Local Government Finance Bill

Lord Jenkin of Roding Excerpts

Tuesday 16th October 2012 Lords Chamber

I hope that I am right in sensing support from all parts of your Lordships’ House for a measure that does not seek to prevent central government making the savings it believes are necessary, and does not raise additional taxes but redistributes the burden for the same taxes from the very poorest in society to three times as many households, all of which are a bit better off—the single person households from which a smaller contribution would be required. Should your Lordships support the amendment and the proposition then receives consideration in the other place, there seems to be a reasonable prospect of it finding acceptance there too. I hope I can ask noble Lords to join me and the noble Lords, Lord Jenkin and Lord Tope, to say to the Government, “Please look again at this opportunity to let councils raise the funds needed to satisfy the Treasury requirements of them, but without having to pursue those who would suffer serious hardship if this opportunity is rejected”. I beg to move.

[Lord Jenkin of Roding]

My Lords, the noble Lord, Lord Best, has made an extremely good case and has made it very clearly. It is a case which, when he first put it to me, attracted me. Although there are disadvantages—and we shall no doubt hear some of them during this debate—I took some heart from what the noble Lord, Lord McKenzie, said in the first debate this afternoon: this could be one way to address the problem to which the noble Lord, Lord Best, referred and was identified in that debate.

As he said, we need to address the problem of councils seeking to extract small sums from large numbers of people who have never paid council tax before. That seems to be at the heart of what we have to address. I say this with some awareness of the past. I was the Secretary of State who, with my colleagues, the noble Lords, Lord Baker and Lord Waldegrave, devised what became known in the press and by everyone as the poll tax. We called it the community charge. For various reasons, one of which was that we never effectively had the support of the Treasury, it had a lot of very rough edges. However, one thing that it did was to ask councils to collect very small sums from large numbers of people who had never before paid a local tax—they had always had the benefit of the relief. Of course, then it was the rates but the principle is the same.

We all know how that ended—with riots across the major cities and particularly here in London. I am in no doubt whatever that one of the major causes of the distress that provoked the riots was councils trying to collect what were inevitably small sums of money from large numbers of very poor families who had never before paid rates. I think that my noble friends in government are running the same risk with the current situation.

Of course, there are other ways that one could address this problem. One was proposed by the Front Bench opposite in the previous debate but the House clearly disapproved of it. However, of any proposal that I have heard, this solution put forward by the noble Lord, Lord Best, seems to come the nearest to avoiding having to go to large numbers of people who have never paid council tax before and trying to extract money from them. I have heard it suggested that if councils find that they have to collect one or two pounds a week from families, they will not bother. To my mind, that is a counsel of despair. I see that an article in today’s Guardian suggests that a very large number of councils will be asking themselves whether it is worth the cost of collection. We cannot put local authorities in that position.

The amendment of the noble Lord, Lord Best, to which the noble Lord, Lord Tope, and I have put our names, proposes giving councils an extra discretion which they can use in appropriate circumstances, subject to local conditions, to help to close the gap which would otherwise have to be closed by removing council tax relief from people who would find it very difficult to pay, by putting up council tax generally or by cutting expenditure. Of course, one knows that if local authorities cut expenditure, that often affects the poorest people, whereas the proposal here is for a discount. It is a discount that has existed for many years and one understands the logic of it—that single people impose fewer burdens on local authorities and therefore it is not unreasonable that they should pay a lower council tax. It is not going to be all taken away but, even if a reduction from 25% to 20% were adopted across the board, that would go a very long way to closing the gap that we are talking about.

The other argument that I have heard is that the discount has been part of the system from the beginning and it is not the same as applies to second homes or empty properties and so on. However, it is still a discount. It is exactly the same as where local authorities give relief under certain circumstances but in this case it is for single households.

I totally agree with those who say that we have to look at the situation we are in and not the one that we might want to be in, but this is the problem that we face. If the measure as set out in the Bill goes ahead, then I am afraid we shall be heading—I am not saying that we shall have riots in Grosvenor Square—to many of the problems that provoked those earlier riots. The benefit of experience is that you learn from it. I think that those of us who lived through those years will not forget the problem. I am not proud of having launched the community charge—the poll tax. It is not one of the more lambent chapters of the book that I will never write but nevertheless it is there and there are lessons to be learnt. To support this amendment would be to learn those lessons and avoid making the same mistake twice.