Local Government Finance Bill
Debate between Earl of Lytton and Baroness Sherlock
The Earl of Lytton
My Lords, I rise to speak in support of this amendment. I do not have any function in the Local Government Association, but I am the president of the National Association of Local Councils, which is the parent body of parish and town councils. However, that is not a particular interest here because they are not billing authorities.
I believe that flexibility is desirable within certain rules. A large number of issues come into play here: wholesale reductions in local authority funding, a reorganisation of the benefits regime, moving the process away from central government to local government and, perhaps I may say, a considerable increase in the complexity that attends us in relation to the measures in this Bill. There is an increased risk of turmoil, uncertainty and unpredictability of revenues and indeed of benefits, and how the reliefs are going to apply.
Like the noble Lord, Lord Jenkin, my memory goes back to the unified system of general rates—and, yes, I can fulfil the desire of the noble Lord, Lord True, by mentioning the rates. He very appropriately drew attention to the fact that they had not yet been mentioned. As I say, there was a unified system under the General Rate Act 1967, but of course that has now been split asunder. However, the tax base that represents council tax on the one hand and business rates on the other has never been subject to the care, maintenance, management and upgrading that is necessary. In short, it is an outdated tax base, and we are using it as the basis for implementing this ostensibly desirable change as the financial expression of localism and a reduction in centralist government. I support that move in terms of localism, and the implicit re-engagement of local people and businesses with local tax raising, so I take it as read. However, I question the use of some seriously worn out components as part of the process.
I am grateful to the noble Baroness’s department for allowing me to take some fellow professionals to meet with officials, but I am bound to say that I had the impression that the issues I have been raising are not ones for this particular Bill. I do not want to rehearse that again because I get the message and I have taken it on board. None the less, that has implications for what we are trying to do in the context of this Bill. It seems that the coalition wants to have its cake and eat it. It wants to hand things over to the billing authorities but not to relinquish the levers of control. The noble Lord, Lord Shipley, mentioned this point and I certainly relate to it. It does not seem to be true localism. It perpetuates what I see as an essential incoherence in top-down government in this particular area of endeavour.
I understand the messages of the past, some of which were mentioned by the noble Lord, Lord True. It predated my existence on the planet, but in the 1930s a well-known south coast local authority paraded itself as having the lowest rates in the country while conspiring to achieve the highest level of property values. That was part of the reason why, for the general rates, which then covered both residential and non-residential property, the assessment of property values was taken out of the hands of local government.
I can also well remember the arguments about the community charge, the poll tax, on which I made my maiden speech in this House. I recall the many issues around trying to attach a tax to a highly mobile group of individuals and the problems that that would incur. I recall the discussions on council tax when it came in, particularly in connection with banding and the defined relationship between the top and the bottom band. There was the case of a single person rattling around in the former family home or a single person living on their own in a smaller or, indeed, a larger property, but either with greater means or, more particularly, using the services of local government to a much greater extent. I understand the issues, and we have not plumbed the depths of how to approach local taxation, although it is part of where these arguments seem to be coming from. Is it for services supplied by local government or is it a tax according to the value of a property? We still have not worked out what we are going to do. We are trying to set up a unified system, whether it be for residential properties in terms of council tax or the business rate, which is the non-domestic rating system, but we are trying to look in two directions at once. We have not rationalised how to deal with the contradictions.
Here I depart a little bit from the views of the noble Lord, Lord True. I well remember the rates being paraded as the unjust and unfair system. In a sense it was but it was highly efficient and nothing else that we have produced since would have survived to this day were it not for the information technology that now enables us to manage a highly complex system. I do not think that it has become any fairer, for all that complexity.
Only central government has the power to resolve the contradiction between a tax on property values and a tax for services provided, and that resolution still eludes us. The reality is that neither council tax nor business rates achieves either of those objectives particularly effectively.
So what do we do? I have tried, in the context of this Bill, to suggest that something needs to be done about the management of the tax base. I accept that I am not going to get a comprehensive review of either business rates or council tax this side of this Bill coming into force and being implemented. I am not expecting any concession on that at all, but it seems to me that the only thing that this House can deliver is to give some sort of discretion and flexibility in how these things are organised. If we are to rejuvenate business, if we are to re-engage the electorate, we have to have some sort of local flavour to that. Otherwise, it is simply central control of the type that we have had for many years.
This piece of legislation is going to bring into sharp focus bills as against benefits. I do not put that forward as a mantra of any sort; I just feel that that is what is going to happen. If we are going to see this justified locally, we have to remove some of the stranglehold of the past and allow issues such as poverty, deprivation and need not to be laid down from on high but assessed locally. I see no option but to do that, and it is for that reason that I support this amendment.
Baroness Sherlock
My Lords, I was not going to speak to this amendment but I have been provoked into doing so by the debate. I will be very brief because I know that noble Lords are anxious to move on.
I want to lay down a couple of markers, having been prompted by the reference to lone parents. As many noble Lords will know, I spent some time as the chief executive of the National Council for One Parent Families, and I have very strong memories of more than one lone parent coming to me and saying, “The toughest thing is that my husband walked out and overnight our income dropped but my bills did not go down by a single per cent. The rent stayed the same, the electricity bills stayed the same and we didn’t need a smaller house, but one of the very few things that at least made some allowance for the fact that there was only one adult in the house was the single person discount for council tax”.
I understand that the distribution of single parents tends towards the bottom, but the reality is that if the council tax liability for a single parent rises, the minute she moves into work, especially with what is happening to tapers around the country, she will find it very hard to be better off in work. At a time when the Government are forcing more and more lone parents into work, the reality is that the very, very poorest may not benefit from this, but these people are still very poor and this does not seem to be the way forward.
Finally, we had a debate some time ago about child benefit and whether or not people in the higher income group should have child benefit taken away from them. That was advocated as being justice, but it is a very narrow view of justice, which sees justice as being only between the rich as a group and the poor as a group. Of course, child benefit is actually a horizontal redistribution, a transfer from the population as a whole to those who have children because society recognises that their costs are higher. Any simplistic view of the tax system that takes no account of anything other than income seems to be heading for difficulty. If we are going to revisit the whole basis of council tax, which of course was meant to take account of individuals as well as property, we need to do so in a much more systematic way than this debate will allow us to do.