Ross Kelly
Well, we'll start, if we may, by asking about the Community Charge. And the latest figures that we have for Dumfries and Galloway, in our area, are that 85 per cent of people have in fact paid. Now, there is a suggestion that the anti-Community Charge campaign may in fact have helped that figure. Do you believe that's the case perhaps?
MT
Well, we noticed that, when it came to registration, the overwhelming majority of people registered without difficulty, and some of the fears didn't come about. But then, I think, the particular region of Scotland you're talking about were very wise. They offered a discount, which is very good practice. If you get your money in earlier, then you're not going to have to borrow, indeed you may have some to lend out to some people, and I think they got a good response.
Ross Kelly
Do you think that figure of 85 per cent really means acceptance of the new Charge, or in fact a simple wish to be law-abiding, as most Scots are?
MT
Well, firstly I think it is a wish to be law-abiding, but I do think that it's a recognition that it is generally fair. You see, in any case, the Community Charge meets only about 14 pence in the pound of local authority expenditure, and the rest, as you know, is met by business and about 50 per cent by the taxpayer. So I think there's a realisation that the taxpayer first pays the lion's share, then business, and then the local people pay directly to Community Charge, and I think they recognise that that's a lot fairer than the old rating system, and half the adults in the country didn't pay at all, and so this one is a great improvement.
Ross Kelly
As the potential Community Charge payers in England are looking back at the Scottish example, I mean, given a success rate, which we must call it at 85 per cent paying, is there any real need for cushioning Community Charge payers south of the border?
MT
Well, they're cushioned also north of the border, because, you know, people who can't afford to pay get a rebate and already in Scotland one million people are getting a [end p1] rebate. That's just to make certain that there's not an unfair burden on people. South of the border, the amount we pay directly towards local authority expenditure is higher than in Scotland. It's about 25 per cent in England. We had to bring it forward in Scotland, because Scotland had a rating revaluation, and I think what people are now comparing is what they're paying under Community Charge compared with what they would have paid under a rating revaluation, which caused so many problems that we couldn't leave it any longer in Scotland to bring in the legislation. But, we do try to have it similar, very similar, almost identical with its reliefs. And certainly in England we will learn from what has happened in Scotland.
Ross Kelly
Where will that cushioning money come from for English Charge payers? Will it come from Government funds or from other Community Charge payers?
MT
Well, in England, as I indicated, Community Charge would take up about 25 pence in the pound of local government expenditure. In Scotland it's about 14. The cushioning, for example, on the rate rebate: the rate rebate, or the Community Charge rebate, which is taking its place, is paid for entirely by the taxpayer. So the taxpayer pays the lion's share towards local authorities. On top of that, the taxpayer finds £1 ½ billion, for the United Kingdom, for people who can't fully afford to pay the Community Charge. So, don't call it the Exchequer. The Exchequer only consists of people who pay taxes.
Ross Kelly
On rebates, there have been delays and it's apparently been, according to people we've spoken to in Scotland, a nightmare to administer. Many people haven't had their rebates, simply because they're perhaps ignorant that they were able to have one or failed to register in time. Is the rebate system really fair enough?
MT
Oh, I think it is, and it's not new, you know. You had rate rebates, so people do know how to operate the system, and they've only to ask their local authority or their Citizens' Advice Bureau if they're not quite sure. But as one million people have already applied for rebates and seem to be getting them, I don't think that charge is quite right.
Ross Kelly
Now then, on both sides of the borders—existing Charge payers, potential Charge payers—many are still not convinced that it is a fairer way to pay for services. The example of the widow paying the same rates as perhaps a family with young adults working can be contrasted with the laird in his castle paying less, in fact, than a working family in a small cottage or terraced house.
MT
The … the … The laird in his castle … anyone who is earning well will in fact be paying the lion's share towards taxation, a much greater share than the working family. Of course. And don't forget I said it is the taxpayer who pays most towards local [end p2] authorities. He will also be paying in full for the Community Charge rebate. So the taxpayer is paying quite a lot towards local authority expenditure. Indeed, far more than the Community Charge payer.
Ross Kelly
Now, the Community Charge is designed expressly to make councils, local authorities, instantly accountable. How will the new Charge do that better than the old rates did?
MT
Well, the old rates, as I indicated earlier, half the adults in the United Kingdom did not pay directly towards local authority expenditure through the rates. Under Community Charge, all adults will pay unless they get a rate rebate … unless they get a Community Charge rebate. And then some of them will pay part of it. Now, that means really that what you're voting for, you pay for, in part. And I think it will make you very much more aware of whether your local authority is getting value for money. That's what people want. And we've arranged the grant, the taxpayer's grant, the businessman's grant, such that wherever you are in the United Kingdom, and the system is working in full, the same standard of service delivered at the same level of efficiency will lead to the same Community Charge. So people will be able to see at once whether their local authority is spending more than others or whether they're efficient or inefficient. So if your local authority is spending on a bigger scale or spending less efficiently, then the local electors will be paying a higher Community Charge, and that will give them a very, very ready way of saying, “Look, where is this money going?”
Ross Kelly
So, in effect, neighbouring authorities might be seen to be competing if … .
MT
Oh, indeed. They will be. If the Community Charge varies enormously, then the local electorate must go immediately to the council and say, “Why are you taking more? Why are you taking more in Community Charge? What are you spending it on?” Because there will be a standard level of service.
Ross Kelly
Now, we're roughly half way between implementation in Scotland, for some of our viewers, and the implementation in England. Were there any lessons learned from the administration of the Charge and the implementation in Scotland which have been applied south of the border?
MT
I think we have learned something. For example, we're getting problems in Scotland with second homes. And Malcolm Rifkindthe Secretary of State for Scotland is having a look at that. I think, in England we have a bigger magnitude of one problem, which is that for years, under the rating system, there was an enormous subsidy from the better-off areas to the less well-off areas. But that was hidden. Now, it's going to be all above board. And people are now saying, “But why should we pay not only to our own local [end p3] authority, but also by way of a Community Charge to other local authorities who are more extravagant than we are?” And we say, “Well look, it's a transition period,” but they're not liking it, because they're going to have on their Community Charge demand precisely the amount which is the standard Community Charge and the amount which they are paying. And then we were going to put on a third factor, what we call the safety net. That is to say, a transition payment. And that meant that some individual payers would be paying extra, not by virtue of their own local authority, but by what was going to others. Now, they've been doing it for years, but it's been hidden. Now, it's come up and above board. You can see they're saying, “It's against your whole philosophy, Mrs Thatcher. The fact is that we've gone to this particular method so that we can see whether our local authority's giving value for money. Now, we can't if we're paying to another one.” And we're taking that away and looking at it very carefully. It would only be a temporary thing, but obviously people want to know immediately what they're paying and why they're paying and it is going to their own local authority.
Ross Kelly
You touched on there the subject of second homes. In both sides of our region, we have many, many second homes. And perversely, it must be said, one of the aspects of the new Charge which is very popular with the local people is that the standard Charge, up to a multiplier of two, is being applied on these homes. That satisfies them, but is there a danger that these homes will then be left to be derelict, will be abandoned, because people are reluctant to pay that Charge?
MT
The standard Charge for a second home doesn't have to be as much as a double charge. The local authority has some discretion about that. And I think if they use their discretion, they may find more people keeping second homes, which is very important to some areas, but also it's not only the second home with a holiday home, for example. It is that some people, who have to live in a certain house because it goes with the job, may in fact be buying another home for their retirement and when they no longer have the tied house, and we're having to look at that one very carefully. Now, we did find, and I won't go into the technical details, slight differences between the English law and the Scottish law, and we're trying to bring that into line so that it gives a little bit more … chance to the local authority to be a little bit more lenient with second homes.
Ross Kelly
Turning now, Prime Minister, to your visit to Scotland, the Poll Tax, as it's commonly known there, may or may not be responsible for a showing of 16 per cent in the polls there, a System Three poll last week. There also was the problem over the resignation of the party President. How concerned are you about the state of the party in Scotland right now?
MT
I'm always wanting the state of the party to be better in Scotland, and we need more members in Scotland. And we need to win back more seats. And what is puzzling is why, when Scotland is doing very well, better than ever before, why that is not being [end p4] reflected in the polls. And the message which I have to get across is that Scotland would not enjoy the prosperity it is now, and it is much more prosperous and the male wages and earnings, as you know, are the second highest in the United Kingdom after London and the South East. But this could never have come about unless we had pursued for the last ten years Conservative policies which have enabled people to increase their enterprise, increase their earnings, increase the proportion they keep, and enable this prosperity to happen. And, all the way, including things like the sale of council houses, all the way, our opponents fought everything we've tried to do, and they've fought the recipe which has brought success. So that's the message we must get across.
Ross Kelly
You did think genuinely that … that the state of the party in Scotland, coupled with the prosperity there … Is that a case again of just bad selling of what you believe are good policies … .
MT
No, I think there is a factor. The last election, the last election, the fall in unemployment in Scotland had lagged behind that in England. I think, had the election in Scotland come nearly a year later, which it could have done, I think we should probably have won more seats, because they would have seen how the policy really was working very effectively to bring down unemployment in Scotland, and now very, very effectively to get more inward investment. That investment would not come here, either to Scotland or to North East and North West of our country in England, unless those overseas countries had real confidence in the Government and that its economic policies were right and long lasting. And I think that that would be much more visible at the last election, had the election been a little later.
Ross Kelly
On the 16 per cent showing, it's almost as bad as 1985. I think it was a 14 per cent showing in the polls when there was the extremely unpopular—you've mentioned it—the rates revaluation. The Community Charge was designed to rid that anxiety of the old rate payers there. Do you think perhaps it's failed then, given that …
MT
No, I don't think it's failed at all. I do indeed remember it went down to 13 per cent. The rating revaluation was horrific for many small businesses and for many, many families. Oh, enormous multiples of their rates, they were going to have to pay. And we had to have a transition arrangement quickly. Believe you me, it would be infinitely worse in Scotland had we not brought in the Community Charge. And it's suiting many people, it's suiting many people. Home owners, for example, who under the old rating system, if you improved your home—you put in central heating, you added a room, you added a conservatory, you added a downstairs cloakroom. Along came the rating valuation officer, said “You've improved your house. You must pay more rates.” It was silly. It's a silly way to levy a tax for paying for local authorities, if the more improvements you do to your house, the more tax you pay. It was silly, and many people are now realising that. What in the first instance they're doing, of course, is comparing the Community Charge they're paying now with the rates they [end p5] paid last year. What they should be … be comparing is the Community Charge they're paying with the upgraded rates they would be paying without any relief. And I think you'll find that the Community Charge will be more and more accepted in Scotland because it is fair. Every adult should pay something towards local government expenditure unless they really can't afford it. If they can't afford it, they get the rebate. And it's really fair, but quite wrong that, because you have a considerable number of people living in one house, they should pay … they should have paid nothing, but nothing towards local authority expenditure. So I think as it works it will be seen to be fair, and the example you've quoted in the Borders, will go to other regions, provided the local authority also tries to get value for money for every pound of Community Charge payers' money it spends.
Ross Kelly
Do you think perhaps …
MT
If not, you've got to change your local authority to one that does get value for money.
Ross Kelly
So it's down to the voters as customers then?
MT
Yes!
Ross Kelly
Do you think that perhaps with the Scottish voters, or customers, Community Charge payers, it's a case of time that they felt just slightly they were being used as guinea pigs for the new system?
MT
But not used as guinea pigs. Scotland had a system which we didn't have in England. It had more frequent revaluation of rates, and when this revaluation of rates came up, I said, “Look, are you sure you want to go ahead with it? Because I've been through two revaluations of rating south of the border, and I've known the trouble they've caused.” And we hadn't had a revaluation of rating for fifteen years. And so, if we were going to have one, it was going to be terrible. “Oh yes,” they said, “because there are lots of new properties and lots of new businesses and lots of new office blocks.” And they said, “The old system isn't fair, so we want the rating revaluation.” I, I must confess, was sceptical, because I'd been interested in rates for a long time and knew it was an unfair system. I said, “If you want it, you go ahead with it,” because they said that we would have to introduce legislation to … not to go ahead with it. And I wasn't surprised when we got the terrible results we did. And we got the rebellion, a real rebellion. So I knew we had to do something about it. Now, we did something about it by transitional relief, but that wasn't enough, and conference after conference I was tackled. And I said we will bring in something which is a much fairer system, and Community Charge is a fairer system where everyone will pay something to it, unless they can't afford to. And it is a fairer system, and we had to do it, because Scotland's then existing law required a rating revaluation. Ours we could postpone [end p6] without having to bring in more legislation. And we did. So, no, we had to act quickly because of Scotland's special problems, and we did.
Ross Kelly
Finally, on this subject, how long do you think it will be before Scots payers are convinced that this is a better system?
MT
I think that the figures you gave me at the beginning mean that they accept it's a good system. They know that it pays only a small proportion of local authority expenditure, but it's enough to make the local authority accountable to them, and that's what democracy is all about. And I think some of those who oppose the Community Charge—I know why they oppose it: because for the first time it will show how efficient and how wise in expenditure a local authority is. And for those who are profligate and inefficient, they're not going to like it.
Ross Kelly
Now on to the environment, Prime Minister, and Green concerns are very, very central here in this region. I'd like to ask you, what really are the Government's plans to stop chemical pollution in the countryside?
MT
Well, first we have, as you know, taken measures to take the sulphur dioxide out of the power stations that generate electricity from coal, because our coal has a lot of sulphur dioxide in. And so we have a programme, which is a very expensive programme, to take the sulphur dioxide out, which causes acid rain, not perhaps so much here but in Scandinavia, but it was causing trouble here. Now, that programme is already under way. Yes, it is expensive. Yes, it was necessary to do it. Secondly, with our new water legislation, we have a new National Rivers Authority, and we have a new Director General of Water, who can in fact monitor and enforce the law. The new National Rivers Authority will be looking at the quality of the rivers and the discharges into it, and will have power to enforce. Thirdly, in some areas of the country the nitrate fertiliser has been so concentrated, depending on the kind of farming you're doing, but in some of the arable areas, that the concentration of nitrate in drinking water appears to have got rather high, and we've got several pilot schemes to see how we can deal with that. There are nitrogen sensitive areas. It's not over all the country. And I think farmers too are getting much more economical with the use of fertilisers. I went to a very interesting research station which was doing work on this, and they told me that sometimes the nitrate fertiliser is scattered in such a way that two thirds of it doesn't go near the roots of the plant and is just washed through straight into the water. So it means first you can probably get as good results by putting on less. Now, we are looking at it with the pilot schemes to see what action needs to be taken, and then we discuss with the farmers, the nitrogen sensitive areas, and if they're in one of those areas, but they may themselves have been using good practice, then we feel that we would have to compensate them, and not charge those who have been using good practice. But otherwise the normal rule is that the polluter pays. But if they're still getting nitrogen problems with good practice agriculture, you would have to compensate them on the basis that they would use less nitrogen. [end p7]
Ross Kelly
Yes, I know you believe very strongly that those who want a better environment ought to pay for that. Will that mean a pollution tax, in effect, on perhaps the chemicals farmers buy and the things we as customers buy in the shop?
MT
Well, we'll decide how to do it, but the general principle is that the people who pollute the atmosphere must pay for the pollution, and … er, we would be saying to some of the farmers, “No, you cannot pollute the atmosphere.” But don't think that the nitrogen in the water is always because of farmers putting on too much. It is an accumulation of decay of plants and previous fertilisers over the years. And it can also come from certain … some kinds of organic farming. It can come from slurry too. So it is not necessarily bad practice and it wouldn't be fair, then, to make the farmer pay if it was not due to his practice. So if we demanded that he put on less, then he would need compensation for that.
Ross Kelly
And that …
MT
It's being fair. You can't always please everyone in politics, but you can try to be fair, and that's a very good principle.
Ross Kelly
Farmers will be glad to hear that because, of course, they would say that any tax on chemicals they would find hard to pass on, given that they're in a market which is designed to keep prices stable.
MT
Well, the Common Agricultural Policy, as you know, looks at its prices every year, and the prices, I'm afraid, were such that we got enormous surpluses in agriculture. We've now got rid of those surpluses, and they've got a much better prospect in the future. But I think already, you know, farmers are cutting their costs. Because the profit they got depends upon the relationship between their costs and the price, and I think they are cutting some of their costs and getting just as much profit as they would otherwise have done.
Ross Kelly
I notice you talk very specifically about the kind of pollutants. Will industrialists and farmers have a less easy ride because we have a chemist as a Prime Minister?
MT
Er … well, let me put it this way. All the solutions you have must be soundly based scientifically. That we insist on, otherwise you can do more harm than good. We shall have a very big Control of Pollution Bill in the next Parliament. We've learned a great deal since the last one, which was 1974. It's absolutely vital that we look after the environment. The global environment, which is what supports life, all kinds of [end p8] life on this earth, and the local environment, because you've got to keep the local ecology, you've got to keep the food chain going in the sea. If we disturb that, then we can alter things fundamentally for the future for our children in unknown ways. And we have a duty to do this. We have a duty to hand on the whole environment as well as we received it, and preferably better, because we know a lot now that we didn't. And, of course, the concentrated way in which we've been doing things in the last hundred years—the increase in population, the concentration in farming, the concentration in using all the fossil fuels. It's all this extra that's been pouring in that is having effects that we didn't really know about. Now we know about them. The problems that science has produced, in the way we've been using it, will be similar to the problems which science can solve, but they must be very soundly based as solutions for our children's sake.
Ross Kelly
And will the central theme of that be making polluters pay and consumers who want a better environment?
MT
Yes, you have to have them. For example, when you burn coal which has high sulphur dioxide in it … to get your electricity, it costs money. It is the generators of electricity for the consumers who would have to take the sulphur dioxide out, and so we shall have to pay more for sulphur dioxide [sic]. We shall have to pay more for the water, if as a result of drought we have to have more reservoirs, if as a result of the nitrogen sensitive areas we have to have more equipment to take the nitrates out of the water, then the consumer will have to pay. I believe the consumer will be prepared to pay, because, I think, with a higher standard of living, consumers are rightly demanding a higher quality of life. And most citizens are very concerned too about the future our children will come into and don't want to be seen to be doing things at the expense of future generations. So they will be interested, and so will the young people.
Ross Kelly
Prime Minister, thank you very much.
MT
Thank you.