Previous convictions

The author regrets his small role in the poll tax debacle and the beginning of the end of Tory hegemony
March 20, 1999

I fell for the idea straight away. Douglas Mason, a Scottish councillor, came up with a poll tax as a way to avert the rating crisis which hit Scotland in the early 1980s, and which threatened to do the same in England.

It is often difficult to track an idea back to its source, and there may well have been other people who thought this one. It would be surprising if there were not, because local government finance was reaching a critical stage, and people were examining how other countries managed. Capitation taxes, local income taxes, sales taxes and land taxes were among the ideas which came under scrutiny.

It is quite possible that civil servants, political researchers, academic analysts, even government ministers might have independently come up with the poll tax idea; but I heard it first from Douglas Mason.

The Daily Mail, whose readers were squirming at the injustices of the rating system, wanted me to set out an alternative. Mason mapped out a draft for me. Rates, which in practice fell upon home-owners, were to be replaced by a broader-based, fairer tax which would fall on the whole local population. The Mail ran the piece, with a cartoon depicting a poll tax box alongside a ballot box, and the idea was floated.

Looking back, I can see why I liked the idea. It seemed to present an elegant solution to an intractable problem. The problem was representation without taxation. In local electorates dominated by council estates, the home-owners who footed the bill for local services were often in a minority. The many would happily vote themselves a big-spending council to be paid for by the few. In fact, because a large chunk of their budgets came from the Treasury, local councils were already supported by the tax-paying classes.

To a Conservative government there was another point. People tempted to vote Labour at national elections had to consider what it might do to their tax bill; but at local level many of them did not pay rates anyway, so they could vote Labour with impunity. Local expenditure was rising rapidly, so the problem was becoming acute. A poll tax, in the form of an annual charge for local government services, would make electors face the consequence of their vote.

There was a final attraction: in the long run the poll tax might depoliticise local services. I had never understood why garbage collection and street cleaning should be decided at the ballot box; they seemed just like services such as dry cleaning, to be chosen on the basis of quality and price.

We were nervous about the change. We feared that local councils would use the changeover to jack up spending (they were to do so, massively), and recommended a spending freeze during a transition over several years. We recognised that there would be no point in charging students, for example, because students do not have any money. If unemployed people were to be charged, there would have to be compensating benefit increases.

At the time of the proposal, the average poll tax in Britain would have been roughly the sum of two of the other poll taxes. That is, it would have been the annual vehicle excise duty plus the broadcasting licence fee. For both of these, dustmen paid the same as dukes, and without much quibble. They were simply regarded as things you paid for, like milk. Perhaps we could get local government charges regarded in the same way.

We were wrong. When the tax was brought in, without the spending ceiling or the carefully phased introduction or the exemptions, it was huge. Suddenly people faced bills of ?600-700. The collection was a bureaucratic nightmare because there was no obvious way of ensuring payment short of an army of enforcing collectors. Employers did not collect it for the government as they collected income tax. Businesses did not collect it as they collected VAT. This meant an immense, expensive apparatus of collection, a high default rate and a vast backlog.

It could still have worked. There were signs that it was working in Scotland, where big-spender councils saw steep drops in support at the first elections after its introduction. Lessons should have been learned in Scotland and applied to England, but they were not.

If I were to do it again, I would go for a local sales tax. For all its injustices, it works, in many countries. Electronic cash registers compute it automatically; shops make collection efficient and automatic. Most important, people accept it. They will pay for their local services by paying an extra 6 pence when they buy a light bulb, or by adding ?2.50 to the cost of a jumper, much more readily than they will pay a sudden bill of hundreds of pounds.

There would be boundary problems, as people sought out low sales tax areas for their shopping, but this actually constrains local spending. The experts tell us that a difference of more than three per cent leads people to shop across the border. I still think it could have been made to work-and it could have given local authorities the chance to raise most of their money locally. Instead we had rate capping, seething resentment, and local authorities made almost wholly dependent on national government.

Yes, we would have done it differently-and we may yet. Given the parlous state of local finance, the poor relations between local government and the Treasury, and the virtual ending of local accountability, someone has to think about how local government can become local, democratic, efficient, accountable and acceptable.