House of Commons Hansard Debates for 22 May 1990

Mr. Taylor : The hon. Lady pleads a special case, and I do not want to comment in detail on that part of the country. However, she should consider the needs of those areas and the services that are provided. She should also consider the support among the public for what is happening there. She must remember that the cost of introducing and administering the poll tax, including the tens of thousands of people required to implement it, amounts to between £650 million and £750 million.

I want to consider the options available under the Government's review of the poll tax. The Government have canvassed the possibility of increasing central Government's grants to local authorities. However, an extra £1 billion would save each adult only £28. It would also miss those people most in need of help. It is hard to believe that the Government will follow that route. The cost of making that option effective on any scale would put the Government off. The Government could also consider transferring the control and financing of the police, education and fire services. However, that would have a knock-on impact on income tax levels nationally. It would also centralise education, which is a service that most hon. Members believe should remain at the discretion of local authorities and be able to respond to local needs.

The Government could also improve the transitional relief scheme which is currently very limited in its application. If that relief were extended now and retrospectively in Scotland, it would target money more effectively than increased grants. When the Government announced the transitional relief scheme, they said that no one would be more than £3 a week worse off. That has not happened because local authorities have not been able to set poll tax levels at the level that the Government argued that they should. If the Government are to respond to the needs of the most hard up, they should consider extending transitional relief. They could also extend it to all adults.

The Government have also considered improving the benefits system which targets money, although less efficiently. Under that option, the minimum poll tax payable could be reduced from 20 per cent. to 10 per cent. However, the problem is that all those options simply tinker at the margins and do not tackle the fundamental problem, as the hon. Member for Acton has said.

Mr. David Nicholson (Taunton) : I do not want to apologise for the standard spending assessment system of which I have been critical in my constituency, particularly with regard to its impact in the shire counties. I am sure that Cornwall and Somerset have similar problems with the SSA system. However, will the hon. Member for Truro (Mr. Taylor) acknowledge that both the noble Lord who initially made the statement in another place and my right hon. Friend who is now the Secretary of State for Wales, but who previously had responsibility for the community charge, made it clear that the £3 a week limit extended only in so far as local authorities spent in terms of the somewhat fictitious SSA limits?

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Mr. Taylor : The problem is that, when the public heard the announcement, they did not see the fine details. That was inevitable. Whether intentionally or otherwise, they were grossly misled and that is one reason why hon. Members have been attacked by the public, who have said that they thought that they would be protected. The public did not understand what was happening. Moreover, as the hon. Member for Taunton (Mr. Nicholson) said, the SSAs are fictitious and very few of us believe that they amount to anything more than that. The Government could also relate the poll tax to income in some form, perhaps through a banding system. However, I have already explained why I believe that that option would not be effective.

Sir George Young (Ealing, Acton) : The motion that the hon. Member for Truro (Mr. Taylor) moved asks the House to relate the poll tax to ability to pay from next year. He must know that in no way could the kind of system that he advocates be introduced next year. However, it is possible to move away from the present system, with the flat rate, to a banded rate from next year. Whatever the arguments against the scheme put by the hon. Member for Truro--and there are powerful ones--there are strong arguments in terms of realism for accepting the present position and changing that instead of trying to turn the whole system upside down and starting again with the hon. Gentleman's proposal. We can overcome the objections to which the hon. Gentleman referred by having more than three bands to remove the

discontinuities in the system.

Mr. Taylor : The more bands there are, the closer we get to a local income tax system. However, as we move from one band to the next there is a problem in that people end up worse off. That may be to a lesser degree, but that problem remains. Nevertheless if the hon. Member for Acton is right and a local income tax system could not be in place for next year, the Government should consider that option. However, our advice is that setting aside the legislative process--of course, in Scotland with the UBR it was done extremely quickly--the introduction of local income tax and providing absolutely accurate income figures district by district would take only about six months. The process is not as long as the Government have claimed. The final alternative canvassed by the Government is the capping of most or all authorities. On average, 1 per cent. of local spending would reduce the charge by 3 or 4 per cent. To reduce the total poll tax bill to the £10 billion suggested would require cash cuts of about 7 per cent. in local budgets in 1990. Cuts in real terms are nearer 15 per cent. Such capping would be a disaster for local services and would take away the very principle that local government exists to defend--local flexibility--and would be a grotesque centralisation of power.

I have referred to several matters that we could introduce in the short term. I was interested in the point raised by the hon. Member for Acton, but let me now tackle the local income tax system and the specific criticisms that have been made about it. I do not wish to go into great detail, but I shall refer to the four or five criticisms that have commonly been made and say why I believe that they are based on a fiction of what a local income tax system would be.

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Mr. Allen McKay (Barnsley, West and Penistone) : I assume that a local income tax system would be based on a person's income or ability to pay, just as the national income tax system is. If the hon. Gentleman does not believe in equalisation rates, how do we come to terms with the problems of an area such as mine where there is low earning and high unemployment? A local income tax system without equalisation rates would be disastrous.

Mr. Taylor : My answer is very simple. As with the present poll tax system or the old rates system, we would have a central Government grant system that would be specifically tailored to a local income tax system, the major element of which would be to ensure that we levied the same levels of income tax to provide the same levels of service in different areas. In other words, we would take account of income levels in each district. That is what our figures are based on. The calculation could be refined further by an expanded Inland Revenue survey of 500,000 individuals to make sure that the basis was accurate. That is not difficult to do and it is similar to the present grant support system.

Mr. Campbell-Savours : Would the local income tax that the hon. Gentleman's party is proposing be based on taxing income after national tax allowances have been claimed?

Mr. Taylor : It would be based on precisely the same tax allowances as the national income tax system.

Mr. Campbell-Savours : After allowances?

Mr. Taylor : After allowances. The basis of the local income tax system that we propose--it is not the one that the Government talk about, which comes as no surprise, because ours makes more sense--is that we would set a local income tax rate to provide services. Under our system, the range is between 3 and 8 per cent., and the average is 4.7 per cent. across the nation. We would then levy nationally a standard local income tax of 5 per cent., the nearest full figure to the average. That would be collected through the existing PAYE taxation structure with no local variation at all. It would simply be collected at the national rate. At the end of the year, on the basis of the tax paid and the relevant local area details that are already held by the Inland Revenue--people would receive a letter saying, "You live in an area that has a higher than average income tax, and this is the amount that you owe," or, "You live in an area with a lower amount, and here is your rebate cheque." That is the basis of the system.

Mr. Campbell-Savours : Is not there a flaw in that? I did not realise that there might be a flaw of this nature. The flaw is that one is taxing income after one has been able to use all one's allowances on the great number of Government schemes that have been introduced, such as small business investment or whatever, after those tax allowances have been taken into account. Is there a danger that, in effect, people might fix their income after tax by way of using all those mechanisms to reduce their ability to pay local income tax to local authorities?

Mr. Taylor : That is a criticism of the income tax system and the allowances that operate under it, and it applies equally to national and local income tax. It is for the Government to decide the allowances, and a Government

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run by the hon. Gentleman would set different allowances from a Government run by Conservative Members or by me.

It is said that our system would drive people out of the inner cities. That is not a relevant criticism because the grant support system would ensure that it did not happen. It is said that the administration costs would be unduly high. We would use the existing Inland Revenue structure and save the £750 million that is involved in the bureaucracy of the poll tax, and in the process get rid of all the bureaucrats involved. The extras needed for the Inland Revenue would be small because the basic structure already exists. Sweden and Canada already operate such combined systems. The collection costs in terms of the tax take are 30 per cent. in one case and 50 per cent. in the other--lower than the costs in this country because of the introduction into the system of an incentive for individuals to make their own tax returns.

Several Hon. Members rose--

Mr. Taylor : I will tackle some of the likely questions that hon. Members may have, and then give way if they still wish to intervene. It is said that the system of collection would be complex. But our proposed method is already being used simply and cheaply in many countries. Moreover, it is also already being used simply and cheaply in this country for national income tax, so that a new complex system would not need to be introduced.

It is claimed that local income tax would be difficult to enforce. Those who are introducing the poll tax can hardly argue along those lines because they have allowed for much higher default rates than occurred under the old rating system, for example, and we are experiencing the much higher default rates that are occurring in Scotland.

Mr. Michael Jack (Fylde) : I have listened with interest to the hon. Gentleman's argument thus far, but two points arise. First, he has not addressed his remarks to anything concerned with the efficiency of local government. In Lancashire, for example, we identify the fact that the community charge would be £60 a head lower if the local authority had pursued a prudent and efficient budget. What pressures would the hon. Gentleman's party bring to bear on a local authority to improve its efficiency?

Secondly, the hon. Gentleman says that under his system people would get a supplementary bill if a council overspent. How could somebody plan a domestic budget with such an open-ended commitment to spend? Let us remember that some Labour authorities love to spend public money.

Mr. Taylor : People will not receive a supplementary bill if a local authority overspends. The amount is taken from the local income tax rates, so people know the amount in advance, because they know at what rate the local income tax has been set. If one is paying 5 per cent. and the local income tax rate is 5.3 per cent., one will have to pay that 0.3 per cent. of taxable income at the end of the year, a bill which for most people will not be nearly as significant as the poll tax bill.

An example of that is that in the Minister's constituency of Enfield, Southgate the average household is currently being asked to pay a poll tax bill of £658. Under our system of local income tax, which has been fully

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set out, that same household with average income would pay in total £356. In Southampton, Itchen, an average household poll tax bill of £614 would become a local income tax bill of £303.

Those figures show the advantages that would accrue to people, although some would, of course, pay more. Hon. Members would pay more and the Minister would pay a lot more, but he can afford to pay. Judging from the smile on his face, he, too, thinks that he can afford it. That is the nature of a system which is based on ability to pay. We ask for less from those who can afford less and more from those who can afford more. We retain local accountability through end-of-year adjustments, as I have explained, and at a stroke we get rid of the bureaucracy of the system that has been introduced by the poll tax.

4.29 pm

The Minister for Local Government and Inner Cities (Mr. Michael Portillo) : I beg to move, to leave out from "House" to the end of the Question and to add instead thereof :

believes that most adults should contribute towards the cost of local services with relief for the less well off ; welcomes the embodiment of those principles in the community charge and notes in particular that 10 million people have received bills reduced by rebates whilst 7.5 million have been protected by transitional relief ; welcomes the willingness of the Government to listen to constructive suggestions for further improving the new arrangements ; and contrasts the fairness and clarity of the community charge with the injustice and impracticability of a local income tax favoured by the Social and Liberal Democrats and the total lack of any clear proposals from the Labour Party.'.

I begin by saying a warm "thank you" to the hon. Member for Truro (Mr. Taylor), both for his kind words of welcome and introduction and for what I thought was a thoroughly entertaining speech. I also thank the hon. Member for Sheffield, Brightside (Mr. Blunkett) for writing to me to welcome me to this new subject.

The title of this debate, chosen by the Social and Liberal Democratic party, invites the House to consider amendments to, and alternatives to, the community charge. I am glad to do both. I intend to demonstrate that the community charge is the best of the options for raising that part of local authority funding that should be raised locally. Moreover, the House will know that the Government are considering whether any amendments to the operation of the charge should be made to improve its working.

I should like today to take the House through the options for raising local authority finance. Our discussion must begin with the rates. Labour is supposedly against the rates. The SLD describes them in an early-day motion as an "injustice" ; I thoroughly agree--and we have abolished them.

Perhaps on a subject where we are unanimous I need not dwell too long, except to make a couple of points. First, the rates were grossly unfair. I make that point because it may help us to colour our view of the fairness of the community charge. Secondly, the unfairness of the rates derived mainly from the fact that property values are no proxy for wealth or income and any system based on property will repeat the injustice of the domestic rates.

Mr. John Lee (Pendle) : Many of us, especially those of us from the north of England, remember my hon. Friend's success in saving the Settle- Carlisle line, so we take an optimistic view of his new appointment. One reason that

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hon. Members such as myself, who represent constituencies in the north-west, are particularly unhappy about the present community charge is the gap between the amount that a household may pay collectively under the community charge, despite transitional relief and the safety net, and the very low rates that we have paid historically. I hope that my hon. Friend will consider that aspect, during his speech, but especially during the review.

Mr. Portillo : I intended to continue by telling my hon. Friend that we shall, of course, listen to suggestions that are made to us. Indeed, I have been listening to suggestions already. My hon. Friend well knows that part of the problem in Pendle, which has a community charge of about £299, is that Lancashire increased its spending by 20 per cent. and Pendle increased its income by 22.8 per cent. I know that my hon. Friend understands that, and recognises that it has added to the problems that his area faces.

Dame Elaine Kellett-Bowman : When he is considering amendments to the community charge, will my hon. Friend bear in mind the fact that it is absolutely no good giving more money to extravagant councils such as Lancashire county council? Does he accept that any money that is dispersed must go direct to the charge payers, such as pensioner wives or the mothers of young children, so that they get the benefit because, if it is not, those bandits in county hall in Preston will simply swallow the loot and will not give any abatements whatsoever in community charge? The benefit must go directly to the charge payers.

Mr. Portillo : I understand my hon. Friend's point. As she has said, Lancashire has increased its spending by about 20 per cent. My hon. Friend knows that Lancaster has increased its income by nearly 28 per cent. by comparison, the other council with which my hon. Friend deals, Wyre, which is under Conservative control, has been more moderate in its increase, which was just under 14 per cent.

Mr. Dennis Skinner (Bolsover) : Should we not be fair and put the figures in the proper perspective? The Minister has referred to Lancashire and to the increases there. If the standard spending assessment for Derbyshire had been calculated on the same basis as that for Westminster, we would not have had any poll tax in Derbyshire ; we would have handed out £309 to every single poll tax payer. We would not have been collecting money. Because of the different political complexion in Derbyshire, our poll tax is much higher than Westminster's. Let us all have the same calculation as the one that resulted in the bribery at Westminster and Wandsworth ; then there will be no complaints.

Mr. Portillo : I do not know what the hon. Gentleman is referring to. The standing spending assessments were worked out on the same basis throughout the country, and, as he will know, in Bolsover the SSA is nearly 15 per cent. higher than the grant-related expenditure figure under the old system. The increase in income in Derbyshire is 19.5 per cent., while Bolsover has increased its income by 17.3 per cent. That is what has made the difference.

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Mr. Harry Greenway ( Ealing, North) : Is not the point that, in local government, as in national government, the Labour party is always highly profligate with public money? The rates in Ealing in 1987 increased by 65 per cent.--

Mr. Quentin Davies (Stamford and Spalding) : What was the money spent on?

Mr. Greenway : It was spent on, for instance, homosexual activities and parties for lesbians. Certainly no letters to the town hall were answered. While the rates and the community charge have increased in Ealing under Labour-- [Interruption.] Labour Members may shout, but, despite those increases, efficiency went down, the streets were not properly swept, expenditure on education was reduced and people had a disgraceful deal. They always do from Labour.

Mr. Portillo : My hon. Friend makes his point extremely well. The latest increase in income in Ealing appears almost moderate in comparison, at some 14.5 per cent. My hon. Friend does well to point out that that increase was on top of the horrendous increase in the previous year's rates, which resulted in a community charge in Ealing of £435. My hon. Friend will be satisfied that those who were responsible for those increases have received their come-uppance.

Mr. Anthony Nelson (Chichester) : My hon. Friend the Minister made his reputation in the Department of Health and Social Security by targeting public assistance on those most in need. Many people in low-spending areas such as the one that I represent, who are just above the line of eligibility for rebates but by no stretch of the imagination well off, now have substantial difficulty in paying their community charge because of low rateable values leading to their previous light contributions. Surely that has major implications for transitional relief, and for next year's rebate. Can we look to the Minister to help those people, who are finding it difficult to make ends meet?

Mr. Portillo : I assure my hon. Friend that I shall weigh carefully what he has said. I shall continue to listen to him, and to other hon. Members who intervene. He referred to targeting. I ask him to go to his local authority and target this point on it : at present his local charge payers are contributing £44 a year each to the safety net. It would be excellent if that money could be used to bring the community charge down next year, which would greatly help all Chichester's community charge payers.

Mr. Campbell-Savours : The Minister should ignore the blandishments of his hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman), who is the only hon. Member for Lancashire who publicly advocates cuts in public services in her constituency, and stands condemned throughout the community for so doing.

I have done some work on the question of the Westminster settlement. Why was that settlement inflated by a substantial amount of money for flood relief? Is not the calculation on enhanced population for Westminster grossly inflating its central Government grant? Would not an inquiry reveal that the Westminster settlement was nothing but a fix to get Lady Porter out of a corner?

Mr. Portillo : The criteria used for flood relief works were applied nationally. It is true that, in the first year, the criteria are particularly helpful to Westminster. They will

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not be particularly helpful to Westminster in the second year. The criteria were given to us by local authority associations and certainly were not skewed to any particular authority. That still leaves the hon. Gentleman with a great deal of explaining to do about why other Conservative authorities that did not have the benefit of flood damage relief, such as Wandsworth, set such low community charges and are so commended for their good management.

Mr. Richard Tracey (Surbiton) : It is time that the Labour lie was nailed. It is undeniable that both Wandsworth and Westminster received substantially less external aggregate grant than any other inner-London borough. The net result was that an authority such as Lambeth, which is Labour-controlled, and which received grant of £324 a head more than Wandsworth, set a community charge of £350 more than Wandsworth.

Mr. Portillo : My hon. Friend is right that Wandsworth and Westminster were towards the bottom of the list of the amount received from Government by inner-London boroughs. That is a perfectly valid point and I am glad that my hon. Friend has made it.

Mr. Simon Hughes (Southwark and Bermondsey) : The Minister knows that I have respect for him. I ask him to think of a new way of calculating standard spending assessments. Could he not suggest that, instead of the Government coming up with the formula--which would be open to the allegation of fixing, whoever was in government--they could offer the local authorities the chance to agree it? If they can agree on a formula, that should be the one by which grant is given to local authorities. If they cannot agree, the Government will, as always, have to make the decision. Would that not be a fairer system, less open to allegations that the Government had distorted the figures?

Mr. Portillo : The method that the hon. Gentleman suggests is that which we attempt to use. We get together with all the local authority associations and try to agree the criteria with them. The hon. Gentleman will recognise that different local authorities have different views. Even the local authority associations, which represent different sorts of local authorities, have different views. We do our best to agree on the criteria. I am listening to representations made to me about standard spending assessments that seem to fall short of expectations or perceived reality in some way. The problem with the rates was that 40 per cent. of those in properties above average rateable value had incomes below the average. A person on low income could, and often did, pay more to the local authority than other people on higher incomes in the same area. Under community charge, that simply cannot happen.

Furthermore, the rates were paid by only half the adult population and that half was selected arbitrarily--so arbitrarily that it consisted largely of widows and pensioners, but excluded many wage and salary earners. It was therefore possible for some local authorities to follow expensive, and expansive, policies knowing that they would be paid for by that ill-chosen minority of the population.

The second major option for local government funding which I ask the House to consider is the community charge, with any amendments which the Government may

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propose. The basic principle of the community charge is that nearly every adult should contribute to the costs of local services. As the charge has settled down in Scotland and is settling down in England and Wales, I believe that that basic principle that everyone should contribute is well accepted. We do not seek that the charge payer carry all the costs of the local services provided. In principle, we look to the charge payer in England, for example, to contribute only about a quarter on average. The balance comes from revenue support grants, the uniform business rate and the £2.75 billion worth of community charge rebate, transitional relief and income support payments, all funded from central Government. So businesses and national taxpayers meet three quarters of the cost. That is the measure of the subsidy from the common pot to the individual.

Mr. Andrew Welsh (Angus, East) : Does the Minister accept that the tax has settled down in Scotland to be a costly, ineffective, bureaucratic mess which is hated by the population and not paid by almost 1 million Scots? If he is worried about the burden of extra costs on poll tax payers, should he not worry about the burden of the poll tax itself? In Scotland last year, there were about 2 million changes in the register in one year alone. That is a foretaste of what is to come in England. In London, annually updating the register will be a bureaucratic mess. That puts extra unnecessary costs on poll tax payers.

Mr. Portillo : My information from Scotland is that the number of people who have paid or started to pay the community charge--

Mr. John Home Robertson (East Lothian) : For last year?

Mr. Portillo : Yes, for last year--is comparable with the number of people who paid rates. Collecting the rates was no easy matter either in Scotland. The extra burden of expenditure for collecting the community charge is well worth it, as we have achieved a fairer and more widespread system.

Mr. David Blunkett (Sheffield, Brightside) : First, will the Minister clarify the statistics that he just gave on the amount of local authority spending met from the poll tax? He said that it was a quarter. The figures that I have been given in written answers show that it is almost a third. Secondly, he said that three quarters of the spending is funded from central Government, but he has included the aggregate external funding, which is part of the uniform business rate.

Mr. Portillo : My response to the hon. Gentleman's second point is explicit in what I said. On his first point, I said that we sought that the charge payer should contribute a quarter. I recognise that, with the overspending which has occurred among local authorities and which has raised community charges, the percentage is a little higher than the Government looked to raise from the community charge payer. We have often made the point that the citizen who pays income tax and full community charge can pay many times more towards local authority spending than his neighbour on maximum rebate for the community charge who pays no income tax. We have repeated that a household in the top 10 per cent. of income will pay 15 times as much as a household in the bottom 10 per cent. of income.

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I am sorry that my hon. Friend the Member for Surrey, North-West (Mr. Grylls) is not in his place today. He suggested a most fruitful and graphic way of illustrating my point in an article published recently in the Daily Mail. In the article, he showed what various typical people in our society would contribute to local government finance, on the assumption that part of income tax is used to finance the local authorities.

Of course, the figures cannot be exact. However, I have no reason to believe that they are far from the truth. My hon. Friend found that the student paying a 20 per cent. contribution would pay £57.20 if the full charge were £278. The gasman earning £12,000 would contribute nearly £1,000 in tax and community charge. The airline pilot on £50,000 salary would pay in about £3,250. The barrister on £100,000 would pay more than £7,500. The advertising agency chief on £200,000 would contribute more than £15,500.

Mr. Matthew Taylor : The Minister knows that this is a good debating point. Is it not equally the case that local government central support grant comes out of VAT and Customs and Excise payments? In that case, the figures would show that those on the lowest incomes paid rather more than they appeared to pay under the poll tax.

Mr. Portillo : My hon. Friend the Member for Surrey, North-West made an allowance for the proportion of Government revenue represented by income tax. He included only those figures. If he went on to include VAT, on the assumption that people who are better off buy more goods, the proportion that came from the better-off would tend to rise. Certainly the absolute cash sums would tend to rise. That would support my point, rather than the hon. Gentleman's. I firmly believe that the community charge fulfils the widely recognised need for a system in which nearly everyone contributes. With its rebate system, which is much more generous than the predecessor which applied to rates, it provides for 10 million people on the lowest incomes. With transitional relief, it softens the change for 7.5 million people. With the contributions from the taxpayer and non-domestic rates, providing a large subsidy to the community charge payer out of the national graduated tax systems, I believe that we have a system which is soundly based.

Mr. George Foulkes (Carrick, Cumnock and Doon Valley) : The Minister has had a great deal of advance publicity about being a whiz kid. Can he explain how a 20 per cent. minimum payment of the community charge can be more generous than a 100 per cent. rebate on the rates that some people once got? That was the scheme previous to the scheme introduced by the Minister's predecessors, which allowed for a 20 per cent. minimum rebate on the rates. Why is an 80 per cent. rebate more generous than a 100 per cent. rebate?

Mr. Dick Douglas (Dunfermline, West) : On a point of order, Madam Deputy Speaker. Earlier in the debate, I asked Mr. Speaker about speakers from the Front Bench. I know that Opposition Members are extremely flexible, but how can an expert in foreign affairs who speaks from

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the Opposition Front Bench suddenly become an expert on local government finance when sitting on the Back Benches?

Madam Deputy Speaker (Miss Betty Boothroyd) : That is a matter for the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes), not for the Chair.

Mr. Portillo : Some time ago, we changed the maximum rebate on rates from 100 per cent. to 80 per cent., as we rightly recognised that everyone should make a contribution to local authority finance. At the same time, we made a contribution to the income support system--from memory, an extra £500,000 went into the income support system--to cover the average 20 per cent. of rates.

The community charge will succeed too in its aim of establishing local accountability. That has already happened, mainly in those places where there are unitary authorities, where the councils faced elections and where Conservatives offered a low community charge to their electorate. Such local accountability was also established in one area, where the SLD offered a reasonable community charge to its electors in Tower Hamlets.

Local accountability has moderated community charge increases in the second year in Scotland. As the workings of the charge are better understood, it will bring improved accountability everywhere. Next year in England and Wales, with none of the distractions that we have had this year in changing the system, the electors will know that the level of community charge imposed by their local authorities is down to those local authorities alone.

Mr. Allen McKay : As the Minister is talking about the electorate, he should consider my area. The council stands for election every year, so it is accountable. Every councillor attends his surgery each Saturday and is therefore accountable. That council ran its election campaign against the poll tax and poll tax capping--and it won 22 seats out of 22.

Mr. Portillo : Because the authority of which the hon. Gentleman speaks is subject to a capping proposal, I must be careful about making any comment about it. The hon. Gentleman and the council have had the opportunity to make representations to us about that proposal and I am glad that they did so. When the people voted, they knew about the proposal to impose a cap on the authority. One simply cannot know what effect that had on the electors.

Mr. McKay rose --

Mr. Portillo : If I have upset the hon. Gentleman, I shall, of course, give way.

Mr. McKay : It takes a lot more than the hon. Gentleman to upset me. We ran the council election campaign against poll tax capping and we won 22 seats out of 22. Such is the effect of poll tax capping.

Mr. Portillo : I enjoyed my opportunity of discussing this subject with the hon. Gentleman when he visited me, but I do not want to be drawn further into a debate about an authority for which a capping proposal has been made.

The introduction of the community charge, the uniform business rate, the standard spending assessments, the transitional reliefs and the entire new structure represents a major new change--a change from something that all parties in the House argued was wrong, but which only the Government have been willing to put right. I am not

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surprised that in such a major upheaval there are many who think that there are things that need to be adjusted and put right. I have listened to what my hon. Friends, as well as those in local government, have said about that. I shall listen again today, and in doing so I shall attempt to distinguish between those points that are just a symptom of change, which can and should sort themselves out, and those points which represent genuine anomalies. I thank my hon. Friends for their help in that process.

The third option for local authority finance is not to pay the community charge, and to break the law. That policy is espoused by 28 hon. Members in the Labour party. How legislators in a democracy can advocate breaking the law is beyond my comprehension. I understand one thing, however : non- payment by some will mean higher payments by others Those who do not pay will often not be the poorest, and those who must pay more will often not be the richest. If there is any concern about justice, that cause will not be advanced by non-payment, because non-payment is the biggest injustice of them all. When the hon. Member for Sheffield, Brightside (Mr. Blunkett) comes to speak for the Labour party, I would appreciate it if he set out his party"s attitude to non-payment, to those non-paying Members of Parliament and to those hon. Members who attend rallies organised by the Anti-Poll Tax Federation.

The fourth option for local government finance is the roof tax. The House and the country are waiting upon Labour's alternatives to the community charge. Before the hon. Member for Brightside gets up to tell me that it is a modern property tax related to the ability to pay or whatever other sugar -coated, all-things-to-all-men phrase is currently in vogue, what we are looking for today from him is detail. I do not mean complicated details, but simple ones such as who is meant to pay it.

The last time that that question was posed to the hon. Member for Dagenham (Mr. Gould), he replied enigmatically that that would be a matter of "maximum choice". Suppose the hon. Gentleman and I went out to dinner, the bill arrived and we tried to decide who would pay it. If that was left to a matter of maximum choice, we would be there all night trying to decide who would pay. [Interruption.]

Mr. Foulkes : On a point of order, Madam Deputy Speaker. I want to hear the Minister, but I cannot because of the traitor below the Gangway.

Mr. Douglas : On a point of order, Madam Deputy Speaker. Please ask the hon. Gentleman to withdraw that remark.

Madam Deputy Speaker : Order. The wording used by the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) is unacceptable to me, and I am sure that he will rephrase his remark.

Mr. Foulkes : Someone who gets elected as a Labour Member of Parliament, who then leaves the Labour party and refuses to allow a by- election is here under false pretences, and "traitor" seems to be a perfect description. Because of my respect for you, Madam Deputy Speaker, I shall certainly withdraw that remark, but I know you understand what I mean.

Madam Deputy Speaker : I am much obliged to the hon. Gentleman. Can we now proceed in good order?

Column 194

Mr. Douglas : That from the party of idealism.

Mr. Portillo : When the hon. Member for Brightside speaks, I hope that he will tell us about the Labour party's proposal for the roof tax. Will he explain how it will be related to ability to pay? What is the Labour party's way out of the obvious pitfalls such as the burden that will fall on pensioner widows, the effect of home improvements or the simple fact that the value of a person's home is a wholly unreliable indicator of the owner's means?

Mr. John Maxton (Glasgow, Cathcart) : In Scotland in the non- domestic sector, the Government have drawn up a scheme to give some relief on revaluation. However, when it comes to improving property in the non- domestic sector, whoever owns the business will have to pay the full amount of the new rate imposed as a result of those improvements. What is the difference? I do not understand why the Minister has made a difference between the new rates in the non-domestic sector and the old rating system in the domestic sector.

Mr. Douglas rose--

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