House of Commons Hansard Debates for 26 Mar 1991

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targeted on services. There should be a general Government grant, the RSG, a uniform business grant, which we already have, and an education grant.

The education service has distorted local government ever since the mid- 1950s. In 1957, when we moved away from specific percentage Exchequer grants for education, all the local authority associations, all the teaching unions and the Labour party condemned the Conservative Government. They said, rightly and understandably, that it would be wrong to move to a block grant because education was too important to be considered on the same plane as refuse disposal, parks and libraries. They said that some authorities would spend money intended for education on other services, that standards across the country would be far from uniform, that there would be growing disparity in education provision and that we should not be able to deliver national priorities in education policy. They cited the fact that there was a Russian satellite going round that year to prove that technical education was important.

They were right, and we have not delivered national priorities in education. However, the same people now condemn the attempt by some of us to move to a central education grant. They claim, for some reason, that it would lead to a gigantic central bureaucracy which would deny local democracy. It did not do so then and would not do so now. It would be good for education and for local government. A royal commission, the Redcliffe- Maud commission, based its entire structure of local government on the optimum number of people required to run an education service. That is how far education has distorted local government. It is still distorting council budgets, accounting for 60 per cent. of a country's resources. For heaven's sake let us get back to raising locally a proper local services tax, with national services paid by national Government.

How should we fund that remainder? I have some suggestions for my right hon. and hon. Friends. We must go back to a property-based tax. Every sensible, sophisticated, modern western economy has one. The question that remains, however, is on what principles to judge the value of property. The Inland Revenue valuation service would like to revalue every house in the country as often as possible. Many more valuers would have to be recruited and they would have a lot more to do, but it would be daft and unnecessary. We do not even need to obtain modern capital valuations. We certainly do not need to do what my right hon. Friend the Member for Blaby suggested-- have a rolling programme over 10 years. If we did that, by the end of the process the valuations that we started with would be completely irrelevant. The process is an abstract concept. It is a theoretical, undesirable norm that is irrelevant in practice.

What matters to the people of, say, Leeds, is not whether their semi- detached houses are valued on a similar basis to semi-detached houses in Luton. What matters to them is whether semi-detached houses in Leeds relate properly to terraced houses in Leeds and big, detached houses on the edge of Leeds. I believe that we could move instantly back to a sensible categorisation of properties by using values already on the computer. They are already used for the collection of water company charges. Those values are not irrelevant and dead ; they are used now. Local authorities would categorise properties within broad bands, on the basis of existing local authority valuations.

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To take Leeds as an example--I made a speech on the same issue months ago in the House--if we used the old valuations, properties valued at below £100 would be within category A. Properties valued at more than £1,000 would come into the highest category. Most of the properties in Leeds were valued at between £300 and £450. There could be a band for properties valued at between £100 and £300 and another for properties valued at between £500 and £1,000. That would stop the nonsense of properties being revalued when their owners improve them by adding a bit on, or installing central heating. We do not want individual revaluations of property. That causes enormous irritation, imposes an enormous cost and takes a great deal of time. We could move immediately to a broad assessment. Accountability would then be pinned on to local authorities.

If one revalues on a rolling basis or on an instant year basis, as happens in Scotland, householders become confused about accountability. They believe that it is the Government who have caused the increase in the value of their property, while the local authority gets the credit for lowering the poundage. However, local authorities never reduce it sufficiently to compensate people ; generally they end up paying more. It is a purposeless exercise that does not solve the problem. People ought to know that they will pay less if they live in one type of house and that people with more money who live in much bigger houses will pay more.

The local council would adjust the boundaries. It is a rough and ready system, but if certain parts of a town improved while other declined, the onus would then be on the local authority to move properties into the relevant band, just as the onus would be on the local authority to change the poundage year on year and not to confuse it with revaluations. Once houses were put into categories A, B, C and D, that would be it. Each authority, whether in the south or the north, would put properties into those bands, regardless of what other authorities did, to raise the revenue they needed. That would be a straightforward system that could be introduced quickly. The other remaining issue that my right hon. Friend must resolve is whether we take account of numbers and how that is to be done. We must state as clearly and quickly as possible that to take account, in broad terms, of the number of people who live in a house does not involve a twin-tax system. Whatever the Opposition may tell the public- -that the Government intend to impose a poll tax on top of a property tax-- we are not doing that. [ Hon. Members :-- "Yes you are."] I do not believe we are. I hope that my right hon. and hon. Friends will say that that is not what we are going to do. If I allow them to speak for themselves, I must be allowed to speak for myself and to suggest that we could--I trust that the consultative documents will suggest a number of options--place the charge at a level that would be the equivalent of a couple. That charge would be halved if a single person were living in a particular property.

The press have suggested that the charge would be fixed on the assumption that three people were living in a house. That could be done, a reduction being made if only two people or one person lived in the house. I should not favour such an option, because the basic number in a household is two, not three. I do not think it is worth while trying to count the numbers in households with four, five or six people. Most households do not have more than three people.

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This would be a rough and ready system which would end the abuse of the rating system--to which the Labour party would go back--under which a single person would pay the same as three or four wage earners in the house next door. It would take account of numbers in an approximate way.

If one wished to do more than that, one could impose on the owner of the house the duty to declare the numbers of people in his house, as he does for the electoral register. I would recommend to my colleagues, if they wanted to go that way, that it should be a scheme whereby the local authority would check the electoral register to see how many people were living in a house and the owner would then get the bill for two, three or four people. He or she would then decide whether to spread the burden. There are simple ways of doing that and it would not involve a separate bill for each person or keeping a separate register such as the poll tax register. There would be a single bill. It would not involve all the scrutiny, all the inspection and all the policing. I wish to goodness that we could nail this one and stop Opposition Members making nonsensical remarks about it.

Mr. Patrick Thompson (Norwich, North) : My hon. Friend just mentioned the community charge register. Does he support my contention that most of those in local authorities who have the duty of collecting local government taxes would agree with him that it is important that we do away with the concept of any separate register?

Dr. Hampson : Certainly. I totally endorse what my hon. Friend has said. I do not believe that I have seen any statement from Ministers that suggests that there is any intention of keeping a poll tax register in addition to the electoral register. I do not believe that that makes practical sense, and I trust that Ministers will not pursue that route.

Having outlined two possibilities of what we might do and suggested that, if we are to keep the percentage of central Government grant at its present level, we do so by moving and transferring services such as the bulk of education--we need not move it all, but we could certainly move 75 per cent. of it and go back to something like the system we had until 1957--we might have a balanced system that Opposition Members would feel they could support. I remind them that, when the present Leader of the Opposition was their education spokesman, he endorsed and advocated publicly on platform after platform that I was on that there should be a transfer of at least some education expenditure, so why can we not reach some compromise which Opposition Members would agree to endorse?

9.37 pm

Mr. Tony Banks (Newham, North-West) : Notwithstanding anything that the hon. Member for Leeds, North-West (Dr. Hampson) or any of his right hon. and hon. Friends have said about the Bill, everyone in the country knows exactly what the Bill is about : it is about trying to save the Conservative Government, and it is borne out of fear and panic.

It was obvious from the very outset to Opposition Members, and to some of the more perceptive Conservative Members, that the poll tax would not work.

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It has taken a while, but gradually it has dawned on even the most stupid Conservative Members that the poll tax has become an electoral liability, and that is why they are moving so speedily to dump it. After all, nothing concentrates the minds of Members of Parliament more than the possibility of coming second or even third in their constituencies at a general election.

I am sorry that the previous Prime Minister is not in her accustomed place to listen to the debate. She viewed the poll tax as her flagship, but of course flagships are not designed to be hung around the neck. When studying the right hon. Lady's language it becomes politically interesting when for "flagship" one reads "millstone" ; for "unassailable" one reads "on the way out" ; for "jewel in our crown"--as the right hon. Lady referred to the GLC when it was won for the Conservative party--one reads "abolition"; and for "the iron lady" one reads "rusty old hulk now sitting in the political scrap yard waiting to be torn to pieces". I for one am no mourner as I watch that process.

Tory Members of Parliament knew that the poll tax had to go, albeit rather slowly. They would like to dump it in one day, but that is not possible. But even to dump it slowly, they had to dump the right hon. Member for Finchley rather more quickly. The poll tax represents bigotry and arrogance turned into legislation. Conservative Members went through the lobbies in support of the right hon. Member for Finchley, and now the vast majority of them are repenting. One would expect some of them at least to have the humility to stand up and admit that they were wrong, and to apologise to local authorities and to the people, but arrogance still sits easily on them. I should like to know, indeed, whether the right hon. Member for Finchley will have the decency to apologise in this House. I suspect that she will not. In that case, she should be dragged here, nailed down to a bench and made to listen to the first ringing of the death-knell of her flagship.

I should like to know whether the right hon. Lady will vote tonight. I understand that the Government have imposed a three-line Whip. Will the right hon. Lady obey that Whip? Has she been paired? Mr. Jacques Arnold rose--

Mr. Banks : I shall not give way.

Has the right hon. Lady been paired? Perhaps she has been paired with the right hon. Member for Blaby (Mr. Lawson)--who knows? They would make a very interesting couple. Or perhaps she has been paired with some other friend of the family. If she defies the three-line Whip, will she be admonished or denied her expected elevation to the upper House?

The poll tax has been a total fiasco.

Mr. Arnold rose --

Mr. Banks : I will not give way. Many hon. Members want to speak, yet Government Members have taken up ages with boring, tedious speeches. I want to get in and out as fast as possible. Let me give the hon. Member for Gravesham (Mr. Arnold) a bit of advice : he should do likewise, both in his political life and in his private life.

The poll tax has been a fiddle from start to finish. Today again, the Secretary of State for the Environment was less than impressive. He asked who was paying for services in Wandsworth. Someone is paying. Surely it has dawned

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even on Conservative Members of Parliament that there is no such thing as a free lunch. All that the Environment Secretary could say was that, if everyone were to vote the same way as people in Wandsworth, everyone would benefit in the same way. Let us take that to its logical conclusion. If every local authority went Tory, who would pay for the local government services? It appears that no one in Wandsworth is paying.

It is costing the taxpayers of this country about £14 billion to save the Government's face. The Government have reduced local authority finance to the level of low farce. If any local authority had been responsible for the financial chaos that the Government have visited upon the people, its members would have been surcharged. Indeed, some of them would have been disqualified for many years, as happened to many decent councillors in Liverpool, Lambeth and other places, who delayed making a rate only because they wanted to protect services. The Government have reduced local authority finance to a state of chaos, yet they are still walking around and expecting us to be grateful now that they are trying to clear up the mess that they created. This is hypocrisy raised to an art form.

As for the people who will benefit from this Bill, I hope, Mr. Deputy Speaker, that I shall be able to catch your eye when we are dealing with some of the amendments. Many people in my constituency will not benefit from this reduction of £140. Those who are paying only 20 per cent. will get only £28. They will have to spend only about £1,100 on VAT-rated services to pay all that money back, and they will continue to pay VAT after that. The last time VAT was increased, millions of retailers increased prices by amounts considerably greater than the tax increase. This is a bad deal for many thousands of people. It is certainly bad for the 41,000 in my borough who are on benefit. Those people will receive very little as a result of the Government's munificence. The Government are trying to buy off the taxpayers.

We have an incompetent, bungling, stupid, half-witted Government, who deserve to be kicked out of office as fast as possible. They have done vast damage, not only to local government finance but to the whole machinery of local democracy and accountability. They are a bunch of ratbags, and they deserve to be booted out.

9.44 pm

Mr. Michael Spicer (Worcestershire, South) : The fundamental question which has lain behind this debate is whether we continue to want local government with the local democracy to which the hon. Member for Newham, North-West (Mr. Banks) referred. I am one of those who believe in continuing to press forward with attempting to have a proper system of local democracy, and there are three possible approaches.

In ascending order of merit, they are, first, to fund local government nationally, as has been suggested by various hon. Members today, by my right hon. Friend the Member for Blaby (Mr. Lawson) yesterday and by my hon. Friend the Member for Norfolk, North (Mr. Howell). I think that that would be a bad idea because, however clever one is with such a funding arrangement, there would have to be a predetermined formula which would essentially have to be based on local needs decided by the Government. My hon. Friend the Member for Norfolk, North has come up with the suggestion of parcelling out money from the

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centre and leaving it to local government to choose how to spend the money, but the element of choice would be denied by a predetermined formula.

My one anxiety about the Bill--a point that was made by my right hon. Friend the Member for Blaby, my hon. Friend the Member for Norfolk, North and others--is that it is a halfway point, a stepping stone, towards such a national form of local government funding. There are good reasons for worrying that this might be such a step. On the one hand, the gearing point, which has been made several times, is that, once a position is reached where only 10 per cent. of local funding is discretionary, there is the problem that a 1 per cent. increase of expenditure on top of the existing formula would result in a 10 per cent. increase in the local discretionary funding. That would result in a situation which no Government, of whatever political persuasion, would be prepared to tolerate. This in turn would result in the perceived need for universal capping, and that would be tantamount to nationally run local government. For the sort of reason that my right hon. Friend the Member for Blaby put forward, there must be some anxiety that the Bill is a step in that direction, or might be in the wrong hands. That would be disturbing. A second broad approach to local government was suggested by my hon. Friend the Member for Leeds, North-West (Dr. Hampson), and that is to leave the proportion funded the same but to take away some of the services. There are some logical arguments in favour of that. That would leave genuine local services which one would hope would be funded locally with maximum local discretion and accountability and that would overcome some of the problems, which undoubtedly lie in the Government's mind, about the enormous size of some items of local funding such as education.

Thirdly, there is a set of suggestions which would involve genuine local accountability. The community charge was undoubtedly such a scheme. Inefficient councils, such as Lambeth, impose severe penalties upon the people who live in their area and those people have the power, which can be developed over the years, to throw out such a council and replace it with ones like that in Westminster, which will give them the benefit of a low community charge.

Mr. George Walden (Buckingham) : One important point is constantly elided. My hon. Friend mentioned education in passing. Education is the most costly and important responsibility of local government ; whatever decision is made about it should be made not on cost accounting grounds, but on the basis of whether that decision will promote or retard the improvement in quality that is imperative to the country's future.

I am sorry to sound so pompous, but this strikes me as rather important.

Mr. Spicer : My hon. Friend has made a fair point. As he says, education is a predominant feature of local expenditure--so predominant, indeed, that it is surely reasonable to ask whether it is a genuinely local service that should be financed through a form of local taxation. I merely suggest that one way in which to preserve the balance between local funding --with genuine local

accountability--and national funding, while lowering the overall bill, would be to remove education from the local budget.

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Mr. Patrick Thompson (Norwich, North) : Does my hon. Friend accept that many hon. Members, possibly on both sides of the House, sincerely believe that there are genuine educational grounds for making the transfer?

Mr. Spicer : Certainly I concede that ; it is an important--perhaps predominant--factor.

There is a third way of funding local government : by maintaining the democratic local accountability that goes with a system that penalises inefficient authorities, and relates what people spend to the services that are provided. I have already expressed my anxieties about the Bill. I very much hope that it will prove to be a temporary measure to enable us to maintain the fundamental principle that local democracy can survive only if local government is allowed to raise its own money, while accepting the penalties that may be involved. I cannot see how genuine local democracy and accountability could be maintained under an exclusively property-based tax, or under a system of national funding whereby local government became simply the agent of central Government. I hope that we can retain the fundamental principle that--unashamedly--formed part of the community charge proposals, and which I have defended in my constituency and elsewhere : the desirability of a relationship between what is spent locally and what is raised locally. I hope that the Bill represents no more than a breathing space, and that we shall keep faith with what we have done in the past--although, of course, we must develop and modify past measures for the future.

I should have preferred the money that we are spending in the Bill to be devoted to helping those who are most in need. That is a good Conservative principle, which we should have espoused by developing the rebate system. I trust that the Bill will provide us with no more than an interlude during which we can build on the principles that we have already established.

9.54 pm

Mr. John Home Robertson (East Lothian) : The hon. Member for Worcestershire, South (Mr. Spicer) was commendably candid when he said that the Bill was intended to buy time on a purely political basis. No amount of time for this legislation can save the Conservative party. If only for his own sake, he should learn the lesson of what happened to his colleagues in Scotland at the previous general election, most of whom lost their seats precisely because of the poll tax.

I welcome the fact that the burden of the poll tax will be reduced as a consequence of the Bill. I even welcome the fact that the Government are beginning to redress the balance by increasing the subvention from central to local government to a proportion similar to that which existed when the Government first came to power. However, my constituents and I will not start rejoicing until the poll tax has been abolished. Whatever else the Bill may be, it is not quite the abolition of the poll tax.

The right hon. Member for Blaby (Mr. Lawson) said yesterday that this would be "son of poll tax", but he was not quite right--it will be triplets. There will be a property tax, a poll tax--a substantial poll tax if the Secretary of State for Scotland has anything to do with it--and a value added tax surcharge to deal with the panic. In spite of the Bill, the poll tax will remain a substantial burden, even after the £140 reduction. My constituents who pay the full poll tax will still have to pay £402 as a consequence of the

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capricious way in which the Scottish Office distributes central Government grant among local authorities in Scotland. More important, the people on the lowest incomes in my constituency will still pay £80 towards the poll tax, which many of them cannot afford. I vividly remember, when I received my first poll tax bill, bringing it to the House at Prime Minister's Question Time. I told the then Prime Minister that I should be £1,000 better off as a result of the poll tax, whereas the poorest people in my constituency would have to pay more. She told me that I should give my ill-gotten gains to charity, but that would not be of much assistance to the poorer people in my constituency or anywhere else.

The new formula will still mean that the poorer people will be required to pay substantially more than they can afford, partly to pay for the shortfall in local authority revenue caused by the chronic inefficiency of the poll tax, with which we have all become painfully familiar in recent months and years. It is absolutely vital that, whatever formula the Government try to devise to overcome the crisis that has befallen the poll tax, they must do the honest and fair thing for people on the lowest incomes. I understand that it would cost just £30 million to give those who qualify for the maximum rebate a 100 per cent. rebate in Scotland. That is the minimum that the Government should do to protect those people.

Ministers need not tell us that they were not warned--we told them what would happen. With my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton), I was a member of the Committee which, in the winter of 1986-87, dealt with the Abolition of Domestic Rates Etc. (Scotland) Bill. We warned the Government then that the poll tax would be unfair and unworkable. I remember especially contrasting what Her Majesty the Queen would pay in respect of Balmoral castle--a holiday or second home--with what a pensioner living in a cottage on that estate would pay. We now have the same thing again. The Queen will be £280 better off in respect of her second home at Balmoral, while a single pensioner living in a cottage on her estate will benefit by only £28.

Mr. Deputy Speaker (Sir Paul Dean) : Order. I am sure the hon. Gentleman will realise on recollection that he should not bring the royal family into his argument.

Mr. Home Robertson : We dealt with that issue in the debate at that time. I was referring to Her Majesty's private estate rather than to her official position, but I shall move on.

I remind the Secretary of State for Scotland how he and his colleagues scoffed and sneered, and exchanged reassurances about how it would be such a grand affair for the Tory party in Scotland to have the poll tax. The Secretary of State said :

"This is an issue which has been deliberated upon and considered and reviewed in all circumstances and from all angles for a very long time, and it is now appropriate to take decisions What the Bill proposes is a workable and viable solution to the serious problem."--[ Official Report, First Scottish Standing Committee, 13 January 1987 ; c. 144.]

I remind the Secretary of State that, in Committee and on the Floor of the House, when we discussed the Bill on the Scottish poll tax, he voted for the poll tax no fewer than 35 times. A number of his colleagues did the same, but they cannot do so again because most of them lost their seats at the ensuing general election. Those who lost their seats included the Minister in charge of that Bill, Mr. Michael Ancram, and the Whip, Mr. Gerald Malone, who

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I understand is now in Winchester. Others who lost their seats included Mr. John Corrie, Mrs. Anna McCurley, Mr. Alexander Pollock, Mr. Barry Henderson and Mr. Michael Hirst. Even the Chairman of the Committee, Mr. Albert McQuarrie, lost his seat. The only Tory survivors from that Committee were the hon. Members for Stirling (Mr. Forsyth) and for Eastwood (Mr. Stewart), and the right hon. Member for Galloway and Upper Nithsdale (Mr. Lang), now Secretary of State for Scotland. Yet we understand that they are still fighting to retain the principle of the poll tax. Will they never learn? The Secretary of State still describes the poll tax as a "remarkable success story" and wants to ensure that the principle is retained in Scotland. I do not mind the Secretary of State and his dwindling band of hon. Friends from Scottish constituencies--11 down and 10 to go--behaving like political lemmings, but I do mind my constituents having to suffer as they do now under this grotesquely unfair tax, which bears no relationship to ability to pay or to access to services in different districts and regions in Scotland, and which takes no account of its chronic inefficiencies. The Secretary of State for Scotland should face the fact that the poll tax is now in the process of self-destruction. It has been difficult enough for the poll tax to be administered up to now. Now that its death has been announced by the Secretary of State for the Environment, although he is trying to fudge the issue at the moment, what has up to now been a difficult tax to collect will become a non-starter. It will be like carrying on feeding the proverbial dead parrot.

What is required is not tinkering with the poll tax, and not palliatives like the Bill. What is required is the immediate abolition of the poll tax. The only way in which that can be done administratively--whatever the merits of the local income tax or anything else that hon. Members may wish to discuss may be--the only way to get rid of the poll tax this year is to reactivate the rating system and find ways of making it workable and acceptable. It may be worth considering other forms of taxation in due course, but we must face the fact that there is only one way to get rid of the poll tax now--to reintroduce a workable and fair property tax, and that is what we propose. The Government will not be able to get away with this shambles. I am glad that even the hon. Member for Worcestershire, South (Mr. Spicer) admitted that the Bill was only a palliative and a means of buying time, but it will not buy time--the poll tax must go. 10.3 pm

Mr. Donald Dewar (Glasgow, Garscadden) : We have seen some remarkable events. This morning, we learned that the Scottish National party has sacked its spokesman on the poll tax because he refuses to pay. The one point about the position of the Scottish National party that strikes me now is that, almost irrespective of what the Government produce, it will have to be backed by the Scottish National party--poll tax element and all. There are changes not only on the Opposition Benches. The Scottish Office has a new slogan. Its advice is not to pay the poll tax until the new arrangements are in place.

Mr. Alex Salmond (Banff and Buchan) : Will the hon. Gentleman answer a straight question? Now that nobody, not even Ministers, believes in the poll tax, will he, as shadow Secretary of State for Scotland, instruct Labour

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local authorities in Scotland to stop poinding the poor, as they are doing now, and to stop arresting benefits and stealing the goods of the sick, of the disabled and of the unemployed?

Mr. Dewar : I must confess that the hon. Gentleman's view of local democracy is strange if he thinks that it is my position to instruct those in local government. What is even more disreputable is that someone who has led people into a situation where debts have piled up so that they are no longer able to claim rebates, legal costs have accrued and they face great problems should then lecture me about the morality of the situation as he reaches for his cheque book and walks away from the problem.

If the Government's advice is that people should not pay and that we should all stop our direct debits until the new arrangements are in place, I suspect that the Secretary of State will find that the problems that that creates in terms of take-up in the next two years will be considerable.

There is always a temptation to rewrite history. In the recent statement on local government in Scotland on 21 March, the Secretary of State, when challenged about the liability of the severely mentally handicapped, suggested that the sympathetic approach that the Government had adopted to the community charge would perhaps put people's fears at rest. Those who remember the debate on Alzheimer's disease, our desperate efforts to persuade the Government to consider the problems of those suffering from that illness and the remarkable resistance of the Government to including them in the exemption scheme put up by the Secretary of State will find that charge somewhat unwise.

What about the mystery of the register? Ministers are all over the place on whether there will or will not be such a register. On Thursday, the Secretary of State for the Environment told hon. Members :

"under the new system we shall not need a register."--[ Official Report, 21 March 1991 ; Vol. 188, c. 422.]

By Sunday, on television, he was telling us that there may be a register. Meanwhile, the Secretary of State for Scotland was telling anyone who listened that there would have to be some kind of register. On that form-- it is just a symbol of the debate--it would be a surprise if the Government managed to agree on anything. The relief scheme also constantly changes its form and substance. Transitional relief mark 1 has given way to mark 2, and now we have the community charge reduction scheme, which was altered yet again during last night's debate.

I accept that all the changes have been made in the cause of simplicity. Therefore, I was particularly interested when the Scottish Office offered a clear explanation today on how the new community charge reduction scheme will work. It offered the following formula :

where E is the number of persons in a household, C the poll tax level for 1991-92 and R the rates bill on the property as at 31 March 89. The hon. Member for Leeds, North-West (Dr. Hampson) has suggested that it would be easy for anyone to adjust their poll tax liability under the new scheme, but if that formula is the kind of simplicity and light that the Government are pushing into the world of local government finance, we shall have many questions.

We are getting into an appallingly complicated and confused situation, not on the basis of any principle, but

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on the fatal basis that Ministers are trying to take a little bit here and a little bit there. Their actions will not produce something for the public good, but they hope that that will keep the warring factions in the Conservative party quiet for a little while longer. Warring factions there are in plenty. Many Conservative Members still look to Finchley as the Jacobites once looked to France.

Undoubtedly there are many Conservatives who are unhappy about what has been announced by the right hon. Member for Henley (Mr. Heseltine). In a recent article in the Glasgow Herald, the vice-president of the Scottish Conservative and Unionist Association, faced with the prospect of a two-tax system, said that that had all the attractions of being stranded on a desert island with Esther Rantzen. Whatever his personal judgment of Esther Rantzen, he has certainly expressed his view on the two-tax system.

I do not know what that gentleman will say about the three-tax system that the Secretary of State has now produced. My advisers tell me that the tabloid press has already described that as "Hezza's hat trick". I suspect that that proposal will be unsellable and will be seen for what it is--a pathetic attempt to buy time while the escape committee continues to meet in vain to find a way out of the difficulties in which the Government find themselves.

The Bill can only be described as a form of conscience money. We accept that any relief is welcome, but we have the most fundamental objections to many of the aspects and implications of what the Government are doing.

Again and again, speakers in this debate have said that it is not everyone who will get £140 off what they have to pay or, if they pay less than that amount, will see their bill totally eliminated. However, I suspect that that fact has not been appreciated by many people. In Scotland, 800,000 people are dependent upon income support. All of them will get a maximum of £28. They are sitting at home thinking about £140, and they are going to be very bitter and disappointed.

I was very interested in what the Secretary of State for the Environment said tonight about the reduction in the headline figures. I noticed, as I am sure he has noticed, that the differential--the reduction--in England is much larger than it will be in Scotland. Considering the minutiae and how the system will impact, we are left with considerable anxieties, and with the feeling that we have been the victims of a con trick.

My constituents will certainly notice the anomaly of Wandsworth and Westminster. They do not see a triumph of accountability in that. They do not see the sacred principle that buttressed the poll tax for so long--the principle that everyone must pay something. It is really no answer for the Secretary of State to say that people should get their local authorities to reduce their charges and also their budgets. Are we going to sack home helps in hard-pressed areas of urban deprivation? Are we going to close schools? Is that the advice of the Secretary of State, who once paraded up and down the length of England, posing as the champion of deprived urban areas? Is that the advice that he is now giving?

I can only talk with detailed knowledge of the Scottish system, but that shows that there is little correlation between the size of the poll tax in the current year and grant payments made or expenditure. For example, in

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Lothian, which is a major local authority in Scotland, the poll tax is nearly the same as the notorious figure in Lambeth that we have heard so much about. However, Lothian's grant per head from the Scottish Office is the lowest of any region in Scotland, and it spends less per head than the regional average. That puts into perspective some of the simplistic deductions--I regret to say that they were almost sneers--about local government during this debate, sometimes from ministerial sources.

Later tonight, we shall consider amendments. I very much hope that the 20 per cent. rule will be abolished. Again and again, we have tried to convince the Government that it should go, but we have always been met with the argument that it had to be retained because of the principle of accountability, that sacred principle that everyone pays something--except, as my hon. Friend the Member for Dunfermline, East (Mr. Brown) said, in Wandsworth.

I am sure that the Secretary of State will recognise the seriousness of the argument that, if one transfers a large tranche of local government expenditure to VAT, which has been picked as the most invisible of taxes for political reasons, if one proposes a scheme in which the only legal liability will fall upon the householder and no legal liability will fall upon other people who generate liability but are not responsible for it, which I should have thought was the anthithesis of accountability, it is clear that the system of accountability has gone, and with it goes the only possible reason for retaining the 20 per cent. rule.

In Scotland, that rule could go for £30 million. That sounds like a lot of money, but it is dwarfed by the waste and appalling inefficiency which has been forced upon us by the mismanagement of the Government and the inefficiency of the system.

I hope that we shall not get a stony-faced refusal to consider this matter. May I offer some helpful advice? it would greatly help the Government's credibility if they gave ground on this, as they have given ground and scuttled on so many other things after the past three or four weeks.

I finish by returning to a theme of my hon. Friend the Member for Dagenham (Mr. Gould). The situation in Scotland parallels the one to which he referred in connection with the right hon. Member for Henley (Mr. Heseltine). Over a considerable period, the Secretary of State for Scotland has taken a stringent approach to local government finance. We have had a ruthless series of cuts--a withdrawal-- [Interruption.] It may not be ruthless by the standards of the hon. Member for Stirling (Mr. Forsyth), but it is ruthless by the standards of any reasonable or ordinary human being. The Secretary of State for Scotland has appeared as a Scrooge-like figure of probity, with the hanging face of an unsympathetic bank manager refusing an overdraft, when saying that any increase in local government spending or in central Government support for local services was anathema. The kernel of my concern and worries is not the spirit in which the Government have approached the problem. Of course I should have liked to see a retreat and the acceptance that central Government have to make a due contribution and to maintain a proper balance in the funding of local services, but I suspect that this is the start of a process that will leave local democracy with a sterile future. We are starting a process that will mean that there

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will indeed be a huge percentage of central Government funding, but which will produce an impossible gearing effect.

In Scotland at the moment, only 13 per cent. of local government finance is raised by local government itself and is controlled by local government. The result of that huge percentage dependence on central government support will be low expenditure and deteriorating services, and that is a tragedy. The price of the increase announced in the Budget will be a straitjacket on local government and its most stringent capping by the Secretary of State for the Environment in the years ahead.

There was an interesting exchange the other day at the Convention of Scottish Local Authorities, at which the Secretary of State for Scotland spoke. I listened with care to his speech--as I always do--because on occasions his speeches throw up some interesting ideas. He equated control with accountability, which is a dangerous fallacy. It is not true that control and accountability are the same thing. In many ways, they are very different.

Central Government control is now being substituted for accountability, and in that we see the essence of the death of local government. That will be seen with great sorrow in many areas of England, where local authorities have been supported by Tory councillors who have worked honourably to control the affairs of their own communities and to run them in accordance with the opinions of their electorate.

If I am right, if that is the process on which we have started, and if the Bill is part of that process, every hon. Member who has an interest in local democracy and in the right of communities to run their own affairs will have every cause for concern.

10.17 pm

The Secretary of State for Scotland (Mr. Ian Lang) : There have been some interesting speeches in this debate. I thank particularly my hon. Friends the Members for Torridge and Devon, West (Miss Nicholson) and for Chelmsford (Mr. Burns) for their support. I thank also my hon. Friend the Member for Leeds, North-West (Dr. Hampson) for his interesting contribution to the on-going review that we shall be pursuing into other aspects of local government funding, and my hon. Friend the hon. Member for Worcestershire, South (Mr. Spicer). This is a small Bill, but it is important--not only for local authorities and for local government in general, but also as part of the broad approach to the reform of the funding, function and structure of local government that we are bringing forward in a measured and orderly way. It is most immediately and directly important because it brings an immediate benefit to the residents of local authorities throughout the country. There is no doubt about the reason and need for the Bill--it is the high spending of local councils.

The hon. Member for Dagenham (Mr. Gould) tried to pretend that aggregate Exchequer finance for local authorities had been cut and that only this Government have cut it as a proportion of expenditure. However, as my right hon. Friend the Secretary of State for the Environment pointed out, cuts in aggregate Exchequer finance started from 1976 onwards under the last Labour Government. In Scotland in 1975-76, the figure was as high as 75 per cent. of local government expenditure. By the time we came to power, it had been cut by the Labour

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Government to 68.5 per cent. Certainly we have reduced it further, but the grant has gone up by 6 per cent. in real terms since 1979. The problem is that the overall level of the local tax burden is too high. That is what we had to address in the Bill, as my hon. Friend the Member for Chelmsford pointed out. The reason is that local authorities have continued to increase their spending year after year over and above the rate of inflation.

Mr. Bob Cryer (Bradford, South) : The Minister is presenting a somewhat distorted picture. My hon. Friend the Member for Coventry, South- East (Mr. Nellist) told us earlier in the debate that it was clear from an answer that he had received to a parliamentary question that, if the rate support grant had been maintained at the same level from 1978-79, the poll tax would be not £250 but £150.

Mr. Lang : The hon. Gentleman is ignoring the fact, that while local government funding in Scotland has risen by 6per cent. in real terms, the increase in spending by local authorities has risen faster and that has caused the burden on local people. In Fife, for instance, in the five years before the community charge was introduced, expenditure rose by no less than 40 per cent. in real terms. The hon. Member for East Lothian (Mr. Home Robertson) blamed the high poll tax levels in Edinburgh and East Lothian on the grant distribution, but that is absolute nonsense. In fact, the opposite is the case. Lothian got a higher than average increase in Government grant this year. In Edinburgh, spending has risen by no less than 70 per cent. since 1984, and staffing is up by 30 per cent.

Mr. Dick Douglas (Dunfermline, West) : Is it not a disgrace that Labour-controlled Fife regional council gets the Douglas Mason accolade from the architect of the poll tax, by showing clearly that, if everybody behaved like that council, the poll tax would be working?

Mr. Lang : The hon. Gentleman may wish to fight his private battles with others in Fife on the Floor of the House. The one contribution that we would welcome from the Scottish National party would be an apology to the people of Scotland whom it has led into severe difficulties through its non -payment campaign. The sympathy evinced by the hon. Gentleman and his hon. Friends for the poor in Scotland is the most sickening hypocrisy against the background of having led those people into misery and debt through the non-payment campaign. Under the community charge, local authorities had their chance to behave responsibly and to show themselves accountable to local residents. Now, for the sake of the community charge payer, we have had to recognise that the local tax base can no longer sustain the burden that councils have been imposing upon it. That is why we have moved to increase funding from central Government and the United Kingdom taxpayer. With that comes more accountability to the taxpayer.

I confirm to my hon. Friend the Member for Leeds, North-West (Dr. Hampson) that this is a long-term step change in the central-local taxation relationship. If local authorities find themselves under tighter control in future because of accountability to the national taxpayer being more rigorous than accountability to local residents, they can reflect on the fact that they had their chance to be more responsible in their approach.

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I am fully aware that the provisions of the Bill require local authorities to undertake important additional administrative tasks. We are trying hard to keep disruption to a minimum. To the hon. Member for Dagenham I can say that the £60 million estimate of additional administrative cost to local authorities is just that. It is not intended to compensate authorities for lost cash flow because advance payments from the non-domestic rate pool in England and advance payments from the rate support grant in Scotland will do that. On the figures for re-billing given by the hon. Member for Birmingham, Perry Barr (Mr. Rooker), it sounds as though the provision of £60 million is generous.

Our intention is that the Bill should be implemented as quickly as possible. We shall give maximum co-operation to local authorities. There are signs that many local authorities can re-bill quickly. I agree with my hon. Friend the Member for Chelmsford that it would be unforgiveable if local authorities delayed their bills and held them back from the electorate until after the local elections in order to hide the good news.

Mr. David Marshall (Glasgow, Shettleston) rose --

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