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Mr. Jones : A shop in Oxford street in Swansea currently paying £33,000 in rates will pay £54,000 with the end of transitional relief--an increase of over 60 per cent. In Alyn and Deeside my local newsagent currently pays £684 in rates. Next year, under the new non- domestic rating system, the rates will be £847. When transitional relief ends, the rates will rise to £1,869.
A Chinese restuarant in Shotton currently pays rates of £2,987. Its rates will more than double to £6,000 when transitional relief ends.
Mr. Jones : The impact on local authority rates bills will also be great, but local authorities are not compensated for that in the revenue support grant settlement. Therefore, the impact will mean higher poll taxes.
My local authority--Alyn and Deeside--currently pays £103,000 in rates on Deeside leisure centre at Queensferry. In the first year of the uniform business rate, the rates bill will rise to £134,000. Without transitional relief the rates payable wil be £202,000--an increase of 95 per cent. The full effect will mean that the council's rate bill for next year
Column 998will rise by 25 per cent., and with the end of transitional relief the figure will be 82 per cent. The Government are not pointing all that out and local authorities must explain to their communities the damage that will arise from a supposed enhancement.
The Government claim that industry will benefit. Under the revaluation, Shotton steelworks stands to gain a £1.5 million cut in its rates bill and that is the equivalent of about 140 new jobs. I thank the Secretary of State for that. However, under the system of transitional relief, the steelworks must wait years before it receives the full benefit.
It is totally unrealistic to claim that the poll tax in Wales will work out at £173. The likely figure is £210. The settlement that the Secretary of State seeks to impose is £80 million, or 4 per cent., short. All the financial professionals agree on that.
The Government also ignore the high rate of inflation, high interest rates and the white and blue-collar salary increases which local government must bear. They underestimate the costs of collecting the poll tax and they overestimate the numbers who will pay it. As the settlement is defective, there will be severe pressure on the schools service, social services, housing and local environmental services.
The impact of the business rate on small businesses will be considerable. There may be bankruptcies, there will be hardship and there is disillusion. Already the rate of liquidations and bankruptcies has risen amazingly. The situation is now worrying throughout Wales.
The poll tax will bear down very hard on the Gwent valleys, on Mid Glamorgan, West Glamorgan and Dyfed. That is what politically impartial professionals in local government tell me. The poll tax is a poor reward for people who still bear the scars of deprivation and economic difficulties.
In 1987, the right hon. Member for Henley (Mr. Heseltine) said that the poll tax
"will be known as a Tory tax."--[ Official Report, 16 December 1987 ; Vol. 124, c. 1141.]
With a dignity that few others can attain, the hon. Member for Clwyd, North -West (Sir A. Meyer) said that the Prime Minister had foisted the unworkable poll tax upon us. That is Conservative Members' definition of electoral poison in Wales.
Last week, the right hon. Member for Chesham and Amersham (Sir I. Gilmour) said that the poll tax is "wholly unfair", "Orwellian", and "illogical". He also said that it is "expensive," and "difficult," and "difficult to collect."
On transitional relief, welcome though it is, I note what the Secretary of State said tonight. The figure is the same as that which was given last December. What is new?
Opposition Members will vote against the revenue support grant report and the revenue support grant distribution report. There are seven Welsh Conservative Members. It appears that war has been declared on two knights of the shires, but I predict that the poll tax will put severe pressure on the remainder. There is discernible panic in Conservative ranks because of the poll tax-- [Interruption.] I advise Conservative Members who are trying hard not to listen that the poll tax does not relate to ability to pay. The bigger one's house and the wealthier the citizen, the better the poll tax suits. The people of Wales always demand fair play. We are a democratic and fair-minded people. The poll tax cannot be right in Wales. There is no support for the poll tax in
Column 999Wales. Last year, in two parliamentary by- elections, the county elections and the European elections, the Welsh electorate delivered a resounding rejection of the poll tax.
Column 1000Tonight, Her Majesty's Government will impose the poll tax upon the people of Wales. In effect, they propose a £173 confidence trick. The reports will only confirm an anti-Tory mood in Wales. That mood has been growing steadily, and it will sweep away the Conservatives. A Government who impose a poll tax on Wales deserve to be defeated.
Column 100110.52 pm
Mr. Gwilym Jones (Cardiff, North) : The hon. Member for Alyn and Deeside (Mr. Jones) began by wondering, in a rather naive voice, why some of the Welsh community charge figures about which we have heard will be at an excessive level. The hon. Gentleman knows the answer as well as I do, but he refuses to give it. There is only one truthful reason why any council in Wales will levy an excessive community charge, and that is because it will choose to do so.
Before they start using the language of rate capping, I remind Conservative Members that on Monday, the Vale of Glamorgan borough council levied a community charge 36 per cent. above the Welsh Office's target. That is one of only two Conservative district councils in Wales. Incidentally, one of them has in the past--mistakenly, I believe--observed Government spending guidelines. If they--
Mr. Jones : I promise the hon. Gentleman that I fully intend to refer to his own council, if he will only allow me to make progress. My right hon. Friend the Secretary of State delivered an excellent settlement and has steadily improved the position. In November he said that the average community charge in Wales would be £174. On December 18 he told the House that the figure would be only £173, or £165 after allowing for the rebate scheme. Wales is doing better in every way. Sixty- seven per cent. of all council expenditure there is coming from central Government, which compares very favourably with a contribution of 56 per cent. in Scotland or of only 46 per cent. in England.
The new business rate of only 20 per cent. in Wales will bear down much more easily than the 28 per cent. that will apply elsewhere. Some 85 per cent. of all Welsh council expenditure will be covered, leaving only 15 per cent. to be raised by the community charge.
Mr. Ian Bruce : Does my hon. Friend agree that, if my right hon. Friend the Secretary of State for Wales ever finds himself looking for a new job, that of Secretary of State for Dorset should certainly be open to him? He is asking community charge payers in Wales to make only a 15 per cent. contribution, whereas in Dorset, the Government contribution will be only 38 per cent., leaving local authorities there to raise the remaining 62 per cent.
Who then is letting down the people of Wales?--[ Hon. Members :-- "The Tories."] Who is causing the anger that has been created at the unnecessarily high level of
Column 1002community charge being imposed in some parts of Wales? The answer to that question is the local councils, which are best depicted here by hon. Members opposite.
The settlement provides Welsh councils with a 7.1 per cent. increase--not on Welsh Office figures, but on the local council's own figures.
Eighty-five per cent. of Welsh councils's spending will be met from central Government, leaving them to find only the balance of 15 per cent. themselves. They have chosen to set community charges that are far too high, purely for crude political advantage. As my hon. Friend the Member for Wirral, West (Mr. Hunt), the Minister for Local Government and Inner Cities, said when winding up last Thursday's debate on local government finance, Labour councils in Wales, as in England, are following the instructions from on high to set a rate as high as they can get away with. They are blatantly exploiting the confusion that has naturally arisen in the change from rates to community charge, by blaming any increases on the Government. If what is happening in my constituency is typical of the rest of Wales, as seems to be the case, many Welsh people are justified in being furious at their local councils. South Glamorgan county council is proposing a community charge of £175 when it ought to be no higher than £147, and could easily be lower. That represents a 20 per cent. increase. Cardiff city council's community charge should be £31 but it proposes a figure of £78--a 152 per cent. increase.
If South Glamorgan is bad, Cardiff is crazy. Remember that Cardiff is the more extreme, more Left-wing council. It is not just a Labour council, it is supported by its allies in the Liberal party. If anyone has ever doubted whether the Liberals are a party of the extreme Left, I invite them to look at the situation in Cardiff, where the Liberal and Labour parties jostle with each other to show which is the dafter.
I know that they have been desperate to soak up the extra spending that has been proposed in this ridiculous 152 per cent. increase--£78. The Vale of Glamorgan council next door, which provides virtually the same services, is proposing a community charge of £24. That is the difference. People who live in an area administered by a responsible, Conservative-controlled council, get a community charge of £24. I understand that the Vale of Glamorgan county council does not expect any rise to be necessary next year.
The latest dodge is that Cardiff is selling back to itself land that it already owns so that it can charge the charge payers an extra £20.
I am sure that all hon. Members will accept that there may be variations between the figures, perhaps of 1, 2 or even 5 or 10 per cent., but 55 per cent. is the scale of the increase we face from April, and that is over and above what we know needs to be charged in Cardiff. That is way beyond any amount that is sane. It is crazy.
Column 1003The settlement is very good. We had a 7.1 per cent. allowance for increases. The councils only had to find 15 per cent. They have now come up with a community charge of £253. They know that it is a political con, and they are trying to take advantage.
However, I remind the Opposition that "you can't fool all of the people all of the time." In Cardiff we have had that experience. The last time that Labour was in control in Cardiff it went in for increases on this scale and put up the rates up by 94.5 per cent. We had local elections a year later and Labour was swept from control. The people of Cardiff will realise that they have to pay £90 a year more per person--the price of having a Labour or an extreme Left-wing council in charge. There will be elections next year, but that is a long way off. In the meantime my right hon. Friend the Secretary of State for Wales is the last line of defence for the people of Cardiff and the people of Wales.
How mad or bad do councils in Wales have to be before my right hon. Friend uses his powers and acts? I was glad to hear the firm commitment that he made this evening. He is absolutely right, and I encourage him to move in that direction. Unless some sanity comes to Cardiff and to similar crazy councils, he must consider capping them.
The uniform business rate is one of the many idiocies of the poll tax. At Question Time on Monday, and again this evening, the Secretary of State made much of the fact that manufacturing industries and factories, many of them in the valleys and throughout south Wales, will benefit because the valuation of those properties will be lower after revaluation. That is a fact, but perhaps he should not crow too much about it, as the valuations are lower because of the decline in manufacturing and industry in Wales during the past ten years.
B and Q will pay more, Great Mills will pay more and all the other temples of consumerism selling foreign goods will pay more because they make more profits. Maufacturing industry will pay less, not because its property is dilapidated, which is what the Secretary of State said, but because there is no profit in manufacturing industry. It is because of the decline in manufacturing industry in the past ten years.
The Secretary of State need not smile at my remarks. It is a fact that 10 years of Tory Government have caused a massive decline in manufacturing industry in Wales. It is nothing to shout about--we should feel sorry about it. That is why the revaluation is having that effect.
The uniform business rate will make matters worse. As I understand it, it does not matter how many factories or manufacturing units a district or county council area contains ; what matters is the number of people it contains. Manufacturing industry rating goes first to the Treasury and then back to the Welsh Office before being distributed per head of population. Why should planning officers in Llanelli, Cardiff or anywhere else put land aside for industrial development if it can be put to better use--if houses can be built on it, and people put into those houses? That will mean more money, in the form of both poll tax and uniform business rate.
Column 1004The reforms militate against manufacturing industry. The planning officer is in charge ; the industrial development officer has nothing to do, because his land is worth less than the land earmarked for residential housing. The uniform business rate is a crazy tax, which will lead to a further decline in our manufacturing base. It is symptomatic of the 10 years of the present Government that property has always come first and manufacturing second, and the uniform business rate will exacerbate the problem. The sooner it is abolished and we bring back a community-based industrial tax, the better. The link between industry and local government will be broken ; no incentives will be left. South Wales does not possess many flat industrial sites, and we are particularly short of large sites for large industrial investment. Such sites will be used increasingly for housing purposes--as they have been over the past five years--and particularly for housing at the upper end of the market, as people living in such houses do not draw on local resources so much. The uniform business rate is one of the most idiotic aspects of the whole idiotic poll tax.
Sir Anthony Meyer (Clwyd, North-West) : I shall not be voting against the orders. Unfortunately, I ran into my hon. Friend the Member for Hereford (Mr. Shepherd) in the Lobby, and he told me with tears in his eyes how much it would upset my right hon. Friend the Secretary of State if I did. Being--as my hon. Friend the Member for Teignbridge (Mr. Nicholls)-- has so delicately put it--a member of the spineless tendency, I decided to take refuge in abstention. I cannot withhold my admiration for the brazen cheek with which my right hon. Friend shamelessly raids the coffers of the Treasury for the benefit of poll tax payers--I have the Prime Minister's authority to use the term "poll tax"--of Wales. I also admire the immense skill with which he has handled local authorities of all political persuasions throughout Wales, and has managed--up to now--to induce them to behave in a reasonable manner ; I do not want to do anything to make his task more difficult.
My brief tells me that the new system of local government finance is simpler and fairer, and that it will lead to more political accountability. I must say that I find "fairer" a little difficult to accept ; I know that it is a cheap example, but I find it hard to understand why the Duke of Westminster should pay the same sum as an elderly couple who have retired to a small cottage precisely because of its lower rateable value.
"Simpler" is a bit more complex. Perhaps the scheme had simpler elements when it was first announced--it had, at least, the merit of rough injustice --but now we have rebates for the poorest, which I welcome ; exemptions for some handicapped people, but not for others ; safety nets, and then transitional cushioning for the introduction of the safety nets ; and, on top of all that, the near-certainty that the level of non-payment, whether through deliberate refusal or through the impossibility of keeping track of migrants, will hugely exceed the estimates. It no longer looks quite so simple as it did at the beginning. It is now beginning to look as though the uniform business rate will give rise to some problems of its own. There is a great deal of unjustified moaning about the uniform business rate. I take the point made by the right
Column 1005hon. Member for Llanelli (Mr. Davies), but, because of the delays over revaluation--neither side of the House can take great pride in that--many businesses have been paying far lower rates for a great many years than they ought to have done under any equitable system. There will therefore be large increases, and they will be a shock. There is a delightful pub in my constituency, the Blue Lion at Cwm. At the end of every polling day, my wife and I like to have a drink there. We certainly intend to have a drink there after polling at the next general election. The landlord of that pub told me with some dismay that his business rate will increase from £4,700 to £7,300. I understand his shock. Although it will be spread over three years, it is nevertheless a very substantial increase.
It is a little awkward for the Government to argue that a sharp rise in the business rate for some is not unreasonable, since revaluation would have led to such an increase, even under the old rating system. My recollection is that the Government used the pretext of revaluation as some kind of scare--to suggest that retention of the existing rating system would be quite impossible. As for the new mechanism for the revenue support grant, I thought that, if not more equitable, it would be easier to explain. By and large, I suppose that it probably is. To some extent, however, we are in Red Queen territory, too. Rhuddlan borough council, under the leadership of its exceptionally able chief executive, who is also the borough treasurer, and has been for a long time past, finds that it will get £745,000 less in revenue support grant than it received last year, entailing a poll tax increase from £35 to £53.
That does not mean that the borough council has been extravagant. All it means--we have the explanation from the Welsh Office--is that the reduction
"results from a revision--fully discussed with and accepted by the Council of Welsh Districts--to the formula for the current expenditure component of SSAs. Whilst this revision inevitably affects the SSA of certain districts, including Rhuddlan, it is important to set this change within the context of the excellent Settlement for Wales for 1990/91."
I accept that it is an excellent settlement for Wales, but it is pretty cold comfort for poor old Rhuddlan, just because the formula changes, to find itself £750,000 short, having to increase its poll tax element by 50 per cent. and risking being clobbered for so doing.
What about accountability? The first thing that leaps to mind--it is something that Ministers have been claiming, and my right hon. Friend the Secretary of State for Wales claimed it just now--is that local authorities will be raising a much smaller proportion of the money that they will spend than they did under the old system. Previously, it was nearly 40 per cent. ; now, it is about 16 per cent. I do not understand where the accountability comes into it, according to that formula.
Under the uniform business rate, there is a further removal of accountability. Not only will councils not fix the rates ; they will not even derive any benefit if they treat local businesses well. Once again, I cannot see the logic of it.
My right hon. Friend has excellent relationships with the Welsh local authorities. Until recently, they have responded well. Despite the huge defects of the system, I hope that they will continue to do so. That is one reason why I shall not vote against the reports tonight. If, none the less, after all this explanation I am asked by Opposition
Column 1006Members why I am not going into the Division Lobby, I shall have to confess that, frankly, I am stumped for an answer.
Mr. Richard Livsey (Brecon and Radnor) : It is a pleasure and a privilege to follow the hon. Member for Clwyd, North-West (Sir A. Meyer). He has a style which has long been lost in the Conservative party, and we congratulate him on his recent campaign.
The best way to analyse what the Secretary of State is doing is to look at individual parts of Wales and see how they are affected by the revenue support grant, how that affects the level of the poll tax, and how they will be affected by the uniform business rate. We need to examine specific circumstances. As the Secretary of State decided to bash Powys a little in his speech, I want to give some figures for that area.
The Secretary of State should congratulate Powys on having come up with a poll tax that is almost bang on the average £173 that the right hon. Gentleman said was the right figure to go for. The only problem is that Powys's poll tax is likely to be the lowest in the whole of Wales, so it cannot possibly be the average.
The Welsh Office firmly predicted in November that the county of Powys would pay a poll tax element of £109 ; and, adding on the appropriate district and community council costs, the end figure for the poll tax would be £120 for Montgomery, £129 for Radnor and £130 for Brecknock.
The only problem with these predictions is that they showed a £3.5 million shortfall in expenditure compared with what the Welsh Office itself assumed the county would need to spend in the coming financial year to provide an average level of services--that is, the assumption for total standard spending. Local government treasurers in Powys were astonished by the Welsh Office's poll tax predictons. They rightly said that the £3.5 million shortfall had to be made up. That done, they predicted that the poll tax would between £175 and £200 a head.
Yesterday, Powys, along with the district, set its poll tax. The county poll tax ended up at £147, not the £109 forecast by the Welsh Office in November--an increase of £38 per head. Radnor district set its poll tax yesterday at £175, not the £129 forecast by the Welsh Office in November, an increase of £46 a head just to keep services
As I said, all this was just to keep services equivalent to Welsh Office targets. In this exercise, the Welsh Office sets up figures only to knock them down again.
Powys will have the lowest poll tax in Wales, at £175. That was the average poll tax predicted by the Secretary of State last autumn. I can confidently predict that every other council in Wales will have a much higher figure.
All these false figures are nothing more than a con trick. The Welsh Office predicts that wages will rise by 6 per cent., but the Secretary of State for Education and Science has predicted an increase of 7.5 per cent. for teachers. The
Column 1007figures do not add up ; no allowance has been made for such increases. The legislation for implementing the national curriculum and for local management--
Mr. Win Griffiths (Bridgend) : Mid Glamorgan has already found that, under the last settlement, the money provided by the Government was £350,000 short of what was needed. To provide water and extra power points in old primary schools, the council will have to spend almost £500,000 that the Welsh Office has refused to provide. That one small item is equivalent to another £1.25 on the poll tax. Is that not a disgrace?
Mr. Livsey : It was a disgrace. The hon. Gentleman makes his point well : the level of the poll tax was grossly under-estimated. New burdens will be placed on community care by the National Health Service and Community Care Bill, and the green Bill, which contains provisions on litter and adds the burden of collecting it on districts, and will add an estimated 6 per cent. to the costs of districts.
To shorten my speech, I shall give two brief examples of problems that will arise under the uniform business rate. At present, a newsagent's shop I know in mid-Wales pays rates of £1,239, but under the uniform business rate it will pay £1,533--an increase of almost £300, or almost 24 per cent. A tourism complex in the south of my constituency currently pays £19,000 in rates, but under the uniform business rate it will pay £35,000--an increase of £16,000, or almost 100 per cent.
The uniform business rate will have a devastating effect on small businesses. The Treasury's contribution will be only 2 per cent., yet business rate payers in Powys will contribute 40 per cent.--not 20 per cent.--which was the figure that the Secretary of State gave. This is a good deal for the Treasury but a lousy one for small businesses. Added to those figures must be high interest rates, which, with the uniform business rate are a right and left hook to small businesses. Small business people who used to vote for the Conservative party will not do so again under any circumstances.
Mr. Nicholas Bennett (Pembroke) : If the Labour party has any sense, it would not oppose the hon. Member for Brecon and Radnor (Mr. Livsey) at the next election. Only he makes the hon. Member for Alyn and Deeside (Mr. Jones) sound exciting.
Tonight, I heard the most synthetic opposition that I have ever heard in the House. The Labour party knows that Wales is getting a better deal on the community charge than Scotland or England. We are benefiting from the expertise of my right hon. Friend the Secretary of State for Wales.
I welcome the community charge system. I do not understand how it can be considered fair for 50 per cent. of the electorate in Pembrokeshire to vote in local elections but not make a direct contribution to the services that they receive, while the other 50 per cent. carry the burden through the rating system. Everyone over 18 who is eligible to vote in local elections should make a direct contribution to local authorities for the services that they receive.
It is nonsense for the hon. Member for Alyn and Deeside to claim that people who live in bigger houses
Column 1008have bigger incomes. Many of my constituents who live in large houses, but whose husbands or wives have died and whose children have moved away, are on low incomes. They do not wish to move from the home in which they have lived for 40 or 50 years. I do not believe that they should be driven out.
The community charge recognises that not houses but individuals use local authority services. Individuals use street lighting, dustbins, swimming pools and public libraries, not houses. They should therefore contribute to the cost of the services that they receive.
Mr. Bennett : No, because the hon. Member for Alyn and Deeside would not give way to Conservative Members throughout his speech. The hon. Member for Bridgend (Mr. Griffiths) had a fair crack of the whip in the earlier debate on education.
The community charge will make local authorities more accountable. It cannot be right that a minority in many local authority areas picks up the bill for the services provided to the majority. Local authorities will be more accountable if every voter in local elections makes a direct contribution to the cost of local authority services.
We should be aware of the position in Wales. This year, we are receiving a 7.1 per cent. increase from the Government in local authority grants, based not on Welsh Office figures but on the previous year's spending of local authorities. In addition, relief will be available to one in three community charge payers, as announced by my right hon. Friend the Secretary of State in reply to a question from my hon. Friend the Member for Cardiff, North (Mr. Jones).
Some community charge voters will get an 80 per cent. rebate on the total charge that they would have had to pay, had they been on average earnings. It is important to acknowledge that the Government have taken into account people's ability to pay, not only in the fact that those who pay income tax and are on the highest rates will pay 16 times as much anyway in their contributions to central Government, but in the community charge itself, with relief of up to 80 per cent.
On the uniform business rate--
Mr. Neil Kinnock (Islwyn) rose --