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Column 748Nothing that the Government say will hide the truth from the electorate. No matter how much money they spend, their proposals to tinker with the poll tax will be exposed for what they are. The resultant confusion will lead not only to greater bewilderment but frustration and anger among people who think that they are entitled to relief but discover that they are not--and among those who believed that their poll tax bills would be lower but realise that they were misled.
Local authorities throughout the country point out that the administrative chaos will be something to see. The problems of 1982, with the transfer of unified housing benefit out of the social security system, were bad enough, but the bolt-on arrangements for the computer systems will lead to considerable difficulties. Some have already been evident. During the registration procedure, 15,000 forms were lost in transit between Wickham and the Philippines. Sastec, which was given the task of transferring the registration data to magnetic tape, sent work, under competitive tendering arrangements, to the Philippines. That material was lost in transit on the return journey. Perhaps other local authorities will, in the interests of achieving the lowest possible labour and other costs, send their registration data around the world in implementing transitional arrangements. If that is done, the chaos will be even greater than envisaged.
The continuing expense and delay has been criticised again and again by not only Labour authorities but the leaders of the Conservative-controlled Association of District Councils. Councillor Thomason feels that it will be necessary to delay the dispatch of poll tax bills until May or June next year, and I understand that the Secretary of State has told the ADC that such might be necessary. Some of us remember when councillors were surcharged and disqualified for failing to implement rates bills by 1 April.
Mr. Chris Patten : For the record, and as the hon. Gentleman raised this point, it should be possible for local authorities to send out bills at the appropriate time next year. There should be no need for delay.
Mr. Blunkett : The Secretary of State must be an optimist for bringing forward such proposals in the first place. I hope that he is right, but if the bills are not out by 1 April the poorest will suffer. They will find it hardest to catch up if the system for making payments on a weekly or fortnightly basis is not immediately implemented.
When things go wrong, the Government will blame the local authorities. When the predicted chaos comes about, the Secretary of State will suggest that such was never the Government's intention and that it is not their fault.
The public will not believe them. It will be understood that by introducing complicated and difficult arrangements at a late stage, the Government and not local authorities must take the blame for the consequent difficulties.
Mr. Patten : I have no doubt that introducing the scheme late in the day will place additional burdens on local authorities, who are already hard pressed, in making an important but difficult change to the community charge. I do not doubt either that many local authority officers are working flat out to introduce the community charge as proposed and that they have shown considerable commitment and professionalism in the work that they have already done. It would be neither sensible nor helpful
Column 749if I or anyone else were to make the kind of charges against local authorities that the hon. Member for Sheffield, Brightside (Mr. Blunkett) suggested we might be inclined to make. I want to work with local authorities to implement the interim relief scheme as successfully as possible. Despite the difficulties, we should, by working with local authorities, be able to achieve that objective. However, I do not for one moment underestimate the difficulties.
Mr. Blunkett : My belief is that local authority officials will do everything possible to implement the interim proposals and to cope with the administrative difficulties that confront them. I am anxious to ensure that no one remains under any misconception about the problems facing those officers and the difficulties that they will create for the public. I am anxious to stress also that if blame is to be allocated, it is not placed at the doorstep of the individuals who are nearest to members of the public, who are confused and suffering.
The Government will determine the level of poll tax through aggregate external funding and the arrangements announced by the Secretary of State for standard assessments and specific grants. The Government have constantly got wrong their estimates of the poll tax, so it is important to spell out again that it will not be a notional or imaginary figure. Three years ago, the Government suggested that, at average levels of spending, the poll tax would be £162 per person. The figure has since risen to £278.
That notional figure does not take into account balances that cannot be repeated by being used more than once, or the fact that no authority can achieve 100 per cent. take-up--in Scotland it is estimated that there has been a 7 per cent. drop. Nor does it take into account the real rate of inflation : the 3.8 per cent. figure is only half the true rate. Even if it were to take those factors into account, however, the notional figure would be about £345. The importance of the Government figures is that the Government have chosen to use them in the implementation of transitional relief : people will be entitled to such relief only if the figure approximates to what the Government think the local authority should be spending. The notional figures, which are obviously either below or above that level depending on the Government's assessment, will determine whether they are so entitled.
Apart from collective poll tax and standard poll tax--with the exemptions which apparently are now available to Members of Parliament--along with the rating system that will continue to holiday lettings and the non-domestic rate applying to commercial premises, there are now seven different personal poll tax levels. There is the Government's standard spending assessment--the mythical target or ready reckoner of £278 which will have to go on poll tax bills. There is the notional poll tax or settlement figure for spending at Government-approved levels, exemplified in the papers that have been produced today. There is safety-netted poll tax ; transitional poll tax for ratepayers ; transitional poll tax and special help for non-ratepayers ; rebated poll tax ; and, finally, the real level of poll tax that will be levied by authorities working in and having to cope with the real world. They will set a level of poll tax that will retain the existing level of service for the
Column 750people in their areas : that is the level about which people will be concerned, and on which they will make a judgment.
Since 11 October, the myth has been peddled that no poll tax bill be more than £3 above the existing rate bill. Because of the notional figure-- because of the way in which the Government are intent on blaming the local authorities--literally hundreds of thousands, if not millions, of people who think that they are entitled to relief will find that they are not.
It is no good saying that that is because local authorities are overspenders. Conservative Members can say that if they wish, but if they do they must then condemn their own authorities. More than 90 per cent. of local authorities in England spend more than the amounts in the Government's guidelines--the new target figures that have been reintroduced. Of the authorities that spend more than 10 per cent. more than the guideline figures, 56 are Conservative and 36 Labour.
Mr. Chris Patten : May I help the hon. Gentleman? I am not sure from what he is saying whether he has misunderstood the interim relief scheme. He seems to be suggesting that, if a local authority spends more than is consistent with total standard spending nationally, the scheme will not be available to those living in that area.
Mr. Blunkett : I did not say that at all, and I would not want to imply it. What I am suggesting is that people who believe that they are entitled to relief will then find that they are not, because if spending is higher than the notional level predicted by the Government they will not be able to claim the difference between their rate bills and their poll tax bills. Many people expecting lower bills next year will be disillusioned when the bills fall through their letter boxes.
I will not be diverted from my argument, however. I was saying that, of the authorities that spend more than 10 per cent. more than the assessed level, 56 are in Conservative hands, while only 36 are in Labour hands. Of the top 20 per cent. of so-called overspenders, seven are Conservative and only three Labour. The highest overspender--in terms of the assessment--is an authority that spends 210 per cent. more than the Government's guideline requires. That authority happens to be Mole Valley, the constituency of the chairman of the Conservative party.
I do not think that Conservative Members should be too quick to tell people, in the months ahead, that their local authority has disbarred them from help that they were promised. The offer of such help was illusory so it is no wonder the former Minister of State, the right hon. Member for Suffolk, Coastal (Mr. Gummer), has moved to pastures new : Suffolk, Coastal spends 36 per cent. more than the guideline, and it will take more than irradiation to make the poll tax palatable in the right hon. Gentleman's area.
Even if the authorities conform to the Government's guidelines, however, few ratepayers will find themselves eligible for the new transitional help- -those who are currently ratepayers, that is, as opposed to those receiving special help. The reason is simple : entitlement to it is dependent on a very low rateable value. The Secretary of State said that our hearts should go out to pensioners. Mine does : it goes out to pensioners in
Column 751areas such as Pendle, where a rate bill would have to be as low as £12.74 a year--not a week--to entitle them to relief. In Hyndburn, it would have to be as low as £19.92 for a single pensioner ; in Barrow-in-Furness, it would have to be £41.57. In the same areas, a couple would have to have a rate bill as low as £181.48, £195.84 and £239.14 respectively.
There will be major problems in regard to pensioners and the disabled-- categories who are to be offered special help--who are not ratepayers, and who are therefore clearly living with a primary ratepayer. Apart from the administrative problems, clumsiness and costliness involved in trying to sort out who is eligible and who is not, it will be difficult to identify the primary ratepayer. Although it would be easy enough to look at the list to find out who paid the bill, in many households the primary ratepayer-- the person whose name appears on the list--is not necessarily the person who pays the bill. As we have tried to point out, other members of the household effectively pay rates, in that they contribute to household expenses. Thus many people entitled to special help because of age or disability will be better off than the primary ratepayer, who will find that he is entitled to no help. People living in the same household, on the same income, will be paying different amounts of poll tax, and one householder may be entitled to help while his poorer next-door neighbour is not. People will ask each other why their poll tax bills are different. That was exactly the accusation made against the rating system by Conservative Members when they introduced the poll tax : that a pensioner could be living alone in a house next door to people who were earning and better off but could end up paying the same bill. That is exactly what will happen under the transitional arrangements. A primary ratepayer who is a pensioner living alone next door to someone who is entitled to special help will find that he or she is a great deal worse off. I can see neither the fairness nor the justice of that. That is why we reject the scheme.
The cost will be enormous. That money ought to be spent on helping to cushion the effects of the poll tax. I do not know what the word "reasonable" will mean when it comes to the administrative costs that the Government have agreed to bear. They have said that they will meet all reasonable costs. The last time those words were used, the Association of District Councils suggested that the cost of implementing the poll tax would be £200 million short of what was required. That expense will have to be met by poll tax payers and by cuts in services. There will be confusion and concern about that. The poll tax will have a great impact on community care. We have already referred to the fact that the poll tax will hit families hard. We are worried about the transitional help that is to be made available. I hope that the Secretary of State will deal with the point --I do not believe that it divides us politically--that if 28 February is used as the cut-off date we shall disfranchise people who move house and deal a blow to people who move from one type of property to another--for example, from a hostel or a nurses' home. They will not be entitled to any help because they are not primary ratepayers ; they are secondary ratepayers.
We shall also disfranchise those who are discharged from hospitals and hostels for the mentally ill and the mentally handicapped for rehabilitation in the community. All hon. Members would be horrified to find after 1 April that people who were being rehabilitated and
Column 752reintegrated into the community were to be disqualified from special help because 28 February was the cut-off date. I ask the Secretary of State to examine that point again. He may not have much sympathy for those who live in houses of multiple occupation, who are not primary ratepayers and who will not get help. He may also not be worried about those who move from one household to another. However, I believe that every hon. Member will be concerned about the impact of the cut-off date on community care policies.
We welcome the additional exemptions to cover those who suffer from senile dementia, but I hope that the Secretary of State will put it on record that all sufferers from senile dementia, not just those suffering from Alzheimer's disease, will be exempted.
Mr. Blunkett : I welcome that commitment unreservedly. I believe that it is a wise and sensible move. I wish that it had been made a long time ago. My Scottish colleagues will have a word or two to say about it and other issues--that steps could have been taken to help the people of Scotland but were not.
Those who cease to be exempt under any category will find that they are not entitled to relief. Given the present position--and we would not dream of starting from here--a rebate system would make much more sense than the transitional relief proposal. It would be fair, understandable and workable. Furthermore, it would be
administratively simple and it could easily be implemented by 1 April. It would help those who are just outside rebate entitlement. People are often hit by the means test which disqualifies them from obtaining any help. By changing the taper from 15p to 10p, we could bring within the rebate scheme as many as 2 million people, 500,000 of whom would be pensioners. We should help those who need help most. We should do what most people believe to be fair--help those in need. We should base help on ability to pay and we should target that help. There are excellent precedents for doing that, with which Conservative Members would agree. I rarely agree with the new Secretary of State for Trade and Industry but I have to say, although it comes hard to put it on record, that I agree with what he said in the House on 18 Aprl 1988. He said that the Government had made their rebate system more generous, and that they had targeted it very much better. He said :
"I can think of no scheme more closely attuned to ability to pay."--[ Official Report, 18 April 1988 ; Vol. 131, c. 591.] That cannot be faulted. A rebate scheme--improved and extended by the £300 million that the then Secretary of State did not have--would help millions of people who, without that help, will be unable to meet their poll tax bills. That is why, in an effort to be constructive--not to carp and to be critical--we have tabled amendment (f) to Lords amendment No. 330.
It is important to examine again the operation of safety nets. As a result of phasing out the relief and safety net system, people such as pensioners, through no fault of their own or of the local authority, will be hit hard during the move from the first year to the second year. How can it be fair for a pensioner in, say, Guildford to make a gain of 28 per cent. in the second year of poll tax whereas a pensioner in Lewisham will lose by 69 per cent.? That is both unfair and unjust and it will be thought to be so when the scheme is implemented.
Column 753The non-domestic rate is another major bone of contention. Many of us in the north and the midlands are very concerned, not about the fact that people in the south will receive help during the transitional period but because the hard-pressed industrial and manufacturing sectors will have to bear the cost of the transition rather than the country as a whole. We believe that the transitional costs for the non-domestic sector should be met by the Government, just as they have agreed to meet the costs of personal poll tax payers during the transitional period. The 400,000 businesses that ought to gain from the revaluation changes should be allowed to enjoy the boost that they would give to economic and employment prospects, at a time when the single European market will be posing a major threat to jobs and manufacturing industry in those areas.
Mr. David Nicholson (Taunton) : The hon. Gentleman says glibly that the Government should meet those costs. Will he explain why the presonal taxpayer should meet the costs of bringing relief faster to businesses in areas that will benefit from the changes that this Government are introducing? The Labour Government never did that.
Mr. Blunkett : It is quite wrong that the unemployed, the low paid and deprived people in the north, the midlands and Wales should be made to pay for the phasing-in process. Why should industry be put at a disadvantage? Why should the relief not be made available to both personal poll tax payers and businesses? Why are the Government not prepared over a five-year period to find £2 billion to make that a reality? It would be a substantial help to those industries in the manufacturing sector. Our balance of trade might be improved if their opportunities were increased and the funds they had available for investment were increased by a reduction in rates. They shouted hard enough at me when I was the leader of a major city council. I want industries now to put the same pressure on the Government to make sure that they receive the gains to which we all agree they are entitled.
At the end of the day it does not matter what we do to the transitional arrangements for personal poll tax or the national business rate, tinkering about at the edges with safety nets which allow big fish through but catch the small fish as we attempt to protect people from the worst unfairnesses of the tax. The truth is that we cannot get rid of the anomalies, the disadvantages and the dangers unless we get rid of the tax. It is no good kidding ourselves that people will be helped and assuring them that they will not feel the pain of the poll tax. In the end the tinkering will fail and people will realise what the poll tax means to them and to their families.
In one sense the answer is a little like the answer to the problems surrounding Sir Alan Walters and the former Chancellor. Tory Back Benchers have been saying, "Get rid of this tax or it will get rid of us." Our answer is the same as it was for the former Chancellor and the Prime Minister's adviser. When one goes, both will go. When the poll tax goes, it will go because we get rid of the Back Benchers who trooped throught the Lobbies and voted it
Column 754in. The answer for the electorate is clear. If they want to get rid of the poll tax, they should get rid of the Government who imposed it.
The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton) : It may assist the House if I refer to the Scottish amendments which were alluded to earlier, although I shall also refer to the comments of the hon. Member for Sheffield, Brightside (Mr. Blunkett).
Lords amendment No. 260 relates to the standard community charge. The Government are responding to the concerns that have been expressed in Scotland over some of the effects of the present standard community charge arrangements. I should make it quite clear at the start that many of the grievances that have been brought to our attention can be attributed directly to the decisions by local authorities. Under the present arrangements, they have had the discretion to set their standard community charge at between one and two times the personal charge. It is therefore regrettable that, with the exception of the Shetlands and the Western Isles, all Scottish local authorities set their charges at the maximum this year.
Mr. Maxton : When the Minister and the Secretary of State were establishing the level of revenue support grant to local authorities in Scotland, what multiple did they consider the local authorities would use?
Lord James Douglas-Hamilton : Obviously the maximum which local authorities might set has to be taken into account, but we have taken that into account and we shall consider possible changes with regard to this year.
We accordingly decided that we had to alleviate the problem caused by high charges. The new proposals are designed to focus specifically on areas of hardship, leaving intact the basic principle of a flat-rate charge. They give the Secretary of State power to prescribe certain classes of property for which he will set the maximum multiplier. While we are still considering the extent to which that power should be used, we do not expect to make widespread use of it. Local authorities are very well placed to identify problem areas, and for that reason we are providing them with the power to prescribe their own classes, for which they will be able to set their own multipliers. That power will be limited by regulations, but our intention is only to restrict its use so that it does not become a means of reintroducing a form of tax based on the physical characteristics of a property.
The new powers will allow levying authorities to set different multipliers for classes in different districts in their areas--a power requested by the Convention of Scottish Local Authorities with which we had a useful exchange of views. Finally, authorities are being given powers to set their multipliers at nought, a half, one and a half or two. That is in line with the powers available to authorities in England and Wales.
I should like to refer specifically to amendment No. 260 which allows the Secretary of State to prescribe certain classes of property for which he will lay down a maximum standard charge multiplier. It will also allow local authorities to determine their own classes for which they will be able to set their own multipliers. I am glad that the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) is in his place as he raised this matter in the summer, along with his colleagues who represent rural constituencies.
Column 755Although we have not reached a final decision on which classes should be prescribed, premises which attract a standard charge because the person who was living there has to live elsewhere either to be looked after because of age or infirmity or as a carer looking after someone else who is old and infirm will attract a multiplier of nought. Empty manses will attract a multiplier of nought, homes of prisoners will attract a multiplier of nought, and homes of full- time students who live elsewhere during term time will attract a multiplier of nought for the duration of the course. Properties which attract a standard charge because of the occupant's death will attract a multiplier of nought for six months after the death. Properties used as trial flats for housing associations will attract a multiplier of nought. That will leave scope for authorities to determine other classes. For example, they may wish to determine a class comprising properties which attract the standard charge because their owners are obliged to live elsewhere under the terms of their employment. It will be for each regional or islands authority to determine within certain prescribed limitations what additional classes will be appropriate for the circumstances of their area and what the multiplier should be for those classes.
A particular query concerns prisoners. We are proposing to use the new standard charge provisions to prescribe a class of property comprising the homes of prisoners for which a maximum standard charge multiplier of nought will be prescribed so that people in prison will not have to pay the standard charge on their former home, although they might have to continue paying in respect of a second home. The hon. Member for Dundee, East (Mr. McAllion) raised the matter of rebates. The take-up has been approximately in line with expectations, with more than 1 million people, or almost one in three adults, not having to pay the full community charge. He also mentioned the feasibility of implementing the scheme in Scotland. Discussions with local authorities so far have not revealed insuperable difficulties in introducing the community charge transitional relief scheme, even in the context of a scheme which will allow retrospection for the current year. My right hon. and learned Friend the Secretary of State for Scotland has undertaken to reimburse local authorities for reasonable administrative costs incurred in introducing and operating the scheme. Discussions with COSLA are certainly continuing and we hope to be able to announce in the near future the details of a fair and workable scheme.
Lord James Douglas-Hamilton : Obviously the exact amount that it will cost for the local authorities to carry it out is a matter for negotiation between the local authorities and the Scottish Office. But the actual costs of the scheme will be between £20 million and £30 million for this year and the next two years. I look forward to hearing the hon. Gentleman's speech later.
As for the transitional relief scheme, the hon. Member for Brightside was not fighting the principle of relief, but wanted to apply it differently. The Government recognise that the transition from domestic rates to the community charge led to significant increases in bills for some people. The proposed amendments will enable the scheme to be
Column 756introduced which will provide transitional relief for former ratepayers, pensioners and the disabled whose community charge bills are significantly higher than their former rate bills.
The first amendment provides a regulation-making power which allows the Secretary of State for Scotland to provide that, where prescribed conditions are fulfilled, a person's liability to pay a personal community charge may be reduced by an amount in accordance with prescribed rules. The clause has been drafted widely so as not to prejudice the formulation of the scheme most appropriate to Scotland. It will allow comparison to be made between people's rates bills and their community charge bills, and will allow for special arrangements to be made for pensioners and disabled people. It has been drafted specifically to allow the scheme to be made retrospective in Scotland and thus be applied in respect of the financial year 1989-90. Discussions are continuing on the practicality of doing that. We intend to use the powers to prescribe a scheme under which former ratepayers and their partners will, in the first year, lose no more than £3 a week, or £156 a year, as a result of the change from rates to the community charge, provided local authorities spend in line with the Government's assumptions. As the relief will be limited to the additional costs borne by two chargepayers, we intend to make special provision for pensioners and disabled people who would not be eligible for relief as former ratepayers or partners of former ratepayers. They will be able to apply for relief to ensure that they pay no more than £3 a week in community charge, with the same proviso. We have been discussing the precise details of the scheme with local authorities and full details will be announced as quickly as possible.
Mr. Malcolm Bruce (Gordon) : The Minister is giving the House important information that, although not ideal, will be welcomed. Will he make it clear whether he is speaking of individuals or households? Four adults paying £100 in rates may have to pay over £1, 000. Will the household receive the cumulative amount or only the individual?
Lord James Douglas-Hamilton : The point about multi-person households has already been raised. No final decision has been reached about the treatment of such households in Scotland. The hon. Member should remember that the scheme is intended to be targeted at former ratepayers. The change in their liability is not intended to provide universal relief. However, the rebate scheme will continue to link directly the community charge with the ability to pay. In most cases, the rateable value of households with three or more adults is too high to qualify its residents for relief.
The second amendment on transitional relief allows for the payment of a grant to local authorities in respect of the relief scheme. The grant may cover the revenue forgone by authorities as a result of community charges having been reduced by the relief scheme and the administrative costs to the authorities of administering and setting up the scheme. We have met with COSLA, and discussions are continuing to ensure that a fair and workable scheme is developed as quickly as possible. I hold the strong conviction that there is the will to make the scheme work and to get the funds to those concerned as quickly as possible. [Interruption.]
Column 757The hon. Member for Dunfermline, West (Mr. Douglas) laughs, but about 500,000 people may benefit from such funds in Scotland. It is therefore important that it is done as quickly as possible. The hon. Member for Brightside mentioned people who suffer from Alzheimer's disease. I am grateful to the hon. Member for Glasgow, Garscadden (Mr. Dewar), who wrote on 12 October to say that he was very relieved that we have been able to make a concession. Hon. Members will be aware of the Government's decision to extend the exemption from the community charge for people who are severely mentally impaired to include people who are impaired as a result of a degenerative brain disorder or mental illness. The changes necessary to implement the proposals will be made by regulations under existing legislation.
Mr. Douglas : Given the importance of this issue, will the hon. Gentleman say what the Government are doing to overcome some of the difficulties that occurred when previous exemptions for the severely mentally impaired were made? Will he give an undertaking that if the Scottish Society for the Mentally Handicapped produces a leaflet to publicise the exemption, the Scottish Office will assist with its financing? What publicity does the Minister envisage to bring to the attention of the public the exemptions that will be made?
Lord James Douglas-Hamilton : The hon. Member raises a different point, about which I shall write to him. I met the chairman of the Alzheimer's Disease Society, who welcomed the steps that we are taking and asked for them to be back-dated. I am glad that we have been able to respond to that request.
Under the new definition, we are extending the definition of "severely mentally impaired", because the only people included under the current definition are people who are severely mentally impaired as a result of a brain injury or a congenital handicap. In future, others who are impaired because of a degenerative brain disorder or because of a mental illness will be included. It took some time to widen the definition of "severely mentally impaired" and to adopt a formula that would be effective and would stand the test of time. To qualify, a person must be severely mentally impaired and meet one of the qualifying conditions, such as entitlement to constant attendance allowance or severe disabled allowance. COSLA has welcomed these changes most warmly, and I hope that it has been of some assistance to report them to the House.
Mr. Maxton : I do not intend to enter into the argument about whether the domesic rating system was good or not, but, whatever its faults, it was an awful lot better than the scheme that the Government came up with to replace it.
The Secretary of State attacked the domestic rating system, and whenever anyone does I put on the record a quotation that says : "The Government recognises that rates are far from being an ideal or popular tax. But they do have advantages. They are highly perceptible to ratepayers and they promote accountability. They are well understood, cheap to collect and very difficult to evade. They act as an incentive to the most efficient use of property. No property tax can be directly
Column 758related to the ability to pay ; but rate rebates, now incorporated in housing benefit, together with Supplementary Benefit, have been designed to reduce hardship. The Government have concluded and announced to Parliament that rates should remain for the foreseeable future the main source of local revenue for local government." That quotation is from the Government's 1983 White Paper on local government financing. I hasten to add that that was after the 1983 election.
Mr. Bill Walker : The hon. Gentleman will realise, as does every Scot, that despite what was said in 1983, the revaluation between 1983 and 1987 produced the most appalling problems for many people in Scotland. No Government, of whatever colour or complexion, could have allowed that to continue.
Mr. Maxton : Past revaluations did not cause any outcry, but there were two reasons why there was an outcry about the last revaluation. First, the Government were cutting rate support grant and, therefore, placing an increased burden on domestic rates, and, secondly, the Government gave instructions that the burden was to be switched from business rates to domestic rates. The hon. Member for Tayside, North (Mr. Walker) has never understood that fact, but there are many things that the hon. Gentleman fails to understands.
When the Government got the scheme off the ground in Scotland, the Secretary of State for Scotland said, "It is almost perfect ; we are almost there. The scheme will last, and it is a good scheme." A quarter of the English Bill was taken up with changes to the Scottish Act. Now, these amendments are being shoved into an English Bill that again refers to the Scottish system. The Government realise that the poll tax in Scotland is a shambles. It is not working and is an administrative mess. The computer cannot cope with the 4,000 daily changes as a result of people moving. Rebate applications made on 1 April have still received no response. People have not received the rebates to which they are entitled and the 25 per cent. in Scotland to which the Secretary of State referred has not materialised. He said that the bills would be sent out with ease. Perhaps he should speak to Bill Aitken, one of the four Conservative councillors on Glasgow district council. He has written letter after letter to Strathclyde regional council asking it to send him a bill for his poll tax. He may be daft but he wants to pay it. However, it has not sent him a bill and there are many other examples of bills that had not been sent out even by the end of October.
Some people are receiving final demand notices for the poll tax when they have not received the original bill. The system is a shambles. The unfairness of it is shown in the enormous number of people who cannot afford to pay and who have not paid even though it is now November. Therefore, the Government have been forced to rethink their attitude to the way in which the poll tax will operate in Scotland. The transitional payment recognises that the poll tax is basically an unfair tax. By introducing it, the Government have admitted that.
I shall give a short history lesson because some hon. Members may not be aware that in 1986, when the Government introduced the Abolition of Domestic Rates etc. (Scotland) Bill, there was a transitional arrangement within it. Under the Bill the rating system would be phased out at the same time as the poll tax was phased in. Rightly, the local authorities said that that administrative scheme was a nightmare and that they did not believe it could work. They said that the new scheme was difficult enough
Column 759but to have to run the two side by side would be absurd. So the Government accepted the amendments that I and others tabled and on Report they withdrew the transitional arrangement.
Having talked about the abolition of the original transitional scheme, the local authorities wrote to all members of the House of Lords. In a letter dated 24 April 1987 they said :
"This suggests the need for some form of special transitional arrangement to limit the increased payment being sought in the first year ; while such a broad-brush approach should provide rather rough justice, there is a precedent for it in the arrangements which were introduced in response to the special difficulties of those rate bills which rose in 1985."
The Government rejected that. It was two and a half years ago that the transitional arrangement was first suggested to the Government as a means of ensuring that payments would not be massive for those who could least afford them. It has taken the Government two and a half years to accept that it might work. The Secretary of State described COSLA as the vehicle for Labour party policy in Scotland, but it was COSLA which first suggested that scheme. Now the Government are suggesting to COSLA that it should implement it. However, it is too late. It will cause enormous administrative problems and will not be anything like as generous as the Government think.
I accept the Government's commitment that any outstanding payments will be backdated to 1 April 1989 and that anybody entitled to them will receive them. However, they will probably not receive them until after 1 April 1990. The local authorities have made it clear to the Minister that, with all their other administrative shambles, they will find it impossible to cope with this scheme as well. We will have the absurdity of final demand notices being sent out to people who after 1 April next year will have a large part of that poll tax repaid to them.
In some of the regions dominated by the absent Scottish National party-- Grampian--
Mr. Maxton : Some of its members are still part of the administration. That area will use warrant sales. People will have the poll tax taken off them by the sale of their property. I have never heard anything so absurd as people having their property sold around them in order to pay a bill that will be repaid to them six months later. It is nonsense and the Government know it. They should have introduced the scheme long ago.
As has been pointed out, the Secretary of State and his Ministers plucked the notional poll tax figures out of the air during the months prior to the scheme's implementation in Scotland. No one in Scotland, from finance officers or elected local government personnel, has ever managed to work out exactly how they came up with the figures, but those are the figures upon which the transitional payment will be based. Let us suppose that one receives £156 more relief than under last year's rates. In Aberdeen the notional poll tax figure is £201 but the actual figure is £301, so one must immediately add on £100. The people will not receive anything like the generous benefit that Ministers are claiming. We welcome any relief but it ought to have been introduced two and a half years ago when it was first suggested, as it would now be in operation. Mr. Bill Walker rose --
On the standard poll tax, we welcome the changes that take out of the system elderly people who are forced to live with relatives because they are no longer capable of looking after themselves for short or long periods. They may have been pushed into having to pay a standard community charge on their house that could have been a multiple of two and upon which no rebates were allowable. We also welcome the other changes. However, they fail to recognise the basic unfairness of the tax.
In my constituency an old age pensioner couple wrote to me saying that some years ago they had been left a holiday flat in Millport on the island of Cumbrae. It has no toilet or bathroom and they have to share a toilet with the rest of the flats. In 1988-89 they paid £56 in rates. This year they are paying £540 in poll tax. They cannot afford to keep the flat on. Even if the local authority had used a multiple of one rather than two, that couple still would have had an increase in their local government bill from £56 to £270 --a massive increase, although not as large as if they had paid the poll tax. The nonsense of the poll tax is shown by the fact that the Duke of Argyll who has a home in London can designate Inveraray castle as a holiday home and will pay the same rates as a poor person with a holiday flat in Millport or Dunoon. The same unfairness applies to the standard poll tax as to the personal poll tax. It does not take account of people's ability to pay. The Government's obsession with the poll tax has forced them to introduce a standard community charge rather than leaving second properties in the rating system, which would have made much more sense than the present proposal. The Government have exempted those suffering from Alzheimer's disease and other degenerative disorders. It is about time that happened and we are grateful to the Government for doing that. I am sorry that the Minister of State--the hon. Member for Galloway and Upper Nithsdale (Mr. Lang)--is not present. On six occasions in one Scottish Question Time in February the hon. Gentleman said that it was impossible to bring these people into the system. Perhaps the generosity of the new Secretary of State for the Environment or a change in advice--I notice that there is now a new chief medical officer--have led to the exemption.
Lord James Douglas-Hamilton : Does the hon. Gentleman accept that my hon. Friend the Member for Galloway and Upper Nithsdale (Mr. Lang) was extremely keen to achieve this change, but he believed that it had to be an effective change that would stand the test of time? We believe that we have achieved such a change.
Mr. Maxton : My hon. Friend is right. On six separate occasions in one Question Time the Minister said that it could not be done. Of course we are grateful to him and are delighted at the news. I hope that the Secretary of State will spell out the numbers involved. There seems to be a discrepancy between the press release that the Secretary of
Column 761State issued in Scotland and the number of people whom we estimate suffer from Alzheimer's disease and other mental disorders. We welcome these concessions, but there are no concessions that will get rid of the basic unfairness of the poll tax and the resulting bureaucratic nightmare in Scotland. There is only one way that we can do that--by getting rid of the poll tax completely and returning to another system. That cannot happen under the present Government. They will not give way. They are obsessed with the poll tax. My hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett) was right when he said that the only way to get rid of the poll tax was to get rid of the Government. That will happen at the next general election, and we all look forward to it.
Mr. Malcolm Thornton (Crosby) : My right hon. Friend the Secretary of State touched briefly on amendment No. 372 and amendments (a), (b) and (c) thereto, which I tabled. I hope that the brevity of my remarks will not detract from their importance. Amendments (a) and (b) are intended to extend the transitional protection to businesses paying rates before 1 April 1990 even if they move premises after that date. The Government rightly support initiative, enterprise and expansion, but this proposal is a deterrent to all three. Denying transitional protection to businesses that move will slow the natural progress of successful smaller businesses that are seeking to move to larger premises. In turn, this will leave fewer smaller units available for new businesses wishing to start up. It is important to stress that point. I should like my hon. Friend the Under- Secretary of State to pass on my thanks to my hon. Friend the Minister of State, who has written to me today on this subject. I hope that attention will be drawn to this in the wind-up to the debate. I urge my hon. Friend to reflect on that point. The Government state that they want to support small businesses, which are going through a difficult period. The extension of transitional protection to those who wish to move will be an important safeguard for small businesses during this period.
Mr. William Cash (Stafford) : I am the vice-chairman of the Conservative Back-Bench smaller businesses committee. My hon. Friend may know that we produced a pamphlet last year on this very subject and we feel that in the prevailing economic circumstances, with high interest rates and so on, there is a strong case for my hon. Friend's point to be taken into consideration. I support him in his view.
Mr. Thornton : High interest rates are the type of difficulties to which I referred and are likely to be with us for some little time to come. It is important that the Government take that on board. Amendment (c) deals with the permitted increase. The Government say that it should be 15 per cent. plus inflation. That means an increase of up to 23 per cent. in real terms, which is a massive increase for any small business to face. My amendment would limit it to 10 per cent., and would have a salutary effect.
Many people in small businesses can give examples which demonstrate clearly that an increase of 23 per cent. would force them out of business. One such example was given to me by a man who owns a butcher's shop in
Column 762Stanmore in Middlesex. He paid rates of £2,305.18 in 1988-89. He currently expects a rent review after which, if the property next door is to be used as a guide, he will pay £1,666. His bill, plus the uniform business rate poundage of 36p, will amount to £4,199.76. That is an increase of £1,894.58 or 82 per cent. He has been in business for a long time and has already moved premises, so he will probably go out of business. He will be forced to move and, in moving, will lose any benefits from the transitional protection provisions. That is a double blow.
The Government rightly recognise that small businesses are central to the growth of our economy. They have introduced many small measures during their time in office to assist small businesses in many different ways. I, and the many small business men who have made representations to me and my hon. Friends, feel that the Government could take the small step suggested in my amendment. As my hon. Friend the Member for Stafford (Mr. Cash) said, small businesses will face a particularly difficult time in the coming year or so. I urge my right hon. Friend the Secretary of State and his colleagues to accept this relatively minor amendment and give small businesses the extra help and protection that are vital for their continuing health and growth.
Mr. Matthew Taylor : Many good changes were made in the House of Lords, not least some of those that we are discussing now. However, I have listened to the debate with the slight feeling that all this could have been avoided had Ministers listened to some of the points made in Committee on the Local Government Finance Act 1988. Committee members, including myself, raised then the difficulties that the Government are only now starting to tackle. It might have been possible to avoid people in Scotland having to pay the poll tax without these changes having been implemented, and many people who look forward to paying the poll tax in the new year would not have the worries they have even now had the Government listened to the advice given earlier.
Only now, in a series of amendments--and the Secretary of State himself accepts that it is unfortunate to bring in such changes at the tail end of the Bill--are we starting to receive some response. I hope that in part it is a result of the new Secretary of State assuming office. I say that not only because I wish him well in his new job, but because I hope that it marks a change of direction. It may be politically in the Opposition's interest for him to continue along the path of the previous Secretary of State, but for those whom we seek to protect and represent it is better that there should be a fundamental change away from that. If this debate has been sparked off partly as a result of such a change, it is to be welcomed. Yet, as we have already debated, people's expectations about the introduction of transitional relief will not be met in practice. When I have travelled around my own area and other parts of the country, people-- and especially the elderly--say to me that they do not believe that they can afford even the extra £3 a week which they have been told is the maximum extra they will have to pay. I can understand why they are so concerned in view of the low level of pension and benefits that many people receive. However, those people are operating under a delusion. Many will be paying more than an extra £3 a week and they do not understand that it is a notional figure based wholly on the Government's set of figures of what local authorities should be spending, not on what is happening
Column 763in their own area. Their worries are based not on what will happen to them, but on the best that may happen to them. In reality, people will have to pay more than that in district after district. Whatever the background arguments--and we could debate indefinitely the politics of why those figures are higher--those people will find it impossible to pay the extra sums without hardship, and some of them may not pay at all.
Mr. David Nicholson : Does the hon. Gentleman accept that many of those who will benefit from transitional protection are living in low- valued properties at present? If we had kept domestic rates, there would have been a revaluation and they would have had to pay more anyway. The Government's concession takes account of that as well.
Mr. Taylor : The process of revaluation is not as straightforward as that. I am no defender of rates, and I am proud to say that I represent the only party that has argued consistently for a local income tax.
People are being sold the poll tax and are planning for it on the basis of the misapprehension that the Government have guaranteed increases of no more than £3 a week. That will not happen ; the figure is purely notional, and it will not do. In fact, more than 90 per cent. of districts are spending over the Government's target, so the figure is not even a half truth. It is not even a quarter truth. Moreover, in houses in multiple occupation, only two people will be eligible for relief. That is ridiculous. Earlier, when I told the Secretary of State that he could not defend that ridiculous state of affairs I thought that he would at least admit that the principle was wrong, whether or not he had found a solution. I listened with interest, but the right hon. Gentleman would not even say that. It seems to me obvious that no one can go to a group of people sharing a house and say to them, "We have to pick a couple of you. Which two of you want relief and who wants to pay more?" It does not work like that. People will not be receptive to that idea.
The hon. Member for Crosby (Mr. Thornton) raised some important points concerning the effect on small businesses of the changes in non-domestic rating. In areas that have enjoyed low rates in the past, many small businesses are set to suffer badly, especially in deprived parts of the country with low wages. In Cornwall, for example, local authorities have gone out of their way to keep rates down, and businesses will face large increases. The Government have provided transitional arrangements to allow for 20 per cent. or 15 per cent. increases plus inflation. If Conservative Members are honest, they will admit that such increases will be extremely difficult for small businesses to meet. They will find the burden insufferable. Many small shopkeepers have no alternative source of income from which to find the extra money at a time when living standards are becoming increasingly tight, when mortgage interest rates are increasing and when small businesses have precious little opportunity to expand.
What makes all that harder to bear is that small businesses know that the extra money will go not to improve local services but to maintain a higher level of service elsewhere. Elsewhere the rates will be cut but the services will continue to be provided. They know that their fiercest competitors--the national retailers with a shop on