Blog

The speech made by Michael Heseltine, the then Secretary of State for the Environment, in the House of Commons on 19 February 1991.

I beg to move, to leave out from “House” to the end of the Question and to add instead thereof: ‘welcomes the Government’s thorough review of the functions, structure and finance of local government; notes that the Government has provided for a substantial increase in Aggregate External Finance for 1991–92; and welcomes the introduction of the Community Charge Reduction Scheme which will provide £1.7 billion extra help in England for those former rate payers, the elderly and the disabled who have faced the biggest increases in their contributions to the cost of local services.’. Perhaps the House will understand that the first task that fell to me as Secretary of State in conducting the review with which the Prime Minister entrusted me was to look at the issues that could be immediately addressed in the context of the settlement for the next financial year. The House will be all too familiar with the constraints that the need for primary legislation to change the existing framework imposed on any review. There were bound to be specific sectors of concern and I shall say a word or two about a number of them, particularly the liability of service men in the Gulf, in the light of recent legal decisions.

I know that many hon. Members are concerned about the service men and women in the Gulf and their treatment with regard to the community charge. In an earlier debate, I promised to provide further guidance on that subject. It is likely that last Thursday’s judgment in the Anderton case, dealing with the sole and main residence of a merchant seaman, has implications for the advice that we gave local authorities last November, and which we would have updated in the further guidance. We have yet to receive the final terms of the High Court judgment, and yet to consider the full implications.

In our view, service personnel and associated civilians posted to the Gulf should not have to pay the personal community charge during the period of their posting. If detailed study of the judgment shows it to be necessary, we shall take appropriate steps to ensure that they do not have to do so, either by legislation or by other means. I am grateful that the Opposition have already made it clear that if we do take such legislation, we shall receive their support.

Mr. Gould

I happily confirm our earlier assurance. Will the Secretary of State make it clear that the dispensation he mentioned will apply to all service men and women, irrespective of where they are based in the Gulf and will extend, particularly, to merchant seamen? Will he also make it clear that the Government will recompense local authorities for any loss of revenue that they suffer as a result?

Mr. Heseltine

The assurances that I have given apply to all those involved in the military endeavours in the Gulf, and I announced on an earlier occasion that it applies to auxiliaries as well as to the professional services. However, it does not apply to those who are engaged in the normal pursuit of their careers as merchant seamen. We are dealing with people who are involved in the Gulf endeavour and I must carefully ring-fence that particular arrangement.

Mr. Gould

It is important that we should try to make this point clear, because many thousands of merchant seamen and their families will want to know the answer to this question. Is the Secretary of State excluding merchant seamen as a category, or does he accept that some merchant seamen will be present in the Gulf in a supporting role to the military effort and they will be included in the scheme?

Mr. Heseltine

Of course, if they have been involved in the Gulf as a consequence of Gulf activities, they will come within the assurances that we have given. In what I said earlier, I was referring specifically to merchant seamen pursuing their normal activities. They would not come within the context of the announcement that I have made.

The second issue about which I am concerned—and this covers a point raised by the hon. Member for Dagenham (Mr. Gould)—relates to those local authorities where service men represent a significant proportion of their charge payers. Those authorities face a drop in their community charge income when troops are sent to the Gulf. My hon. Friend the Member for Aldershot (Mr. Critchley) has raised that issue with me extremely forcefully and he in particular made representations about the effect on the authority with which he is concerned. We have therefore announced this afternoon a scheme to provide grants for the authorities most affected to compensate them for loss of income. I know that that extra Government help will be warmly welcomed in the areas concerned.

Mr. Gould

I am sorry to bother the Secretary of State again on this point, but it is important that we get it as clear as possible. The phrase that the Secretary of State just used was a little opaque. He referred to grants to cover the authorities most affected. Is he not prepared to make it clear that, as a consequence of this scheme, he will recompense every authority for all loss of revenue suffered?

Mr. Heseltine

I do not believe that my statement was opaque. Some authorities have very limited numbers of service men within their areas and they would not be outwith normal movements that one would expect in normal circumstances. We have introduced a scheme to deal with authorities in which a significant number of local inhabitants have been moved as a result of troop dispositions. I have no doubt that once the details of the scheme have been examined, and in the light of consultation with the authorities concerned, the House will be satisfied that we have dealt with the matter effectively.

Mr. Julian Critchley (Aldershot)

My right hon. Friend will be aware of the sense of relief felt by service men who are serving in the Gulf and their families and by the electors in places like Rushmoor, which is Aldershot and Farnborough combined, who faced a notional additional charge of £14 a head. My right hon. Friend knows that he is always welcome in Aldershot and never more so than when he comes to speak to the local Tory party in May.

Mr. Heseltine

On that occasion I shall be able to explain to the electors in that constituency that, were it not for the persistent pleas of my hon. Friend, they might not have gained the benefits that I have announced this afternoon.

I announced the details of the community charge reduction scheme some time ago and I am the first to recognise that, as it must take into account the level of the community charge that is set for next year, it is not possible in advance of that to be precise about the exact quantification of benefit that will flow to individual charge payers in each local authority. However, it is possible to identify the indications, and examples can be given in general terms.

In gross terms, about £1.7 billion will go to more than 18 million people in England. When we turn that sum of money into individual cases, it will be clear to anyone who has made the calculations that a couple living in a previously averagely rated house in Lancaster, for example, could see a reduction of nearly £300 in their joint liability next April if their local authority sets its community charge at the same level as this year. We have a very important responsibility to bring home to large numbers of people precisely how much help will be available. I know that all my right hon. and hon. Friends will take it specifically on themselves to spell out locally exactly what that means.

Mr. D. N. Campbell-Savours (Workington)

Does the Secretary of State recognise that the nightmare of the poll tax has meant that hundreds of thousands of young people—some in my constituency—are refusing to pay? Does he recognise the implications of driving that number of young people into illegality? Should not some special concession be introduced? Are those people to remain in debt for many years to come? They form a sensitive age group.

Mr. Heseltine

The hon. Gentleman is fully aware that the provisions in legislation cover the age groups to which he has referred. There is no way in which they can be excluded in the absence of primary legislation to deal with the issue. All over the country, many young people recognise the force of the law and are paying their bills. Those who are not paying are, doubtless, fully aware that some Labour Members are encouraging others not to pay. There is no justification for individual hon. Members to assume that they are above the law of the land.

Several Hon. Members rose—

Mr. Heseltine

You have asked us to make progress, Mr. Speaker. This is a short debate and many hon. Members wish to speak.

Several Hon. Members rose—

Mr. Speaker

Order. I support what the right hon. Gentleman has said. Many hon. Members wish to participate. Some of them now seek to intervene. That will not help their chances to make speeches later.

Mr. Heseltine

The community charge reduction scheme does not, as I have said, apply only to many people in general. Specific additional relief has been give to those living in sheltered housing. That is additional to the scheme that we announced for poll tax payers generally. In addition, we were able to exclude certain people who were living in property that came within the definition of “charitable”. The scheme was the first response of the review. It is a comprehensive scheme which will bring significant benefits to many millions of people. It was, perhaps, in advance of the expectations of what we might do in such a short time. Perhaps the indignation of the hon. Member for Dagenham is a sign of his growing awareness of just how many people are likely to benefit from what we have already done.

The hon. Member for Dagenham also questioned me about the review. It has been under way for only a few weeks and it would have been wholly unrealistic to assume that we would come to conclusions about so complex a matter in so short a time. We have made significant progress in a wide range of detailed examinations into function, structure and finance. We have now reached a point where we are able to begin to decide those options with which we may not wish to proceed. As I said recently to the House, I hoped that by April, I should be able to narrow the focus of attention—[Interruption.] I find it extraordinary that I am urged by the Opposition Front Bench to speed up the review, yet the moment I agree to do so there is a baying of indignation from Labour Members. They are obviously frightened that we might do just that and that they will not be pleased with our conclusions. The Opposition will not deter us from moving on with the expedition that the matter requires.

Anyone who has the slightest doubt about the real views of the Opposition and about the timing involved in such a complex matter may have had the chance to listen to the hon. Member for Dagenham speaking on the “World This Weekend” last Sunday. When asked about the whole question of timing, he answered: what we propose is that we should deal with the problem in stages—that it’s futile to think that we can achieve all that is necessary overnight. However, when the hon. Gentleman comes to the House, he assumes that the Government can do precisely what he said could not be done. It is entrancing to note the speed with which the hon. Member for Dagenham has moved his position. I remind him of what he said about a year ago, when he was involved in this review—[Interruption.]

Mr. Campbell-Savours

What did the right hon. Gentleman say, at that time?

Mr. Heseltine

If the hon. Gentleman is not careful, I shall tell the House what Labour Members were saying a year earlier than that. That makes the position even more complicated. When the hon. Member for Dagenham was asked about this complex business, he said: we are making very good progress with the work that we have undertaken to prepare our alternative…We have every confidence that in the coming months we shall reach a conclusion that we shall be able to bring forward with confidence.”—[ Official Report, 18 January 1990; Vol. 165, c. 438–39.] Two months later he was asked who would pay under Labour’s new system, to which he replied: that’s the one issue we have yet to decide…We will reach a decision very shortly. He said that on 27 March 1990, but we still have no idea who will pay under Labour’s proposals.

Mr. Gould

The Secretary of State cannot be allowed to get away with that complete misstatement. I am disappointed—if it is the case, since the right hon. Gentleman has a reputation for not reading his papers—that, as we published a full statement of our proposals in a document entitled “Fair Rates,” which I passed across the Dispatch Box at the end of July, he has not yet read that statement. Not having read it, he will not necessarily have understood our proposals. I recommend him to read the paper because in it he will find the answers he seeks.

Mr. Heseltine

The hon. Gentleman is helpful in inviting me to go on giving what he must regard as uncomfortable quotations, for, although he tries to say what he would like us to believe, he gave a much clearer indication about a month after making the statement that I quoted last, when he said—

Mr. Campbell-Savours

What did the right hon. Gentleman say when he was on the Back Benches?

Mr. Heseltine

As the hon. Member for Dagenham interrupted me to say that I had misquoted him, I am surely in order in trying to put the record right. He said that people would be given plenty of information in good time so that they will have some idea of what the relative size of their bill will be. Labour’s “Fair Rates” document was published in July 1990. It outlined a range of proposals for a property tax, but it gave no indication of how much anybody would pay.

What I found most revealing about the remarks of the hon. Member for Dagenham this afternoon was that he criticised the Liberal party for being prepared to talk to me, when he was frightened that his proposals would be put through the computer and that the facts might emerge. So now we know that at least the Liberals have a policy in which they have confidence, that the Scottish Nationalists and Welsh Nationalists have policies in which they have confidence, but that the Labour party has a policy in which it has no confidence—[Interruption.]—and that has been revealed all too clearly.

Mr. Richard Tracey (Surbiton)

My right hon. Friend’s proposals for relief for those who have been hit by the community charge will be most welcome. Does he agree that the most important question now for the occupants of the Labour Front Bench is whether they will condemn those in the community who are refusing to pay the community charge, in particular Labour Members who are law-breakers?

Mr. Heseltine

My hon. Friend is of course—

Ms. Dawn Primarolo (Bristol, South)

On a point of order, Mr. Speaker.

Mr. Speaker

I shall call the hon. Lady to raise a point of order in view of a misunderstanding that occurred earlier.

Ms. Primarolo

During Prime Minister’s Question Time, I asked a question—[Interruption.] I urge Conservative Members to listen for a moment. They should calm down. I asked a question about the extension to other deserving cases of the poll tax exemptions. In the baying and braying that goes on during Question Time, the Prime Minister said that I had not paid my poll tax. Unfortunately for the right hon. Gentleman, he was wrong in that statement. For the future, may I urge all right hon. and hon. Members who utter such comments in the Chamber to check their facts?

Mr. Speaker

I allowed the hon. Lady to make that point of order to put the record straight because I believe that most of those in the Chamber at the time took her nod to be a negative, but it was evidently a positive.

Mr. Heseltine

Let me say at once how much I admire the hon. Lady for having complied with the law. Although I am not saying that she feels exactly as indignant as I do about the fact that so many of her right hon. and hon. Friends have not paid their poll tax, I must advise her that the only effect that that can have is that her constituents will be likely to find their costs rising because others do not pay.

I return to what has now been so clearly revealed about the difficulties of the Opposition in this matter. It should not be a great surprise to my hon. Friends because when the hon. Member for Birmingham, Perry Barr (Mr. Rooker) was responsible for the Labour party’s local government policies, he described his party’s dilemma with admirable clarity when he said: I’m saying to the NEC policy makers, I’m saying ‘Hang on a minute, what’s our policy on local government?…Putting it at its boldest, we haven’t got a policy, that’s the actual truth Time has marched on, but the policy making has not.

Mr. Jeff Rooker (Birmingham, Perry Barr) rose—

Mr. Heseltine

The hon. Gentleman has popped up, so I shall give way to him.

Mr. Rooker

The Secretary of State should make it clear that he is quoting from an article in The Independent of September 1987, which was true because our consultation process and policy formulation on local government had been interrupted during the general election. The article then stated—the Secretary of State will not have the guts to read this out—that my party was being the more honest about local government by admitting that we were going back to square one to look for a better way of funding local government.

Mr. Heseltine

The hon. Gentleman has made my point. There is a gap, a ravine, between us, but this process takes time. The difference between the Government and the Opposition is that we shall reach conclusions that people will understand, but, three years on, the Opposition still have not done so.

Mr. Campbell-Savours

On a point of order, Mr. Speaker—[Interruption.]

Mr. Speaker

Order. What is the point of order?

Mr. Campbell-Savours

May I ask you, Mr. Speaker, to read the motion and the amendment that are on the Order Paper? Will you ensure, as you normally do, that right hon. and hon. Members keep to the motion and the amendment? The Secretary of State is debating a matter that is not on the Order Paper.

Mr. Speaker

The Secretary of State is addressing himself to the Government amendment.

Mr. Heseltine

By this time, I am sure that the House is beginning to share my acute anxiety for the hon. Member for Dagenham as he finds himself—

Mr. Alistair Darling (Edinburgh, Central) rose—

Mr. Heseltine

No.

The hon. Member for Dagenham is now facing increasing difficulties defending the position of Labour authorities which consistently overcharge at local level. As the House knows—because I have read it into the record previously—we now have the clearest indication that in all classes of local authority—the London authorities, the metropolitan districts, the shire districts, and in England as a whole—the fact is that, when stripped of the safety net, Labour authorities consistently set higher poll tax charges than all other political parties. The evidence is not only a matter of history—the evidence is there for the coming year. This week’s Municipal Journal gives the figures for the counties. Only three of the 22 counties that are controlled outright by the Conservatives or by the Conservatives in conjunction with other parties have set their budgets above their SSA, whereas all but three of the 13 authorities where the Labour party is in charge or in joint control have exceeded the level of their SSA. Again, it is the old, old story—

Mr. Geoffrey Lofthouse (Pontefract and Castleford) rose—

Mr. Heseltine

No.

The next difficulty for the hon. Member for Dagenham is that, in order to justify his talks, he has to talk in terms of cuts when all hon. Members are fully aware that there are no cuts. The Government have been responsible for injecting an additional £4.25 billion of central support to keep down the level of charges this year. If the Labour party claims to be fit to be the Government of this country, it ought to tell the people just how much above £4.25 billion it believes that a national economy can stand in any one year. But it cannot do that.

The next argument with which we are all too familiar is that all the changes bring about dramatic cuts. There is an annual ritual of claiming that cuts will have to be made. Yet time and again the anticipated cuts that we hear about do not materialise when the budgets are set. Last year we were told that the Government’s proposals would have the most serious implications in many authorities; but charges broadly within acceptable levels were introduced and the cuts disappeared. Economies were found without great difficulties.

The hon. Member for Dagenham has now taken to suggesting that the assumptions on which we based the community charge reduction scheme were ill founded. He suggests that we are working on some notional calculation, as opposed to the actual calculations on which the scheme is based. He managed to put out a document which suggested that 26 authorities are in significant excess of the figures that we estimated. My right hon. Friend the Member for Bath (Mr. Patten) said that if local authorities set their charge in line with the Government’s assessment of what they needed to spend, the charge would be £380. The list published by the hon. Member for Dagenham included 26 authorities, 13 of which had set their charges at £380 or, indeed, less. The hon. Gentleman reveals clearly that he has not understood the essence of our announcement.

Dr. Lewis Moonie (Kirkcaldy)

On a point of order, Mr. Speaker. As the Secretary of State is speaking, three of his hon. Friends have fallen asleep. Will you ask the Serjeant at Arms to check the ventilation in the House to find out whether it is detrimental to the health of us all?

Mr. Speaker

That is one of the common accusations made in this place. Sometimes when there is some noise, hon. Members lean their head sideways towards the amplifiers.

Mr. Heseltine

The hon. Member for Dagenham failed to understand that we took as the basis of our assumptions the actual community charges for the current year but that we had to adjust them to take account of the safety net. It is obvious that we would not have established a community charge reduction scheme in which the safety net was included. So we adjusted the figure for the actual charge, net of the safety net. In some cases that meant that we increased the assumption on which the benefits are provided. It is apparent to anyone who examines them that the figures produced by the hon. Gentleman show that our assumptions are largely accurate. The figures for the list of authorities support everything that we have said, even on the hon. Gentleman’s calculations.

Mr. Kenneth Hind (Lancashire, West)

Does my right hon. Friend agree that one fundamental thing which the British public understand is that any fool can spend money but that it takes a lot more ability to spend it well and that that is what local authorities should do? If he takes the opportunity in his busy day to examine Lancashire county council, which is Labour controlled, he will find that the authority commissioned a report from the consultants P and A, who advised it that its social services were expensive and badly delivered and recommended a series of alterations to the service. The authority totally neglected those recommendations and a poor service to the public is continuing as a result. That authority continues to increase its spending well above the rate of inflation. Perhaps not only my right hon. Friend but the voters of Ribble Valley will take note of that.

Mr. Heseltine

I have not the slightest doubt that my hon. Friend is right in saying that well-managed Conservative local government is much more likely to give value for money to its electors and will continue to do so.

The last area of increasing embarrassment is the failure of the hon. Member for Dagenham to take part in the consultation process to which we have invited him. Undoubtedly there was a chance there for the Labour party to measure up to the responsibilities of a national party genuinely interested in a constructive debate. I could not have asked for greater evidence of its reasons for doubt than the speech by the hon. Member for Dagenham who said that he did not take part in consultations because he was frightened that we would put his figures through the computer. That is the greatest giveaway of all time. He will not put his figures through the computer because he does not know the implications of the scheme on which he is campaigning.

The hon. Gentleman blames us for taking our time in a thorough review to get these matters right. We will take what time is necessary for that comprehensive review and will come forward with policies which we believe are right and on which we can secure the support of the British people. We will not fall into the Labour party. trap of producing words without facts to underline them. It is quite apparent that the Opposition are more interested in raising the anxieties of the British people than in contributing to a constructive debate. That is why my right hon. and hon. Friends will vote against the motion.

The statement made by Michael Heseltine, the then Secretary of State for Environment, in the House of Commons on 17 January 1991.

With permission, Mr. Speaker, 1 should like to make a statement about the local government finance settlement for 1991–92.
On 31 October, my right hon. Friend the Member for Bath (Mr. Patten) announced the Government’s proposals for next year’s finance settlement. As the House will know, since then I announced that the Government are undertaking a fundamental review of the structure and finance of local government. We are looking both at longer-term changes and at changes that we might implement in the short term. My statement today deals with the changes that we can make for next year, but announces first our decisions following consultation on the finance settlement for 1991–92.

I have considered carefully all the representations that we received on the proposed finance settlement from the associations and from individual authorities. My hon. Friends the Minister for Local Government and Inner Cities and the Parliamentary Under-Secretary responsible have reported to me on the meetings that they held with a number of authorities.

My predecessor’s proposals envisaged that it would be appropriate for local authorities to spend £39 billion in aggregate. That is an increase of 19 per cent. over the corresponding figure for 1990–91—a very substantial increase. It follows an increase of 10 per cent. for this year over last year, and takes account of the fact that local authority spending has grown substantially in the last three years. I am satisfied that £39 billion is fully sufficient for local authorities’ services, taking account of all the pressures that local authorities face, as well as the scope for saving and what the country can afford.

I considered the representations that were made about the methodology for calculating standard spending assessments. My right hon. Friend had proposed a number of improvements for 1991–92, and with those improvements in place, I am satisfied with the method for calculating SSAs for 1991–92.

My right hon. Friend proposed that aggregate external finance—that is, central support from grants and from business rates—should be set at £26.05 billion—an increase of 12.8 per cent. on this year’s settlement. I considered very carefully the argument for providing a greater level of support from national taxation to reduce the burden on community charge payers generally, but I concluded that in the present circumstances—notably those in the middle east—no further increase can be afforded in the amount of AEF beyond the increase of nearly £3 billion already proposed. So I confirm today that figure for the increase in aggregate external finance.

I am therefore fixing AEF and its distribution on the basis described in the consultation paper that was issued on 31 October. I have placed in the Vote Office, and have sent to local authorities, exemplifications showing the final standard spending assessments and grant entitlements for each authority that will follow from the settlement. The formal reports will be laid before the House shortly and debated in the normal way.

When we moved from rates to the community charge, the Government were concerned to protect many of those whose bills rose significantly as a result of the changes. We therefore introduced some transitional relief to protect those former rate payers, and elderly or disabled people even if they did not pay rates.

My predecessor announced in July improvements to the transitional relief arrangements that would take effect in April. The Government have reviewed the impact of those arrangements, and we have decided that they are no longer adequate for the present circumstances. We intend to replace them from April with a community charge reduction scheme that will reflect the improvements already announced but provide considerably more help.

The new scheme is designed to help those whose bills have increased significantly over what they paid in rates. It will continue to limit increases over rates. This year, the limit is £3 a week. The limit next year will be £2 a week, as previously proposed—but unlike the transitional relief scheme, the new scheme will be based not on notional charges but on actual community charges after allowing for the unwinding of the safety net. Sadly, in many areas local authorities increased their spending by much more than we had provided for in the settlement, and almost all actual charges were higher than those notional charges.

As I shall explain, the new scheme will provide help for many of those in sheltered housing who largely did not qualify for transitional relief. The new scheme will reduce the amount paid in charges by £1.7 billion—of which £1.2 billion is new money—compared with £350 million of transitional relief this year. The number of people receiving help will go up from about 7 million this year to more than 18 million next year, which, as the House will realise, represents more than half of all those liable to pay the community charge.

The House will be aware that many people who lived in sheltered accommodation were ill-served by the old scheme. No matter how many people live in a sheltered housing scheme, in many cases they shared an entitlement to transitional relief as if there were only two people living there. Under my new scheme, most individuals or couples in such accommodation will be able to qualify for a reduction in their own right. Within the new scheme, that will provide about £150 million of help for these people. I know that that change will be warmly welcomed.

I also propose that my new scheme will give more help to people who previously benefited from charitable rate relief. It will require local authorities to take account of charitable relief granted under the General Rate Act 1967 when calculating the assumed rates bill. Among those who will benefit will be clergymen who live in church accommodation and elderly people who live in almshouses or other accommodation provided by a charity. Further details have been sent to local authorities today. Copies of the letter are in the Vote Office.

My right hon. Friend the Chancellor of the Exchequer is making a separate announcement on the wider public expenditure and financing implications of the new scheme.

By adding the new scheme to the increase in AEF announced by my predecessor, the Government will be providing more than £4.25 billion extra support for England alone towards community charges next year than has been given this year. In addition, there is help from community charge benefit, which is paid to about 10 million people and is running at nearly £2 billion this year.

Given the extensive help available from relief and benefits, it is not surprising that the community charge that people actually pay on average is much less than the figures that local authorities have announced as their charges. This year, although the headline average charge was £357, the average amount payable was only about £280. Next year, provided that local authorities budget in line with the realistic provision that we have made, it is within their power to ensure that the average amount actually paid is less than £300.

It is of the utmost importance that that additional Government help should go to the benefit of charge payers, not to finance higher spending. In October, my right hon. Friend announced the criteria that he was minded to adopt in using his powers to cap excessive budgets, or excessive increases in budgets between years. I should make it clear to the House and to local authorities that I stand firmly by the intentions that he then announced. Let nobody think that the additional support means that authorities can relax their efforts to control spending.

The finance settlement I have announced and the new community charge reduction scheme reflect the Government’s commitment to financing local government. It will now be for local authorities to provide the services that their charge payers want, at a price that their charge payers can afford.

The speech made by Michael Heseltine, the Secretary of State for the Environment, in the House of Commons on 5 December 1990.

I beg to move, to leave out from “House” to the end of the Question and to add instead thereof: congratulates the Prime Minister and the Government for their decision to undertake a careful and fundamental review of the community charge; and deplores the fact that despite several unsatisfactory attempts, the Labour Party has failed to come forward with any clear or workable proposals of its own.”. My right hon. Friend the Prime Minister has described the Government’s review of the community charge which he has invited me to lead as very thorough, very constructive and very fundamental. It is time to raise the whole tone of this debate—[Interruption.] I hope that the Labour party will not rule itself out of our continuing discussions.

The debate is not about who pays how much in each local authority. The issues——

Mr. Alexander Eadie (Midlothian) rose——

Mr. Heseltine

The issues involved far exceed the precise financial impact on particular groups or constituencies of this or that local tax. The heart of the matter is the future relationship——

Mr. Eadie

Will the Secretary of State give way?

Mr. Heseltine

No.

The heart of the matter is the future relationship between central and local government, and the relationship that local government will have in its turn with its local community, in the fullest sense.

These relationships go to the heart of the sort of society that we have and want to have. I make no apology for putting that issue before the House. The question of the proper relationship between central and local government has lurked beneath the surface of policy making in successive Governments for the past quarter of a century. I believe that it is widely recognised that in those 25 years we have not been able to bring ourselves to look at the structure and finance of our local government as two sides of the same coin.

Mr. Eadie rose——

Mr. Heseltine

The time has now come to address both issues together.

In seeking to improve standards, central Government have begun to change attitudes to the pursuit of value for money, significantly by the establishment of the Audit Commission, but Government have yet to see sufficient progress in raising the quality of services that many local authorities deliver. In advocating accountability, successive Governments have not dealt with the structural and functional weaknesses to make accountability a reality.

We will not solve this problem unless we are prepared to recognise the proper partnership between the different parts of our democratic system——

Mr. Eadie rose——

Mr. Heseltine

and my first purpose must be to try to bring that about. I shall begin with the Opposition parties.

Mr. Gould

Before the Secretary of State goes off on a detour, perhaps he will save us all a great deal of time and trouble by answering the single question that is in the minds of millions of poll tax payers. Will he now commit himself to abolishing the poll tax—yes or no?

Mr. Heseltine

There is a certain—[HON. MEMBERS: “Yes or No?”] There is a certain quaintness about the fact that the hon. Member for Dagenham (Mr. Gould) has not been able to answer any questions in three years, but he thinks that I will give him a yes or no answer in three days. [HON. MEMBERS: “Yes or No?”] Let me help the hon. Member for Dagenham and the Labour party.

Mr. David Clelland (Tyne Bridge) rose——

Mr. Heseltine

I shall start with the Opposition parties. If Opposition Members could bring themselves——

Mr. Eadie

Will the right hon. Gentleman give way?

Mr. Speaker

Order. The hon. Member for Midlothian (Mr. Eadie) is an experienced Member, and he knows that, as the Secretary of State has not given way, he must resume his seat. There is no point in persisting.

Mr. Heseltine

If Opposition Members could bring themselves to do so, I should like to take this matter beyond the narrow bounds of party political conflict. The country wishes us to try to identify a stable and just basis for the future development of local government and the provision of local services. I should like to explore with the Opposition parties the extent to which we can establish common principles for the future role and direction of local government. [Interruption.] The country will not have lost sight of the fact that, when we offer to discuss these matters, all we get is baying and divisiveness. [Interruption.]

Mr. Speaker

Order. This debate is of great interest not only to every hon. Member in the House but to many other people outside who may well be listening to it. If this din continues, they will not be able to hear it.

Mr. Heseltine

What I could hear from the Opposition was not worth hearing.

I hope that the Opposition will take my proposal seriously, because it might help them in a material way. If they were prepared to enter into dialogue, it might help them to clear their own minds about the answers to questions that have escaped them for so long. I hope that local authorities will recognise that they have an important role to play. They too must help to improve the climate in order to allow these essential developments to flourish.

Mr. Graham Allen (Nottingham, North)

Perhaps there was so much noise that the Secretary of State did not hear the question that was posed earlier. Will he answer yes or no about whether he will commit himself to the abolition of the poll tax? That is an easy question. Why does the right hon. Gentleman dodge it?

Mr. Heseltine

The hon. Gentleman clearly heard what I said. I said that, in our review, we wish to enter into a dialogue with Opposition parties to see whether we can find a basis of stability in our future relationships with local government.

Mr. David Blunkett (Sheffield, Brightside)

So that we may be clear about the matter, will the Secretary of State confirm that he intends to try to take the issue of the poll tax out of party politics and to go for a second review of both the tax and the structure of local government, even though he knows that he has no intention of abolishing the tax? He has no permission to abolish it, on the very simple grounds that it would be the greatest U-turn in political history and a clear admission that we have been right all along.

Mr. Heseltine

The hon. Gentleman should appreciate that I am offering the Opposition the chance to contribute constructively to the establishment of a basis for stability within which local government can operate. It is quite apparent that the Opposition have no interest at all in constructive dialogue, because they can produce only negative proposals.

I hope that local authorities will also recognise that they have an important role to play. They must help us to improve the climate. In the past, I have not been slow to criticise waste and inefficiency in local government. I make no apology for that, and that will continue to be an aspect of criticism. However, I have also paid tribute to the part that local government plays—and should play—in defining and giving expression to our quality of life.

The hon. Member for Dagenham spent some time quoting speeches that I made when I was a Back Bencher. I am not sure whether he was wise to call in aid what Back Benchers say about their party’s policies. If the hon. Gentleman listened to what his Back Benchers say about Labour’s policies, he would realise that Back Benchers have a degree of freedom and discretion which is at the heart of our parliamentary democracy.

I do not for one moment attempt to escape from the fact that I have been involved in these matters before. Like many right hon. and hon. Members, I have views that I have expressed, and they are on the record. I have always assumed that that is what Back Benchers are for. Today, as Secretary of State, it is my responsibility to start afresh; in doing so, I neither overstate the possible, nor deny the potential.

Mr. Allen McKay (Barnsley, West and Penistone)

The Secretary of State may or may not be aware that the offer of co-operation was made three years ago, in Committee on the Local Government Finance Bill, when my hon. Friend the Member for Copeland (Dr. Cunningham) made the then Secretary of State for the Environment the same offer. He pointed out the dangers facing the Government, and we told the Government to forget the poll tax altogether. We said that they should take the Bill back and that we should look together at a proper system of local government funding. The Secretary of State’s present offer is three years too late. Does his present offer of co-operation include the abolition of the poll tax if it is found to be at fault?

Mr. Heseltine

My position is absolutely clear. We are conducting a comprehensive review, as defined by my right hon. Friend the Prime Minister. In that context, we rule nothing in and nothing out. In that spirit, I believe that the Opposition will come to regret their instant hostility to my offer.

Mr. Malcom Bruce (Gordon)

Does the Secretary of State accept that my party believes that his philosophical approach is correct and that we must have a system for local government that will be permanent and which will last? Does he therefore accept that we would be willing to discuss with him all possible options, provided he repeats that no options, including complete abolition, are ruled out?

Mr. Heseltine

I made it quite clear that no options are ruled in and no options are ruled out. The observations of the hon. Member for Gordon (Mr. Bruce) are a great deal more statesmanlike than the instant party, divisive views of the hon. Member for Dagenham.

Mr. Donald Dewar (Glasgow, Garscadden)

I want to understand what is being offered to me and my right hon. and hon. Friends. The right hon. Gentleman referred to a constructive dialogue. What is he actually offering? Is he suggesting all-party talks or that other parties join the working party? What is he suggesting exactly?

Mr. Heseltine

We can all welcome the thinking man’s contribution from the Labour party. The hon. Member for Glasgow, Garscadden (Mr. Dewar) has suddenly spotted the trap into which the hon. Member for Dagenham fell from a million miles. My offer could not have been clearer. I am offering to consult the Opposition parties to see whether we can find a basis of stability for the relationship of this House with local government. That could not have been clearer, and it is recorded in Hansard.

Mrs. Margaret Ewing (Moray)

I am grateful to the right hon. Gentleman for recognising that a variety of views are held by hon. Members who represent different Opposition parties on what should replace the community charge. My party has made that clear with our amendments and in our letter to him. Is the right hon. Gentleman to introduce a time scale for the completion of the dialogue to which he has referred?

Mr. Heseltine

I hope that the hon. Lady will accept my assurance that that matter will be addressed in my speech as I make progress.

Mr. John D. Taylor (Strangford)

First, I take the opportunity of congratulating the right hon. Gentleman on his return to the Government Front Bench. I can well understand his difficulty in answering the question yes or no, but surely he can answer with a yes or a no the question whether he will extend the poll tax. There still remains one party in Northern Ireland, the Conservative party, whose spokesmen want an extension of the poll tax. It is the only party left in the nation that takes that view. Will the right hon. Gentleman confirm that he will not extend the poll tax to Northern Ireland?

Mr. Heseltine

I said that I rule nothing in and rule nothing out but I hope that the House will understand if I rule out the concept that the poll tax should be extended to Northern Ireland.

Mr. Dafydd Wigley (Caernarfon)

I welcome the Secretary of State’s undertaking that nothing whatsoever is ruled out. It will obviously take time to examine such a broad scenario. Can he give an undertaking that, in the meantime, some assurance can be given to the beleaguered poll taxpayers that some relief will come as from next April?

Mr. Heseltine

I hear clearly what the hon. Gentleman says, and my answer is the same as that which I gave to the hon. Member for Moray (Mrs. Ewing). If the hon. Gentleman will allow me to expand my speech, I think that he will find that these matters will be thoroughly covered.

Mr. Dave Nellist (Coventry, South-East)

Will the Secretary of State give way?

Mr. Speaker

Order. I think that the Secretary of State has now given way to all the minority parties in the House. I think that it would now be wise to get on with the debate. Hon. Members will have an opportunity later of expressing their views if they are called.

Mr. Heseltine

I think that the House will feel that I have tried to reflect the interests of the House. If I give way further I might be trespassing on what I have to say later. The hon. Member for Coventry, South-East (Mr. Nellist) might have a small part to play in what I have to say.

Mr. Gould

I have been listening carefully to the Secretary of State. He appears to be saying that he and his party are now so bereft of ideas that they are prepared to come a-begging and to ask others whether they might be prepared to help. As we have already developed a fully worked out position, I am prepared to make a counter-offer, from a position of some strength.

If the right hon. Gentleman would care to talk on the basis of an agenda on which the abolition of the poll tax is the first item, and a proper consideration—with the help of the civil service and the Government’s computers—of our alternative is the second item, I am prepared to make available to him, free of charge, our fully worked out proposal. I make a further offer. If the right hon. Gentleman recognises the merits of what we propose, we shall support him in any Division that takes place over any legislation that he brings forward to implement our proposals.

Mr. Heseltine

I am grateful to the hon. Gentleman for giving me an additional copy of his party’s policy. It contains only one fact—the price, and that is too high. I congratulate the hon. Gentleman on a new record. He has been the proud possessor of the ability to move from policy position to policy position at three-day intervals. He has now done that in about three minutes. Having rejected what I have been saying, he now realises—with the assistance of his right hon. Friends—that I was actually giving the Opposition the most generous opportunity that they have ever been offered.

Several Hon. Members rose——

Mr. Heseltine

I think that I should continue arid say something more about my attitudes towards dealing with the matter.
I yield to no one in my belief that central Government must exercise their mandate; that in the end, power lies in this House. Indeed, all Governments insist that the mandate upon which they were elected should prevail. The Labour party must learn to accept that in opposition, just as surely as they have always accepted it in government.

Certainly, no Chancellor of the Exchequer can tolerate a challenge to his authority to manage the economy with prudence and discipline. No Secretary of State can turn his back on inadequate standards simply because they are administered by a local authority. Indeed, I would go further—I do not believe that this House would have legislated to share so much of its responsibility for financial prudence or for the quality of services if it had believed that local authorities would claim the right to frustrate or undermine the mandate of central Government.

I have made as clear as I can my belief that, with the authority of Parliament, the will of Governments must prevail. However, that clear statement does not and should not close the options for a partnership with local government that provides for civic pride and local initiative; nor should it close the potential for men and women to have their desire to serve their community fully satisfied within their own local authority; nor should it divert our attention in Parliament, or outside in local government, from the responsibility to deliver quality of service and value for money, without which it is the nation and its people that pay an unacceptable price.

I believe that now, far more than appeared possible 10 years ago, the importance of partnership is recognised. For all the rhetoric, and despite all the difficulties in the relationship between central and local government, there is a sense of partnership and co-operation in our inner cities, very much satisfying the aspirations that I held years ago. Despite all the tensions of the past 10 years, central and local government are now able to work together to regenerate some of our worst urban areas. Local authorities throughout the country, of all parties, have accepted the vital role of the private sector in economic revival——

Mr. Neil Kinnock (Islwyn)

The right hon. Gentleman is saying a great deal about partnership and the role that he wants to be developed between national and local government. Would he care to reflect on the fact that, when he was previously Secretary of State for the Environment, the amount of central Government expenditure as a proportion of total local government expenditure fell from 61 per cent. to 52 per cent., and that over the same period there were education cuts of 16 per cent.?

Mr. Heseltine

Those figures are not immediately in my mind. I remind the right hon. Gentleman that, when his party was in government, the collapse of local authority council building was imposed upon them by the International Monetary Fund. The reason why our waters and our sewers are in such a state today is that the Labour Government slaughtered the capital programmes. It is nothing short of hypocrisy for the right hon. Gentleman to try to deny what his Government were forced to do by the profligacy of their economic mismanagement.
I repeat what I profoundly believe—that, despite all the tensions of the past 10 years, central and local government can now work together to regenerate life in some of our worst urban areas. Local authorities are working together. Local authorities which told me 10 years ago that the message of involving the private sector was unacceptable are now at the forefront in their plans to do exactly that.

In all our big cities, there are now collaborative projects which show the right way ahead. The Birmingham Heartlands initiative is bringing together the city council, a number of private companies and central Government to regenerate east Birmingham.

In St. Helens on Merseyside, Ravenhead Renaissance is a consortium of private sector companies and the local council. With Government support, it is regenerating a large rundown area of the town.

Mr. John Evans (St. Helens, North) rose——

Mr. Heseltine

In Newcastle, the Cruddas park project to regenerate two council estates grew out of a private 321sector initiative. In Glasgow, there is a striking example of the transformation that can be achieved when central and local government work in partnership with the private sector. If hon. Members doubt the success of that partnership, I urge them to go to Glasgow and see for themselves what is being achieved by partnership between local authorities and the private sector.

Mr. John Battle (Leeds, West) rose——

Mr. Heseltine

There is now a range of co-operation in the network of enterprise agencies giving advice and support to small companies. The Groundwork Trust is using the enthusiasms of the voluntary sector, the enterprise world and local authorities to clean the rural fringe in many of our older towns. [Interruption.] The nation will be dispirited by the Opposition’s total indifference to all those major advances.

Mr. Thomas Graham (Renfrew, West and Inverclyde) rose——

Mr. Heseltine

For a century, the Opposition have shown a deep embittered resentment at any constructive attempts to bring new life to the inner cities. They have a vested interest in talking down the success of Scotland. Time and time again, when they get the opportunity, they shout down anyone with whom they disagree.

Several Hon. Members rose——

Mr. Heseltine

I take a wholly more optimistic view. There has been a change of culture in Britain. Just as the flow of private sector cash into urban renewal has followed from the Government’s initiatives, there is now a widening range of opportunities in our run down areas.

It is not simply a question of urban renewal. My Department has to deal with environmental issues. The entire nation is preoccupied with the view that we should develop an international presence in environmental matters. It is gravely damaging——

Mr. Brian Wilson (Cunningham, North)

On a point of order, Mr. Speaker.

Mr. Speaker

I hope that it is a point of order.

Mr. Wilson

It is a genuine point of order, Mr. Speaker. As I understand it, the debate is entitled “Abolition of the Poll Tax”. It is not an opportunity for a tour d’horizon to cover the five years during which the Secretary of State has been out of government. May we have your guidance on whether the Minister should address himself to the subject of the debate?

Mr. Speaker

If the hon. Gentleman looks at the Order Paper, he will see that the Secretary of State is moving his amendment, and that is what he is addressing himself to.

Several Hon. Members rose——

Mr. Speaker

Before we proceed, in what I hope will be good order, I should add that many of those hon. Members who are seeking to intervene are the very same hon. Members who are seeking to participate in the debate. It will be difficult for the Chair to call them if they seek to delay the proceedings in this way.

Mr. Stuart Bell (Middlesbrough)

Further to that point of order, Mr. Speaker.

Mr. Speaker

Order. As there was no point of order, the hon. Member cannot raise anything further on it.

Mr. John Home Robertson (East Lothian)

On a point of order, Mr. Speaker.

Mr. Speaker

It is really not good practice to seek to intervene in a speech by making a point of order, but I will allow the hon. Member to do so on this occasion.

Mr. Home Robertson

You, Mr. Speaker, drew attention to the fact that the Secretary of State is speaking to his own amendment, which is all about the poll tax. His comments about urban renewal and the international perspective are fascinating stuff, but they have nothing to do with the business before the House.

Mr. Speaker

Every right hon. and hon. Member has a right to make points in his own way. I have heard nothing that is out of order. If the hon. Member will examine the Government amendment, he will clearly see that the Secretary of State was perfectly in order.

Mr. Heseltine

It is inconceivable that one could address the subject of financing local government by whatever means and not be preoccupied with local government structure or the quality of the services for which the money is to be raised. I am glad that, despite the Opposition’s totally artificial and almost irrelevant attitude, local Labour councils know that they must co-operate with central Government in the ways to which I referred.

Mr. Harry Barnes (Derbyshire, North-East)

Will the right hon. Gentleman give way?

Mr. Heseltine

At the moment, no. The hon. Gentleman does not even pay his poll tax.

Mr. Kenneth Hind (Lancashire, West)

Does my right hon. Friend agree that, given the way that he has presented the review, which provides for open and honest consultation, the electorate and others outside the House who are watching this debate will not understand artificially imposed conditions on his offer of discussions, designed to avoid councils participating in what many of them accept is an absolutely necessary reform of local government finance?

Mr. Heseltine

I am grateful to my hon. Friend. The general public will understand exactly the role that the Labour party is playing this afternoon. I greatly regret it, because from my talks with councillors of all political persuasions, I know full well that they want stability. They want to know the nature of the relationship and that it will stretch into the future. The Opposition are trying to frustrate a genuine attempt to find a constructive way forward.

I must refer to one more area in which co-operation is essential in the national interest. Local and central Government have an inseparable role in attracting inward investment—discretionary and footloose—to depressed areas of Britain where jobs need to be created. That will not happen if an alien atmosphere is created by Labour for party political reasons.

In all those matters, it is increasingly obvious that a new relationship is emerging between local and central Government. Local authorities are beginning to perceive and come to terms with their new strategic role as enabling authorities, as opposed to providers of all services. All that is fostering a new spirit of co-operation at local level, as private companies compete with local services, as owners intermingle with tenants, and as parents and teachers play an increasing role in school management. All those trends are to be welcomed, and are characteristic of the change in attitudes that occurred under the premiership of my right hon. Friend the Member for Finchley (Mrs. Thatcher).

The 1984–86 review of local finance, which led to the proposals for the community charge, concerned itself very much with the issue of accountability. It explored the mechanisms of central funding, which produced local tax rates, which bore little relation to local spending decisions. It found that, in many areas, only a minority of voters contributed to the cost of local services, and it found that in some areas much of the extra cost of services was met by those without a vote. That situation had to be addressed.

In practice, under our previous arrangements, many who consumed the local services were paying relatively little or nothing for them. That is why there has been a broad measure of support for the simple idea that nearly everyone should make a contribution to the cost of the local services that they consume. It is not that principle which has caused difficulty.

One thing that I have always made absolutely clear is that there is no quick fix for this problem. For next year, my predecessor announced some important proposals, which will significantly improve the financial position of local authorities and local charge payers. I am now considering the response to the consultation on those proposals. I will place the statutory reports before the House in the light of those comments, once colleagues have considered the matter.

As all right hon. and hon. Members know, there is no prospect whatsoever that a final answer can be designed, passed through Parliament and implemented in under a two-year time scale. A complete solution may require a longer time scale. That is a matter of hard reality. But: that is not an excuse for procrastination or delay. The issues involved have been explored many times. I must keep open, however, a proper sense of timing. Our review could well identify a programme, divided into quite different time perspectives. It may well be that what is required is a programme of building blocks, constructed logically and carefully towards a clearly defined objective.

In the context of such a review, it is obviously right to explore why it is that the ambitions originally set for the community charge have not found the necessary degree of public support and understanding.

An argument which is much advanced is that, if the charge had been introduced at a lower level, its underlying principles of accountability and broad coverage of most of those who benefit from local services might have been more readily accepted. We shall consider whether that is true; but there is one truth which cannot be avoided. Local authorities as a whole increased their spending by nearly 13 per cent. this year—and by nearly a quarter in only two years. It is difficult to escape the conclusion that local authorities have sought to use the turbulence of the changeover to mask their spending increases and to pass the blame on to others.

There is another truth. The law is the law. Bills legally issued under the authority of this place must be collected. There can be no dining a la carte with the law of the land. I want to say just a brief word to Opposition Members who hold to the constitutional novelty that they are the arbiters of what is legal and what is not, and particularly that they are justified in refusing to pay. I cannot abide the concept that many on low incomes from limited savings in their twilight years—[Interruption.] Of course the Opposition do not care, but we care. I cannot abide the concept that such people should be expected to pick up the tab for those who are elected to this House in the name of the world’s foremost parliamentary democracy, and then claim a bogus veto over the mandate of the people. It is neither moral nor fair; nor is it constitutionally justified. The Labour party would never tolerate it from us if we were in opposition, and it is unforgivable that they should allow it to themselves in the present context.

Mr. Nellist

Is it not a fact that, had it not been for the 14 million who have yet to pay the poll tax, the Secretary of State would not be here this afternoon announcing a review suggesting changes or possibly abolition? Furthermore, if the right hon. Gentleman is so concerned about people on low incomes, why—despite his announcement of a two—year review-is his right hon. Friend the Secretary of State for Social Security still imposing on every local authority in the country a £100 million cut in the Government payments made to them to provide rebates for the lowest paid? He is cutting those Government rebates from 97 per cent. to 95 per cent.

Mr. Heseltine

As the hon. Gentleman knows, one in four people receive a rebate. He has asked the wrong question: the question for the House is whether, by majority decision, we create the legislation that governs the country, or whether the hon. Gentleman’s entrenched bigotry imposes a veto on what the majority of us decide here. But it is not just a question of the hon. Gentleman’s having a veto; it is a question whether a large number of people who are a great deal less well off than he is should be expected to pay for his self-indulgent hypocrisy.

We are determined that the taxes that we advocate should be seen to be fair, and the British public must be persuaded that the arrangements proposed at the conclusion of the review will be fair. Our priority must now be to address their concerns as fully as possible.

Our second priority is to put the relationships between central and local government on a healthier footing—to replace conflict with partnership, preferably within a widely accepted consensus about their proper roles. This is not a debate about complete localism or complete centralism; a myriad of options lie in the middle ground. Some we may be quick to implement, while others will take longer. The task now is to identify what is available, and what will serve us best in the long term. That is why the Government have decided to include in its review issues of structure alongside issues of finance. If we can resolve those matters, there is, I believe, a chance for a new, constructive phase in the development of local government.

In all my consideration of these difficult issues, I cannot escape the fact that some of the greatest moments in British history have coincided with the times of resolve, civic pride and municipal initiative in our great towns and cities. I am therefore determined not to set a rigid timetable for our review. I cannot anticipate what agreements can be found; I can only promise to listen with care, to decide, with my colleagues, on the way forward once our review is complete, and then to act with determination. That is the responsibility of Government, and the responsibility that we shall discharge.