House of Commons Hansard Debates for 12 Nov 1991

Mr. Robert Hughes (Aberdeen, North) : Why is the Secretary of State now reading a speech that he clearly had not seen before he came to the Dispatch Box? [Interruption.] I cannot help it if the right hon. Gentleman cannot read his civil servants' handwriting. In the earlier part of his speech, the Secretary of State gave Scottish local government credit for the increase in the number of pupils staying on at school and in social work expenditure--for the improvement in all services that are provided directly by elected local government representatives. In the later part, he has rubbished the lot. The right hon. Gentleman really should be able to do better than that.

Mr. Lang : This may be poor stuff, but it is mine own.

The point that I was making--it may have been lost on the hon. Gentleman-- was that, because of our prudent management of the economy, the Government have been able to expand services and increase in real terms the funding of local authorities. They have allowed the economy to develop, prosper and have left people better off. In contrast to that, Labour's irresponsible approach--its proposed abandoning of all the controls that have made our achievements possible--would place burdens on our people that would cause immeasurable damage. The cost of business rates has been reduced by some £270 million as a result of the steps that we have taken to bring them down to a level that would be comparable across the United Kingdom. Last year, they rose by 1.5 per cent., the rate of inflation being over 10 per cent. We have brought about a gradual convergence and I hope that we shall be able to do more this year.

Labour would undo all that. Labour would dismantle all the progress that we have made and all the justice that we have introduced ; it would tear away the protection that we have brought in--especially for small businesses-- and let business rates rip. I assume that the party would not take such action lightly : presumably it has thought it through and considered the consequences. I have another question for the hon. Member for Garscadden.

Mr. James Wallace (Orkney and Shetland) : Will the right hon. Gentleman give way?

Mr. Lang : No, not at the moment. This is an important point. The hon. Gentleman will want to hear the answer, as it will affect businesses in Orkney and Shetland just as it will affect businesses in Dumfries and Galloway. By how much does the hon. Member for Garscadden expect business rates to rise in the first two years after he has taken off the controls that we introduced on business rates? How many jobs will be lost as a result? How many businesses will close? Scottish business deserves and awaits answers to those questions. Those whose jobs would go deserve answers to those questions. I expect the hon. Gentleman to answer that question in his speech.

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The Labour party wants to embark on a three- point programme to punish local government.

Mr. Wallace : Will the right hon. Gentleman now give way?

Mr. Lang : Yes.

Mr. Wallace : The 1986 Green Paper foreshadowed special arrangements for business rates in Orkney and Shetland, because of the anomaly created by the oil terminals. What progress is being made to implement the social arrangements promised by the Government?

Mr. Lang : As the hon. Gentleman knows, since he and I have had many exchanges on this subject across the Floor of the House, Orkney and Shetland almost always have special arrangements. These matters are continually up for review and reconsideration, but his representations will, as always, be borne in mind.

The Labour party has a three-point programme for punishing local government. Simultaneously the Opposition want to return to the worst injustices of the domestic rating system. They want to remove all safeguards to protect local taxpayers through capping. They want to expose the business community and its employees to the horrors of runaway council spending. It is an extortion racket that would make the mafia look like a children's charity.

If the Labour party really wants to get rid of the poll tax, it should help the Bill through. If not, the inescapable conclusion will be that it wants to stop the Government abolishing the poll tax for its own dark reasons.

What we are proposing is a tax based upon property and upon the people who live in it. It is a tax that will recognise that taxes are paid by people, not by buildings. It is a tax that will take account of the needs of single -person households, many of which contain pensioners, students, student nurses, apprentices and trainees, and of the needs of the young, the old, those on low incomes and those who live in high-priced areas. It is a tax which will be administratively simple, which will require no register to determine liability and which will provide a firm basis for local government finance. In other words, it is a fair tax, a sensible tax, a workable tax and a tax which I commend to the House.

5.1 pm

Mr. Donald Dewar (Glasgow, Garscadden) : That was an entertaining performance, by the standards of the Secretary of State for Scotland. It contained one or two memorable lines. I was interested in the concept of the Secretary of State not yawning but choking over his script. I imagine that that is something he gets used to. I was also intrigued by the concept that somewhere in the International Monetary Fund there are a number of gentlemen who are very worried in case Stirling district council is not capped in 1996.

Before dealing with the Bill, may I say a few words about the way in which the Bill is to pass through the House and the parliamentary timetable. What is proposed and what will no doubt happen, because of the power of the Whips--is an attack on Parliament itself. This is a complicated and controversial Bill that will be forced through its Committee stage in three weeks. The Committee will meet almost literally day and night. There will be no possibility of proper consideration. There will be

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no detailed scrutiny of very important matters that will have an impact on everyone. It is a straitjacket that makes a total mockery of the parliamentary process.

Mr. Nicholas Budgen (Wolverhampton, South-West) : Will the hon. Gentleman confirm that it will be impossible within this three-week period, if the House votes for the three weeks, for there to be any proper consultations with interested parties and any sort of repetition, by means of which the ordinary person in the pub may understand what is to be visited upon him, and that it will be a complete abortion and distortion of the way in which Parliament ought to consider a complicated piece of legislation?

Mr. Dewar : I have a great deal of sympathy for what the hon. Gentleman says. I was about to refer to the constant approaches to me by professionals. I am referring not to politicians but to officials and assessors who are extremely worried about the practicality of many of the Bill's provisions. Poor souls--they approach me because they say that it will be possible, of course, to obtain the answers in Committee and to tease them out there. That will not be so. I do not want to enrage the Secretary of State, if that is not a contradiction in terms, by asking him about COSLA's views. For those on the Conservative Benches who are not familiar with the Scottish scene, that is the Convention of Scottish Local Authorities. Local authorities of every political colour are members of COSLA. Its recent circular deals with the need for a statutory canvass which it says many people believe to be essential. The circular continues : "No doubt these are issues which will be debated more fully within the Committee stages of the Bill".

COSLA appeals to its members to send in detailed suggestions for improvements and amendments.

Within that three-week period it will be very difficult to separate the Scottish provisions from the English provisions. There are differences-- differences of starting base and differences of tradition. This is a very serious departure from the standards that we expect from a Government when dealing with the House of Commons. In a letter to me on 30 October the Secretary of State said that, whatever else, he was sure

"that the Scottish interests will be dealt with appropriately." If the Secretary of State thinks that this is dealing with Scottish interests appropriately, he is not living in the same world as I am. It will be met with deep cynicism and deeper dismay in Scotland.

Mr. Budgen : Is there not a serious risk that the problem of peope refusing to pay may become worse if they feel that the proper authority of Parliament has not been given to the Bill by means of proper discussion and argument ?

Mr. Dewar : All I can say to the hon. Gentleman is that I very much hope that that is not the case. As he knows, my colleagues and I have turned our face against non-payment from the very beginning of this argument. We are opposed to such a policy. I would not want to see anything that encouraged that problem, either under the present system or any successor system.

May I put a point to the Secretary of State in very muted terms, because I do not wish to overstate it ? It is extraordinary that one of the last Conservative politicians in Scotland should argue that Westminster is the right forum properly to look at Scottish legislation, to dissect it and to make sure that it reaches the statute book in a way

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that is a credit to the legislative process. It is extraordinary that the Secretary of State for Scotland should be responsible for and should be backing the kind of timetable motion that has been put before the House. It is an abuse of the parliamentary process that goes beyond the ordinary. It is a cop-out by the Secretary of State for Scotland, who gives the impression of having given up by allowing such a thing to happen.

As for the Second Reading debate, the right hon. Member for Henley (Mr. Heseltine) gave a spirited performance yesterday. I use the word performance advisedly. He is a little bit faded these days, compared with the bright years of his youth, but undoubtedly it was a triumph of technique. He knows that when one is in difficulty one does not talk about the Bill that one is defending. One attacks, because that is the best form of defence. I suppose it is something that he learnt in the old days in the combined cadet force at some public school. He certainly did that during the exchanges.

It was interesting to listen to the arguments put forward by a string of distressed loyalists, who got little in the way of a response from the Secretary of State for the Environment. Their only consolation will be that the Hendon Times, the Brent Bugle and other local papers will record that they asked the questions, but they will not be able to record any of the answers to the worries that clearly exist among their Back Benchers, particularly in the south-east of England. That gives added force to the points that are being put forward from our side about the way in which the Bill is being railroaded through the House.

In particular, I noticed that the hon. Member for Gravesham (Mr. Arnold) asked a question about the revenue support grant in the south-east of England. He was told by the Secretary of State that it was an important point and that he would deal with it specifically in his speech. I read the speech with great care this morning. There was not even an attempt to provide an answer. That is typical of the way in which the debate was conducted yesterday and has been conducted again today by the Secretary of State for Scotland.

The Secretary of State for Scotland made some interesting remarks about how we deal with sewage charges in Scotland and I believe that he was right, but I fear that the main reason that they were paraded was because it took up a few minutes without him having to deal with the fundamentals of the Bill. He went on to give a litany of hatred about local government and its responsibilities.

I do not want to spend a great deal of time on this subject, but it must occur to the Secretary of State that if he creates such an abrasive atmosphere, if on the one hand he says that local government has done well and he claims the credit while on the other hand blaming it for everything that goes wrong, he is undoubtedly creating a situation in which there will be continuing difficulties. With a better atmosphere, one could get more reasonable results for most parties. One of the tragedies has been the constant confrontation. I do not think that that area of policy has been conducted with any form of common sense in recent years.

For the Secretary of State to lecture us about the non-domestic rate--the business rate--and say that fear of

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that is driving companies out of business takes one's breath away. When I talk to business men, when I look at the records of insolvencies, liquidations and business failures, people talk to me about Government economic policy and the recession and not about some sort of hypothetical concern that lives large only in the mind of the right hon. Gentleman.

As regards the Bill, a number of our past arguments are clearly highly relevant to the debate. I said earlier that the Secretary of State was not noted for his phrases but, to be fair, he introduces them occasionally. He was the first person that I have heard talking about the dampening effect of banding and it may well be his modest monument. However, I object strongly to that phenomenon. I do so because I know that it is a form of protection racket, although I know that that is a phrase that Tories have found offensive, but it makes the point. To be fair, Conservative Members have not tried to hide that fact. They have said that they want to protect those in the upper range of the property market. They accept that there is a link between income and the housing that most people live in and they want to protect people who are likely to have substantial incomes. They want artificially to protect them by squeezing the range of banding--it is unashamed and unabashed.

The answer is that modest home owners such as first-time buyers will inevitably pay more than they otherwise would have done. The other day I described--I shall not do so again to save embarrassment, although it is the Conservatives' and not mine--all the tears that were shed for those at the bottom of the home ownership market, especially council tenants who bought their property who we were told would be victimised as the Labour party would take vengeance by taxing them on the full value of their houses when they had bought at a considerable discount. If that is not hypocrisy and if it was genuinely meant, there must be some troubled consciences on these Benches when Conservative Members consider what they are introducing.

It is not merely a question of the elimination of the discount in the local taxation system ; there is also the weighting to which I referred which will clearly be a considerable problem for those people. I do not believe that there is misunderstanding of the system or that there is such lamentable ignorance on the Conservative Benches that they did not understand the argument when they made it so vociferously only a year or 18 months ago. When the Government defend what they once condemned we are looking at plain hypocrisy. The right hon. Member for Henley lectures us about the politics of envy. I think what he means by that is that he does not want a system that is too progressive. It occurred to me that I should argue that that would be an odd thing to suggest because if one applied it to income tax one would have a regressive and unfortunate situation. However, when I consider what the Government have been doing to the tax system in the past year or two, it could be an argument that appealed to them. I have to repeat that it is not merely a matter of trying to protect or victimise. It ought to be a question of the fair distribution of the burden. The present rigging--if that is not too cruel a word--or, if we want to be more mealy-mouthed, the present adjustment of the banding system, ensures that there will not be a fair distribution. That also has another effect which has given rise to great discontent in areas such as Hendon. I see that one of the Members representing

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Hendon, the hon. Member for Hendon, South (Mr. Marshall) is here. The problem with banding, even with an eight-band system in place, is that in some areas virtually all the properties fall into one or two bands. As a result, one is suspiciously near to a flat-rate tax system of the type that we are supposed to be abandoning. My second serious point is the question of the complexity of the new tax and I shall put that in general terms. I listened carefully to the Secretary of State but I was not convinced. I noticed in the Financial Times this morning the suggestion that the right hon. Member for Henley does not know anything himself but

"knows a man who knows."

I was quite impressed until I discovered that that man turned out to be the Minister of State, the hon. Member for Enfield, Southgate (Mr. Portillo). That was a strange accolade for a man who only a few months ago thought that the poll tax was a vote winner. In any event, he may have some grasp of some of the technical details, but I am not convinced that the Secretary of State for Scotland has the same grasp. When I listened to him musing about when a register becomes a list, I could only conclude that he wants to duck out of the controversy and leave it all to local authorities.

The Secretary of State knows that if one talks to people who will be involved, it is nonsense to say that everything is on course and is going smoothly. I shall give one example. In the middle of September, as the Secretary of State knows, a draft circular on the Local Government Finance and Valuation Act 1991 was issued. It dealt with the financing of the new valuation process. In mid September local authorities replied, raising a number of important issues. Unless the midday post brought something unexpectedly, since then there has not been a cheep out of the Scottish Office. We have not got the circular. There is a great deal of confusion and hiatus because understandably local authorities want to know about funding arrangements, practical details and want answers to their questions about the use of private sector surveyors and they have not had any answers. They are not being obtuse or refusing to act. They have waited week after week for the circular but it has not appeared and the timetable is slipping by. If that is things going smoothly, the Secretary of State is talking a different language from the ordinary people of Scotland.

That is a painful contrast with the way in which preparations for the passage of the Bill are being bulldozed through with no respect for the niceties of the parliamentary process.

Everyone knows that Opposition Members are concerned about the discount because we do not believe that it is a properly targeted concession. Many people argue that a statutory canvass is essential. I notice that the Secretary of State disagrees and says that it is very much a matter for local authorities to take what he describes as "reasonable steps". However, given that it is all on a daily basis and that it might not be an auntie but perhaps a youngster who moves from address to address--that happens frequently in my constituency and perhaps even in the Secretary of State's constituency--all the problems with identifying the number of folk in the house, which sank the administrative basis of the poll tax, will to a large extent arise again under this system. It is no good saying that it will be up to the local authority to take reasonable steps and then going home to Bovril or Horlicks and thinking that the problem has been solved.

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I shall cite one example and I invite the Secretary of State to stop me if I am wrong. It is likely that I am because, although I have taken good advice, no one is sure that they know exactly how the system will work, but let me try. Let us consider students. That is fair because there has been a recent announcement and it will be fresh in the Secretary of State's mind. He will be able to keep the House right and that may also save time in Committee, which is important given the lack of time that will be available.

As I understand it, if a student lives in a hall of residence, he will be exempt. I am sure that the Secretary of State will nod his assent.

The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart) indicated assent.

Mr. Dewar : The Under-Secretary, the hon. Member for Eastwood (Mr. Stewart), who is slightly more animated, is doing so. I distinctly saw his sideburns move in the wind. The advice that I am given is that if a student is not in a hall of residence but is in a flat where he is the liable person, either because he is the owner or tenant, and no one else lives there, he will not be exempt. Am I right?

The Minister for Local Government and Inner Cities (Mr. Michael Portillo) : No

Mr. Dewar : We are making progress. The Minister is shaking his head.

Mr. Foulkes : The Scottish Minister of State is nodding.

Mr. Dewar : It is very complicated indeed to read the signs. It will be by guess and by God, and certainly not by good advice. In Scotland the impression, as explained to me by several experts, is that the liable person, if he is a student owner or tenant, will get a 50 per cent. reduction--25 per cent. because he is a single person and 25 per cent. based on his status. If he is the liable person but he is married, even if he is married to another student, he will get only a 25 per cent. reduction. If he is at home with one parent, he will get a 25 per cent. reduction. If he is at home with both parents, the full charge will be payable by that household. If there is a group of students in a flat, the position is not at all clear, unless they will be exempt under clause 4 in England or clause 72 in Scotland. It is a matter for interesting speculation what happens if one student fails his examinations so that one failed non-student is staying in the flat.

We in Scotland are proud that our failure rate is below the national average, but we did not realise that it would be a financial necessity to coach our colleagues through to avoid this chaos. I accept that I may have got that example wrong, but I hope that the Minister understands that I do not make these suggestions lightly. I have tried to canvass the best opinion that I can find, and that is the best advice that I can get.

Mr. Portillo : The reason why the hon. Gentleman is not entirely clear is that much of that will be covered by regulation. My right hon. Friend the Secretary of State and I have made these points clear in press conferences and the Secretary of State for Wales made it clear in his reply last night. Since the hon. Gentleman is obviously unclear about this, I undertake to make it clear in my reply this evening.

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Mr. Dewar : That is a handsome offer and--I will not say that it ensures my presence, as I would have been here out of curiosity in any event--I shall certainly be present.

The point that I am making, perhaps rather over-lengthily, is that there are great areas of confusion, which are compounded by the fact that the system operates on a daily rate. I understand what the right hon. Gentleman says about a person having to have a principal residence or dwelling and that if somebody comes casually to visit that will not count. Nevertheless, there are great problems. I can think of categories of people, for example, Members of Parliament, and of interesting little tricks of the trade that may arise there. [Hon. Members : --"Oh."] Yes, that may well be. The position is not clear.

The Secretary of State for the Environment (Mr. Michael Heseltine) : I am interested. Perhaps the hon. Gentleman will explain what he means by "tricks of the trade" by Members of Parliament.

Mr. Dewar : I certainly hope that no right hon. or hon. Gentleman would in any way seek to escape his liability. I have no doubt that sometimes people do. I can think of privatisation issues where rules have been bent. Those are exceptional cases. All I am suggesting is that there are great complexities and doubts.

I will give the right hon. Gentleman another example--the oil rig worker. As we know, under the poll tax there has been endless litigation and no satisfactory outcome. Such a worker may be away from home for over half a year, when the days are aggregated. That raises the question of how his liability can possibly be calculated on a daily rate.

Mr. Heseltine : Have we not seen the clearest example of scaremongering, invention and allegations without foundation? When challenged about the "tricks of the trade", the hon. Gentleman has nothing to say because his comment was wholly without foundation.

Mr. Dewar : The right hon. Gentleman has gone red in the face and he is making himself look ridiculous. I repeat that in a large number of areas there will be complexities and difficulties of interpretation which will lead to great confusion and a good deal of unhappiness.

Mr. Heseltine : That is a climb-down.

Mr. Dewar : It is not a climb-down at all. The right hon. Gentleman is, to say the least, seizing at any straw, if he is reduced to using that as an argument.

The other day the Secretary of State for the Environment put up a pathetic display about the 20 per cent. rule. When challenged to say why it could not be abolished in April next year, he said it was simply because income support levels had been set and it was impossible to change them. The reason is beyond me. We all know that every hon. Member is agreed that the 20 per cent. rule is indefensible. We have had it from the Audit Commission that its collection results in a net loss to the Exchequer. I cannot see that the technicality behind which the right hon. Gentleman shelters is any defence for the clear breach of principle in allowing an inhumanity and a financial nonsense to continue in a system where it has no place. It should go in April 1992. If the right hon. Gentleman had the courage of his own arguments, it would go then. To suggest otherwise is contemptible.

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My view--I have to put it as bluntly as this --is that the Bill is a disorganised hypocrisy and few of its authors believe in it. Some at least would admit that in private. The Scottish Office team, largely still intact, attacked the so-called roof tax--a property-based system with capital valuations and a single person in the household liability--as an abomination. The team made it clear that it was a wholly unacceptable concept and said of the family home that it would be the family millstone, yet the team has ended up in exactly the same area.

Mr. Lang : When will the hon. Gentleman get round to answering the questions that I put to him during my speech?

Mr. Dewar : I know that the right hon. Gentleman does not like this, but I am talking about the proposals in the Bill before us and I intend to continue to do so. I am extremely interested in the arguments used in this debate in the past 24 hours or so.

Mr. Heseltine : Another "trick of the trade".

Mr. Dewar : It may well be.

Mr. Foulkes : Does my hon. Friend recall that the right hon. Member for Ayr (Mr. Younger) had himself registered at a fictitious address in the town of Ayr to deceive the electorate that his principal home was in Ayr and not, as we all know, in Stirling? Is that properly described as a "trick of the trade"?

Mr. Dewar : I have no idea, but that is an interesting anecdote. On 11 November the Secretary of State for the Environment was challenged by the hon. Member for Norfolk, North (Mr. Howell), who said that the Government should just add a further 2.5 per cent. to value added tax. The right hon. Gentleman said that the Government were determined to make progress, but that they did not believe that progress would be made by the imposition of a further 2.5 per cent. to VAT. He said :

"the inevitable conclusion on my hon. Friend's proposals is that every authority's spending is fixed precisely. Authorities have no capacity to raise additional revenue, and, to the most minute detail, central Government fix their expenditure. That would not be the right way to progress."

I am grateful for that information, but I do not believe that that principle is operating in local government now. I do not believe that that is the general thrust of the policies advocated by the right hon. Gentleman and his colleagues.

The Secretary of State also argued that the council tax would maintain accountability. He said :

"Thirty-eight million of the 42 million adults in Great Britain--that is, more than 90 per cent.--will be directly taken into account by the council tax."--[ Official Report, 11 November 1991 ; Vol. 198, c. 786-789.]

I regard that as sophistry. I remember trying to argue that under the old rating system, and the successor that we were proposing, everyone in a household made a contribution towards its running and should be taken into account and counted as being part of the taxation system. I was vilified by Scottish Office Ministers for holding such a view--vilified is a word that I can take seriously. I was told that only one person was legally liable and therefore only a small percentage of the electorate was covered by the taxation system. I was told that that was totally unacceptable.

Now the right hon. Member for Henley has the brass neck to repeat that argument and attach it to a system to

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which, in terms of the arguments that he and his colleagues used for so long, it does not apply. I thought that that was the most outrageous claim from the right hon. Gentleman in recent weeks until I remembered some of his other remarks. He said that the Scots had complained when they got a separate poll tax bill and asked why they should complain now that they do not. That was a remarkable statement. The right hon. Gentleman also said that the only thing standing in the way of the abolition of the poll tax was the Labour party. Such comments will merely lead the right hon. Member and his colleagues into disrepute.

Mr. Malcolm Bruce : Surely it is remarkable that, when the Secretary of State for the Environment was asked why he did not oppose the poll tax in Scotland when he did so in England, he replied that he thought the Scots had wanted it. Is that not a sign of how out of touch Ministers are with the people of Scotland?

Mr. Dewar : That is unfair to the right hon. Gentleman as I believe he is being misquoted. What he said was even more alarming. He said that he had asked the Secretary of State for Scotland if the Scots wanted it, and then he believed him.

Mr. John Butcher (Coventry, South-West) : It is the duty of the Opposition to oppose and the hon. Gentleman is doing so with great vigour. I pay tribute to the Scottish Labour party for spearheading the Opposition's view on the community charge and local government reform. If the hon. Gentleman's speech is to have any intellectual and moral integrity on behalf of the Scottish Labour party, he should, in all conscience, answer the specific questions put to him by my right hon. Friend. The hon. Gentleman, more than any other hon. Member, has a duty to state his party's proposals and their effects on the Scottish people.

Mr. Dewar : If the hon. Gentleman believes that the relationship with local government should depend for ever on the ever pressing presence of capping power, he takes a gloomy and miserable view of the future of that relationship.

The Secretaries of State for Scotland and for the Environment have a great influence on spending in local government because they control the revenue support grant and the ability of additional expenditure to attract that grant. There are a number of ways in which they can, should and will influence responsibly, but the idea that one must spend one's time in a constant war over capping is mistaken.

In recent weeks the right hon. Member for Chingford (Mr. Tebbit) has made his stand against a single currency in Europe. He said that if we had such a machinery it would leave the Chancellor of the Exchequer

"as nothing more than the treasurer of a rate-capped local authority."

That tells us something interesting about the disunity on the European issue, but in the context of the Bill it is also interesting. The right hon. Member for Chingford is not noted for his lack of imagination or his inability to think of vindictive comparisons. Obviously he could think of nothing more wounding to say about the Chancellor than that he should be compared to the "treasurer of a rate-capped local authority."

The Government should not seek to rely upon such capping powers. We do not want such a machinery and we would not rely upon it.

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Mr. Lang : The hon. Gentleman will recall that his former colleague, Lord Ross of Marnock, said that a Secretary of State should have "necessary reserve powers to restrict grants where an authority fails to maintain standards or spends excessively."

The hon. Gentleman's predecessor thought that such capping powers were necessary, as did Bruce Millan, now a commissioner of the European Community. Will the hon. Gentleman now answer the questions that I put to him?

Mr. Dewar : I have already answered--we do not believe that such powers will be necessary.

The Secretary of State was a decade out when he spoke about this recently. We put section 5 of the Local Government (Scotland) Act 1966 on the statute book because it was thought to be necessary at the time. I was not party to that decision. However, no Secretary of State ever found it necessary to use it and we would not wish to see those powers restored. We would not contemplate using those powers and therefore the comparison is wrong.

Mr. Bill Walker (Tayside, North) : Can the hon. Gentleman tell us why real deductions in local government expenditure took place in Scotland under the Government of 1978 as a result of the decision taken--quite properly in my view--by central Government to control expenditure? The reductions were not small, but massive.

Mr. Dewar : I am extremely grateful to the hon. Gentleman, who so often rides gallantly to the rescue of his enemies. That is exactly the point I was seeking to make earlier. The decision in 1978 was an unpleasant one, but it was thought necessary at the time. The reductions were made by cutting the rate grant support from central Government. That machinery is always open to a Government. At that time the Government rightly chose not to use the capping powers that existed.

Mr. Harry Ewing : I apologise to my hon. Friend for intervening and I know that he has been generous in giving way. The Secretary of State referred to the late Lord Ross but it is important to clarify that the Secretary of State is not talking about capping powers--those powers were described as indicative costs. At no time did any Labour Secretary of State, either Lord Ross or Bruce Millan, allow a local authority to set its budget and then cut that budget in the knowledge that cuts would then be made to public services. Unfortunately, the Secretary of State has deliberately misrepresented the late Lord Ross.

Mr. Dewar : I appreciate that my hon. Friend speaks from his experience in the Scottish Office.

Ministers are fond of complaining bitterly about the draconian way in which Labour Governments have controlled local authority spending in the past. It seems rather odd therefore that they should now complain that we would not use the capping machinery. We regard such machinery as redundant.

I have given way a great deal and I do not want to prevent other hon. Members from contributing to the debate. In conclusion, I believe that the story of the past two or three years has been an unhappy and disreputable one. Those who have followed the debate in the past few weeks will know that I have read the press releases that were put out in the past by hon. Members who are now part of the Scottish Office team. My fax machine used to go mad every Sunday when yet another letter to cheer me

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up was sent by the then chairman of the Scottish Conservative party. Hon. Members will remember when the Minister of State at the Scottish Office had that dignity.

I re-read one such letter from the hon. Gentleman this morning and it was full of words such as "deceitful" and "disreputable". The hon. Gentleman predicted that a property-based tax on a capital valuation, taking everything else as it was at that time, would produce a tax of between £30 and £40 per £1,000 of the value of a house.

I accept that the £140 sweetener must be taken into account, but the figures are so dramatically wrong, even taking account of that, that I can think only that they were put about with malice as scare stories. Such malice would, no doubt, be engaging at a fringe meeting of Young Conservatives, but it is alarming coming from a Minister of the Crown.

When I read the Minister's remarks, the words "disreputable" and "deceitful", which he used cheerfully about Labour Members, struck me as a useful vocabulary when considering his efforts. I find intellectually contemptible the way in which Conservative Members have stood on their heads when adducing such arguments.

We then had strong advice from the right hon. Member for Henley to read the Municipal Journal . When I examined the issue of that publication for 8 November, I noticed a splendidly robust quotation from Mr. Roger Humber, director of the Housebuilders' Federation, who said :

"Mr. Heseltine is talking absolute nonsense."

Mr. Humber will find that the right hon. Gentleman has a habit of doing that, certainly when dealing with local government taxation and house building statistics.

From Conservative Members and Ministers we have had bluff and bluster. They are attacking proposals from the Labour party which are sensible and coherent. In Scotland we have a valuation base that was put together in 1985 and is still hardly out of date, even if the system had run on. It is intact and would be a practical starting point. We propose to build on it, to move from that practical starting point to a reformed, improved and modernised rating system. That would be infinitely preferable to a scheme which was spawned by political disaster, and cobbled together in considerable panic. The Secretary of State said that his system was fair. We question that. He also said that it was welcomed. As he said, no tax is likely to be popular. It is interesting to note that in the MORI poll of 1 November it was discovered that fewer than one in five favoured the so- called council tax. That poll was better for my hon. Friends than for Conservative Members, and that is true of most polls these days. At least we reached the 25 per cent. mark. The Liberals achieved only 11 per cent. with their proposals. I take some consolation from that.

We have a Government who dislike and distrust local democracy, and the reason is obvious. It is because, as the Secretary of State has constantly said, local authorities tend to be controlled by the Labour party. That does not happen by magical chemistry or conspiracy. It happens because people vote for and elect Labour candidates.

There is something shabby in a Government making great play of the fact that they lose elections at the local level. The result is that we are plunged into a situation in which, despite the quotation from the Secretary of State for the Environment to which I referred--about the need

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