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Mr. A. J. Beith (Berwick-upon-Tweed) : Will the right hon. Gentleman clarify the passage in "Fair Rates" which explains that, after going back to a rating system, a Labour Government would implement changes to help those hardest hit by the poll tax, but only as far as the situation that they had inherited permitted? Will the right hon. Gentleman confirm that only when fully implemented would such a system help seven out of 10 people?
Mr. Kinnock : That is directly explanatory. It is called being honest and prudent, not pretending to people that we can or will afford more than the country has at its disposal. The hon. Gentleman's question could only come from a party that can form an opinion but can never form a Government. I have given him an answer gratis--and have not even charged him 7p in the pound local income tax.
If the Government went back to a system of rates--as they could do straight away with the assent and co-operation of the Opposition--it would mean not only a saving of £300 million in operating costs, but a system of local taxation in which 99 per cent. of the bills were paid, because it would be an efficient system and inexpensive to operate. It would also mean that people would pay their fair share--for instance, the members of the Cabinet, all of whom gained vastly from the move from rates to poll tax. Now, scandalously, they gain again from the flat rate subsidy of £140 off the poll tax, not just on one home but on both their homes. They ought to join me in volunteering that any gains that they make out of the £140 reduction will go to charity. That would be a generous thing for them to do. It is absolutely outrageous that the Government have ensured that to them that already have well over sufficiency there shall be given even more. Come on, chip in ; then we shall all give something to charity as a result of what the Government are doing.
This is the Government who gave us the poll tax, with all its vast cost and all its injustices. This is the
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Government who are not killing the poll tax but keeping it. They are in a mire of their own making ; they will not tell us what is to come ; they will not tell the British people what to expect. Their consultation is a camouflage that does not convince most of the country, or many of their own party. Ministers are self-contradictory in what they say and, as ever, they are self-serving in what they do. Everything for them is a matter of expediency ; nothing is a matter of democracy, morality or economy.We have no confidence in the Government, because they have no competence and no conscience. They have done terrible wrongs to this country with their poll tax. By their refusal to right those wrongs, the Government have destroyed any claims that they may have had to confidence or to trust. We have no confidence in Her Majesty's Government. If they want to consult the British people, they should do it through the ballot box, straight away.
Mr. Speaker : Due to the large number of right hon. and hon. Members who wish to participate in the debate, I propose to place a 10-minute limit on speeches between 7 and 9 o'clock.
4.12 pm
The Prime Minister (Mr. John Major) : It is always the right of the Opposition to test the confidence of this House in the Government. That is always their right and, in line with the conventions of the House, we shall always make time. What this debate will prove beyond all doubt is not lack of confidence in this Government but the Opposition's lack of competence--a lack of competence that even extended to putting down their motion, which they got wrong. I believe that the whole country-- [Interruption.]
Mr. Speaker : Order. There was nothing wrong with what the Prime Minister said.
Mr. Stuart Bell (Middlesbrough) : On a point of order, Mr. Speaker. Earlier you said that the motion was entirely in order. You are the person who is responsible for that. The Prime Minister said that the motion was wrong. Will you ask the Prime Minister to withdraw what he said?
Mr. Speaker : The Prime Minister said that he did not agree with the motion on the Order Paper. [Interruption.] Order.
Mr. Bell rose--
Mr. Speaker : Order. Will the hon. Gentleman please sit down? The whole House heard what I said. The motion that we are debating is the motion on the Order Paper.
Mr. Bell rose--
Mr. Speaker : Order. The hon. Gentleman puts severely in jeopardy his chance of being called.
Mr. Bell : The right hon. Gentleman said that the motion on the order paper was not in order. He said that it was wrong. Mr. Speaker, will you look in Hansard to see the words that he used, and ask him to withdraw?
Mr. Speaker : Order. The Prime Minister has been on his feet for only about three minutes.
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The Prime Minister : Millions of people this morning heard the hon. Member for Copeland (Dr. Cunningham) say that the debate was to be about the whole range of Government policy. The motion does not permit that debate. The Opposition did not put down the motion that they wished to debate.
The whole country will also notice that, after all the Opposition said in the last day or so, last night they did not oppose our Bill to reduce the community charge. Nor, after all that the Leader of the Opposition said last week, did they vote against the increase in value added tax. When the shouting and the jeering were over, they followed where we led, because they knew that what we were doing was sensible, but they lacked the courage to admit it.
This must be the first recorded occasion on which a censure motion has been put down one week to be debated the next, and in the interim inflation has fallen, interest rates have fallen, the trade gap has narrowed and the exchange rate has risen against all the European currencies. If that is a precedent, I hope that the right hon. Gentleman will put down many more such motions.
Precisely because the right hon. Gentleman got his censure motion wrong to meet what he wished to debate, we have no opportunity to debate the record of the Government as a whole. We can debate local government of course, and many aspects of the Government of course, but we cannot debate other matters that the Opposition would not wish to debate, like defence and matters of that sort on which their policies are highly inadequate. The reality is-- [Interruption.] I wonder whether those who may be watching the debate will note how the Opposition are behaving and how little they like what they hear. I shall come in detail to local government reform, but in the week in which the House approved the Chancellor of the Exchequer's Budget by 110 votes, I shall start with the appropriate aspects of the Budget. [Interruption.]
Mr. Speaker : Order. It is no good hon. Members pointing at the Chair. We have yet to hear what the Prime Minister has to say. I hope that it will be in the context of the motion.
The Prime Minister : If Opposition Members had been listening rather than shouting, they would have heard me refer to the appropriate aspects of the Budget. As its centrepiece, my right hon. Friend reduced the burden of local taxation dramatically, with £140 off the headline community charge right across the country. [H on. Members :-- "No."] I said, the headline community charge right across the country. That shift reversed the progressive rise in the local tax burden begun by the right hon. Member for Bethnal Green and Stepney (Mr. Shore) 15 years ago. That shift is fundamental. Since the Labour party supported the Bill last night, presumably it will not reverse that shift--or will it?
Mr. Peter Shore (Bethnal Green and Stepney) : Does the Prime Minister not recall that the last three rate support grant settlements made by the Labour Government, with myself as Secretary of State, were all at 61 per cent. of local government current expenditure? Will he tell us what the percentage is now? Is it not below 40 per cent.?
The Prime Minister : I quite specifically said to the right hon. Gentleman that it has been falling consistently since 1976 when he set it. As the Opposition supported our Bill last night, presumably they are not going to reverse that
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stand. Our Budget proposals reduce to just 14 per cent. the burden of local spending to be met from local tax, but yesterday the hon. Member for Dagenham (Mr. Gould) said that local taxpayers should pay not for 14 per cent. but for 20 per cent. That is a critical question for local taxpayers.So which is it--our 14 per cent. or the hon. Gentleman's 20 per cent.? That is the first question for the Opposition. Do they accept the level of local taxation that we have set or will they raise it by more than one third from 14 to 20 per cent., as the hon. Member for Dagenham said? If they do, will they raise everyone's bills by more than one third as well? Will the hon. Gentleman or the Leader of the Opposition tell us? Do they know? Can local taxpayers look forward to local bills one third higher under a Labour Government than under us, irrespective of the levels of local spending? That is what the hon. Gentleman said. I am willing to give way to him. [ Hon. Members :-- "Answer."] The hon. Member for Dagenham, the Leader of the Opposition and even the hon. Member for Copeland seem disinclined to answer. I have a second question of equal relevance.
Mr. David Blunkett (Sheffield, Brightside) rose --
The Prime Minister : I shall give way when the hon. Gentleman has answered my question.
My second question is how would they raise the money. Do they want to pay for lower local taxes which they want and we want by raising central taxes other than value added tax? In his Budget response, the Leader of the Opposition was indignant that the VAT proposals applied to children's sweets. Today's third question is, which party put VAT on children's sweets in the first place? [Interruption.]
Mr. Speaker : Order. The Prime Minister.
The Prime Minister : The silence on the Opposition Front Bench provides the answer to that--they did.
We already know that the right hon. Gentleman does not know whether he wants to increase local taxes, does not know how to fund the switch between central and local taxation and does not even know which party introduced VAT on children's sweets in the first place. In short, not only does the Leader of the Opposition not know where his policy is going,--he does not know where it has come from. Let there be no doubt about the far-reaching nature of the Government's review of local government. We propose to simplify its structure, to assess its functions, to increase its accountability, to improve its efficiency and to reform its finance. It is the most radical review this century ; the first to look at structure, functions and finance at one and the same time. We intend to give local government back to local people, so we need their help in deciding how local loyalties are best reflected in the structure of local authorities. We seek efficient delivery of local services to the local electorate, so we need to examine thoroughly how local councils can improve their management and whether some services now carried out by local authorities might be better delivered or funded directly through central Government.
The Labour party cries out for details. We could have arbitrarily decided how to proceed, but I believe that that would have been wrong. A review of this wide scope and nature demands consultation and people deserve
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consultation. If we had not offered consultation, we would have been rightly and bitterly criticised, not least by Opposition Members. We will listen, we will take advice and we will consider. We will do it in that order, and then decide what we are finally going to do.Mr. Dave Nellist (Coventry, South-East) : I do not wish to intrude on too much private grief between two ex-Chancellors of the Exchequer. On the review, can the Prime Minister tell us what justification there is, moral or financial, for telling pensioners and those on income support this week or next week that they should pay 20 per cent. of the poll tax and that 10.8 per cent. of their disposable income should go on VAT? Will that survive the review?
The Prime Minister : Whatever any community charge payer has to pay, it would be less if the hon. Gentleman paid his community charge. I can spell out here and now the basis of our new deal for local tax payers. There are five main principles to the review. There will be a single local tax bill for every household. That will reflect the number of adults in the household and the value of their property. The new local tax will be low. In real terms, it will be lower than the old rates bills, thanks to the fundamental shift in local taxes announced in this year's Budget. The new local tax will reflect ability to pay. There will be rebates for those on low incomes and it will not place excessive burdens on those with larger properties or on higher-priced parts of the country such as the south-east. The new local tax will keep local councils accountable to the local electorate.
Mr. John P. Smith (Vale of Glamorgan) : Will the Prime Minister give way?
The Prime Minister : I hope that the hon. Gentleman will forgive me ; he has been asking for much of this information for some time. He might usefully listen to me.
As I have said, the new local tax will keep local councils accountable to the local electorate. The number of adults in a household will affect the size of the local tax bill. Unlike what happened under the old rates system, a single person living alone will not pay the same as larger households. Those who use local services will be required to help pay for them. The new local tax burden will be restrained. Local government will not be allowed to impose excessive taxes through over spending. We will maintain the capping regime.
Those are the fundamental basic principles of the tax system that we will introduce.
Mr. David Trimble (Upper Bann) rose --
The Prime Minister : Will the hon. Gentleman forgive me? There is more than one way of meeting those objectives and it is for that reason that we propose to set out the options in a document to be published and available to the House after the Easter recess. It will be a comprehensive document and I do not propose to be drawn on individual parts of it until its publication. It will be important for people to see all the proposals and how they interlock before we proceed. That is the sensible way to proceed.
Mr. Trimble : I am grateful for the Prime Minister's information about the document to be published shortly, which he says will be comprehensive. When he has
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abolished the poll tax, will he proceed to abolish the last old rating system? Will the proposed new system apply to the whole country?The Prime Minister : The hon. Gentleman may be reassured to know that, for the moment, we have no plans to change the system in Northern Ireland. [Interruption.]
Mr. Speaker : Order. I ask the House to settle down. There is great pressure from hon. Members to participate in the debate. Interventions take up time and will jeopardise those who wish to be called.
The Prime Minister : It is interesting that Opposition Members, after all that they have had to say in recent days, are so disinclined to listen.
I have offered the House five pledges about our plans. In return, we would settle today for answers to just two questions about Labour's own proposals. The Opposition's document says :
"These changes"--
that is, Labour's fair rates proposals--
"will mean that seven out of 10 families will gain."
That is a direct quote. The document says that that is shown by "independent research". I am very pleased to hear it. It is wise to consult and to carry out such research. The Leader of the Opposition is right to have done that, but if he has done it, he must have the calculations to back up what has been said. If he has the calculations, why has he not shared them with the House? Will he publish them? If his plans are in such a state of grace, will he lay those calculations in the Library so that we may all examine them? Surely the independent researchers, having carried out the calculations, will have given them to the Labour party.
Where is this document? How many of the right hon. Gentleman's hon. Friends have actually seen it? [Interruption.] Hands up, those who have seen it. I see no hands. That is extremely interesting. No Opposition Member has seen the document--not even the hon. Member for Dagenham, who told us about it. I do not for a moment think that the hon. Member for Dagenham would mislead anyone, so I ask him in a perfectly straightforward fashion, so that the doubts of everyone may be put at rest, whether he will put that document in the House of Commons Library this afternoon. [Interruption.] I am willing to give way for a reply. [Interruption.]
Mr. Speaker : Order. Let us get on with the debate.
The Prime Minister : In reply to my question, I get silence. Silence is not only golden ; it is instructive.
The second question to which every taxpayer is entitled to an answer is, how will the Labour party stop local tax bills soaring? We have said perfectly clearly that we will cap spendthrift councils. The Opposition have said that they will not cap spendthrift councils, so how will they keep the bills down? Will they make business pick up the bills, or will they just let their fair rates rip? If so, how will that possibly be fair for the taxpayer?
Taxpayers can be reassured, however, because the hon. Member for Dagenham came galloping to the rescue today. He told the New Statesman and Society that he has
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an answer ; that he knows how he will stop all the over spending local councils. What he said was perfectly clear and very firm. It was :"We would certainly do all we can to encourage councils to behave sensibly."
So there it is--there is the smack of firm opposition. This House--
Mr. Blunkett : Will the Prime Minister give way?
The Prime Minister : This House is entitled--
Mr. Speaker : Order. The Prime Minister has indicated that he is not giving way.
The Prime Minister : The Opposition do not like it when they are on the receiving end, do they ?
This House is entitled to ask why so many Labour councils deliberately choose to set community charge bills that are far higher than they need to be. The answer is that those councils resist any measure to reduce local spending overall. They put political priorities before local needs. They put the interests of the providers before those of the public. The Audit Commission report ? They ignore it. Cost-saving suggestions ? They reject them. When new ideas are proposed, they do not even begin to understand them. Mr. D. N. Campbell-Savours (Workington) rose --
Part of our reforms must be to make such councils truly accountable, and we shall do that.
Mr. Campbell-Savours rose --
The Prime Minister : I shall give way to the hon. Gentleman in a moment.
The behaviour of Labour council after Labour council has brought the financing of local government into disrepute. The story has been the same across the country--money wasted, services neglected, and the concerns of local people ignored. Which are the councils with the largest number of empty properties ? Labour councils. Which councils do not collect arrears to fund the rates fund ? Labour councils. Which councils produce the worst education system ? [Hon Members : "Labour councils."] Yes, Labour councils.
But there are some things--and I want to be strictlyfair-- Mr. Campbell- Savours rose --
The Prime Minister : In a moment.
I want to be strictly fair and there are some things that Labour councils do better and of which they do more. They do more town twinning, they have more foreign visits by local councillors, more nuclear-free zones, and more campaigns on international causes that lie well beyond the interests of local government. The Labour party has one policy on local government--to force costs higher. Over the past few years, too many people in this country have, sadly, come to know through their rates and community charge bills the high and bitter cost of living under a Labour council.
Mr. Campbell-Savours : If the Prime Minister is so concerned about the waste of public moneys, why did he and the Secretary of State for the Environment sit back for
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weeks twiddling their thumbs while local authorities spent tens of millions of pounds sending out invalid bills? Was not that the biggest squandering of public money ever known?The Prime Minister : If it were the biggest squandering of money, many community charge payers would be happy, for far more has been lost by Labour councils' activities.
Several Hon. Members rose --
The Prime Minister : I have given way sufficiently.
The fundamental problem remains : Labour councils spend too much. That is why in this Budget we have made a fundamental shift from local to central tax and that is why we will reform the system to stop the burden ever being felt again.
The Labour party opposed us at every step and now Labour Members challenge us today--not just the high spenders but the non-spenders sitting on the Opposition Benches. The Leader of the Opposition is concerned about the damage allegedly done to this country by the community charge. What about the damage done to this country by Labour Members who incite others to break the law?
The Leader of the Opposition censures the Government, yet he does not have the courage to take action against those Labour Members sitting behind him who incite others. The Labour party has no plans to keep local bills down. Those bills would rise even further because Labour has no plans to keep inflation down either.
We are winning the battle against inflation. The Opposition--no, I draw a distinction : the Labour Opposition--have fought us at every step. Every time we have had to take a hard decision, they have gone for a soft option. Every interest rate increase has been opposed. Every cut has been derided as not enough. The Labour Opposition's standard incantation has been Monklands law--whatever the prevailing interest rate, call for a 1 per cent. cut. They would have been better employed calling for cuts in wasteful and unnecessary spending by local Labour councils.
The Budget strategy is central to our aims for local government, not only in a switch from local to central taxation but in our determination to get inflation down and keep it down. That is as important for local government and local government taxpayers as it is for central Government.
Inflation has now been falling for four successive months. The next six months-- [Interruption.] Wait and see ; hon. Gentlemen will see the relevance of this. The next six months will see dramatic reductions. I expect a sharp drop in the inflation rate within two months. That will greatly help to ease in the new system of local government finance. By the end of this year, inflation will be down to 4 per cent. and it will go on falling into 1992. If we are to move successfully from the community charge to the new system of local government finance, low inflation is essential. It is now well on the way to being achieved.
Ms. Hilary Armstrong (Durham, North-West) : Will the right hon. Gentleman give way?
The Prime Minister : I shall not.
Our inflation rate will be half its current level by December. That lower inflation is the route to lower
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interest rates, lower bills for local taxpayers and a fairer system, which we will introduce, for local government finance.We have had four days' debate on the Budget presented by my right hon. Friend the Chancellor, a substantial part of which was devoted to the reduction in community charge bills and, as is proper, we have debated that fully. We are now entitled to just a few answers from the Labour party about its shadow Budget and its impact on local taxation.
Labour says that it supports the switch from local to central taxation, but the Leader of the Opposition leapt to criticise the increase in VAT. Perhaps Labour would fund the switch out of VAT ; perhaps it would not. Perhaps Labour has in mind raising income tax. In successive elections, Labour has pledged itself to raising the basic rate of income tax. Labour wants higher taxes, but these days it does not have the courage to admit how much higher taxes will need to be to fund its local government plans.
Local government finance is not the only place where Labour's numbers do not add up. As we saw, Labour's child benefit figures add up only if Labour claws back from the poorest in the land the money that it would give to others, whatever their income. Those on income support and family credit can expect no comfort from the Labour party, yet those are the very families that we have helped with £350 million a year extra in each of the past three years. Did Labour intend to hurt the poorest, or was the reason incompetence? Can the Leader of the Opposition tell us what happened in Labour's shadow Budget to pensioners, Labour's highest commitment? They vanished completely from the shadow Budget--a very shifty position indeed.
Mr. George Howarth (Knowsley, North) : On a point of order, Mr. Speaker.
Mr. Speaker : Is it a point of order or a point of frustration?
Mr. Howarth : It is a point of order, Mr. Speaker. It is very simple. At the beginning of the debate, you pointed out that the motion on the Order Paper was quite narrow and related specifically to the poll tax-- [Interruption.] The Prime Minister has not referred to the poll tax.
Mr. Speaker : I have not yet heard anything out of order.
The Prime Minister : We do not even have to guess what a Labour Government would be like ; we can see Labour in action in local government every day of the week. Labour has brought shame on the very name of local government. Labour has overtaxed and overspent on a scale that shows its unfitness to manage our national budget. Labour has left waste and chaos in its wake. No one could believe for a single moment that a party that has failed and failed again at local level could even begin to form a Government--Labour cannot even clear the rubbish properly at local level.
The motion of no confidence should be directed at the Labour party--no confidence in a party which will always be divided when it comes to standing up for Britain, no confidence in a party which would never accept the responsibilities that go with government. The House can have that confidence in the Conservative party today, tomorrow and for many years to come. [Interruption.]
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