hon. Gentleman say? He said, "I will tell you what our policy is. We will publish a White Paper." That sums up the Labour party's policy. The next Labour party election manifesto will state "Vote for us and you will get a White Paper." That will be the reforming policy. The hon. Member for Birmingham, Perry Barr (Mr. Rooker), who is to reply for the Opposition, has been left naked as a result of that. Indeed, the Labour party is naked in that it lacks any positive approach to any form of policy. Labour Members are aware that they are hankering after an adjustment of capital values, and that would be far more unpopular than anything that has been proposed today.The attack by Opposition Members on what they call interference with local government and their attack on any alternative, has been shown to be completely bogus, as they do not have any alternative themselves. I recommend the proposals to the House because they are positive for Wales.
On a point of order, Mr. Deputy Speaker. This Bill applies exclusively to England and Wales.
No, it does not.
Why are we to be lectured by a Scottish Member?
That is not a matter for the Chair.
The hon. Member for Milton Keynes (Mr. Benyon) is wrong. I would have been much more impressed by the dramatic account of the tensions on the Government Front Bench at the start of yesterday's debate if the Secretary of State for Wales who gave that account had been present to experience it.
The hon. Gentleman has said that I was not here. I was. I was sitting on the Government Front Bench. I heard all the interventions that were made during the speech of the hon. Member for Copeland (Dr. Cunningham).
I certainly withdraw what I said. However, I am informed that the Secretary of State for Wales was not present when his right hon. Friend the Secretary of State for the Environment opened the debate. I entirely accept the word of the Secretary of State for Wales. As an explanation, may I state that the right hon. Gentleman has become so inconspicuous in British politics over recent months that he was not seen yesterday either.I do not believe that the speech made by the Secretary of State for Wales was marked by any ringing defence of the principles that lie behind the poll tax. That was conspicuously absent. I am not surprised, because we are being asked to endorse a low-yield, high-cost tax which has been born out of opportunism and panic. I approach the debate with some feeling of guilt. At least the origins of the present adventure are partly to be found in the private and often obscure in-fighting that we call politics in Scotland. We bear some responsibility for what has happened. No doubt the House will recall that the Government have been flirting with rating reform for many years. They produced White Papers in England and Scotland in August 1983. We were told north of the border that the rating system was fundamentally sound and that no radical change was required. The Department of the Environment in England and the Secretary of State for Wales specifically rejected the poll tax as an option. There was no messing about and no ambiguity. At that stage, the public face was mirrored by private conviction. We know that from the comments made yesterday by the right hon. Member for Henley (Mr. Heseltine) with his rather engaging glimpse of domestic life around the Cabinet table. However, revaluation occurred in my country. There was a revolt by the Scottish bourgeoisie and the whiff of grape shot was seen in the streets of Eastwood and Newton Mearns. There was a convulsive spasm in the Scottish Office and it threw up—if that is the right elegant term —the poll tax. That it happened is beyond dispute. Why it happened remains something of a mystery. The main charge that we make against the tax is that it is unfair and unjust. That is an essential truth and it is widely recognised despite the Government's best efforts — despite the speeches, press releases, leaflets and adverts in nine national Scottish newspapers and 119 local newspapers all bringing the good news about the poll tax to every corner of the kingdom. You may be surprised to know, Mr. Deputy Speaker, that mixing with the Christmas cheer, whether in the Inverurie and District Advertiser or the Largs and Millport Weekly News, there is a ministerial pep talk about the virtues of the poll tax. That would take the bang out of anyone's Christmas cracker and it will. The facts about the poll tax are there for everyone to see. I will use my constituency as an example. I represent a very large housing scheme. There is not a great variation in rateable values in the scheme. The average household rates bill is £430 for the present financial year. In Kelvindale, where I live, an area of Glasgow only about three quarters of a mile from the housing scheme, the average rates bill is more than £1,000. The contrast between a married couple living in one area and in the other is painful. If we assume that their incomes are above the rebate level, a married couple will be paying about £600 a year in poll tax. In the oppressed housing scheme of Drumchapel they will be about £170 worse off, while in Kelvindale just down the road the couple will be pocketing a profit of about £400. The reason for that is self-evident. However incomplete, there is a rough link between income and rates bills. The wealthy tend to live in exclusive and expensive property in up-market areas and they pay more. The poll tax represents a shift against areas that are already disadvantaged by the Prime Minister's popular capitalism. The argument was conceded almost from the beginning by the Scottish Office. The Secretary of State for the Environment has been fond of lecturing us about the out-of-date, corrupt rating system. He suggested that it is some payoff for political loyalty and that by implication, the poll tax will right that imagined wrong. I shall leave the bizarre political theory, but there is an implicit admission that there will be a swing against areas that he considers to be politically hostile, such as inner cities and housing schemes. By venting his spleen, the right hon. Gentleman reveals all. It is a joke that Ministers from the Scottish Office or from any Department should pose as sea-green incorruptibles. In Scotland, the poll tax was designed to cement the crumbling Tory vote. At the general election, Strathkelvin and Bearsden, Aberdeen, South, Edinburgh, Central and Edinburgh, South — a whole range of constituencies—joined the already embarrassingly long casualty list. Present public opinion polls in England and Wales show that 57 per cent. of people are against the poll tax. I predict that that percentage will increase, because the arrival of legislation concentrates the public mind wonderfully.
Will the hon. Gentleman give way?
I shall give way to the hon. Lady in a moment.Ministers may try to launder the facts, but the stain of discontent will spread. In Scotland, we know from experience that information and knowledge are our allies and the Government's enemies. Only this week I noticed that the paper produced by the Tory Reform Group — I accept that the Secretary of State for Wales is not personally responsible for statements by his hon. Friends—stated:
"Support for the community charge is dropping as fast as a stone over a cliff."
May I point out to the hon. Gentleman that support for the community charge will grow as people realise exactly what will happen. In answer to a written question, from the hon. Member for Copeland (Dr. Cunningham), the Minister made it very clear that the maximum 80 per cent. rebate will be available for everyone receiving income support, and that gets over another problem, because the demands will be made net and not gross. That will put a lot of fears to rest.
I agree with the hon. Member for Lancaster (Mrs. Kellett-Bowman) that there may be a point where public opinion will deteriorate no further. If the Tory Reform Group is right in saying that the support for the community charge is falling like a stone over a cliff, it will ultimately hit the bottom and achieve a rating of nil.Despite the rebate scheme, the community charge will hit the most vulnerable people in our community. The Minister has argued that the worst off in our community will benefit, but that is a form of sleight of hand. It is a dash of dishonesty added. It gives a new meaning to new maths. The Government assume that a pensioner on supplementary benefit living alone will find that 20 per cent. of the poll tax is less than 20 per cent. of the original rates bill. That assumption is based on appalling dishonesty. The Government are not admitting that they are responsible for the new system which abolishes the 100 per cent. housing benefit and introduces a 20 per cent. rule. That is hypocrisy.
The hon. Gentleman spoke about information being given out. The Labour party's briefing note, "Campaign for the Facts on the Poll Tax", states:
"There is a country where the right to vote was won after years of long and bitter struggle.
The present Government wants to change that right.
They are making all adults pay to be registered.
They will issue identity cards and check up on citizens every year."
Where does that appear in the legislation?
If the hon. Member for Pembroke (Mr. Bennett), continues reading Labour party policy, it will do him a good deal of good. I accept that those who take such a position are interested in long-term solutions. However, there is a strong correlation between the right to vote and the fight against the poll tax. A disincentive to register is built into the system. Many people who wish to avoid the poll tax may decide that the first essential precaution is to make sure that they do not register to vote. If the hon. Gentleman thinks that that is a step forward for democracy in Britain, his principles are very strange.
The hon. Gentleman has been challenged by a leaflet by his own party which says:
that is, the right to vote. Will the hon. Gentleman say that his party has no part in that and does not believe that it is true, and will he repudiate the leaflet?"The present Government want to change that right"—
The Secretary of State obviously took some time to read the pamphlet, because he has not been listening to what I said, which is that there is a correlation and a connection between the poll tax and the right to vote. We are entitled to protest and to campaign about that.
Order. I think that it is clear that the hon. Gentleman is not giving way,.
I wish to make one or two points, and perhaps hon. Members will wish to comment on them.
I am grateful to the hon. Gentleman for giving way. If there is such a good case against the poll tax, why is it necessary for the Opposition to resort to untruths?
I am sure that the hon. Gentleman will agree that a disincentive to register to vote is built in to the system. That is extremely dangerous and we are entitled to protest.I now move to the matter of accountability on which the Government place such weight. The idea that unless people pay their local taxation personally, they cannot be trusted to vote responsibly, is an odd argument which would have odd results if it were applied to income tax and the parliamentary franchise. It shows a distorted view of the family and suggests that in some way the family does not work together, but is a fragmented collection of individual units who do not co-operate in any way.
On the subject of accountability—
The leaflet goes on to say:
that is, the Government—"They will issue identity cards"—
I give a categorical assurance that the Government will not issue identity cards. Will the hon. Gentleman now repudiate that leaflet?"and check up on citizens every year".
I am glad to have an assurance that the Minister is departing from the strong hints in the original Green Paper that there would be identity cards. I welcome that departure. The Minister knows that there will be a very complicated and complex computer-based tracing system which is in itself an invasion of privacy. The answer to the question "What did you get from Mrs. Thatcher's third term, daddy?" is "An alogarithm—a computerised identity number that goes with me everywhere." That justifies not just the concerns, of Labour Members, but the directly expressed fears of the Data Protection Registrar who was never consulted and who has made strong adverse comments about the way in which the matter has been organised.
If the Secretary of State imagines that this is some sort of Labour party ramp opposition to the poll tax, let me draw his attention to the comments on accountability in a statement that was issued this week by Archbishop Winning, the Archbishop of Glasgow, Bishop Derek Rawcliffe, the Episcopal Bishop of Glasgow and Galloway, and the Rev. Maxwell Craig, convenor of the Church of Scotland church and nation committee.[Interruption.] The Government Front-Bench Member who shouted, "Oh God," in a rather bored, dispirited way, should be ashamed of himself.That impressive group of people warn us:
They go on to express concern that the new tax could damage family life and that young people may be encouraged to leave home. They say:"Ignoring the wishes of the Scottish people on such a fundamental change can do nothing to maintain respect for the democratic values of which we are justly proud."
They conclude:"Caring families will be penalised financially for their commitment to look after an elderly, ill or disabled relative."
It is not a narrow political argument; it is a moral and ethical concern about what is happening."In expressing these concerns we are prompted by considerations of social justice which is an imperative of our Christian faith."
It is strange that a Scotsman should be introducing a debate on an English Bill when he does not find Englishmen acceptable on Scottish Bills.If the hon. Gentleman objects to a standard charge for the services of local authorities—which, let me remind him, is already the law in Scotland—how does he stand in the situation—[Interruption.]
Order. We want to get on with this intervention.
How does the hon. Gentleman justify the fact that last week the BBC, which levies a standard charge on the pensioners of Perthshire for their licence fee even if they do not want to watch the BBC, sent up five people—at a return fare of £144 each with two nights in the Sheridan hotel and dining in the best places — in order to take one photograph of my house, which has one income coming into it and no local services, to compare it with a council house which has five incomes going into it in order to justify the idea that the standard charge is wrong?
If the hon. and learned Gentleman has any complaints, he should take them to the BBC. But I think that that was to illustrate the admirable point that those who earn large salaries and pay high rates bills will receive an enormous advantage from the introduction of the poll tax.The hon. and learned Gentleman raised the Scottish matter, so let me say that Scottish experience is of some interest to the House and introduce a Scottish comparison for him. He will remember that the Scottish Conservative and Unionist Association produced a report on its general election performance in which, after lamenting the fact that, on the poll tax, the Opposition had
it went on:"effectively exploited its weak points and successfully made it unpopular",
and, sadly, it concludes:"it was inadequately explained"
I do not often have sympathy with Scottish Conservatives, but I have a deep sympathy with them on that problem."indeed, it probably could not have been adequately explained".
The Conservative and Unionist Association has a complex problem which needs ingenuity. It is unlikely that the hon. Gentleman will solve it.Let me say a brief word about the problems of collection and compilation. There is no doubt that the system will be cumbersome, expensive and a threat to privacy. There is a touch of farce about some of the points that have had to be debated. There has been a long and protracted discussion, of almost theological nicety, about whether a bicycle can have four wheels. That becomes important in the looking-glass world of the poll tax. I am prepared to confide in the House that the answer, though we have not seen the order, is yes, a bicycle can have four wheels. We are being asked to debate whether a beach hut or a buffet is a domestic hereditament. In many ways such questions are better than the Christmas quizzes with which some of us entertain ourselves over the Christmas season. But the point is that it is not a game; it is deadly earnest. When one looks at the problem of the running registrar, the problems of canvassing on a day-to-day basis to keep it up to date, the way in which the records will be pillaged —housing benefits and education—for cross-referencing, the fact that 1·8 million people are being added to the register in Scotland who were not on the valuation roll and the 800,000 changes a year that will have to be traced, picked up and pursued, one begins to see why computers are being purchased and staff hired. My regional council is hiring 100 extra full-time staff on the clerical side alone and over 300 extra part-time staff for canvassing duties. If the Tories want to salvage something from the debate, that proves that there are occasions when public expenditure can be a wicked waste of money.
No, I shall not give way. I have given way a great deal.It is no coincidence that this experiment in fiscal archaeology is almost unique to the western world. I can claim— I suppose that this is blatant boasting—that I started to run the rumour that the poll tax was alive and well in Papua New Guinea in a Scottish Grand Committee debate in April 1986, and I am glad to notice that it is still up and running. Let me now repent and recant. That was a slander. The good people of Papua New Guinea have far too much sense to run a poll tax system and are not doing so. In the few parts of the world that had experimented with it, it has been abandoned. I notice that there was an outbreak in Canada, but it was almost killed off in 1970 in Nova Scotia. I took the trouble to read the debates in the Nova Scotia legislature on that point, particularly the speech of the then leader of the Liberal party. Arguing, successfully as it turned out, because the tax was abolished the following year, he said:
Quite prophetically from a Scottish point of view, he went on to worry and express concern about the young single person, when he said that there is always the question of whether he is"of all those against whom the poll tax is levied not more than 60 per cent. ever pay it."
Those are exactly the kind of questions that we must face: where are they, how can they be traced, how can they be pursued? He ended:"really living at home …or … over in New Glasgow working."
It is rather ironic that it is from Canada that we get those warning words, but the House should heed them, even so. I suggested that panic was an important motivation for the scheme that we now see. There is also an element of vendetta. The Government want to squeeze local government and undermine local democracy. There is a feeling that the man from Whitehall or the Scottish Office knows best. That is well illustrated in the essentials of the Bill. Let me take one interesting example from my part of the world. In Scotland, we shall freeze the industrial and commercial rates. There will be no increase above the retail price index. That means, as every hon. Member knows, that all the buoyancy will be concentrated upon the poll tax and the unfortunate people who pay it. It means, almost inevitably, that built into the poll tax is an escalator on which we will all have to rise. We calculated on the Government's own figures what would have happened to the poll tax in Scotland, given the freeze on commercial and industrial rates, if the whole system had been in operation. Let me take one example. I take it because it is a fair example. Inverness was precisely on guidelines in the given year; the Highland region, which is the other contributor to the rate burdens, was less than 0·5 per cent. over guidelines. Inverness was a model authority, and no doubt, an example to the whole nation in the eyes of the Secretary of State. To meet the guidelines, rates in Inverness had to rise by 16 per cent. But if the new formula, were applied, with the freeze in commercial and industrial rates, the result would be an increase of 33 per cent. The poll tax would go up twice as much as the rates. Faced with those figures, the hon. Member for Galloway and Upper Nithsdale (Mr. Lang) had to have recourse to telling the truth. For those interested in the small change of British politics, the hon. Gentleman is the Minister of State, Scottish Office. When it was pointed out to him that, if his own arithmetic were applied, it would mean twice as high a rise in the poll tax as in the rates, the hon. Gentleman said that the main fallacy underlying such calculations was that the community charge system would have no effect on the spending behaviour of local authorities. He added:"Income tax is a fair tax because it only taxes those that earn. Property tax is a fair tax because it only taxes those who own, but the poll tax is a tax which really goes against the grain, the Magna Carta and the British system".
I object to the Minister's arrogance in saying that no local authority would "dare", when it has a democratic mandate. It reveals that the Minister is attempting to force local authorities to dismantle services. Where is the humanity or justice in that? Even more significant, if Inverness did not "dare" to raise the poll tax—as the Minister suggests—to accord with the budget on which it had decided, the inevitable consequence would be that it would have to claw its expenditure down below the guidelines that the Scottish Office itself had said were necessary. A particularly cruel squeeze is built into the system. The crisis in local government has certainly come. It is well documented, and no Opposition Member will deny it. Let me give the House a quotation:"I very much doubt whether authorities would dare to maintain their spending policies at levels which would lead to community charge increases at some of the high levels mentioned."
It is a terrible comment on the state of affairs that we have reached that nearly every hon. Member would agree with that statement by the Secretary of State for the Environment on 26 September this year. The right hon. Gentleman must know that if we have reached the point of no return at which local government has almost disappeared as an elected element in the land, that is the direct result of his policies over eight or nine years. The trouble is that persistent cuts have left the local authority financial system bearing a burden for which it was never designed. The answer must not be a poll tax, which is unwanted and unworkable, but to reverse the policies that have done the damage. That is the simple conclusion which should be drawn from the Secretary of State's own remarks. Let me remind the House of a tale that has been going the rounds in Scotland. A nine-year-old girl in Paisley, when asked to comment on the character of the Prime Minister, said that she was the kind of woman from whom, if your ball went into her garden, you would not get it back. The truth is that this friendless system is being sustained only by the Prime Minister's strong obstinacy and prejudice. A feeling of widespread concern—a fear that we are being faced with a fundamentally unfair system — is shared by many people who do not take my political stance and, indeed, by many who may benefit financially, at least in the short term, from the change. It was put concisely and brutally, and, I thought, effectively, in yesterday's debate by the right hon. Member for Henley, who referred to the strains, stresses and discontents that were bound to arise from the new system. He went on:"Any further measures to constrain or limit local spending from the centre would virtually spell the end of local government as a separate elected element in the land."
That has the ring of truth, and there is added authority in the source from which it comes. It is to the right hon. Gentleman's credit that he put his view so clearly and so strongly. Only the toughies, the tankies in the Prime Minister's new model army — and, of course, the placemen working their tickets—would dispute that. At the end of the day, their political reward for their obstinacy will be a martyr's crown. The resentment that is already felt in Scotland, and will come and grow in England, goes beyond ordinary political debate. Parliament did not linger overlong on the poll tax when it was proposed for Scotland; it must now learn its lessons from that. Nearly a year ago, the right hon. Member for Henley voted cheerfully for the poll tax in Scotland, a year after his escape from the Cabinet. This time, to his credit, he is standing up to be counted. Already there is anger and dismay in my part of the country, where the poll tax looms. I warn hon. Members that that will soon come south of the border. In Scotland, pressures are being imposed on legality and on the acceptability of the law on an unprecedented scale. It is bad for the system, and bad for Parliament. That is why I believe that the House must now reflect the concern that is so widespread. Hon. Members have a duty to speak out, and parliament and democracy will be the poorer if that opportunity is passed up. I recognise the inevitable pressures on Back Benchers, but I believe that many of them should resist those pressures. We shall start our fight against the Bill in the Lobbies tonight. I very much hope that those who share our reservations will have the courage to join us."All of these resentments will build on a platform of crude regression which seeks to make equal in the eyes of the tax collector the rich and the poor, the slum dweller and the landed aristocrat, the elderly pensioners living on their limited savings and the most successful of today's entrepreneurs." —[Official Report, 16 December 1987; Vol. 124, c. 1141.]
Perhaps by intervening for what I hope will be only a few moments in my customarily low key I may restore a rather more sober note to the proceedings than was imparted to them by the hon. Member for Glasgow, Garscadden (Mr. Dewar).In the speech that he made yesterday, my right hon. Friend the Secretary of State said that the Bill's characteristics were that it was fair, workable and, above all, accountable. I have seldom heard three greater fallacies put forward in the House with such little conviction. The fact is that the Bill runs counter to all the long-accepted tenets of the principles of taxation. My right hon. Friend the Secretary of State for Wales, in his exuberant opening speech today—his voice rising even higher, with its customary Welsh lilt — may not have done much to persuade the Welsh, but he certainly persuaded us, the English, that if the Bill ever reaches the statute book the Welsh will get a much better deal out of it than we will, owing to his unexampled skills in negotiation. Let me say a word about each of the characteristics of the Bill that my right hon. Friend mentioned. The first is "workable". Every authority agrees that the Bill is far less workable than the rating system, that it will cost at least twice as much to run, and that the means necessary to implement it fully would be abhorrent to most of us. For that reason alone, it stands condemned. Secondly, it is said that, above all, it is accountable. The point has been made many times that that statement is inexplicable. The amount coming from local government towards its costs will be lowered enormously, but that is said to be one of the reasons why we should support the Bill. However, that is not accountability, and accountability for businesses will be removed entirely. Let us accept those facts, but we should not say that accountability is a powerful argument for the Bill. Before coming to the point of fairness, I should refer to the speech of my right hon. Friend the Member for Henley (Mr. Heseltine), in which he recalled the origins of this great debate 13 years ago. The autumn manifesto of the Conservative party said clearly:
that is within five years, not in the first Session of Parliament—"Secondly, in the normal lifetime of a Parliament"—
That was our undertaking, and it is still the right one for any Government with regard to local taxation. It is true that at that time any thought of a poll tax was banished from the mind, in the same way as my right hon. Friend the Member for Henley said it had been banished ever since until the Bill was brought forward. When I say that the Bill is not fair, I do so because it is not related to the ability to pay. In fairness to my right hon. Friend the Secretary of State, he has declared in speech after speech that the tax should not be related to people's ability to pay [HON. MEMBERS: "Absolutely right."] My hon. Friends are absolutely wrong, and I shall tell them why. [HON. MEMBERS: "What about rebates?"] The more that my hon. Friends or the Secretary of State give way to pressure for rebates, the less fair they are making the tax. If it is fair to have a poll tax, as soon as it is changed the fairness is removed. I believe that the poll tax is unfair in any case, so I can, therefore, advocate changes in it. If the Bill reaches the statute book, I hope that students, nurses and those in similar positions will be exempted. [HON. MEMBERS: "Why? Don't they use local services'''] Yes, but it is an unfair burden on them."we shall abolish the domestic rating system and replace it by taxes more broadly based and related to people's ability to pay."
Last week, during the debate on the Education Reform Bill, it was possible to give way because there was not sufficient time to make speeches. However, today there is plenty of time for hon. Members to make speeches.I shall quote what the Secretary of State has said on the matter:
That basic point shows a complete difference of philosophy and political belief between the Secretary of State and those who support him and the political parties in this country and, above all, the Conservative party. We have always believed that redistributive taxation should take place through the rates and the property and income tax systems. There is no doubt about the Secretary of State's view on this matter, because he has made it clear publicly on many occasions. This is the question that my party must answer. I am not interested in the Labour party because it has no power, and is unlikely to have any in the future. However, this is what we must face. Are we to change the philosophy of our party for the past century and the tenets of taxation for far longer and move to a position in which we cannot use the local government system for redistributive taxation?"We also believe that redistributive taxation should be a matter for the Chancellor of the Exchequer."
Had the fairness of the prices and incomes policy when compared to the ability to earn not eventually ended in my right hon. Friend's Government, and he had, in the five years of Parliament, introduced the scheme that he has read out, may we hear what it would have been?
Yes, I am coming to that. If my hon. and learned Friend now accepts that local government will be financed according to ability to pay, I shall tell him exactly what our view was. It was outlined in the Green Paper of 1972 and discussed in a Special Committee. We proposed that national taxation and social service benefits should be amalgamated, and that required the complete computerisation of the system. It was worked out by Lord Barber, as Chancellor of the Exchequer, and his assistants, but to my great regret, in the Special Committee, the Labour party objected to it. It would have saved, in the Treasury and Inland Revenue alone, nearly 20,000 people. That was a sensible method of saving manpower in the Civil Service that would have simplified matters for every citizen in this country with regard to direct taxation and social security benefits.We planned that that could be done by 1979. That computerisation required an immense effort. It still does, yet we are nowhere near reaching that position. It is the right way to handle direct taxation and social security benefits. Having computerised national taxation and social security benefits, it would have been simple to move to a local income tax, which could have been combined with the national system. It would still cost far less, produce what is required and work according to people's ability to pay. It would be a much better solution than the poll tax.
I am excited and interested to hear that it was a local income tax that we were proposing at that time. The rate of the local income tax in the borough of Camden, according to the present level of spending, would be 25·6p in the pound, whereas in my right hon. Friend's constituency it would be about 5p in the pound. How would he prevent people leaving Camden and settling in Bexley because of the enormous effect, which could be measured in thousands of pounds, that that would have on their net pay?
This is not peculiar to local income tax. If Camden has high taxation, people can move to boroughs with lower taxation. The borough of Bexley, of which my constituency is a part, has had stable rates since 1983, yet we have had precious little reward for it. We have heard only constant attacks on local government by my right hon. Friend from the Front Bench. Why? Because of a handful of loony Left councils. Does my right hon. Friend expect reliable, responsible people to enter local government, bearing in mind the future that they can foresee?One of the most discreditable aspects of the Front Bench is the way in which it has constantly attacked local government, without questioning its efficiency. Bexley has been penalised by low payments for Bexley health authority, which has meant that we cannot sufficiently man our new hospital, Queen Mary's, as I have told the House before. To say that differences in taxation between boroughs is an argument against a local income tax is completely fallacious and completes my right hon. Friend's quartet. The poll tax is unfair and unworkable. It does not increase accountability and it will be immensely damaging to the Conservative party. I am not concerned about the attacks from the Front Bench on the Labour party. What concerns me is the future of the Conservative party. This measure will always be held against us. We should look further ahead into the future and make the necessary adjustments in the way that I have suggested. That is only sensible direction to take for national taxation and local government finance.
This tax represents the most massive act of maldistribution in centuries. It is manipulative in purpose and mendacious in presentation. The Secretary of State for Wales is like Gaul; he is divided into two parts. He is animated and vigorous when he attacks the Labour party, but he talks in rather dull Civil Service speak when he defends all aspects of Government policy, and so it was when he defended this infamous poll tax. The fact is that, like the majority of his Cabinet colleagues, he does not want the poll tax. The genuine majority in the House does not want the poll tax and the majority of people in this country do not want the poll tax. It is being forced through against people's basic belief that tax should be an assessment of what is fair.Most hon. Members — probably every one of us—ought to declare an interest. I shall declare mine. I shall benefit substantially from the poll tax. But I should not be its beneficiary. Indeed, none of us should, and we all know it. The tax also goes against the basic argument that I thought was now agreed by both sides of the House— that it is time something was done about inner-city deprivation and urban policy. There is no doubt that if the Government continue with their deep-seated animus against local government, we shall not be able to renew the inner cities and we shall not be able to restore good local government to this country. There was a time when the Conservative party stood for good, sound local government. I have lived in Devon all my life. For most of that time the local authority, although independent, has been controlled by Conservatives. For a substantial part of that time, the city of Plymouth has been controlled by Conservatives. I have opposed them vigorously and disagreed with them on many policies, but, with one or two exceptions, they have been dedicated to good local government. It has to be admitted that the rebuilding of the city of Plymouth was carried out first by exceptional Labour councillors and later by Conservative councillors. This nonsense that there is no good whatever in local government has got to be stopped. The responsibility to stop it still rests heavily with Labour Members and, in fairness to them, it seems that they are trying. At long last the damage done to the good name of local government by a minority of hard-Left Labour-controlled local councils seems to have got through to them. Should that damage mean that we should distort our whole tax system? This legislation will be difficult to repeal; I only hope that it can be done. Does that extremism mean that we have to change the very basis on which local government and central taxation have been founded? The right hon. Member for Old Bexley and Sidcup (Mr. Heath) is right. It has been accepted that progressivity and fairness in taxation can apply both centrally and locally. We all know that the rating system was becoming increasingly discredited and that reform was essential. Reform will involve, first of all, the integration of tax and benefits — we all know that that has to come — and preferably the abolition of the national insurance contribution, which hits the low-paid wage earner particularly hard. Once that has been achieved, we may be able to find a way of grafting on this system so that it has the progressivity of the banded community charge proposed by the hon. Member for Ealing, Acton (Sir G. Young). The Secretary of State for the Environment, who has now left us, spoke about his hon. Friend in derisory terms, and we are used to that from the Secretary of State. He said that his hon. Friend was not even in a bespoke suit but in an off-the-peg suit. What sort of suit is the Secretary of State wearing? It is not his usual Savile row suit; instead, the proposal owes everything to Smith square. The tax has been tailored in the belief that it will help the Tory party. I agree with the right hon. Member for Henley (Mr. Heseltine) that this will be called "the Tory tax". The Government thought that because practically every Tory voter would gain from the introduction of a poll tax, it would be popular. That assumption is not completely true, as the hon. Member for Glasgow, Garscadden (Mr. Dewar) pointed out. A substantial number of Tory voters are pensioners, and pensioners, particularly single pensioners will suffer. Age Concern says that one third of single pensioners will be worse off under the poll tax, and that applies to some married couples, too. Furthermore, it has not always been the well paid who have voted Conservative in the past, as many of us know to our cost. Many people on council estates have voted Conservative for many years. That is the first thing that will have to be realised. The poll tax is not quite so well tailored as the Government thought. It does not have quite the proportional tailoring of a Weatherill suit. It owes everything to Thatcherism and Tebbitry and nothing to the true Conservative party. It shows no real understanding of where the votes will start to eke away from the Tory party. I am not in favour of unfairness. That is what I dislike about the poll tax. It is not only unfair but virtually unworkable and unaccountable, as the right hon. Member for Old Bexley and Sidcup said. I do not like the spirit that lies behind it. I do not like the feeling that only the Chancellor can decide the level of taxation and that everything has to be decided by this Government, as though they had a God-given right to occupy the Government Benches in perpetuity. They confidently think that they have. It looks as though this debate will be like the many debates that we have had over the past six or seven years in which the vote does not follow the voice. We have become all too used to having speeches against a measure and votes in favour of it. The time will have to come—in this Parliament—when the Government are checked, as they properly should be checked, in the Division Lobbies. That ought to happen tonight and it should be done with the assistance of the hon. Member for Ealing, Acton on his principle. One can argue about details of banding the tax, although it will not be easy to do. It would be much better to integrate it as part of an integrated tax and benefit system. If the Tory party thinks that the poll tax will increase its standing in this country and that in the long term it will increase its vote in the part of the country in which it has undoubtedly been eroded over time, it will have to think again.
Will the right hon. Gentleman give way?
I shall not give way. I said that I would keep my speech to 10 minutes and I shall do so. [HON. MEMBERS: "Shame."] I give way to the hon. and learned Gentleman.
Will the right hon. Gentleman tell us how fairness for the people of Camden will be achieved by his party's proposal of local income tax? They will be faced with a 25p local income tax and with plummeting property values as people leave Camden for neighbouring authorities. Will he tell the House how that will help with the problems of inner-city deprivation to which he referred?
That is a classic illustration of why one should not give way to the monkey when the organ grinder has already used exactly the same argument. The answer is quite clear. Income tax is broadly fair; poll tax is basically unfair and everybody knows it. The Government will push the Bill through in the Division Lobbies tonight, but they will regret it in future years.
As always, I listened with great interest to the remarks of my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath). As he knows, I have shared a number of his views in recent years. However, I choose to disagree with him on this occasion.There is an obvious difficulty with our present system of local authority finance. There is also a difficulty with any of the available alternatives. Politicians had better be straightforward about this; people outside the House are not convinced by easy denunciations of Government proposals, particularly when such denunciations are not backed up by any sensible proposals of alternatives from Opposition Members. If there was a straightforward and easy alternative to the present local authority financial system, it would have been found 30 years ago. The fact that no alternative has been found and the fact that this afternoon and yesterday we have heard a number of different solutions put forward only convinces the electorate of the difficulty of finding an answer to the problem we face. It would be better if politicians addressed this matter fairly and straightforwardly and acknowledged that they are dealing with a difficult area in which easy solutions cannot be found. Bearing in mind the different jobs we now expect local authority taxes to do, the difficulty of finding an alternative has been much compounded. My electorate in Bury will be deeply dissatisfied with the paucity of argument from the Opposition Front Bench spokesmen. It is not sufficient for the Labour party merely to claim that it will produce a White Paper. It is not sufficient to rely on a policy that was unformed and ill thought out in June and expect people outside to be convinced by it now. I do not think that we should be surprised that the policy is unclear and ill thought out, but I do not think that the Labour party should expect any great support for its policy from the country. Most people's reaction to the proposed community charge has, understandably, been based on their own practical experience — whether they will pay more or less. The question that was always posed, "Shall we reform the rates?" was a false question. People did not mean that. They really meant, "Can we pay less?" That was what was behind the argument. That cannot always be done. If we accept that a fixed sum of money has to come from the Government and if we accept that local authority expenditure will continue to rise, it is simply not possible to reform local government finance without there being winners and losers. Therefore, with these proposals, as with any alternative, that can be expected. Although people's response to the community charge has been based largely on their own pocket, there are wider considerations behind the Bill and I should like to deal with three of them. I want to look at the damage being done under the present system to the relationship between central and local government, at accountability and the flat-rate concept and at the failure of any of the alternatives to deal with the real problems facing local government. First, I shall deal with the damage being done to the relationship between central and local government by the present rate support grant system and the general system of local authority financing. I have had two close experiences with local authorities. Each has illustrated a slightly different problem of the present system and each was serious in its own way. My first experince of local government was with the London borough of Haringey where I served for two years as a local councillor. I learned a great number of things in that borough. I learned to respect good Labour councillors and good officers in that borough who were trying their best to deal with an outer-London borough with inner-London characteristics. There were many problems. However, I saw another side to the local authority. I saw the gradual collapse of decent people in the Labour party in that borough as some of the stranger and more militant elements of the local Labour party began to take control. I saw the heartbreak. There is not a single Conservative councillor on that borough who does not know of a good, former Labour colleague who has left the party and the council because of the activity of other Labour councillors. I saw the failure of the existing system of control. I saw the gradual deterioration of that borough. I saw confrontation and outright hostile intolerance of those with an opposing view, whether in government, or among councillors opposing the militant controlling Labour group within their own party. I wondered in despair what could be done in a borough such as that to restore some normality and decent local responsibility. My second experience of local government has been through my relationship as a Member of Parliament with my local authority in Bury. The problem was rather different there. The metropolitan borough council in Bury is thrifty and frugal. It is slightly less so now under Labour control than it was under Conservative control until 1986. However, for a metropolitan borough it is a tight and efficient authority. Bury and Haringey share a problem. The way in which the existing local authority finance system works sets up a problem of relationship between town hall and Whitehall. Over the years the various measures used to control local authority spending have hit both those authorities in different and slightly unfair ways. Haringey deserved it, Bury did not. I maintain that the way in which the Government have sought to control local authority finance, whatever the decent intention behind it, has fundamentaly damaged the relationship between central and local government. I listened with care to the speech of my right hon. Friend the Member for Henley (Mr. Heseltine) yesterday. He suggested that rate capping had been effective to a certain extent and that it might continue as a reasonable way of controlling local authority finance by central Government. I disagree. In the short term it might be an effective way of keeping local rates down, but only at the cost of further damaging the relationship between central and local government and of further undermining pluralism in our society. I believe that that is too great a price to pay. We all believed that rate capping and measures such as targets and penalties set by central Government had only a limited shelf life. It was worth while and useful to make the attempt because there were great problems about local authority spending that had to be tackled. However, ultimately the tension between Whitehall and the town halls and the damage being done to relationships was too great. I do not believe that we could have carried on with rate capping and targets and penalties. Therefore, I have to disagree with my right hon. Friend the Member for Henley and say that it was not effective at all. It was ultimately going to lead to disaster.
Will my hon. Friend add that rate capping has had limited effects? It has been substantially applied in London where it has had an effect, but it has not helped domestic ratepayers or, more particularly, businesses in many of the industrial areas of this country where it has not been applied? Does my hon. Friend agree that it is business in areas such as his that will benefit from the uniform business rate being introduced by the Bill?
My hon. Friend makes a fair point. The effect of the uniform business rate in my constituency in the north of England will be largely beneficial. It will be enormously helpful and will help to bring about further jobs.
Rate capping is an ingredient of the Bill. The fact it is in the Bill shows a lack of faith in the system that the Government are putting forward.
I hope that rate capping will not he used. I fully appreciate that it is in the Bill, but I genuinely believe, like many others on both sides of the House, that decisions on local finance must be made as locally as possible. We know that central Government have a role to play. That has been admitted on both sides of the House. We know that when the Labour party was in government in 1976 it first began to take strict control of local authority finance by reducing rate support grant to put pressure on local authorities. None of us would want the role of central Government to be exclusive. I hope that the way in which the new proposals will work will increase the opportunity for local authorities to control their own finance and, therefore, remove the need to consider rate capping or anything like it. Although it may be in the Bill, I hope that it will not need to be used.Bury's dissatisfaction was not with the system of rate capping, but with the way in which the rate support grant was calculated and worked and its feeling that it was an efficient authority which was being penalised along with the inefficient and profligate authorities. It was never able to make a satisfactory case on its own and never able fully to be in charge of its own spending. Therefore, it suffered under the rough decisions when other local authorities deserved those decisions rather more. Many local authorities controlled by the Conservative party throughout the country would echo that complaint. We have had rate support grant statements in the House during which Conservative Members have been up in arms at the way in which the system has worked and their authorities have suffered. I hope that they will see the legislation as a possible way out of that problem. I hope that it will command their support on that basis alone. The problems of accountability and the way in which the RSG has worked will be assisted by the effect of the new community charge. The RSG will be simplified and I welcome the paper which the Government have put forward showing how the new grant system will work for local government. I hope that, in the calculations, some consideration will be given to qualitative rather than quantitative decisions, so it will be possible for good authorities to be distinguished from bad. Ultimately, that decision must be made at local level. The Government's proposals will improve local accountability. It is difficult to ensure a better link between the local vote and local decisions. Many people are influenced in voting at local authority elections by the performance of the Government and by national factors, but it is defeatist merely to assume that that must go on. It would be far better to work to create a better system of local linking so that, when people go to the ballot box at local level, they know that their decisions will have an effect on their local authority. I do not believe that that happens now or that it works well. These measures aim to improve the position.
My hon. Friend has a reputation for fairness which we all admire. Does he think that everybody, regardless of income, should pay the same? Is it right for the managing director of the biggest firm in his constituency to pay the same as the vicar?
With respect to my hon. Friend, I shall turn to that point in a moment. There is not a good enough link between expenditure decisions made by local authorities and the local ballot box.
Will the hon. Gentleman give way?
No, I shall not give way. My hon. Friend the Member for Staffordshire, South (Mr. Cormack) asked a question about fairness. If there were no other contributions to local authority finance but a flat rate poll tax, the short answer would be no. However, bearing in mind that there are other sources of local authority finance, particularly the major part contributed by the national Exchequer, a major part of which is in turn contributed through a progressive income tax element, a flat rate charge has its place.Central Government sought to control local authority finance through targets, penalties and rate capping. Those methods were ultimately unsatisfactory and doomed to failure because accountability at local level could not be guaranteed and because the voters were not aware of the proper link between the two. The community charge and the flat-rate element will put it right. The flat-rate proportion can be altered in two ways. If we are so concerned about the effect of that flat rate upon those who will be paying it, we can try to ensure that that flat rate becomes an increasingly smaller proportion of what is spent by the local authority. That can happen in two ways. Local authorities can become more aware of the marginal impact of their decisions on the flat rate, thus controlling their income more tightly because they have no desire to see the community charge rise. All authorities will have a vested interest in keeping that flat rate down. If they do so, the proportion of that flat rate in respect of the rest of the money contributed to local authority finance will fall. The flat-rate proportion would also fall if central Government increased the money which they put in through the national Exchequer. At the moment, the Government are rightly not tempted to do that because they are not certain about how local authorities spend and they have many examples of local authority profligacy. If, however, this works as they think it will to control local authority expenditure, and the spreading of the accountability base means that local people will make their decisions on marginal expenditure much more carefully, the Government may be tempted to put more money into the pot. That would also reduce the proportion being paid by those who pay the flat-rate poll tax. If the flat-rate charge was the only way in which people contributed to local authority finance, it would not be fair. However, bearing in mind that it takes its place as a minority proportion of a system in which money comes from other places, there is a role for it and it is not as unfair as some of my colleagues have said.
How much will the hon. Gentleman get out of it?
My wife and I will be better off, but not that much. We must wait and see. I have not worked it out. I live in a three-bedroomed semi-detached house in the metropolitan borough of Bury. If my local authority continues to spend as it is doing now, there will not be that much difference. The hon. Gentleman may wish to tackle other hon. Members about that issue.I wish to deal with the way in which the alternatives, which have not been given much of an airing, would damage my constituency. A rating revaluation would devastate low-rated terrace properties in the north of England. My constituents would be hammered by that. This problem has not been explained to people. I wish that the Government had made the position clearer in the build-up to discussion of the community charge. If my constituents knew how much they would be paying under a revaluation, they would be shocked and devastated. I am pleased that that will not happen. I wish to turn to the capital values proposed by the Labour party in its new alternative to our proposals. I do not see how that is any more helpful than the present system. There is no direct link between ability to pay and the capital value of a house. It is not fair that someone on a low income, who has to buy into the London property market, should pay an enormous amount on the capital value of the property, while people with a higher income in my constituency in a much more modest property should pay much less. If the Labour argument is about fairness, how do they square that one? They cannot. I have served on Haringey borough council and seen how local councils can manipulate finance. My constituents would not be desperately pleased to have a local income tax in the hands of the people who currently control many town halls throughout the country. That would be very damaging. Government figures suggest that the community charge in Bury will be about £244 per head, while the income tax per head would be about £550. If people admit that it is difficult to reform the system, that it has taken 30 years to do so and that no system is perfect, and if they consider the alternatives and how the Government are tackling the problem, they will recognise that it is a straightforward policy which is worth more than a try. It will succeed in bringing about a better system of accountability at local level. Above all—and this is important to the future of a pluralist democracy—it will help to restore a better relationship between central Government and local government, a link which has been so badly damaged over recent years and for which so much of the blame must be laid at the door of members of the Labour party in town halls throughout the country.
I am grateful to you, Mr. Deputy Speaker, and to the House for the opportunity of contributing to this debate after my enforced absence. As we approach the Christmas recess, I wondered whether the BBC would invite us, as the most famous amateur dramatic society in the country, to present something for Christmas. The most appropriate production would be "A Christmas Carol" but it would be difficult to decide whether the Prime Minister would play Scrooge and the Secretary of State for the Environment would play the part of Christmas Yet to Come.The poll tax offers the most devastating prospect for those least able to fend for themselves. In my constituency, an increase of 109 per cent. in the amount that people pay on average is in prospect. Hon. Members may cast their minds back to a book called "The Ragged Trousered Philanthropist". Mugsborough would have nothing on Cirencester and Tewkesbury because in the Mugsborough of the late 20th century we shall once again see the ragged trousered philanthropist. Those who cannot afford to pay will not only end up paying more, but will be paying for services which are in the main consumed largely by those who can afford to pay. Hon. Members should examine any part of the country — any county or city — and consider what happens within such areas. They will find that, in the main, those who are taking up further and higher education come from areas that pay high rates and can afford to do so. Those who live in the best environments pay the most. Those who use library and other services the most live in areas where people can afford to do so. Those who live in more wealthy areas of low density and with long drives — in areas where they do not demand that we put dustbins at the end of the drive—tend to live in larger houses. In my city people in Hallam will get away with paying the same amount for having their dustbins emptied, but they cost the city council twice as much as those in inner-city flats.
They pay income tax, do they not?
Obviously, they pay more income tax, but that is part of the fairness of the redistribution within our system. If the present rating system has any unfairness — of course it has — it is partly because of the Government's deliberate actions over the past eight years.There has been a deliberate destabilisation of the relationship between local government and central Government and of the local government finance system. It has discredited the system that has lasted for almost 400 years and would have reached its 400th birthday had we not had 43 Bills affecting local government, over 20 of which affected local government finance. Over the past eight years, the equivalent of 4p in income tax has been taken from people in terms of grant distribution. Penalties and the holdback system have ensured that rates have gone up while services have remained the same or have deteriorated. There has been a deliberate policy of undermining people's confidence in a system that was working, even if it needed updating. Above all, there has been a failure to go ahead with the statutory revaluation which, under any system, whether it be the present one or capital values, would have given a greater degree of equity in terms of what people pay for different properties in different parts of the country or within different districts, county or city areas. That is what the Government have done. If we had wanted to change the system, we might have laid down some of the principles that have been discussed over the past two days. Is the tax cheap and easy to collect? Is it difficult to evade? Will it be seen to be fair in terms of people's ability to pay? When it is not progressive, will there be some choice? There is a choice in respect of people's income, housing, property and rates. There is even a choice under the value added tax system. There are those who say that there should not be a choice and that a flat rate should be levied for everyone, whatever their income and needs. Is that applicable to VAT? If it is, the charges that were made against the Labour party during the general election that we were scaremongering about VAT on food and other essential items will be proved to have been dishonest. The Government will justify it in due course, in the same way as they justify the flat rate poll tax now. Should a tax increase people's dependence on the state, worsening the poverty trap, especially from a Government who preach removing dependence on the state. As the right hon. Member for Henley (Mr. Heseltine) and others asked, should the tax damage family life? Should it discourage people from caring for each other in sickness and old age? Should it hit those who volunteer or are employed in caring services? Community Service Volunteers, to name one organisation, actually gets accommodation, meals and a small extra which might be considered to be pocket money on top. But, of course, its workers are not entitled to supplementary benefit or the new income support, and they are not obviously seeking work. Should they pay the poll tax? Under the Government's proposals, they would. So much for those who believe in volunteering. Under the Government's present proposals, they will not receive a rebate because they do not fall into the two categories of being unemployed or on income support. They have not yet been excluded, along with everybody else who will eventually be excluded to ensure that the Tory party is reelected. Should the tax hit people's liberty and privacy? Should the tax link democratic rights with the ability to pay? Should accountability and responsibility be seen in terms of a financial contribution to the community? Unless the hon. Member for Bury, North (Mr. Burt) reads the Bill, he will be unaware that the icy fingers of "poll capping" are reaching out and grabbing the throat of accountability and responsibility before it has even had a chance to be tested. Let us not talk about a poll tax bringing in those who do not pay so that payment can be linked with citizenship and the right to decide what happens in a community. As a friend of mine pointed out, there might be other ways in which people should be encouraged to make a contribution to the community. Finance is not the basis of our democracy. If we are in the business of asking questions on what the Government are about, I have a fundamental question. Do the Government say that the Administration are abandoning any pretence that there will be a distributive element in forms of taxation? If there is no justification for it at local level, when will there be no justification for it at national level? If there is no justification at local level for people voting and participating unless they pay—those above income support will be hit hardest by the proposal —when will we no longer be able to justify income tax at national level, never mind reducing it steadily? We must bear in mind that 20 million people do not pay income tax because they are below those levels. What would we put in place of the poll tax if it is implemented? To begin with, I believe, and Opposition Members would support, that some form of property tax, updated, revised and modernised, is justified and should be progressed.
When the hon. Gentleman was leader of Sheffield city council, his submission to the Government was for a local income tax. He will have read an article in the Sheffield Star of 15 December 1987, which states:
So said the new council leader. You have changed your opinion. You are not saying that it is a local income tax."The days of hand-to-mouth annual budgeting, and ineffectively blaming the Government when grants and financial regulations fail to meet expectations are a thing of the past".
Order. The hon. Member must not bring me into the debate.
I apologise, Mr. Deputy Speaker. The hon. Member for Sheffield, Brightside, (Mr. Blunkett) has changed his stance. He said that it is not a local income tax any more; it is now a property tax. We in this place require stability and an alternative that we stick with all the time.
If the hon. Gentleman had given me an opportunity to draw a breath, I would have gone on to say that I should like to pick up the words of my hon. Friend the hon. Member for Copeland (Dr. Cunningham) yesterday. He phrased it slightly less pointedly than I shall. I am in favour of a property tax that is supplemented by a fair tax on incomes. That means a local income tax.Before someone screeches "Camden" for the umpteenth time in the past two days, a tax that was levied together with a property tax which distributed the burden of income and contribution would be fair if the equalisation system on which it is based—just as it is true of capital values—took adequate account of the problems of the area and ensured that every area received grant. At the moment, the borough of Camden receives no such Government grant. Nobody's income tax goes into the London borough of Camden. The penalty and holdback system has denied it a fair share of national resources. Conservative Members should get their facts straight. The Secretary of State for the Environment asked whether people would flood across the boundary into Bexley—a new lemming system, led by the Secretary of State, with multiple occupation of the house that is owned by the right hon. Member for Old Bexley and Sidcup (Mr. Heath). It bears no consideration. If people were able to link the valuation system with how much is paid in the pound and a small supplementary income tax, some sanity would be restored to local government finance. It is necessary to spell out the way in which the present system works. The rebate system is calculated on values and the person's income together. The valuation system then allows local government to levy pence in the pound. However, there are such distortions that various Secretaries of State — not just the present one — have talked about Sheffield as being the second highest rated authority in the country. If I had given the hon. Member for Sheffield, Hallam (Mr. Patnick) time, he might have got round to mentioning that. There is such a gross misunderstanding of the system they operate that they are either inept or sailing very close to misleading the population, including the House. In fact, Sheffield is 61st in terms of the amount paid in rates. It is not pence in the pound that determines what people pay, but the combination of rateable value and pence in the pound. It would help if some of the people who abuse the present system understood the way in which it operates and if they told the truth about its present impact. I should like people outside the House to hear the truth about the impact of the poll tax. Present statistics have often been used in a way which takes grant-related expenditure assessment into account, but not the actual expenditure of individual authorities. Figures have been used that do not include the removal of the safety net to 1994. Of course, one cannot expect a Government to tell the truth before the next general election or to allow people to feel the full impact of what they are inflicting upon them. I give the Government credit for having enough common sense to know that they must phase in the poll tax so that people cannot feel the full impact of the consequences of the Government's actions. Furthermore, the Government do not spell out the ways in which the tax will have to be raised to avoid problems of evasion and non-payment. In the notes on the Bill, the Government include something to take account of the fact that there will be increased court costs as a consequence of people being taken to court for nonpayment. However, they do not include anything in their calculations for the fact that the amount due has not been paid to the local authorities concerned. The sooner Conservative Members who are at the moment favourably disposed to vote for the Bill calculate in real terms what it will mean for their constituents, the sooner we can overturn the nonsense. I repeat the warnings that have been given by hon. Members of all parties, including past Secretaries of State for the Environment. It was in 1377 that the first person tried to introduce a poll tax in this country. Four years later, he was hanged, drawn and quartered in the peasant's uprising. The man who opened the gates of London to let him in has been made famous by the presence of the Labour party's headquarters on Walworth road — he was Mayor Walworth. History may be apocryphal in terms of what will happen in four years time.
As the right hon. Member for Henley (Mr. Heseltine) said last night, there is nothing —[Interruption.]
I shall let the hon. Gentleman intervene.
It is just a small point. I believe that, in the 14th century, the uprising to which the hon. Gentleman has referred started in Fobbing, which is currently in the borough of Thurrock, near my constituency. I can assure the hon. Gentleman that in the 20th century the Government's proposals will not cause any repetition of that uprising.
I must agree with the hon. Gentleman —we shall not hang, draw and quarter anybody—[HON. MEMBERS: "Why not?"]—because some of us will not be able to afford the silken rope with which to do so.The prime task facing the House tonight is not to inflict on people something against which they will rise up, but to protect them from the consequences of the Government's actions. We may not be able to stop the Bill tonight — I hope that we can—but nothing is more certain than that this proposal is doomed to failure from the start and, with it, those who are inflicting it on all of us.
Whether we agree or disagree with the hon. Member for Sheffield, Brightside (Mr. Blunkett) we all concede that he knows a great deal more about local government than most of the rest of us in the House.The right hon. Member for Plymouth, Devonport (Dr. Owen) said that the Government were behaving as though they had a God-given right to govern. We all know that God is a Conservative — [Laughter]. Well, there is a serious point. This legislation will be so unpopular and disruptive that the assumption behind it is that there will not be a change of Government during the political lifetimes of the two current Front Benches, or it would not be introduced. Looking at the Opposition, one is bound to say that that assumption is probably justified. However, it is a dangerous assumption. In the British political system the biggest check on any Government is the fear of being turned out of office at the next election. That fear no longer applies. This legislation is the result of that fairly dangerous, if probably well-founded, assumption. Although it was not altogether clear from the speech of the hon. Member for Glasgow, Garscadden (Mr. Dewar) today, it is generally conceded that there is a disease. However, I do not know whether this is the right remedy. It is not only a question of loony-Left councils. During the past two years, my constituents have faced rate increases of 40 per cent., even with councils that are exceedingly economical and do not splash money about on lavish projects. They have also seen 11 or 12 different systems of local government finance since 1979, nearly every one of which has been worse than its predecessor. The question now is whether this system will be worse than its predecessor. The community charge has one considerable advantage. I am lucky enough and have the honour to represent one of the richest constituencies in the country. Therefore, a great many of my constituents will do very well out of it. As I have been asked to declare my interest, I shall do very well out of it myself. However, many of the well-off people in my constituency are extremely uneasy and look on this proposal with considerable misgivings. They do not understand why they, who are living in nice houses with large incomes, should pay exactly the same as people who live in less nice houses and who have much smaller incomes. At the same time, the small businesses in my constituency are likely to do very badly. There seems a considerable inconsistency in the Bill because it seeks to retain a property tax for business but to abolish it for domestic payers. If a property tax is a good thing, surely it should apply to all? If it is not a good thing and is unfair, it should be abolished. There is definitely a disease. We have heard a little less in defence of the poll tax today by hon. Members saying that it can be described as fair. It seems impossible to do that. As has been said, it bears no relation to the ability to pay. To say that the poll tax is fair is like saying that Mr. Shakoor Rana is a fair umpire. In both cases, using the word "fair" is an abuse of language. Not only is the community charge unfair, but it is largely unworkable. The Rating and Valuation Association, which is an extremely staid body, not at all given to headline-making predictions, thinks that there will be 5 million summonses every year under the Bill to get people to pay the charge. I have no idea what will happen to the magistrates courts. However, it is likely that there will be that number of summonses because the tax will not carry consent. For hundreds of years one great distinction between this and other countries has been that, on the whole, our people pay their taxes because, with one or two exceptions that have been mentioned, the taxation system has carried consent. To my mind, the poll tax will not carry consent and will therefore be extremely difficult to collect. How on earth did the Government get landed with the poll tax? We know that there are several alternatives, although we all concede that none is ideal. However, almost all seem to be better than this proposal. It seems to me that a fundamental reason why the Government have got into this position is their hostility to institutions and their attitude to markets. I think that that provides the rationale for the Bill. The Government's hostility to institutions leads them to give the market a monopoly. Of course the market must be an important factor. However, there is no idea of balance, because the market is given a monopoly and must be allowed to prevail in every sphere. On that philosophy, the people of this country are not so much citizens as consumers. So that their consumer preferences should not be frustrated, our institutions, such as local government and others, are downgraded and weakened. Those institutions are not allowed to stand in the consumer's way. The only institution that is not weakened is, of course, the Government, who are made more powerful by the weakening of the intermediate institutions. Therefore, on this philosophy, everybody is a consumer and the world is a giant supermarket. Life is nothing but a prolonged pursuit of groceries whereby one chooses education from Tesco's and local government from Sainsbury. There is no essential difference between a university and a department store. If the university does not satisfy the customer, who may be the Government or business, it should go under like a shop that does not satisfy demand in the high street.
Given the circumstances that my right hon. Friend has outlined, it appears he is arguing for a progressive tax, but will he concede that only 22 per cent. of local government taxation will be covered by the community charge or the so-called poll tax and that 50 per cent. of that money will come from the Treasury, which in the circumstances, will be means-tested and based on income tax and other taxes?
To coin a phrase from the Opposition Front Bench, "I am coming to that." Schools and universities should spring up and disappear like betting shops or cinemas according to the temporary fluctuations of demand. The short-term market is absolute in every facet of life. On this philosophy we have the consumer and Government, but virtually nothing else. Based on that philosophy, flat-rate community charge is logical. Local government is just a bunch of people selling something — like Marks and Spencer — and the services that it provides are bought like clothes or food.Just as the rich pay the same as the poor for a television set or a fridge bought in the high street, so they should pay the same as the poor for the services brought from local government. One and all are consumers. The fact that one consumer may be 50 times richer than another is as irrelevant as the fact that many consumers will be victims of the community charge. That is a logical argument and, as the hon. Member for Brightside has said, it is capable of extension. Who knows, in the next Parliament we may see the abolition of direct taxes on individuals and the introduction of a flat-rate national or state charge that will be the same for rich and poor. After all, the rich, in common with the poor, can only die once, so why should they pay more for defence? That is the principle and the logic of the community charge. It is a defensible view, but it is not one that I share or admire. In the past, virtually all Conservatives have recognised the great importance of the existence of powerful, intermediate institutions as a breakwater between the state and the individual to preserve political freedom —otherwise, only the Government are left. The Government's hostility to our institutions seems to me unConservative, misguided, centralising and potentially authoritarian. The Bill is unfair. It is wounding to the family and probably unworkable. It will cause great damage to the country and to the Conservative party and I cannot support it.
The hon. Member for Solihull (Mr. Taylor) yesterday said that the Opposition should support this Bill. Sometimes it is said that the Labour party has the ability to snatch defeat from the jaws of victory. It does not have the cynical nature to support the Bill. It is true that the Bill is political dynamite and that, in London, it will blow apart the foundations of the seats of a good many Conservative Members of Parliament.I know that the hon. Member for Streatham (Mr. Shelton) will be thinking that he will get the boot as a result of the Bill. Indeed, the hon. and learned Member for Putney (Mr. Mellor)—a Foreign Office Minister—and the hon. Member for Battersea (Mr. Bowis) will have some explaining to do to the darlings of the Conservative party in Wandsworth, who will discover that the average rates burden per person will more than double and that the business rate will increase by 61 per cent. The poll tax is not even fair to Conservative supporters. I can also see the order of the boot coming for the hon. Member for Dulwich (Mr. Bowden). When we first debated this proposal in an Adjournment debate, I said that if the Government had a victory with the tax they would face defeat at the polls. The nature of the opposition from leading members of the Conservative party is indicative of that fear. I wish to consider the effects of the Bill on an inner-city area such as Lambeth. However, the Lambeth figures are not untypical of what will happen in Southwark, Greenwich and other inner-city areas of London. In Lambeth, the average rateable value is £261. The rate in the pound is just over £2 and the rates per household are £536 a year.
Now tell us about Wandsworth.
As a result of the Bill, the rates per person in Wandsworth will be even higher, but I shall deal with that later.Based on the census statistics, there are roughly two persons per household in Lambeth—typical of inner-city areas. Therefore, the average rates burden in inner-city Lambeth is £270 per person over the age of 18. It is much the same in Southwark. However, the average burden as a result of the poll tax will be £547 per person per year. In Camden the average rates burden per person will be £750 as against £150 per person in Croydon. Therefore, if we want a plan for fiscal migration, the poll tax is it. The effect in Lambeth, Southwark and similar areas will be that the average burden for an adult over the age of 18 will double. The minimum contribution in Lambeth will be about £2·10p per week — that is, after any element of rebate. It is clear that the average burden will double, but let us consider the poorer standard of house with a rateable value of £150 occupied by a poorer family. If that house is occupied by two persons, they will presently pay rates of £156 each, but under the poll tax they will pay £547 each. The burden on the poorer family will be three times higher than at present. If there is a child over the age of 18 in that house, the burden will be £1,641 a year—five times the existing average burden per adult in such a house. At the other end of the spectrum there is Dulwich. The Prime Minister and her husband, if they are the only occupants of their house, presently pay about £2,912 a year in rates. Under the poll tax they will pay roughly £1,100 a year. Therefore, the Prime Minister and her husband will save themselves almost £2,000 a year. Throughout all the inner-city areas, the affluent will be paying less and the poor more. All of us who live in larger and more affluent houses expected a revaluation to increase our comparative burden and relieve the burden on the less wealthy. Nobody expects anything else to happen as a result of a revaluation. In Lambeth, the average burden will double and, at the lower end of the income scale, it will almost treble. However, there will be no relief on the business rate because the universal business rate will be exactly the same as it is at present. There will be no compensation for businesses. Why will such a sharp, intolerable and divisive burden be imposed on the inner cities? It is sharp because equalisation will end in London. My constituents go and scrub in the City and drive buses and trains to take people to the more affluent parts of London. My people man the hospitals and look after the patients who have heart attacks in the City. If they are lucky enough to find a job, my people type, operate computers, manage and work in other more affluent parts of London. It is in the end of their share of the wealth that they have created which creates such sharp divisions in the capital and such heavy burdens in the inner-city areas. The main feature of the inner city is the polarisation between the rich and the poor. That is the guts of the inner-city problem, particularly in London. Tension and social division arise from that polarisation. The rich, even in places like Lambeth, do not pour their wealth over the borough like golden lava—they do not shop in Brixton: they shop in the west end. The wealth generated by the rich of the inner-city boroughs often does not end up in the inner-city shopping areas in my constituency. Carefully researched figures fro Lambeth, done by independent agencies, show that the bottom 45 per cent. of the population was 10 per cent. worse off in 1984 than in 1979. People at the very lowest end of the spectrum are probably about 14 per cent. worse off over the past seven years. That shows clearly the way in which the polarisation that I mentioned is going. What will the poll tax do? It will add to this awful, contagious poverty. The drop in purchasing power of the lower half of the population means that it has less money to spend in the shops; fewer shops are open, fewer jobs are provided in the retail sector, fewer services are provided, and so this contagious poverty begins to knock down employer after employer. That would be intensified by a poll tax that doubled the average burden. Of course, the poor quality of some of our local government services adds to the despondency of the inner city. Some of the services are good, but because of restrictions on Government spending, major repairs on housing estates and the provision of enough social workers are restricted. The poll tax will add nothing to the quality of those services which, if poor, add to the despondency and despair in areas such as the one that I represent. The tax has a contagious effect on the community. It is corrosive, and creates even more embittering poverty and divisiveness between groups. I give the House an example of how it will work. The changes in housing benefit regulations mean that someone in my borough who has saved all his life and has more than £6,000 in the bank will have to pay £547 a year poll tax, with no rebate. He will look at his neighbours, who may be drawing social security and, if they register, only paying 20 per cent. of the poll tax. He will ask himself why he, who has made some provision for his old age or retirement, has to pay the full poll tax, whereas the very poor are evading it or paying only 20 per cent. So there will be even greater bitterness between the rich and the poor, and between those who have not and those who have even less. The tax will intensify the bitterness that is so much a feature of inner-city life. My community, like many others, needs a degree of cohesiveness and equanimity. What do the Government give us but a multiple fracture when we need to be healed? We want family unity and stability. We want a reinforcing and supportive society, but if a tax that puts twice as heavy a burden as the rates is applied, we set spouse against spouse, partner against partner, mother against son, carer against the cared for, youth against authority, the poor against the law, the rich against the poor and, because of the disincentive to register, we shall set the citizen against the exercise of civil rights. At the very time when we need to provide a stable, resilient and cohesive community we introduce a tax that has turmoil and turbulence built into it. I have given the official figures for the tax, but they will be even greater because of the difficulty of getting registration to take place. In my constituency, the turnover in population, based on the election register, is between 25 and 27·5 per cent. a year. That is the velocity of change, and many of the people involved are poor. The poll tax will be almost impossible to enforce in a population with that degree of velocity of movement, so the costs of administering it and the residual costs on the rest of the population will be higher. There will be higher costs, coupled with a corrosion of democracy. With the growth of the assured tenancy, people in the private sector will be paying rents two or three times those that they pay now. Will they volunteer to pay the poll tax at the same time? Will the landlord volunteer to pay income tax by registering? The turnover of 25 to 27 per cent. of the population will make things difficult, too. On the bottom rung of the ladder, impoverishment will increase and the vote will be lost. Will such people volunteer to pay £10 a week for the right to vote? Some of them, as we know, do not have much faith in institutions or authority. The most awful dilemma will be created for people at the bottom. I, like many other hon. Members, represent people who cannot afford to plan their affairs so that they can pay their gas and electricity bills. We make the biggest management demands on the poorest members of the community. That is why we have things such as "Fuel Direct". There will be some degree of compensation, but not enough. We shall be asking the mother to choose between paying her 20 per cent. of the tax and buying her child shoes — between her child not going to school properly dressed and paying the poll tax. Out of human family considerations, she will choose her family in preference to the local authority.
My hon. Friend has described a world about which most Conservative Members know nothing. That is one of the reasons why there is so much support for what he is saying. If the Government were really interested in democracy and in greater participation in elections, they would do something about the 17 per cent. of people in inner cities who do not get on to the electoral register, and would give local authorities the funds to enable them to get as many people as possible on to it. This Bill has nothing to do with democracy, as I am sure my hon. Friend will agree.
It will have the opposite effect. Its enforcement on council estates in which unemployment among young people aged between 18 and 25 can be as high as 80 per cent. will set those young people against local authorities, community institutions and the police, who will have the job of enforcing the tax among those who will not regard it as fair. Some of them already do not pay tax on their cars or televisions. There is little to show that they will volunteer to pay the poll tax either. The poll tax will be an incentive to break the law in the inner-city areas in which we are trying to encourage respect for the law and integration into society.Two things emerge from all this — impoverishment, and a disincentive to take one's proper place in society. The tax will engender bitterness and a deeper dislike of the police and of authority, and it will make the ordinary citizen the hostage of the local authority. If, as happens now, a local authority discovers widespread child abuse, or if it is flooded with the homeless, and tries to tackle such problems, the effect of the poll tax, because of the way in which local authority finance is run, will be to multiply by four or five times the increase in such expenditure. So, for every 1 per cent. spent on the homeless or child abuse, an extra 5 per cent. burden will land on those who must pay the poll tax. The Bill will make the poorest people hostages to the local authority that ought to be looking after them. In a metaphorical sense, it will force local authorities to shoot some of the prisoners in order to feed the rest. It will make people captive gladiators under the Roman imperial rule that introduces this cruel tax. The Bill is a negation of democracy and does nothing to improve the cohesiveness of the inner city. People talk about 1381 and the peasants' revolt, the revolt against the last poll tax. I do not know exactly what kind of revolt will take place and I do not want to contemplate violent revolt in the middle of our cities. I have already seen revolts take place, because one happened in my constituency in 1981, 600 years after the peasants' revolt. My constituency was in flames as a result of a perceived injustice against members of my community. There is nothing in the Bill that will add to the equanimity of the community that I represent. There is everything in the Bill to militate against a peaceful and calm society.
I am grateful to hon. Members for their kind remarks about my suits. With my shape, off-the-peg is not an option.I agree with my right hon. and hon. Friends that the time has come to abolish domestic rates. In choosing a successor, one has to ask why they lasted so long and why they began to lose credibility. Domestic rates embody a principle which has popular support and which should be carried through to its successor. The principle is that there should be a link between the ability to pay and the contribution made to local services. It is the shortcomings in the application of that principle that have discredited the rates and not the principle itself. With this Bill, the Government throw the baby out with the bath water, because in a rough and ready way the rates reflect ability to pay. As the Government have said in their Green Paper:
If one looks at the figures, one sees that 83 per cent. of the poor, those earning £50 a week or less, live in properties at or below average rateable values, and that 75 per cent. of people with incomes over £300 a week live in properties with above average rateable values. Therefore, there is a broad relationship, but not a perfect one. It was the lack of accuracy in that relationship that led to the original commitment given by the Conservatives to abolish the domestic rates and to replace them with a local revenue tax based not on property but on people's ability to pay. In the Green Paper of 1981, under the heading, "Local Taxation: The Main Requirements", one such requirement listed was "individual capacity to pay". The Government have totally abandoned that principle, and it is this that has led to the difficulty. To replace it, the Government have tried to invent another one. They are now trying to claim that we are not talking about a tax at all, although before the wordsmith of Marsham street got to work the Government called it a tax. Now they seem to call it a charge and a new principle has been constructed divorcing it from ability to pay and linking it instead to use. The Secretary of State described this new principle in somewhat tortuous language in an article in The Times on 4 December. It says:"It is probably true as a broad generalisation that those people living in the more valuable houses in an area can more easily afford to pay local taxes."
He has carefully avoided the trap of linking it directly to use, because manifestly it is not. The absence of that link was one of the criticisms of the rates. What is this new principle linking a charge to ability to use local services? The biggest cost to the charge is education. In what way are primary and secondary schools available to be used by pensioners or the childless? How on earth does one explain it to those people who are hardest hit by the Bill—young single people—when they use local services least? The principle is manifestly absurd and indefensible. We are talking about a compulsory payment paid by everyone over the age of 18 irrespective of use. In my book, that is a tax."It is important that a local charge for local services should reflect in a rough and ready way everybody's ability to use local services."
Will the hon. Gentleman give way?
No; in fairness to other Members, I should like to make progress.I suspect that the Government are unhappy about resting their case too heavily on that principle and instead are stressing accountability. The Government maintain that there are high-spending local councils mainly in the inner cities and too many voters are financially insulated from the consequences of voting for them. Remove the cover, the argument goes, expose them to the cold wind and they are more likely to vote for councils that spend responsibly. Legislation to make councils spend responsibly is no stranger to the Government, and I have played my part in putting it on the statute book. The fact that many councils are now acting more responsibly has nothing to do with the legislation. However, it has everything to do with the fact that our party won the last general election and councils now realise that they will not be bailed out by the Labour party. I shall shortly say something about the electoral consequences of the Bill. The way forward in the inner cities is to show the people who live there that our social and economic policies work. We should show that by voting Conservative they will help improve standards in the schools, accelerate investment in the rundown estates and diversify tenure. We should show that, by voting Conservative, they will increase jobs and prosperity in their areas. There is ample ammunition in our arguments to win the case. The way to lose support is to sandbag people for being poor. That will have exactly the opposite effect and will undermine confidence in our party and in our policies. Crucially, it shifts the argument away from the social and economic policy arguments, which we can win, to arguments about fairness, bureaucracy, intrusion and means testing, which we cannot win. It does that not just in the inner cities where there is a problem, but over the whole country. The Government betray a lack of confidence in their argument because the Bill retains the ability to rate-cap. As my right hon. Friend the Member for Aylesbury (Mr. Raison) said yesterday, the Government will still retain the ability to override local decisions if local accountability does not come up with the answers that the Government want. The hon. Member for Norwood (Mr. Fraser) spoke about electoral consequences. I am confident that, due to his diligence, my hon. Friend the Member for Dulwich (Mr. Bowden) will hold his marginal seat with an increased majority at the next election. But do we not make his task unduly exciting by introducing a policy that his borough treasurer estimates will make 95 per cent. of my hon. Friend's electorate lose money? How does one explain to a retired couple living in a tower block in Finsbury Park and who may always have voted Conservative that they will pay twice as much as an SDP-voting merchant banker living in gentrified Barnesbury? I shall now turn to the implications in the Bill for those on benefit, whose numbers the Bill increases by 1·2 million. The Government have spent much time recently attacking exemplifications of alternative systems which show the better-off paying more than under a flat-rate system, though not necessarily more than they are paying at the moment. They have said far less about the implications of their proposals for the less well-off, unfortunately giving the impression that big increases for the better-off are untenable but for the less well-off are acceptable. Seeking material for my speech from the Whips Office, I found some briefings criticising a progressive alternative which increased the charge as incomes rose. It says:
Quite; that is exactly what will happen to the poor under the rebate system as the 80 per cent. rebate is withdrawn and their income goes up. For those at or below benefit level, the Bill proposes that they should all be registered, that 80 per cent. should be rebated at source by the local authority and that help for the other 20 per cent. should come from another authority—central Government—which is then paid to the first authority. Whether a person is in or out of pocket will depend on where he lives. A few days ago, when the House debated the housing benefit regulations, the Minister of State said:"Their charge might go up not because council spending increased, but because their income had increased by a few pounds."
The process which he quite rightly congratulates himself on having abolished is reintroduced in the Bill. The interesting thing about the paper chase of money is that at the end of the day the net contribution to the funding of local government is precisely nil. It is self-cancelling, in that 80 per cent. is rebated at source, 20 per cent. of the average comes from central Government, and the Local Government Finance Bill contains huge chunks which have nothing to do with financing local government at all. It is precisely because the whole charade is totally irrelevant to how local government will be funded that many of us believe that it would be better to scrap it and start from the point where the Government end, at great expense, and say, "If the poor are to make no net contribution because they are poor, let us look at another system which starts from that premise and deals fairly with those who can pay". My hon. Friends will agree that over the past few years we have introduced policies which have impacted hard on the nearly poor and those just above benefit level, with changes in housing benefit, tapers and capital rules for income support, and policies on local authority rents, prescription charges and charges of some nationalised industries. I have been prepared to support those policies in the Lobbies because behind each one has been a defensible principle. If we are to spend more on maintaining and improving council estates, rents must go up; if we are to spend more on the Health Service, it is legitimate to look to the user for part of the cost; if the benefit bill is to be contained within limits the country can afford, we must target it on the less well-off; and if we are to put nationalised industries on a sound basis and increase investment, we must have sensible tariff policies. But this Bill puts extra burdens on one group of people, not in return for better services, more jobs or anything else, but simply to reduce the taxes of those who, on average, are better off. The paradox, as my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) said, is that they do not like the policy any more than those who lose. After writing an article in the Daily Telegraph I have received hundreds of letters, and many of them have three themes: first, the writer had always voted Conservative; secondly, he or she benefits substantially from the Government's proposals; and, thirdly, he or she is totally opposed to them. I suspect that such a reaction could happen only in Britain, but it is none the worse for that. I turn now to the question of banding. The Government have introduced a banded tax on income — a banded national insurance contribution. At the moment, if a person's income goes up from £38 to £39 per week, they suddenly become liable to pay 5 per cent. of their total income as a contribution. I would like to use the same words as my right hon. Friend used when he criticised my proposal. He said:"As I said earlier, housing benefit brought the administration of assistance with rents and rates together under one roof for the first time… It made for far more sensible and efficient administration, in that millions of households had their bills rebated at source for the first time, instead of having to take the money handed out by an arm of central Government and immediately pass it on to the local government offices down the road."—[Official Report, 19 November 1987; Vol. 122, c. 1243.]
That is exactly what happens when someone earns £39 instead of £38 per week; they have to pay over £100 a year in national insurance contributions. There is another band at £65 a week, when it goes up to 7 per cent., and at £100 a week it goes up to 9 per cent. Each time the income moves up a band, a higher percentage applies to the total income. If it is fair that someone earning £39 a week should have to pay £100 extra in tax when his income goes up by £1, is it totally unthinkable that someone earning 10 times that income should pay £400 a year if he finds himself in the next band? If the argument is not about banding but about the height of the steps or the ceiling, let us sit down and talk it through. It would be ludicrous to dismiss the whole concept simply because of some initial exemplifications, and wrong to describe it as pernicious, if the Government have already done it. We have been no stranger to radical changes in the House since 1979, many of them long overdue, but we have had public assent behind us to see us through the opposition by vested interests. There has been public assent to council house sales, trade union reform, privatisation, education reform and even rate capping. The tide of public opinion has enabled us to sweep forward, but we have no such assent to the Bill; we have deep unhappiness among some hon. Members who have never voted against the Government before. Our friends in local government are not with us and our supporters are unhappy. The Bill is inconsistent with our principles, irrelevant to our programme and inimical to our prospects, and for those reasons I shall vote against it tonight."If people earn a little more and thereby fall into the next income band, they would find that the extra amount of local tax that they would have to pay would be more than their extra earnings."—[Official Report. 16 December 1987; Vol. 124, c. 1125.]
I believe that people should not get something for nothing and that there should be a link between money spent and services provided. If the Government were going down that road, I would travel with them. I am not sure that they have travelled very much further than that general theory, because although the tax, or charge, makes such a linkage clear, and it will have to be paid by all over the age of 18, if they can be found, I do not believe that a single tax can any longer meet the needs of local government.On a recent visit to the United States I noticed that the many different layers of local and national government all had their own separate tax base. When we are dealing with the multi-purpose local authorities, we should look at a wider base. It is clear from the remarks of the hon. Member for Copeland (Dr. Cunningham) that the Labour party has thought about that, but it is clear, as the debate has developed yesterday and today, that it has not been thought through. If one looks at column 1137 of Hansard for yesterday, one sees that we were told by the Opposition spokesman that there were significant arguments for broadening the local tax base. During one of the shouting matches we were told that Labour would repeal the legislation if it became law, so one must assume that Labour Members intend to go back to some sort of a property tax plus other things, but they have not specified what those things are. They do their supporters and the country a disservice by not being prepared to specify those things.
I shall give way to the hon. Gentleman in a moment, because the House and the country would like to hear him.We were told that the tax should be based on fairness and ability to pay. If it is to be fair, a property tax would require frequent, perhaps annual, revaluations, as is done in the United States. If the tax is to be related to ability to pay, each individual should be treated on their merits. I say to the hon. Member for Bootle (Mr. Roberts) that everybody should pay something and that the sum should be variable depending on the amount of money required by the policies of each local government. The hon. Member for Copeland made it plain:
If Labour intends to bring the two things into line and to remove central Government intervention, that will drastically reduce and transfer to central Government many of the present functions of local government."we shall review the functions and duties of local government to re-establish sensible links between it and local government finance."—[Official Report, 16 December 1987; Vol. 124, c. 1137.]
We certainly will not do that. We will increase local democracy and give many functions back to local government. My hon. Friend the Member for Copeland (Dr. Cunningham) made it clear that we are in favour of maintaining a reformed, updated and more fair property-based tax. We are also considering other forms of local taxation linked with the property tax in the same form as that described by the hon. Member for Londonderry, East (Mr. Ross) My hon. Friend the Member for Copeland also said that we would try to achieve a consensus. There will be debates and discussion. The main point about the proposals that we are debating today and most other local government legislation on finance that the Government have introduced in the past eight years is that there has been no consensus. That is bad for democracy and bad for local government.
I am grateful for the comments made by the hon. Member, as I have carried forward the Labour party and gained more information from it. No doubt Conservative Members will now press Labour Members on those points. However, I do not want to go too deep into the nitty-gritty of the Government and official Opposition argument about the Bill.My colleagues and I have another reason for voting against the Bill this evening that is related to the broad assumption put forward by the Secretary of State for the Environment yesterday. The assumption is that the new charge is vastly superior to the present system of rates. However, we were told during the previous Northern Ireland Question Time that 2·5 per cent. of the national population would have to wait and see how the other 97·5 per cent. got on with the new charge before it applied to Northern Ireland. Why are the Government practising that discrimination against Northern Ireland? Why is the Province the one area of the United Kingdom that will be denied the benefits which the Government proclaim for the new system? If those benefits exist, why are we in Northern Ireland being cut out of them? I believe that all national taxes in a unitary state should be the same, and all other taxes are the same and proceed from the same base. However, the new system, called charge, taxation or whatever, will still come out of people's pockets to pay for local government, but we are being denied the benefits that the Government claim for it. Why should that be so? We must oppose the imposition of the Bill on that basis. Of course, the Government tell us that local government in Northern Ireland is different from that in England and Wales. It is different in Scotland as well, but the Scots are well ahead of the field, are they not? Why should we be denied? The Secretary of State for Wales told us about differences in Wales and said that income would be split and divided up in slightly different ways. I appreciate that local government in Northern Ireland has practically no powers, as 90 per cent. of the things done by local government in Northern Ireland are administered by central Government. However, at the end of the day, we pay regional and local rates. Are the Government refusing to apply the poll tax, or charge, to Northern Ireland because the system of ratable valuations and local and regional rates in Northern Ireland is vastly superior to what applies in the rest of the United Kingdom, and, moreover, vastly more superior to the proposal in the Bill? If it is, why should the rest of the United Kingdom not follow the lead given by Northern Ireland so many years ago? We have to consider those questions before we decide how to vote tonight. Indeed, that is why our ranks are rather thin this evening. However, we are putting down a marker. We believe that Northern Ireland has a right to be treated the same as the rest of this kingdom, for good or ill. That is why I make this case before the House this evening as a Member of a United Kingdom Parliament.
The hon. Member for Londonderry, East (Mr. Ross) certainly struck a new note in the debate with his plea that the people of Northern Ireland should not be denied the benefits of the community charge. One cannot but be struck by the unrealism that has coloured some of the charges and counter-charges between the Opposition Front Bench and the Government today.My right hon. and hon. Friends have argued again and again that one of the chief advantages of their proposal is that it will increase accountability. The Opposition Front Bench have bought that argument. Indeed, that is what they object to. Opposition Members fear that the Bill will extend accountability to all sorts of people who will be called to account to contribute to the cost of local services and local government and who they believe should not be called to account and should not contribute. The truth lies in the opposite direction. Far from the Government's proposal leading to too much accountability, as Opposition Members fear, I believe —and I hope that the House will consider my view—that local government will still be not nearly accountable enough — and for reasons that have been made clear today. Only a small proportion of the cost of local services will be covered by the community charge. The bulk of the rest will be paid for either by our still highly progressive income tax or by the uniform business rate. The percentages are very high indeed. They are high enough for England, but my right hon. Friend the Secretary of State for Wales told us with great confidence that 86 per cent. of the charges of all so-called local services, or services administered locally, would not be met by the community charge. In other words, we all recognise that he was saying that the vast bulk of services are to be financed by means that have been debated elsewhere, and already accepted, but to which the general concerns about the nature of this tax do not apply. The proposal before us covers only a minor fraction of local services. The reality that 86 per cent. of the cost is already covered in Wales and well over 70 per cent. in England, shows up the flaw in the concerns expressed by my right hon. and hon. Friends—which I understand—from the Back Benches — the flaw in the case for banded charging. I congratulate my hon. Friend the Member for Ealing, Acton (Sir G. Young) on doing us all a service by bringing those ideas for a banded charge before the House. However, I do not believe that my hon. Friends are prepared to recognise and take account of the enormous and glaring reality that the vast majority of local services are already paid for by a highly progressive system of income tax. The suggestion that we should add to that and worsen the marginal disincentives, which I freely concede already exist, flies in the face of everything that the Government have tried to do over the past eight years. We have tried to lift the curse of marginal disincentives to unwind the enormous burden of discouragement to work and to open up the enterprise economy.
Will my right hon. Friend give way?
No, I want to finish my remarks within 10 minutes.I have described the scene. While the Government are trying to improve accountability and perhaps may make some progress, the community charge is still far from underpinning a truly accountable system of local government, for two glaring reasons. First, we are not abolishing or removing the great apparatus of grant support organised by the bureaucrats in Whitehall as a result of the proposals in the Bill. That apparatus will still exist, although it may not exist in such a bizarre or complex form. We may not have all the clawbacks and holdbacks that we encountered in the early 1980s which almost rivalled the Austro-Hungarian empire in their complexity. However, we will still have a quite complicated combined standard of grant plus a needs element. The whole source of the poison in the relationships between the taxpayer and ratepayer and central and local government is channelled there. That will remain and we are not making much progress with this Bill in removing it. Secondly, we now have a new apparatus of a uniform business rate which is a device for channelling another section of locally generated funds from businesses to central Government, to the Whitehall bureaucrats and around in a great circle back to the support of local services. While I see the arguments put forward by Ministers for the community charge as a vast improvement on the iniquitous and utterly discredited rates, the truth is that we still have a long way to go. Local government in Britain, in terms of voting support and popular support and understanding, is the feeblest of any system of local government in Europe or in most of the western world. So far, I see no vast improvement in that stucture. When the Bill has been passed, local government will still be a Whitehall show. So if the community charge is the first step, what will be done to make local government genuinely accountable and effective so that it will cease to be the playground of central bureaucracy and incomprehensible formulae that we have experienced in the past? The House has been treated to a number of views, and there are instructions on the Order Paper from my hon. Friends the Members for Ealing, Acton (Sir G. Young) and for Kensington (Sir B. Rhys Williams). My hon. Friend the Member for Kensington has a reputation for thinking very far ahead—sometimes to the fury of his colleagues. He is sometimes rather too illuminating, and the glare is too much for them. His message is simple. It is that the whole range of services which are national, but are called local—he mentions education, police, fire and civil defence—should not be covered by the community charge. That implies that national services should be paid for nationally. If we were to move in that direction—so far we have not examined that option—we would at last see the community charge covering a larger proportion of local services. Of course, the uniform business rate undoes that aim. Despite the need to protect businesses in some areas from the loony Left, perhaps it would have been simpler to cap the industrial rates more vigorously. That has worked in some areas. But only when we recognise that a wide range of national services should be paid for nationally, will the community charge as the major element of payment for genuinely local services come into perspective. I hope that my right hon. Friends, having urged us to take the first step, will consider, and indeed implement, the principle of a more national payment for national services, notably on such issues as education, the cost of which more than covers the present rate support grant. But if one cut the rate support grant pound for pound, it would be possible to go some way down that road without any rise in income tax. I hope that my right hon. Friends will continue to point out that local government functions can be divested and subcontracted. I spoke with the permanent secretary of the French Ministry for housing who had travelled to Birmingham and other cities. She expressed amazement that local government should be involved in managing social housing and welfare housing, as the French call it. She believed that it was crazy for such issues to be muddled in with the tasks of hard-pressed local government officials and thought that they should be managed outside the Government structure. I hope that my right hon. Friends will comment on that. I hope that Ministers will be less dominated by their obsession with the formula of standard costs for standard levels of service. They have been carried along too far by Whitehall bureaucrats and the sticky fingers of Whitehall involved with that formula. I should like a more robust challenge to that centralising jargon. I hope that local government will be allowed greater scope to raise cash in various ways that my hon. Friends have frequently suggested. I shall vote for the community charge as the first step away from the appalling rates. It is only a first step away from that system. Nothing will be right in local government unless it is reformed root and branch. Before my right hon. Friend the Member for Mole Valley (Mr. Baker) became the Secretary of State for Education and Science, he was planning a major reform of local government which many hon. Members had wanted for years. Can the Minister tell us what happened to those plans which were important and influenced my view on the virtues of the community charge? My fear is that we will repeat in reverse the mistakes of 1972 when we reformed the structure of local government without looking at its finance, with unhappy results. Today, we are looking at finance, but is the structure to be left behind? If it is, we will be in difficulties again. Nothing will be solved until local responsibility, local funding, local prosperity, and local democracy are truly married together as they have not been in Britain for a century. I would like to hear and see my right hon. Friends rise to that challenge.
I listened with interest to the speech of the right hon. Member for Guildford (Mr. Howell), who suggested that the full costs of some services should be transferred from local government to the national Exchequer. He may be interested to know that his right hon. Friend the Secretary of State for the Environment has made similar suggestions on at least one occasion.Indeed, there have been several references during the debate to the way in which the Government have changed their mind about local taxation. Ministers have changed their collective mind, and they have also changed their individual minds. The most spectacular conversion was that of the Secretary of State for the Environment. Before he took that office, someone sought his views about local taxation and the rating system. He wrote personally to his correspondent saying that he was convinced:
He went on to say:"There is no real alternative as a local tax, to a property tax of some sort, and that in fact means rating."
That is not the Government's policy now. Clearly, the Secretary of State has changed his mind. I am not suggesting that there is nothing wrong with the rating system. There are two widespread and justified criticisms of the domestic rate as a means of taxation. First, it is impossible for anyone to understand how the rateable value of his home has been assessed. Secondly, the rebate system is totally inadequate. It is so complicated that it is almost impossible to understand how anyone's rebate has been calculated. There is no doubt about the need for reform. It would be much easier to understand the rateable value of a house if it were based on its capital value—what the house would fetch on the open market—and no one concerned about fairness in taxation could deny the overwhelming case for a greatly extended and simplified system for rebates. However, the Bill is not about reforming the rating system. The poll tax will simply make matters worse, and I have two main objections to it. First, it will lead to an unnecessary increase in public expenditure. There is supposed to be much concern on the Government Benches about unnecessary public expenditure, and they sometimes seem to regard all public expenditure as unnecessary. Opposition Members are equally concerned about unnecessary public expenditure, because we would like more money to be directed to social services and other worthwhile public expenses. I come from a city where the social services department has stopped approving any adaptations to the homes of disabled and elderly people because it has run out of money. That is why I am concerned about unnecessary public expenditure. We all know that it will cost more to collect the community charge than it does to collect the rates. The Bill itself admits that the additional cost to local authorities will be between £160 million and £200 million each year —double the present cost of collecting rates. That will be on top of the cost — between £70 million and £90 million — of setting up the new system. Birmingham's city treasurer has calculated that the collection of the community charge will cost an extra £8 million and require an extra 350 staff. My hon. Friends and I would rather see an extra 350 staff employed in the departments of education and social services than in collecting the community charge. My second objection is to the basic unfairness of a community charge, which is a flat rate tax. The Secretary of State for the Environment has boasted that it will redistribute the burden of taxation. He has talked about transferring the burden from the widow in a semi-detached house to a family of three or four wage earners living next door. But he has failed to tell us that the poll tax will also redistribute the burden of taxation to the widow in a semidetached three-bedroomed house living on her pension and savings of a few hundred pounds in an area such as Shard End in Birmingham from a widow in a large detached four-bedroomed house in Sutton Coldfield, living on income from her investments worth hundreds of thousands of pounds. The Secretary of State has also failed to tell us that the widow living in a one-bedroomed flat or bedsit bungalow will almost certainly find that her taxation burden has been increased. The Minister for Local Government shakes his head, but I must tell him that my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) and I know more than he does about the people living in council estates and those estates where houses have been sold in Birmingham. I can assure him that we can provide figures, as we shall in Committee, to show that the burden of taxation for many people living in semi-detached houses, flats and bedsit bungalows will be increased. The burden of local taxation will also be redistributed to the family living in the house on the other side of the widow in that three-bedroomed semi-detached house—a family where the husband goes to work and the wife chooses to stay at home because she is responsible for looking after their children or an elderly parent. As a result of her care, that parent is saved from going into a home for elderly people, and the council is saved the cost of home helps, meals on wheels and all the other social services that are provided for elderly people who have difficulty coping alone. Because that woman chooses to spend her time looking after an elderly relative, that family will be paying extra tax because they will now pay a community charge, and she cannot earn an income like other people."The only alternative is to abolish the domestic rate and fund local government to an even greater extent from the Exchequer. This is the policy of the Government."
There may be hypothetical cases such as the hon. Gentleman describes, but does he agree that, in the circumstances that he described, a person without income would be eligible for the reliefs available under the system proposed? Therefore, the dire consequences that he envisages would not take place.
The hon. Gentleman has not read the Bill carefully. In the situation that I have described, the husband will be liable for the wife's community charge. Therefore, the family will pay a community charge for two people, whereas only one income will be going into that household. The wife will not be eligible for a rebate. If that family then take the elderly mother or father into their home, they will pay for the privilege. That is an appalling tax for any Government to dream of imposing on caring people.The Government's figures show that more families will lose than will gain from the new poll tax. It cannot be denied that the people who gain will include those with the highest incomes living in the most expensive houses. The people who will lose will include those whose incomes are just above the threshold for social security benefits, those who have small private pensions and those who have below average wages — the people who already have great difficulty in making ends meet. This new tax is a tax on the family, a tax on caring and even a tax on living, because one pays the tax simply for being there. This new tax has been rightly described as a "Tory tax", with all the unfairness, injustice and inequity implied by that description. Everyone opposed to Tory philosophy will vote against it.
I hope that the hon. Member for Birmingham, Hodge Hill (Mr. Davis) will forgive me if I do not take up directly his remarks. I noticed that he was in favour of a reform of the present situation.The debate has at times been dominated, perhaps a little too often, by the technocratic side of local government and a little too much political emotion. What has been lacking is any real discussion of the quality of local government as presently practised. The figures show that local government in Britain is involved to the extent of about 8 per cent. with roads and transport, about 10 per cent. with police, 10 per cent. with social services and 65 per cent. with education. Therefore, if we are to find a solution to a problem which nearly every hon. Member admits exists — the present rating system — we should start not by looking at it as an accountant but by looking at the quality of the delivery and the quality of the functioning of local government. Let us start with education, since that takes up 65 per cent. of local government expenditure. Local government spends 98 per cent. of Government expenditure on education. Therefore, we are not talking about a service which is even significantly influenced by central Government, and as a recent Minister in the Department of Education and Science I can vouch for that. The nation cannot be proud of the present situation. But only now have we reached the position where both sides of the House recognise that something is grievously wrong with the standards of education in Britain. That is no longer an hysterical gripe by Tory bigots; it is now admitted in the House and in the country that something is seriously wrong with the standards of education in Britain. How can local councils, which have had so much control over education over the years, escape their due share of blame—it may even be a lion's share in the case of some local authorities—for the degeneration of education in Britain? Let me give one example from what I know best. I was a Minister with responsibility not for schools, but for higher education. As I travelled around the universities —I went to 25 of them—I always asked one question: "What percentage of your students come from private schools?' As every hon. Members know, about 7 per cent. of British schools are private and the answer was a dismal one for Britain's education, and, in particular, for local authorities. The answer was that in Britain's best universities about 50 per cent. of students come from private schools, in many other universities about 30 to 40 per cent., and in some cases over 50 per cent.
The hon. Gentleman is making an interesting point, but not only are those private schools selective and can in many cases get the best, but, more crucially, the universities are selective and are not always as willing to take people from every background as they might do. The evidence for that was recently revealed in a report from Oxford university which showed that the results of students from the state sector were significantly better than those from the private sector, despite the fact that many more students came from the private sector than would be merited by the private sector's role in education—7 per cent. in Britain.
I regret giving way. It is simply out of touch with current reality to believe that the root of the problem that I am underlining has something to do with universities' selective attitudes. Universities are bending over backwards because they are thoroughly embarrassed, as indeed they should be, by the figures. The hon. Gentleman is simply out of date.Let me make a crucial point. When I talked to many university professors about their lamentable state of affairs, I was further distressed by what they told me. They said that when people from the state sector got into their universities, they often out-performed those from private schools, because for the first time in their lives they were being adequately taught. What does that tell us about the waste of talent among the 93 per cent. in the state sector, and about the quality of the functioning of local democracy, which has had a near-monopoly of education in this country for so many years? I hope that Opposition Members will take note of what I am saying, because it is often their constituents who lose out. I also hope, however, that my hon. Friends will remember that the state sector often does not do well in our constituencies. I admit that I am fortunate: in Buckinghamshire, we have grammar schools. We have a responsible county council, and achieve good results. But how many times have I heard ordinary people—not rich people; not everyone in the shires is rich—say to me, "Mr. Walden, we believe in the state sector; we want to use it; we have given it a try. But the old teacher has left, and the new one is no good. The child does no homework. So the wife is going out to work. She will earn £5,000 a year after tax, and that will be enough to send our child to a private school". I am not making a cheap party point. We have a national education problem, and, whether the council is Labour or Conservative, that problem runs very deep. Only now is the country beginning to recognise the grave international position. Our education record is not remotely as good as we think. So much for the achievement of local government. Housing is another problem. It should be remembered that the three major Bills that the Government are introducing in this Session are important and sensitive because they touch a good many raw social nerves. They are interlinked. Education is linked with rate reform, and with housing reform. I know less about housing than I presume to know about education, but let me make one common-sense observation. I have travelled considerably in this country, especially in the past few years. Is it really possible for hon. Members to dissociate in their minds the desolate towns of the north— the most desolate in Europe—from the record of local councils over the past 20 years? I should be interested if any hon. Member were able to name a European country with as appalling a record—not only aesthetically, but in human terms—as many of the major conurbations in the north of England. What has been the record of local government in this country, in educaton as well as in housing?
Will my hon. Friend give way?
I would rather not, because I do not want to go on for too long.There has been much talk outside the House about the functioning of local government, and some hon. Members, including my right hon. Friend the Member for Guildford (Mr. Howell), have mentioned the turnout in elections. That is a subject that exercises me particularly. Taken as a whole — obviously, there are exceptions; I have met some very good councillors, both Labour and Conservative—the record is dismal. The powers vested in our local government, particularly in education, are far greater than they are on the Continent. Is it not clear that our system is doubly disabled: by not producing education of good quality, and by having such a miserable turnout —the lowest in Europe? In 1986, the turnout for the district metropolitan elections was 39·3 per cent. Those districts cover 40 per cent. of the population. I know that exact comparisons are difficult, but here are the figures for the most recent elections in major European countries. The turnout in Italy was 86 per cent.; in Germany, 75 per cent.; and in France, 65 per cent. Something is fundamentally wrong, not merely with the quality of the services provided by many local councils but with the system of local democracy, when we produce a miserable turnout of 39·3 per cent. in our metropolitan elections. When we have discussed possible solutions, there has been considerable emphasis on fairness. That is a concept that we all understand. I do not believe that it divides the House in the way that many hon. Members have pretended. However, let us be honest: some of the legislation enacted by the Labour party—and we have acquiesced in some of it—seemed immensely fair at the time, but has caused great damage to those whom it was supposed to help. Let me give two examples. The first relates to housing. Many of us thought at the time that it was fair to give tenants overwhelming legal rights of tenure. But what has been the result? The very people who need rented accommodation nowadays cannot obtain it. That is an interesting example of what happens when we lean over too far to be fair. My second example again relates to education. What happens when there is an egalitarian education system? Again, I do not blame the Opposition entirely, because Conservative Members acquiesced in it: it was the spirit of the times. But who are the people who lose out? They are the people whom I talked about earlier. Who is hit hardest by a system of low expectations? The answer is the people in the inner cities. I know what I am talking about, because I grew up in an inner city. The problem goes much deeper than matters of accountancy and sorting out the cash. It is a national problem relating to the quality of the product, and that applies first and foremost to education. The problem will not be solved if we go for the old-fashioned, rather condescending sort of fairness that ends up damaging those who need help the most. We have heard a good deal of talk about an income tax solution to the problem. I do not wish to continue my speech for too long, but let me make one or two points. This country starts off in a peculiar fiscal position, with one of the highest overall tax burdens. The Opposition have recently complained about that. When tax and national insurance are taken together, the figure is still extremely high. When people say that the poll tax has a regressive element, which is intellectually undeniable, they should see the position alongside the existing fiscal level. It is surely possible in that context to contemplate introducing a community charge system in which people pay for what they get. When considering how to replace the present rating system, we should have fresh in our minds the unseemly debate that took place in this Chamber a few days ago. How would you have reacted, Mr. Deputy Speaker, if on that evening you had happened to have a guest from abroad in the Strangers Gallery? Suppose that you had met him afterwards, and had had to explain to him about the proud traditions of British parliamentary democracy. How would you have managed that? We have no option of doing nothing on the rates. If hon. Members want an illustration, let them think for a moment about where the disturbance the other night came from.
I shall not give way. The hon. Gentleman is wasting his time.The disturbance of the other night occurred because of the irresponsible conduct of some local councillors. I raise it not because I see it in disproportion; I know that there are sensible Labour councillors. However, a certain virus has been let loose in the system, and has penetrated the Chamber, as it did the other night.
Rubbish. What about the yobs on the other side?
Let me make a final point, returning to the subject of education. It must be remembered that the quality of those in charge of education reflects our present system It reflects our turnout—39·3 per cent.—and the extent of the power that they have had in the past and have so often misused.I shall quote a small extract from a speech made by the chairman of ILEA. It says:
[Interruption.] The hon. Gentleman asks what this has to do with the community charge. I live and pay rates in London, and the reason why I do not send my children to a state school in London is that they are headed by a man capable of writing that. I am in favour of the principle that he is groping to outline, leaving the syntax aside for a moment. But, like Groucho Marx, I would not send my child to a school run by Groucho Marx. That is why I insist we must find a solution to this problem that will take account of the hideous failures of parts of our local government system, particularly in education. On the evidence that I have seen so far, the only way that we shall get this message over to the people is through something analogous to the community charge."Are we delivering the basics right? Has the move away from formal rote learning—whatever the merits of the new teaching methods — carry the skill of deskilling a generation, by failing to equip them with the hard-headed basic skills of literacy and numeracy which they need to survive' What are our proposals for monitoring the progress of each individual child against their peer group and against national standards?"
I shall not follow closely the speech of the hon. Member for Buckingham (Mr. Walden), but I remind him that when he visited Salford as a junior Minister and saw the colleges of higher education and the university he left impressed by the work that had been done by local councillors. When the policies of the Government of the day militated against those institutions it did us a fat lot of good coming down to Elizabeth house to argue the case for justice.Yesterday, the right hon. Member for Henley (Mr. Heseltine) said that the first Tory proposal to abolish rates arose during the 1974 election but that by 1979 it had been buried. Like the right hon. Gentleman, I believe that that decision was forced on the Tory party when it considered the harsh realities of the matter. The then Tory party— there is a difference in philosophy now—concluded that the alternative to rates was manifestly unworkable, with any genuflection to social justice. By 1986, an increasingly arrogant Government. flushed by the success of their policies for hitting the poorest and weakest, stepped up their vendetta against local government and local democracy. Forced by a revolt because of rating revaluations among their keenest supporters in Scotland, and with a general election on the horizon, the Prime Minister led the charge to abolish rates. She started from a clean sheet, or, rather, from the back of a clean envelope. Thus, this squalid measure, which is on a par with that which provoked the peasants' revolt in 1381, was to be visited on an unsuspecting British public. The first guinea pigs were to be in Scotland and it was then to be inflicted on the rest. Those who forget history will surely live to repeat it. Foremost in the charge to create this policy on the hoof was the Secretary of State for the Environment, whose inept and casual performance at the Dispatch Box yesterday will have stunned the country; it certainly stunned the House, including those Conservative Members who were honest enough to show it. In a democracy, it is a disgrace that such a fundamental change, so regressive a tax and so unfair a burden on the poor can be introduced so carelessly. To say that this measure has been prematurely introduced is an understatement. Many people — certainly those with a constructive interest in local government—would have understood if the Government had taken the Layfield report from its pigeonhole, dusted it down, and tested its recommendations against the Prime Minister's perceived need to do something about rates. It is true that the Layfield report proposed a continuation of domestic rates, but it did so on a new basis of capital value of property—which has been discussed today—with a local income tax as an additional source of revenue for local authorities. I am not suggesting that it provided all the answers, or, indeed, any of the answers. However, at least the Layfield examination was thorough. It considered a local sales tax, vehicle fuel duties, a payroll tax and several other taxes that escape my memory. It did not consider it worth while even to mention a poll tax. At least the Layfield report provided a starting block for any future consideration of a change in the rating system, however near or far off. That the Government did not choose to start from that point is now a fact, but the reasoning behind it is worthy of some scrutiny. The Layfield report held at its heart the view that local determination, local accountability and local democracy should be uniquely safeguarded, which was the compelling reason why the Government refused to use it as their starting point. There is no similar commitment to local democracy from the Secretary of State. Equally, there is no commitment from the Government. That has been amply shown by the welter of anti-local government legislation that my hon. Friend the Member for Copeland (Dr. Cunningham) drew to the attention of the House yesterday.
Does the hon. Gentleman agree that one of the factors that is not being seriously considered—it is one that he, as a northern Member of Parliament like myself, must consider—is that the industrial-commercial rate will create many jobs in the north in the inner-city areas, where commercial rates will drop? Surely we should not consider only votes. Hon. Members such as myself, when entering the Lobby, will think not only about that but about jobs.
I have lived .and worked all my life in northern communities and I have served on local authorities in those communities. The problem concerns the way in which the Government operate. They see no further than Watford, and anything that goes on in London is visited on the rest of the country. I can argue, and would do so successfully, that local authorities in the north have done sterling work in partnership with industry and local commerce. There is accountability between them, but this proposal does away with that completely.Yesterday, the House had to endure the Secretary of State boringly reciting a litany of abuse that he heaped on Labour-controlled local authorities. I am sick of hearing from the right hon. Gentleman about the shortcomings, as he perceives them, of one or two London councils, and that goes some way to answering the question of the hon. Member for Lancashire, West (Mr. Hind). Efficiently run Labour-controlled councils such as Salford and Wigan, which I represent, and Bolton, where I live, are heartily sick of the gratuitous insults that are constantly heaped on them by this hostile Government. They are sick of the mountains of restrictive legislation that have been imposed on them over the past nine years. The Bill must be the final straw, striking as it does at the roots of local democracy. It is further bad medicine for the good, efficient, local authorities that I have mentioned. For that reason alone it should be confined to the scrapheap of history. In destroying local democracy, as the Bill surely will, the Government will stand condemned by future generations for dismantling the best system of local government in the world. That system has produced giants in local government. [HON. MEMBERS: "Like you?"' Like Councillor Les Hough whose boots the hon. Gentlemen have neither the wit nor the ability to lace. That gentleman died not many weeks ago still striving in the service of those whom he represented for years as leader of Salford city council. He was succeeded by Councillor Ken Edwards, who was another giant in northern local democracy. Like —[Interruption.] We do not need your protection from the rabble on the Conservative Benches, Mr. Deputy Speaker. We expect this sort of thing when the truth is being put down their throats. The system produced people like Councillor Bernard Coyle, the chairman of the Wigan local authority and Councillor Bob Howarth from Bolton. All four have been sterling workers for their communities. All of them have been respected by business people, by their electors and by their ratepayers—whether business or domestic ratepayers. All of them were far better men than the Conservative Benches could ever produce.
My hon. Friend the Member for Buckingham (Mr. Walden) ended his most interesting speech by reminding us that many policies introduced by both Conservative and Labour Governments to increase fairness have ended up decreasing fairness. He cited housing and education measures as examples. The Government argue that this measure will increase fairness. I think that it will have to be added to the list of measures produced by my hon. Friend.I have examined the impact of the proposed community charge on two wards — Penge and Shortlands — which stand at opposite ends of my constituency in every sense. Shortlands is affluent and prosperous, and in the past 12 months the bulk of the letters that I have received from my constituents in Shortlands have complained that the inspectors of the Department of the Environment have been allowing too much development and that that is spoiling the attractive ambience of that ward. Penge, on the other hand, is beset with social problems. I do not want to pretend that Penge is a hopeless area. It has a strong sense of community, and it has prospered in recent years, but when it comes to housing and employment problems, and problems with social services, there can be no doubt that Penge is a poorer area than Shortlands. My borough treasurer has gone through the rating lists for Penge and Shortlands and examined the impact that the imposition of the community charge will have. In the first instance there will be an increase of 44 per cent. in the average rates bill from the town hall in Penge. In Shortlands there will be a reduction of about 11 per cent. in that bill. I am anxious for the burden on my constituents in Shortlands to be reduced, but I do not think that one can argue that it is fair that their burden should be reduced by increasing the burden on the inhabitants of Penge. Unfairness in not the only problem with which we have to deal. There is the question of the practicality of the community charge—
Will my hon. Friend tell us whether the London borough of Bromley discriminates between Shortlands and Penge, or whether the ratepayers in both areas get the same services?
The inhabitants of Penge get slightly better services than the inhabitants of Shortlands. The inhabitants of Penge might dispute that, and it is a point that I have frequently argued on the doorsteps.My borough treasurer and his small staff regularly collect 99 per cent. of the estimated rates revenue. He estimates that if the community charge proposals come in unamended his staff will have to double and that the amount of paperwork with which they will have to deal will quadruple. We shall not be able to count on collecting 99 per cent. of estimated revenue, because my borough has a mobile population and it is much harder to keep track of people than of houses and flats. Therefore, we shall be able to count on only 90 per cent. of the estimated revenue, which means that the burden on the average resident in Penge will increase by more than 50 per cent., while the notional value of the decrease in Shortlands will be virtually wiped out.
Does the hon. Gentleman agree that the 10 per cent. abstention rate that he forecasts is a gross underestimate of the figure that most local government finance experts now accept is likely? Does he accept that every table of figures now published in Scotland, which has experience of these calculations, takes into account the probability of a 20 percent. abstention rate? Does he accept that for every peson who does not pay, the poll tax will be forced up further for those who have no choice?
The hon. Gentleman is being over-pessimistic in suggesting that there will be a 20 per cent. slippage. Most of the local authority professional bodies estimate that it will be in the neighbourhood of 10 per cent.The Association of District Council Treasurers, the Rating and Valuation Association, the Chartered Institute of Public Finance and Accountancy — all non-revolutionary bodies whose advice one would normally seek — have argued that the new system will add to administrative burdens. My noble borough treasurer happens to be the chairman of the London Treasurers Association. That association estimates that in London as a whole some 2,000 extra staff will be needed and that the administrative problem will be very serious.
Can my hon. Friend think of any occasion in which a local government officer, faced with a radical change in what he is asked to do, did not say that he would need considerably increased resources, both financial and manpower, to achieve it?
In this case the Government have acknowledged that there will be a doubling of the administrative burden. It so happens that those directly involved believe that it will be substantially higher than that. The amount of paperwork that the Government acknowledge will be involved is at least four times greater than it is now.For the past eight years, we have been arguing that it is important to reduce the amount of bureaucratic paperwork that the governmental machine generates. Here, at one stroke, we are proposing — from the Government's own figures — to double it, and many others believe that the actual figure will be much greater. Indeed, my borough treasurer has voted with his feet. As I have said, he is the chairman of the London Treasurers Association, but he has decided to resign and leave local government largely because he does not believe that the system that we are planning to introduce will be efficient or workable. I have to say that I agree with him. The Government's claims that the Bill will increase accountability are not well founded.
I think that I have given way enough. I wish to be brief.The Financial Times said yesterday that the introduction of the uniform business rate, which reduces the amount of revenue generated locally from 50 per cent., means that local government is being made accountable to Whitehall and not to local electorates. I do not believe that the Bill will increase fairness, nor do I believe that it will increase the efficiency of local government. I believe that it could be improved in Committee by introducing an element of the banding system, which was argued so persuasively by my hon. Friend the Member for Ealing, Acton (Sir G. Young). However, I hope that the Bill will not reach the Committee, and I intend to join my hon. Friend the Member for Acton in voting against it.
The hon. Member for Buckingham (Mr. Walden) has just left his seat. That is unfortunate, because I want to comment on his speech, which was as lucid as ever. He said something with which I fundamentally disagree. He mentioned what happened on Tuesday when we were discussing the Local Government Bill. He talked about what he would say to a visitor who had witnessed such scenes and how he would explain the lowering of standards in the behaviour in the Strangers Gallery. Of course, under arcane parliamentary procedures we are unable to recognise that the Gallery exists. However, we all know that it is there and we heard what was being said and what noises were coming from it.The hon. Member for Buckingham is not in his place so I cannot say this to him directly. However, I hope that he will read it and I will say it to him outside the Chamber. That Gallery was full of many young women whose relationships were being described in the most insulting and derogatory fashion. All they did was to respond with applause when they agreed with a comment and with hissing when they did not. I thought that that was perfectly reasonable bearing in mind what was being said about them. The hon. Member for Lancaster (Mrs. Kellett-Bowman) commented on something that was said about the fire-bombing of Capital Gay. She thought that it was a good idea. I found that more insulting to the good standards of Parliament than anything that was going on—
Order. Now that the hon. Gentleman no doubt feels that he has redressed the other side of the argument, I am sure that he will return to the issue before the House.
I listened to the speech of the right hon. member for Old Bexley and Sidcup (Mr. Heath). He had to experience another form of parliamentary procedure that is now growing up on the Conservative Benches and that is to be constantly barracked by one's hon. Friends. That is the way in which the Conservative party has fallen now that the spivs and second-hand car salesmen have taken over. The poll tax is part of the same sad decline of the Conservative party. The Bill is part of the Government's campaign of hatred towards local government. It is led by the Prime Minister and echoed by all the little people who have now taken over the Conservative party. Most of those people are lower middle class — the most contemptible of all classes — such as small shopkeepers. Those people now infest the Conservative Benches.The poll tax is doctrinaire in its political intent and will be wholly inequitable in its economic impact. It is one further stage in the Government's campaign ultimately to dismantle the whole system of democratic local government and democratic accountability in this country.
To be fair to small shopkeepers, does my hon. Friend agree that even they oppose this Bill? Whatever modest gain they may make in their small shops, they will lose in their domestic poll tax when compared to domestic rates.
I was thinking of a particular sort of small shopkeeper—the sort who, no doubt, short-changed the working class when serving in the shop and who now short-change the working class when heading the Government. That was who I had in mind. I fully accept what my hon. Friend has said.
Will the hon. Gentleman give way?
No. I will not give way for a moment.——[Interruption.] I will give way to the hon. Gentleman later. Do not worry, I am more than able to deal with any intervention that he may make, but I want to get on with my speech.There have been some consultations and some papers about local authority finance dealing with this measure. The Government have done the same as they have done with most other proposed changes in local government on which they have deigned to consult. They have ignored all the advice they received. The abolition of the Greater London council and the metropolitan county councils was opposed by all informed opinion and all that informed opinion is now very much against the poll tax and the uniform business rate. Even the Conservative party's poodle organisations such as the Confederation of British Industry and the Institute of Directors have expressed their opposition to the uniform business rate. The Government just ignore them. The Government are bloated with arrogance and dripping with venom—[Interruption.] I hope that I am conjuring up a nasty picture because it looks very nasty when one is standing on the Opposition side of the Chamber looking at the Conservative Benches. I am pleased to see that some Conservative Members are at least sufficiently animated to want to intervene in my speech. I wish to deal with the effects of the Bill on the London borough of Newham. The main concerns of Newham borough councils are as follows. First, it is concerned about the large number of Newham residents who will have to pay more—often considerably more—under the poll tax. Secondly, it is concerned about the disproportionate impact on ethnic minorities, women and the low-paid. Thirdly, it is concerned about the inevitable invasion of privacy in preparing the register and the impact of this on the image of Newham borough council. Fourthly, it is concerned about the extra staff needed and the consequent high cost of collecting the community charge. Most Newham residents will have to pay more. I remind Conservative Members that Newham is the second most deprived local authority area in England, according to Department of the Environment statistics. However, it is fortunate because it is wealthy in its representation by three hon. Members in Parliament. Unfortunately, it is economically and socially deprived. There will be major disquiet about the large number of Newham residents who will have to pay more under the community charge. At 1987–88 expenditure levels, the community charge would be set at the level of £309 per person. The average rates bill per household in Newham is currently £518, so, while the 12 per cent. of Newham adult residents who live alone will pay less, some 88 per cent. will pay more. How can Conservative Members say that the measure will commend itself to the majority of people in Newham or that it is fair in its application?
What is the hon. Gentleman's view of the consequences of the voters of Newham electing the Conservative party to represent them locally in the borough? What does he think would be the consequences for the future trend of the community charge in the area, if they had the sense to do so?
I know that it is Christmas, but I do not believe in Father Christmas and I have never believed in Grimm's fairy tales. The hon. Gentleman's suggestion is a complete fairy tale. Newham is a Tory-free zone. Does the hon. Gentleman not know that? There are 59 Labour councillors and one SDP councillor on Newham borough council, so the Tory is a very rare creature in Newham and will remain so. I cannot even begin to understand the hon. Gentleman's hypothetical ramblings.About 45 per cent. of Newham adults live in households with two adults and would have to pay about 19 per cent. extra. However, the main concern is for the 68,000 adults — 43 per cent. of the borough's adult population—who live in households with three or more adults, who will suddenly be faced with considerably larger bills. Newham has a particularly high proportion of very large households. More than 27,000 adults—over 17 per cent. of the borough's adult population — live in households of five or more adults. The majority of these very large households comprise people of ethnic minority origin. In many cases, they have decided to live in extended families to ease the cost of buying a house, according to building societies such as the Halifax. As those statistics show, Newham has the fastest rising house prices in Greater London, with an annual increase over the past year of some 38 per cent.
Yes, and the highest swing to the Conservatives from Labour in the United Kingdom took place in Newham, South—8·9 per cent.
I shall deal with that point, made from a sedentary position by the hon. Member for Pembroke (Mr. Bennett). In the constituency of Newham, South, the largest swing in the country took place from Labour to Conservative. Much of that was due to the Conservative party trying to build the Labour party out of central London. Herbert Morrison said that he would do precisely the same thing to the Conservative party. He succeeded, whereas Conservative Members will not. Let me add another small psephological fact to the hon. Gentleman's memory bank. I represent the safest seat in the south of England. I have a 30 per cent. lead over the Conservative party. It is an unassailable lead and I intend to keep it like that.A six-adult household would have an increase from an average rate charge of £518 per annum to a community charge of £1,854. I remind Conservative Members that Newham is the second most deprived local authority area in the country. The lack of a transition period means that these increases will hit people particularly hard in Newham. An ordinary four-adult household — for example, a middle-aged couple with children aged 18 and 20— will have an immediate 139 per cent. increase imposed on it, from £518 per annum to £1,236 per annum. A major effect of the legislation is the vast increase in staff who will be needed to produce the register, collect the charge and recover the debts. The number of separate accounts in Newham will increase from the present 57,000 rate accounts to 163,000 community charge and uniform business rate accounts. As all community charge payers must be given instalment facilities, and each person must be sent a personal bill, the number of payment transactions will increase from 350,000 to 1,500,000 per annum in Newham. It is estimated that the number of summonses issued for non-payment will rise from 8,000 to 35,000 per annum and the number of distress warrants will rise from 6,500 to 30,000 per annum. Statistics can be exceedingly boring when hon. Members are not aware of the area covered. Conservative Members know nothing about the problems of deprived inner-city areas — [Interruption.] As my hon. Friend the Member for Walsall, North (Mr. Winnick) says, they do not care about them. If they were really interested in doing something about the problems of inner cities, characterised by the London borough of Newham, they would restore to Newham and to other local authorities the billions of pounds of rate support grant that has been taken away from them since 1979–80. At that time, the rate support grant represented about 61 per cent. of local authority expenditure. In the current year, that figure is down to about 46 per cent. That accounts for the crisis in local government services. It is entirely the Government's responsibility and the poll tax will only make the problems of Newham and other inner-city areas much worse. It stands utterly condemned, as does the hon. Member for Gainsborough and Horncastle (Mr. Leight) who has just got to his feet. Unfortunately, I must sit down.
I am sorry that the hon. Member for Newham, North-west (Mr. Banks) described the lower middle classes as contemptible. No doubt he was looking down on them from the lofty heights of a member of the upper middle classes. His speech smacked of high Toryism when he spoke of the contempt of the shopkeeper mentality. The shopkeepers of Newham created the wealth and prosperity of Newham. No doubt the hon. Gentleman would approve of Burke, who said:
I think that 200 years ago Burke said rather more of interest than the hon. Gentleman can ever hope to say."To tax and to please, no more than to love and to be wise, is not given to men."
The hon. Member for Newham, North-West (Mr. Banks) insulted the lower middle classes. If a Tory were to stand up and talk about black people in that way, he would rightly be shouted down for discrimination. Does he not think that class hatred is as bad as race hatred?
Throughout the debate we have heard how the Labour party has become the party of reaction. The Conservative party has become the progressive party. [Interruption.] I shall not take any comments from the hon. Member for Birmingham, Perry Bar (Mr. Rooker). We are still waiting for his policy. It is extraordinary that the Labour party should support the present rating system, which results in 40 per cent. of houses with above average rateable values being occupied by families on below average incomes.Kier Hardie would turn in his grave if he could see his party faced with such a problem. It is not just a tax that does not bear any relation to people's ability to pay: in many cases, the rates are a positive regressive tax against people on low incomes. Kier Hardie would turn in his grave if he could hear the Labour party, on this great issue of the day, saying, "We want consensus. We are going to ask the rich for a consensus on whether we should tax them." That is Labour party policy. It does not add up. My right hon. Friend the Member for Henley (Mr. Heseltine) described it as a Tory tax. I would rather go to my electorate having honestly tried to reform an unfair tax than keep what I think would be a funk tax, which is the present rating system — a do-nothing approach of prevarication 13 years after my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) made his pledge. I was a candicate in Middlesborough at the time. I had hoped to be elected. I said that I would carry it out.
The hon. Gentleman criticised the rating system and described it as regressive. He did not take account of ability to pay. Over the years housing benefit, although unfortunately reduced, has helped many people who otherwise would not have been assisted. Surely the logic of his argument is that we should put forward proposals for an income-related tax. If the rating system is wrong, how much more wrong is the poll tax? It does not take account of ability to pay. One of his constituents, who perhaps earns £140 a week or less, will pay precisely the same as the hon. Gentleman. What sense would that make?
He will not. As my hon. Friend the Member for Buckingham (Mr. Walden) said in a lucid speech, the community charge will cover a small proportion of total local government spending. Of course, we have progressive income tax.Yesterday we heard a speech from the leader of the Liberal party. The right hon. Gentleman, who is a star of the two-minute telly chat but a dwarf of parliamentary debate, vaguely waves his hand at points about computerisation. The system is not computerised. Umil it is, there is no hope of bringing in local income tax. Another interesting point about the Liberal party is that its members constantly lecture us about independence and accountability. The only way in which a local income tax will be made to work is if it is centrally organised. What would then happen to local government independence? Local authorities would be the slaves of the block grant.
The hon. Gentleman disagrees. No doubt, later in the debate, as the sole member of the alliance present, he will be able to give us the benefit of his views.If there is to be local income tax, we shall have all the arguments, which I need not rehearse tonight, about 400 Chancellors of the Exchequer, and so on. The main argument against local income tax is that only 20 million out of 35 million voters will pay it. What attracts me to the community charge is its universality.
Does my hon. Friend agree that probably the worst problem with local income tax is that it would be socially divisive? Can he imagine what would happen if the rich in Camden were taxed at unlimited rates by Camden council? They would move out. Rich ghettos and poor ghettos would be created. That would be totally socially divisive and would stop us from creating the balanced communities that Conservative Members regard as desirable.
My hon. Friend has made the point very well.The other thing that worries me about local income tax is that I am faced with Liberal councillors in my constituency, who currently control the West Lindsey district council, who say that it is their policy to bring it in. They have not told my electorate that a community charge in West Lindsey and East Lindsey would result in about £150 for an adult, and a local income tax would result in £327 — a staggering 107 per cent. increase on what people pay now.
I am fascinated by the hon. Gentleman's figures. We have heard about Camden. I presume that the figures are derived from the Department of the Environment brief that was issued to hon. Members on the subject. There are certain peculiarities. For example, why is it assumed that the redistributive measures will be appropriate to the community charge rather than to an income tax? Why is it not assumed that there might be some redistribution on the basis of income distribution across the country? That would obviously be far more appropriate. After January last year we suddenly found that there was a national jump in average income tax from 4·5 per to 6 per cent. Perhaps the hon. Gentleman can explain the peculiarities.
The hon. Gentleman is now in favour of local income tax redistribution, although, perhaps, coupled with clawback and so on. Of course, alliance Members know that they will not become the Government. They always try to put forward a policy that has the aura of respectability, but which, in reality, is a sham, and they know it. They know that local income tax is simply not a runner.The advantage of the community charge is its universality. The major problem that we face is the weak correlation between expenditure and taxation. If few people realise that every family in the country is paying, on average, £1,500 towards the National Health Service, even fewer really understand how local government taxation works. I suspect that there are probably only two Members in the Chamber now who have a firm grip on the matter, and they are sitting on the Treasury Bench. Years ago, a Secretary of State admitted that he did not understand it. The weak correlation between taxation and expenditure results in a perpetual ratchet effect in favour of ever-increasing Government spending.
My hon. Friend is absolutely right. Earlier, my hon. Friend the Member for Buckingham (Mr. Walden) spoke about the low turnout levels at local elections. When I have been out canvassing in local election campaigns, one of the most frustrating and depressing aspects has been the low level of participation of young voters. Does my hon. Friend accept that one of the great improvements that the community charge will bring about is that the 18-year-old or 19-year-old who is earning a wage will have to make a contribution towards raising local government revenue? That will start to increase that person's vested interest in taking part in local government elections. Through that mechanism, if through no other, we shall see a much higher level of participation in local government elections and a great and welcome increase in the political understanding of younger members of the community.
My hon. Friend has made his point well. I shall not comment on it.The weak correlation between taxation and expenditure is a major problem, but the other problem involves the yawning poverty and earning traps. They still trap many people in destitution and unemployment. For that reason alone, I cannot follow my hon. Friend the Member for Ealing, Acton (Sir G. Young) along the route of the banded community charge. However he dresses it up, it cannot be fair if there is a straight banded community charge for a £1 increase in earnings to result in up to a £1,000 increase in banded community charge. A tapered banded community charge would simply result in a local community income tax. I hope that I have shown that that is not a starter. I have looked at the options and found them all wanting. Although the Government have quite rightly looked at looming revaluation and decided that something needs to be done, the imposition of a straight, flat-rate community charge may be the start of a type of radical restructuring of our entire social security taxation system, of which I have long been in favour, based on flat-rate charges and benefit and a standard rate of income tax. I shall not develop that theme; I shall give it more time on another day. For the reason that there is no alternative, I shall enthusiastically vote for the Bill.
The debate is about an important issue. I was saddened when the right hon. Member for Old Bexley and Sidcup (Mr. Heath) made his contribution. In 1970, he led the Conservative party to victory. Indeed, he snatched victory from what opinion polls right up to polling day considered would be a Labour victory. It was sad to see the contempt that some of his hon. Friends showed for him while he made his contribution.I recognise that there are faults in the present rating system. I do not say, and have never said, that it is a perfect system. However, unless one can find a better system, one should not change the existing system purely for the sake of change. There is no question but that the tax will be unfair because it will hit hardest the poorer sections in our community. The hon. Member for Bury, North (Mr. Burt) said that there must be both winners and losers. We all know that the legislation will mean that some are winners but some are losers. However, I advise the Government to analyse who will be the winners and who the losers as a result of the Bill. A large percentage of those who will he the winners —I do not say all—will be those people who least need to benefit in that way. Indeed, one could argue that they have already benefited the most because of the Government's changes in income tax, which make an indirect contribution to local government expenditure, because they benefited from the biggest income tax reductions. Immediately after the Government were elected in 1979, top-rate taxpayers had a reduction of 20p more than the reduction for those who pay only the standard rate of income tax. The simple fact is that those people have already benefited considerably and contribute less to local government expenditure—
No, I shall not give way because several hon. Members wish to speak. In all fairness and to allow those Members the opportunity to speak, I prefer to make my speech. I am sorry, but other hon. Members have been trying to speak all afternoon.One should seriously consider the reasons why the Government wish to introduce the legislation. It is a further indication of their dislike and detestation of local government. They wish to destroy effective local government. They have clamped local government continually either by financial means or by legislation ever since they were elected in 1979. The repeated references to Camden by Government supporters illustrate exactly what this legislation is about. I have always accepted that a Government should have the right to determine how much they are prepared to put into local government expenditure, and have said so in the House on several occasions. Indeed, I said it as the leader of my council before I was elected. I accept also that people have a right to argue that that money is insufficient. Certainly that money has been insufficient ever since the Government were elected. However, if local democracy is to mean anything, local authorities should have the right to determine how much the local people should be asked to spend on the provision of services at a local level. That is what local democracy is about. 1t is wrong for central Government to determine what figure they are prepared to put in, but to take that money away if they feel that a council is not carrying out what they wish. However, that is what has happened in many cases recently. I could never defend that. It has been quite clear all through this exercise that the Government are misleading people in the way in which they are presenting the figures and illustrations. They have referred to a single pensioner paying the same as the family of four that lives next door. That reference appears on page 4 of their leaflet, "Paying for Local Government—the Need for Change". The Government have repeated that time after time. If the Government really regard that as unfair, how can they justify under their system a person who has just enough money to pay the full poll tax as a result of income — whether that be a state pension or perhaps a company pension in addition —being unable to obtain any form of relief, paying the same as the millionaire who might live a few streets away? The Government cannot justify that. If they believe in fairness, they must accept that that is absolute nonsense and that the direction in which they are asking us to move is totally wrong. The Secretary of State has often referred to accountability. In an article in The Timesof 4 December, he stated:
He went on to refer to accountability. How does the Minister for Local Government account for the fact that clause 124 lays down quite clearly that the charging authorities are the district councils and the precepting authorities are a number of authorities, including county councils and parish councils? I shall not read out the full list. I ask the Minister to recognise the fact that in a non-metropolitan borough such as Burnley, which the Minister has repeatedly described as a high spender, 76 per cent. of the rate that Burnley fixes goes at present to the county, and only 24 per cent. is a borough rate. Ministers have written letters to several of my constituents saying that Burnley is a high spender, but they have never said what we are spending that we should not because they are not prepared to say what we should cut—"Last, and most important, accountability. Of all the arguments for change this is the one which people do not seriously challenge. I believe the community charge will revolutionise local government and local politics in two ways: first, if a crude distinction is made between people who want to see local authorities increase the scope of their services and spending and those who want to keep both to a necessary minimum, the balance will shift markedly to the latter."
The answer to the hon. Gentleman's question is perfectly simple. The bills that will be sent to each community charge payer will show exactly what each precepting authority is spending as well as what the collecting authority spends. They will also show that spending in relation to the needs assessment and the previous year's spending of each authority.
That is an absolute nonsense of an answer. The present rate bills and the leaflets that accompany the bills show that quite clearly now. Therefore, people know exactly what they are paying to the county council and to the borough council at present. If the Minister wants accountability, that is what he has got now. Therefore, he cannot justify the change.Yesterday the Secretary of State referred to the borough of Pendle. I tried to get him to give way, but he was not prepared to do so. I represent a small handful of electors—less than a dozen—who live in the borough of Pendle. That is because of the local boundary changes. However, because of the change made to my parliamentary constituency last Thursday, that will be corrected at the next general election. The Secretary of State said that that borough, which is the lowest rated borough in the whole of England, pays out £700 per adult per year. How has the Minister arrived at that figure? The figures produced by the Chartered Institute of Public Finance and Accountancy show that the borough pays £72 per head. I accept that the basis of the figures is different because the latter figure also includes children. However, Pendle certainly does not have a population in which adults comprise only 10 per cent. The comparative figure for Burnley is £7864. Again, the Secretary of State was deliberately misleading the House. To arrive at that figure he must have been including within those figures the capital expenditure of both the district and county council as well as the revenue figures. The Secretary of State was clearly wrong. The rates figure for Burnley, which again is an extremely low-rated town, is £246 per household. The poll tax will be £239 per person. That is before the safety net provision. It is clear that considerable numbers of people are not registered at present. Therefore, it is reasonable to assume that the Government's forecast of £239, with 20 per cent. evasion—it could be only 10 per cent., but let us assume that it is 20 per cent. — could be £299. When the Government publish their figures they repeatedly forget to say that they are based on 1986–87 figures and therefore they do not take account of inflation in the intervening period. The Bill clearly represents a Government attempt, once again, to curtail the activities of local authorities. On 5 December The Guardian published a table on the poll tax charges that showed that a single person in Burnley aged between 18 and 24, earning more than £47·80, a couple earning £125·10 with two children under 11 and a pensioner couple with an income of £103 would pay the full poll tax burden. Therefore, the people with the lowest incomes will be hardest hit. The Minister must recognise that wage levels in the north-west are considerably lower than those in London and the south-east. In north-east Lancashire and Preston they are lower than those in Manchester or other areas of the southern part of the north-west. Indeed, the difference between average weekly earnings in London and the south-east and the north is about £60 and the difference between those areas and north Lancashire is greater than that. I believe that the Government have got it wrong and they should go away and think again. This is not the way to change the present system because it will not deal with the problems. All it will do is penalise some of the poorer sections of the community and benefit a small percentage. Indeed, in constituencies such as mine less than 10 per cent. of the people will be better off. I am sure that the other 90 per cent. will say to the Government, "We do not like what you are doing; you have got it wrong. Think again and stop this Bill before it is too late."
It is fair to say that a few years ago, any Government, especially a Conservative Government, who introduced a measure to abolish rates would have met with enormous support in the country. That was the feeling in the 1970s when the last revaluation took place. However, since then, things have changed and I believe that such support no longer exists. Indeed, outside the Chamber and within some parts of my party the Bill is considered a child that will have few loving relatives. The country views the Bill with considerable suspicion.The history of this measure and possible rate reforms was touched upon by my right hon. Friend the Member for Henley (Mr. Heseltine). In the interests of time I do not propose to repeat that history. I notice that the hon. Member for Walsall, North (Mr. Winnick) is in the Chamber; I am sure that he will agree that the one thing that my right hon. Friend omitted was the report from the Select Committee on the Environment in 1982. That was an all-party Committee with a Conservative majority, but its unanimous conclusion—set out in paragraph 40 of its report—was that there was no case for a poll tax. Shortly afterwards, my Government concurred with that report and similarly rejected the option of a poll tax. Four years later we have this legislation before us. It must not be too surprising to some of my hon. Friends if those of us who studied the matter in great detail four years ago retain our opinion. I do not believe that, in the past few hours, due reason has been given to change our minds. Many hon. Members have referred to accountability. It is not right to suggest that the Bill increases the accountability of councils to their electorates. It certainly increases the accountability of councils to central Government, and whether that is good or bad will depend upon my hon. Friends' attitude to local authorities, either specifically or in general. I regret such accountability. During my time in the House I have sat on many of the Committees considering the large number of Bills referred to by the hon. Member for Copeland (Dr. Cunningham). During that time, I have supported measures that increase accountability, improve the efficiency of local authorities and reduce centralisation or the danger of centralisation posed by the Government of the day. Several hon. Members have drawn unfavourable comparisons between the number of potential payers of the community charge — some 35 million — and the number of ratepayers or income tax payers—some 20 million. The reason for the difference between those figures of 20 million and 35 million is the fact that no account is taken of the estimated 10 million or 11 million working wives who earn money and pay tax — they would readily recognise that fact—but whose earnings, under our present tax system, are deemed to be part of their husband's income. When discussing the possibility of a banded charge, suggesting that women are not, in some way, aware that they are paying tax is nonsense. Indeed, the figure of 35 million also includes a considerable number of people who are, in theory, liable to pay the community charge because they receive supplementary benefit or income support. In some cases, those people will be reimbursed as a result of benefits. Therefore, when we take such people out of the total figure of 35 million, we are left with a different figure altogether. Other than the unfairness of the proposal, the matters that concerns me most are the potential for cost to local authorities and the problem of evasion. There have been references to estimates—at this stage in our deliberations everything must be based on estimates — of the possible evasion rate. We are aware of some evasion rates in other walks of life. It is accepted that 8 per cent. of those who should pay the television licence evade that payment. The cost of the licence for a colour set is £58. I challenge anyone to deny that when considering the Government's proposals for a community charge — at the lowest estimate that figure will be three or four times the cost of a television licence and in some cases it will be 10 times higher—the evasion rate will be higher.
Will my hon. Friend give way?
I will give way only once, because I am conscious of time.
My hon. Friend has thrown down the challenge on evasion. Of course evading payment of a television licence—it is easy to hide a television—takes place, and indeed, payment of the car licence is also evaded. However, it is difficult to hide oneself in our community. All of us use some form of public service and it is difficult to avoid claiming benefit or using a public library. I draw my hon. Friend's attention to a set of statistics. I am grateful to the hon. Member for Cunninghame, North (Mr. Wilson) because he asked for the total electorate in Scotland this year as opposed to last year. This year, after the introduction of the poll tax legislation, the fall in the number of electorate in Scotland was 1·1 per cent. and not 10 or 20 per cent. as claimed by that hon. Gentleman.
I am glad that my hon. Friend reached his point. I intend to deal with the electoral register in a moment.I am discussing the evasion of the charge once it is in force. I am sure that my hon. Friend will concede that if someone is on the electoral register the chances are that he will end up being assessed for the community charge. In fact, it is presently estimated that that register is missing some 3 million people, and that is at a time when there is little or no penalty for not registering. I invite the House to consider whether that figure will increase, as a result of the Government's proposals. I believe that we must naturally conclude that that figure will increase and that has disturbing democratic implications. Ministers have correctly pointed out that non-inclusion on the electoral register will not, of itself, enable an adult to avoid payment, but the corollary of that is that inclusion on the register will make an assessment certain. The population will not be slow to draw the obvious conclusion. Some of my hon. Friends have mentioned the manifesto commitment. In the eight years that I have been a Member, I have never accepted that giving 80 or 100 listed pledges in an election manifesto resolves all possible subsequent discussion. That is intellectual nonsense. What is more, independent commentators on the last election made it clear that, with the obvious exception of Scotland and one or two constituencies in the north-west, the issue was hardly raised on the doorstep. That was my experience and that of a number of my colleagues. The matter only became a flagship about seven or 14 days after the election — the first recorded instance in history of a flagship being commissioned after the surrender of the enemy. For many years I have believed that there is nothing intrinsically wrong with a property tax, and I retain that view. Assuming that the Bill becomes law in its present form, we shall be the only western country without a property tax. That supports my view that such a tax has a legitimate and honourable place within a developed financial system. But no property tax will emerge from this legislation, and everyone recognises that. That is why I join some of my hon. Friends in wanting the Bill amended to bring into play a fair balance on income to allow those who do not earn as much as many in our society, but who are above benefit levels, to be treated less harshly than they will be under the Government's proposals. I hope that it will be possible to bring in a banded charge. I believe that the Bill will be intensely unpopular, not only now but in three and five years' time, too. It is right to court unpopularity if there is an underlying sound principle which, in the course of time, is likely to be generally approved. In my belief and experience, it is foolhardy to stretch the patience of so many of our supporters unless the principle is sound. It is not on this occasion. When the Scottish legislation was debated, I made it clear to the Government that I would neither support nor seek to oppose it, because I recognised pressure from my Scottish colleagues. However, I said that if we introduced such a measure in England and Wales, I would speak and vote against it. I have done, and I shall.
I listened with the greatest interest to the hon. Member for Hornchurch (Mr. Squire), and I suggest that his hon. Friends do likewise. The legislation and the response to it will be a case of the chickens coming home to roost for the Conservative party, which has failed to listen to sound, reasoned argument. Some Conservative Members are replete with self-conceit and blind in their faith, suspending doubt and clambering aboard what they have been told is the Government's flagship. I say to them without malice that they know nothing of the squalls that lie ahead—not in the House, but in their constituencies —as knowledge of the poll tax filters through.If anything can be learned from the Scottish experience of the past two and a half years it is that, the more people know about the poll tax, the less they like it. That is not a statement of propaganda; it is a demonstrable fact with which Conservative Members will have to learn to live soon. I want to say three things about what the Bill does not do, because, inevitably, rationalisations are being constructed to justify it retrospectively. First, it is not about protecting hard-pressed ratepayers from the excesses of wicked Labour local authorities. I shall not go over the historical pattern that has been described by various speakers—about how the poll tax re-emerged from the shelves of the Adam Smith Institute and was dusted off in Scotland by a handful of zealots three years ago. Anyone who had the wit to listen to my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) would have understood the truth of what I am saying. What my hon. Friend told the House was of tremendous significance. He spoke of the calculation of the escalator factor when one relates the effect of the uniform business rate and the inflation freeze upon it to the increase in poll tax. In virtually every Scottish local authority— almost without exception—to spend within the Government's own guidelines in past years, the poll tax increase would have had to be double the level of the domestic rates increase to maintain the same level of spending. So, if the Government say they will attack the spending levels of local authorities by the imposition of the poll tax, let us be clear that they are talking about the spending levels of non-political, Conservative and Liberal-controlled local authorities, which are now living within the Government's guidelines. Fifty-four of 56 Scottish local authority areas would have had to impose a rate of poll tax increase approximately 100 per cent. greater than a domestic rate increase to achieve the same increase in revenue and remain within the Government's guidelines. So the measure is not about protecting domestic ratepayers, because domestic poll tax payers will be infinitely harder hit. Secondly, the Bill is not about attacking large families per se. There are many large families in this country—large families of lawyers, business people and high earners who pay domestic rates commensurate with their substantial family incomes. There are many proven cases, with which I shall not trouble the House in detail, in which five or six people living in such households will still pay less in domestic poll tax than they previously did in domestic rates. Clearly, this Bill is about attacking large working-class families. Thirdly, the Bill is not about protecting old ladies who live alone in houses. In reply to a question to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker), the Government admitted that, even on their own figures, one third of all single pensioners would be worse off under the poll tax than under domestic rates. So the legislation is about taking away from old ladies who live in poor circumstances to give to old ladies who live in prosperous circumstances. The problem can be better handled through a rebate system on domestic rates. I conclude with a point about the register that has hardly been touched on. Any hon. Member who supports the legislation and who has not taken the trouble to go to the Library to read the Chartered Institute of Public Finance and Accountancy report on the implementation of this tax in Scotland does not have a clue what he is talking about. Those in the Scottish Office—poor souls —who were lumbered with implementing the tax, had to go to CIPFA to ask how, in heavens name, they were to do it. Back came the facts—not in propaganda, but in grim detail. The report costs £4,000 per issue if any hon. Member cares to purchase it, and comprises two tomes —one on the compilation of the register, and one on the tax's implementation and enforcement. Because of shortness of time, I shall not go through all the grim facts in that report, but shall mention only one. In Scotland alone, CIPFA tells us, there will be 800,000 register changes in a year. How many register changes will there be in the whole of Great Britain? If we multiply by I I, we get the Great Britain figure and it is over 8 million. Add a couple of million for London, where the whole thing becomes crazy, and we are talking about more than 10 million register changes a year that will have to be monitored by an army of poll tax inspectors. Conservative Members have become indignant about the idea of a state identity system, but it is all there in the CIPFA report. It uses polite language but it says that there will have to be something called a community charge identifier. Those are the reasons why the poll tax has been utterly rejected in Scotland, not only by those who will lose but also by many of those who will gain but who have a shred of morality and human decency.
I support the introduction of the community charge. It will bring more accountability into local government and, contrary to what the Opposition say, within a few years it will be generally and fully accepted.I should like to deal briefly with some points about redistribution and the way in which the community charge will affect people living in different parts of the country. Those who compare what they are likely to pay under the community charge system with what they now pay under the rating system are under a misapprehension, because the alternative to the community charge system is not what is paid now, but what would be paid following a general rating revaluation. The last revaluation was carried out in 1973, and current assessments are now totally out of date and unrealistic. We now have the job of explaining to many people who live in properties with rateable values that are grossly low compared to what they would be if we had a revaluation that they will benefit considerably from the change to the community charge. The hon. Members for Norwood (Mr. Fraser) and for Newham, North-West (Mr. Banks) spoke about the situation in London. I shall outline the situation in my own northern metropolitan district of Bradford, where we have not only a high-spending Labour authority, but where one can still find many terraced properties with rateable values of about £60 or £70 per annum. It must be safe to assume that many of those valuations would at least treble if there were a revaluation of domestic properties. An analysis revealed that, while there would be a sharp rise in the rateable value of all properties, terraced properties would rise more sharply than all other types of property. Thus, the tax burden would be redistributed from ratepayers in larger premises, often in suburban areas, to ratepayers in smaller terraced or semi-detached homes, many of which are located in inner-city or urban environments. It is clear that the alternative to the community charge would be an impost that would hit hardest those who are least able to afford it — certainly as far as the metropolitan district of Bradford and similar areas are concerned. In my constituency, only about 12 per cent. of people living in the three urban wards of Keighley would gain from revaluation, while as many as 88 per cent. would find themselves at a disadvantage. The figures would hardly be different for other wards, such as the Worth Valley ward, including Haworth, where many of the homes date from the time of the Bronte sisters. For many people revaluation would be a far nastier shock than the community charge, which, because it is linked to the number of adults in a household, is actually related to services provided and is more likely to be related to people's ability to pay. This is just one facet of the case against taxes based on property values. It shows what nonsense such taxes are in modern-day society, where services are essentially provided for the benefit of people. No one inventing a method for funding local authorities today would try to justify anything like the present rating system. A principal argument employed against the introduction of the community charge is that it would redistribute the local tax burden from the well-off to those less able to bear it. However, if we look at the impact on Bradford as a deprived urban area in the north of England, we see that over 45 per cent. of households would be better off after the community charge is introduced, even if it is at a level that I would regard as unacceptably high because of the high spending policies adopted by Bradford's present Labour rulers. On the other hand, as many as 84 per cent. of households would pay more subsequent to a rating revaluation. Furthermore, revaluation would hit hardest those in inner urban areas such as the middle of Keighley, where many people live on low incomes with little capacity to adapt their resources or their expenditure to cope with that situation. No system of local government funding is perfect and, of course, there will be gainers and losers. However, the community charge system has more advantages and certainly fewer drawbacks than any other system including the present one. That is why I am glad that the Government have had the boldness to come forward with this change. In time, the public will recognise the logic that underlies its approach.
I have been listening to the debate all afternoon and I am reminded that ever since this subject was raised there has been continual discussion —we have heard it in this debate—about whether it should be called a poll tax or a community charge. It is worse than any simple community charge because even if a person chooses not to vote they will still have to pay the charge. It is a tax on existence after the age of 18. Every adult will have a price on their head, regardless of their ability to pay. It would be better to call it a head tax.The concept is totally abhorrent but entirely consistent with the Government's philosophy of valuing people below property. They are willing to tax people who have little or nothing, but leave untaxed the wealth and property of those who have much. Just as we will have this Tory head tax, we will have Tory head hunters. Local authorities will have to employ armies of snoopers to find out who is living where and with whom. The idea of a man from the council scaling our drainpipes to count the number of toothbrushes in the bathroon would be ludicrous if its implications were not so sinister. As the youngest Member of the House, I have a special interest and awareness of the impact of the tax on young people, especially those outside education and training. The poll tax represents yet another attack on their rights, just as the removal of wages council protection and the introduction of the lower rate of income support were attacks. Young people have again ended up on the losing side. From April, a single, childless unemployed person under 25 will receive just £24 a week in income support £6 less than older recipients—regardless of their need. In addition, like everyone on income support, young people will have to find 20 per cent. of their poll tax bill. The Government's promise to uprate benefts to cover this extra cost is hardly reassuring. The Guardian on 23 September reported that uprating would not even be permanent but that the Government would claw it back in future years by failing to raise benefits in line with inflation. How mean can the Government be to the most needy? Youthaid has calculated that the uprating will be insufficient to cover the 20 per cent. poll charge in approximately 112 local authorities. Young claimants will have to find the extra money from their already reduced benefit. The double blow of the poll tax and the income support system will make large parts of Britian literally no-go areas for young people in search of work. the problem will be still more acute for young people living in areas which will have larger than average poll taxes on 1 April 1990. The Child Poverty Action Group rightly stated in its report on the poll tax that a
The truth is that some will be forced to leave their family and friends in order to flee the tax. It is ironic that the self-proclaimed party of the family should introduce a measure which can only hasten the demise of the family unit. The effect of that attack on families in constituencies in rural areas such as Truro will be marked. Every rural community is dependent on the agricultural economy. In Cornwall the emphasis is very much on the small farm, often run as a family business, and currently in difficult financial circumstances. In these hard times, many farms keep going only with the support of all the family working together. The introduction of the poll tax could be the final straw for many farming families. Adult sons and daughters who presently help to keep the family farm afloat by working long hours for little reward may have no option than to quit. The Government have told us that a redistributive tax is inappropriate for local government. They prefer a tax based on the benefit principle. The Secretary of State told us:"group which is particularly hard hit by the proposals are young people who are not householders, who are brought in to the net for the first time. Using the Government figures, 21 per cent. of the 52 per cent… … who will lose will be non-householders."
That is an erroneous assertion, but carrying through its logic, we should look at the services available to those isolated farms. Do they benefit in the way that that comment. supposes? The main objective of the Bill is supposedly to improve the accountability of local government."The community charge is a charge made for the services provided by a local authority. It is a service charge". —[Official Report, 1 July 1987; Vol. 118, c. 536.]
Will the hon. Gentleman give way?
The hon. Member knows that I am very short of time.Surely there can never be genuine accountability while local authorities — Conservative, Labour or Liberal —achieve a majority of seats on a minority of the vote. Only a fair electoral system can introduce accountability into local government once and for all. If the Government believed in accountability and listened to the electorate, the Bill would never have been introduced. If the Government were interested in consensus and consultation, they would know that no one wants the Bill. This week my hon. Friend the Member for Southwark and Bermondsey (Mr. Hughes) asked the Minister yet again to name a single local authority of any political or party make-up that welcomes the introduction of the Bill. The Minister was unable to give an answer. If he can give an answer tonight, we will be interested to hear it. The Bill has no support. We know that the majority of people do not want it. I welcome every Conservative Member who is wise, aware and alert enough to recognise that and vote against it in the Division.
Having sat here for two days, I do not have as much time as I would have liked to make my speech, but I am grateful to the hon. Member for Birmingham, Perry Barr (Mr. Rooker) for his courtesy in allowing me to intrude on his time.
The hon. Gentleman is on his side.
I am on the side of the people. My interest goes back to a long time before the hon. Gentleman entered the House. On 3 December 1974 I introduced into the House—I subsequently introduced it on six separate occasions—a Bill to reform the rating system of England and Wales. Among the colleagues whom I was delighted to have as fellow sponsors was my right hon. Friend the current Secretary of State for the Environment. My hon. Friends and I were then aiming, both to exempt internal improvements from increases in rates, because we thought that that would be iniquitous, but to see that only all adult wage earners made a contribution. It is on the issue of who should pay, more than any other, that I have to cross swords with my right hon. Friend.I have two principal objections to the Bill. I have others, but we do not have time to debate them. First, it is wrong that the Bill should apply to people with no income. Secondly, it is fundamentally wrong that there is no relation to the ability to pay. Many colleagues have made that point in the past two days. I cannot look anyone in the face and say that I believe the Bill to be just when I have constituents living in small, ramshackle terrace houses who point to those living in considerable affluence and say, "We are going to pay the same." That is fundamentally wrong and, much as I regret to say it, it is offensive.
The rates are wrong.