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Fewer and fewer good services were being provided in those Labour boroughs. It is interesting to note that in Liverpool, the only time in living memory that the rubbish has been collected on time has been during the past four months, when the city council decided to put out the refuse collection to tender. Previously, it had been costing that council £16 million to collect the rubbish. The council's direct labour force decided that it could do the job for £8 million. In fact, the contract went to a private contractor for £4 million. The rubbish in that city is being collected much more efficiently for £4 million than it ever was for £16 million under the direct labour force. That is just one example of what happened in inner-city areas controlled by the Labour party, and continued for years, if not decades. It is one reason why the old rating system became discredited and had to be changed.Mr. John Maxton (Glasgow, Cathcart) : If the hon. Gentleman is so convinced that the old rating system was untenable and unworkable, can he explain why his Government, as late as October 1983--only 15 months before they introduced the idea of a poll tax--said in a White Paper that rates were a fair system of local taxation and would be the local tax system in place for the foreseeable future? Does the hon. Gentleman agree that it was the blind panic in the Tory party over revaluation in Scotland in 1985 that led to the end of the old rating system, and that it had nothing to do with what the Government thought about the system in England and Wales?
Mr. Mans : I agree with the hon. Gentleman to the extent that if the old rating system was fair at all, it was fair in those areas controlled by the Conservative party, where there were not excessive increases in rates. The hon. Gentleman knows that for a number of decades the Tory party has been committed to producing a better system for financing local government. Indeed, the hon. Gentleman put his finger on an important point : one reason why the rating system became discredited was the difficulty of carrying out a revaluation exercise. I must point out that that exercise was skipped over again and again by the Labour party when it was in government. It refused to carry out a revaluation because it understood that there would be difficulties with the electorate when it was put into practice. In many ways, it was unfortunate that the old rating system became discredited and we had to come up with a new system.
All that I want to say about the community charge is that while I do not fully agree that the principle was wrong, its implementation undoubtedly caused a number of complications.
Mr. Mans : The hon. Gentleman may think that they are excuses, but the way that the implementation of the community charge was used by Labour councils to increase considerably the amount of money that individuals had to pay to their local authorities meant that the system had to be modified, if not changed. One of the most disreputable actions during the past few years was that of a number of councils--notably Labour, and especially Labour county councils such as Lancashire--which deliberately increased the amount of the community charge for those on slender means. They hoped that they could push them into believing that the Labour party had
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the right solution in wanting to return to the old rating system and that it was the fault of the Conservative Government that they had to pay considerably more to local councils.Dr. Hampson : I accept everything that my hon. Friend has said about Labour councils, but is it not about time that some of us stopped saying, rather defensively, that the principle of the community charge was correct- -that principle being that everybody should pay the same amount? We acknowledged that that was wrong when we started to introduce rebate scheme after rebate scheme and reduction scheme after reduction scheme, which meant that the majority of people were not paying the same amount.
Dr. Mans : I have considerable sympathy with what my hon. Friend says. The main point is that simply because of the size of the charge and because a number of councils increased it--and not just Labour, in this case--well above that originally intended, it appeared to be most unequal. In that respect, I agree that because of the number of rebates that had to be introduced it became clear that the system needed to be changed. The new tax at least takes into account our experience of the community charge and, indeed, our experience of the old rating system--which, despite all its faults, was a simple tax, whereas the community charge was a complicated tax. I agree with my hon. Friend that the community charge became increasingly difficult to operate properly.
Although it is a pity that, once again, we are having to change the system of local government finance, I am having great difficulty coming to terms with the Labour party's idea that the best way forward for the 1990s is to return to the discredited system of the 1970s and 1980s. I cannot imagine many people, including many Labour supporters, going along with a system that goes back to the sort of inequalities that I have mentioned. We must learn from the experience of the past few years--both in trying a system that should have been fairer and from a system that clearly was not fair-- to produce a system that takes the best of both previous systems and is also simpler.
In debating the new tax, both now and in Committee, we must look closely at some of the major problems with the community charge and try to iron them out before the Bill becomes law. The problems that need to be sorted out now, rather than later, are those associated with people who move around a great deal. Perhaps they work abroad, are in the armed services or the merchant marine, or are fishermen. People in my constituency have found themselves in difficulty both with the old rating system and, more specifically, the community charge. I hope that we will consider those whose occupations mean that they do not stay in one place for very long or move around at regular intervals, and ensure that they are not penalised as against those who stay in one place for a long time.
One lesson that has been learnt during the past few years is that people expect the Government to protect them against high-spending local councils. It is therefore important that there are stringent capping mechanisms, not only for this April, but for the next few years under the new council tax system. Ultimately, people at local level still believe that the Government have an obligation to stop high-spending councils taxing them too heavily. Unlike Labour, we understand the need to prevent over-taxation and over- spending by local councils, using
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the capping mechanisms in the Bill. We understand also the need to give some kind of rebate to people living on their own. Again, that was a particular inequality with the old rating system. Many widows living in the houses that they occupied when their spouses were alive ended up paying the same amount to the local council, despite the fact that they were living on reduced incomes. I am pleased that the Bill recognises and deals with that particular problem.Most important of all, we have devised a simpler and fairer system of raising local finance. I believe that we must give councils some method of raising finance locally, and that the council tax will provide the fairest method of doing so.
7 pm
Mr. Peter Hain (Neath) : At the end of yesterday's Remembrance Day parade in Neath, I enjoyed the hospitality of the Royal British Legion. One of the ex-service men present asked me about the council tax, and I sought his own view. He was quite blunt. He said, "The Government are on the fiddle again." I have to agree with him. Although the Bill says that it will abolish the community charge--more accurately the poll tax--it will be with us until at least 1993, and even then there is some doubt about whether the Government will be able to introduce their new tax, assuming of course that they are re-elected.
Over the past 18 months, there has been an incredible waste of literally billions of pounds, which have been poured down the drain as a result of the poll tax. The Local Government Information Unit calculates on current figures that the cost to the country will be £19 billion by the end of the year 1992-93. The LGIU estimates that every week the extra cost of continuing the poll tax amounts to £170 million. Every week, money is being poured down the drain. Imagine what could be done with £19 billion, which is being wasted with such reckless abandon. Imagine what could be done in terms of investing in new housing, schools and hospitals, and in industry and jobs that could put the country back to work and prepare it for the threat of 1992 and economic integration with Europe.
We have seen under the poll tax, and will see under the council tax, the rich freeloading off the rest. There is the classic example of the Duke of Westminster, whose old rates bill was £10,400. His inititial poll tax bill fell to £400--the same as his chauffeur, butler or gardener. With the £140 rebate announced by the Secretary of State for the Environment earlier this year, presumably the Duke of Westminster's poll tax bill is now just below £300. Under the council tax, he may have to pay between £500 and £600. How can that collapse in the Duke of Westminster's payment, from more than £10,000 to £500 or £600, be justified?
Mr. Mans : Will the hon. Gentleman confirm that he retains a home in Wandsworth--the home of many champagne socialists--for which he pays nothing?
Mr. Hain : I am happy to confirm that I continue to retain a home in Putney in addition to my main residence in Neath. I am happy to confirm also that I continue to pay
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community charge in Putney, in addition to the full charge that I pay in Neath--though what that has to do with the debate, nobody knows.I spoke of the monumental waste that has occurred under the poll tax, and I shall now refer to its monumental incompetence. There are £1.5 billion in uncollected arrears, requiring 7.5 million summonses by the end of the year. With crime soaring and the courts clogged up with criminal cases as a consequence of the Government's incompetence in other areas of their policy responsibilities, it is an incredible diversion of resources and effort to allow the courts to be clogged up with poll tax cases. Instead of concentrating on the real criminals, the Government are prosecuting people as a result of their own incompetence and failure to deliver a proper local authority finance system.
Over the years, the Conservatives have claimed to be the party combating waste and inefficiency, but the Government were responsible for the most wasteful and inefficient system of local tax collection possible to devise. If the Government intend to abolish the 20 per cent. rule in respect of the council tax, why not abolish it now in respect of the community charge? Such a measure could be introduced immediately as part of the Bill and would relieve a great deal of repression and injustice for some of the poorest members of our communities. It would also relieve local authorities, for whom the expense of collecting the tiny revenue that they enjoy under the 20 per cent. rule exceeds the income that it produces. The Audit Commission estimated that for every £15 spent by local authorities collecting the poll tax under the 20 per cent. rule, they receive only £6 in return.
Mr. Janman : The hon. Gentleman urges the Government to introduce the council tax even more quickly, yet the hon. Member for Dagenham (Mr. Gould) accused the Government of being too hasty. Which does the hon. Gentleman want?
Mr. Hain : The hon. Gentleman did not listen. I said that if there is to be any consistency in the Government's actions, they should abolish the 20 per cent. rule in respect of the poll tax immediately. That could be done today or tomorrow, if the Secretary of State were willing.
The legacy of the poll tax still hangs over, for example, the constituents whom I represent and affects them in a punitive and discriminatory fashion. The latest twist in this sorry saga is that the poorest and often oldest members of that community pay the same as those of us who have a decent income. One of my constituents is a retired person on income support who has a home overlooking the Gnoll, which is the home of Neath rugby club. He wrote to me asking why he had not received the full £140 reduction promised by the Government when they tried to sugar the bitter poll tax pill earlier this year. It transpires that, whereas a full charge payer such as myself living in the valley of Resolven was levied an average rate of £229.54 last year, this year we are paying an average of £79.17--£140 less. However, someone receiving benefits, such as the retired resident on income support who wrote to me, who was paying £65.18 last year, received only a £20 reduction this year and is now paying £45.18. In other words, he is paying just £34 less than the richest charge payer in Neath, compared with £164 less last year. How can that be just and equitable?
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I want the Secretary of State for Wales to justify the way in which that discriminatory system is penalising my constituents--many of whom are least able to bear the brunt of ever- increasing costs as a result of the Government's incompetence. [Interruption.] Conservative Members may shout and scream, but let them come and explain to my constituents how the situation I described can be justified.My constituents know that if they vote Labour--as they will in their tens of thousands--and if a Labour Government are elected, as I am confident will happen next year, we will have a fair rates system that ensures that the poorest members of the community will pay no community charge at all, and that those who can afford to pay towards local government finance will be levied at a fair and just rate. In preparing to implement the council tax, the Government are still starving local authorities in Wales of the finance that they need. Their standard spending assessments are ridiculously out of line with local needs, and are a figment of the imagination of the Welsh Office, and of the Department of the Environment in respect of the rest of the United Kingdom.
Mr. David Hunt : That has nothing whatever to do with the Department of the Environment. Standard spending assessments are worked out after close consultation with the Council of Welsh Districts and the Assembly of Welsh Counties. The SSAs to which the hon. Gentleman has referred were suggested and agreed by those bodies. He should acknowledge that, as I do, for they have done some fine work in reaching such agreements.
Mr. Hain : The Secretary of State is right to clarify that technical issue. My point is that--as I am sure the right hon. Gentleman will be ready to concede--the assessments are set following his imposition of financial disciplines and restrictions on local authorities. It is those restrictions that are causing the cuts that are being made in local services, thus placing local provision with local needs.
On 25 July, I raised the problem of West Glamorgan county council with the Minister of State, Welsh Office, but nothing has been done. The council's net revenue budget for the current year stands at £242 million. Education accounts for £138 million of that, social services for £28 million and environment and highways for £15 million. As the Secretary of State will doubtless acknowledge, the county council is renowned for providing a better standard of nursery education than almost every other authority for 90 per cent. of three-year-olds ; it is almost famed for its provision of music and drama in schools. Although the council has a reputation for financial prudence, the Government's financial restrictions are causing it to run into a brick wall. Moreover, next year it will need to spend an additional 6 per cent.--£11 million--just to meet the additional statutory obligations that the Government are placing on it. These are not optional spending measures proposed by a profligate council ; they are obligations required by the Government, and requiring 6 per cent. real growth.
The demographic changes resulting from the fact that school rolls are beginning to rise again, together with increased student participation in higher education, will add an extra £1.5 million to West Glamorgan's spending. National curriculum support measures will require an
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extra £500,000. Local management of schools and colleges, the provision of extra computer systems, administrative support and training for staff and governors will require an additional £400,000. Special educational needs identifed by the Education Act 1981--the provision is not discretionary--will require an extra £500,000, which the county will have to find from its local charge payers. I am informed that the maintenance of school buildings will require an additional £1.5 million, against a maintenance backlog of £20 million. Clearly, the full demand is not being met. As for social service provision, the Children Act 1989--introduced by the present Government--requires additional support for families, which means that an additional £500,000 will be needed.The Government have unceremoniously dumped on local authorities such as West Glamorgan a variety of community care responsibilities, which will require an additional £750,000 or so. Mental handicap and mental illness provision will require an extra £300,000. The Government have imposed many other obligations on the council ; it must, for instance, spend an extra £5 million on upgrading highways. If there is no change in the existing financial provision, West Glamorgan will be unable to meet the Government's requirements without making savage cuts.
This year, the council has been allocated an increase of just 6 per cent. Of that, 1 per cent. has already been committed for the full-year effects of this year's pay award to staff, principally teaching staff. The Secretary of State has assumed that some 4.5 per cent. will cover price and pay rises. In other words, 5.5 per cent. of that 6 per cent. has already been swallowed up, leaving just 0.5 per cent. to cover any additional award above the 4.5 per cent. that teachers may receive.
Against that background, how can the introduction of the council tax possibly be just? This is a charter for the rich. The banding system is deeply unfair. The Prime Minister himself told the Financial Times on 27 November 1990, "Banding does not work." I agree with that assessment.
Dr. Hampson : The Prime Minister was referring to income banding, which was then the subject of debate. He was not talking about banding in relation to property values.
Mr. Hain : The Prime Minister was referring to banding in the context of the circumstances. [Hon. Members :-- "Withdraw."] Let us look at the way in which the Secretary of State has applied the banding system to Wales. The top band covers properties valued at £240,000 and above. I can tell the House that there are not many such properties in Neath ; they can be counted on one hand. Although such properties are worth at least eight times as much as those in the lowest band, their occupants will pay only three times more than the owners of those properties. The Secretary of State, who owns a property in Westminster, will pay a little more than twice what will be paid by the average charge payer in Neath ; yet his property is worth 10 times as much. How can that possibly be just? How can the right hon. Gentleman possibly defend such an inequity to my constituents?
Mr. Janman : Will the hon. Gentleman give way?
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Mr. Hain : No, I will not.The Secretary of State's salary is now about £1,200 a week, 10 times the average income of a couple of pensioners living in the average property in Neath. Many people in my constituency will feel that they are subsidising rich residents in England and elsewhere in the United Kingdom. Moreover, the system centralises financial provision to such an extent that just 8 per cent. is raised locally in Wales. If my local authorities wish to raise their expenditure by 1 per cent., they must increase council tax by 12 per cent. Mr. Janman rose--
Mr. Hain : I have given way plenty of times ; I will not do so again.
The council tax is hugely complicated. According to Neath borough council, it will be just as difficult to administer as the existing poll tax system. It will cause chaos : bills will arrive literally weeks before payment is due, and people will have only a few weeks in which to appeal against the bandings applied to them. This is a Heath Robinson proposal ; it has simply been cobbled together.
I sympathise with the Secretary of State for Wales. He is a decent man fallen among knaves, trying to do an honest job on behalf of the people of Wales. He is far too sensible to have thought of this proposal off his own bat. He is steamrollering it through, knowing that it is nonsense. He has been very unlucky : his first Prime Minister dumped the poll tax on him and the second has burdened him with the council tax, which will be just as unpopular as its predecessor. It is a schizophrenic tax, unable to decide whether it is a head tax or a roof tax. That is one of the reasons why I believe that the people of Wales will reject it, and vote in a Labour Government next time.
7.18 pm
Dr. Keith Hampson (Leeds, North-West) : When I tried to raise some of the education issues with the hon. Member for Dagenham (Mr. Gould), he refused to let me intervene. I wished to make the simple point that the Labour party's "Fair Rates" document makes no reference to students, and to add that, in my view, our proposals offer students the best deal that they have been offered by any system of local finance.
It does not embarrass me at all to say that I did not approve of the principle of the community charge. I opposed it from the very beginning. My opposition goes back to 1979 and to the work done in the Department of the Environment when I was in it on the production of the 1981 Green Paper. It stated clearly that a flat rate charge could not cope with the scale of local authority expenditure and that it could not do so fairly. Experience has proved that to be the case.
When we considered the impact that such a system would have on my city of Leeds, when it was thought that it would be about £187 per head, we realised that that in itself would be disastrous. On that basis, about 80 per cent. of my constituents would have been worse off. However, the Leeds charge came out at about double that figure. It was therefore a disaster for towns in the north, particularly those that contained a high proportion of terraced property built around the turn of the century. I do not weep over its loss.
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Although one can say good riddance to it, I do not wish there to be a return to the past, as the Opposition propose. The community charge system became more and more discredited. Some of my colleagues have accepted that it became discredited, but they are still trying to a certain degree to defend it. The reason that it became discredited on the scale and at the speed that it did was due to the efforts of the gentleman who introduced it, the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley).Due to the way in which he handled its introduction, it did not have a cat in hell's chance of succeeding. Not only was there no capping of the excessive expenditure that Labour councils were bound to indulge in, but my right hon. Friend insisted that it should be introduced not as a phased tax but all in one year. Above all, he insisted on reducing the revenue support grant rather than increasing it, which is what all of us said was necessary to soften the blow. The effect of those actions devastated the tax and meant that in no circumstances could the level be low enough to make it justifiable and acceptable. What happened reflects upon the competence and judgment of my right hon. Friend, as has been demonstrated again recently.
The Labour party document states that there should be a return to the old system and to the valuation of properties that was carried out in 1973. How can the Labour party believe that it is fair to value properties on the basis of the 1973 valuation? Do not the Opposition remember what happened in Scotland when properties there were revalued? Do they not realise what would happen to a young couple who bought a terraced cottage that had a traditionally low rateable value? Under the Labour party's proposal, that property would be revalued, which would have a devastating effect on the finances of that young couple. There would be the same backlash and bitterness as happened in Scotland.
If the people of Leeds want a Labour Government to be returned to power, they can be sure that property in Leeds, particularly that sought by young people, will have devastatingly raised valuations. Their bills will be higher than this year's community charge bills. Under our scheme, the bill for the average property in my constituency will be approximately halved compared with what people are expected to pay under the community charge. The headline bill--in Leeds about £400 per person will instead be about £400 per house. The Opposition have totally failed to grasp the banding concept. It is possible to have a relatively speedy valuation because no attempt will be made to place a specific value on every house. However, that is what the Labour party would do. After having introduced the outdated 1973 valuations, at some stage it would have a nationwide revaluation. A specific value would be placed on every house. There would be a return to all the anomalies that the old rating system caused. It would take a very long time to implement and would be very costly.
Moreover, the Labour party's system is guaranteed to penalise property improvement. If changes were made to a house that increased its value, the valuation would be increased ; hence, one would pay more tax. It would be a major disincentive to property improvement. The value of banding is that it can be done speedily and quickly. It might even be possible for Members of Parliament to walk down the street and assess the approximate value of
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property in one street compared with property in another. Moreover, if the bands are sufficiently wide, they will cope with any alterations and improvements to property.My only hesitation is whether the two middle bands are wide enough. I argued passionately for a top higher band. But if a new kitchen were needed in an older property, it would cost about £10,000. The difference between the two bands in the middle is about £10,000. A slight extension of those bands could ease the extra cost that might be brought about by improvements.
The hon. Member for Neath (Mr. Hain) said that there will be chaos when everyone appeals. I do not believe that that will happen. The difference between the sums of money in the different bands that people will have to pay is relatively small. It is probably not worth appealing about a difference of approximately £40. It is also conceivable that if one strays across a band because a property has been improved to the tune of approximately £10,000, one will not have to pay much extra.
Mrs. Fyfe : The hon. Gentleman believes that because there will be broad bands whole streets will be assessed in one go, not individually. If, however, an estate agent in England says, "I think that this street of properties is worth £35,000, or £45,000 or £58, 000" and it is just on the borderline between bands, who will get the benefit of the doubt? Will it be the council, on the ground that the upper band would provide it with more money, or will it be the householder?
Dr. Hampson : I do not believe that there would be any complication. People will be told that their property comes within a certain band which ranges, say, from £52,000 to £68,000. They will not complain if they believe that their property is worth more than the band in which it has been allocated. If, however, they want to say that their property should be in the band below, it will be a simple matter of testing it on appeal. There will be a great deal of evidence, from the valuation office and market prices in the area, upon which to test it.
Opposition Members are desperately struggling to find every conceivable thing to carp at, because they know that the scheme will be relatively speedy to introduce and that it will work effectively. Compared with anything that they have dreamed up, it is a clear-cut, simple scheme. Their solution is to return to an outdated system and then to try to improve it. The consequent revaluations would cause mayhem, chaos and huge bills for those on the receiving end. The Opposition have not found a way round that problem.
The Labour party's document makes no reference to students. It preaches the virtues of helping all hardship cases, but the old rating system to which the Opposition wish to return would impose considerable costs on students, as it did before. University halls of residence had to pay for students. If students were in digs, they had to pay their share of the rates. Under this measure, universities will not be charged for halls of residence and students will not be liable to a council tax charge in the rent that they pay. The only problem relates to those students who are married to someone who is not a student, in which case there is a 25 per cent. discount. Furthermore, we have not dealt clearly enough with the position of those students who may be living in the same property as their landlord. Landlords will have a 25 per cent. discount because they take in students, but will they
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pass on the full tax to the students? We must make it clear to students that they can appeal against their rent to a tribunal so that the tribunal can decide whether the landlord is overcharging them on the council tax element.We must make our argument clear. Only today I received a document from the Committee of Vice-Chancellors and Principals that shows that it does not understand. It fears that universities will have to pick up the tab, and it draws a sharp distinction between those who will be non-payers and those who will get 25 per cent. I should like to believe--we must make this clear --that only a very small proportion of students will contribute. The concept of the poll tax was that the more people there were in a property the more they paid, whereas under the council tax students will not add to but will deduct from the bill.
Of the 42.5 million adults in this country, only about 3 million are from households with more than two people. I never understood why we got in the tangled bureaucratic mess of the community charge to pick up the tiny amount of 3 million out of 42.5 million people. The council tax is related to the number of people in a house, but it offers more generous treatment for people such as students, who will not add to the household bill.
Have Ministers considered taxing people who accommodate students as a business the universal business rate rather than the property rate, and whether that might be a way of avoiding any burden falling on students? I raise that as an off-the-cuff thought.
We must also make it crystal clear how much shopkeepers, who gave us so much flak when we introduced the business rate and the community charge, will now be paying. They will still pay the universal business rate, but what will they contribute to the new council tax? The council bill must clearly show not only the precept for each level of local government but itemise what they are paying for street cleaning, for dustbin collection, for the police and for the various local government services.
The Labour party attacks us for not operating a fair system, yet the old rating system offered relief in the form of rebates. Labour now realises that that system of relief was not adequate. It therefore proposes a register of those who are eligible for relief. Its document says that it is against rebates.
"for which application has to be made."
Therefore, it proposes that as a result of computerisation at the Inland Revenue a local authority register will be established so that authorities are aware of the pensioners, those with disabilities and those on low incomes. Relief will then be offered to such people. That is a register- based system. Our system is not register based but claimant based.
The Labour party cannot have it both ways : it attacks the system either because it expects people to claim or because it requires a register. Of course it is a claimant-based system--no one has ever hidden that fact. People who can be eligible for up to 100 per cent. will claim for it, and then, as under the old system that worked simply and cheaply, it will be on the records. That is the system, with extensions, that we are now returning to.
The single person discount will not apply equally to the rich millionaire and to the poor elderly widow. The male millionaire will not get any rebates, whereas the single older widow will be eligible for substantial rebates, and a single unmarried mother with several children who is on
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income support will pay nothing. The reality that the Opposition overlook is that the combination of the single person discount and rebates of up to 100 per cent. make the council tax far fairer than the old rates, certainly fairer than the poll tax, and much fairer than the Labour party's proposals. For the elderly, and especially for students, it is a better deal than was offered by any previous alternative system of local government finance, and it is much fairer and is a better deal than what would be imposed by the Labour party. 7.35 pmMr. Dick Douglas (Dunfermline, West) : Although we have gone over ground that we have gone over many times in the House, the debate has been extremely interesting. I make no apology for going over some of the ground again.
I recall the reform of local government--not local government finance--in the 1970s. By trying to reform finance without simultaneously considering local government's powers, boundaries and responsibilities we are making the same mistake as we made then. We have two Bills--one for England and Wales and one for Scotland. Separate Bills were introduced for the poll tax. A Scottish Bill was introduced in 1986-87 because the Government panicked about local authority finance for Scotland.
We have heard much in the past weekend, if not before, about the concept of the mandate. Labour Members from Scotland--some of them at least--have raised that concept. The Liberal Democrats, particularly their leader, have suggested that the Government have no moral authority in Scotland. It is strange that that point is being made because of a shift of about 1,000 votes in a constituency. But the Government had no moral authority in Scotland in 1987. The Scottish people overwhelmingly rejected their policy.
We must consider the mandate not in party terms but in personal terms. I sought a mandate from my constituents to oppose the poll tax and made it plain exactly what I would do.
Mr. McCartney : Seek a fresh one.
Mr. Douglas : I shall give way to the hon. Gentleman, for whom I have some affection, or to any other Labour Member who can tell me what part of that mandate I have reneged on.
Mr. McCartney : I shall contribute later. The point is clear : if the hon. Gentleman feels that he is totally committed to his mandate and that he has not changed his opinion, he should ask the electors of Dunfermline, not me.
Mr. Douglas : I meet the electors of Dunfermline regularly, not just once a month. They can come to me at any time.
What part of the 1987 manifesto is still in place? The commitment to Trident, which is particularly important to us in Scotland, is not. It is evident that the hon. Member for Glasgow, Garscadden (Mr. Dewar) does not rest his case on opposition to the poll tax. At the next election, he will seek to enhance the so-called sovereignty of Parliament. I reject the sovereignty of Parliament. We
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have the poll tax because there is no such thing as the sovereignty of Parliament. There is the sovereignty of the majority party and its Whips.We all know that the poll tax does not have a friend in 1991, so why did that tax have so many friends in 1987 and afterwards? Conservative Members- -with a few honourable exceptions--were dragooned through the Division Lobby by the Government Whips. They did not consider what was happening. We have had the example of Scotland, where we have suffered from the poll tax for a year longer than people in England and Wales, and much grief and sorrow have resulted.
People say to me, "You did not pay the poll tax and could afford to pay it." I did not pay the poll tax. Before I took that stand, I made it plain what I was going to do. I still feel justified in taking that stance, especially as the people of Scotland, aided by the Scottish National party, were partly instrumental in ensuring the downfall of that tax.
We have all talked about finding a fair local government taxation system. Front Benchers and Back Benchers have been going through the hoops, trying to devise a system that is fair and is always related to ability to pay. That was suggested by the Labour party in "Fair Rates" and by the Conservative party in their so-called council tax--somehow, mysteriously, the system has to be related to ability to pay.
I cannot envisage a system related to ability to pay that does not approximate to income flows. I repeat what I have said many times : I do not know of any person who pays taxes out of anything other than income. That is why we and the Scottish National party have suggested a local income tax.
Conservative Members have said that there would be many difficulties with such a system. It might be unfair because of different earning capacities in different areas--I think in particular of Scotland. Under the present arrangements, we would expect to raise from local income tax about 14 per cent. of local revenue. I estimate--although I would not go into the trenches on it--that that could be achieved in Scotland with a tax of 3 p or 4p in the pound. People say that that would cause local authorities to be profligate. The Government castigate the Labour party for wanting to raise taxes--particularly, I suggest, income tax. The Government claim credit for tax reductions, albeit only 1p or 2p in the pound at the standard rate. Local income tax would provide a salutary device to bring about local accountability. Why have all this paraphernalia? The Secretary of State for Wales is in the Chamber, so he can confirm or deny my comments. In Wales, all this administrative machinery will be erected to get 8 per cent. of the revenue. That is farcical. In England, it will result in between 15 and 20 per cent.
Mr. David Hunt : It will be 14 per cent.
Mr. Douglas : It will be 14 per cent. That will happen because we will not allow local authorities to administer a local income tax. One could argue that, if central Government were so magnificent at controlling finances, we could castigate local authorities for being profligate. But the Government expanded the public sector borrowing requirement overnight, going from a PSBR of
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almost zero to one of £20 billion--and that is not supposed to be profligate. Why not? It is not profligate because the Conservative party wants to win the election.If local authorities want to raise revenue for essential services which the Government have said they must provide, it is supposed to be dastardly. If someone from Mars were considering what has happened, he would think it weird and wonderful that so-called intelligent people oppose a local income tax on other than economic grounds. The grounds are political.
We met Ministers to discuss our proposals. I said that we could abolish the poll tax and, within three months, introduce a local income tax in Scotland. I am willing to debate that case in any forum. We would also look into a system to reform local government in Scotland and, as others have suggested, to have a much fairer electoral system.
We are discussing a band and hope tax--properties will be banded together ; the assessors, the Government hope, will get the job done by 1993 ; and some of the anomalies will be ironed out, for example, in relation to students. The council tax will not provide a buoyant source of local revenue and will not give direct local
accountability.
What does the council tax do in Scottish terms? I have been on demonstrations with Labour Members who are not here in the Chamber-- [Interruption.] I apologise to the hon. Member for Glasgow, Pollok (Mr. Dunnachie), who is here. Those Labour Members said no to warrant sales and poinding. We have not heard anything about that today from the Labour Front Bench. Schedule 8 perpetuates that system in Scotland. Surely, in this day and age, we can devise a system of getting people to pay. We need a fair tax that avoids the noisome 19th century practices of breaking down the doors of people's houses and poinding and selling their furniture. I plead with the House : if we are trying to get 8, 9 or 15 per cent. of local revenue, surely we can at least achieve a much more satisfactory system, based on ability to pay.
The 20 per cent. rule bears heavily on some sections of the population and should be abolished forthwith. Because I was on the court of Stirling university and have had direct association with many students, I know that students are in dire circumstances now. In fairness to them, the Government should not wait until 1993. If I have understood correctly, when the Secretary of State for Social Security introduced the new measures--many of which are welcome--he suggested that, although benefits have been upgraded, they were not related to a continuation of the 20 per cent. rule. A precedent has been set. The Government should not continue the farce of believing that they can extract the 20 per cent. contribution from local electorates and poll tax payers in Scotland. They should take steps immediately which would not be very costly. The Minister may contradict me, but I believe that it would cost £120 million to write off that contribution for three years. If the Government do not do that they are behaving stupidly because it is extremely unfair to ask local authorities to pursue people who cannot pay and thus to perpetuate the system.
We take cognisance of the Bill and, naturally, we welcome the abolition of the poll tax but we shall oppose many aspects of the council tax. I hope that I have made it plain that I am extremely proud of the stance that I took in opposing the poll tax. I am not by nature a law breaker but I am proud of the stance that I took to stand by the people who would be humiliated because they could not
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pay. I have nothing to be ashamed of. I would have sought my personal mandate at any time and I made my stance clear to the electorate at large.7.51 pm
Mr. Patrick Cormack (Staffordshire, South) : I believe that the hon. Member for Dunfermline, West (Mr. Douglas) is an extremely honourable man, but he is misguided in his stance on the poll tax. However, I unite with him on one issue--I also fought for a personal mandate at the previous general election. I did not support the introduction of the poll tax in Scotland and would have nothing to do with it. I said that I should oppose it consistently if the Government were misguided enough to introduce it in England. This evening I feel as if I have come in from the cold
Mr. Richard Shepherd (Aldridge-Brownhills) : Only two minutes ago.
Mr. Cormack : In answer to my hon. Friend, I did hear the opening speeches. I feel that I have come in from the cold and can support the Government wholeheartedly and without any major reservation. We have at last got rid of one of the most misconceived pieces of legislation that any Government have introduced for a long time and we have now replaced it with something eminently sensible and fair. I congratulate my right hon. Friend the Prime Minister on his courage in recognising that a mistake had been made and in introducing new legislation. Some people fail to appreciate the fact that it takes great courage to say, "I was wrong" and that the higher one's position, the greater the courage that is called for. The Prime Minister has shown enormous courage which deserves to be rewarded. Some years ago, I introduced on three occasions a rating reform Bill and on one of those occasions I was supported by my right hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), who has strayed since those days. That Bill had two main objectives. The first was to remove the ridiculous anomaly whereby a householder was penalised for improving his property, and the second was to introduce a head count so that the amount paid would to some extent reflect the number of people in the household. Those of us who attended ratepayers meetings in the 1970s--and I attended many--know that two criticisms in particular were always voiced. The first was that any improvement to a property was penalised and the second was that which has been quoted so often--the fact that a single person, very often an elderly widowed lady who lived next to a family of three or four wage earners, paid the same as that family.
It seems that the Government have tackled three issues the two anomalies that I outlined and the manifest unfairness of the poll tax. They have introduced a new tax which we believe is infinitely preferable to the Labour party's proposals. I concede that I should have preferred to return to the rates rather than to stick with the poll tax, and I make no apology for that. I have never sought to disguise my views. However, what is now proposed is better than the Labour party's proposals, and I had hoped that we could approach the issue in a spirit of consensus. I regret that the Labour party did not accept the invitation of my right hon. Friend the Secretary of State for the Environment to participate in the talks earlier this year.
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