House of Commons Hansard Debates for 17 Apr 1991

Mr. Portillo : I can tell that the House is in a generous mood this evening. If the hon. Gentleman cared to apologise for his mistake, the House would accept that. He could say that he was speaking on the radio and did not mean to be misleading. He said :

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"What we're talking about is a household bill which will be £140 lower than that same household would pay under this year's poll tax provisions".

Mr. Gould : That is right.

Mr. Portillo : That is not right ; it is absolutely wrong. Mr. Gould rose --

Mr. Portillo : What a household pays under this year's poll tax provisions must take account of the reductions being received by 16 million people under the community charge reduction scheme.

Mr. Gould : The Minister of State persists in either failing or refusing to understand the point that I made at the beginning of the debate. I said that if we are to consider bills paid, the Minister cannot stop merely at taking account of his pet transitional relief scheme in calculating the bills paid. He must also take account of the rebate scheme. As the rebate scheme is substantially reduced by the transitional relief scheme, and as we propose to recycle that money and ensure that every penny is used for rebates, when we regard both of those factors my statement stands. If that is not the case, let the Minister of State dispute the arithmetic.

Mr. Portillo : My advice to the hon. Gentleman is, "When you are in a hole, stop digging". The record of what the hon. Gentleman said on the radio is clear. The House has seen him wriggling today, but he cannot undo what he said on the radio.

The Labour party's figures are wrong by £104 per household. The remainder of its assumed savings could equally arise under any new local tax. It is claiming savings from collection costs on the assumption that all the debts from the community charge system are written off. That could be claimed for any tax system. When it comes down to it, the Labour party is offering savings that people are already receiving and which might be claimed for any new local tax. Its figures are bogus.

Let us cast such mathematical quibbles to one side. Labour party policy is, as the hon. Gentleman said, to take the money available through the community charge reduction scheme and redirect it through the grant system to all local authorities. The hon. Gentleman confirmed that.

The Labour party would take away targeted help from those who need it most- -those who faced the largest increases on moving to the community charge-- and spread it around. Of course, that help under Labour would be targeted on Labour councils. The money that now goes to reduce bills would be used to support even higher levels of spending by councils. We know where the highest levels of spending are--they are in Labour councils. That is Labour's way for local government.

I must again remind the hon. Member for Dagenham of the statement made in "Opportunity, Quality, Accountability" that there will be transitional measures "right from the start". He now denies that this will apply to the new scheme and says that it is meant to apply only to the business rate. I therefore have two charges against the hon. Gentleman. First, Labour policy on this issue is thoroughly confused and the hon. Gentleman gives a passable impression of not having read his own policy document. Secondly, he is unwilling to offer any protection to anyone, whether single people or widows, when he proposes to move people back to their rate bills.

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What is more, if there is to be further transitional relief under the business rate--as we now understand the hon. Member for Dagenham to be saying--may we know where that money will come from? Will it be raised separately? Will it be added to VAT? Will it be raised from income tax? Will it be imposed on domestic ratepayers? Will it be raised from higher business rates for other people? [Interruption.] I am asking the hon. Member for Dagenham a question. Instead of laughing, he should think about how the scheme will be financed. If, as I understand it, there is to be transitional relief for business payers, where will the money come from?

Mr. Gould : I was laughing because I was astonished at the Minister's brass neck. He represents a Government who introduced a transitional relief scheme for their own nationalised business rate which was financed by business ratepayers.

Mr. Portillo : It is not easy to get answers tonight. I take it that this is a further impost on those who pay business rates who would otherwise gain from the move to the uniform business rate. [Interruption.] The hon. Member for Dagenham nods. It is a further impost on those businesses that would otherwise gain.

Miss Emma Nicholson (Torridge and Devon, West) : Does my hon. Friend agree that the hon. Member for Dagenham (Mr. Gould) has made it clear that a heavier burden will be imposed on local people through domestic rates to pay for higher council spending? As the hon. Gentleman said on BBC Radio 4 on 26 March this year, the amount will go up to 20 per cent. The hon. Gentleman fudged the issue by pretending that it is the same as the current level. That is not true.

Mr. Portillo : Indeed. The hon. Member for Dagenham claimed that the appropriate amount to raise from local taxation was 20 per cent We have reduced it to 15 per cent. My hon. Friends may remember that the Labour party was very much against the increase in VAT that enabled the reduction from 20 per cent. to 15 per cent. to be made. Labour Members want to have it both ways. They now want to claim that the new tax should be based on 15 per cent. even though they were so dismissive of the idea of putting it on VAT. If they do not want it on VAT, does that mean that we are to go back to 20 per cent. funding from local taxpayers, or will the money be raised in another way? Mr. Gould rose--

Mr. Portillo : I shall give way for the last time. I must let others speak in the debate.

Mr. Gould : I am grateful to the Minister for giving way so generously as he is again trying to misrepresent what I said. The Minister, the Secretary of State and the hon. Member for Torridge and Devon, West (Miss Nicholson) should get their act together. We should at least be talking about common definitions. If they care to check the statement made to the House by the Secretary of State on 21 March, they will see that he proudly claimed that the sum raised by the poll tax had been 34 per cent. but because of the switch in the Budget had been reduced to 22 per cent. Let us at least have some consistency in the use of these figures.

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Mr. Portillo : I did not hear the hon. Gentleman answer the question. If he is against the VAT increase, where will the money come from?

The regulations offer real help to people who need it. It is valuable help, costing £1.25 billion. It is help to a large number--16 million people. This evening, the Labour party will compound a wretched evening for itself by voting against the regulations. I commend them to the House.

10.59 pm

Mr. Michael J. Martin (Glasgow, Springburn) : Conservative Members talk about confusion in the Labour party. For the past year, I have seen a great deal of confusion in the Conservative party. I watched English hon. Members go into the Division Lobby without losing a wink of sleep to put the poll tax in Scotland. When they realised what they had done in England, they brought about the downfall of the then Prime Minister. Bit by bit, they are now backing off from the poll tax.

We are debating the poll tax tonight because Conservative Members are worried about the municipal elections and the effect that they will have on Conservative councillors. I hope that, for the sake of people who are suffering real hardship throughout the country, they will get rid of the poll tax. Let us forget about the £144 under discussion tonight. Conservative Members must know that elderly people and widows are coming to our surgeries and saying that, under the rating system--bad as it was--they could depend on rebates. Now they are worried and do not know whether they are coming or going. The Minister spoke of "single widows". What can a widow be but single? He said that no one has given assurances about widows, but he must know that, if a widow resides in a house with four or five adults in the household, under the poll tax system she will be worse off than she was under the rating system. In Strathclyde the poll tax is £350. I know of no widow with sons and daughters who is in a better position under the poll tax system. Widows who live alone may be in a different position, but I should have thought that the rating system could cope with their situation under a rebate scheme. The Minister must know that the terrible system whereby sons and daughters leave the household and refuse to register puts mothers and fathers in a distressing position. For the first time in their lives, they have debt collectors coming to their doors. People who prided themselves in never having had debts are now threatened with warrant sales. The Secretary of State for Scotland said that local authorities such as Strathclyde should have more warrant sales. Warrant sales are being implemented in Strathclyde as a result of mistakes by the local authority, when people have paid their poll tax through bankers orders and the money has been credited to other people. People have then been threatened with messenger-at-arms officers.

Mr. Jacques Arnold : Incompetent Labour councils.

Mr. Martin : The hon. Gentleman must know the terrible pressures being put on councils, whether they are Conservative or Labour. Much of the talk about and the attacks on local authorities, regardless of their political persuasion--

Mr. Jacques Arnold : Will the hon. Gentleman give way?

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Mr. Martin : I shall not give way to the hon. Gentleman because the Front Benches have taken up more than half the debate. The hon. Gentleman can take his chances.

Conservative Members' remarks do a disservice to councillors throughout the country. They must know that councillors do an excellent job. They take care of social work problems, look after the local authorities on a voluntary basis and, when they get home at night, are pestered with phone calls and must attend numerous meetings in their wards. When the Minister talked about local authorities, he did not mention that. A disservice has been done. I also believe that the poll tax has brought out the charlatans, the organisations that run around collecting money under false pretences. One organisation, known as the All-Britain Anti-Poll Tax Federation, has received thousands of pounds from the poorest of the poor. It has organised demonstrations, but I do not hear a word from the Minister about investigating where that money goes.

The All-Britain Anti-Poll Tax Federation in the west of Scotland has turned up to school meetings all over Strathclyde. It has collected money under the pretext that it will go to fighting the poll tax and no one knows where that money goes. Some of it has been directed into getting people involved in violent demonstrations in Trafalgar square. The Scottish Nationalists do not come out of the affair very well because some of them--Members of Parliament--have graced the platforms of such organisations. They have turned up in my constituency, telling the poorest of the poor not to pay their poll tax when they know that the worst thing that can happen to people is to get deeper and deeper into debt.

The poll tax has brought out the worst elements in our society who are prepared to exploit people who are living in poverty-- [Interruption.] Hon. Members talk about the Labour party. There are respectable men and women in the Labour party who are on record as saying that, regardless of whether or not this is a bad law, people must obey the rule of law. I shall go on record as saying that. It is wrong for hon. Members to name a few Labour Members and say that their behaviour is typical of all of them.

I do not say that Lady Porter, who sells off a graveyard to developers, is typical of Conservative councillors--far from it. Therefore, why should Conservative Members smear Opposition Members in that way when they know that they are decent men and women?

Mr. Jacques Arnold : Will the hon. Gentleman give way?

Mr. Martin : I shall not give way to the hon. Gentleman--I have given my reason.

Badness comes out when a bad law is brought in. There was a by-election in Scotland where Scottish Nationalists told people on their doorsteps not to pay their poll tax. When asked by the media, the Scottish Nationalist candidate said, "If I am pushed to a warrant sale I will bring out my cheque book and pay the poll tax." Some of my constituents whom the Nationalists encouraged not to pay their poll tax do not have the luxury of bringing out a cheque book and paying their way out of the problems. When bad law is introduced, it brings the House into disrepute, and the poll tax has done that.

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11.8 pm

Miss Emma Nicholson (Torridge and Devon, West) : I am shocked beyond measure to learn tonight from the hon. Member for Dagenham (Mr. Gould) that Her Majesty's Opposition will not vote in favour of the community charge reduction scheme. I believe that there is a certain sad consistency in that dreadful statement. I cannot accept that Labour party members are, in their hearts, committed to cheap, effective and accountable local government. If they were, whether the scheme benefits 8 million, 18 million or 28 million people, it will still be a scheme that gives financial help to people who have found life with the community charge tough.

It is inconsistent and hypocritical of the Labour party to say, on the one hand, that it cares about the poor and, on the other hand, to fail to support the community charge reduction scheme. I am ashamed of its Members ; I think their action is disgraceful. I have spent much of my adult life working for the poor. However, hypocrisy may not be the only hallmark of the modern Labour party, Her Majesty's Opposition. I believe that there is a flaw in their acceptability as a potential Government by virtue of their financial incompetence. The Labour party was foolish enough to go into print. When one goes line by line through its documents that state how it intends to bring about a fair rates system, one sees that beneath those bold statements lie hypocrisy, inconsistency, incompetence and inaccuracy. I make strong statements because I have a local government background. I know about local government finance. I designed systems that led to accountability to the local electorate. While carrying out that work I found that the least competent and, therefore, the most expensive councils- -the ones that paid through the nose for work that ought to have been done very economically--were, alas, those that were powerfully controlled by the Labour party.

Reference has already been made to the Labour party's difficulty over understanding the difference between 27, 15 and 20 per cent. When we calculate percentages we use different bases, according to the point that we are discussing. The assumption of the hon. Member for Dagenham is fundamentally flawed. I made that point earlier. The Labour party assumes that councils will spend the same amount as they have set in their budgets. That is such a naive statement that it hardly bears consideration. We know that Labour council figures do not reflect the long-term effects of very high spending. A more important point is that the Labour party assumes that "Government grant is redistributed among councils on the fairer equalisation basis set out in Fair Rates' ".

I leave aside the obvious point that Labour failed to tell us what form its grant distribution formula would take. The Labour party says that it is consulting on its alternatives, yet it knocks the Government for consulting. It is a curious "Alice in Wonderland" state of affairs when a word means just what one wants it to mean, according to how one uses it.

A more important point is that, according to the fair rates document, the Labour party's proposals would not take effect for several years after the Labour party had taken office. It is therefore untrue to say that Government

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grant would be redistributed among councils on the fairer equalisation basis set out in "Fair Rates." That would provide no help for two or three years.

The Labour party proposes that first there should be a return to the old rating system. That would be very difficult. Some of the rating lists are 10 or 20 years out of date. In a few places in my constituency revaluations have not been made since 1967. How, therefore, on page 3 of "Fair Rates : Labour's Alternative to the Poll Tax" can the Labour party say that the first thing that it intends to do is to modernise the rates by using that list? It also says--this is the untruth at the heart of that paper--that it would make them fairer by relating them to ability to pay. The Labour party offers a menu that will taste very bitter if the electorate is foolish enough to want to taste it.

The Opposition say that the timing of the changes will depend on the situation that they inherit and, in particular, on the resources that are available. They go on to detail a stream of people whom they intend to help in the long run. On top of that, they go into some detail in identifying what they call a property tax linked to ability to pay. That, I believe, is meant to be their fair rates system. They say that they will modernise the rating system immediately. We are told that they will instantly make it fair by relating it to ability to pay. In fact, what they outline on page 4 of this massive, inconsistent and frightening document is the effect of major, centralised computerisation. They say :

"We have considered the potential of the Inland Revenue's increasingly sophisticated computerised data base as a highly efficient and responsive way of linking tax liability to ability to pay."

They may have considered it ; clearly, they do not know how it works. It is indeed a highly sophisticated, highly economical means of collecting the inland revenue, but it would take years to alter it to do what Her Majesty's Opposition want it to do--pick up the possibility that

"means-tested rebates could be replaced by an automatic calculation of liability, using information already available."

We are told that the system

"could even preserve confidentiality and require the disclosure of no new information."

Here we go :

"Properly designed, it could be an important step towards a much wider reform encompassing the benefit system as well as taxation, and offering the prospect of a single tax-benefit transaction between the individual and the Government."

When I raised this matter just before the Easter recess I was assured by Opposition Members that they had no intention of centralising information on citizens in this way. Yet this is what they offer. This is what is supposed to preserve confidentiality and personal privacy and to keep people from worrying. This is their way of creating what they call the fair rating system. It would take a 10-year programme to bring all these things together in a recomputerised format. We would end up with a system cutting right across the principle that confidentiality and individuality should be preserved to some degree. The way to preserve confidentiality and individuality is to keep these two wings of the Government's work apart. That has always been the basis of our society's thinking. But, at a stroke- -or, rather, with a few lines on a word processor--the principle is cast aside. What is on offer is not a fair rates system ; it is a return to the old burdensome rating system, based on an antiquated list which is 30 years out of date.

This Labour party document is not just full of flaws ; it is a fudge, a mudge and an example of utter hypocrisy. I am no longer surprised that Her Majesty's Opposition will

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not vote for something that will benefit the electorate. Last time, they did not press the matter to a vote, but tonight they will do so. All that they are able to offer is something that should be discarded before it can see the light of day. I wish that they would either be honest and say that their paper has no validity in our society, or sit down and shut up.

11.18 pm

Mr. A. J. Beith (Berwick-upon-Tweed) : These regulations are before the House tonight because the poll tax was never related to ability to pay. In the case of many people on moderate incomes, large bills were not abated satisfactorily. Help was available only at the lowest income levels. High- spending Labour authorities were not the only ones to send out large bills ; people in Conservative-controlled areas like Harrogate and Warwickshire had to face the same problem ; and people throughout the country were getting bills that, in terms of the national average, were of medium size. They produced levels of tax which it was unreasonable to ask people of modest incomes to pay ; they were often much higher than the families had faced under the rating system.

One response would be to try to relate the system wholly to ability to pay. The Government response has been other than that : it has been to change their whole policy on the balance of local and central expenditure so as to get the basic charge down. That may be only a temporary measure until they have produced the scheme which they may tell us about tomorrow, but that is the purpose of the regulations. Intriguingly, it is also the purpose that has been pursued by the Labour party. It has concentrated considerable effort on trying to produce another and significant decrease in the overall charge for everybody. Of course, such schemes have the effect of providing a reduction for those who are big gainers from the poll tax as well as for those who are big losers. They benefit the poor less than the rich, because some of those at the bottom of the salary scale cannot gain £140 from the system. It would have been far better for the Government to go from the start for a system related to ability to pay.

What has become even more puzzling tonight is why the Opposition, in their criticism of the whole thing, have not made it clear how a proper rebate system can be grafted on to what they are proposing. It has become the great Labour rebate mystery. The fair rates document indicated that, under Labour's proposals, rebates would be introduced as resources allowed, depending on the position that was inherited, rather than being made integral to the scheme from the start. What has been wrong with the poll tax all along is that ability to pay has not been integral to the scheme. That is why I and my right hon. and hon. Friends so strongly favour a local income tax, which would be based from the beginning on ability to pay. That fundamental defect cannot be solved by the Government's proposals. That said, so far into the charging year, the House would be mad to throw out the £140 relief. That would be a crazy thing to do.

Mr. Rupert Allason (Torbay) rose--

Mr. Beith : So little time has been left for me that I cannot reasonably give way.

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Throwing out the £140 relief would be denying to those people who have been hardest hit by the scheme the only relief on offer. Therefore, I cannot invite my right hon. and hon. Friends to vote for the prayer and to attempt to throw out the scheme, however deficient it is in some important respects.

There is a second reason, however, why I do not want my right hon. and hon. Friends to support the prayer. The Government scheme also incorporates something that I have been pestering Environment Ministers to do ever since they dreamed up the first transitional relief scheme ; that is, to make provision for people living in sheltered housing schemes. I have been to meetings and on deputations to try to persuade the present Ministers and their predecessors that it was wrong that people living in sheltered housing schemes should not have had the benefit of transitional relief. It was the main means by which the Government sought to abate poll tax bills. Many people in sheltered housing schemes are those who most deserve that help. Thank goodness they are at last getting it. It happens that, at the time they are getting it, they will also be getting the additional benefit of the £140 relief to the extent that they are eligible for that as well. So the immediate effect will not be as noticeable, but it is putting right an injustice of the transitional relief scheme since it started.

We are in an odd position, because we are debating two sets of regulations, although three are floating around on the subject. The one which is not before us actually amends the regulations that we are considering. Indeed, things that we pass tonight will be undone in the technical sense by statutory instrument 844. It would have been more helpful if we could have considered all the regulations at one go and if a group of prayers had been tabled by the Opposition to cover all three.

Those technicalities, along with the abstruse formula which has had to be corrected, will not be most evident to the people who are desperate for some relief from the terrific burden of the poll tax. This is the only relief on offer. What a crude mechanism it is, and how crude too is the mechanism which Labour has suggested as an alternative. We should have a local tax related to ability to pay. That is what a local income tax would provide.

11.24 pm

Mr. David Blunkett (Sheffield, Brightside) : If we voted for every scheme and every proposal put to the House that had a grain of good in it we would never vote against anything. It is on those grounds that we shall vote against the regulations tonight.

The proposed scheme is flawed. It does not target help according to ability to pay, but relates help to previous rate bills. On 17 January we were told that the changes would cost £1.7 billion and that 18 million people would benefit. On 24 January, however, the Prime Minister said that any scheme that involved having to give a discount or rebate to more than 50 per cent. of the population was fundamentally flawed and would not last, so we have the right hon. Gentleman's word that we should not vote for the regulations tonight.

On 19 March the Treasury admitted that the £140 reduction would cost £4.5 billion and that a clawback of £1.25 billion was necessary from the scheme that we

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discussed today and from rebates to fund that reduction. On 12 April, however, the Secretary of State told us that £1.25 billion was the cost of the scheme. That means that £800 million will have to be clawed back from somewhere in the rebate system.

The proposed scheme is flawed because it does not target help according to ability to pay. It is not related to the rebate system, which would perform that precise job. It does not tackle the 20 per cent. contribution, which penalises the very poor, and it is certainly not aimed at helping widows. One Conservative Member kept on crying out about widows during the speech of my hon. Friend the Member for Dagenham (Mr. Gould). The way to help widows is to ensure that the bills which have to be paid are directly related to the income of the person. We are not into helping Jacquie Onassis pay her bill under a blanket scheme. We shall help those who need assistance.

The regulations in SI 844 extend the scheme to families with three or more individuals living in the property, even though the Conservatives will announce next week that they want to target help on individuals living alone.

The scheme is absolute nonsense. The Chartered Institute of Public Finance and Accountancy has confirmed time and again, including in a letter from Noel Hepworth on Monday, that it agrees entirely with our arithmetic. It issued only one qualification and The Times got it wrong. It said that, as part of its constitution, it would never endorse any national party. Our scheme stands up to scrutiny. We shall target our help on those who need it most.

If the community charge reduction scheme had been operating 20 years ago, one individual would have had great difficulty in claiming the rebate, because that individual would have had great difficulty in identifying which local authority he lived in. That individual would have been the resident of No. 10 Downing street.

11.27 pm

The Parliamentary Under-Secretary of State for the Environment (Mr. Robert Key) : The saddest thing about tonight's debate is that it isnot being held in prime time with a packed House so that the public could hear exactly what has been said by Opposition Members, mistake after mistake and fluffed line after fluffed line. The Opposition have denied what they said on radio and television. It has been an extraordinary event.

The hon. Member for Sheffield, Brightside (Mr. Blunkett) talked about a grain of good, and some grain it is--about £1.2 billion worth. The hon. Gentleman dismisses 16 million people with a reference to a grain of good. Tonight 16 million people will hear that Labour has voted against their relief. As the Opposition vote against that relief scheme, CIPFA and the Institute of Revenues, Rating and Valuation will be busy distancing themselves even further from Labour's scheme.

I congratulate the hon. Member for Glasgow, Springburn (Mr. Martin) on his courageous speech, which it must have been difficult to deliver. He was right to talk about the violence that has been caused by those who have refused to pay their poll tax. It is interesting to note that the Scottish National party was absent from tonight's debate and it fell to the hon. Gentleman to make that courageous speech. He talked about a disservice to councillors. I do not think that there is any such disservice in what the Government are trying to achieve. We are

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trying to ensure that there is a proper partnership between central and local government. That is crucial if local councillors as well as central Government are to work in proper partnership on behalf of all the people whom we represent.

My hon. Friend the Member for Torridge and Devon, West (Miss Nicholson) made a telling speech about the fundamentally flawed Labour policy. The hon. Member for Berwick-upon-Tweed (Mr. Beith) was his usual generous self when commenting upon the sheltered housing schemes, and rightly referred to Labour's rebate mystery. What we have achieved in the regulations is to take into account excessive spending by authorities and we have further reduced many people's charges in our subsequent schemes to within just £52 of their old rates bills.

This has been an important measure and there are further regulations to come. The House will not have to wait long-- It being half-past Eleven o'clock, Madam Deputy Speaker-- put the Question, pursuant to the Order [22 March.]

The House divided : Ayes 182, Noes 293.

Division No. 119] [11.30 pm

AYES

Abbott, Ms Diane

Adams, Mrs Irene (Paisley, N.)

Allen, Graham

Archer, Rt Hon Peter

Ashton, Joe

Banks, Tony (Newham NW)

Barnes, Harry (Derbyshire NE)

Barron, Kevin

Battle, John

Beckett, Margaret

Benn, Rt Hon Tony

Bennett, A. F. (D'nt'n & R'dish)

Benton, Joseph

Bermingham, Gerald

Bidwell, Sydney

Blair, Tony

Blunkett, David

Boateng, Paul

Boyes, Roland

Bradley, Keith

Bray, Dr Jeremy

Brown, Nicholas (Newcastle E)

Brown, Ron (Edinburgh Leith)

Buckley, George J.

Caborn, Richard

Callaghan, Jim

Campbell, Ron (Blyth Valley)

Campbell-Savours, D. N.

Canavan, Dennis

Clark, Dr David (S Shields)

Clarke, Tom (Monklands W)

Clelland, David

Clwyd, Mrs Ann

Cohen, Harry

Cook, Robin (Livingston)

Corbett, Robin

Corbyn, Jeremy

Cousins, Jim

Crowther, Stan

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