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Mr. Nicholls : I actually said that there were relatively few anomalies and that if they had been addressed the tax would have found favour. However, is the hon. Gentleman suggesting that a system of local income tax would not create economic ghettos and areas in which the Chancellor of the Exchequer and the local Labour authority would have carte blanche without capping--something which he will not allow and which will have to be dealt with through exemptions?
Mr. Wallace : The hon. Gentleman is not suggesting that a system of local government finance would be without a method of equalisation. Every system of local government finance has possessed such a system.
We believe that the council tax is already hovering between being unfair and being unworkable. The concession on students and the way in which the Secretary of State for the Environment struggled to answer my question underline that point. Institutions do not provide enough student accommodation. Some students have no choice but to live out. Some students will be completely exempt from the tax and some will qualify for discounts. Others will have to pay a proportion of the tax, and in London and Aberdeen that proportion could well be high. If it has been conceded that students should not pay the tax, the Government should accept the logic and exempt students altogether.
Dr. Hampson : It seems that virtually all students will be exempt. The only category in which that will not apply is when a student is living with or married to someone who is not a student. In that case, there will be a bill for the property and the non-student will have to pay while the other person contributes 25 per cent.
Mr. Wallace : The hon. Gentleman accepts my point that there will be a distinction between students. I can think of another example. A student who is forced to live out may be lodging with the old lady who seems to feature regularly in local government finance debates. In that case, the discount provision will apply, but the student will still have to pay some proportion when other students pay nothing. It would be welcome to hear that all students are to be exempt.
The Secretary of State for Wales (Mr. David Hunt) : I had hoped that my right hon. Friend the Secretary of State for the Environment had dealt with that point very effectively. The student living in lodgings is invisible in terms of qualifying for the council tax and does not add one jot to the amount that the widow or anyone else would have to pay. They are disregarded.
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Mr. Wallace : If that means that all students are exempt, it would have been better if the Department of the Environment press releases had stated that expressly. I suspect that that is not so, and we can probe it in more detail in Standing Committee.
The 25 per cent. discount is another concession that exposes flaws in the tax. It is an attempt to meet what the Secretary of State for Wales described as the widow factor. However, it does not go far enough. A widow in a modest terrace house on a low income, with--for the sake of argument-- a council tax of £200, will be liable for £150. In a modernised house next door, a two-earning couple will be liable to only £100 each. A single merchant banker in the next house might qualify for his discount on a salary that could be far higher than any other salary in the street.
We cannot support the Bill because it bears no relation to people's income. It will penalise people on low incomes who do not qualify for discounts, and through the banding system it tends to benefit the rich. If we listen on the one hand to the Secretary of State for the Environment and on the other hand to the Minister for Local Government and Inner Cities, it seems that the DOE has something like Dr. Doolittle's "Push-me--pull-you." The Secretary of State is anxious to concentrate on rebates to do something for those who will by hit be the property tax, but the Minister has scorned property taxes and is determined to weight the tax in favour of the better- off. That internal contradiction means that the council tax will not survive. As a result, the Bill will not be the last word on local government finance. It will be an interim attempt to be seen to be doing something to replace the discredited poll tax.
The real tragedy is that there is an alternative which, unlike the poll tax or any property tax, has been tried and tested in many countries in Europe and in America. It is fair and easy to administer. We have supported that alternative--a local income tax--since our submission to the Layfield inquiry into local government finance in 1976. That inquiry, the most authoritative ever carried out, favoured a local income tax. The details of our proposals have been well documented.
We accepted the Secretary of State's invitation to engage in the consultation process which he initiated. Not only can we point to the success of such a tax abroad, but at no stage in recent negotiations or since have we been told that a local income tax would not work. It is important that that point is understood. It would appear that the objection to local income tax is political rather than practical. Having listened to Government spokesmen, it appears that their political objections are twofold. First, they wish to be seen to be reducing personal taxation. It does not matter whether the overall burden of tax increases, as long as they are seen to be reducing personal taxation. Secondly, and perhaps most important, they have claimed that they do not want to hand over control of an income tax to what they perceive to be extremist Labour local authorities. The lack of accountability was the reason which drove the Government to introduce the poll tax. The poll tax has wasted £14 billion of taxpayers' money, led to cuts in services and jobs, caused great hardship for thousands of people, and has led to a general breakdown in law and order. It is now being replaced by a highly complicated tax that will take two years to value and will be a burden to those on low incomes in high-cost areas.
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That is happening because the Government will not make local councils representative of and accountable to their electorates. A fair voting system, which we would also like to see in local government, would mean that it would be unlikely that there would ever be extremist Labour councils. There would be no reason to have introduced the poll tax and no reason for another arbitrary and unfair property tax. Capping would be done by the electorate, which, in a democracy, is where power should lie. The electorate would determine whether the local authority was getting out of hand and penalise accordingly.Mr. Robert G. Hughes : The hon. Gentleman has told the House that, if we had proportional representation for councils, we would not have extreme Labour councils and that, somehow, the more widespread distribution of seats would stop that happening. If that is the case, when Brent council was at its most extreme, when it was spending enormous sums of ratepayers' money and destroying services, why, at every turn, did the hon. Gentleman's party support the Labour party through thick and thin? It would not have made any difference in that borough. We would still have had an extremist council--not Labour, but Labour and Liberal combined.
Mr. Wallace : If one had properly representative councils--for example, in Liverpool, where the minority within the Labour group managed to take control and impose extremist policies--that would not be possible. In any event, the views of the electorate would be much more fairly represented at the next local elections. I have no detail of what individual Liberal Democrat councillors in Brent did, but, if it was perceived by the electorate to have been wrong, they would have undoubtedly paid the political consequences at the following election. That is where the real power of capping should be--with people in the electorate, not with the heavy hand of central Government. We could then allow local communities to decide more of their own priorities and allow councils to justify to the electorate the cost of the various policies that they put into practice. We should put the concept of community back into local government. Fair votes, a reformed structure and a local income tax will provide representative and accountable councils with sufficient finance, raised fairly and efficiently, to meet the community's needs. We are faced with a Government who are determined to get the Bill on to the statute book before an election. I do not believe that the tax will ever be implemented. Nevertheless, in Committee we will consider the Bill seriously to try to highlight anomalies and alleviate some of the flaws in the detail. The Government are making a mistake unduly to curtail debate. If they had faith in their own proposals, they would be happy to see them discussed in detail. During consideration of the Local Government Finance Bill, 218 Government amendments were tabled in Committee and 135 were tabled on Report. In the House of Lords, 196 Government amendments were tabled in Committee, and 286 were tabled on Report. It was clear that the Government were not able to get their legislation right at the first attempt. That will be the case in respect of this legislation, and a host of anomalies will come to light.
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Guillotining the Bill at this early stage shows that Ministers are frightened to come to grips with the legislation and face scrutiny of the details of their own Bill.We all want the poll tax to be abolished as soon as possible. A large number of people seem to share the Prime Minister's belief that the poll tax is already abolished. Collection, particularly in areas such as Strathclyde, is becoming ever more difficult. Cuts in services and jobs will follow. The anger of those who pay the poll tax will mount as they find out the additional amount that they must pay because their local authorities are unable to collect outstanding poll tax. A member of one local authority in England--I will not name it for obvious reasons--told me that the police in that area have said that following up poll tax debts and warrants is not a high priority. When that matter was put to the Home Office and the Department of the Environment, we were told that it was for the local authority to sort out the matter with the local police force.
Local Government is in a state of low morale and near collapse because of the poll tax. Thousands are still facing the burden of a 20 per cent. contribution, even though it is costing up to two and a half times more to collect than the revenue raised. If the Government increased funding to local authorities in need and abolished the 20 per cent. contribution, they would take the sting out of what remains of the poll tax and we might then be able to have a proper debate on what should replace it.
The council tax could be the shortest-lived tax in recent history--even shorter than the poll tax. We will campaign for its abolition and vote against it, because it is a property tax, and property taxes have been shown to be unfair and expensive to administer. Our relief at the abolition of the poll tax does not mean that we will accept its cobbled-together, ill -thought-out and deeply flawed replacement. Only a local income tax is a practical, efficient, simple, easily introduced and, above all, fair means of raising local revenue. Some time in the next six months Ministers will have to justify to the electorate why they forced the untried poll tax and now the council tax on to the British people and, above all, why they have rejected a local income tax which not only meets every sound principle of local finance but has been proved to work in many other countries.
6.6 pm
Mr. Robert G. Hughes (Harrow, West) : The hon. Member for Orkney and Shetland (Mr. Wallace) has described the proposed council tax and any property-based tax as difficult and expensive to administer. That is rather rich, coming from a party that is putting forward a local income tax. I am reassured by the fact that the Liberal Democrats stick to the idea of a local income tax, because a local income tax is everything that we would expect from that party. It sounds absolutely marvellous. It sounds like the simple solution for which everyone has been looking. However, it does not stand up to examination. That is true of much of what the hon. Gentleman's party says. The Liberal Democrats think that they can get away with skating over the surface of problems.
The hon. Gentleman thinks that the council tax, or any other property tax, is difficult and expensive to administer. How does he square that with a proposal that would have everybody inside a council area paying a lump sum to the council and later receiving a rebate because they had paid
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too much? That is in the hon. Gentleman's party's proposal. It is no good the hon. Gentleman shaking his head. If he was putting forward a serious proposal, he would have explained it. The hon. Gentleman has sat down now--he has had his chance. He should have explained his proposal when he was on his feet. If his proposal is not expensive and difficult to administer, I should like to know what is.Mr. Wallace : The hon. Gentleman needs to ask why, in all our discussions with Ministers and Secretaries of State--the Scottish National party also put forward a local income tax--it was never argued that what we were proposing was impractical or difficult to administer. The objections have been narrow political ones, never ones of practicability. We still await practical objections from Ministers who examined our proposal.
Mr. Hughes : I had always thought that Orkney and Shetland was a fairly realistic constituency, but I now recognise that the hon. Gentleman lives in a dream world. He need only examine the speeches made by my right hon. and hon. Friends either from the Front Bench or at venues outside the House to know that they have specifically described the Liberal party's proposals as difficult, complex and unworkable.
My second objection to the Liberal party's scheme is that people would vote with their feet. If people in a particular area were to be charged a substantial amount in income tax, does the hon. Gentleman seriously think that young, mobile and professional people would choose to live in that place? My understanding of the Liberal party's proposals is that, on current spending, the London borough of Camden would have to levy a local income tax in excess of the standard rate of income tax--somewhere near 30p in the pound. Does the hon. Gentleman really think that, on that basis, anyone who could move would keep a house in the London borough of Camden or anywhere else where they would have to pay so much? I repeat that that is a typical Liberal party solution. It sounds good when it is discussed for five seconds, but it starts to fall to pieces when it is discussed for half a minute or longer.
In one sense, today's debate is a repeat of last week's debate on the Queen's Speech. I find it odd in the extreme that the Labour party should have taken up a whole precious day's debate in our response to the Gracious Speech to discuss the council tax when Opposition Members must have known-- everybody else knew this, including the newspapers--that we were due to have a two-day debate on that subject this week. Looking at the Labour Benches, it seems that they have shot their own fox. Labour Members have not turned up and I understand that they did not turn up for the other debate.
Mr. McCartney : What about Conservative Members?
Mr. Hughes : We do not necessarily have to come along on such occasions. Although it does not do so with much conviction, the Labour party says that it is angry about our proposal. It says that the council tax is the poll tax mark II, but you could have fooled me, Mr. Deputy Speaker, given the heat generated from the Opposition and the number of them present.
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I should like to rehearse the history of how we arrived at the council tax. It is important to remember what people objected to in the old rating system. First, people objected to the complicated system of valuations. When my right hon. Friend the Member for Finchley (Mrs. Thatcher) spoke about reforming the rating system and about the community charge, which she ushered in, she always returned to the same basic point, asking whether people in England were to be saddled with a revaluation of their property after 17 years. She took the view strongly-- and I agree with her--Mr. Janman : They would be saddled with it under Labour's proposals.
Mr. Hughes : My hon. Friend the Member for Thurrock (Mr. Janman) is absolutely right to point out one of our basic objections to the Labour party's proposals, although I suspect that that is something that the Opposition will skate over in their normal way.
My right hon. Friend the Member for Finchley was right in saying that the people of this country would have regarded an enormous difference in their rating bills as a result of the revaluation of their property unacceptable when that property might not have changed in any material sense. The problems of the rating system were focused when people made any minor change to their property. If, for example, someone put in a downstairs loo, up went the rates bill. It was right to say that that system must go. Indeed, at that time there was cross-party consensus that the rating system was wrong, unfair and had to go.
Mr. Janman : I am grateful to my hon. Friend for giving way again, especially since I share an office with him. Does he agree that not only does the Labour party not want to discuss this Bill, but it does not want to discuss the bills that will land on people's mats if its system is put into practice?
Mr. Hughes : That is absolutely right. The fact that my hon. Friend makes such a good point leads me to understand why he keeps such massive quantities of paper around his desk in our office. The second reason why people objected to the old rating system was that it was unfair to people living alone. Again, the Opposition parties always skate over that argument. The hon. Member for Orkney and Shetland talked with some hilarity about the mythical widow living by herself next door to several wage earners who occupied an identical house. However, we all know as Members of Parliament--and many of us were councillors before being elected to this House--that that situation did and does exist. That problem had to be addressed, and that is what the community charge did.
The third problem with the rating system was the ability of Labour councils --or of councils in which the Labour party was kept in power by the Liberal party--to overspend and to hide the results from the voters. Because of the way in which council rents were collected, many people did not realise that they were paying rates to the local authority. When I was a Conservative candidate in the London borough of Tower Hamlets, people there thought that it was marvellous that the local Labour council had frozen the rents for several years. However, because of the way in which they were billed, they did not necessarily realise that their rates bill had overtaken their
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rent bill. They were paying far more in rates than in rent, but the Labour party hid that from people, pretending that the rates somehow did not apply to them--Mr. Blunkett : To clarify that point--we might as well have a sensible debate if we are to have one at all on this Bill--
Mr. Blunkett : That is about the level of debate that we have come to expect from Conservative Members, and especially from the hon. Member for Thurrock (Mr. Janman).
Perhaps the hon. Member for Harrow, West (Mr. Hughes) will explain how the tenants in Tower Hamlets did not understand that their rates had increased despite the fact that they had to be billed each year for the rates increase when he believes that they understood that their rents had not increased because they had been frozen. If they were billed for rates and rents combined and their rates had increased, their bills must have increased even if their rent had been frozen. Therefore, because of the frozen rents, they should have known that their rates had increased. Perhaps the hon. Gentleman will explain how the tenants, whom he believes were so ignorant that they did not understand that their rates had increased, managed to miss that fact when their bills as a whole had increased.
Mr. Hughes : It is not I who believe that council tenants are ignorant. Indeed, at that time my wife and my in-laws were council tenants in that borough and I am certainly not saying that they were ignorant. I am saying that the billing system and the fact that it was not possible to prosecute tenants for non-payment of the rates either led them to believe in some cases that paying the rates was something that they could get out of or they were persuaded by the Labour council that it was the Government's fault. The fact is that the Labour party managed to hide behind the old system and anyone who is a former leader of a Labour council, such as the hon. Member for Sheffield, Brightside (Mr. Blunkett), knows that that is true. Fourthly, it is clear that the tax base of the rating system was too narrow. Given that very few people believed that they were responsible for the rates, something had to be done about the system. Again, that was a matter of consensus.
Given that there were all those objections to the rating system, why did people object so strongly--as clearly they did--to the community charge or poll tax? I put it down to two things. The first is the size of the bills. It is inevitable that people's view of a tax is directly linked to the size of the bill that they have to pay. The figures that were projected by my right hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) were not exactly those on the bills with which we ended up. That was one of the major factors that contributed to people losing confidence in that system-- [Interruption.] My right hon. Friend goes from strength to strength and from interesting statement to interesting statement, but we shall leave that for another debate on another day.
Secondly, and probably more importantly, people of different wealth, at least as judged by the size of their home, appeared to pay exactly the same. We had stories about people living in a small rented flat paying the same as someone in the stockbroker belt up the road. On the
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face of it, that appeared to be true but everyone in the House knows that in reality the tax paid by the individuals in the two examples that I cited could differ by a ratio of as much as 25 : 1. However, principally for the reason that I gave, the poll tax did not match up to the British sense of fair play, which runs deep in our society, so the poll tax, rightly, had to go.The Labour party has blamed the poll tax for almost all ills. First, it has blamed the poll tax for most of what has happened in local government for the past few years. It did so to hide its embarrassment about Labour's record in local government. Let us take Birmingham as an example of a Labour authority. We are told that there are many services which it would fund if it were not for the poll tax. Such services, perhaps more nursery education, housing and so on, could have been funded if the authority had not paid for 149 trips to 31 countries in the past year or so. [Interruption.] I will give way to the hon. Member for Sheffield, Central (Mr. Caborn) if he is prepared to speak on his feet. Opposition Members may think that that was a good use of public money. They may think that the councillor and top officials who went to Italy to see the preparations for England's match in the world cup was a good use of chargepayers' money. I do not. Perhaps the hon. Member for Sheffield, Central would like to justify it.
Mr. Richard Caborn (Sheffield, Central) : Does the hon. Gentleman accept that some of those trips may well have brought some of the inward investment which Department of Trade and Industry Ministers have been asking to attract for a considerable period? If the hon. Gentleman criticises areas such as Birmingham, he could also criticise areas such as Sheffield, which ran the world student games. We went and looked at some of the best sports facilities in the world and now the Ponds Forge swimming complex in Sheffield is bringing a tremendous amount of activity to Sheffield and a tremendous amount of kudos to British sport. In 1993 we will stage the European swimming championships. That is the vision of Labour authorities. It is unfortunate that the Conservative party is so negative.
Mr. Hughes : Nevertheless, I wonder whether the advantages to Sheffield will amount to enough to justify the £1.5 million spent on renovating 700 flats to house the athletes and the £250,000 spent on attracting the student games in the first place.
Mr. Caborn : It brought investment.
Mr. Hughes : That may be true. That is a judgment which Labour councils have to make. They must face the chargepayers with that. However, it is doubtful that they will be able to do so logically.
Mr. Mans : Does my hon. Friend agree that the money spent by Sheffield city council on renovating those flats for the athletes could have been better spent on renovating other flats for people really in need of housing? [Interruption.]
Mr. Hughes : Opposition Members are asking from a sedentary position who is in those flats now. The interesting question is whether the council would have renovated the flats otherwise. We see Labour spending priorities here.
Perhaps international relations are catching in the west midlands. Coventry is twinned with so many places that its council has had to set up a department of international
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relations. Will Opposition Members tell me that that is peanuts, to use their word in earlier interventions? Will they tell us that the department was set up without full backup? If Opposition Members are so confident that that was money well spent, can they tell me what the bill was?The Labour party has blamed the community charge for many things, including the inability of Labour councils to spend money in priority areas. The Labour party's own priorities have led to that. It also sought to divert the debate from the level of spending that its policies entail. That is why we hear repeatedly from the hon. Member for Dagenham (Mr. Gould) the assertion that it would be easy to implement Labour's plans. Labour Members want to make people assume that it would be easy and cheap to introduce another system and that the billions of pounds which need to be raised can be raised easily. Any system of raising local government finance is subject to councils' spending plans. Councils must take responsibility for what happens in their area. The hon. Member for Dagenham would not give way when I sought to intervene in his speech. He compared what my right hon. Friend the Secretary of State would pay in
Westminster--£273 on current estimates--with the average bill in Middlesbrough of £447. He described the system as surcharge that families would have to pay for the continued life of a Tory Government. High bills are a surcharge not for the continued life of the Tory Government but for having a Labour council. Rotten services and high bills : that is the double surcharge that people pay. It is not for my right hon. Friend the Secretary of State to apologise for paying a lower bill than people in other parts of the country. It is for the Labour party to look at who is controlling those councils. The Labour party pretends that the council tax is unduly complex and difficult to administer but that Labour's scheme is simple and easy. Any suggestion that a change in the system of raising local taxation can be simple and easy lacks credibility. If the Labour party really believes that its system will be simple, it must come forward with the figures. I notice that it is reluctant to come up with specific figures to show what its spending plans would mean. It said that it would produce such figures during the Queen's Speech debate. It has not done so. I know that the Labour party does not like to get into specifics, but it will have to learn that between now and election day it will have to come up with specifics if it is to be taken seriously.
The new tax combines the ease of collection and the property base of the rating system with a new simplified system of valuations which people will see as fair, reasonable and just. People will accept that the broad value of the property should be used rather than the specific valuation, based on a notional rented value, to which the Labour party wants to return.
The Labour party is floundering in this broad debate because it knows that the council tax is widely regarded as fair and reasonable.
Mr. Maxton : Did the hon. Gentleman vote for the poll tax?
Mr. Hughes : If the hon. Gentleman has not been following my speech, I am happy to start again for his benefit. If he had followed it, he would understand.
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The Labour party must take on board the important point that any change in the system of local taxation means that some people will pay less and some will pay more. But the Labour party wants to sell its scheme as one which has only winners. Such a scheme does not exist. If it laid out the details, people would know that that was the case. They will understand that that is the case even though the Labour party hopes to hide it from them. That simply is not possible and the Labour party knows it.Regional banding has been raised by some of my parliamentary neighbours. I fundamentally agree with my hon. Friend the Member for Hornchurch (Mr. Squire) that a regional banding system would not be practicable. There are areas in Britain where property prices are akin to those in London. Therefore, a regional system of banding would create more difficulties than it would solve.
I hope that the Ministers who wind up the debate tonight or open it tomorrow will take into account the fact that some councillors in London are worried that, because of the value of properties in the city, some money will flow out of London as a result of the grant settlement. When the grant for the coming year is announced, and also for the first year of the council tax, we want the Government to ensure that money does not flow out of London and that the £200 million that has been suggested by the London Boroughs Association is taken into account and kept within boroughs for them to use. It has been suggested that introducing the council tax is so difficult that authorities will not be able to do it in time. That is an attack on the local authorities concerned by the Labour party which does not do them justice. We should take fully into account the fact that it will be difficult for local authorities to implement the council tax but also that it would be difficult to implement any change. We should understand that. Rather than listen to the words of the Labour party, saying that it would be impossible to introduce the council tax by 1993, I would prefer to take the word of the Audit Commission. Although in paragraph 13 of its response to the Government it said that the
"government's proposed timetable is extremely tight",
it recommends an April 1993 introduction and believes that that will be possible.
I urge the Labour party to take a more positive attitude towards helping local authorities with the obvious difficulties that they will face.
As regards the London boroughs grant scheme in clause 103 of the Bill, I welcome the reserve scheme--as Conservative-controlled boroughs will certainly welcome it. Year after year there have been difficulties with the grant scheme. The problem has been that Labour adventurism has put worthwhile and important projects in danger, while Labour and Liberal members seek to blackmail morally Conservative Members on the scheme to agree an excessive level of funding. Some areas which should not be are funded by the grants scheme.
I welcome the reserve scheme in the Bill, but I ask my hon. Friends to consider one change. It is not adequate for one of the criteria for the grants scheme to be that any scheme funded by it should apply to two or more boroughs. That definitely leads to abuse. Some schemes are deliberately pushed across to a neighbouring borough, whether it needs the scheme or not, so that they qualify for funding, unless someone notices and pounces on it. I suggest that either four or six should be the minimum number before a scheme receives funding.
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If my reading of schedule 3 of the Bill is correct, I think that the penalty for wrongful claim of discount, would be a £50 fine. If people wrongfully claim a discount, a relatively substantial amount is involved and the penalty should more equally fit the crime. There should be a range of penalties to fit the intent of the person who makes a wrongful claim, which is undoubtedly theft. People should understand that it is not merely a technical matter but theft from neighbours and local friends.Lastly, I welcome clauses 104 to 110 which restrict voting for non-payers. In one way or another, most members of the Labour party have at least gone along with the tactics of non-payers. They have made a mistake as they have underestimated the feelings of the people that they represent. The law breaking involved makes most people utterly sick and they have no respect for those who urge non-payment or who tacitly go along with it.
Most people will welcome those clauses and I look forward to hearing what the Labour party has to say.
Finally--I am sure that Opposition Members will be delighted to hear that I have only one more thing to say. In the debate on the Queen's Speech the hon. Member for Dagenham was looking for support from Conservatives to ensure that the Bill receives proper scrutiny. I can give him and his hon. Friends one assurance : I want the Bill to receive proper scrutiny in Committee because that will reveal the hollowness of the Labour party's opposition. It will reveal the holes and the threadbare nature of the Opposition's proposal. I want to ensure that the Bill gets proper scrutiny because by so doing we shall dish the Labour party's proposals.
6.35 pm
Mrs. Maria Fyfe (Glasgow, Maryhill) : The hon. Member for Harrow, West (Mr. Hughes) has uttered more "finallys" than Frank Sinatra. Since it seems to be fashionable to quote party leaders tonight, Conservative Members may find it useful to hear the Prime Minister's words. On 1 July 1988, when speaking on the poll tax at the annual conference of the Association of District Councils, he said : "Once implemented and through the transition, I believe the new system will prove enduring and a vast improvement on the status quo."
A year ago, on 24 November, when he was the victor in the coup within the Conservative party, he said in the Daily Mail : "I'll tell you about the poll tax. We were bounced into it quickly because there was such a fuss about rates in Scotland and we were bounced without thinking because of the political fuss."
That is what we have for a Prime Minister--someone who gets bounced into something without thinking, who imposes it on Scotland a year ahead of the rest of Britain and then, still unthinking, imposes it on the rest of the United Kingdom.
I am sorry that the Secretary of State for the Environment gave up listening to the debate a few hours ago. Perhaps when he reads it tomorrow he will recall that the poll tax was imposed in Scotland against our will. He did not oppose it. He became conscious of the poll tax and its defects only when it became applicable to England and Wales.
Now the Government are trying to impose the council tax against our will. How many Kincardines does it take
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to tell them? When are they going to listen? Do they have to lose every seat in Scotland before they start to pay attention to the views of the electorate in Scotland?I notice that some of the more right-wing Conservative Members have already given up on Scotland and could not care less if they never won another seat there because they hope to gain permanent government of England. However, if they will not listen to the people of Scotland perhaps they will listen to the people of Langbaurgh, because it is clear from last week that they have not restored their support there. With all the promises of a change from poll tax to council tax, there was hardly an overwhelming response in support of the Conservatives.
The estimated cost of collecting the new council tax would be £185 million, we have been told, but I am not clear exactly who estimated that. Could it possibly have been the same people who assured us that the poll tax would be only slightly dearer to collect than the rates, when the Government were told by every authority in the land--by all those people with expertise in such matters--that it would be far dearer to collect and so it proved? It has cost hundreds of millions of pounds. The money that the Government have wasted in setting up and collecting the poll tax makes the Western Isles council look like models of sound financial management.
As regards valuation bands, while the Government have decided on eight bands for different parts of the United Kingdom, so far in the debate there has been no discussion of the fact that in Scotland properties in band A will be worth up to £27,000. That may not seem a substantial sum--to people paying yuppie prices in London it will seem like nothing at all--but in the remoter areas of Scotland, including the isles, some properties can be worth considerably less than £27, 000, perhaps about £20,000 or even less. Thus a gross unfairness is being perpetrated against people who live in rural properties which are so much less valuable. I hope that, even at this stage, the Government will take account of that fact. They should take account of that possible injustice. It seems that caravans and boats will be included in band A if they are worth less than £27,000. Some of the boats moored in Loch Lomond are not worth tuppence, and it is remarkable that the Government propose to levy any tax at all on them.
Conservative Members have spent more time criticising the old rating system and Labour local authorities than they have spent debating the Bill. There were some advantages in the rating system. A council could decide how much it needed and add together the total value of its domestic properties and calculate the rate poundage. That meant that householders paid exactly their fair proportion. The problem with bands is that people who fall on the wrong side of a band will pay far more than someone whose house is worth very little less. The Government do not seem to have addressed that problem. Under rate poundage, the amount that people paid was in direct proportion to the value of their house and that could allow for fine differences in house values. Under the council tax, a person who falls into another band by only a few pounds will end up paying much more money. That is bound to cause resentment.
Another flaw in the system is the Government's plan to use estate agents to carry out a massive valuation. A few years ago, when I wanted to sell my flat, I decided to ask three estate agents in the neighbourhood to value it in order to get a good idea of the price it would fetch.
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The Parliamentary Under-Secretary of State for Scotland (Mr. Alan Stewart) : The hon. Lady will be aware that in Scotland the valuation will be carried out by assessors.Mrs. Fyfe : I am speaking not only about Scotland. I am sorry if I did not make that clear. I am making the general point about estate agents being brought in. The Minister says that assessors will be used in Scotland. Why not use assessors throughout the United Kingdom? [Interruption.] The three estate agents that I called in arrived at three different valuations for the flat in the same week. How do the Government propose to solve that problem?
Mr. Wallace : There are different bands.
Mrs. Fyfe : That is not the point. One estate agent might place a property in band B while another could put it in band C. How is the owner supposed to know the true valuation of his house? Have the Government addressed that question?
Dr. Hampson : They must be pretty crummy estate agents if there is a difference of £40,000 in their valuations. The hon. Lady does not seem to understand what is proposed, which is that houses will not have a specific valuation. There is no question of people feeling that they are on the edge and should be in another band. They will be in a broad category and will not have a precise value.
Mrs. Fyfe : One can be in a broad category and still fall into a different band because of a few pounds. The hon. Gentleman says that they must be pretty crummy estate agents. We know that there are many crummy estate agents. That is why we objected to the whole idea in the first place. Will there be quality control of estate agents and, if so, may we have more details? Will they have to pass a test of competence in valuation?
There are only eight bands, and those on the top band will pay three times the amount paid by those on the lowest band. However, their incomes may be considerably more than three times the incomes of those on the lowest band. Conservative Members have expended a great deal of energy on attacking us for daring to propose a national minimum wage of £3.40 per hour. Many people whose houses are likely to fall into band H should be in bands--if we must have bands--well beyond that. Their incomes may not be merely three times £3.40 an hour but perhaps 30 times that amount, or more. That is another fundamental objection to banding. At the top end some wealthy people will pay nothing like their fair share of the council tax. It is only a slight move from the basic injustice of the poll tax, which was that, with few exceptions, the duke and the dustman paid the same amount.
Some hon. Members have talked about single people and widows. I am a widow, but on my salary I do not think that it would be right for me to receive special treatment. It should be a case of paying according to ability to pay. Not all widows or single people are poor. Wealthy single people should pay their fair share and there is no reason for any discount. Obviously for people who are poor it is an entirely different matter.
Mr. Wallace : The hon. Lady says that people should pay according to their ability. May we sign her up for local income tax?
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Mrs. Fyfe : No. Tory Members dodged the problem of a local income tax, which is the difficulty of collecting it. A company with branches across the United Kingdom would be expected to collect different local income taxes for people in towns and cities throughout the United Kingdom. Why should that firm bother? What is in it for the company? If such firms are paid to carry out the job, how could we be sure that they were doing it correctly? The money may be paid to central Government, but I would not trust this Government to dispense it fairly to local authorities. It is a fair idea in principle, but it is not practical.
Unlike Conservative Members, I do not intend to filibuster. It has been said that there will be no need for a register for the council tax. Thousands of people evaded being registered because they could not afford to pay the poll tax and came off the electoral roll. They deprived themselves of the right to vote because of a tax that they could not afford. Will the Government spend some money on advertising to tell people that they should have no fears about this tax? If the Government are sure that it is a fair tax, they should be prepared to encourage people to get back on the electoral roll. Of course it is still an unfair tax, and many people will still feel that they cannot afford what is proposed and will deprive themselves of the right to vote.
As I have said, there has been deliberate filibustering and time wasting. The Government hope to get the Bill through by Christmas, but Conservative Members have wasted time by criticising Labour local authorities or quoting what people have said about Labour's proposals, instead of discussing their Bill. If they carry on in the same way in Committee, I hope that the Chairman will make vigorous efforts to stop them. If the Government hope to succeed in their aim of getting the Bill through in a few weeks, they had better make sure that the debate is about the Bill and is not time-wasting nonsense. 6.48 pm
Mr. Keith Mans (Wyre) : One of the main reasons for the Bill is that the rates system that existed for many decades was totally discredited in the 1970s and early 1980s. I speak from a certain amount of experience, having been a deputy leader of a district council. I saw what went on across the country, particularly in areas controlled by the Labour party and especially in inner-city areas. A remark by the former Labour leader of Liverpool city council makes the point much better than I could. He said :
"Frankly, we have put the interests of the providers of the service, the workforce, above the interests of the tenants."
That sums up a great deal of what went wrong with the old rating system. The Labour party turned a system of a consensus into a system of overtaxation for a minority of people within a borough. As a result, the system became untenable.
All that contributed greatly to a lack of good services in our inner-city areas, where there was a lack of accountability, too much bureaucracy, too many new departments being set up to do questionable things, and a low collection rate for both rates and rent. It is sometimes forgotten that in Labour boroughs not only has the community charge not been collected over the past two years, but the rates were not collected over many decades. That is one of the problems in many large cities such as Liverpool.
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