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is no principle behind it. The Bill has been devised because Scottish local government is overwhelmingly anti- Conservative party. 7.22 pmMr. Robin Squire (Hornchurch) : I hope that I may reassure to some degree the hon. Member for Greenock and Port Glasgow (Dr. Godman). This time last year, those of us in England and Wales were hearing bloodcurdling tales about the cuts in front-line services that local authorities would be required to impose and the mass redundancies that they would need to make. However, the National Association of Local Government Officers--which I am sure the hon. Member for Greenock and Port Glasgow accepts is not a Tory front
organisation--found that councils such as Brent, Basildon and Lambeth made no cuts in front-line services and announced no redundancies. That is not to say that there will be none, but it is clearly the case that, when certain proposals are made, councils talk up their implications--but the reality is something much less worse. I have frequently expressed in this Chamber my scepticism about capping. I have listened to the arguments for and against over the years, and have eventually become convinced, sadly, of the necessity of capping as a last resort. The need for it flows directly from the behaviour of a small number of authorities, but, unless capping remains available, the number of errant authorities will grow. If there is to be capping, it is difficult to argue against the logic of extending it to the majority of local authorities--including the district councils that are currently outside the system.
Presumably, the hon. Member for Dagenham (Mr. Gould) has gone through a similar intellectual exercise, and has worried about whether or not capping should exist. Our only problem is that he seems to have reached the conclusion that it should not exist, whereas he is on record--as my hon. Friend the Member for the Isle of Wight (Mr. Field) said--as confirming that Labour wanted to retain capping as a last resort. If Labour now thinks that capping should not exist, that is a very recent conversion. My guess is that, in the unlikely event of Labour finding itself in power, it would quickly need to devise ways of restraining a small number of local authorities.
I want to comment briefly on standard spending assessments. The hon. Member for Eastbourne (Mr. Bellotti)--who, perhaps understandably, has temporarily left the Chamber--missed the point, because I remember him telling the House that the Government had substantially reduced the proportion of expenditure that is borne by central Government. That is true, but the logic of that statement is that, to the extent that a lower percentage of local authority expenditure is met by central Government, so, relatively speaking, is there less impact from the operation of SSAs. One cannot have it both ways. The hon. Member for Eastbourne rather overlooked that point.
I take the view that there is a continuing need for many refinements to SSAs. I say that on behalf not only of my own council of Havering but of many other authorities, including Doncaster, Barnsley, and Sheffield.
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Mr. Squire : Langbaurgh, too, I am told by my hon. Friend. Certainly the other three that I mentioned are not
Conservative-controlled authorities, but, like Havering, they have become convinced that the bases of the SSAs are invariably drawn against them. The reasons have been well ventilated in a number of debates, and I will not repeat them now. However, I urge my hon. Friend the Minister always to keep that aspect in mind. Right hon. and hon. Members in all parts of the House who have investigated it in detail are convinced that we have not yet found the best answer.
The Parliamentary Under-Secretary of State for the Environment (Mr. Robert Key) : I hope that my hon. Friend will accept my assurance that, in the latter part of every year, local authorities have an opportunity to discuss their SSAs with Ministers. That is done on a regular basis with a large number of local authorities. There is barely an SSA that is not at some point adjusted as a result of such representations--and of our discussions with local authority associations. We are very mindful of the concerns that right hon. and hon. Members in all parts of the House express.
Mr. Squire : I am grateful to my hon. Friend. He would expect me to say that we will be even more grateful when his comments are translated into perceived higher figures for all the local authority areas that currently feel themselves to be discriminated against. The main part of the Bill prepares the ground for the new council tax. I welcome unreservedly the form that it will take, but will comment briefly on the details of its operation that have so far been made available. I recognise that it did not have to follow the introduction of the council tax, but I welcome the fact that those on income support, and one or two others, will no longer be required to pay. I can see why the House was convinced that they should pay, but enough evidence has shown the difficulties that local authorities and those on income support have experienced for us to realise that it is an improvement to take them out of the local tax system.
I welcome anything that does away with regular revaluations. Labour Members from north of the border should urge their colleagues from England and Wales to be slightly less fulsome in their support of the rating system, as they have more recent experience of rating revaluations. Like other hon. Members, I expect that the existing system of rebates will be transferred, so that the more generous system that we enjoy will continue.
The Government have proposed seven bands, whereby the largest property will pay two and a half times as much as the smallest. That seems right, because many people, especially elderly people, live in homes that they acquired many years ago, when their incomes were higher. I should hate them to be unreasonably penalised, as they would be by a system based only on valuation. Whether the system is based on seven, eight or nine bands is an important detail, but that is the right range.
Most important is the provision for relief for the single adult householder. Conservative Members need to reiterate that at every opportunity. Hon. Members who are allured to the old rating system and wish to return to it as soon as possible must explain to every single adult household in the country why should they suffer from the same burdens as they did under the old rating system, which were the main reason why the system was
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discredited. I have no hesitation in commending the Government's recognition of the problem of the single adult householder. What would be the alternative? What do those who oppose the Bill--we now understand that both opposition parties do so--put forward? We know what the Liberal Democrats want, but I shall not stretch your tolerance, Mr. Deputy Speaker, by going into detail on a local income tax. Suffice it to say that it would lead to many more problems in practice than its adherents believe in theory.The Labour party does not believe in a local income tax, but wants a return to a rates system. Many in the parliamentary Labour party come from Scotland and will be aware of up-to-date rating values, but values in England and Wales date back to 1973 unless the house was constructed after that date. Therefore, the values for the majority of properties are ridiculously out of date. That would be bearable, perhaps, if that were the only problem, but rates carry the criticisms that I am reiterating and that many Labour Members have made over the years, and no doubt would privately still be making had it not become official Labour party policy.
Mr. Donald Dewar (Glasgow, Garscadden) : I am falling into personal temptation in intervening, but I am genuinely curious. The hon. Gentleman is making an impressive point about the out-of-date nature of the valuation base in England and Wales. Does he believe, therefore, that the new so- called council tax will require regular revaluations? What does he make of the promise made, I think, by the Minister of State, Department of the Environment, that once a property has been placed in a band it will remain there in perpetuity?
Mr. Squire : The hon. Gentleman makes two good points. The first and reasonably clear consequence of a banding system is that it would not need the same frequency of valuations as a system without bands. Once a house is in a band, it would be likely to stay within it, and the movement of values in the area would, broadly speaking, be in line. The hon. Gentleman's second point was whether it would, stay there in perpetuity, and the answer is that it would, subject to major improvements. The hon. Gentleman knows that the discussion document recommends that the valuation should be adjusted at the point of sale of the property. That also makes much sense and avoids many valuation changes that would make relatively little difference. As far as I understand it, the Labour party proposes four different values in an uneasy alliance, involving replacement and rental values that, by implication, would be reviewed annually. I urge Labour Members who understand these things to look carefully at what they are pledged to. I do not expect them to agree with the Government's proposals-- that would be asking too much--but they have wide experience and they know that, if the Labour party's proposals are remotely as I have suggested, they do not make sense. In their own interests, let alone the interests of better discussion of local government finance, they should do a bit more homework.
I believe that the Bill is a simple Bill that is justified. It will herald a good and better system for local government taxation and I give it my full support.
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7.37 pmMs. Hilary Armstrong (Durham, North-West) : I rise to speak with some weariness. The Government have meddled with local government finance and must hold the record for the number of Bills introduced to adjust or change local government legislation. I note with interest that there has been little enthusiasm for the Bill among Conservative Members. It seems, having listened carefully to the Secretary of State, that the Government are in a hole and are digging themselves deeper into it because they know of no way out. We do--a general election--but the Government are frightened of that. I intend to be parochial. I usually hope not to be so, but I wish to speak specifically about clause 1 and the problems that it will cause district councils such as Derwentside and other small district councils, which have suffered from enormous industrial devastation in the past 20 years and are trying to deal with the consequences. It was interesting that the Tory leader of the Association of District Councils gave the Bill a warm welcome. His press release says :
"A furious Roy Thomason, ADC Chairman, declared : We appear to have a Government that is being run by the Treasury for the sake of the Treasury convenience.
I am shocked that the Government should be threatening small-spending district councils with these centralist controls. The budgets involved are trivial sums in terms of overall public expenditure.' "
Those sums may be trivial in terms of overall public expenditure, but they are critical to the survival of areas such as Derwentside and to the way in which they can deal with the economic devastation of the past decade.
Other districts in Derwentside are also vulnerable because of the ludicrous standard spending assessments. The SSAs are inapplicable to small district councils which have particular problems, and they do not match needs.
Mr. Holt : While specifically criticising the SSAs, will the hon. Lady home in on the aspect in Durham and Langbaurgh with which she particularly disagrees? Is her reason based on the fact that that area does not get large sums under SSA, like Langbaurgh, because they do not have a large immigrant population? If so, does the hon. Lady wish to have a large immigrant population in Derwentside to get more SSA?
Ms. Armstrong : That intervention is somewhat bizarre. I am arguing that SSAs should be related to an area's needs.
Ms. Armstrong : I am sorry, but they are not. When regional policy was actively pursued in the north, much money was spent on infrastructure-- for example, on making sure that our housing was adequate. That made us ineligible because of the way in which SSA is calculated. I shall not pursue the discreditable views of the hon. Member for Langbaurgh (Mr. Holt). I wish to talk about the needs of my constituents.
Before last month's elections in Derwentside, the Conservatives held three seats--they now hold only two.
Mr. Holt : How many do the Liberals have?
Ms. Armstrong : The electorate have had their opportunity to give their verdict on the Government's legislation and actions. They made that clear in Derwentside.
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Mr. Holt : What about the Liberals?Ms. Armstrong : The district council is overwhelmingly Labour, gaining an overwhelming vote of confidence from the electorate at the elections.
Mr. Holt : How is Derwentside doing under Labour?
Mr. Deputy Speaker (Mr. Harold Walker) : Order. The hon. Member for Langbaurgh (Mr. Holt) must not persist in heckling from a sedentary position. I hope that he will desist.
Ms. Armstrong : Derwentside district council--
Mr. Holt : Now will the hon. Lady answer?
Mr. Deputy Speaker : Order. I very much hope that the hon. Member for Langbaurgh will not disregard my advice.
Ms. Armstrong : Consett is located in the Derwentside district. In 1980, the economy of Consett and the surrounding area depended on the steel industry and related industrial activity. Because of the nature of the area and the town's location, the problems facing the district during the past decade are, thankfully, unique. Over the past few years since the last general election, Ministers and Conservative Members have lectured me about the economic miracle in Consett and told me that I should be grateful for the increased activity and should not run down my area when pointing to its needs.
None of the regeneration would have been possible had it not been for the determination of Derwentside district council, which went into partnership with the public sector, the voluntary sector and whoever was prepared to invest or to work in the area--it was prepared to do whatever was necessary and possible to attract industry and support. It cost the electors of Derwentside money, but they took, and take, the view that, if they had not been prepared to contribute, their area would die. Because of their determination to have a future for themselves, their families and their community, they were determined to contribute to attract support from the European Community, central Government, regional agencies and the private sector. Derwentside industrial development agency is a model for many other parts of the country of the way in which public and private sectors can work well together. It cost money, but it has not solved all the problems.
Over the past year, measured unemployment in Derwentside has risen by 16 per cent. and 3,925 people are unemployed. The unemployment figures in Henley, the Secretary of State's constituency, are slightly different. Unemployment rose by 150 per cent. during the past year, but the number of people unemployed in his constituency is one third the number of Derwentside. The base in Derwentside is a much bigger problem to overcome.
Serious problems still exist in Derwentside. The council decided that it had a responsibility to fight for economic regeneration, so it spent to ensure a future for the area, even though regional support through the regional development agency has declined significantly over the past decade. Now the council is told that, by making that commitment, it is going against the Government's views of what an authority of its size should spend. The Government have no idea of the problems that the area faces. A council has a responsibility in those circumstances
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to meet the needs of its population and to work with it to secure a future. An enormous amount of work must still be done.If the Government succeed with the Bill, they will be saying to the people of Derwentside, "We do not see you as having any future. We are not prepared to support you in creating a future and opportunities for the people you serve." I cannot support such a Bill or such vindictive action, and I hope that Conservative Members will think again.
7.49 pm
Mr. Patrick Nicholls (Teignbridge) : I suspect that it will be a good few years before we hear the last word on the community charge, but even at this stage one can make two points which will probably command some support from Conservative and Opposition Members. First, the community charge was not perceived as fair ; secondly, whatever the right amount should be, it was clearly costing too much. On the question of fairness, there is no way in an imperfect world that there will ever be agreement across the board about what is a fair basis for local government taxation. Having said that, it has become clear to me from the many people to whom I have spoken in my constituency that even though some have misgivings about the council tax, it is seen on the whole as being fairer. In an imperfect world, that is probably the most that we could expect.
The amount is crucial because I suspect that if we had got the amount right in advance, people would not have picked away at the concept of the charge to decide whether it was fair. We did not get the amount right and the amount was too high. It is one thing to ask how much the amount should be and one can bandy figures around. It may be difficult to define what a fair amount is but, in the end, one can see what is fair. It has seemed to me for a long time that the way to arrive at the appropriate amount for a local government tax is to shift some expenditure back to central Government. It seemed clear to me that, in these days, 25 per cent. is probably too large a proportion of expenditure to expect a local authority to raise. It is now 14 per cent. as a result of the measures taken in the Budget by my right hon. Friend the Chancellor, which seems about right. Even if we now have a structure which is fair, and even if we now have a mechanism to ensure that the amount is seen to be fair, that can only work provided that one absolutely crucial point is made--we must ensure that the amount that a local authority can raise in local taxation is to some extent controlled.
One of the miseries from the community charge debate and one of the things that may yet make it worthwhile is to try to learn what harsh experiences sometimes teach us. I have seen the operation of the community charge from inside and outside Government, and it seems that the critical aspect is to recognise that no control mechanism will work except capping. The theory was great. The theory was that, in some way, the system would police itself ; that, if a local authority levied at too high a level, the electorate would in the end deal with that and there would be a self-correcting mechanism. It is a tremendous theory, which makes perfect sense, provided that it is only talk. In
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reality, it did not work. Any responsible way of approaching the problem must acknowledge that simple fact.There are probably three principal reasons why we did not succeed in producing a situation in which the electorate would pass their own judgment on the level of the community charge in a particular area. First, in many parts of the country it is unrealistic to think that there would be a meaningful change in the complexion of local party government. Some areas are strongly Conservative, whereas others are strongly Labour. In my experience, it is unrealistic in such areas to think that there will be such a sea change in attitude that the community charge, or the local government tax, can be controlled. Secondly, if it is correct to say that the electorate will pass judgment, they can do so only after the charge has been introduced. The electorate are never able to pass judgment beforehand or at the time. Therefore, even if there is some electoral retribution around the corner, it does not happen soon enough. In the meantime, a locality may have imposed on it a community charge which is unjustifiable. A considerable time might elapse before the electorate can do anything practical about it. Once again, the system breaks down.
Perhaps the most important reason why leaving the decision to the electorate does not work is that, faced with the responsibility of saying that their local authority is at fault, the good old British electorate will instead blame the Government. It has been an interesting experience to receive correspondence from people who readily admit that they understand that their local authority is responsible for setting the level of the charge, but who nevertheless decide that the Government are to blame.
What happened in my district council is an interesting example. It is an issue with which I hope that my hon. Friend the Under-Secretary will deal. I do not think that hon. Members are especially aware of the circumstances in my district council. The charge that it set was certainly larger than I should have liked, but it paled into insignificance when compared with what happened in many Labour-controlled areas. It was interesting to see how the debate took place locally. There was an expectation that the local council would set a community charge in line with the SSA. The debate was heated, and there was an initial vote. It seemed as though a proposition had been carried and as if a charge would be introduced at a certain level. There was then a recorded vote on a narrow majority.
Suddenly, the electors of Teignbridge were faced with a community charge which, although nothing like as great as would have been imposed in a Labour area, was being imposed in an area with no overall Conservative control where people noticed that it had been set at a far higher level than the Government would have wanted. When people wrote to me about that, they acknowledged that the Government were not directly at fault because the local council had set the charge, but they asked, "Why on earth did the Government not see it coming? Surely all your experience of local government was such that you must have realised that, given a free hand, some local authorities will spend."
Authorities may spend from the best of motives, but if we want to see an ultimate discipline imposed on local
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authorities, we cannot leave it to the electoral mechanism because that will not work, and we have seen that in practice. People said to me that it might not be the Government's fault on this occasion, but capping powers exist. They argued many times that such powers are used only in the grossest of cases and should be applied more widely.One of the things that I hope to find out, now that the £15 million exemption has been removed, is at what level the Government are prepared to tell a local authority that they have confidence in the SSAs, that they will negotiate with the local authority but, if the local authority goes beyond a certain level, what degree of excess the Government are prepared to sanction.
The starting point must be that we have confidence in the SSA mechanism. I was once on the inside and had responsibility on a day-to-day basis for the calculation for that formula. It was possible to see that it was fair and uniform and that, in the process of negotiation, it could be made to fit as best as could be in a particular area. If the Government believe that the SSA is an appropriate level, it seems strange that the charge will have to be very much in excess of it before the Government step in. I am aware of people who have been in local government--as I have--who say that that is ridiculous and that the Government are detracting from the right of people to elect their own representatives and that they should have the final say.
I am in favour of people having the final say ; I am in favour of democracy. But let us make no mistake--local government is the creation of the House of Commons, which must take the ultimate responsibility for revenue raising in this kingdom and, at the end of the day, the people will decide that, if they do not like the Government of the day, they will put that Government out of office. That is the way it should be, and I have no complaint about that system.
For a local authority to pretend that it can set up an alternative sovereignty and say that its judgment, and not that of the House, must prevail is an extraordinary proposition. Too often, we mouth such sentiments as, "It must be a matter for the local authority--we mustn't interfere." Sometimes we must get back to first principles and the first principle in this issue is that the House of Commons must make the ultimate judgment, and bluntly, the House and the party of Government will be put out if the electorate disagree with the choices that they make.
We are debating Government policy and it is right that we should. However, when people assess the worth of the Bill and examine the provisions in it, they will want to know something about the alternatives. I found it fascinating--I say that with all the insincerity at my command--to see the hon. Member for Dagenham (Mr. Gould) thinking desperately on his feet trying to work out how to explain that, in extremis, there must always be a reserve power to cap. His explanation was that it was something to do with fraud. We all know that, with matters of fraud, one does not have to a reserve power to cap. We all know that fraud can be dealt with in any event. The hon. Member for Dagenham apparently forgot what his earlier explanation was. At one time, it was not fraud. He said : "It's really just a hypothetical question to ask us to define what would be extreme circumstances. What I am saying to you--I am not ducking your question in any sense--I am saying in extremis that reserve power would have to be reserved, but it's impossible to say in advance what those circumstances would be".
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There we have it from the hon. Member for Dagenham. There will be the terrors of the earth, but he is not certain what they are. We heard this evening a wriggling, squirming and giggling assurance, which came through in the end, that a Labour Government would not cap. On 15 February 1991, the hon. Member for Dagenham was asked what he would do about a 60 per cent. rise. He said :"Well I don't see, even then, that we would want to come in and cap".
That was his attitude. In a sense, one would expect nothing less from the Labour party ; one could say that, in the end, the hon. Member for Dagenham came clean under some pressure and admitted that that was his attitude.
What I found extraordinary was to hear the hon. Member for Eastbourne (Mr. Bellotti) in no way try to dissociate himself from that proposition. He was eager, anxious and positively bouncing to associate himself with the Labour party.
Mr. Bellotti indicated assent.
Mr. Nicholls : The hon. Member for Eastbourne is nodding his assent now. He has made it clear that he too would see no restrictions imposed--
Mr. Bellotti indicated assent.
Mr. Nicholls : I am glad to mention the hon. Gentleman's sedentary assent, so that it can be recorded in Hansard. The hon. Gentleman made it clear, and continues to do so, that he can see no circumstances for capping.
The hon. Member for Eastbourne mentioned a passing acquaintance with local government in the west country. I remind him that we too can remember the experience of Liberal affairs in local government in Devon. We can remember a time only about five years ago when a Liberal administration was kept in power in county hall by the Labour party. The price that the Liberals were prepared to pay was to agree to abolish Devon's last grammar school. The reality of Liberal Democrats in local government is that they will always jump into bed with the Labour party in the end. It says much for the Labour party that, in the end, even it found the association with the Liberals so disgraceful that it felt the need to withdraw.
In the end, the House of Commons must act as the ultimate protector against the exploitation of the people. Without proper capping powers, that exploitation will continue. The experience of the community charge has been bad and painful enough. It would be unthinkable for us not to be prepared to learn from our mistakes. The pity of it is that the Labour party and the Liberal Democrats have shown tonight that they are quite incapable of learning from a mistake. Mercifully, that charge cannot be laid against the Conservative party. 8.2 pm
Mr. Dick Douglas (Dunfermline, West) : I want briefly to follow the hon. Member for Teignbridge (Mr. Nicholls) in his constitutional analysis of the protectors of the people. In a few months--we do not know how long it will be--we shall go to the country in an election. I very much doubt whether any hon. Member will say blandly to the electorate that the real protection of the rights of the people is the House of Commons. Candidates will be pleading for votes, and there will be little discussion, especially in Scotland, about the legislative sovereignty of
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the United Kingdom Parliament. There will be a great deal of speech-making about the sovereignty of the Scottish people. That shows clearly to me one of the major failures of the House of Commons, which was revealed in the nature and thrust of the speech by the hon. Member for Teignbridge.The only part of the United Kingdom that had the poll tax in front of it, in legislative terms, was Scotland in 1987. The people of Scotland overwhelmingly rejected the poll tax, but the Government and the House of Commons in particular paid little or no attention to them. The Bill is a panic measure in a retreat from what could have been foretold--the tenacity of the people of Scotland. It is the result of ignoring the views of the people of Scotland, and of the massive campaign of righteous civil disobedience and non-payment in Scotland.
We have moved a considerable way. The hon. Member for Greenock and Port Glasgow (Dr. Godman) is not in his place. I understand his reasons and I am not referring to him pejoratively. He referred to an article on Sunday by a Scottish journalist, Mr. Ian Bell. The hon. Member quoted a remark by Mr. Ian Bell which showed that, on this occasion, he was speaking in terms that were not unfavourable to the Labour party. Mr. Ian Bell concluded by saying that "Labour opposes and Lang disposes".
What does Labour do when the Secretary of State uses powers that have been called "corrupt" by the hon. Member for Linlithgow (Mr. Dalyell)? Does Labour say, "Lie down and obey the law," or does it show some tenacity in its opposition? Perhaps the hon. Member for Glasgow, Garscadden (Mr. Dewar) will give us some idea of Labour's intentions when the capping powers are used, as they are being used in a sense by the Secretary of State at present.
In a point of order, I made an allusion to the nature of the Bill. It is a tawdry Bill. In view of the lack of Scottish legislation going through the House at present, there should have been a unique and specific Scottish Bill to deal with the matter expeditiously in relation to the position that prevails in Scotland. One way or another, we would have been given the opportunity of doing what is amply justified in terms of fairness. We could have abolished the poll tax in legislative form ; it has already been abolished in practical terms because of the attitude of the Scottish people. We would have had the opportunity to abolish the poll tax not in 1993--if the Government persist in office--but in 1992.
There are two ways in which the poll tax could be abolished. The first way is not entirely favourable to me, but might suit the hon. Member for Garscadden. We could introduce a Bill to reintroduce the rating system. I understand that that is the short-term Labour party measure, and it could be done.
The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart) : Long-term
Mr. Douglas : I may have it wrong, but I understand that it would be a short-term measure and that Labour has longer-term proposals, with which I do not want to deal tonight. The idea is that the Government of the day would reintroduce the rating system. In Scotland, the basis for rating is not too outmoded because of the recent revaluation, which caused us all the difficulties in 1985. It might be uprated without too much difficulty in terms of inflation.
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I argue far more strongly that, given the time scale between now and April 1992, we could introduce a local income tax for Scotland without great difficulty. I do not argue the same case for Britain or for the United Kingdom as a whole, but I suggest that, in Scotland, the mechanism is there and that we could do that.What have we gone through all the paraphernalia to do? We are considering the collection of about £800 million by means of a massive process of banding, valuation, revaluation, assessment and appeals, which would run in harmony with the poll tax registration. It is completely unnecessary. Why do I think that it is unnecessary? I shall repeat comments that I have made before, because they do not seem to be getting through to the electorate. [Interruption.] The hon. Member for Garscadden sniggers. Does he or anyone else in the House know any people who pay their rates or poll tax out of anything other than income? I do not know anyone who sells his paintings or other capital assets in order to make his contribution to local revenue. Everyone I know pays out of his income.
A tax related to income should be an income tax. We hear strictures from the Opposition about the change in the balance of taxation. They say that the Government have altered the balance from direct to indirect taxation. Might I ask the hon. Member for Garscadden whether it is the intention of the Labour party to go back on that? Would a Labour Government reverse the increase in VAT and return to a rate of 15 per cent? Those are important considerations for the electorate.
Mr. Allan Stewart : Does not the hon. Gentleman want an answer?
Mr. Douglas : I do not expect an answer, but the points that I make are important and must be put on the record.
We have seen an alteration in the gearing of local government funding. In Scotland, only £1 out of £10 of local authority revenue comes from what will be called the community tax or council tax. There may have been an argument in the past for using fairly draconian powers to cap local authorities because a substantial amount--up to 25 per cent.--of local expenditure was raised locally. Where is the thrust of that argument now in relation to gearing? The Government have no confidence whatever in the local economy or local accountability. A local income tax would create local accountability. It is possible to go either way. Other countries raise a much higher proportion of their revenue from local income tax than the United Kingdom.
I was heartened today by the decision of Grampian regional council, which is Labour-controlled, to support a local income tax. The vote was 23 Liberal and Scottish National party members for and eight Tories against, while Labour members, who could not make up their minds, abstained.
There is a further point in favour of a local income tax in Scotland. We could dispute the figures. We asked the Secretary of State to supply his own figures. He did so, but we dispute them. I wish to put it on the record for the Scottish National party that the necessary £800 million or so could be raised by a Scottish income tax of about 3.5p or 4p in the pound.
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Mr. Douglas : The Minister disagrees, but that is a matter for discussion and analysis by both hon. Members and experts. I am willing to have such discussions with the Minister.
To substantiate my support for a local income tax, I quote from the report of the Institute of Fiscal Studies. Although the institute argued initially for a property-based tax, the report says : "In the longer term, however, if it is intended that local taxes should contribute more to the costs of local government, we see no alternative to the eventual introduction of a local income tax, either as a supplement to, or replacing, property taxation". That is a considered view.
I argue forcibly for a local income tax in Scotland by 1992. It would be possible to introduce it if there was the will to do so. The only objection comes not from Scotland but from the United Kingdom Treasury. That objection would persist whether a Conservative or Labour Government were in power. If we are to return to fundamental autonomy and accountability, local authorities must have a flexible and buoyant source of finance. The only one that would work is a local income tax.
In his speech, the Secretary of State did not deal with some detailed points. I am aware that some of the points that I intend to raise may be Committee points, but I fancy that we shall have a truncated Committee stage. Therefore, with your indulgence, Mr. Deputy Speaker, and that of the House, I shall ask the
Under-Secretary to explain several points.
Clause 2(2)(a) refers to
"an excessive increase in those expenses over the total estimated expenses there mentioned of the local authority in respect of the financial year".
What legal backing do the Government have for that definition? What does it mean in legal terms? Who will determine what is excessive? That is a fair point.
An open-ended suggestion is made in the proposed section 3A in clause 2(2)(b). It says :
"Different principles may be determined under sub-paragraph (3) above for different classes of local authority and the Secretary of State may classify local authorities for the purposes of this sub-paragraph by reference to such factors as he thinks fit." What does that mean? What criteria will be used when the Secretary of State forms a view of what he thinks fit?
Clause 3(9) says :
"The Secretary of State may be order amend, or substitute another definition for, any definition of domestic property for the time being effective in relation to Scotland."
What is the nature of the power that the Government seek? It is an open- ended power. The Secretary of State could make up his mind and impose on us any definition of domestic property that he thought fit.
We are told that clause 4 applies to England and Wales only. Clause 4(6) contains significant definitions of the charging authority, the community charges registration officer and the valuation officer. None of them applies to Scotland. The Bill contains no definition of a valuation officer in Scotland. The Secretary of State said that the Commissioners of Inland Revenue would be the top dogs. This is a new procedure, under which the local assessors in Scotland would not be asked to work in harmony with the Commissioners of Inland Revenue. I am open to being convinced otherwise by the Minister, but as I read it, the local assessor will be subordinate to the Commissioners of Inland Revenue. As far as I am aware, that is something new.
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