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to prevent local government being controlled in every detail by central Government--in Scotland, only 11 per cent. of revenue is in local government control. The Secretary of State has only one argument and policy, and that is ever more brutal capping. That is not an argument for local democracy. Rather, it is an argument against the Government and their attitudes.I fear that the Bill will do no service for Parliament. Nor will it be of service to the people of the United Kingdom and particularly to the people of Scotland. In Scotland it will buttress and reinforce the conviction that the Government are running out of energy and ideas and, best of all, running out of time. They should go. 5.43 pm
Sir Richard Luce (Shoreham) : I enjoyed the speech of the hon. Member for Glasgow, Garscadden (Mr. Dewar) because it was entertaining. Although he spent much time criticising the council tax, only towards the end of his remarks did he touch on the alternative proposed by the Labour party and he did that without enthusiasm. Indeed, he failed throughout to answer the challenging questions put to him by the Secretary of State for Scotland. I can only conclude that the hon. Gentleman is not convinced that the Labour party has better proposals for dealing with local government taxation. In 21 years in this place, I have not before found it possible to speak with enthusiasm about any local government taxation system. At least on this occasion I can give a modest welcome to the council tax. It is certainly a marked improvement on the community charge and it is infinitely better than Labour's proposals for a return to the rating system, remembering the intense pain that that caused to many people through the 1960s and into the 1970s. The fact that the Labour party is not proposing to introduce a formula which would allow for restraint in public expenditure by local government means that its ideas could prove disastrous.
Mr. Harry Barnes (Derbyshire, North-East) : The right hon. Gentleman says that the council tax is an improvement on the community charge. In which way is it an improvement?
Sir Richard Luce : I was talking not about the Labour party proposals, but about the council tax--
Mr. Barnes : Answer my question.
Sir Richard Luce : If the hon. Gentleman will listen, he will see why the council tax is an improvement on anything that we have had in post- war years. It is a vast improvement on the rating system as proposed by the Labour party.
The four factors that must be looked for in a local taxation system are a measure of fairness, some reflection of ability to pay, an adequate measure of accountability and the maximum of administrative simplicity. No one can have any illusions about any form of local government taxation being perfect. It is almost an area in which one cannot win. There is bound to be an element of rough justice. But the Government's council tax proposal achieves a judicious balance of those elements. It may not be perfect, but it is better than any of the alternatives.
Mr. John Maxton (Glasgow, Cathcart) : I assume that the alternatives about which the right hon. Gentleman is speaking include the poll tax. If my memory serves me
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right, he was a Minister when both poll tax measures went through the House. If he felt that that system was so wrong, why did he remain in that Government?Sir Richard Luce : The hon. Gentleman has got me wrong. On all the taxation system that we have had since the war, including the rating system and then the community charge--he is right to say that I supported the latter--the council tax represents an improvement. That is all that I am saying.
I hope that, when replying to the debate, the Minister of State will deal with some points that I have to make about the standard spending assessment. But first I have some general comments on the Bill, in particular on accountability. It is important to bear in mind the fact that the Government are allowing local taxation to be increased to the extent of 15 per cent. of total resources. Some would argue that if it is to be at that low level, relatively speaking, we should do away completely with an element of local taxation and fund it all from central Government.
I believe that it would be a profound mistake to do that. For a Government who believe in decentralisation, it would be a damaging policy. I should have preferred a larger element of local funding to central grants and other forms of revenue. Indeed, had not Labour-controlled authorities in the past driven small businesses out of the inner cities and acted in a thoroughly irresponsible way, creating unemployment in those areas, I should have preferred more flexibility in the business rate system. However, experience does not encourage that.
I am glad that the single bill which people will receive under the council tax will contain two elements--property and personal. Constituencies such as mine have large retired populations and I am concerned about the effect of the Bill on widows and single people. They were heavily hit under the old rating system and the position of most of them was eased considerably under the community charge system. I watch with considerable anxiety to see whether they will lose out under the new council tax. I should be grateful if my hon. Friend the Minister will reassure me on that matter when he winds up.
As my right hon. Friend the Secretary of State said, in two-tier authorities it is important that bills should contain two elements to make it clear to members of the public what element relates to the county, for example, and what element relates to the district. Hitherto, one misfortune of the systems has been that people are not sure who is responsible for certain expenditure.
I have corresponded endlessly with my hon. Friend the Minister and his predecessors on the standard spending assessment. He will no doubt be saying, "Thank God he is leaving Parliament at the next election". Nevertheless, the issue will remain because, under the new council tax system, it is essential that local authorities and the public have absolute confidence in the fairness of the method of or criteria for calculating the standard spending assessment. It becomes even more acute because the Government--rightly--decided to extend the potential to cap authorities spending less than £15 million. The standard spending assessment system must be based on local authorities having as much confidence as possible. In my area, the two district councils of Arun and Adur--one of which is Conservative and the other Liberal--are profoundly concerned about that issue.
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I realise that, whatever system we have, it will be complex. The previous system was even more complex and the Government have done much to simplify it. The present system has six major service blocks, ranging from education to highways and maintenance. The "other services" block contains issues such as environmental health. Also taken into account are population factors, commuters, visitors, density and sparsity of population and the social index, which are all designed to reflect the physical, demographic and social characteristics of each area, so it is bound to be fairly complex. I accept the argument that some complexity cannot be avoided and that there will be an element of rough justice, but the experience in my constituency demonstrates that rough justice can go too far. The disparities in the per capita grant received in my district compared with the neighbouring districts of Worthing and Hove have been such in the past two or three years that much injustice has been caused. Anyone who glances at those areas--it is no disparagement of the neighbouring authorities--will see that the social conditions in my area are acute compared with those in neighbouring areas, yet the per capita grant that my area receives from central Government is much lower. Something is wrong with that and the formula is too crude. Will my hon. Friend undertake, over a reasonable period and before the council tax is introduced, to carry out an independent review of how that works, taking into account the views of a cross-section of authorities? That review should be published and an adjustment to the standard spending assessment should be considered. In the meantime, there are some arguments for suggesting that the smaller the authority, the rougher the justice and the cruder the formula. Therefore, there is an argument for the higher authorities--in my case the county council--to have an element of discretion in dispersing funds so that they can iron out the worst anomalies and disparities between the various district councils. I hope that when my hon. Friend winds up he will comment on that and consider my proposals, which are intended to be helpful, as positively as he can. I give my encouraging support to the Bill.5.55 pm
Mr. Jimmy Wray (Glasgow, Provan) : It must be made clear that the Labour party is not to blame for the poll tax which the Government introduced. The nation should be told about the chaos, poverty and hardship that the Government have created in deprived areas throughout the country. I am not too worried about the new council tax because I doubt whether it will see the light of day. Will the nation vote the Government back in? They will be voted out and it will be a long time before we have a Conservative Government in Britain again.
Let us consider democracy in local government and the three Secretaries of State for the Environment who have had a go at local government taxation. The right hon. Member for Cirencester and Tewkesbury (Mr. Ridley), the right hon. Member for Bath (Mr. Patten) and now the right hon. Member for Henley (Mr. Heseltine) have all been unsuccessful and got it wrong. Who would have thought that, as we enter the 21st century, 7.5 million people would have been served with warrants? Yesterday, the Secretary of State for Scotland made a statement condemning local councils for overspending. The poll tax
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collection rate throughout Britain varies from 33 per cent. to 93 per cent. Non-collection is not confined to Strathclyde and Glasgow but applies also to the shires, which collected only 82 per cent. and inner London, which collected only 66 per cent. Scotland is owed some £437 million in unpaid poll tax.Local authorities should be given some money to get them out of the mess. Although the Secretary of State for Scotland condemned district and regional authorities such as Lambeth, Hackney and Strathclyde, no one could say that they have not tried to collect that money. Strathclyde regional council even decided to hold an auction because the ruthless Government have allowed it to deteriorate. It is nearing bankruptcy and has had to make 720 employees redundant, which is a sorry state of affairs.
Mr. William McKelvey (Kilmarnock and Loudoun) : There are difficulties in collecting the charge. Strathclyde authority undertakes the task diligently, but still faces problems. I received a letter this morning from the social security office stating that it cannot take anything off the income support of one woman who is being pursued for arrears because she is too poor. However, the Government refuse to abandon their policy of making everyone pay 20 per cent. although they know that it costs twice as much to try to collect it as the amount that they actually collect. They penalise poor people such as my constituent.
Mr. Wray : I sympathise with my hon. Friend the Member for Kilmarnock and Loudoun (Mr. McKelvey) but surely he has been a Membeer long enough to know that the Government do not care. Conservative Members are not interested in the poor, but are interested only in their own shares and in the rich. During the Government's term of office they have cut £600 million from the Strathclyde budget for services, so that council has to increase its bills this year by 32 per cent. The Government are guilty of mismanagement, gross neglect and maladministration, and should be turned out tomorrow because they are not fit to govern.
It annoys me when I hear the criticisms that come from the Secretary of State for the Environment. He talked about what my hon. Friend the Member for Dagenham (Mr. Gould) said. I shall quote a couple of paragraphs to see if anyone knows who said them : "Once implemented and through transition, I believe the new system will prove enduring and a vast improvement on the status quo." It was said at the annual conference of the Association of District Councils on 1 July 1988. [Hon. Members :-- "Who was it?"] Maybe hon. Members will know who it was when they hear the next part. Three years later the same person said :
"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 was said by the Prime Minister. It was easy to see that he was running for his job then.
Why do we have to wait until 1993 before the poll tax is abolished? We know what the position is. In Strathclyde alone, 1.25 million warrants have been issued ; many others have been issued in various constituencies. The position is so bad that the sheriff officers are afraid to go into homes. The saddest story I heard was of a sheriff officer going to a door to collect items that were to be sold at auction. He
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said that the woman in the house had only a table and television, and had spent the night before polishing the table so that it would bring in a wee bit extra to clear her debt. Is that the sort of Government we have? Yes, they do not care.Why will not the Government abolish the 20 per cent. rule ? Why are they allowing the ratepayers and taxpayers of this country to go on throwing money down the drain ? It costs the Government 19 per cent. of what they collect if they collect 6 per cent. of the charges. Why do not the Government abolish the whole damn lot and give the people a free run for Christmas ? They should do so if they have any compassion.
Mr. George Howarth (Knowsley, North) : They are stony-hearted.
Mr. Wray : Yes, they are stony-hearted.
I have taken a long look at local government finance. The Government collect only about 14 per cent. of the charge and the rest comes from central Government--is it worth collecting it ? Some £4.25 billion has been thrown away on trying to get the people out of the mess into which the Government have placed them and £5,795 million has been poured in to try to save the Government from embarrassment. But the people of Scotland and Britain will never forget the sad 13 years in which people have been brought to their knees. The most deprived regions are still suffering from cuts in social services, the police force and education. The Government are hoping to carry on and according to the Secretary of State for the Environment the people will have to put up with the tax until 1993.
The Government have made a mistake with the new tax from the very start. They have valued the average house at £80,000. They were told months ago when they first set out valuations that they were wrong by between 16 and 26 per cent. Some of the houses that were valued at £80,000 were worth 26 per cent. less and others 16 per cent. less. The Government were warned about their assessments by the Local Government Information Unit and by building societies. When they try to collect the money, with all the various bands involved, they will need the St. Francis pipe band to get out of the mess. They are worried about the people in the top bands and they are ensuring that those in the highest band cannot be made to pay more than three times the amount charged to those in the lowest band. The Government are protecting very wealthy people.
What nonsense it is for the Government to say that they will give a 25 per cent. discount for everyone in every household--25 per cent. for a pensioner in the poorest slum district and 25 per cent. for a millionaire living in a penthouse. If they consider that to be fair they have got it wrong again.
The Government do not want to get rid of capping and have retained it in the Bill. The only reason that they have not capped local authorities as much as they would have liked is because of the word "unreasonable" contained in the legislation to implement the poll tax. However, the new Bill does not contain the word "unreasonable". If that word had not been included in the poll tax legislation, the Government would have capped about 31 local authorities in Scotland for overspending by a small percentage. It is a sad day when the Government put the jackboot into local authorities because of their expenditure--democracy and accountability have gone out of the window. The new
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system is a costly business for local authorities because big changes have to be made, computers are brought into education departments and offices which means extra cost. Local authorities also have to consider gearing. When a local council increases a bill by £1, it means a 6 or 7 per cent. increase for the charge payer, which is bad news for them.The poll tax meant a bonanza for private landlords--the Rachmans in Britain. About one week before the Act came into force to abolish rates those landlords were running about trying to get their tenants to sign to agree a rent increase, and they will do the same thing with this legislation. How will the Government deal with multiple occupations? They will tell the Rachman landlords to collect the money. They might get half the money--the other half will go in the landlord's pocket. There will be no registers. When the properties are valued they will be looked at from the outside so there could be 30 or 40 people inside. I know one place in Alliston street in which there are 20 or 30 people in one room sleeping in hammocks. If valuers do not go inside the properties, how will they be able to value them? In some streets all the buildings look alike although they may contain three, four or even six apartments, and it is unfair to place them all in one band.
The Government say that they will use the services of estate agents. Two or three of them have been out to value my place and have given me three different valuations--none of them right.
Mr. McKelvey : I advise my hon. Friend not to tell us what the valuations were.
Mr. Wray : I certainly will not ; I am afraid to.
Even some Conservative Members have been grumbling about the bands and asking for another two or three at the top of the ladder because of the jump from £160,000 to £320,000. But some houses in this city are worth £2.5 million. What band should they come under? I hope that a new Government will come to power so that the council tax cannot be implemented. [Interruption.] I am running out of material.
Mr. John Battle (Leeds, West) : But my hon. Friend is using it well.
Mr. McKelvey : Before my hon. Friend stood up to speak he told me that it was a scandal that so little time is being allowed for a Bill of this magnitude. It is all the more astonishing that Scottish Conservative Members should not have learnt the lessons from the implementation of the poll tax which they--backed by the legions of Tory Back Benchers who are not here today--thrust on the people of Scotland. They should at least have learnt not to push through legislation like this in so short a time, thereby denying the opportunity to discuss it thoroughly.
Mr. Wray : It is difficult for any Government to justify the type of legislation that has been passed here over the past three years. The average council tax in England will be £400, in Scotland £270 and in Wales £163--or so we are told. But I think that the figures are wrong. The Government should realise that the time has come to fund local authorities centrally. Democracy has been thrown out of the window by this Government and we shall return to democracy only
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with the return of a Labour Government pledged to bring in a fair tax system based on ability to pay. Our document takes incomes into consideration ; the council tax does not.I will be glad when a Labour Government are returned to power and we implement the fairer system known as fair rates.
6.13 pm
Miss Emma Nicholson (Torridge and Devon, West) : My right hon. Friend the Secretary of State said yesterday that, despite the Opposition's fears and unyielding opposition to the proposed council tax, they managed to muster only 20 Members for the debate. I see that that number has fallen still further today-- [Interruption.] Despite the laughter, only 14 or 15 Opposition Members are able to be here at this early hour for what will be a lengthy debate. What is more, I see that the Liberal Democrats cannot be bothered to be present at all, such confidence do they have in their proposals and their amendment. [Hon. Members :-- "Where are the Tories?"] I shall not respond to blandishments inviting me to criticise my hon. Friends for not fielding more people. After all, we support the Government. We have no need to summon up armies to support our logic. It is the Opposition who need to oppose our proposals, and that they have significantly failed to do, to judge not only by numbers but by the lack of content in their speeches.
I welcome the council tax, and I find it difficult to understand the reasoning behind the Opposition's staunch refusal to see its virtues. I am forced to conclude that their opposition is comparable to their opposition to the £140 reduction in the community charge, against which many Opposition Members voted. Their opposition derives from a mulish obstinacy which directly harms the electorate ; it does not rest on logic or reasoning, and it is not worth listening to. The council tax, by contrast, responds to the electorate's wish to maintain a tie between local government revenue-raising and housing, thus identifying a centuries-old notion of ability to pay. I suggest that that notion of ability to pay still applies. Most people who live in large houses are more able to pay than those who live in small ones. Whether or not that is an accurate assumption, it became clear in the lengthy debate on the community charge that the electorate wanted us to retain that tie.
Mr. Maxton : It is interesting to hear the hon. Lady stress the centuries-old tradition of the link between property and ability to pay. That being so, why did she support the poll tax, which did not meet that criterion for a local tax?
Miss Nicholson : I do not blame the hon. Gentleman for not listening to some of my statements on the community charge, but I pointed out at the time--
Mr. John McAllion (Dundee, East) : Yes, but how did the hon. Lady vote?
Miss Nicholson : I pointed out at the time and in the way I voted-- and I say again now--that it is the country's perception that a house provides a notion of ability to pay, even if it is not a truly accurate assumption. We all know, for instance, that under this Conservative Government wealth has been created more readily, so people have had more money to spend, and they do not spend it just on
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where they live. Their sense of self-worth is not based solely on their dwelling place. They also buy video recorders, tape recorders, televisions by the armful, cars and all sorts of other things. People's wealth is visible in a variety of ways. But, as I said, the electorate at large still believes strongly that the house in which someone lives reflects at least in part his or her ability to pay. This tax is a light touch on local wallets, since it raises only 25 per cent. of local authority revenue, the remainder being raised from and distributed by central Government taxation systems. I give credit to the Government for this considerable and generally welcome innovation. That leaves the United Kingdom with the second lowest rate of value added tax in the whole of Europe. That is due to our large 25 per cent. of zero-rated items. We are managing an extraordinarily intelligent mechanism to raise more money while still having the second lowest VAT average in the Community. I congratulate the Government on that splendid achievement.The council tax recognises the duty and the desire of the responsible citizen to contribute to local services. Opposition Members may smile. Some irresponsible Opposition Members did not wish to make a contribution. Several of them had such a desire to duck their contributions that they were found guilty in court. The desire to contribute to services is a badge of civic dignity, and the Bill will help to build a responsible society.
The council tax will exempt or grant a quarter discount to students, student nurses and YTS trainees and will thus build a caring society. It recognises the crucial importance of food production, thus contributing to the building of a practical society. It is thoroughly sensible--and what more could one ask of a mechanism for raising local government revenue?
The Opposition do not wish to be sensible, but that is nothing new. That gives me an opportunity to look at their uneasy and uncomfortable proposals which smack of their obsession with the continuance of the command economy. Perhaps I should say command extravagance and incompetence and, ultimately, the stagnation by command that socialist systems produce. The Opposition propose large-scale meddling in private matters, and that lies at the heart of Labour's obsession with a fair rates system. Their system would not work without an army of snoopers. [Interruption.] There is an overlarge army of Scottish Opposition Members. If I had my way, there would be a fair system of Scottish representation. There would be fewer Scottish Members, and none of them would be Labour. [Interruption.] The Opposition cannot down a good Conservative. Labour's fair rates system smacks of that party's usual incompetence and, even more sadly, of their naive and unrealistic belief in the perfection of man-made systems. What does Labour propose? First, in the most incorrigible, sad and old-fashioned belief, it is determined to return to the rating system based on 1973 values, a truly crazy idea. Secondly, Labour proposes a new system of valuation, a second earthquake after its reversion to the early 1970s, and that system will be based on a rolling revaluation of 22 million properties based on four values, the first of which is maintenance and repair costs. Someone will have to call to see whether I have managed to replace my back door with one that has glass panes instead of wooden panels. It
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is important that maintenance and repair costs are taken into the rolling revaluation on the critical first valuation. How does Labour propose to work out rebuilding costs, the second of its four values? The other two are rental values and insurance values. One can see the chaos and confusion that such a dreaded system would create. The hon. Member for Glasgow, Garscadden (Mr. Dewar) said that people would pay more than they needed to pay, but that is possible only if one of two events occurs. First, it can happen because of extravagance on the part of those who spend taxpayers' money such as, dare I say it, the councils in Lambeth and Camden where 40 per cent. of the electorate leave every year. Those people vote with their feet and get out. The second cause for people to pay more than they need to pay would be the introduction of a cumbersome mechanism for identifying and collecting tax revenue. The fair rates system smacks of both those matters.I suggest that Labour's proposals are not even supported by its Front-Bench spokesmen. We do not need to go far to find all too revealing quotes. On 5 October, on "Any Questions", Mrs. Margaret Beckett said--
Mr. Deputy Speaker (Mr. Harold Walker) : Order. We usually refer to hon. Members by constituency.
Miss Nicholson : She said that there was "no question" but that they would replace the council tax with their rates system. On 17 October another Opposition spokesman said that Labour would "amend the council tax" and scrap the 1973 rates stepping stone. A third Opposition spokesman said that Labour
"would repeal it in almost all circumstances",
but might pick up the council tax valuation register.
I think that I am correct in saying that over the past four years Labour has adopted 70 different positions on local government finance. That puts the author of the "Kama Sutra" in the shade. Labour has suggested capital value rates and a twin tax--which sounds like Dracula and his brother--of local income tax and roof tax. It has suggested a floor tax which gives me, and I suggest the electorate, cold feet. I shall tell the Serjeant at Arms about that because we need more floor space in the building for our secretaries. Labour has been twisting and turning and has offered a variety of local income taxes that puts even Heinz to shame. It has adopted a number of positions that I have already referred to in perhaps an unseemly manner. I could not support those proposals even if I were the daughter of a coal miner. I am the daughter of an MP who actively assisted coal miners and I am remarkably glad to support the Government's sensible and sane proposals.
As I have said, the Liberal Democrats have so little confidence in their proposals that they seem to have left the SDP to carry their banner, which I am sure that that party could do with far greater competence than the Liberal Democrats. The local income tax would be difficult and complex to create and to continue, tasking the Inland Revenue, as it would, as the agent of collection. It offers the horrific uniformity of a rate throughout the year that will be the same for everyone. Thus far does the Liberal Democrat imagination take one, and, lo and behold, it proposes a variety of adjustments at the year end. Is that really local initiative? The Liberal Democrats would tax wealth creation and there would be a little bureaucrat in every town hall. A high local income tax would create debtors, destroy jobs, and drive out wealth creators.
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The Inland Revenue operates on the basis of where people are employed and not on where they live. Those of us who have been employed all our lives in real businesses know that. Therefore, the hugely complex computerised Inland Revenue system would have to be recreated. A new collection point would have to be added to the existing system. This new machinery would be created for a fictitious local additional accountability that would give more authority to local councils. There would be a creation of new power bases for no new benefits to the electorate.Both Opposition parties offer systems that do not help individuals or families--the people whom we, the Conservatives, are pledged to serve. Instead, they offer more bureaucrats.
Mr. David Nicholson : My hon. Friend has made an effective attack on the proposals of both the Labour and Liberal parties, but she has not mentioned one of the greatest weaknesses in those proposals, which is that both parties have consistently voted against the Government's attempts to curb excessive local government spending through the capping mechanism. The Labour party--I should not be surprised if the Liberal Democrats thought this way too, but I have not explored their policy on this--is committed to abolishing the capping mechanism. Would that not leave council tax payers open to the burden of extravagance in local government?
Miss Nicholson : I wholly agree with my west country colleague. We see things sanely and sensibly there.
Both Opposition parties are pledged only to help bureaucracy. In the case of the Liberal Democrats, that is their favourite repository of power--the local council officials. As a result of the Labour party proposals, new armies of snoopers would arise. If Labour Members fail to see the truth of that, then they are even more foolish than I thought. Only the Conservative proposals will raise the necessary sums of money for appropriate local government expenditure with a light touch and with fundamental fairness and sureness. I support the Government.
6.32 pm
Mr. John Cartwright (Woolwich) : The kindest thing that I can say about the speech of the hon. Member for Torridge and Devon, West (Miss Nicholson) is that she obviously believes that attack is the best form of defence, although I notice that she did not go into a great deal of detail in defending the Bill.
It may seem a strange charge to level against this Government that they are imbued with the philosophies of Leon Trotsky, but when it comes to local government, this Administration seem to believe in the Trotskyite theory of permanent revolution. We used to have a local government Bill every two or three years, but now we have two or three local government Bills a year. No sooner do we get one system in place and local authority officials beginning to understand it than it is torn up and something new is put in its place. We should spare a thought for the officials in finance departments in town and county halls who are trying to sort out the last remnants of the rating system while fighting a losing battle to cope with the problems of the poll tax. On top of all that, they are being asked to prepare for a completely different system which is apparently being worked out as we go along on some sort of do-it-yourself
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basis. Any hon. Member with recent experience of trying to help constituents with poll tax rebate problems knows that the system is creaking badly and is under considerable strain. It is at least possible that it will be unable to meet the timetable that the Government have laid down for this change. If it does, I expect that the resulting quality of service will be pretty poor.The great tragedy is that the lessons of the poll tax fiasco have not been learnt. Once again, we shall drive complex legislation through the House at breakneck speed, with all the risk of major flaws not being discovered until it is too late. Perhaps there is a more fundamental lesson to be learnt. Once again, Ministers are trying to persuade a bewildered public that they have stumbled on a magic solution to the age-old problem of local government finance. We have seen them waxing lyrical about the Bill. Two Secretaries of State, on two successive days, have been ecstatic about the Bill, but we saw the same fervour and enthusiasm marshalled, a couple of years ago, behind the poll tax. How are we to believe that, this time, they have got it right ? The more enthusiastic Ministers become, the more disillusioned the punters will be when the reality of the situation finally comes home.
I may sound cynical, but all my experience at the sharp end of local government, leading a London borough council, in the local authority association and as an original member of the Layfield committee, leads me to believe that there is no ideal solution to the problem of paying for local council services. We can think up no system--fair rates, council tax, poll tax or local income tax--that would be regarded as fair by everybody and that would have no snags, drawbacks, anomalies or defects.
Every time that we change the system, there are gainers and losers. We should by now have learnt that the gainers take their gains and, saying nothing, scuttle away to enjoy them, while the losers complain long and loud. That is an old political truth which I suspect the Government will once again discover when the full impact of the council tax hits their traditional supporters in London and the south-east.
If there is no perfect system, we are looking for the least worst solution, the one with the fewest drawbacks and injustices. I make no apology for saying that, ever since Layfield reported, I have been convinced that the best solution and the one with the fewest injustices is a local income tax. All those Conservative Members who painted spine-chilling pictures of the adverse impact of local income tax should explain why the system works in Europe and, beyond Europe, in North America. Are we so incompetent that we cannot make it work at least as well as it works in other nations?
The injustice of a property-based tax is evident. The value of a home is only a rough guide to the affluence of the person who lives in it and in many cases is no guide at all. We can all think of circumstances in which the value of somebody's home has gone up through no effort of his own. The area becomes fashionable, property values go up and suddenly he is sitting on an asset that does not reflect his income. For example, although the London borough of Hackney is not widely recognised as a centre of gracious living, 70 per cent. of the households there are in bands D, E and F, but in Rotherham, 84 per cent. of households are in bands A, B and C. That shows the impact of London property values on the tax.
Many of the people in higher-banded properties in Hackney, Greenwich, Southwark and other London
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boroughs will be council tenants who have no choice about where they live. They have to go where they are put and accept the property that they are offered. If that property has a high theoretical market value, they will have to pay a high council tax. The only answer that Ministers give to this problem is the celebrated dampener. It protects, to some extent, those in upper bands, but only at the price of imposing larger burdens on those in the lower bands.I was interested to read the Conservative party's research department document on the Bill, dated 26 April this year. It said about the impact of the council tax :
"There will be no return to the very big bills that characterised the rates."
With considerable courage, it went on to say :
"Indeed, the Government believes that only those who can afford to are likely to have to pay more in council tax than in Community Charge."
Armed with that brave statement, I looked at the impact of the council tax on my constituents in the London borough of Greenwich. The Government have helpfully provided us with figures showing how the council tax can be worked out on the basis of this year's council spending. It makes frightening reading for my constituents. In the London borough of Greenwich, the average home is in band E. Couples with a property in that average band would this year have been paying £213 more than they are paying in poll tax. Only 2 per cent. of households in Greenwich would pay less than the sum that they pay in poll tax. Single people would be even worse off. Those in average property in band E would be paying double what they are now paying in poll tax. That is £547 compared with £242. No single person in Greenwich would pay less than they are paying now. For many of my consituents, the switch from poll tax to council tax will be turning a crisis into a disaster.
It is not only Greenwich that has high-value property, but I have no doubt that Ministers will say that the outturn lies entirely with the borough's spending. That is true because Greenwich is spending 14.1 per cent. in excess of its standard spending assessment and grants will continue to be based on the SSA. It has been said already that the system is riddled with anomalies.
Does any local authority accept that its SSA accurately reflects its need to spend? I have never accepted that civil servants in the Department of the Environment in Marsham street, however sophisticated their computer programmes may be, can decide better than those on the spot what a local authority needs to spend. I shall give one example of anomalies in the SSA system. The child populations of the London boroughs of Greenwich, Lewisham and Wandsworth are almost identical, yet the social service SSA per child is set at £271, £437 and £514 respectively. How can anyone accept that the methodology and the system are fair and reasonable when there is that sort of variation?
That leads me to capping. I speak about it with some authority because the London borough of Greenwich--I represent one of the constituencies within its area, and that is where I live--must be in the "Guinness Book of Records". It has succeeded in getting itself capped every year since capping began. It is the only local authority in the length and breadth of the land that can claim such a record. We know something about capping in Greenwich.
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I accept that the system limits total spending, but it does so at a pretty high level. It does not, however, protect local people from the impact of spending curbs.The local authority has not been encouraged by capping to make itself so efficient that it can deliver good-quality services at a lower price within the spending limit. Indeed, the reverse has happened. Sensitive services have been cut to some of the most needy groups to enable the borough to make the political point of blaming the Government. That was entirely predictable. Unplanned cuts have been made at the last minute wherever they could be made quickly. As a result, day centres for the handicapped have been closed, the home bathing service has been scrapped and home help services have been cut. Basic services, including the provision of public toilets, have been brought to an end. Grass in parks has not been cut.
Throughout, the council has said, "It's not our fault, guv. It is not us. This is the result of poll tax capping. It is that rotten Government who have made us do all these terrible things." That is the basic problem with capping. It undermines the accountability of local authorities. It gives a poor local authority a perfect excuse to shift the blame off its shoulders and place it on someone else's. In a borough such as Greenwich the result is the worst of all possible worlds--high bills and a poor quality of service.
Mr. John Marshall (Hendon, South) : Does the hon. Gentleman believe that it is significant that Greenwich, which has a Labour council, seems unable to elect any Labour Members? Does that suggest to him that the Labour-controlled council of Greenwich may be the borough's greatest asset?
Mr. Cartwright : That thought often strikes me when I return home after an evening's canvassing. I think that I should sink to my knees and offer a prayer of gratitude to the London borough of Greenwich. Whenever I think I am in trouble, another inspired piece of lunacy comes forward which guarantees that I find more support, especially on council estates. Nevertheless, it is monstrous that we should have a capping system. It produces high taxation and a poor quality of service.
The Bill's epitaph may be "Another Chance Missed". When the Secretary of State for the Environment began this round of local government changes, I thought that at last someone had understood the fundamental error that had found its way into every previous attempt at reform for the past 30 years. The right hon. Gentleman seemed to want to try to find changes that would stick and that would bring some much-needed stability to local government. Once again, however, complex legislation is being driven through the House without any search for consensus and with all the risk that such a speedy process involves.
Once again, it seems that Ministers are convinced that they have found a magic solution to an age-old problem. Once again, we are changing local government finance in isolation from its functions and structures. I do not believe that the proposed tax will turn out to be any better or any more popular than the poll tax. I do not believe that it will work. We have been round the course many times before and I suspect that it will not be long before we have to go round it yet again.
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6.46 pmMr. Bill Walker (Tayside, North) : I welcome the opportunity to talk about the Bill. As the House will be aware, one part of it refers exclusively to Scotland. Unlike many others, I have no complaints. I think that we have been presented with a sensible way in which to legislate. Where there is commonality throughout the United Kingdom, Scottish sections should be included in English Bills where that is possible. That removes much of the girning and grieving that is often the result of the timing of legislation rather than its content.
When examining local government financing we must consider the history of local government if we are to understand why we are where we are now. Earlier in the proceedings I intervened in the speech of the hon. Member for Glasgow, Garscadden (Mr. Dewar) to remind him of the problems that were caused by the Labour Government. I did not do so accidentally. Anyone who remembers the trust that used to exist between local government and central Government will realise that that trust began to vanish rapidly during the administration of the Labour Government and especially during the winter of discontent. It is not surprising that that trust disappeared. During the period to which I have referred, local authorities were upset because that Government had, properly, in an attempt to control the economy, decided to reduce local government funding and, therefore, local government expenditure. A new set of problems was created and the trust that had previously existed, which all Governments had enjoyed, began to vanish. Against that background, the incoming Conservative Government of 1979 found that Conservative-controlled authorities had followed substantially the edicts and wishes of central Government and had restrained their expenditure, while many Labour-controlled authorities had become profligate to offset the impact of the reduction in support from central Government. The Labour authorities had decided to enable that to happen by increasing the rating burden.
When examining local government spending in 1979 it is essential to understand that central Government had to control the national economy. That was especially important during 1977 to 1979, when the country was rapidly going bankrupt and it was necessary, at the behest of the International Monetary Fund, to introduce measures that had a substantial impact on local government funding and expenditure. That was certainly so in Scotland, the area about which I shall speak.
When the Conservative Government came into office in 1979, there was a Conservative district council in Perth and Kinross and a Labour district council in Dundee. The Dundee council proceeded to spend in every way that it could and, accordingly, pushed up the rates. As a result, the Government had to introduce measures to control local government expenditure. The blunt instrument of cutting central Government grants meant that the pain had to be shared, but the view was taken that the measure should be implemented. Therefore, Perth and Kinross had to share some of the pain with Dundee. At the time, that appeared to be unjust and unfair and my view has not altered. It is sad that that lack of trust between central and local government has resulted in the councillors no longer running the councils. The truth is that the chief executives and the executives run the councils. In Scotland, the councils are substantially being run by NALGO.
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