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Mr. Heseltine : I remember what the hon. Gentleman's constituency and the area around it was like in 1979. It was a desert of dereliction which had been ignored by the Labour party in power. The area has now been transformed into one of the most successful urban renewal areas anywhere in the world because of what our party is doing.
The hon. Member for Newham, North-West (Mr. Banks) has helpfully brought me on to the issue of the cuts--the suggestion that, over the course of the decade, there is a pattern of cuts in local authorities. Consumption-- expenditure--in local government in the recent decade has risen by 20 per cent. in real terms. That is the fact of the matter. That is why, if we look at local authorities service by service, we find in, for example, education that pupil-teacher ratios have improved from 19 : 1 to 17 : 1. There were certainly no cuts there. That is why we discover that one in four of our 18-year-olds are now going on to higher education, and soon it will be one in three. There were no cuts there. We find that standards in education are rising, so there were no cuts there. If we look at services on a service-by-service basis, we see that there are 40,000 extra people in social services, 18,000 extra people in housing, 2,500 extra people in planning, and 15,000 extra people in the police force. All those figures represent increases over the decade.
There is no issue about cuts in those services ; it is simply that, as a Government, we have had to constrain local authorities' appetites so that they do not get out of control. Even then, without capping, one finds that they often run seriously ahead of the rate of budgets which are acceptable in the national interest.
Column 793Mr. Andrew Hargreaves (Birmingham, Hall Green) : My right hon. Friend illustrates a point that is well met in my constituency. On various occasions, Birmingham council has increased either its rates or its community charge from 30 per cent. to 42 per cent. In particular, I refer my right hon. Friend to the elements of capping. Is he prepared to give the community charge payers and future council tax payers of Birmingham an assurance that, other than the section that would come from the council's ability or inability to raise that tax, he will cap any excess expenditure over and above inflation? Can he give them that guarantee?
Mr. Heseltine : My hon. Friend is as concerned as I am about the levels of increase in local government expenditure, but I ask him to bear with us until we publish the details of our capping proposals, which we expect to do relatively shortly.
Mr. Heseltine : I should be grateful if I could make progress. The next aspect of this legislation that will be of concern to the House is that which deprives councillors of the right to vote if they have not paid their community charge or council tax. That issue has been seriously ventilated in this House and before a wider audience. What I found most extraordinary about our debate on this subject last week was that, when I asked the hon. Member for Dagenham whether he would oppose the legislative proposal to take the right to vote away from councillors who had not paid, he was on his feet as quick as lightning saying, "No, we will not oppose it".
Therefore, I ask the hon. Gentleman the same question today : by what conceivable justification could the Labour party tolerate non-paying councillors standing and campaigning in its name and how could it tolerate having Members of Parliament who do not pay their council tax, yet the moment the Tories do something about it the Labour party climbs on the bandwagon as though it has always supported our action? I find that extraordinary. It gives the clearest possible indication of the Labour party's rule--that it leaves the difficult decisions to us and hides behind the responsibility that we deploy.
Opposition Members never protest within their own party. They campaign on behalf of their non-paying councillors and their non-paying Members of Parliament. They welcome them into their deliberative process and tolerate them until we do something about it and then they capitulate, like the windbags that they are. Mr. D. N. Campbell-Savours (Workington) rose
Mr. Heseltine rose--
Mr. Heseltine : Anybody who is interested in the effect that the lack of control and the lack of capping would have--that is what the Labour party has threatened our entire community with if it was returned to power- -must be interested to learn that the Opposition have ambitions to extend the scope of municipal activity into yet a further area of extravagance. Doubtless the hon. Member for Dagenham will want the House to read today's interesting interview in the Financial Times. When Andrew Adonis and Ian Hargreaves asked the hon. Gentleman why he
Column 794now feels that he can take a relaxed view of local government, its councillors and the Labour party, when compared to previous years, he said :
"Local government today is very much more aware of its responsibilities in restraining expenditure than a decade ago. They all understand very clearly that the sky is not going to be the limit."
That will be a reassurance to all those who pay the community charge and who will pay the council tax.
Perhaps I can ask the hon. Gentleman which Government, which party, brought about the discipline. Who made local government realise all that? Who finished the job that the right hon. Member for Bethnal Green and Stepney (Mr. Shore) had to begin in 1977, with the International Monetary Fund at his back? Who had to take that on? Who came to the local government scene determined to change its attitudes? And which party, through its council work, the activities of its Members of Parliament and in the press and the media campaigned, in partnership with its friends in the trade unions, to perpetuate that attitude of irresponsibility? It was the Labour party.
Anybody who thinks that that game is over should return to that article in the Financial Times. When talking about the benefits of competition and about how this Government are always seeking to extend competition in the private sector, the hon. Member for Dagenham said :
"Ministers are fond of saying there should be no no-go' areas for the private sector. I would reverse that and say that in principle, there should be no no-go' areas for the public sector either." --[ Hon. Members :-- "Ah."] Yes, ah. Not only is the cap coming off, not only are the unions to get their pay-off, but the local authorities will be enabled to indulge in municipal enterprise--what a contradiction in terms-- in any area without let or hindrance. Just to help the hon. Member for Dagenham to argue his case, I refer him to the Evening Standard of 8 November, from which we discover that Lambeth is in the dark and £11 million in the red. So great is the confidence in that bulwark of municipal enterprise that London Electricity wants cash up front before it will fit any more street lamps in Lambeth. No constituent in the country is safe from the marauding instincts of the Lambeth direct labour organisation which will compete in every constituency in every county of the land, given the restraints which the hon. Gentleman intends to remove. Last of all I want to come to the Bill. I was not referring to this excellent piece of legislation introduced in my name and that of my right hon. Friends. I was referring to the piece of legislation produced by the Labour party to get rid of the poll tax. Within it we have one interesting question. It has been at the forefront of the Labour party's campaign that in order to collect the council tax we shall need a register. We have pointed out to the Labour party that there are no powers in our legislation to give local authorities the right to form a register. That power does not exist. But the argument goes on, "Ah, but you will need so much information about individuals that local authorities will need a register."
Of course, local authorities have a great deal of information about people. That is perfectly true. I dare say that that information may be relevant. That is likely. Before Labour Members get carried away with mirth at the curious concept that local authorities may take a little trouble to find out whether people who claim discounts are entitled to them, I draw my right hon. and hon. Friend's
Column 795attention to the Bill produced by the hon. Member for Brightside. No one would expect the hon. Member for Dagenham to get as far as producing a Bill, but the hon. Member for Brightside brings an integrity to the Opposition Benches for which I commend him. Clause 10 of the Bill of the hon. Member for Brightside enables the Secretary of State, after consulting various people,
"to provide for rebates of, and special help with, fair rates up to the full amount that would otherwise be payable by persons, including the following :
(a) single retired people who live alone ;"
How will councils know who they are? Who will find them out? Will there be a list, a register, a snoopers' charter? Where will the information come from?
Mr. Heseltine : The hon. Gentleman says from a sedentary position that it is on record. If it is on record, a register already exists. We go on. Pensioner couples, persons and families on low incomes and persons with disabilities will also be eligible for discounts. All those people will be eligible for discounts, regardless of their income. The richest single retired people who live alone? The millionaire's widow? Eligible, eligible, eligible?
The revelation is totally clear. Opposition Members have made it clear by their own admission that one does not need a register. They say that they can achieve many of these things without a register. We have made exactly the same point. It is not necessary to have a register, so local authorities will not have the power to create a register.
Our tax, the new council tax, will replace the community charge by April 1993. We shall see it on the statute book at the earliest possible opportunity. It will be fair and it will be welcomed. It will be cheap to administer and easier to collect. I commend it to the House.
Mr. Bryan Gould (Dagenham) : I propose to introduce a novel element into the debate by speaking about the Bill. When the Secretary of State could bring himself to talk about his own legislation, we heard from him in effect an admission that the Government who brought us the poll tax are now bringing us a new poll tax. Just when we thought it was safe to dip a toe into the poll tax water, we are faced with a poll tax mark II. No wonder the right hon. Gentleman did not want to talk about the Bill. All the familiar features, the problems and the objectionable unfairnesses of the poll tax are there, but this time combined with the further complications of a totally new and untried property tax. In other words, it is the poll tax crossed with a capital value tax--a roof tax crossed with a head tax--a cross-bred monster which gives us the worst of all worlds.
The Secretary of State seems to think that we should be so grateful that the Government have promised that the poll tax will go that we should not look too closely at what will replace it. The reverse is true. The poll tax disaster should surely put us on our guard. We must ensure that that terrible mistake is not repeated. The British people will not forgive a Government or a Parliament that make another comparable mistake.
As the Local Government Chronicle put it in its leading article of 1 November :
Column 796"To introduce poll tax is a mistake, to bring in council tax is a disaster."
The omens are far from promising. The new tax is bred out of panic coupled with cowardice. All its problems arise directly from the political situation from which it springs, from the urgent need felt by the Government to distance themselves from the poll tax and the equal need to placate those internal supporters of the poll tax who will choke over any support for a property tax.
The first motivating factor was the overriding need to be seen to get rid of the poll tax before the next general election. No matter that the poll tax bills will still arrive, bigger and nastier than ever next year and probably the year afterwards. All that matters to the Secretary of State and the Prime Minister is that they should be able to face the electorate with the commitment to replace the poll tax enshrined in legislation. The nature of the replacement and whether it would work hardly matter. As so often with the Government, the illusion and not the reality is what really counts.
That is why haste is everything. The Prime Minister may have complained that under former management the poll tax was bounced through, but he will gladly ram through the new poll tax. The years taken to prepare the poll tax look like a model of wise and thoughtful government by comparison with the pretence at consultation and the shockingly truncated parliamentary timetable with which we are now confronted.
The unseemly haste is dictated not merely by the Government's electoral timetable, but by the fear that if the measure is given proper time for debate there will also be time for the real, but as yet nascent, concerns of Tory Back Benchers and their constituents to grow and mature. A Government seeking to minimise awkward questions will try to railroad the the Bill through, hoping that by the time that Back Benchers have woken up to what is happening and their constituents have understood the dangers it will again be too late.
It is not merely we parliamentarians who are the victims of that haste ; local government is again caught up in a hopeless struggle against the odds. The poll tax has been a nightmare which shows no sign of ending. Non- collection will total £1.5 billion by the end of this year and 7.5 million summonses will have been issued. The courts and the police will be unable to cope.
Against that background, local authorities are now required to prepare for a totally new tax--requiring a new valuation, a new banding system, new discounts and new registers. As Mr. Ron Lord, Wakefield's assistant chief financial officer, points out in the Municipal Journal, they could at least introduce the poll tax
Column 797"against a background of a stable rating system which managers were able to put on automatic pilot while diverting their attention to the multitude of practical problems that were to arise with the new system. There is no such luxury available with the implementation of council tax."
Mr. Squire : As I expected, the hon. Gentleman responded to the last intervention by saying that a Labour Government would simply reintroduce rates. He knows that that would not only cause a major upheaval in local government but would be followed shortly afterwards by other proposals. The hon. Gentleman must recognise that the Labour proposal would cause a double upheaval and a return to a system which the Opposition Front Bench has criticised many times.
Mr. Gould : I am disappointed in the hon. Gentleman, who usually follows these matters quite closely. He will know that we propose for the sake of speed and practicality to use an existing valuation register, which everyone agrees exists and can be used. To the great relief of local government, we would then abolish the 20 per cent. contribution rule and extend the rebate system to help those special groups which might otherwise be disadvantaged. We would then be able to do what Conservatives should have done from the outset--pick up and operate a tried and trusted system and concentrate on dealing over time and in proper order with imperfections that had developed. That is what we propose to do, and in his heart of hearts the hon. Gentleman and many other Conservative Members know that that is the right course.
No wonder that independent experts and local authority treasurers are in despair about the timetable that is being forced upon them. As Mr. Lord warns, there is no room for mistakes or changes. It will have to be right first time. Most experts agree that it cannot be done and that the poll tax will live on until 1994.
I appeal to the Secretary of State, his Ministers and the House not to inflict chaos yet again on local government. Please do not posture and pretend that these problems do not exist. We have been warned in the most solemn terms, and a Government who were responsible for the poll tax should surely this time show some humility, some willingness to listen and learn.
Of course the Government could have avoided these difficulties. They could have done what we suggested. They could have accepted our offer of co- operation on a short Bill to return to the rating system as a first step towards a more general reform. But, again, the politics got in the way. No doubt it was hard enough to accept the volte face involved in embracing an element of property tax. A return to the reviled rates would presumably have been too much to take. All the denunciations of a property tax could just about be accommodated, but how were the Government to overcome the whole rationale of the ill-fated poll tax experiment, the supposed unacceptability of the rates? The country is asked to pay the price of the Government's overriding concern that they should not lose face.
That overriding concern is why we have to have not just a property tax but a new and different property tax that is fraught with novel and unpredictable difficulties. That is why we have to have a new basis for valuation, a capital values tax. How is a totally new, totally comprehensive valuation of capital values--something that has never before been done in England and Wales--to be carried out within the dangerously tight timetable dictated by the Government's electoral concerns? That is where the banding proposal comes in, offering as it does, by virtue of its crudity, a short cut to a new register which poses the most horrific problems on the way. Those problems were foreshadowed by the confusion that attended the production of the Government's banding proposals. No work was done. Figures were plucked out of the air. Guesses were made and 14, nine and seven bands were variously decided upon and then rejected. By some arbitrary and misleading reading of the entrails, it was apparently finally decided that eight bands should be the basis. Banding is by necessity crude and regressive. Properties that are worth less than the mid point in the band must be overvalued, whereas those above the mid point are necessarily undervalued. We understand that no individual valuations will be done and that leaves unanswered questions about how individual properties--for example, those that have been adapted for disabled people--will be assessed. We heard today from RADAR that it remains far from convinced that it can rely on the Minister's assurances that benefits available under the Rating (Disabled Persons) Act 1978 will be restored.
The same panic-stricken drive for speed dictates that the valuation must be done on the cheap. There will be subcontracting to local estate agents, who will tender for cut-price job lots of up to 20,000 houses at a time. What confidence can the individual householder have in such a process? Surely it is storing up horrendous problems for the future. We can expect hundreds of thousands of appeals from irate householders, just at the time, in early 1993, when the new tax is supposed to be implemented.
Sir Peter Emery rose --
Sir Peter Emery : I thank the hon. Gentleman for giving way, and refer him to a part of his speech when I tried to gain his attention. He passed over--I might suggest even glibly--the fact that 1.5 million people have not paid their community charge. Will he, from that Dispatch Box, condemn that non-payment? Otherwise, he will be encouraging it.
Mr. Gould : The hon. Gentleman makes an entirely false point, because we have repeatedly condemned non-payment. He cannot even get the facts right. That was why--and I confess it to him quite freely--
Column 799following the argument. As a consequence, he misunderstood-- [Interruption.] I am happy to repeat the facts. By the end of the year, there will be a backlog of uncollected poll tax amounting to £1.5 billion. In case anyone rushes to say that that is the fault of local authorities, the point that I made, and which the hon. Gentleman failed to understand, was that by that point local authorities will have had to issue 7.5 million summonses--the biggest debt collection exercise in the history of the world.
Mr. Keith Mans (Wyre) rose--
The real problem arises because of what the Secretary of State for Scotland, who has now left the Chamber, revealingly described last week as dampened banding--the artificial compression of the true range of property values into the eight bands defined by the Secretary of State for the Environment. It is that, together with the insistence on one national register for England, which causes so much distortion.
The need for a different range of property values in Scotland and Wales has been properly recognised, which makes it all the more baffling that, given that the most extreme variations in property values occur within England, the Government have blindly insisted on only one set of bands for England as a whole. The consequences are horrific. As the right hon. Member for Brent, North (Sir R. Boyson) said during last week's debate--and I am sorry that he, too, has left the Chamber :
"But the largest differences are not between Scotland, England and Wales but between the north and south of England, where the disparities in property prices are tremendous. Only 1 per cent. of houses in greater London are in the bottom band, whereas in the north 47 per cent. of houses are in the bottom band. In greater London, 31 per cent. of houses are in the top three bands, whereas in the north only 4 per cent. are in the top three bands. Those are not anomalies--they are great chasms."-- [Official Report, 1 November 1991 ; Vol. 198, c. 142.]
I can only agree.
The consequences for many people will be that the new tax will be a form of property poll tax--a virtually flat-rate tax. Worse than that, for those in areas with high property values the flat-rate tax will be at or near the highest level, even though they live in ordinary, average houses. Because the dampening or flattening of the bands has the effect of reducing the bills for those at the top of the scale, the necessary consequence is that the bills for those lower down the scale will be higher than they should be.
How did the Government get into that position? It is bad enough to have a crude and regressive banding system in the first place, but why have a system that is deliberately distorted in that way? The answer again lies in politics and the tangle into which the Government have got in trying to extricate themselves from the poll tax mess. The poll tax was, and is, hated by the majority of people. It benefited a wealthy minority, who found that its deliberate unfairness meant that their bills were reduced. The majority of those beneficiaries were Tory supporters. Not surprisingly, they are reluctant to give up their windfall. The Secretary of State decided that they had to be protected--that it was politically too dangerous to create yet another set of losers.
Column 800The new tax, like the poll tax before it, is deliberately skewed to protect the better off and to excuse them from paying their fair share. That is why the bands are dampened--to enshrine the political principle of a poll tax, the principle of unfairness which so justifiably outraged the whole people.
I know that this is a bit too complicated for the Secretary of State-- details and sums were never his strong point. In the debate on the Loyal Address last Wednesday, he revealed that he had not yet got to first base, when he asserted :
"If one does not raise more money from the top bands, one does not actually help the people in the lower bands."--[ Official Report, 6 November 1991 ; Vol. 198, c. 533.]
That could be dismissed as a piece of charming naivete if it were not for the fact that this is the man who proposes to inflict that unfair system on the British people, and the man who will himself benefit--in the sense that his bill as a millionaire in the heart of London will be lower than that of most other bills in the country. Will the right hon. Gentleman admit that he did not understand, and perhaps still does not understand, the central feature of his own proposals? I believe that his own preferred phrase is, "Get off your butt."
The unfairness was not the only concession made to the devotees of the poll tax. A Government and a Secretary of State who belatedly tried to make a virtue of recognising and acting upon the obvious defects of the poll tax have simply lacked the political will and courage to make a decisive break.
As a result, we have a continuing head tax element, which adds to the complexities and difficulties of the new tax. That is the price which had to be paid to placate the remaining Thatcherites--the sop to Cerberus. Unfortunately, it was a very large and costly sop. It is that notion of single person discounts that defies what should be the basic principle of any such tax in modern Britain--that it should reflect the ability to pay. Discounts for single-person households will offer reduced bills to 7 million taxpayers, or 33 per cent. of the total, but they will be wholly untargeted and unrelated to the income of the householders.
A millionaire living alone in a luxury penthouse will, as a result, have 25 per cent. knocked off his bill, while a family man struggling on a low income will not. The family man's bill will have to be higher than it would otherwise be to make up for the discount offered to the millionaire. Where is the fairness in that?
The position becomes even more complicated when account is taken of the status discounts. Those discounts are, in the case of people such as students, extremely welcome, but they immediately give rise to other anomalies. The Secretary of State was uncharacteristically uncertain when he attempted to draw distinctions between questions of exemption and eligibility for rebates and discounts.
The complications become nightmarish when one realises that the liability in each case is to be calculated on a daily basis, so that individual liability could change from day to day not only a result of the individual moving his or her address--which, as the Audit Commission
Column 801discovered, occurs on a massive scale--or status, but as a consequence of a move or change in status by others as well. How are local authorities to keep track of all those moves and changes of status within households, and of the knock-on consequences for individuals who do not themselves change their address or status, but whose status is changed by the moves of others? The only answer is that they will have to keep a record of who lives where. That is the considered view of the local authority associations and of all those who have looked at the problem.
It does not matter much whether local authorities are or are not required by statute to keep something called a register. The practical needs of the situation will require them to have a point of reference and a database. If they do not keep a register themselves, they will no doubt make use of the one register that does exist--the electoral register, thereby prolonging and exacerbating that threat to civil rights already posed by the poll tax, which has induced hundreds of thousands of people to trade away their votes. Few local authorities will be much comforted by the distinction attempted by the Secretary of State for Scotland last Wednesday : "There is all the difference in the world between a register and a list. A register is a statutory designated body that is a basis for designating liability, and a list is a source of administrative efficiency for the use of the local authority."--[ Official Report, 6 November 1991 ; Vol. 198, c. 540. ]
If he expects, on the basis of such unconvincing casuistry and gobbledegook that local authorities will say, "That's all right then, " I fear that he will be sadly disappointed.
Dr. Hampson : That particular point is referred to in Labour's fair rates document, which makes it crystal clear that the only people in the Chamber calling for a register are Labour Members. That document calls for the computerisation of the Inland Revenue to be the basis of the calculation for liability of widowers, pensioners, the disabled, and other groups. The only people arguing for a register are Opposition Members. No register will be needed if people have to claim.
Mr. Gould : The hon. Gentleman has totally misinterpreted, to put it kindly, or has misreported what is in our document. The only proposals that we made in respect of the categories that he mentioned are for a long- overdue extension of the existing rebate scheme. Again, the Local Government Chronicle gets it right. It said in the same leading article that I quoted earlier :
"If the single person discount remains a feature of the tax, they will have to create a register--a point that Michael Heseltine will eventually have to acknowledge. The discount--the achilles heel of the system--would be better abandoned now rather than later."
I hope that the Secretary of State for the Environment heeds that advice, although on past form I am not optimistic.
Mr. Tony Banks : The Department of Social Security's internal working party's papers make it clear that local authorities will have to keep a register if they are to apply fairly the benefits that the Secretary of State did not spend much time talking about in his roustabout Second Reading speech.
Mr. Harry Cohen (Leyton) : There is nothing inherently terrible about keeping registers. The problem with the Government's system is that the information that is required to gain benefits and discounts is so detailed and personal that it will be a terrible invasion of the individual's privacy.
Mr. Gould : I continue to believe that it is the civil rights implications of keeping a register of where people live that is the most worrying feature--of not only the poll tax but the proposed council tax.
The poll tax legacy continues to do its damage. The rules establishing joint and several liability are another survivor of the poll tax, causing as they do such difficulty, incomprehension and bitterness within families. The new tax will be costly to administer and complicated to collect. The collection level will be low and the collection costs will be high. The load lifted for those at the top of the scale and for the single millionaire will mean an extra burden borne by those less able to pay. For all those reasons, council tax bills will--on the Government's own figures- -be much higher than they should be.
Other aspects of the Bill arouse almost equal concern, but I will mention them only briefly. The uniform business rate is to remain nationalised, narrowing local government's tax base and cranking up the gearing effect to an alarming extent. The grant system is to be calculated on the same distorted valuation base that will so unfairly penalise those districts that have high property values but low average incomes. The 20 per cent. contribution rule is to be done away with, but, the abandoning of the principle having been conceded, it is nevertheless to be retained for the remaining lifetime of the poll tax.
Why is the chance not being taken to abolish the rule--if not immediately, at least from 1 April 1992?. Why is the misery to be prolonged for millions of people? Why is the Audit Commission's advice to be ignored, and why is local government to be forced to go through the costly and futile business of trying to squeeze blood out of millions of stones?
This is an ill-starred Bill, conceived in haste out of the disaster of the poll tax and fathered by a Secretary of State who is more interested in gimmickry than in good government. It is a sort of poll-tax zombie which will stalk the land long after the poll tax has supposedly been laid to rest. There is only one chance for us to ensure that the worst mistakes of the poll tax are not repeated and magnified : we can take advantage of that chance if the House, for once, does its job properly, standing up for the constituents whom we represent and insisting that good government must not be prostituted to short-term electoral considerations. We, the Opposition, will do our duty ; I appeal to Conservative Members to do theirs.