The contribution or the hon. Member for Battersea (Mr. Bowis) came across as a last-ditch defence of the poll tax. I shall be surprised if the hon. Gentleman does not vote against the council tax, on the basis that he would prefer the poll tax to remain. Some of his speech sounded exactly like the arguments that we had when the poll tax was introduced—a mish-mash of half-baked myths and half-truths about Labour local authorities and others which do not stand close scrutiny. They are unfounded allegations that could be challenged anywhere within or outside the House.

The hon. Gentleman referred to Leeds city council, which has never been rate-capped or poll tax-capped. Indeed, Conservative Ministers have commended the prudence of Leeds city council. He may find that he will fall out with some members of his own party who support trade links with Europe, while he seems to be running with the Prime Minister and suggesting that we should blow cold on Europe and not build the vital trade links that our cities need to ensure that our industries are taken through to the next century and not rubbed out by this Government's economic policies.

Getting back to the amendment, I find it difficult to understand why the Government are holding out any longer—or, more precisely, who in the Government is holding out—against withdrawing the 20 per cent. rule from next April. Why can it not go through tonight? There are overwhelming arguments for getting rid of it from next April. We would welcome the reintroduction of the 100 per cent. rebate, with the council tax as part of that. It is the only part of the council tax Bill so far which has met with universal acclaim.

There is also general relief, as others have said, that the Government agreed in Committee that there would be no clawback of the compensation element when the council tax is introduced. That is welcome, because it perpetuated a further injustice in the poll tax. Now that the Government have got as far as accepting the principle that there should he no minimum contribution to local government, it is hard to see why the question of timing should hold matters up. It seems to me that that is all that is left; it is simply a question of the timing of the introduction. It certainly cannot be the principle of the 100 per cent. rebate, because that is now universally accepted.

It has been helpful that some Government Members agree with us that the 20 per cent. rule should be abolished now. I was on television with the right hon. Member for Brent, North (Sir R. Boyson) on the "Scrutiny" programme when he agreed that it would be much better if the Government abolished the 20 per cent. rule now; and I know that he is not alone. Many Tory Members agree with that point of view.

That reflects a change of approach by Conservative Members. I believe that they all see and acknowledge that the time is now up for the 20 per cent. minimum rule, on which the former Prime Minister insisted. I hope that the Government will accept our amendment tonight and agree that it is unnecessary to perpetuate that injustice.

All that seems to remain is a lingering confusion about what means-tested income support is and what it is supposed to do. Income support is not part of the tax system, whether local or income tax. It is for people who pay no tax because they are on a very low income or have no job. It should be separated, and is separated by the benefits system, from the tax system. It is part of the income maintenance system and should never have been confused with the taxation system. From the start the Government have presented that basic contradiction in their ideology. They have insisted on the notion of universality, that all must pay, regardless of their ability to pay, or, more important, their inability to pay and regardless of their lack of income. It may, on the face of it, seem laudable that everybody should make some contribution. The problem is that that principle comes into direct conflict with a means-tested benefit system, where people are asked what income they have and, if they do not have an income, are given support from the state.

The Government now refer to means testing as "targeting". The problem is that universality clashes and cannot operate with means testing, or targeting. Universality and means testing are incompatible. That is the basic contradiction built into the poll tax from the outset and that is why it is unfair to poorer people.

The whole purpose of income support is to support the incomes of poorer people. It can be argued that everybody should pay their rent and rates or rent and poll tax and we agree with that. But people should not be expected to pay them out of income support if no allowances have been put into income support in the first place. If they have no other source of income, because they have no jobs, the money that they receive from income support should pay their basic bills. That is the basis of income support, but the Government approach has been to lower the level of income support and to deduct, as it were, rent, rates or poll tax. As a result, that income support has been penalised and that is the injustice in the poll tax. I believe that it is not necessary to continue it any longer.

I remind the House of the history of the 20 per cent. rule. Until 1 April 1988, all those on supplementary benefit, as it was then called, received a 100 per cent. rebate if they paid rates because the system was means tested. If someone did not have enough money to pay his or her bills, the principle could take that into account.

The new system of income-related benefit which was introduced in April 1988 allowed only those who received rate rebates to qualify for a maximum rebate of 80 per cent. Everyone at that stage was required to pay 20 per cent. of the rates. In other words, the 20 per cent. principle was introduced during the last year of the rates to prepare for the universal principle of the poll tax. Therefore, the principle of the 20 per cent. contribution was simply carried forward from the end of the rate rebate system to the poll tax rebate system. No matter how low one's income, everyone was required to pay at least 20 per cent. of his or her poll tax bill.

I am surprised that the Government have now conceded that that principle is unjust and are prepared to return to the full 100 per cent. qualification for rebates from April 1993. The Government appear to have acknowledged that they were wrong to try to use the income support system as a means of deducting local tax, or the poll tax as it was.

Why are the Government holding out against all critical opposition, whether from the Labour party, public bodies outside the House, other parties and even some Conservative Members from the Back and Front Benches? There seems to be no logic or economical reason for holding to the 20 per cent. rule any longer. There certainly is no reason of principle.

I emphasise that those people who have been asked to pay the 20 per cent. minimum contribution may have had to face severe financial difficulties. I am sure that most hon. Members will have heard from such people at their advice surgeries, particularly pensioners, who say that the 20 per cent. contribution can cause real hardship if poll tax levels are high. Nor do those levels have to be above the rate for poll tax capping. That should have been taken into account. When the poll tax was introduced, it was simply assumed that 20 per cent. was a notional figure and that people could chip in a small amount to make a contribution because it would not make a real difference to their disposable incomes. In fact, as we have all learnt during the past few years, that 20 per cent. can make a considerable difference to people's incomes.

It was the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley), one of the great architects of the poll tax, who, in The Guardian on 8 March, said: The charge is higher than people on low incomes can afford because the rebate system has become totally inadequate. It was designed in 1988 when we expected community charges to be much lower than they turned out to be. I agree with that statement. It precisely highlights the problem.

In the responses to the consultation paper "A new tax for local government", those calling for the immediate abolition of the minimum 20 per cent. contribution included the Chartered Institute of Public Finance and Accountancy, the Rating and Valuation Association, the Association of Metropolitan Authorities, the Association of London Authorities, the Association of District Councils, the Convention of Scottish Local Authorities and the Society of London Treasurers. In other words, evidence of the need to abolish immediately the 20 per cent. payment has been building up.

In support of the abolition of the 20 per cent. contribution, the audit commissioners said: It is worth mentioning one change which would assist authorities in their current collection arrangements and therefore, indirectly, facilitate the introduction of the council tax. That has to be a helpful suggestion. It is a friendly remark suggesting to the Government that the abolition of the 20 per cent. rule will ease in the council tax and ensure that the kind of confusion and chaos that we have seen in local government finance in the past year is not repeated next year.

5.15 pm

In a memorandum in March this year the Child Poverty Action Group said: The strong reluctance to make this change— the immediate restoration of the 100 per cent. rebate stems from the principle underlying the poll tax that everyone should make a financial contribution to local services. We believe this argument is flawed on both principle and pragmatic grounds.

The Government have already accepted the principle that the 20 per cent. contribution is flawed. That is why they decided to reintroduce the 100 per cent. rebate. I hope that the Minister will not cling to it. When he gave his press conference on 28 November he seemed to suggest that it would be inappropriate to introduce some of the changes and that it would be better to wait and introduce all the changes at the same time under the new system. He seemed to be arguing that, as long as the poll tax had a shelf life, the principle that everyone must pay regardless should be held to, as though it were irrevocably wedded to the principle of the poll tax. I hope that he does not believe that; that he now fully subscribes to the notion that there should be a 100 per cent. rebate system. The working out of the income and benefit system is different from that of the tax system, whether it is based on property or personal income, or on a combination of the two, as is the council tax. I hope that the Minister is not holding on to a residual principle that everyone must pay.

On 26 March, the hon. Member for Leeds, North-West (Dr. Hampson) said: About 70 per cent. of defaulters are those who are supposed to pay 20 per cent."—[Official Report, 26 March 1991; Vol. 188, c. 858.] If the 20 per cent. deduction has become the problem of the whole system, it is nonsense to continue for a further year. If that is the case, it should be tackled now, not simply compounded, allowing problems to build up in the future.

I hope that the Minister will take seriously the Audit Commission's argument for abolishing the 20 per cent. minimum contribution. In its report, "Administration of the Community Charge: Some Longer-term Considerations", it says: exempting 20 per cent. payers would more than pay for itself and would ease the pressure on the system, particularly in areas where collection is very difficult anyway." If the Government cannot accept the amendment and do not agree to abolish the 20 per cent. rule now, the inevitable result will be that the problems that have been experienced this year will be experienced on exactly the same scale, if not worse, next year. It must be good economic management and common sense to abolish that 20 per cent. contribution now.

We are pleased that the Government have at least acknowledged in principle that the 20 per cent. rule should go, but I hope that the Minister can now assure me that there are no pragmatic reasons for not making the change now to be effective from next April rather than having to wait longer. Not many changes were made to the Bill in Committee, but I hope that, as on the clawback, the Government will say that the amendment is common sense and that they are prepared to accept it.