House of Commons Hansard Debates for 22 May 1990

Madam Deputy Speaker : Order. The hon. Gentleman should resume his seat and let us proceed with this debate in an orderly fashion.

Mr. Douglas : On a point of order, Madam Deputy Speaker. I want to be perfectly fair--

Mr. Foulkes : It will be for the first time.

Mr. Douglas : On the Government Benches, it is well known and clearly defined as to who speaks from the Front Bench.

Mr. Foulkes : They are the Government and they are paying, idiot.

Madam Deputy Speaker : Order. I think that Mr. Speaker dealt with all that earlier. We should be able to continue the debate now. The hon. Member for Dunfermline, West (Mr. Douglas) is being disruptive, and unnecessarily so.

Mr. Douglas : Further to that point of order, Madam Deputy Speaker. It is well and clearly defined : we have institutionalised opposition. What I ask you to do--perhaps after further consultation with Mr. Speaker--is to get as clearly defined as it is for the Government who may speak from the Opposition Front Bench. Already we have had, from the Back Benches, interventions from an expert on foreign affairs, a Scottish Opposition Front-Bench spokesman. May the matter be cleared up for the benefit of those of us who are eternal Back Benchers?

Madam Deputy Speaker : I understand that Mr. Speaker dealt with the matter earlier today.

Dame Elaine Kellett-Bowman : On a point of order, Madam Deputy Speaker. Is it in order for the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes), having withdrawn the word "traitor", then to refer to his former colleague as an idiot?

Madam Deputy Speaker : I did not hear that. I think that we ought not to behave like fifth formers. We should get on with a serious debate.

Mr. Portillo : I do not want to delay the House much longer. If the hon. Member for Brightside cannot deal

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today with the matter that I have put to him, it may appear in the policy document which the Labour party is to produce later this week. Unfortunately, the rumours suggest that it will not be in the policy document. If it is not, we shall consider ourselves swindled out of an explanation to which we feel entitled.

In reply to the point made by the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes), the great unfairness about a roof tax is that a person whose means do not change at all could find that the value of his or her property suddenly rises because the area around it goes up in value ; perhaps it becomes yuppified. That is a wholly different position from a business seeking to invest in its own premises and improving the premises thereby.

The fifth option for local government finance is the local income tax put forward by the SLD. I congratulate the party on putting it forward consistently but not on the proposal itself. I do not know how the hon. Member for Truro can explain the fairness of a system which would allow one third of the adult population to make no contribution at all. The burden of the contribution that millions of people would otherwise make would have to fall on the unlucky two thirds.

Not only has the SLD come up with a policy ; it has also come up with figures. Unfortunately, those figures are badly flawed. They have to be flawed in order to support the fantasy contention that most people would be better off under a local income tax than under the community charge. Anyone who looks carefully at the SLD figures will see the basic flaw. The amounts of money that the SLD seeks to raise are a year out of date. They are based on the 1989-90 figures. Since then, local authorities have chosen to increase their spending by £4.5 billion ; therefore, the figures considerably underestimate what would need to be raised.

The SLD's figures have been set to raise just £7.2 billion in England, whereas councils in England this year are raising £10.4 billion from community charge payers, after allowing for the contribution from central Government via benefit and transitional relief.

As it happens, we have set out the correct figures in an answer to my hon. Friend the Member for Fylde (Mr. Jack). They show that a person in Yeovil on average male earnings would pay a local income tax bill of £955 compared with a community charge of £363 ; that is over two and a half times as much. Even a single person on £5,000 of taxable income, which I think most of us would agree is not excessive, would pay more in local income tax than in community charge in Yeovil.

In Truro, the story is similar. A person on national average male earnings would pay £888, which is two and three quarter times the current community charge. A person on £5,000 of taxable income--say, a farm worker--would still have to pay more if his own Member of Parliament got his way. It is at the level of average earnings and above that the local income tax really begins to do its damage. The author of the original SLD proposals admitted that couples with a joint income of £12,000 or above would be worse off under local income tax than with the community charge.

I do not want to detain the House too long on a local income tax, but I should like to address one point raised by the hon. Member--namely the cost of administration.

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He used a figure of £750 million for the community charge. I do not recognise that figure. The correct amount is nearer £400 million ; £750 million would be right for collecting a local income tax. The Inland Revenue has estimated that it would take 55,000 more staff to administer it. As my hon. Friend the Member for Fylde said very accurately, the great problem with a local income tax, like a roof tax, is that it would do nothing to increase local authority accountability, the absolutely vital point which we have addressed in bringing in the community charge.

In considering what improvements we can make to the community charge, we will not dilute its effect on local accountability. To do so would not be an improvement. It would be bad for the national economy, for local government and, above all, for the people who had to pay the bill. None of the alternatives that I have mentioned--not rates, not a roof tax, not a local income tax--can match the community charge in fairness, simplicity or accountability. I urge the House to reject the motion and to support the Government amendment. 5.5 pm

Mr. David Blunkett (Sheffield, Brightside) : I repeat my welcome to the Minister on inheriting a bed of nails. All his predecessors have been promoted, one of them out of what we might describe as mad cow disease into mad cow disease in terms of what he has inherited. I apologise to the House because I shall have to leave shortly and return later in the debate.

There is no doubt that the issue of the next two months will be the alternative to the poll tax, whether it is the version that the SLD has chosen to adopt and to which it is sticking through thick and thin--mostly thick--or the adaptation that the Government are seeking to introduce while maintaining the principle that they claim is the fundamental basis of the poll tax.

I should like to take up the question of what the principle is. The Government amendment suggests, as the Minister did, that the real principle is that most people should contribute something to local services. But we all know that that is not the basis of the poll tax. Its basic principle, to which we object, is that we have a flat-rate tax that does not take account of ability to pay above rebate levels. A large and growing number of the Government's Back-Benchers also object to that principle. That is why only a fair and progressive alternative could meet the myriad of anomalies that present themselves as the Government attempt to dig themselves out of the hole which all Opposition Members--Labour, SLD and others--spelled out as the poll tax went through its parliamentary stages.

Whatever the Government do in the next two months, they will make administrative matters worse and they will cause even greater confusion. Let us take the statements over the weekend about the sudden resurgence of a commitment to the family and to the community. Let us assume that the Government introduce an exemption for non-working wives and mothers looking after children. All Opposition Members would welcome that. It would be a progressive and sensible step that the Government should not tax people who do not have income. It is such a common sense step that it is blindingly obvious to anyone who is the least caring about what the Government are doing. It would be right because it would encourage parents to stop at home to look after their children, rather

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than having nannies or sending the children to private schools--something, of course, of which Tory Members know nothing. Having established that there is a sudden resurgence of commitment, with parents looking after their children at home, which we welcome, we have to ask--who pays for it?

Under a progressive tax that takes into account the ability to pay, takes more from the better off, exempts those with no income and relieves those with little income, it is fair to exempt people who stay at home. However, would it be fair to retain a flat rate tax that took exactly the same from everyone above rebate levels? That would mean that a person on two thirds of average income would be treated the same as the person with five times the average income. It would mean that a wife looking after the children of a very rich man with £100,000 a year coming in would be exempt, whereas the woman living next door, who looked after her children at home, went out to work part time and earned wages that took her--or jointly her and her partner--above the rebate level, would not be exempt. It would mean that the person who got up early in the morning, went out cleaning to keep the bread on the table and make ends meet and ensured that the family were not entitled to benefit but stood on their own two feet, would be penalised by the poll tax, whereas the rich woman in a detached house nearby would be exempt. What nonsense there would be under a flat rate charge.

The same anomalies arise in the cry--which is understandable from those who know nothing about holiday cottages and second homes--that those who have second houses should also be exempt. They say that the standard poll tax, which is really a property tax, should be lifted from the shoulders of those struggling to maintain two homes. All Opposition Members--including, I presume, those in the minority parties--accept that there is a good case for alleviating the second charge of standard poll tax where people are obliged by their job to be in residence as part of their employment contract. We accept that where people are attempting to sell their homes, their tax should be alleviated. There are anomalies. However, we can never accept that those who can afford weekend cottages should have their dustbins emptied, roads maintained, streets lit and communities protected for them at the weekend, or the occasions when they visit their homes, at the expense at the rest of the community. It would not be right if everyone else paid more so that they paid less.

Mr. Peter Fry (Wellingborough) : Will the hon. Gentleman give the House an estimate of the percentage of the average community charge that goes on the services he has just mentioned? Does he agree that the vast proportion of community charge goes on education and social services, which are paid for the area in which a person lives? Therefore, someone with a second home would be paying a much bigger contribution for services that he will not use.

Mr. Blunkett : Even with the Government making a 50 per cent. contribution for protection services such as the police, the fire and road maintenance services which notch up a large percentage of the revenue spent by local government--[ Hon. Members :-- "What about education?"] Conservative Members shout, "What about education?" but this is supposed to be some sort of charge for services

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received. That is what the Government have said in the past three years. Most of us accept that education should be met through a tax. We accept that the quality, availability and provision of education and training for the children of our neighbour and our community is as important to our well-being, as well as of moral importance, as it is to the children that we bring up ourselves. Therefore, it is not a charge for services received for ourselves and our family, but an obligation, a responsibility, for the whole of society. That is why we believe in tax, not this notional charge.

Mr. Matthew Taylor : I feel particularly strongly about second homes, given my constituency. I found the remarks of the hon. Member for Wellingborough (Mr. Fry) extraordinary. There are many villages in my part of the country where 50 per cent. of the homes sold are second homes. It is bad enough for local people to lose the opportunity to be housed locally, without losing the money for the local school, bus service and the rest, which is, effectively, what he suggested.

Mr. Blunkett : That is a helpful intervention because it reminds me that £5 million of this year's income of the well-known London borough of Westminster came from the standard poll tax. That says a great deal about the flats of business people in Westminster, and about what the relatively poor would have to pick up if the standard poll tax were abolished. Therefore, it is an interesting point--[ Hon. Members :-- "What is the Labour party going to do?"] Conservative Members shout, "What is the Labour party going to do?" We made it clear that we believe that it is necessary to have a tax that takes into account the property that people occupy and therefore, as I have already spelt out, the service that they receive when occupying that property.

There is a range of potential anomalies which the Government, if they stagger into them, will regret at leisure. It is helpful for us to be able to read the articles printed in right-wing newspapers like the Sunday Express that spell out the sort of shambles that we are in for in the months ahead if the advice given by Conservative Back-Benchers is taken.

That raises the issue of the meaningful alternative to the poll tax that replaces unfairness with equality and justice, and ensures that the anomalies that we can all see round us are swept away once and for all. The alternative cannot be a local income tax, which the hon. Member for Truro (Mr. Taylor) attempted to persuade us was a good idea. That is not because such a tax is not progressive or does not have attractions. It is partly because it does not take into account the provision of services to property, even if only partly occupied. It is partly for the very reasons that the hon. Gentleman's speech illustrated. If this debate could only be seen on television tonight, I think the issue about having a single, local income tax as a replacement for the poll tax would go by the board for ever. The idea of having a percentage flat rate, adjusted at the end of the year so that people received a penalty while facing an increase in their tax--as a buoyant tax, a percentage would automatically increase their liability--would be a killer for people. It would penalise those who fell just inside the tax threshold.

If Conservative Members are trying to peddle the idea that the fact that most people pay is a key principle, they will not find us unreceptive. We accept that it is important

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that people who have an income that entitles them to pay tax, or which can be shown to be of a sufficient level to enhance their earnings to a point where they should pay tax, should pay. Only those who have no income or a low income should have an amelioration in their tax.

Mr. Douglas : Will the hon. Gentleman clarify the position? If I understand correctly, the Labour party is in favour of a property tax plus an additional element that takes into account ability to pay. How long would it take to bring that into operation, given Layfield's estimate of five years?

Mr. Blunkett The Layfield committee, operating in 1976, did not have a great deal to say about the technology 14 years--by the time we are able to implement our taxes, more like 17 or 18 years--later. Clearly it will take time to change the position that we inherit. My hon. Friend the Member for Dagenham (Mr. Gould) has spelt out clearly the timetable that we would adopt after taking office. I give the pledge that the introduction of our alternative tax will not only be more speedily implemented than the poll tax has been, as it has been foisted on the people of Britain, but we shall ensure that the anomalies that we are now debating week after week, in the press as well as in the House--which all Conservative Members know exist-- will not be present. We shall consult about it first, listen to what people are saying, iron out those anomalies and ensure that, whatever happens, people's poll tax burden will be alleviated as quickly as is humanly possible. We shall welcome the aid of all hon. Members in the speedy introduction of an alternative tax.

All Conservative Members who want banding ; all who want to maintain safety nets, as they will when they discover what will happen to their seats if they do not ; all who believe in fairness : and all who have an inkling that if they do not change their minds the electorate will help them to do so will be reminded by the next Labour Government that we want their assistance in getting rid of one of the most unfair and unprincipled inventions that has ever been inflicted on the British people.

Mr. Simon Hughes : Will the hon. Gentleman confirm or deny that the Labour party did not adopt a local income tax not because of its inherent defects, not because there is not a huge body of support for it, but because the hon. Member for Dagenham (Mr. Gould) and the Labour party's environment team received an instruction from the Leader of the Opposition that a local income tax had to be excluded from their alternatives because it had already been proposed by another party?

Mr. Blunkett : It is difficult to take seriously a question which presumes that the Labour party operates in the same way as the Social and Liberal Democratic party where, when an instruction comes down from above, everyone jumps to adhere to it. No one could ever accuse the Labour party of not engaging in full and open debate on its policies. We are notorious for that. We have lost the past three elections in our endeavour to engage in open and democratic debate. We shall certainly not engage in it again. We have every intention of uniting behind a fair and just alternative which does not have the disadvantages of the poll tax, the anomalies of a single income tax or the

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inanity of those hon. Members who leave the party and think that it is great fun to have a few jokes about who should be sitting on the Front or the Back Benches.

Those who pose the question "What about the non-payment of tax?" must address themselves to their own friends and supporters. How can Conservative Members have the audacity, in the media or through their summer offensive today, to accuse a handful of Labour Members of breaching the law by not paying their poll tax when the National Audit Office has just issued a report showing that the Government are allowing £5 billion--not million--of tax to remain uncollected and encouraging such evasion by cutting the inspectorate which should be preventing that? They should put their money where their mouth is and increase the inspectorate so that that uncollected income tax can be chased up.

Mr. Harry Greenway : The hon. Gentleman makes an extraordinary point. Is he aware that the Labour-controlled Ealing council, so summarily dismissed by the electors a few days ago, has not had a single year's accounts passed by the district auditor since it was elected in 1986?

Mr. Blunkett : I imagine that it is taking steps to ensure that it collects all its income, which is more than can be said of the Inland Revenue. The hon. Gentleman may be euphoric about the result in Ealing, and I make no bones about it being a bad one for the Labour party, but he should bear it in mind that the Labour party polled more votes than the Conservative party in Ealing on 3 May.

Mr. Greenway : That is not true.

Mr. Blunkett : Yes, it is.

The Conservative party, which preaches about being a low-tax party but does not collect tax and national insurance, causing the rest of us to pay more, has this year increased the amount of tax which we pay as a nation from 33.8 per cent. to an estimated 37.6 per cent. of gross domestic product. The Government have the cheek of the devil to proclaim themselves the tax reliever of the poor and the benefactor of those who are badly off. The Conservative party has taxed the poor more, hit middle-income earners harder, assisted the rich and ensured, through the poll tax, that there has been a transfer of income from the poor to the wealthy ; from those who can least afford to pay to those who can afford to pay more. That is the scandal of the Conservative party's tax policy. That is why we are not only against it but will replace it with something which will receive universal support for its fairness and equity.

5.25 pm

Mr. Peter Fry (Wellingborough) : The hon. Member for Sheffield, Brightside (Mr. Blunkett) sought, rather oddly and illogically, to justify a campaign of breaking the law by complaining that in another area the law was not being carried out effectively. Despite the Leader of the Opposition's statement dissociating the Labour party from the anti-poll tax campaign, it is evident to anyone who knows the leading members of the anti -poll tax campaign in his locality where their political allegiance lies. They are composed of Labour party supporters and are even headed by at least one hon. Member. It is high

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time that those Labour Members who feel so strongly at least resigned their seats and offered themselves for re- election on that basis.

However, I do not want to spend too much time talking about the Labour party, for the simple reason that we have considered what it intends to do for a length of time which can be compared with the gestation period of an elephant, except that it has not even produced a mouse. Therefore, we are talking about a void.

It is much more important this afternoon to debate the policies of the Social and Liberal Democrats. It is interesting that once again the hon. Member for Truro (Mr. Taylor) and his party have got their figures wrong. Their figures and estimates are based on last year's expenditure. That is hardly surprising, because the Social and Liberal Democrats spend all their time dealing with the world as they would like it to be, rather than as it is, which is the Government's province.

The crucial point, which has not been made often enough, is that it is completely wrong to equate the level of the rates last year with what the level of the rates would have been this year if there had not been a change. Wellingborough district council has a modest community charge of £288, but even its spending showed an increase. A comparison of its rates last year with what its rates would have been this year shows a 22 per cent. increase. Northamptonshire is not a tremendously high spender, but throughout the county the rates would have been about 30 per cent. higher. If many of those who write to hon. Members realised that their rates would have been 30 per cent. higher, they would not have been so critical of the community charge.

But that is not the only point that I want to make about the proposal. It is interesting that it is assumed that a local income tax will give the accountability that is claimed for it. It is true that some European countries have a local income tax. I was fascinated to hear an interview with a Danish person. He was asked, "How do you pay for your local government services?" The answer was, "By means of a local income tax." The next question was, "How much is your local income tax?" The answer amounted to the Danish equivalent of 28p in the pound.

If local authorities were to be given the right to impose a local income tax, costs would escalate before we knew where we were. If the argument is then advanced that central Government must cough up the money in the form of grant in order to ensure that the local income tax is not too high, local accountability would become very difficult to enforce.

Rates were a most unsatisfactory form of local government taxation. I entered politics because I could see no justification for the rating system. Can those Opposition Members who say that the community charge is unfair tell me why it was fairer for one person living alone in a house to pay the same in rates as four or five people earning money in the house next door? The rating system was totally discredited.

Sir Cyril Smith (Rochdale) : Then why did it take the Government 10 or 11 years to do something about it?

Mr. Fry : A sinner who repents is better than one who never repents.

Neither the official Opposition nor the other Opposition parties have said anything this afternoon that makes me believe that the system that the Government

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have introduced is wrong. However, as with all great innovations, there are defects in the Government's proposals. I, and most of my hon. Friends, accept that there are defects. Therefore, we welcome the amendment tabled by my right hon. Friend the Prime Minister and others, which demonstrates that the Government are prepared to listen to sensible proposals. The main point of the debate is to air a number of alternatives. I give the hon. Member for Truro credit for listing some of them. Some of the other contributions have been less helpful.

Mr. William O'Brien (Normanton) : The hon. Gentleman has reminded the House that the Prime Minister is prepared to listen. Does he have any suggestions to make to her about amending the poll tax so as to benefit his constituents and people throughout the country?

Mr. Fry : I was about to do just that. I trust that the hon. Gentleman will listen to what I am about to say.

Mention has already been made of the fact that the sudden imposition of the full community charge on married women with no income of their own can have a drastic effect on the family's finances. I am aware of the fact that transitional relief and other benefits are available, but many people live in what was comparatively low-rated property. Therefore, when the community charge was introduced, they found that the bill increased sharply and that they could not obtain transitional relief.

All people should, in principle, contribute towards the cost of local government services, but the Minister ought to consider whether married women with no income should pay the full community charge. The cost of complete exemption would be exorbitant, but the community charge bears heavily upon the mothers of small children who have no income of their own. All hon. Members would welcome anything that the Minister could do to help them.

Mr. Allen McKay : I sympathise with the hon. Gentleman's point, but who will pay the bill in those areas where three quarters of married women do not work?

Mr. Fry : Under the rating system, the husband paid for his wife and himself. We are talking about an additional amount of transitional relief for married women who do not go out to work. I said that I did not believe that full exemption could be afforded, but some exemption could, and it ought not to fall on the other community charge payers. The money would have to come from central Government.

The hon. Member for Brightside did not fully appreciate the extent to which the community charge is bearing heavily on people of comparatively modest means who have second homes. He suggested, as did the hon. Member for Truro, that everyone who owns a second home is exceedingly wealthy.

Mr. Chris Butler (Warrington, South) : A constituent came to see me in my surgery at the weekend and told me that he had bought a chalet in Wales which has no electricity, gas or water. He is disabled and earns £79 a week. The rates on the chalet were £140 ; he is now being asked to pay two standard community charges. The system does not enable him to qualify for transitional relief. He is in receipt of no community charge rebate. Ought not that anomaly to be corrected?

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Mr. Fry : I am grateful to my hon. Friend. I had intended to refer to a similar case in my constituency. People who have worked hard all their lives and whose incomes are modest may choose not to have Mediterranean holidays but to invest their money instead in seaside chalets. They feel that they are being penalised.

Mr. Home Robertson : All those hon. Members with Scottish constituencies who had the poll tax and all the other anomalies inflicted on them a year ago, just because of votes cast for the hon. Gentleman and his hon. Friends, find it quaint to hear them squealing about all these problems. The hon. Gentleman has referred to a number of poll tax concessions. Would he go a step further and say that such concessions should be made retrospective by the addition of a further year for Scotland?

Mr. Fry : The hon. Gentleman must make his own speech in his own way, should he be given that opportunity. If he will allow me, I shall get on with mine.

Sir Cyril Smith : I strongly support what the hon. Gentleman says. I have had more trouble with second homes in my constituency than I have had about the rest of the poll tax put together. I have written to the Prime Minister and the Minister giving details of specific cases and requesting that they should be part of the review. The council in my constituency has decided to charge twice the rate of poll tax on second homes--about £800. I am delighted that the Government have rate-capped Rochdale. The council has indulged in gross extravagance.

A constituent of mine, a woman of 91, went to live with her daughter four years ago. She said, "I'm only coming so long as I can keep my home." The daughter kept her mother's home for four years rather than upset the old dear. Suddenly the daughter was faced with having to pay 800 quid, although she is caring for her mother and keeping her home going.

A fortnight ago, a full-time officer in the Royal Air Force told me that he had bought a second home in Rochdale ready for when he comes out of the RAF and he has suddenly been faced with an 800-quid poll tax. I strongly support the hon. Gentleman.

Mr. Fry : I am most grateful to the hon. Gentleman.

Mr. Simon Burns (Chelmsford) : My hon. Friend is as interested as I in the remarks of the hon. Member for Rochdale (Sir C. Smith). I put it to him that a number of my constituents are also suffering because they own second homes. They are not beautiful holiday homes ; they are second homes for work, or other reasons. My constituents have to pay two community charges. May I suggest that the hon. Member for Rochdale has a word with his colleagues, the Liberal councillors of Chelmsford borough council who have imposed two community charges on second homes?

Mr. Fry : This is rapidly becoming a debate on interventions rather than on the motion before the House.

Dame Elaine Kellett-Bowman : Will my hon. Friend give way?

Mr. Fry : No. If we go on like this, my hon. Friend may know where she is, but I shall not.

One of the greatest problems is that many councils which never previously rated empty properties too readily accepted the formula of imposing two standard charges, so

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people who were paying nothing suddenly had to pay two standard charges. I know that allowances are supposed to be made for the first three months and that then charges on a rising scale from nothing up to two standard charges could be imposed. However, certain categories of people have been badly caught when councils have imposed the full charge.

One such category comprises young people who have bought old properties because they could not afford a new property or one in a good state of repair. A young man and woman who want to get married in a year's time and have bought an old property now discover that they are being charged a standard charge where they live and a double charge on the empty property which they are repairing and renovating. Instead of having to pay one charge each, they are having to pay four charges between them.

I assume that it was never intended that people who are trying to help themselves and who could not afford to buy a house in good repair should be penalised. The present safeguard of three months is totally inadequate ; even a year would probably be inadequate. Local authorities need to apply much greater discretion in taking such cases into account.

Dame Elaine Kellett-Bowman : I wish to draw attention to two particular cases. First, somebody who loses an elderly parent may subsequently receive an immediate community charge bill. There is no three months' leeway. Secondly, empty farm cottages are relieved of community charge in Scotland but not in England. However, the cases involving deceased parents are really quite tragic.

Mr. Fry : The three-month period started at the beginning of the year, so it was over before the community charge came into force. I am sure that my hon. Friend the Minister has the ability to put right the anomalies that have been raised. The injustice that has been outlined by hon. Members on both sides of the House causes deep resentment. People on modest incomes who can pay their own community charge strongly resent being asked to pay more.

I am sure that my hon. Friend the Minister will be delighted to know that I do not propose to read out a list of suggestions for him to follow.

Sir David Mitchell (Hampshire North-West) : Is my hon. Friend aware that there is another anomaly, involving farm workers? Those who suffered a large increase in their community charge compared with the rates that they paid will be eligible for concessions, but that applies only to those who previously paid rates. Farm workers in tied cottages did not pay rates, so they are not eligible for the concession. I hope that my hon. Friend will realise that that is another anomaly which should be drawn to the attention of my hon. Friend the Minister.

Mr. Fry : I am coming to the end of my remarks and from now on hon. Members will have to interrupt someone else. I have suggested two main concerns and no doubt hon. Members will make other suggestions. However, in all seriousness, I stress that the two anomalies that I have mentioned this afternoon will make a great difference to the ultimate acceptance of the community charge. The electorate are fully aware that the Government intend to do something, but what they do will decide how that electorate will react.

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I am aware that there is not untold money to throw at the problem, and I am not suggesting it, but when my hon. Friend completes his deliberations and produces a number of sensible proposals that do away with the worst anomalies, he will receive not only the gratitude of Conservative Members and perhaps some Opposition Members, but the thanks of the electorate.

Finally, even when the worst anomalies have been removed, I am sure that my hon. Friend the Minister is fully aware that that will not be the end of the story. The major problem is that the charge is too high. Whether the community charge is £288, as in my constituency, or £350 or £400 as in other parts of Northamptonshire, anyone who has to pay more than they paid in rates will regard it as excessive. Will my hon. Friend re -examine the way in which central Government grants are distributed? For example, in Northamptonshire we have many of the costs that arise in the south-east of England, but those extra costs were not recognised in the grant that the council received. I hope that my hon. Friend will consider that factor, as it could make a considerable difference in future.

Local authorities must examine their budgets. We are often told that no savings can be made and that there can be no more cuts. After the introduction of local management of schools, are the Government determined to ensure that local education authorities cut their central administration? Certainly real savings could be made and passed on to the community charge payers. We should ensure that county councils initiate thorough cost investigation exercises, because ultimately county councils are the deciding factor. I am sorry that the hon. Member for Bolsover (Mr. Skinner) is not here, as he had so much to say about Derbyshire. One of the most interesting local election results was not Westminster but Derby. Derby was marginally held by the Conservative party and everyone thought that it would be lost, but it was not, because anyone who has been to Derbyshire recently knows that Derbyshire county council is clearly marked out as a mighty overspending authority. When the electorate can clearly identify the overspenders, people will vote accordingly. In my view, that justifies the Government's policy.

Mr. Harry Barnes (Derbyshire, North-East) : Will the hon. Gentleman give way?

Mr. Fry : No.

Before I sit down, I must tell my hon. Friend the Minister that he has a mighty task ahead of him. I welcome him to his new position, knowing how well he did in his previous post in the Department of Transport, and I wish him well, but the hopes of many Conservative Members and the hopes of our party rest heavily upon his shoulders. 5.48 pm

Mr. Dick Douglas (Dunfermline, West) : I welcome the Minister to his new post. Let me say with some diffidence that when he was elected to the House he was one of the younger Conservative Members that I marked out for stardom. I do not want to condemn him by saying that. I recognise that he has enormous ability, but he has an enormous task because he has to attempt to reconcile the irreconcilable.

The criteria that the Government adopted for the poll tax were accountability, fairness and efficiency. However,

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the more one tries to achieve fairness, the more one moves away from accountability. Therefore, I do not apologise for referring particularly to the Scottish experience.

It is probably difficult to carry out a policy of a local income tax for the whole of Britain. I recognise the administrative difficulties, as did Layfield a long time ago. However, in Scotland, it is perfectly possible to have a local income tax. If the proposals accepted by the Opposition parties for a Scottish Parliament are carried out, it is eminently desirable that that Parliament is elected on proportional representation, and that it carries out discussions on how we reform local government in Scotland and how we apportion taxation, on both a Scottish and a local authority basis. If we cannot do that for 5 million people in Scotland, we had better give up advising people on how to govern themselves. The basic difficulty for the Opposition parties is how we should move towards that position. The Labour party especially has got itself on the horns of a dilemma.

The Government talk about accountability and say that everyone has to pay. If one accepts that, extreme problems are encountered, as in Scotland. What does one do about the mentally handicapped? One has to make concessions. We were told repeatedly that concessions could not be made for those with Alzheimer's disease, yet concessions were made. There is an enormous anomaly in relation to care of the aged. The hon. Member for Rochdale (Sir C. Smith) gave an illustration of it. He spoke about a lady who had left her home temporarily to be cosseted in the bosom of her family. The family had to pay their own poll tax and twice the standard charge for the home that the old lady had vacated, although they were looking after an aged parent. I have many experiences of such cases in my own family. If our elderly parents had been put into nursing homes, they would not have paid the poll tax, yet they would have made a greater charge on local government services. Those are considerable anomalies, but they relate to fairness.

It is a farce that we loosely speak of "local government finance". There is no such thing, as the Minister reveals in his speeches. If local government finance means anything, why does the poll tax account for 25 per cent. to 30 per cent. of local revenue in England and Wales, whereas in Scotland it accounts for 15 per cent? The reason is that the Exchequer transfers resources in one form or another from central Government revenue to local government on a basis that is not, and cannot be, equitable. In Scotland, the poll tax accounts for 17 to 18 per cent. of local revenue in some authorities, whereas in others it accounts for as little as 4 per cent.

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