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Rates (Scotland)

Volume 164: debated on Thursday 21 December 1989

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11.58 am

I regret that at this festive time of year I have to raise the unhappy topic of the implementation of the Abolition of Domestic Rates Etc. (Scotland) Act 1987. No single item of legislation in the past Thatcher decade better illustrates the Government's philosophy than that legislation, which the Prime Minister has called her flagship.

The theory underlying the legislation is that consumers of local government services should pay for them and that those who administer the services should be accountable to the electorate for their provision. Therefore, we have the concept of the community charge, which is in reality a tax, based on the view that it is possible to make people pay a flat-rate charge for local services. Conservative Members have argued that people should pay a flat-rate charge in the same way that they do for a television licence. But a moment's examination shows how absurd that is. If one could afford it, one could have three, four or even five televisions in the house, but pay for only one licence. Therefore, the consumption of the service is not related to the charge.

Originally, the view on the community charge—more appropriately called a poll tax—was that, if implemented, it should be as a supplement to and not a replacement of the rates. It has been well documented that the panic measure was introduced in the House because of the revaluation in Scotland in 1985. The Government sought a cheap and effective way of replacing the rates, initially in Scotland, and they introduced the legislation just before the 1987 general election.

It is valid to examine the legislation because when it was introduced it applied to no section of the United Kingdom other than Scotland. Even now, there is no poll tax legislation for Northern Ireland. We are a United Kingdom Parliament and theoretically we are all subject to similar, if not the same, levels of taxation, but there are differences and distinctions.

At the time of the 1987 general election, no other piece of legislation, passed by the House, was subjected to the direct examination of a part of the United Kingdom. The Government argue that they are accountable to the people for legislation which affects local authorities, but when we examine what happened in Scotland at the general election we find that the Tories were almost wiped out. No one can say, with any measure of truth, that the poll tax legislation was not the subject of intense debate at that time. Scotland, the specific subject of the poll tax legislation, overwhelmingly rejected that legislation, yet we still got it. So much for electoral and democratic accountability.

I do not know how any Scottish Minister, knowing that he owes his place at the Dispatch Box to the electorate, can say at the next general election that, even if the Government's record is rejected, they will continue with their policies because they have a majority in the United Kingdom Parliament.

This legislation, the Government's flagship, places an enormous strain on the Union. Those who persist in neglecting the democratic views of the Scottish people and at the same time mouthing unionism in terms of the United Kingdom are verging on being hypocritical. They are endangering the Union. The Government cannot say that people have a vote which counts, which has to be related to a specific piece of legislation, and yet, when the electorate affected by that legislation rejects it, continue to force that legislation down their throats.

Unfortunately, memories are short when it comes to the implementation of the legislation. One of the most invidious features of the legislation is the infringement, and continued infringement, of individual liberty. The poll tax registration officers seek personal information to find out where a person is living and whether they should be subject to the poll tax. They even get hold of unlisted telephone numbers.

A student was living with one of my constituents. His telephone number was unlisted, but, somehow or another, the poll tax registration officer in Fife managed to get hold of it. That is the extent to which he was prepared to go to get hold of information. He is responsible to no one—neither to the Secretary of State nor to the regional councils in Scotland. No democratic control is exercised over poll tax registration officers.

The poll tax bears no relation to ability to pay. It is a flat-rate tax. The Government argue that its effect is modified by a complicated rebate system. However, the tax burden will be shifted from the backs of those who have sufficient resources to the backs of those who have not. It is a highly regressive and painful tax. That pain is inflicted in various obnoxious ways. In order to secure the payment of the poll tax, certain sanctions are imposed. We know about the sanctions relating to income tax and rates.

As for the cost of administering the poll tax, yesterday the Under-Secretary of State gave what I consider to be a wholly bogus figure when he said:
"The cost to local authorities of collecting the community charge in 1988–89 is estimated by authorities at £31·8 million."
That is well over £14 million more than the cost of collectting rates. I believe the Convention of Scottish Local Authorities, which says that the true cost of collecing the community charge will probably be £50 million. The Under-Secretary's figure does not include indirect charges. The poll tax costs more to collect and employs 2,000 additional people. Scotland has lost jobs in shipbuilding, steel and coal mining, but those losses are compensated for, theoretically, by the creation of 2,000 additional jobs. So much for keeping control over local authority manpower.

When the local authorities considered how much the poll tax would yield, they believed initially that there would be a downturn in the yield of about 6 per cent. There ought to be about 4 million people on the register. I ask the House to bear that figure in mind.

If the tax is to work, the penalties must be severe, and the Government know that. It is one thing to try to enforce penalties in relation to a tax that people have accepted as fair but another to have similarly severe penalties in relation to a tax that people do not accept and have voted against and that is manifestly unfair. The penalties for non-payment include arrestment of wages or salaries, arrestment of bank accounts and such things as income support and the poinding of one's goods and, eventually, one's savings.

I want the House to realise how obnoxious the warrant sale procedure can be. I do not think that this has been shown before. One of my constituents, Mr. Terence Donnelly, received a letter dated 14 December from H. M. Love and Partners, 8 Abbey Park place, Dunfermline. Representatives of that firm called at Mr. Donnelly's house while he was working. The letter stated:
"We refer to the Summary Warrant granted at Dunfermline Sheriff Court in connection with arrears of Community Charge for the year 1989/90.
As payment has not been made, our Officer has called today with instructions to carry through a Poinding of your household effects. As no one was in attendance, you are hereby notified that unless payment, as detailed below, is made to our office immediately, our Officer may be instructed to return to your premises.
It should be noted that the warrant carries authority to open and shut lockfast places."
If the householder is absent, the sheriff officers or the messenger-at-arms can break in. That is the sanction which the Government are willing to impose to collect this regressive tax. The Minister must respond to that point in relation to the sanguine speech that the Secretary of State made in Edinburgh on 4 December and the figures that were repeated yesterday. The Secretary of State said that 70,000 warrants were being issued in Strathclyde, but only a minute number of warrant sales are being effected.

All Scottish local authorities have avoided the imposition of warrant sales. I am told that Strathclyde has not had a warrant sale in 14 years. Depending on how the figures are calculated, nine months into the financial year between 500,000 and 750,000 Scots have not paid the poll tax. If the Government want to impose the full rigour of the law, they will have to stand back—they will say that this is not their responsibility but that of the local authorities—and watch those authorities get themselves into extreme financial difficulties. They may say, "It is your responsibility to collect these sums." To put it crudely, Scottish Labour local authorities will have to do the Tories' dirty work.

Scottish local authorities have assured-warrant sales for the rates. I shall repeat Strathclyde's record because it is worth repeating: it has had no warrant sales in 14 years. However, the local authority is to issue about 300,000 letters through the sheriff officers saying that people are in debt. I do not see how warrant sales can be avoided if the full rigour of the law is enforced. Perhaps the Under-Secretary will explain his proposals and how local authorities can avoid that.

In addition to those complications, we have the pressure applied by English Back Benchers to alter the scheme halfway through. The Opposition have arguied that people with Alzheimer's disease should be totally exempt but the Minister said no.

:Warrant sales would be required for large amounts of money if we are talking about a year's poll tax. The furniture collected and sold secondhand and the costs involved with that mean that a person's house will be virtually stripped bare and still the money would not be raised to pay the poll tax and the debt would be outstanding. That is a horrendous device.

I accept that point.

I return to the subject of altering the rules of the game—with some justification—halfway through, and the complexity involved for Scottish local authorities. The Convention of Scottish Local Authorities said that the stumbling block over transitional relief is the Government's desire to see the recalculation of rebate for any qualifiers who are currently in receipt of such benefit. COSLA says that it cannot administer this along the lines that the Government suggest and that the cost will be enormous. The Government are now suggesting that COSLA employs a firm of consultants to investigate the cost.

One of the forms of arrestment was to go to the bank. In a letter of 22 November the Scottish clearing banks said that the cost to the banks of trawling through their accounts would be considerable. A paragraph that was not entirely accurate in terms of total numbers but which illustrates the point said:
"Press reports suggest that there are now 450,000 non-payers which could result in an inordinate cost being placed on the banks if a corresponding number of arrestments were to be served on them. Should even 100,000 arrestments be served on a bank, the cost for that bank would run into several millions. If these costs are multiplied across all four banks, the costs could exceed £20 million."
What is the Government's reply about the cost effectiveness of the collection of taxes?

Round one of safety-netting transferred resources from the rural regions to the more urban regions. Next time the Government will finance part of it and the charges to Strathclyde and Glasgow will rise to an estimated £20 million. So the poll tax will soar.

I know that time is short. As it is the season of good will 1 will not he unduly offensive to my absent friends in the Labour party although I have given notice that I intend to refer to them. The Government are in a dilemma and so is the Labour party—theoretically the party of conscience. At a rally a few weeks ago the shadow Secretary of State, my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar), and my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) paraded themselves in front of a banner saying, "No warrant sales." Does the Labour party mean it? If it does, how will it present itself at the next regional elections? Will it say, "If you elect a Labour regional councillor there will be no warrant sales"? That is difficult to do. Will it say, "If you elect us, wait until the next Labour Government in order to get the poll tax repealed"?

If we raise that level of expectation and Labour is elected on a Thursday, by Monday nobody in Scotland will be paying the poll tax. The depth of hatred for the tax is not seen in the south-east of England. If that level of expectation is raised, nobody in Scotland will wait a year or 18 months for a Bill to go through the legislative process.

We are in the season of good will. To put it in biblical terms, if Mary and Joseph had gone to Bethlehem to pay their poll tax, they might have had to pay the standard charge for the stable and when they returned to Nazareth they might have found their furniture poinded and subject to a warrant sale.

The Bill is the Government's flagship. It epitomises a policy of making the poor pay. My party was created, in effect, to defend the poorer sections of the population. That is our raison d'etre. I am sad that my party says that it is opposed to warrant sales and poinding furniture but at the same time tells people that they must obey the law and pay the poll tax. To propose that people should obey the law is to imply that the law is just. But the law should have a democratic sanction behind it. This law does not have that sanction in Scotland. The Minister knows that, and knows that if the Conservative Government and the Conservative party continue to behave in the manner that they have, come the next election there will be no Conservative Members in Scotland. What will the Government do then? If there is a Labour Government there will be a dilemma, and if there is a Conservative Government those who persist in stuffing this type of legislation down the throats of the Scottish people will be responsible for splitting the Union.

12.21 pm

The Parliamentary Under-Secretary of State for Scotland
(Lord James Douglas-Hamilton)

In the limited time available I shall seek to answer as many as possible of the points that the hon. Member for Dunfermline, West (Mr. Douglas) raised.

The hon. Gentleman and his colleagues prophesied great difficulty in introducing this form of local authority tax. In fact, 99 per cent. registered and those who said that they would not pay failed in practice. I stress that we said consistently that over 1 million people in Scotland would receive rebates. It is now clear that that is indeed the case. Those on income support had their benefit increased to take account of the 20 per cent. of the poll tax that they would have to pay. They are exempted from paying the other 80 per cent.

The principle behind the community charge is that it introduces far more accountablity. We are convinced that it is an incomparably fairer system than the previous rating system under which only about 40 per cent. paid rates, although more contributed to them. Accountability is the principle.

The hon. Gentleman asked about the use of telephone numbers. I cannot comment on the circumstances of the case that he mentioned without further information. I suggest that it is reasonable that people who are liable for the community charge should be registered so that they pay their fair share towards the cost of local authority services.

The figures for the cost of implementing the poll tax are as given in the parliamentary reply to the hon. Gentleman. One of the common threads running through our debates on the community charge is that the Opposition have never presented a clear view of their position on the community charge. As the hon. Gentleman says, the official position is that people should pay. The hon. Gentleman represents a minority view in his party.

The number of people who have made some payment of community charge throughout the regions is largely within the range of 85 to 95 per cent. of those liable to pay. In one region 98 per cent. of people were recorded as having paid something. I acknowledge that those figures do not take account of people who are in arrears. As I said to the hon. Member for Dunfermline, West, the figures are not available from local authorities. The figures for the total number of people in arrears would be misleading. The legislation allows people to be up to two instalments in arrears before they risk losing their right to pay by instalments. Many people take account of that in their payment pattern, just as they did under the domestic rating system.

Even the figures for summary warrants do not provide a particularly accurate guide to the number of people in arrears. Those figures simply show the number of people who failed to clear their arrears at particular dates at which local authorities decided to proceed with the next stage of their arrears collection process. The ideal course is for everybody to pay on time, but I have yet to hear of any tax at any time for which that happens.

The collection procedures are no different from those used under domestic rates. They were agreed by the House of Commons as recently as the Debtors (Scotland) Act 1987. We have heard a great deal about the numbers of people that local authorities are pursuing for arrears. It is the last hope of those campaigning for non-payment that these procedures will prove ineffective. However, there are already signs that people are responding to the notifications that they have received about summary warrants and are paying up or entering into a payment arrangement with their local authority. All the evidence suggests that that pattern will be repeated across Scotland. All that people who have received a summary warrant will have gained is a 10 per cent. surcharge.

Much has been made of the numbers of warrants so far and those likely to come next year. One non-payer per local authority is one too many because that person is consuming services without paying for them—simply getting a free ride at the expense of the rest of the community. Nevertheless, realistically a certain level of non-payment must be expected and authorities have budgeted for that.

Inevitably, comparisons are sought to be made with the rating system. They are difficult because many aspects of the two systems are different. The figures emerging from local authorities are broadly in line with what we expected at this stage from the evidence of what happened under the rating system.

I have only four more minutes and I should like to deal with the hon. Gentleman's questions on warrant sales.

Recently there have been reports that the local authority power to arrest bank accounts might prove unworkable. As with so much else, the reports were misleading. I understand that in recent meetings between local authorities and representatives of the banks many of the banks' initial fears were allayed. Moreover, bank account arrestment is only one of several diligences available to local authorities.

The ultimate sanction is the warrant sale. It is fair to say that nobody wants any case to reach that stage, but it is only right that the process should be available to local authorities as a weapon of last resort. It is important not to get this aspect of debt collection out of perspective. It is not the case that almost everyone in arrears will face a warrant sale. First, other means of collecting debt are available to authorities, such as the arrestment of bank accounts or earnings. Secondly, almost all people either pay their debts in full or reach an agreement with the authority before a sale is reached.

I have been informed that last year in Strathclyde the number of warrant sales in respect of rates arrears could be counted on the fingers of one hand. The hon. Gentleman claimed that there were none. Whatever the case, it shows the scale on which warrant sales were carried out.

The Scottish Law Commission found similar arrangements existed in every other western country. After looking thoroughly at the whole question, it concluded that the procedure should be retained in Scots law. However, it recommended that some of the more resented aspects of warrant sales, such as the advertisement of sale showing the debtors' name and address, the requirement to hold the sale in the debtors' house and the inclusion of most household effects in the goods to be sold, should be changed. They were changed in the Debtors (Scotland) Act 1987 and it is noteworth that when the Bill went through the House the Labour party did not vote against it in principle. Before a sale is reached, the person in question will have been given every opportunity to settle his debt by other means.

I understand that the hon. Gentleman is recommending non-payment of the community charge. Few of us like paying taxes, but it is wholly irresponsible for a Member of Parliament to adopt that attitude, not only because Members of Parliament should be setting an example and not encouraging law breaking, but because they are wealthy members of the community who can well afford to pay. It is unfair for a Member of Parliament to refuse to pay and, by his actions, put a burden on the less well-off members of the community that he represents. In the circumstances, it is right that the local authority should have the power to enforce payments. If non-payers were allowed to get away with it, authorities would have to cut back on essential services or on the number of employees, or they would have to require more people who pay the charge to subsidise those who do not. I believe that that would be unfair.

The hon. Member mentioned the transitional—