House of Commons Hansard Debates for 3 Dec 1990

Mr. Richard Holt (Langbaurgh) : Does my hon. Friend accept that the people of Cleveland are complaining bitterly about the lack of capping upon that spendthrift authority by the Government? It has just decided to spend a seven-figure sum on repainting all its fire engines orange, instead of red, to acquire a corporate image. If it had been rate-capped or community charge-capped, it would not have had the opportunity to waste that money.

Mr. Deputy Speaker : Order. I remind the House that Mr. Speaker pointed out that the scope of the Bill is very narrow.

Mr. Portillo : Nonetheless, I am deeply sympathetic to my hon. Friend, whose constituents face community charge bills of £421 and £429--very high community charges indeed--which are due to that level of overspending.

Haringey failed to reduce its community charge by the full amount of its budget. We challenged that decision in the courts, which held that Haringey's charge was unlawful.

Finally, we took action to force Lambeth to pass on to its charge payers the full reduction in the charge resulting from capping. The court held that, in the particular circumstances of this case, it was lawful for Lambeth to act as it had done, but the Lambeth case, to which this Bill is the response, did not call into doubt our powers to cap budgets, or the way in which we put the caps into effect. As I shall shortly explain, it related only to the question of what level of community charge should result from the cap.

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If necessary, we will use our capping powers next year, including our power to cap excessive year-on-year increases, a course which was not open to us this year.

Mr. David Bellotti (Eastbourne) : Is the Minister aware that, while he is taking these powers--as he has confirmed he will continue to do--the contribution by the Government to county council finances in the east Sussex area which I represent, has gone down in the last 10 years--it used to be about 40 per cent. and it is now only 16 per cent? Is the Minister saying that there is a moral justification for taking such excessive powers against a council, when the Government are doing so little to help councils?

Mr. Portillo : When we recently announced that the weighting given to tourism in the standard spending assessments next year would be doubled, the local authority which benefited most was Eastbourne. So I must challenge what the hon. Gentleman has just said.

Mr. Bellotti : The hon. Gentleman has challenged me. Is he aware that the greatest part of the county council's expenditure is on education, that the reduction in central Government grant to county council expenditure has had a great effect upon our schools and that tourism is only a small percentage of our budget? Unless he does something about education, social services and housing, there will be no answer. Is he aware of all those things?

Mr. Portillo : If the hon. Gentleman felt so strongly about that, I am sure that he would have led a delegation to see Ministers during the consultation period--which, I am afraid, is now closed. By announcing our intended capping criteria for next year in advance, as my right hon. Friend the Member for Bath (Mr. Patten) did in his statement on local government finance on 31 October, we have given councils the chance to decide for themselves. Any council which strays into being capped next year will have done so with its eyes open. I do not deny that our criteria are tough, but they are realistic and they are necessary. We will be putting a very great deal of extra money into local government next year, and we will not see it frittered away in unnecessary spending.

We shall, of course, consider carefully the individual circumstances of any authority which we propose for capping. There would, of course, be an opportunity for any authority which was designated to make representations about the level of the proposed cap. That is no mere ritual. What is perhaps more of a ritual is the list of horrors which each local authority trots out in its public presentation--the cuts which they claim to be the inevitable consequence of capping. The list always contains the most sensitive front-line services--never reductions in waste, or improvements in efficiency.

Time and again--from the earliest days of rate capping such lists have been trotted out, but rarely, oh so rarely, do the predicted horrific consequences in reality occur. Indeed this year, in the middle of the capping process, one authority designated for capping--Hillingdon--changed control, from Labour to Conservative. The Labour administration of Hillingdon had claimed that the proposed cap was "totally inadequate to meet the needs of Hillingdon". What actually proved to be totally inadequate was the Labour administration. Three days later, they were thrown out of power. Under

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the new management, Hillingdon was able not merely to accept the proposed cap but to set a budget significantly below the cap. My right hon. Friend the new Secretary of State and I stick firmly by the intentions for criteria laid down by my right hon. Friend the Member for Bath. Today, just as when he made that announcement, they remain the Government's proposed criteria for capping in 1991-92. Let no council doubt it for a moment.

Mr. Martin Redmond (Don Valley) : Will the Minister confirm that, when an authority is capped, both manpower and services may be affected? Will he give a guarantee that any authority that--having been capped--falls foul of the law by not providing what is legally required of it, because it no longer has the necessary resources, will be indemnified against any court action?

Mr. Portillo : I have already referred to the opportunity that exists for all local authorities to make representations if they are opposed to capping. During such meetings, authorities often mention the difficulties that they feel that they may encounter in meeting their statutory obligations, and I shall bear the matter carefully in mind.

Let me tell the hon. Member for Don Valley (Mr. Redmond) that his authority, Doncaster, is being allowed a 9 per cent. increase before it comes within the range of capping. That strikes me as very reasonable.

Mr. Hind : My hon. Friend will be aware that councils such as Lancashire are avoiding making efficiency savings. A report that Lancashire commissioned from P and A recently showed that its social services and homes for the elderly were in a disastrous state. It has, however, shelved that report and done nothing about it. It is already £4 million overspent on its social services budget, and is now making cuts.

There is clearly a message here for councils : they should take the advice of those whom they hire to investigate their position. That is exactly the point that my hon. Friend was making a moment ago.

Mr. Portillo : I certainly agree that councils should be willing to take the best advice on how to run their affairs efficiently. My hon. Friend will probably be pleased to know that next year Lancashire will be restricted to a budget increase of 9 per cent., if my right hon. Friend the Secretary of State applies the criteria as he has said he will.

The purpose of this short Bill is to amend the existing law on the setting of substitute personal community charges to guarantee that the budget reductions that a council makes as a result of capping will feed through in full to chargepayers.

We decided to introduce the Bill following the judgments of the divisional court and the Court of Appeal in the Lambeth case in September. Lambeth chose, when setting its substitute charges, to deprive its charge payers of over half the cut in the charge implied by the reductions that it had been required to make in its excessive budget. That looked to me like a spiteful decision by the council. While there is an argument--not one that I accept, but one that I understand--that capping forces councils to make cuts that they think should not be made, I cannot see why, once they have been required to make those reductions, however reluctantly, they should still resist passing on to their charge payers the full reduction in their bill resulting from that cap.

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What motive can there be for seeking to deny hard-pressed charge payers the full benefits of capping, especially for a political party that feigns concern for those who find it hard to afford the charge? Yet Lambeth was not alone in attempting to do its charge payers out of their dues. Haringey--and, to a lesser extent, a number of other authorities--tried it ; indeed, Haringey went so far that we successfully challenged the legality of its decision in the courts--as I have already mentioned.

I believe that it would be wrong in principle for us to leave in place a loophole that enables an authority to deny its charge payers the full benefit of capping. This Bill puts matters beyond doubt for the future. By doing that, I hope that we can save a lot of court time and community charge payers' money which might otherwise be spent testing the law or contesting actions by Government or local councils. The reductions that an authority is obliged to make owing to capping will lead to commensurate cuts in charges, and we propose that that should be made entirely clear.

The Bill seeks to achieve its aim by means of a formula. It appears a complex formula, because it is algebraic. Let me briefly interpret it. The Bill provides that the new charge must be derived by our subtracting from the old charge the difference between the old budget and the new budget, divided by the area's adult population. If a budget is reduced through capping by, say, £50 per community charge payer, the community charge must be cut by £50.

Clauses 1 and 2 of the Bill must cater for that in the case of, first, precepting authorities and then, separately, charging authorities. It also prevents the use of a dodge to get around the formula by setting a further higher charge, after using the formula in clause 3. It must make provision for what authorities must do if, for example, both the district and the county are capped. Clause 4 ensures that there will be no wasteful multiple re-billing in such cases, and clause 5 deals with refunds that may be due to charge payers after capping.

Mr. Fraser : I understand the equation "A (B C) divided by the number in the adult population". How would the Minister determine "E", which is, I believe, between 0 and 1?

Mr. Portillo : "E" will apply to the City of London. It is intended to ensure that the reduction due to the community charge payer is passed on, because the finances of the City of London are very particular and specialised. The factor is 0.01. Although the Bill does not say that "E" refers to the City, I am able to reveal that it does.

The Bill is not as complicated as it looks. I admit that it is not proof against mockery from Mr. Matthew Parris, on the ground that its meaning does not at once leap from the page : that is the point that the Liberal Democrats have tried to make in their reasoned amendment, which has not been selected. I shall, however, endeavour to make all its provisions absolutely clear to the Standing Committee, and I shall supply every hon. Member who serves on it with all the helpful explanatory material that I can provide. Even so, I recognise that it is likely to give hon. Members some scope for amusement at my expense in Committee.

One thing that is truly in earnest is the Government's determination to keep council spending under control, and to offer charge payers a degree of protection against

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profligate councils. The House will know that we found it necessary to make use of capping under the rating system : capping is not, therefore, a by-product of our moving to the community charge. For the reasons that I have explained, it might be necessary under any system of local government finance. Because of that, I see no merit in the other part of the Liberal Democrat amendment, which implies that we should hold fire until we have completed our review. The Bill is needed in any event, and it is needed in time to protect community charge payers from April 1991. The loophole exists today--a loophole that threatens to cheat charge payers of the reductions in charge to which they should be entitled. The Bill closes it, and it is designed to guarantee that local people benefit from lower council spending.

Mr. Harry Barnes (Derbyshire, North-East) : Does that mean that, from April 1991, nothing will be done in the House to alter the current structure and system of the poll tax and its operation?

Mr. Portillo : I refer the hon. Gentleman to the second paragraph of my speech, in which I said that I had nothing to say about the community charge review further to what had been said by my right hon. Friend the Prime Minister. The hon. Gentleman and others will, however, have an opportunity to raise points in Wednesday's debate. We look forward to that.

If local councils will not act in the local interest, the Government will require them to do so. The Bill is part of that commitment, and I commend it to the House.

5.8 pm

Mr. Bryan Gould (Dagenham) : I am unlikely to be alone in detecting in the Minister's speech some embarrassment at the fact that he had to come to the Dispatch Box today to present this measure. That embarrassment arises, I think, from the existence of a puzzle at the heart of the Bill, which the Minister did not seek to resolve. That puzzle is not to do with the Bill's complexities--although, as the Minister has conceded, anyone who recalls the Government's promise that the poll tax Bill would be simple would be forgiven for seeing in the complicated provisions of this short Bill yet another poll tax promise that turned out to be false.

The real puzzle is why we should still be confronted with such a measure at all. Why do the Government, who have totally lost confidence in the poll tax, still insist on turning the poll tax screw even tighter? Why, after all the damage, failures, broken promises, insuperable difficulties, repudiations and resignations, do the Government still doggedly insist on digging themselves yet deeper into the hole that they have created? Why, after all the misery that the poll tax has meant for millions, the damage to local government services and the threats to the role of local government itself, do we still have to debate a measure that can only make matters worse? Have the Government truly learnt nothing from the debacle of the last year or so, or is the truth, perhaps, that the lesson is clear enough but that they are paralysed by indecision about what to do about the poll tax? How can the Minister stand at the Dispatch Box and present a measure whose purpose--to nail down the discretion that

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remains to local authorities as to how to set the poll tax--is flatly contradicted by statements made in recent weeks by virtually all his senior colleagues in Government?

Is the Minister unaware that the new Prime Minister has admitted that the problems of the poll tax are a technician's nightmare and that they have created an irresistible momentum for further change? The Prime Minister blames those changes on the fact that the Cabinet were "bounced"--his word- -into decisions. Why, then, are we being bounced into taking this step, when surely the right course is to have a period of mature reflection so that the full implications of the Conservative party's disenchantment with- -indeed, abandonment of--its flagship can be fully digested before it sails further on to the rocks?

Is the Minister aware that the former Chancellor of the Exchequer, the right hon. Member for Blaby (Mr. Lawson) has variously described the poll tax as "indefensible", " a grave error of judgment", "completely unworkable" and "politically catastrophic"?

Mr. Hind : The hon. Gentleman will be aware that, irrespective of what happens in the House today, it is impossible to introduce a new system of local government taxation by 1 April 1991 together with all the necessary back-up that would be required. Surely it is better to deal with the problems at this stage by means of an interim measure and then to have a full review of the community charge.

Mr. Gould : I am grateful to the hon. Gentlman. He at least is a little clearer on that point--although I am not satisfied that he is right- -than was his ministerial colleague. My purpose is to try to smoke out the senior Treasury Bench Ministers. We do not have the Secretary of State, a point to which I shall turn later.

Mr. Holt : He is sitting there.

Mr. Gould : Of course he is sitting there, but I want him to get up to answer the question. I want to know what the relevance of this measure is to the fundamental review to which the Secretary of State has committed himself. He will probably not intervene, because he is already on record about the principles embodied in the Bill. Let me deal with other Cabinet members. A moment ago I dealt with an ex-Cabinet member, the former Chancellor of the Exchequer. The new Secretary of State for Education and Science--

Mr. Holt : On a point of order, Mr. Deputy Speaker. The Minister rightly drew attention to the narrowness of the Bill. The hon. Member for Dagenham (Mr. Gould) is making a wide-ranging speech, without intervention.

Mr. Deputy Speaker : The hon. Gentleman is following the pattern set by the Minister when he addressed the House.

Mr. Gould : As I am sure you will confirm, Mr. Deputy Speaker, when a Bill is given its Second Reading, it is perfectly legitimate for the Opposition to inquire why it has been introduced, given the political context from which it emerges. That is the point that I intend to pursue. From the line of argument that I am developing, we shall see that the point of the Bill emerges clearly and in an unfavourable light.

I was about to quote the new Secretary of State for Education and Science. He concedes that the poll tax is a

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major problem. The Minister can hardly be unaware, either, that the Secretary of State for the Environment until just a week ago, the right hon. Member for Bath (Mr. Patten) who was in charge of the poll tax, is on record as saying that the poll tax is a bomb that has to be defused. If that is the case, why prime it further so that it makes an even bigger bang? Why should not the Minister adhere to the position, now revealed--admittedly, rather late in the day--by his former superior, that the poll tax cannot proceed in its present form? The Minister cannot be unaware, either, that the present Secretary of State for the Environment has repeatedly denounced the poll tax.

In deference to Mr. Speaker's ruling, I shall not go into the details of the myriad complaints and denunciations that the right hon. Member for Henley (Mr. Heseltine) has levelled against the poll tax. They can await our debate on Wednesday. However, we ought to recall that the right hon. Member for Henley made his critique of the poll tax and his determination to replace it in some form or another the centrepiece of his election strategy for the Tory leadership. He was joined by every other candidate for the Tory leadership. All agreed, at least implicitly, that the poll tax had been a disaster. Why, then, does the Minister come to the House with this measure, which has been disowned, at least by implication, by the Government as a whole and by his own Secretary of State?

Mr. Andrew Mitchell : The hon. Gentleman is setting up a bogey man that he intends to shoot down. My hon. Friend the Minister stated clearly that the point that the hon. Gentleman addresses is not relevant to the Bill. The Bill had to be introduced in order to enable the Government effectively to cap councils that overspend. That was true under the rates. It is now true under the community charge. Why does the hon. Gentleman persist in pursuing a point that is not at issue today?

Mr. Gould : The hon. Gentleman seems, surprisingly, not to have heard the made repeatedly point by the Minister in the second paragraph of his speech. In it he explicitly refrained from making the point that the hon. Gentleman has just made. The reason is that the Minister will not say what relationship the Bill will bear to whatever emerges from the fundamental review. He does not intend to tell us anything about that. Therefore, we are entitled to ask the question ; we have not yet had an authoritative answer.

It is not surprising, and it is perhaps significant, that the new Secretary of State for the Environment on this occasion--the first occasion he has had on which to address this major preoccupation, this virtual obsession-- remains silent and simply a bystander. I suspect that the Secretary of State just sits there because he is happy to allow the Minister to be the fall guy.

Why is that happening? There is one explanation : that, on this occasion, the Minister is a volunteer, not just a pressed man. He alone in the whole of the Government still believes in the poll tax. He still believes that its dread disciplines must be imposed, irrespective of the damage they cause. That was his message to the Tory conference just a few weeks ago. He told the Tory party then : "far from being a vote loser, with your help, it"--

the poll tax--

"will be a vote winner and launch us on our fourth term."

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If I recall correctly, that stirring statement earned only the most lukewarm of applause. I suspect that the hon. Gentleman would be hard put to it to find anyone who now subscribes to those sentiments. The Minister was soon at it again. On 14 November, he told us that the poll tax review was now complete--that no further changes were needed and that all the problems had been ironed out. Thus spake the last true believer in the poll tax, before he was overwhelmed by the headlong rush of all his senior colleagues, including the right hon. Member for Henley, to bale out from a disaster area.

On that interpretation, the Minister deserves at least some recognition of the fact that he alone still has the courage of his colleagues' former convictions.

Mr. Deputy Speaker : Order. I think that the hon. Gentleman ought to return to the terms of the Bill.

Mr. Gould : That is exactly what I intend to do.

There is, however, one further possible interpretation of the Minister's position on the Bill. It begins with our recollection that he was originally appointed as the then Secretary of State's minder--a member of the Stasi, one might say--to ensure that there was no backsliding and that the sacred principles would be intact after the last review had taken place. Is that, perhaps, still his role? Is his continuation as Minister for Local Government and Inner Cities a sign that he is required by the Prime Minister to ensure that the fundamental review becomes just a matter of further refinements? Is that why he is still with us, doggedly chanting the same old incantations, pursuing the same old rituals and demanding the same old sacrifices?

The Minister is out of line with the Secretary of State not only on the principle of the poll tax but on the point advanced by the Bill--capping and the apparent closing of the Lambeth loophole. On that point perhaps above all others, the Secretary of State was most clear and specific in his critique of the poll tax. He aimed a scatter-gun at virtually everything about the poll tax, but the one thing on which he was very clear was the point about capping. The Bill, after all, is the measure of a Government who are not content with their power to fix budgets for local authorities. The purpose of the Bill is to make the poll tax cap fit even tighter, to override the judgments, as the Minister pointed out, of the High Court and Court of Appeal by permitting the Secretary of State to fix the poll tax bill--at least by necessary implication--without reference to factors such as the collection level in a locality or its effect on services and on the ridiculous assumption, which was confirmed by the Minister, that the collection level will be 100 per cent. It is the most extreme form of central Government diktat over local government that we have yet seen, and all in the name of a poll tax which is now completely discredited. How can the Minister argue for a measure that empowers the Secretary of State to substitute for the judgment of the local authority on the size of the poll tax bill, when the judgment of the Government on the principle of the tax has been repudiated by their own supporters?

Mr. Holt : Would an incoming Labour Government place any controls on local government, or would it be allowed to set whatever level of charges it wished on the local inhabitants of its area?

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Mr. Gould : We have repeatedly made it clear that we do not think that capping is the right answer to the problem. As I shall show, the Secretary of State agrees with us.

In his celebrated article in The Times on 10 May, the Secretary of State said that they had "crawled over" the capping option but finally rejected it. Why had they crawled over it but rejected it? He pointed out the practical difficulties of setting a limit that is neither too high nor too low, and he concluded that such a system would

"negate accountability and be an act of centralised political power outside our experience. On these grounds alone, it should be resisted."

The hon. Gentleman made those points with all the more force because he knows, as we know and as everybody knows, that the only case made for the poll tax was that it would improve accountability. With that same perverse destructive logic that has destroyed everything it touches, the poll tax has now attacked the principle that gave it birth. The Bill is the death knell of accountability. It means that every aspect of local government finance is under central Government control.

Mr. Sydney Bidwell (Ealing, Southall) : Does not the nation understand that that is the prime reason why the right hon. Member for Finchley (Mrs. Thatcher) is not still our Prime Minister?

Mr. Gould : I am sure that is right, and I am sure that it is very much the view of the Secretary of State.

As a consequence of this measure, every poll tax bill will, either directly or by necessary implication, be sent out with the sanction of the Government. The bills that arrive next spring will be the Government's bills.

The right hon. Member for Henley (Mr. Heseltine) has scored not the full success that he clearly hoped for but at least a change in the leadership of the Tory party and recognition that the poll tax has to change. But at the very time when he secured that change and put the party in a position where it is doing all it can to distance itself from the measure that it created, the Bill locks the Government in even more tightly to every poll tax bill. That is a negation of accountability carried to an extreme which even the Secretary of State could not have foreseen.

The Secretary of State presumably agrees with us. He advised us in his article in May to resist. "Resist"? Introducing a Bill in his name that will put the Government in charge of the poll tax not only does not resist the measure but nails down the coffin lid even more firmly. "Resist"? We should not have to resist. In the political situation that now obtains, the Bill should be withdrawn. The idea, the policy and the poll tax that the Bill defends is bankrupt and defunct. If resist we must, resist we shall. We shall resist with our votes against the Bill. We challenge the Secretary of State to join us in that resistance in the Lobby this evening.

5.25 pm

Mr. Kenneth Hind (Lancashire, West) : I welcome my right hon. Friend the Member for Henley (Mr. Heseltine), who is now leaving, to the Front Bench. I never realised that I had quite such an effect on Ministers, but one learns something every day.

Perhaps the fact that my right hon. Friend was on the Front Bench shows that a rethink on the community charge is needed. Many of us welcome that rethink and look forward to his deliberations. In the meantime, it would be impossible to introduce, for the next financial

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year, a fundamental change in the system of local government finance. The Bill amends the current system and enables some sensible financing under the present legislation.

The hon. Member for Dagenham (Mr. Gould) referred to damage to local government. The Bill does no damage to local government. It represents a need for prudent financing, cost savings and provision of good value for money for the payers of local government tax, whether it be rates, the community charge or, as the Liberal Democrats would advocate, a local income tax. It does not matter what the system is, because what is needed is a prudently financed system that serves the community and provides good services. The purpose behind the Bill is to protect local government taxpayers from profligate financing by local government and to prevent it from taking from community charge payers far more money than they can afford, which reduces their standard of living.

Mr. Allen McKay : The hon. Gentleman is talking about prudent financing. Why does he support a system that costs my authority £3.5 million more than collecting rates? He is supporting a Bill that will increase that expenditure.

Mr. Hind : I cannot speak for the hon. Gentleman's authority, but some authorities in Lancashire--mine in particular--have had no trouble in collecting the community charge. A large number of people registered and the cost has not been excessive. The cost of collection probably comes down to prudent financial management. I do not know whether the hon. Gentleman's local authority is prudent. I assume that it is Wakefield--

Mr. McKay indicated dissent .

Mr. Hind : It is Barnsley, then. A number of authorities in Yorkshire missed being capped by a whisker as a result of the £26 rule. That suggests to me that their spending was high and that their community charge was high, which in turn suggests a sad lack of prudent financial management.

Mr. Martin M. Brandon-Bravo (Nottingham, South) : My hon. Friend has argued that the Bill seeks to limit councils' spending, and hon. Members and people outside the House are presuming that the Bill will automatically produce a proportionate reduction in the community charge. Will my hon. Friend bear in mind the fact that, although it limits council spending, the Bill will not specifically prevent a council from imposing a penalty on charge payers in respect of those who will not--I stress "will not"--pay their community charge? There will be a levy on the innocent to make up for the crimes of the guilty. Does my hon. Friend agree, therefore, that the Bill needs to be strengthened--quite the opposite of what the Labour party has argued?

Mr. Hind : My hon. Friend makes a good point. There can be no excuse for disobeying the law by not paying the community charge, especially as failure to pay by some people may result in a burden being placed on those who do pay. That is grossly unjust. Do those who refuse to pay-- unfortunately, there are some hon. Members among them--consider paying what they would have paid under the rating system? Do they not realise that, by their refusal to pay, they are depriving children in schools and elderly

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people in homes, and taking money from the meals-on-wheels and home help services? They are hitting the most vulnerable people in society who cannot afford to hit back.

Suppose that a Labour Government--I doubt whether we shall see one in my lifetime--introduced a tax with which we disagreed. They would not smile if we said that we would not pay it. Refusal to pay is a recipe for anarchy

Mr. Harry Barnes : Will the hon. Gentleman give way?

Mr. Hind : The hon. Gentleman is a classic example. He has refused to pay, and I shall certainly not give way to him.

Rate capping was used to control local government spending and so protect the ratepayer, and community charge capping has been similarly successful in protecting the charge payer. A Gallup poll conducted in April 1990 showed that 53 per cent. of voters recognised the need for the Government to protect the community charge payer in certain circumstances from excessive spending by local authorities. I would point out that 43 per cent. of Labour voters think that, too. Presumably many of them live in areas with Labour-controlled local authorities and bear the burden of those councils' profligacy. The hon. Member for Dagenham argued that there was no excuse for capping, and that we should abandon it now. I maintain that there are plenty of reasons for capping. In my own county of Lancashire, for example, we must encourage councillors and local government managers to focus their attention on the need for proper prudent financial management.

Lancashire spent a vast amount on a P and A report, in which the social services provided by the council were examined. That report has been shelved. It said that the meals-on-wheels and home help services, as well as some of the criteria used in the running of old people's homes, were a disaster, and suggested ways in which the system could be improved and in which money could be saved for the benefit of community charge payers.

Mr. Deputy Speaker : Order. The Bill deals with particular aspects of community charge capping. So far, I have allowed the debate to range over the general principle of charge capping. The hon. Gentleman is taking the matter a stage further and referring generally to the relative wisdom of the community charge and other systems of local government finance. He is going very wide of the subject before us.

Mr. Hind : I shall bring my remarks back into order, Mr. Deputy Speaker.

The hon. Member for Dagenham described the Bill as the death knell of accountability. My point is that, far from being the death knell of accountability, it will focus the attention of local councillors and local government officials on the need to give good value for money in the provision of services to the public and on the cost of those services. That is what the Bill is all about. Lancashire increased its expenditure by 15 per cent. last year when inflation was only 7.8 per cent. Can an increase of twice the rate of inflation reflect prudent financial management?

Many hon. Members, myself included, originally failed to identify a further reason why capping will be important. In local government, we have a four- year cycle. In the first year following its election, a council may increase the charge that it levies by a huge amount. For the first three

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years, the extra money will be stored away in the bank reserves. In the year of an election, all the reserves that have been accumulated can be used to reduce the charge to ensure that the council is re-elected. We can surely expect prudent financial management every year, and capping will focus the attention of local government officials and councillors on the need to avoid that cycle of events which is to the detriment of local charge payers--although, to be fair, I ought to say that all councils of all political complexions are guilty of the practice.

Mr. Allen McKay : I must challenge the hon. Gentleman's statement. He said that all councils were guilty of the practice. My council has always gone to the electors after three years. It is evident that the hon. Gentleman does not know much about local government. Authorities cannot create reserves to spend in later years, because the books are audited and the auditors would pick the sums up. Authorities can only accumulate reserves for a rainy day. The Government's policies have made them spend that money, so that now nothing is left for a rainy day.

Mr. Hind : The hon. Gentleman has picked me up on my general point. Let me be more specific. The hon. Gentleman was talking about district councils, and I agree that they are elected on a three-year cycle. I was talking about county councils, which are elected every four years.

In my district of west Lancashire, £32 of the community charge is payable to the district council and the remainder--£344--is payable to the county council. That is why capping is important. A survey was carried out in west Lancashire of 500 voters, who were asked what the district council and the county council do. The majority of the voters did not know, and they did not know where the money went. Under the two-tier system, the district and the county councils should send out separate bills to the charge payers. They should be able to justify that expenditure, so that the odium does not fall on district councillors who, particularly in west Lancashire, run a good council prudently and who budget sensibly.

We are debating the Bill against the backdrop of a review. However, whatever comes out of the review, we must ask for good prudent management of local government resources from our local representatives and officials. It is essential that we introduce this proposal next year to protect community charge payers, because there is a danger, particularly in Lancashire, that the community charge will be whacked up as high as possible to embarrass Conservative Members who represent Lancashire.

That would be an attempt to turn the voters against those Conservative Members. The rise would have nothing to do with prudent financing, but a lot to do with the exploitation of a political advantage. That rise should not be allowed to happen at the expense of the voters and those who genuinely cannot afford the rise. Against the backdrop of the review, which I greatly welcome, I do not hesitate to support the Bill.

5.41 pm

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