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Lord Hanningfield: My Lords, I do not think that we should go over old history, but I want to return to why we introduced the community charge or poll tax. It was because there was a revolt against rates. I remember going to meetings where 500 or 600 people were unanimously jumping up in protest against the rates. We are reaching that stage with the council tax. In great chunks of the country, the community charge or poll tax was actually lower than the ratesalthough not everywhere, which was one of the problems. However, in some parts of the country, people were actually paying less than they were under the old rate system. That was certainly the case in Essex.
There were problems. People were outraged about rates. I accept that people did not like the community charge, but we are now getting the same thing about council tax. The Government do not realise that. I attended a meeting with 200 or 300 people aged 65 and over, all of whom were revolting against the council tax. This legislation could gradually push council tax higher and higher, not only through extra expenditure, but through revaluation or a change in the bands.
I was minded to table a rather more complicated and sophisticated amendment. I thought that I should keep it simple, but perhaps I should have tabled a more sophisticated one, because then the Minister would not have been able to make the same comments.
It is vital for the Government to realise how unpopular council tax is becoming and that something must be done about that. If we are to have new bands, putting some people into the higher bracket, after seven years of a Labour Government, it could be that the Conservative Party now cares more than the Government about people's ability to pay. That is why we are trying to protect those people. It is important to test the views of the House on this issue.
Resolved in the negative, and amendment disagreed to accordingly.
The noble Lord said: My Lords, the amendment would deal with some of the practical, not to say philosophical, difficulties thrown up by the current drafting of the clause. The clause prevents a local authority from making a profit from charges for a discretionary service. That is wrong in principle and difficult to police in practice. We listened to the arguments made at other stages of the Bill's progress, and we remain convinced that there will be substantial practical problems with giving effect to the provision as it stands.
The amendment would address some of those concerns. It would enable local authorities to over-recover the costs of provision of a discretionary service but only for the purpose of reinvestment in the service, in order to improve it or widen take-up. After all, the bottom line for all of us is service improvement. Let us not close off one obvious avenue to achieving that.
I remind your Lordships that we are talking about discretionary services, services that local authorities are under no obligation to provide and consumers are under no obligation to purchase. We welcome the introduction of a power to charge for such services. Without that power, the services would probably not exist. Local authorities are hard pressed to meet their statutory commitments, without the added pressure of delivering non-statutory, loss-making services.
My strong belief is that local authorities would be inclined to make much greater use of a power that enabled them to improve a service, without having to subsidise it from somewhere else. They would be able to use the power more effectively. We accept that the purpose of the power is, primarily, to promote the economic, social and environmental well-being of our communities and that it is not intended to provide a further income stream for local authorities. However, in order for local authorities to remain a high-quality service and meet the requirements of promoting the well-being of our communities, it is clear that, in some instances, they may wish to over-recover their costs in order to invest in service improvements, either to raise the quality of service provision or to increase the capacity of the service.
In Grand Committee, the noble Lords on the Government Front Bench suggested that amendments previously tabled had been designed to push local authorities into unrestricted commercial activity. I hope that those noble Lords will not construe the new amendment in that way. We seek to make clear and explicit the freedoms that are hinted at in the Bill. On Report, there was a suggestion, born of experience, I think, from the noble Lord, Lord Bassam of Brighton, that flexibility in defining "costs" could provide sufficient room for manoeuvre in the clause. There was, undoubtedly, a good deal of truth and practical sense in that proposition. However, given that it is primary legislation, finance people, however clever they may be, will find it difficult to change new investment to costs. We are concerned with improving service delivery and widening provision. I cannot see why we should not make explicit what is implicit and say to local authorities that they may over-recover their costs, but only for the purpose of improving the service. That is a more honest and straightforward way of dealing with the power.
In Committee, the noble Lord, Lord Rooker, mentioned the dangers of allowing authorities to enter into unrestricted commercial activity. On the face of it, it is a reasonable argument. None of us wishes to see local authorities putting themselves into financial difficulties because they have lost money as a consequence of delivering discretionary services. However, that is not the danger that the Minister sees. He seems to be content for local authorities to lose money, and the clause does not prohibit that. Perhaps the Minister is alert to a more subtle danger that some of us may have missed. Perhaps there is a danger in allowing local authorities to make money. That is ruled out in this clause. Again, let us remind ourselves that these are services which no one has to purchase and which local authorities do not have to provide.
As well as the principal objections that we have to this measure, we are also concerned about how it will work in practice. What will happen if the take-up of the service is greater than predicted and local authorities make a surplus? Will they be penalised? Will they have to pay back any profit? To whom will they pay the money? Surely, the most sensible and practical way forward would be to oblige any profit to be reinvested in the service. That is what we are suggesting in this amendment. I hope that noble Lords will support this pragmatic approach. I beg to move.
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