House of Commons Hansard Debates for 6 Nov 1991

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four years later, they say, "Sorry, we got it wrong. You had an awfully raw deal out of it, but now we have got it right." Why should people believe them now ? They are just as wrong on this occasion as they were on the previous one.

The Local Government Bill provides for compulsory competitive tendering and creeping privatisation. Ministers are not prepared to allow local authorities to lay down conditions of employment, sick pay, holiday pay and other pay levels. It is appalling that in 1991 the only way in which the Government want to save money is by cutting people's pay and working conditions. It is tragic that they should be doing that to local authority employees. There is no employee on the buses who enjoys as good conditions of service as applied before the passing of the Transport Act 1985 in the areas affected by that Act. I do not believe that local authorities should be capped. I accept that the Government have the right to determine the amount of money that they are prepared to give to local government. There will always be arguments about whether that amount is sufficient, but the amount provided by this Government has always been insufficient. Local authorities have the right to provide the services that they were elected to provide. It is wrong for any local authority not to take into account people's ability to pay. The poll tax failed completely when it came to people's ability to pay.

The Government have never accepted that there are some people who cannot afford to pay for local government services. That applies in every constituency. It is time that the Government accepted that fact and dealt with it. If they did so--and they could do it easily--we should be willing to co-operate with them. The matter could be dealt with speedily, by regulations under the existing legislation. Rebates could be increased. The 100 per cent. rebate to be included in the new Bill could be applied now. The Government could also authorise local authorities to remit payments when they know that people cannot afford to pay.

One case in my constituency highlights the type of thing that happens. Two of my constituents, Mr. and Mrs. Bellis, were sent to prison because they did not pay the poll tax. They had a young child, but the court did not take account of who would look after the child while they were in prison. If magistrates no longer apply the natural principles of justice, it is a bad day for our law. I wrote to the Lord Chancellor about the case. He said that it was nothing to do with him ; it was a matter for the Department of the Environment. When I wrote to the Department of the Environment, the reply was that this was the Lord Chancellor's responsibility. This is the Government's responsibility. They need to do something about it. The poll tax must go, and the quicker the better.

8.36 pm

Mr. Simon Burns (Chelmsford) : I welcome the general tenor of the Queen's Speech. It confounds the rumours that have been put about that the Government are running out of steam. It is an imaginative Queen's Speech. It contains a programme that will take us well beyond this Session, after our fourth election victory in March, April or May of 1992.

I intend to concentrate on two issues in the Queen's Speech--the commitment to continue to prepare for the privatisation of the British Railways Board and the

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commitment to introduce a new council tax and to establish a review of local government structure in England. My constituents are concerned about British Rail's performance. More than 10,000 people commute from Chelmsford to Liverpool Street each day.

Mr. Deputy Speaker (Mr. Harold Walker) : Order. I draw the hon. Gentleman's attention to the fact that we are debating an amendment to the motion on the Queen's Speech. The debate must be confined to the amendment, which relates to the local council tax.

Mr. Burns : I sought guidance earlier, Mr. Deputy Speaker, and was advised that one could speak on anything in the Queen's Speech, but if that is incorrect I shall confine my remarks to the council tax. I was assured that one could discuss any aspect of the Queen's Speech.

Mr. Deputy Speaker : That is not the advice that has been given to me. I am advised that the amendment means that the debate today is confined to the terms of the amendment, which relates to the local council tax.

Mr. Burns : Then I shall curtail my comments on British Rail and deal only with local government finance.

It is a truism to say that nobody likes paying anything for any service. If we could get out of paying for local government, many people would be far happier. They would prefer not to have to make a financial contribution, regardless of their ability to pay. However, it is a fact of life that local government has to be financed by individuals within the local community and by businesses and central Government. What has proved to be a thorny problem, not just during the past four years but for many years before, is the basis for financing all the services provided by local authorities and the level of services that should be provided.

Earlier in the debate, the hon. Member for Eastbourne (Mr. Bellotti) told us of the Liberal Democrats' proposals for a local income tax. I would be the first to admit that I was amazed, enlightened and then staggered by some of the intricacies of the local income tax a la the Liberal Democrats. I had not realised that it was even more complicated than I had been led to believe originally.

The hon. Member for Dagenham (Mr. Gould) told us in the briefest and skimpiest of ways--that is to be expected from the new model Labour party-- of the Labour party's pledge to return to a policy of fair rates. I was staggered to learn that the Labour party and the Liberal Democrats gave categorical assurances to the House that rate capping or capping of any sort would not be part of their programmes.

If there were to be a Labour Government or the unlikely event of a Liberal Democrat Government, it would be open house for local authorities to spend and spend, just like Viv Nicholson. There would be an orgy of spending with no restraint, regardless of the damage that it might do to ratepayers, community charge payers or whatever they may be called. I suspect that, when people up and down the country realise the sheer horror of what is being proposed, they will recoil from such an open-ended commitment for massive local government spending.

The level of service provided by local authorities is crucial. It is imperative that the services provided are cost efficient and of the highest quality. If one looks around the

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country, one becomes seriously concerned about the definition of a high level of service in certain local authorities.

It is interesting that the Labour party proposes to return to what it calls a fair rates policy. As far as anyone can understand or discover what that cliche means, it seems to be a return to the old, discredited rating system. Like the old saying that success has many fathers, but failure has none, nobody is prepared to claim parenthood of the old rating system. Even the Leader of the Opposition is on record as saying that the rating system is the unfairest of taxes, yet we are led to believe that that is what the Labour party proposes.

We have before us a proposal for a council tax to finance local government. I do not want to disappoint the hon. Member for Eastbourne, but the chances of a local income tax are nil, because his party does not have a cat in hell's chance of ever being returned to government.

One of the most worrying aspects is the danger posed by irresponsible and loony left local authorities. Opposition Members may wave their hands, but for those living under the regime of a loony left council, the follies of its ways cannot be highlighted enough. Day after day they have to live with those policies and spending commitments.

Very few people, especially Conservative Members, would dispute the fact that until the change in party control in Brent it probably had the accolade for one of the looniest of loony councils. It was said of Brent under the Labour council :

"If you have a council that is as monumentally incompetent as Brent's has been in the last few years, it rightly gets a major vote of censure from the public."

That forthright common sense does not come from the Conservative Newsline ; nor is it a quote from my right hon. Friend the Secretary of State or my hon. Friend the Member for Enfield, Southgate (Mr. Portillo). That common- sense approach to Brent came from the hon. Member for Brent, East (Mr. Livingstone) who, for those who may not remember, was the former leader of the Greater London council. If that is not enough, a former Member of Parliament and a former councillor in Hackney, Ms. Maureen Colquhoun, said that the only reason for Labour losing seats in Hackney in 1990 was

"the total failure of the Labour Group to deliver services. The record is shameful."

If you, Mr. Deputy Speaker, read what that council has got up to over the past four years, you will appreciate fully, just as people in Hackney do, just how shameful the record is.

Equally shameful was an article in The Guardian of 28 February 1991 in which a Councillor Steve French in Lambeth called for victory for Iraq and urged the bombing of Israel. Up and down the country, there are stories of grotesque mismanagement and waste of money by Labour councils.

Nearer to my home in Chelmsford in Essex--that wonderful county which produces Essex man and Essex woman--the Labour-controlled council in the constituency of my hon. Friend the Member for Basildon (Mr. Amess) has spent millions of pounds on a huge new civic centre. Unfortunately, it forgot to plan for the needed new council chamber within that civic centre.

Senior council officials in Birmingham, some earning up to £65,000 a year--that is more than we poor Members

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of Parliament get--are living in council properties and paying rents as low as one fifth of market levels. Bradford voted to spend £10,000 to celebrate some obscure strike that took place in the city 100 years before. Charge-capped Islington considered sending 25 children and five teachers to Senegal to study French. Islington could have saved its council and charge payers a great deal of money if it had just asked the advice of a local geography teacher and been told that it is better to go to France to learn French.

I understand that in Dudley, Thomas the Tank Engine has crossed swords with the ideologues of the loony Labour left. Thomas the Tank Engine has been banned from schools and libraries because it is sexist. When reading stories about Thomas the Tank Engine to my daughter, I never thought it sexist. Obviously, there is a new interpretation of the word.

Last year in Harlow, the national anthem was forbidden by the local authority at council entertainments. That is all utter rubbish. Local authorities should not be interfering and wasting charge payers' money in those ridiculous, trite and stupid ways.

I have always believed--I make no apology for it--that any system of financing local government must contain a way of making the local authorities more accountable to those who live within the local area. The Government have decided to introduce the council tax. They listened to the representations that were made and, in their wisdom, decided to make this change as quickly as possible. I wish the Bill well not only on Second Reading but in Committee. Hon. Members will have an opportunity to debate the Bill, but, whatever happens, it is far better to have a system that is more accountable to local people and that will, we hope, put an end to some of the ridiculous mismanagement, inefficiency and wasting of money that has gone on for far too long.

8.50 pm

Mr. Eric Illsley (Barnsley, Central) : We listen time and again to scare stories about loony left Labour councils, many of which are figments of Conservative Members' imaginations. I respond with one simple example of wasting money. NHS trust hospitals in my health authority area are sending people to Toronto, Paris and all over the world to learn how to do catering and cleaning. The Government should address themselves to such wasting of money and not to fictitious ideas about Thomas the Tank Engine.

Earlier this year, the Government announced the abolition of the poll tax and the introduction of the council tax. That should have been welcome. Hon. Members, including some Conservative Members, have said how divisive and unfair the poll tax was, how difficult it was to collect, with the result that 7 million court summonses are outstanding, and how expensive it was to administer. Hundreds of thousands of pounds were spent on computers and software, only for them to be replaced by new software for the council tax.

The poll tax bore no relation to the ability to pay, offered no accountability because of capping and limits set by the Secretary of State, and imposed a 20 per cent. universal contribution, despite the fact that many people

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simply could not afford to pay. The hon. Member for Lancashire, West (Mr. Hind) rightly said that it costs more to collect that contribution than it yields.

The problems of local authorities were exacerbated by the Prime Minister saying that the poll tax was being abolished because it was uncollectable. That was welcomed by the organisations that had campaigned for non-payment. Their problems were further exacerbated by the fact that many people took the Government at their word and simply stopped paying. Many local authorities are issuing court summonses and spending much time and money trying to persuade them that the poll tax has not been abolished and that it will be with us next year and possibly the year after.

It is no wonder that local government finance officers regard the poll tax as a financial nightmare. When we explain each local government Bill to them, they frown and put their heads in their hands. The poll tax is uncollectable and expensive. Much of that expense is caused by the enforcement procedures. My local authority spends a lot of money simply issuing court summonses and trying to pursue people for non-payment.

The abolition of the poll tax is widely welcomed until we consider what will replace it--simply more of the same. Page 2 of the consultation paper refers to the guidelines that the Government considered for the new council tax. They considered the same principles on which they based the poll tax. The consultation paper refers to accountability. How can capping lead to accountability? A local authority is accountable either to the local electorate for the poll tax that it sets or to the Secretary of State because he decides how much it can spend.

How can any tax that has a universal contribution, regardless of income, be fair? How can we consider the fairness of the council tax when the eight bands equate house values with the wealth of an individual and his ability to pay? It is simply nonsense. The document refers to ease of collection. One bill will be issued for the council tax, and supposedly there will be no register. How will a local authority allocate rebates? How will it, without a list or register, determine whether a household is a single or a two-person household? How can the council tax be easy to collect if the people who are responsible for collecting it simply do not know how much they must collect from each household? Of course there will have to be a register : otherwise, the system will be thrown into chaos.

The document mentions equitable distribution. Once again, the Government considered making everybody pay the council tax but relented and will abolish the 20 per cent. contribution--not before time. As that is so expensive to collect, why not abolish it now? Conservative Members should realise that capping is based on the standard spending assessment. The cap applies not to what an authority spends but to what the Government believe an authority is entitled to spend. Many times, Labour Members have pointed out the iniquities of the standard spending assessment, which is based on irrelevant data more than 10 years old. The standard spending assessments, which will remain, will lead to further capping and difficulties for many authorities.

The council tax is doomed from the start. It contains not only a personal element but a property element. The personal element of the poll tax led to huge decreases in

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census registration and registration for elections. I understand that about 1 billion people did not register in the recent census. Council tax bills will be based on a two-person houshold. Imagine the confusion that there will be among single people who receive a bill based on a two-person household. Pensioners will believe that they have to pay the full amount unless they query it with their local authority or unless the authority has a list. Council offices will be inundated with people querying their bills.

An interesting change has been made, because under the poll tax each adult had to pay, which penalised larger families. As the council tax is based on a two-person household, a household of four or five students or people on income support will pay less. Many people will not realise that they are entitled to a discount, because, there is no information on how the discount scheme will work. Where will the list be of people who are entitled to a discount? How will a local authority find out who is entitled to a discount? If a person goes to the town hall and says that he qualifies for a discount, the authority will need proof. It will have to compile a list or a register, so the idea that the council tax will not need a register is a complete fiction. It is also wide open to fraud, because many people who are not entitled to a discount may try to claim one from their local authority.

The discount for a single-person household will be set at 25 per cent. Once again, many people will not realise that there is a property element built into that and they will wonder why they do not receive a 50 per cent. discount on the two-person household bill. Many people will not realise that there is a property element built in and that they qualify only for the 25 per cent. discount. The dual element will be a cause of great confusion, which will be compounded by the proposals for other discounts and rebates for people on low incomes. How can those rebates and discounts be administered without some form of register or list? How is a local authority to react to thousands of claims for rebate? Will it wait to deal with them when the bills drop on the doormats and then try to compile a list of people entitled to a rebate after the council tax has been introduced? Will local authorities be required to compile a register of people entitled to rebates before the council tax is implemented? What is the time scale for implementation?

In a brief to me and my colleagues, my local authority wrote : "In addition, because of its very nature as a combined personal/property tax, movements of individuals within a household will inevitably give rise to changes in liability. Consequently, some details of individuals within properties will need to be kept." Local authorities themselves are saying that a register will be needed.

We have heard that the amount to be paid by each household will depend on the valuation of the property and that properties will be allocated to one of eight bands. The problems are obvious. There will be different housing valuations across the country for similar types of property.

Whole areas of property will be lumped into bands with no attempt at individual valuations. People in the south-east will be allocated to bands E, F, G and H and will pay the top rates. They will be extremely unhappy that people in the north and the midlands with similar properties will be allocated to lower bands. We shall also find that people in one band will attempt to switch to

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another in order to pay a lower rate of council tax. The unfairness associated with the poll tax remains with us, and the anomalies will remain until a fairer system is introduced with a more distinct and accurate valuation.

The problems of valuation and banding will also be compounded by the Government's proposed method of valuation, which is to give the job to people such as estate agents who have a vested interest in ensuring that the valuations are as high as possible. The Inland Revenue will merely oversee the process under which thousands of properties will be given over to estate agents to lump into the banding system. Many estate agents have no expertise in property surveying and many cannot even sell houses, yet they will carry out the banding which will place properties into distinct bands. The consultation paper states :

"Valuation is not an exact science. Two different valuers may well come up with two different detailed valuations of the same property--providing fertile ground for appeals and disputes." That is only too true. The same paragraph applies to valuation for banding, especially as properties will be banded in groups of 20,000 or more. There will be appeals and disputes in relation to the council tax ever after. It is interesting that appeals are still in progress for the old rating system from years ago.

As I have said, the abolition of the poll tax is to be welcomed, but even more welcome would be the abolition of the system of grants--the standard spending assessment which is responsible for most of the problems relating to capping and high poll tax bills. Colleagues from neighbouring authorities have drawn attention to the various anomalies in the standard spending assessments and I shall not repeat them. However, one local authority should not receive double the amount of grant received by another only a few miles away for the provision of exactly the same level of service, which is the case at the moment. My authority receives half as much in grant as an authority such as Manchester to provide exactly the same level of teaching service.

The council tax will fail. It needs a register. It has a personal element, discounts and rebates, all of which will have to be listed by the local authorities. It is obvious that some form of register will be needed. The tax is unfair. The basic banding system is unfair, and will lead to appeals and anomalies. All in all, we shall have the same problems as we would have had if the poll tax had remained. 9.4 pm

Mrs. Margaret Ewing (Moray) : I will support the amendment tabled by the Leader of the Opposition. However, it will come as no surprise to the hon. Member for Glasgow, Garscadden (Mr. Dewar) when I say that my party has its own alternative to the council tax, which is referred to in the amendment tabled by myself and my hon. Friends. The House well knows that the Scottish National party has been vitriolically opposed to the poll tax. Our view has always been that any taxation system must be based on the ability to pay. If a tax is to be fair, if it is to have the support of the people and if it is to be collectable, it must be based on the fundamental principle of ability to pay.

The Government introduced the community charge legislation as a result of total panic about what was happening in Scotland when revaluation came before us again. There were screams and cries from Scottish

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Conservative Members, who said that, unless the Government did something, they would lose their seats. The Government did something. They introduced the poll tax and, as a result, lost 11 Scottish Conservative Members in 1987. The introduction of the community charge was a desperate attempt to save the skin of the Conservative party in Scotland, and it failed miserably because of the sense of social justice in the Scottish philosophy. The Scottish people saw the community charge as the most hated tax that had been implemented within their memory.

Other hon. Members have given specific examples of their constituents. I could list many individual examples of how the tax has treated the poorest and most vulnerable in society. I could give examples of how people have been pursued beyond the grave to pull back a few miserly pounds of poll tax payment. Only this weekend, I had a telephone call from a distressed daughter who pointed out that her mother, who was widowed 18 months ago, had just received a threatening letter saying that, if she did not pay £11 for the 16 days between 1 April and 17 April 1989, during which her husband had been alive, poinding action would be taken against her. Such a philosophy is wholly unacceptable and shows how stupid the tax was. Unfortunately, we again have a Government who are panicking about how to fund local government. They have not thought carefully through how we should deal with the important issue of funding and local authorities. The Government are deeply concerned that they may lose seats south of the border as a result of the community charge. It brought about the demise of the right hon. Member for Finchley (Mrs. Thatcher) and many people panicked. As a result, we have another ill-thought-out form of taxation to pay for local authorities. It is clear that the Government are determined that the Bill will be on the statute book before the general election. I understand that a timetable motion is to be introduced on Second Reading--a procedure which I have not experienced. All that is intended to clear the decks because the Government think that the council tax may be the remedy to their problems.

The Bill perpetuates all the anomalies, unfairness, regional variations and bureaucracy that made the poll tax unpopular. I suspect that those of us who continue our work as Members of Parliament after the next general election will find our surgeries just as busy with people complaining about the council tax and its anomalies as we have during the past year as a result of the poll tax.

The Government should prove that they are a listening Government and should reconsider the legislation because the Bill will have profound effects on local government and on people's sense of justice and fairness.

My party has consistently argued that the real alternative for funding local authorities is a local income tax. Such a tax operates equitably and effectively elsewhere--in Scandanavia, for example. In Sweden local income tax raises 99.7 per cent., of total government tax revenues, in Finland 98.9 per cent., in Denmark 91.6 per cent., in Norway 89.5 per cent., in Switzerland 86.5 per cent., and so on. Many other European countries operate effectively a local income tax based on the ability to pay. People there feel that their local authorities are accountable and make

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decisions in the interests of the community and that the taxation system is based on the ability to pay. I believe that we in Scotland would like to have a similar facility.

The Government's argument is always based on how much it would cost to implement a local income tax system. The Secretary of State for Scotland will recall that, when my colleagues and I met him and the Secretary of State for the Environment during the consultation period on local government funding, we argued our case on local income tax and pursued the issue of costing. After letters to and from Ministers, and having asked parliamentary questions, we estimate that, if Scotland yields 8.3 per cent. of United Kingdom income tax, the full-year effect of a 1p increase in Scottish income tax levels for 1991-92 would be £161.86 million. If we place that figure against what is being raised through the community charge, we see that income tax would have to rise by 3.5p. Most people would be willing to pay such a price to remove the anomalies involving the ability to pay. I disagree with the idea that someone on my salary should be asked to contribute the same as the person next door, who is probably earning only half as much. I should pay according to my income and my neighbours according to theirs. I want that sense of fairness and justice to be written into the local government finance legislation. I have heard the Secretary of State for Scotland and some of his ministerial team say that local income tax would not benefit certain groups of people--teachers and hospital porters, for example. We estimate that a teacher earning just over £16,000 a year, with a non-earning spouse, would pay £389 in local income tax, a saving of £175 on the poll tax or £31 on the council tax. A hospital porter earning just over £8,500 a year, with a non-earning spouse, would pay £124 in local income tax, a saving of £440 on the poll tax or £296 on the council tax.

I could give many other examples which would kill once and for all the idea so often propounded by the opponents of local income tax that such a tax would not benefit people on the lowest incomes. Our research, and the examples provided by other countries, show clearly that local income tax would be based on justice and fairness. In all seriousness, I ask the Government not to deride the strong arguments for a local income tax just because they happen to be advanced by what they call minority parties. The Liberal Democrats and ourselves represent a substantial proportion of public opinion throughout the United Kingdom. The Government have a responsibility to look more carefully at the positive arguments advanced. Those arguments are supported by a broad spectrum of opinion, including people working within the taxation system and people involved in local government administration and finance. They believe that it could work. The Government are making a major error by dismissing local income tax out of hand. To replace one bad tax with another solves no problems whatever.

9.14 pm

Mr. Donald Dewar (Glasgow, Garscadden) : I am perhaps out of line with some of my hon. Friends in that I quite enjoyed the speech made by the Secretary of State for the Environment, who opened the debate for the Government. Personally, I have no objection to a little bit of Punch and Judy politics and to some knockabout stuff : it is all good fun. I have to say, however that, in the end--and this applies particularly to the right hon.

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Gentleman's peroration--I thought that he was rather ridiculous. His argument seemed to be based fearlessly on the refusal to recognise what is already public knowledge about our plans. I confess that I literally gasped with disbelief when I heard him calmly announce his determination to get rid of the poll tax at the first possible opportunity. He told The Scotsman the other day,

"the only thing that can stop us is the Labour party."

That certainly qualifies him for a prize for brass neck. The other prize for the evening's debate undoubtedly went to the hon. Member for Berkshire, East (Mr. MacKay) although that, I think, was a prize for innocence and naivety. The hon. Gentleman proudly proclaimed that the new council tax was a perfect compromise, although it was not clear what it was a compromise between. In my experience, perfect compromises are unusual animals, and I fear that the hon. Gentleman is in for a disillusioning experience if the tax is ever brought into practice. Apart from that, I do not think that I learned a great deal from Conservative Members' contributions to the debate --except, perhaps, that the hon. Member for Chelmsford (Mr. Burns), who is not noted for his breadth of vision, does not like Labour councillors, which did not seem to me to advance the argument very much.

I want to examine some of the competing attitudes to, and some of the recent experience in, local government finance. I ought to say straight away that I have some sympathy with some of the Scottish Conservatives. I can make what is perhaps not a usual boast in Scotland : I can claim that some of my best friends are Conservatives. Their agony in recent months and years has been terrible to behold. They have genuinely found it difficult to come to terms with the rout that has taken place--the complete volte- face. I should explain to the Secretary of State that what has been involved is not so much a loss of dignity as a destruction of credibility. The right hon. Gentleman knows--there can be no doubt about it--that, until recently, as the foundations of the poll tax crashed around his ears, he was still proclaiming it to be a remarkable success and something which was here to stay. Now, I am afraid--if rumour is correct--he is reduced to confiding to any journalist who will listen that he was a dissident from day one, bound unwillingly into the whole scheme by a love of collective responsibility. I am afraid that he is getting very near to the Nuremburg defence of saying that he was only obeying orders. I would find it all a little more convincing had the right hon. Gentleman not peddled the Government's line so enthusiastically, with militant zeal--I hope that he will not resent the term--for so many months. All my hon. Friends will remember the reception that was given to Labour's alternative to the poll tax. Abuse and scorn were heaped upon it with an intensity of attack that I cannot remember experiencing previously in my political career. That was perfectly understandable, because what we were proposing was so essentially and uniquely horrible. The House will remember that we had the effrontery to propose that we should have a property-based system founded largely on capital valuation and with legal liability falling on the householder alone. Clearly, that was unacceptable and intolerable. We were told in terms that it was a veritable tyranny--Scotland was colonised by vultures and no roof beam in Scotland was free from this plague.

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What was unacceptable and intolerable suddenly--just like that--became acceptable and tolerable, as the Conservative party line turned, with a discipline which I found quite remarkable and which was reminiscent of societies that Conservative Members often dismiss contemptuously. A study of the assault made on our plans at the time reveals a number of points that were put forward as incontrovertible arguments against what we were proposing. It is perhaps worth taking a minute or two to invite the Secretary of State to answer those arguments in his reply and to explain how they have been overcome in the new council tax system. That will be particularly interesting to Labour Members, and I look forward to it.

I have here a copy of "Roof tax v poll tax", published by the Scottish Conservative party. Let us start with one or two fundamentals. The document states :

"Their new local government tax will be based on the value of your home The truth is Labour's proposed Roof Tax' will be, as the rates were, a tax on your right to live in a house.

The family home. It'll be the family millstone."

How does the new council tax overcome that essential fault? The document contains a second charge. It states :

"council tenants won't laugh when they hear they'll be liable to pay the new tax in addition to their rent."

I must have missed something in the council tax. Some subtlety must have eluded me. I was under the impression that people who rented council houses would have to pay the new council tax in addition to their rents. Clearly I have misunderstood and I am sure that the Secretary of State for Scotland will correct me shortly.

The document also explains

"why the youngster with a full time job living at home will once again pay nothing towards local Government services.

While the youngster who leaves home and rents a flat will be clobbered."

It seems that another subtlety has escaped me. What I have just related will look rather familiar to those who examine the Bill that we will debate next week.

I am sure that the Secretary of State will be able to explain the next point to me, because it is so simple. What is even more chilling for the people who have bought their council houses at a discounted price is that they will now be taxed at today's full value. That point was elaborated upon by the then Secretary of State for Scotland, the right hon. and learned Member for Edinburgh, Pentlands (Mr. Rifkind) who now runs--or rather does not run--our railway system. In a press release dated April 1990, he said :

"A council house in Bearsden is likely to have a much higher market value than a council house in Castlemilk. But the income of the council house tenant might be exactly the same. How does Mr. Dewar justify the one having to pay a much higher roof tax than the other?"

He continued :

"The council tenant who buys his house need also beware of Labour's roof tax. Their liability will not be based on what they have actually paid for their house but what it is deemed to be worth without discount. They may have bought it for £9,000 with full discount, if it is actually worth £30,000 it will be the latter figure that will be used to work out their roof tax ... Labour will punish them with a vengeance."

That was a fundamental objection to our plans. How has the Secretary of State met that point in the council tax?

[Interruption.] We never accepted that that was an objection. I have quoted from the Conservative Cabinet Minister in charge of local government finance. I want the Secretary of State to explain why he has abandoned the attack. Did he do that on the basis of arrant hypocrisy or because he is a man of no principle who is now putting his principles in his pocket?

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The Government have capitulated on the flat rate principle, the property base and on accountability. All we can hear is the sound of Conservative politicians eating their own words. However, that has not encouraged humility, as the Secretary of State for the Environment proved when he opened this debate. The Government have capitulated on principle, but they have made a terrible mess of translating the principle into practice.

In the weeks ahead, we will examine the details of the new council tax. I am sure that the Secretary of State for Scotland will appreciate that I have corresponded with him about the fact that the Local Government Finance Bill is a United Kingdom Bill. I did that on the basis that it is very difficult to scrutinise the Bill's Scottish aspects, complicated and far- reaching as they are, as they impact on a very distinct and separate local government tradition and system within the framework of United Kingdom legislation. I hope that he will use his influence in the usual channels to ensure that there is a decent Scottish input to our debates.

I received a letter from the Secretary of State for Scotland on 30 October in which he confines himself to saying :

"I believe that the Scottish interests will be dealt with appropriately."

If we are reduced to a handful of Scottish Back Benchers and perhaps only a couple of Opposition Scottish Back Benchers on the Standing Committee, that will be deeply resented. It will be seen by many people who do not have a partisan political approach to the problems as a blow at the proper parliamentary scrutiny of Scottish legislation. The right hon. Gentleman must bear that point very much in mind.

I now refer to our objections. Understandably, I must state that, in broad terms--as the House will recognise, we have a Second Reading debate and a Committee stage to come--the first objection is very important. The proposed banding system was dealt with at some length by the right hon. Member for Henley (Mr. Heseltine). It is pinched and restricted. It is artificially constrained in a way that ensures that the burden is not fairly distributed and those at the top end of the property range, and very likely to be at the top end of the income range, are being given shelter which is not justified. The right hon. Member for Henley made a powerful point when he said that all we were doing was trying to introduce an envy tax. He made a strange point, because he said, as though he justified that attack, that, after all, further bands would not raise any more cash. However, as he is always telling us, he does not want local government to raise more cash. It is not just a matter of how much is raised : there is another essential principle, and that is how the burden is distributed. That is the point at issue. I am surprised that someone as acute and as experienced as the right hon. Gentleman does not appreciate that arguments for fairness and justice also enter into the matter.

Mr. Heseltine : If one does not raise more money from the top bands, one does not actually help the people in the lower bands.

Mr. Dewar : Yes, one does, if one broadens the range. At the moment it is 3:1. The richest in the land can pay only three times as much as the person in the most lowly valued, difficult-to-let council house. If one broadens that

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range and spreads it more evenly, one gets away from the present situation in which those at the bottom end of the range are paying more than they need to pay because of the way the system has been constructed.

Again I refer to the "Roof tax v poll tax" document. On this particular the Government have got it right, and I am proud that they got it right. The Tories got it absolutely on the nail. That document states :

"Labour's message clearly is Those on high incomes in high valued properties will make a larger contribution to local services'." I plead guilty to that. That is a principle which the vast majority of people in this country would endorse. It was the principal objection of many people on very wide and varied incomes to the way in which the poll tax operated.

The arrival of the eighth band, which suggests that the right hon. Gentleman's conscience was at least pricking him, is not enough, and more should be done. Perhaps we will refer later to the blatant dishonesty--I am sorry, I must watch my language ; let us say something bordering on the dishonest--of the suggestion that we can have a banding system which avoids for ever the problem of revaluation. I read in the ministerial journals-- the Secretary of State for the Environment will certainly know about it-- that the Minister of State said that, once a person is in a band, his property would be in it probably for perpetuity. That is the level of the argument. If we go to any local government official and talk to him about local government finance and how the council tax might work, he will say that it is nonsense and a case of trying to muddle through and paper over the cracks simply to make the package a little more presentable for electoral purposes.

The next main point is about the complexity of the system. We are, in the practicalities, preserving many of the characteristics of the poll tax that have plagued and complicated our lives over the past two or three years. We have had a plethora of reduction schemes and concessional allowances--five or six of them--and they will go on. We have the 25 per cent. discount. I recognise why it is attractive. All of us are aware of the problems of someone who was living alone and struggling to maintain a large house, but I am genuinely surprised at Conservative Members' enthusiasm for a benefit that is clearly not targeted.

In Scotland, there are 580,000 homes consisting of a single adult over 16. I do not know how they are made up. Many of them will presumably get the 100 per cent. rebate anyway without having to call upon the discount system. Although there is an assumption that most of those people are little old ladies who live in the circumstances that I described earlier, I suspect that we do not really know who the beneficiaries will be, but if the Government do not know, they should tell us. I have said it before and will say again that I am one such beneficiary, and probably not the sort of beneficiary that was intended when it was decided that a discount would be required. If fairness is to be the test, the discount is neither an efficient nor effective way of targeting help where it is most needed. In Committee we shall draw attention to the many anomalies that are already beginning to pile up. Let us take one random example. Perhaps the Secretary of State for Scotland will address the logic of the following. Let us imagine two neighbouring houses. The householder in the first earns £30,000. Only one other person lives in the house, his son who is on income support. As a result of his

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