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Mr. Dave Nellist (Coventry, South-East) : On a point of order, Madam Deputy Speaker. I apologise for rising at this point. I wonder if you can help me. I am in a new and slightly strange position of not being privy to all the discussions which take place in the Labour party regarding its attitude on matters relating to the important Bill which is before the House on Report. As you will know, Mr. Speaker makes a provisional selection of amendments, which he puts before the House in a certain order. Some are selected, some are not. An order of those selected for debate is given. Clearly the debate is not open-ended. We are guillotined and there is no opportunity to debate all the topics that hon. Members would wish to debate. I have tabled some amendments, which have been selected in a group comprising amendments Nos. 57, 122, 85, 68, 69, 107, 124 and 108, which seem to be the only amendments to deal with enforcement procedures such as the use of bailiffs, poindings and imprisonment. Given that the selection is provisional, do you, as the current occupant of the Chair, have any opportunity to rearrange Mr. Speaker's provisional selection of amendments to ensure that between now and 8 o'clock we shall at least have a few minutes to debate enforcement procedures and my desire to oppose the current poll tax enforcement procedures being put lock, stock and barrel into the Bill?Madam Deputy Speaker : I understand the hon. Member's dilemma, but the selection was made yesterday and there is no way in which it can now be changed.
Clause 2
Liability to tax determined on a daily basis
6.30 pm
Mr. Gould : I beg to move amendment No. 110, in page 2, line 2, leave out from dwelling' to end of line 4.
Madam Deputy Speaker : With this we may take the following amendments :
No. 113, in page 7, line 10, to leave out clause 11.
No. 64, in clause 11, page 7, line 10, leave out
amount of council tax payable'
and insert billing authority shall calculate'.
No. 65, in clause 11, page 7, line 11, leave out shall be subject to'.
No. 70, in clause 11, page 7, line 11, leave out discount' and insert personal surcharge'.
No. 71, in clause 11, page 7, line 14, leave out discount' and insert personal surcharge'.
No. 17, in clause 11, page 7, line 16, at end insert
or ;
(c) there are two or more residents of the dwelling one of whom is a disabled person and one is his live-in carer who does not fall to be disregarded for the purposes of discount.'.
No. 114, in clause 11, page 7, line 16, at end insert
or ;
(c) there are two residents who are married to each other or living together as husband and wife and they live with one or more residents each of whom falls to be disregarded under paragraph (2) or paragraph (9) of Schedule 1.'.
No. 66, in clause 11, page 7, line 17, leave out
amount of council tax payable'
and insert billing authority shall calculate'.
No. 67, in clause 11, page 7, line 18, leave out shall be subject to'.
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No. 72, in clause 11, page 7, line 19, leave out discount' and insert personal surcharge'.No. 73, in clause 11, page 7, leave out lines 21 to 23 and insert there are at least two residents of the dwelling who do not fall to be disregarded for the purpose of the surcharge.'.
No. 7, in clause 11, page 7, line 25, leave out 25' and insert 40'.
No. 9, in clause 11, page 7, line 25, leave out 25 per cent', and insert 50 per cent.'.
No. 74, in clause 11, page 7, line 25, leave out 25' and insert 50'.
No. 8, in clause 11, page 7, line 25, leave out from 25 per cent.' to end of line 27.
No. 75, in clause 11, page 7, line 32, leave out discount' and insert personal surcharge'.
No. 81, in clause 33, page 23, leave out lines 10 and 11 and insert--
R P PT
T'.
No. 82, in clause 33, page 23, line 18, at end insert--
PT is the aggregate of the amounts the authority estimates will be payable for the year in respect of the personal surcharge as determined under sections 11 and 12 ;'.
No. 83, in clause 44, page 31, leave out lines 1 and 2 and insert--
R P PT
T'.
No. 84, in clause 44, page 31, line 8, at end insert--
PT is the aggregate of the amounts the authority estimates will be payable for the year in respect of the personal surcharge as determined under sections 11 and 12 ;'.
No. 18, in clause 79, page 51, line 45, at end insert
; or
(c) there are two or more residents of the dwelling one of whom is a disabled person and one is his live-in carer who does not fall to be disregarded for the purposes of discount.'.
No. 14, in clause 79, page 52, line 1, leave out 25' and insert 40'.
Mr. Gould : In Committee, the Under-Secretary of State for Scotland, the hon. Member for Eastwood (Mr. Stewart), constantly assured us that the council tax was a combined tax. He preferred to describe it as a combined property and personal tax. He was not quite so keen when it was described as a combined head and roof tax, although I think that he eventually accepted that that is a perfectly accurate way to describe it. He certainly conceded that the council tax combined those two very different elements in such a way as to combine the difficulties which attend both.
In Committee and on Report I think that we have established that there are real problems with the property tax element. There are problems with regional banding, with the compression of the band and consequent unfairness and with the mechanisms for carrying out valuations--what my hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett) described as a "Mickey-Mouse valuation". That could just about have been tolerated if Ministers had been prepared to acknowledge that it was necessary to move to a straightforward property tax to get rid of the poll tax. Unfortunately, they were not prepared to do so. As a consequence we are saddled with this hybrid monster--part personal tax, part property tax, or part roof tax, part head tax, as I prefer to describe it.
Clause 11 introduces the notion of personal discount, which is the means by which the personal element is given
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effect. That element or discount has rightly attracted a great deal of criticism and attention from organisations outside the House. When and if the Government implement the tax, they can certainly not claim that they were never warned. They have been warned by me and my hon. Friends, but in case they were inclined to set those warnings aside, they have also been warned by all the local authority associations, by the Audit Commission, by the National Association of Citizens Advice Bureaux and by many journals of opinion in the world of local government. In the estimates of most objective observers the Government are running real risks in the implementation of the new tax by adding an uncomfortable and difficult-to-operate element of personal tax.The oddity is that we have yet to hear a convincing argument from Ministers as to why that element is there. Ministers are clear about one thing-- although other people are less clear--that the discount system is not there to deal with the problem of people who cannot afford to pay the council tax.
I give the hon. Member for Eastwood credit for the fact that he is clear that the discount has nothing to do with the ability to pay. The hon. Member for Nottingham, South (Mr. Brandon-Bravo) is looking as blank and astonished as he did in Committee, when I made the same argument. He is going to rise to step into exactly the same trap.
Mr. Brandon-Bravo : I am not looking blank. If we are worried about a person's ability to pay, that is where the rebates come in.
Mr. Gould : I am glad that the hon. Gentleman has at least gleaned that from his long hours spent in Committee, because that is not true of all his hon. Friends. Unfortunately, the hon. Member for Battersea (Mr. Bowis)--although I concede he was an assiduous attender in Committee--is not present. He seemed a good deal less clear than the hon. Member for Nottingham, South has revealed himself to be. I absolve the Minister from all confusion. He always said that the basis for the discount was nothing to do with ability to pay. I agree that it certainly cannot be justified on that basis because, as the hon. Member for Nottingham, South said, the only way in which we can deal with ability to pay is through the rebate scheme. That is what it is intended to do.
The discount scheme has nothing to do with benefits. As we have frequently pointed out, a millionaire--that figure of our demonology, as the Minister would have it--who lives alone will get a substantial discount whereas a low-income family with four children will not. It is clear that the hon. Member for Nottingham, South is
right--discounts have nothing to do with the ability to pay. I hope that when the hon. Member for Battersea eventually arrives he will point that out to him, because he will recall that in Committee the hon. Member for Battersea insisted that a single mother with children should have her ability to pay taken into account and concluded : "The discount system does that."--[ Official Report, Standing Committee A, 26 November 1991 ; c. 355.]
It is perfectly true that he subsequently denied that he said any such thing, but the Hansard record is against him.
So whatever else may be said for the discount system, it has nothing to do with fairness or ability to pay. Indeed, it has that familiar characteristic of so much Government legislation in this sphere, that the better off one is the more benefit one derives from the discount. Someone living
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alone in a £29,000 house in Wales, for example, would get a discount worth £27.25 a year, or 52p a week. Someone living in a £330,000 house in London would receive a discount of nearly eight times that amount, £200 or £3.85 a week. It is all too characteristic of the poll tax and everything that has flowed from it.The Minister of State, Scottish Office, then attempted to make the argument that the basis of the discount was that a single-person household made fewer demands on local government services than a two-person household. As soon as we examined that argument--my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) was particularly severe on it--it became clear that no such inviolate rule could be established. There were many instances of single people making substantial demands--perhaps a single parent with a large number of children--whereas a pensioner couple might make few demands. So there was no basis on that score to be identified for supporting the discount scheme.
Even if there were something to be said for the argument, why stop at the distinction between one and two-person households ? Why not carry the argument through to three, four, five and six-person households ? The Minister was alert to the problems into which that line of argument might draw him. His basis for the argument was clearly his touching, but rather primitive, view that, somehow, all relationships must be based on contracts --that there was a sort of market element to all tax relationships between the community and the individual and that unless the individual had somehow bargained for a given level of services, the tax could not be valid.
Mr. Brandon-Bravo : The hon. Gentleman referred to three, four and five-person households. I have been trying to work out the implications of amendment No. 70, by which he would impose a personal surcharge. Is that his plan and does the Labour party now propose a personal surcharge on the third, fourth and fifth person in a household ?
Mr. Gould : I am delighted to learn that the hon. Gentleman attaches such literal importance to all amendments that appear on the paper. As an experienced parliamentarian, he must know that the purpose of amendments is often to reveal inconsistencies in proposals and the inconsistency in that case is well revealed.
The next argument to be advanced was that the council tax remained to some degree a personal tax--that it was a combination, as we heard earlier, of a property and personal tax--so it was right that that element of head tax should differentiate between a one and two-person household. Again, that left unanswered the question why that logic was not carried through ; that if the old principle of the poll tax was retained in the new tax, why was not that element of personal tax also paid by the third, fourth, fifth and sixth member of the household? When confronted by that argument, the Minister rapidly abandoned that line of reasoning.
6.45 pm
The real, convincing explanation for this monster dare not be articulated by Ministers. It is that whereas the Secretary of State--I pay tribute to him in that he was one of the few clear-eyed Members prepared to say, "We must drive through legislation to abolish the hated poll tax"--finally persuaded his reluctant, or seemingly reluctant, hon. Friends that that step was necessary, even his courage
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failed him at that point. He was assured, no doubt not least by his Minister of State, that it would be virtually impossible to get such legislation through without making major concessions to those battalions who had fought so long and hard in the cause of the poll tax. They would not depart the field without a battle, he was told. They had to have their victory and trophies to take home. He was also told that while it was clear that all those supporters who would die in the last ditch for the poll tax would certainly fight for it--even if they were forced to abandon the poll tax--the last thing they would do would be to vote for a property tax, or something which looked astonishingly like the much reviled rates.How was the trick to be achieved? It was achieved by incorporating into the sensible proposition and basic idea of a property tax the notion of a head tax. The discount idea came from that. But the oddity is that having screwed up their courage--and screwed up their proposal as a consequence of doing so--the Government discovered that the sacrifice had been made in vain. After all, where were those great battalions of supporters for the poll tax? Did they stay to fight the battle? No, not even the Minister of State stayed to fight. He now tries to escape the problem by saying that he supports the poll tax as he supports its abolition. As a grammatical construction, it may be a good sentence, but as a logical proposition it has deficiencies.
Mr. Peter Fry (Wellingborough) : The hon. Gentleman talks about a logical proposition. Will he explain why amendment No. 110 would do away totally with the discount, whereas amendment No. 74 would have a discount or rebate of 50 per cent.? Is Labour policy to have no discount or one of 50 per cent.?
Mr. Gould : The hon. Gentleman labours under the difficulty of not having heard any of the arguments in Committee and probably of not having heard any of the other arguments on the subject, so his state of ignorance is understandable. There is no question but that we are opposed to discounts and that we believe this to be an unacceptable element of head tax. I appreciate why the hon. Gentleman tried a time-honoured diversionary tactic when things were getting uncomfortable.
The importation of this remnant of the poll tax is unnecessary because virtually no Conservative Member will vote against the Bill. Government supporters will troop into the Lobby in support of a measure to abolish the poll tax-- [Interruption.] Perhaps one or two will not. I pay tribute to their sense of principle. Those who swore undying allegiance to the poll tax and to their right hon. Friend who forced it through have all melted away. That may be a kind expression for what they have done. They have skulked or slunk away, so the whole sacrifice was unnecessary. It may have been unnecessary, but it has left the council tax in a hopeless mess of confusion and it is worth considering some of the consequences of that confusion. The single person discount will apply not to a handful of properties, but, potentially at any rate, to 7 million households--33 per cent. of the total. In some London boroughs as many as 50 per cent. of households are single-person households. That is what the Audit Commission discovered and why it is worried sick about the proposal. Not only must the 50 per cent. of households in some London boroughs that are single-person households be identified and sent separate bills and so on,
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but those are the very people found by the Audit Commission to move frequently ; 50 to 60 per cent. of some registers in inner London change over the course of a year.So the problem of first identifying and then tracking, tracing and billing all those people on a differential basis is already horrific. That is why the National Association of Citizens Advice Bureaux has issued a grave warning--I apologise for using again the example which that body provided, but it is so striking that it bears repeating--saying :
"A CAB in Greater Manchester reports a client who had six changes of income status and three moves of address (all in different local authorities) in ten months. For three months the client was a full time student living in local authority A paying 20 per cent. of the community charge. Then the client moved to local authority B, had a part-time job and claimed community charge benefit (CCB). Then she claimed income support and was once again paying 20 per cent. of the community charge. Following this she had two months on a fluctuating income and in receipt of CCB. This was followed by a return to her parental home in local authority C where she claimed income support and was responsible for 20 per cent. community charge She then returned to local authority A to become a full time post- graduate student and became liable to 20 per cent. of community charge". That is not a particularly unusual case, but it illustrates the enormous problems with which local authorities will be faced in trying to decide the appropriate bill to be applied to a given person on a given date.
In addition to the 7 million households, bills must be sent to the owners of empty properties, who will be charged 50 per cent. of the total bill, so that two discounts will be available. Status discounts will also affect the picture. Those will apply to households in which one of the inhabitants is a student or someone who suffers from an illness such as Alzheimer's disease and is therefore exempt under schedule 1. Notwithstanding that huge number of households and all the changes in address, we must also bear in mind the fact that people's status might change from day to day. A person who lives in a flat with a student and pays only 75 per cent. of the bill will be liable for 100 per cent. of the bill if the student gives up the course for any reason. Liability is to be determined day by day, which is a horrific prospect. Little wonder that most local authorities are already quailing at the task that lies ahead.
Mr. Allen McKay : It is interesting to note that, except for the Secretary of State, all the hon. Members on the Government Front Bench are members of the No Turning Back group.
Mr. Gould : That is a good illustration of what an unsuccessful battle the Secretary of State has had to carry his Front Bench team with him. That was well spotted by my hon. Friend. The Secretary of State is in an awkward position. He does not get to his feet to defend the measure--far from it. He occasionally graces us with his presence--I imagine that he derives a certain schadenfreude from the situation--but he leaves it to his No Turning Back group colleagues to defend the measure. At least they have the comfort of trying to defend it on the basis that they have salvaged something from the poll tax.
I pay tribute to the Minister of State's understanding of the measure. I think that he virtually drafted it, which is why he handled it throughout the Committee stage. The Secretary of State did not dare to come into the Committee Room because he did not understand the Bill and knew that he would be cut to ribbons if he dared to offer a view on it. Although the Minister of State understands the
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matter, even he was led into a tangle by the discounts structure. Knowing the Minister of State as I do, I can think of no more wounding charge to make against him than that he was caught in illogicality in his own Bill. The discount system led him to assert that somebody who, on grounds of Alzheimer's disease, for example, was to be exempted from a personal contribution of 25 per cent. could nevertheless become responsible for somebody else's personal contribution under the principle of joint and several liability. What a heartless position and what nonsense.How are local authorities to fight their way through the maze which the Government have created? How are they to track the millions of single householders who change address or status day by day, so that they can send out the appropriate bills? The Bill offers little guidance. Schedule 2 provides a few vaguely drawn powers for local authorities and Ministers have occasionally pontificated on how local authorities may grapple with that problem. But when a local authority treasurer, such as the treasurer in Birmingham city council, says that the only possible chance of dealing with the problem is by setting up a database and keeping a register, the Minister--far from saying that that may be the best way to proceed--says that it would be unlawful.
Mr. Brandon-Bravo : No, he does not.
Mr. Gould : If the hon. Gentleman would care to invite the Minister to come to the Dispatch Box, he will hear confirmation from the Minister's own lips. I asked the Minister about that just a couple of days ago and he confirmed that his advice was that keeping a register is not only not necessary but unlawful. It seems that the Minister will not stir himself to dispute that-- [Interruption.] I look forward to hearing the Minister's reply because it will be interesting to see whether he has departed from that position. With little help or guidance, local authorities are faced with an enormous problem, but are told that it would be unlawful to keep a register.
Mr. Douglas : Will the hon. Gentleman probe the Minister a little further about which legislation makes that list or register unlawful? Would it be unlawful under the data protection legislation? I suspect that the hon. Gentleman is right to say that we need such a list.
Mr. Gould : The Minister will no doubt speak for himself when the time comes, but he may take refuge in the data protection legislation and in the wider principle that a local authority is entitled to do nothing without specific statutory authority. The Minister will probably say that the Bill gives no such authority for the keeping of a register and will probably dismiss provisions such as the Local Government (Miscellaneous Provisions) Act 1976. That is the advice that he currently gives to local authorities.
There is a puzzle in all that, however, because the handbook, "Guidance for Party Workers on the Council Tax", issued by Conservative party central office, says that the head tax element is not extended to three, four and five-person households, because it would require the keeping of a register. Such households constitute 13 per cent. of the total and Conservative party central office says that 13 per cent. could not be traced without keeping a register. Yet, in respect of the 33 per cent. of one-person households, we are told not only that a register is not
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needed, but that if a local authority tried to keep a register it would be acting unlawfully. I hope that the Minister will try to sort out that conundrum because it is a real, practical problem for local government.The only advice that local government has had on that question is that it can resort to what the Minister calls "canvassing", but which most people would understand as snooping, and that they can refer to the electoral register. One of the great objections to the poll tax was the obstacle that it placed in the way of civil liberties. We know that 1 million people, wrongly and misguidedly, disappeared from the electoral register because they hoped that that would absolve them from having to pay the poll tax. We are now told under the new proposal that Ministers will encourage local authorities--indeed, they will leave them with little option--to refer to the electoral register. Therefore, the incentive for people to stay off the register will be greatly increased.
The pity of it all is that, even when local authorities resort to the electoral register, it will help them little because the electoral register is a snapshot of who lives in a particular building at a given moment in time. It will not help local authorities to track day by day, as they are required to do under the Bill, people who change address and status. The Government are asking local authorities to undertake a hopeless task.
Ministers are really saying that local authorities should simply forget about who should receive what sort of bill and just send out a standard bill to every household and wait for the cries of pain. Once they have been told that there is only one person in the household, they have to re-bill, or send another piece of paper with a different bill. It is all very simple. However, when I asked the Minister what calculation he had made of the number of communications needed to establish those facts--how many times bits of paper would flow backwards and forwards between a local authority and a household in one year to establish who was where on specific dates--he said that no estimate had been made. When I asked him about the cost, he said that no estimate had been made. But Ministers know that re-billing costs money.
When the Government changed the basis of billing for the current year by a last-minute change in the Budget, they made provision--I cannot remember the sum, but it was a substantial amount, perhaps £18 million--to cover the cost of local authorities having to re-bill. Therefore, they know that the procedure costs money, but blithely they say that that is what local authorities must do. Local councils have to shuttle bits of paper backwards and forwards to try to establish the correct bill.
7 pm
There are other costs involved in addition to those of the local authorities. When we take account of all those who will receive a single person's discount--7 million in principle--all those who will receive a double discount because their properties are empty and those who will receive status discounts, we find that the fair estimate, derived from Government figures, is that the discount scheme will cost £780 million. I used that figure in Committee and was not challenged, so I feel emboldened to do it again as I think that it is probably right.
Ministers are inclined to say that it is wonderful that £780 million is to be saved on account of poor people living alone, irrespective of whether or not they are well off. In truth, the £780 million is not simply saved--it does
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not disappear, but has to be paid by somebody. Who pays for it? The ordinary family, which is why, under the Government's proposals, bills for such families will be so much higher than they would be normally. All the concessions made to well-off people who do not need help on financial grounds will have to be paid by someone.Sir Nicholas Fairbairn : I want to test the hon. Gentleman's definition of an ordinary, average family, as opposed to the well off. Let us suppose that a widow who, according to the hon. Gentleman's condescending phrase, is an "ordinary, average" widow, married in 1910 and now, aged 100, lives in the same house that she originally bought and mortgaged for £500. That house, for reasons quite beyond her control, is now worth £500,000. The widow produces absolutely no money and lives on a widow's pension. Is the hon. Gentleman seriously suggesting that she is a well-off person, not an ordinary, average, rather poor widow?
Mr. Gould : The hon. and learned Gentleman has, characteristically, completely misunderstood the point. The widow he described would benefit from the Government's new generous provision introduced in the Bill and no doubt qualify for a 100 per cent. rebate. As the hon. Member for Nottingham, South rightly said, that is the right way to deal with people whose ability to pay is called into question. Nothing that the hon. and learned Member for Perth and Kinross said removes the fact that the discount system is entirely misplaced and will cause enormous practical problems.
We have established on many occasions, and have done so again this evening, that the proposals for the discount system, the genesis of which is so disreputable, are unworkable and unfair. They will make it impossible for local authorities to implement the tax. They were included in the legislation for a political purpose, which is no longer necessary.
I conclude as I did in Committee by adopting the language of the Local Government Chronicle which, on 1 November, in a leading article, stated that the discount system would have to go sooner or later because it was unworkable and unfair. It stated that it would be better to do away with it now than allow it to cause a similar disaster to the one that we all suffered under the poll tax. I wish that I could have some confidence that Conservative Members were alert to that danger, but unfortunately most of them have decided to sleep-walk their way through the Bill and we are now confronted with another poll tax disaster.
Mr. Rupert Allason (Torbay) : I support amendment No. 9. The hon. Member for Dagenham (Mr. Gould) spoke of the genesis of discounts. I thought that it would be worth while to cast my mind back to the rating system. The great, central inequality of that system is highlighted by the classic example of two identical houses in one of which lived a widow while in the neighbouring one lived a household with two or three wage earners. It was that central inequity that made the rating system so terribly unpopular and resulted in the Leader of the Opposition rightly condemning it as grossly unfair.
During the 1979 election campaign I received much support because of my criticism of the rating system. I was embarrassed when I fought the 1983 election and nothing had been done about the rating system. It was a further
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embarrassment to me that when I stood for the third time in 1987 the Government had still not acted on the rating system, when we had consistently given a pledge to eliminate the inequity of that system.I was initially enthusiastic about the principle of the community charge which, when it was introduced, was going to benefit my constituency of Torbay through the grant-related expenditure assessment. However, GREA did not last long, and by November of the same year the standard spending assessment was introduced, to the tremendous disadvantage of my constituency, which ended up with the highest community charge in the south -west. From the moment that the details of the SSA became available, I consistently voted against the community charge, and that has remained my position to date. I am now in a curious position. Amendment No. 9 recommends an increase in the discount from 25 to 50 per cent. I believe that that eliminates the inequality which was at the heart of the original rating system. My difficulty is that the Opposition oppose all discounts. I fear that in the Division I shall have to support the Government, which I had never intended to do, on the basis that it is much better to have a 25 per cent. discount than no discount at all. I urge the Government to accept amendment No. 9. The 50 per cent. discount would help those 7 million homes in this country housing single people who do not use the same level of services as those in neighbouring houses.
The Opposition may well dislike the idea of discounts, but it will be helpful to Government canvassers during the next election when it is stated that the Opposition opposed all discounts. Even if single people living alone receive only 25 per cent. discounts, they will be much better off than they would be under the Labour party's proposals.
Sir Nicholas Fairbairn : As the Opposition believe that taxes, particularly local taxes, should be based on ability to pay, is it not absolutely scandalous that they suggest that the elderly and the single, whatever house they live in, should have to pay more than those with the ability to pay and are not willing to grant a discount?
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