Rating and Valuation (Amendment) (Scotland) Bill

HC Deb 05 December 1983 vol 50 cc30-112

Order for Second Reading read.

4.5 pm

The Secretary of State for Scotland (Mr. George Younger)

I beg to move, That the Bill be now read a Second time.

The Bill that we are considering has one simple purpose —to help the ratepayers of Scotland. In 1983–84 they are paying about £1.4 billion to Scottish local authorities. This is a substantial sum. While the rate bill for some householders may be relatively small, it is a considerable burden for many domestic ratepayers. It is also a heavy burden on business and commerce, which pays over half of the rates in Scotland.

It is not surprising that rates are a substantial sum since they help to support a wide range of important and valuable local services, which are now largely taken for granted by the population as a whole. However, it is enough to say that, since there must be local government services, local authorities are entitled to raise whatever taxes they like to finance them. It is essential to ensure with sums of this scale that very close attention is paid to how much is raised, the way it is raised, and the effect on those who pay.

This Bill reflects the White Paper "Valuation and Rating in Scotland: Proposals for Reform" published in August and the comments I have received on it. It may be asked why, in the light of the comments and proposals, we have not proceeded to abolish rates altogether. Rates are a long established method of taxation but, like all forms of taxation, they are naturally unpopular, not least because they are, in the current jargon, highly perceptible. In practical terms this means that individuals are very well aware of what they are paying each year in rates. That, rightly, colours their attitude.

The Government recognised this dissatisfaction when we published our Green Paper "Alternatives to Domestic Rates" in December 1981. We set out the other possible methods of raising revenue locally and invited comments from all concerned. We hoped that, if there was wide dissatisfaction with rates, a generally acceptable alternative would emerge from the consultation. Unfortunately, that was not the case. Opinion was much divided on the merits of the main options—local income tax, local sales tax, poll tax and assigned revenues.

We took the view that there was little point in replacing rates with an unfamiliar and untried system having little support from the outset. We therefore decided to make reforms to the rating system, which we consider basically sound, to eliminate some of the anomalies that have caused concern recently.

I recognise that there will be disappointment among those who argued in favour of each of the various other possibilities. However, I believe that the consultations show that there is no basis for radical change.

The rates paid by ratepayers are the product of two figures—the rate poundage set by the local authority and the rateable value of the property. In this Bill we are tackling both of the elements making up what the ratepayer has to pay. The rate poundage set by the authority is heavily influenced by the authority's level of expenditure. While an authority's capital expenditure generates loan charges, which have to be paid for by rates, the expenditure which rates defray is very largely the current expenditure on services.

When the Government came to office in 1979 we made it clear that we thought that local authorities were spending more than the country could afford. The 1960s and 1970s —if we except the IMF crisis which hit the Opposition when they were in government — had seen a steady growth of about 3.5 per cent. each year in volume terms in local authority expenditure. Plainly such figures could not continue indefinitely. I made it abundantly clear to local authorities in 1979 and every subsequent year that there had to be a reduction in expenditure. So far, that has not happened. The growth may have been checked, but this year local authorities are still budgeting to spend more in real terms than they did in 1979–80, the year of the rate support grant settlement that we inherited from the Opposition. What I have just described is a denial of the empty rhetoric of the hon. Member for Glasgow, Garscadden (Mr. Dewar) of the suggestion that This legislation has been conceived in haste and born from prejudice". I believe that those were his words. They were very good, but the figures were an effective denial of that phrase, however good it may have been.

It is not as if we were asking for the impossible. Individual authorities, both regions and districts, have reduced their expenditure. For instance, in real terms four regional councils have budgeted to spend less per head in 1983–84 than they spent in 1979–80, and 15 district councils and one island authority have done the same.

If all authorities had been prepared to co-operate in that way, and if certain individual authorities had not pushed up their expenditure and rates in a wholly unreasonable way, it would have been unnecessary to take selective action and probably even to make general abatements of grant. It is not open to anyone to say, and be believed, that it is impossible to meet the Government's target, because they have been met by a great many authorities.

I have no doubt that the selective action powers that I have had to employ three years running have fully justified themselves in operation. For the benefit of hon. Members who may have entered the House only this year, I repeat that these selective powers are not new; they have been on the statute book since as long ago as 1929 and, in case it is claimed that the Opposition took real offence against them, they re-enacted them in 1966 and they were modified in 1981 to be prospective rather than retrospective in their effect.

Mr. Tam Dalyell (Linlithgow)

Although I did not enter the House last year, while the Secretary of State is dealing with the 1920s legislation, will he study the special problem of Edinburgh zoo which, I admit, is rather an anomaly? His hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) and I spent a morning with Mr. Roger Wheater and his colleagues at Edinburgh zoo. This is a special case, which puts Chester zoo and other zoos in England at a great disadvantage. Will he consider the position under the 1920s selective legislation?

Mr. Younger

I appreciate the hon. Gentleman's anxiety about this. I have heard from my hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) that this is a matter of great importance. I shall study what the hon. Gentleman has said. I understand that Edinburgh zoo receives 50 per cent. mandatory charitable rate relief under the 1962 Act. It is open to Lothian region, at its discretion, to relieve as much of the remainder of the rates burden as it wishes. I should have to study whether other zoos receive local authority relief of rates or some other form of assistance. I shall consider the matter and communicate with the hon. Gentleman and my hon. Friend.

As I said, these selective powers are not new. They were re-enacted by the Opposition in 1966, apparently without a qualm of conscience. They were modified again by the Government in 1981 to look forward rather than backward in their effect.

Mr. John Maxton (Glasgow, Cathcart)

The right hon. Gentleman keeps claiming that these powers were enacted by the Labour Government in 1966. How many times before the Government came into power were they used? That is much more important.

Mr. Younger

That is an extremely valid and interesting point. The complaint made by the Opposition is that these powers are objectionable. They had the chance on many occasions, and certainly in 1966, to abolish them if they wished.

Mr. Bruce Millan (Glasgow, Govan)

Rubbish. Absolute rubbish.

Mr. Younger

The right hon. Gentleman is making one of his excellent speeches from a sitting position. They are usually better than those of his other colleagues.

Mr. Maxton

The Minister has not answered my question.

Mr. Younger

They have not been used until this Government had to use them, which is why we have the Bill today. The background to the Bill cried out for them. I shall have more to say about that in a few minutes.

The selective powers deal with the authority planning excessive and unreasonable expenditure. They make it possible to return the savings made directly to the ratepayers. A few figures will illustrate that clearly. In 1982–83 Lothian regional council proposed a rate of 116p in the pound. Selective action was initiated, but the electorate's decision — I am glad to say — made it unnecessary to complete that selective action. That is an interesting point. The rate came down from 116p to 100p. This year, Lothian region again planned to increase its spending. Selective action was again taken and the rate was reduced to 86p in the pound.

It might be interesting to note that Lothian is still spending, even after that, more per head than all comparable regions, so there is no suggestion of services being destroyed, abolished or abandoned, although the ratepayers have had a reduction in their regional rate of more than 25 per cent. in two years because of Government action to help them.

Mr. Gavin Strang (Edinburgh, East)

We have been through this before. The Minister conceded the last time the subject was debated, just before the summer recess, that one of the important factors in the Lothian region was the major capital expenditure that had taken place, such as the new sewage works, which involved substantial ongoing revenue costs. Does the Minister recognise that 4,000 jobs have now been destroyed in the Lothian region? We are seeing real reductions in the services. There is a massive reduction in the number of home helps, for example.

Mr. Younger

The hon. Gentleman is half correct. If Lothian region were spending vastly less than any other region and its services were practically non-existent as a result of this, he would have a point, but that is not so. In spite of all those reductions, it is still spending more per head than all other comparable regions. That does not meet the test. Many local authorities have to face heavy capital expenditure. Those authorities in other parts of Scotland that have had heavy capital expenditure would take it amiss if Lothian were placed in a special category.

Similar action in Stirling resulted in the freezing of its rate for 1982–83 and bringing it down this year. The savings that have been made have been welcomed by ratepayers.

I mentioned a moment ago the electoral effect which was clearly seen in the Lothian region, and which was admitted by the previous Labour Administration, who made it clear that they realised that the electorate had rejected them as a result. In Glasgow, a department store, for instance, would have seen its rates bill cut by about £4,000 this year; and because of the regional rate in Lothian, the reduction was even more striking in Edinburgh — about £16,000 as a result of this year's action. The cumulative effect of such action for a similar Edinburgh store would have been to cut its rate by £84,000. That is the result of reducing Lothian's rate from 116p in 1982–83 to 86p this year. Therefore, it must be admitted— it is admitted by most people in the area, whether they agree with it or not — that the Government's action has brought substantial relief to ratepayers, who were finding it difficult to meet the higher rates imposed on them.

When the action was first taken there were in Lothian and Edinburgh city clearly documented cases of small businesses facing extinction. Indeed, many of them went out of business because of the rates imposed on them. Therefore, the figure for jobs that have been lost which the hon. Gentleman quoted must be set against the undoubted number of jobs that had already been lost because of the excessive rates imposed by Lothian regional council.

Mr. Harry Ewing (Falkirk, East)

The Secretary of State seems to say that had he not taken selective action many stores would have closed. Will he tell us how Graham and Morton, the long-established family business in Stirling, was able to remain open during the high rating period but has had to close since he has effectively reduced the rates?

Mr. Younger

I am glad to hear the appeal from the hon. Gentleman that I should have been more severe on Stirling district than I was. He is probably right that I was, as always, too kind to it. However, his timing is a little wrong. He cannot believe that a business concern can suffer three or four years of severe rate increases and then suddenly survive when relief is given. Those two or three years of high rate increases probably caused difficulties for such a business, although I am sure that there were additional reasons for the closure.

Mr. Donald Dewar (Glasgow, Garscadden)

The Secretary of State seems especially worried about department stores. He will know that department stores are a special case because they are more highly rated in Scotland than in England. Will they be helped by clause 13 of the Bill?

Mr. Younger

I shall deal with that point in more detail later, but whether clause 13 will help them will depend whether, in a specific case such as a department store, no other rental evidence is available. As the hon. Gentleman realises, other rental evidence will probably be available, in which case it will be fair for the rating system to operate as it does. But in other cases, which may or may not be department stores, where there is inadequate rental evidence, the Bill will help them.

Selective action has been widely criticised. The questions raised by hon. Members today show that they are still disposed to criticise that action, but they cannot escape the fact that this has substantially helped some ratepayers. Obviously, I would prefer not to have to use the powers, but they have been of benefit to ratepayers, and any general abatement of grant affecting authorities as a whole has been less than it might otherwise have been because of the effect of selective action.

The ratepayer's bill is the product of the rate and the valuation of the ratepayer's property. The Bill also tackles the problems that have arisen on valuation, particularly since our previous revaluation in 1978. I remind the House that the next Scottish revaluation will take place in 1985.

Scotland has its own valuation system, which is separate from that of England and Wales. However. from time to time anomalies arise that can have important consequences for individual ratepayers, especially those where there is competition between similar businesses north and south of the border. In the Bill we seek to deal with some of the unfairness, always with the aim of helping the ratepayer. The main valuation provisions of the Bill have three principal objectives: first, to put an end to two specific anomalies; secondly, to extend considerably the opportunities for a ratepayer to appeal against his valuation; and, thirdly, to improve the appeal system to allow quicker and more authoritative settlement of appeals.

I now turn to the detailed provisions of the Bill. Clause 1 would remove what is widely seen as unfairness in the present arrangements for grant abatement, and I hope that it will be supported on both sides of the House. When it is necessary to reduce rate support grant during the year as a result of the overspending planned by local authorities generally, the grant reduction falls on individual authorities according to their original share of grant. Thus it is unrelated to their overspending as measured against the guidelines. Within existing statute we have made some limited arrangements to protect authorities within or close to guidelines. However, for the bulk of authorities the penalty bears no relation to the overspending. Since we do not use the block grant system that is applied south of the border, there is no predetermined penalty that an authority knows that it will incur if its spending reaches a certain level. This clause will make it possible to relate grant loss directly to overspending measured against current expenditure guidelines. It will bring greater pressure to bear upon high spenders, and will recognise the efforts of more moderate authorities, which will be widely welcomed by those who have felt ill-used in recent years because of the unfairness of the system.

I am delighted to tell the House that, in 1982–83, the last year for which we have final figures, no fewer than 25 local authorities brought their spending within the guidelines, which again shows that it is by no means a difficult or impossible target.

Clause 2 would make it possible to streamline the selective action procedure. As I said, the power to take selective action has produced measurable benefits for ratepayers. At present, I must lay an individual report before Parliament for each authority that is the subject of selective action. That report must be the subject of a separate debate and vote. Clause 2 would make it possible to lay a combined report covering several authorities and thus speed up the procedure.

Clause 3 would give me the power to control the rate levels of all authorities. As I have made clear to the House—

Mr. Dennis Canavan (Falkirk, West)

Is the Secretary of State aware that opposition to the rate-capping proposals in clause 3 is not confined to Opposition Members? Is he aware that many Tory councillors, including Councillor Brereton the leader of the Tory group on Edinburgh district council, are opposed to the proposals? I understand, too, that many Conservative Members of Parliament south of the border are afraid that the proposals will be imposed later on their local authorities. Is it not a pity that the gutless Scottish Tory Members do not have the same spine, and do not defend their local authorities? Is it not significant that, excluding the payroll vote and the parliamentary private secretary to the Secretary of State, only five Scottish Back-Bench Tory Members are here today for this Second Reading debate? Is that not an absolute disgrace?

Mr. Younger

I pay tribute to the hon. Gentleman's close links with Conservative Members, but if I wish to undertake a survey of Conservative Members I shall listen to my hon. Friends rather than to the hon. Gentleman. We must await the view of the House on these measures, and I shall pay special attention to the views of ratepayers on the prospect of a fall-back position, which the Government can introduce if there is a likelihood of difficulty, so that there is some limit on general rate increases, which have caused much concern to ratepayers.

Clause 3 would give me the power to control the rate levels of all authorities, and I have made it clear to the House and to the Convention of Scottish Local Authorities that I hope that I never need use that power. It may then be asked why it is to be used only if authorities fail to respond to other actions and to the exhortations that have been addressed to them so often since 1979. I am encouraged by the fact that rate increases have fallen, but the total expenditure of local government is still too high. The possibility of rate limitation should, therefore, be an incentive to all authorities to which it could be applied to moderate spending and rate levels in the interest of the difficulties faced by ratepayers.

If the power had to be used, local authorities would be given good warning, probably in April, in response to unacceptably high rates and budget proposals for a particular year. I would make use of this power in the following financial year. General rate limits for each class of authority would be set, subject to parliamentary approval, in the autumn before the financial year to which the control of rate levels would apply. Individual authorities would apply to me for exemption from the general limit, and that exemption could be granted if there were exceptional circumstances.

I accept that this would, if it were used, limit the freedom to set rates that authorities have at present, but authorities would still have the full freedom within the limit to set their rate and their own expenditure priorities. I reject the idea that this clause would spell the end of local government in Scotland as we know it, and all such statements that have been made by some people in recent weeks.

Mr. Harry Gourlay (Kirkcaldy)

The right hon. Gentleman claims to believe in local democracy, and his party's great slogan for many years was "set the people free", but what example is this, and how will the people in Scotland be set free? As my hon. Friend the Member for Falkirk, West (Mr. Canavan) said, though the Secretary of State may not accept this, even Tory Members and councillors are objecting to this proposal applying to Scotland, in case it should apply in England as well. How is this setting the Scottish people free?

Mr. Younger

I appreciate the hon. Gentleman's point, but it depends on whom one means by the people. The one group of people that the hon. Gentleman has left out of his calculations is that of the business ratepayers, which is a numerous group. No doubt there are many in his constituency. They have been actively canvassing for some form of relief from the extra burdens that they have had to pay at a difficult time, when all family and business budgets have been under pressure.

Clause 4 introduces a statutory requirement for local authorities, before fixing their rate, to consult their non-domestic ratepayers, which are responsible for paying 60 per cent. of the rates. This clause aims to ensure that local authorities inform their business ratepayers of their expenditure plans and themselves are fully aware of the consequences of increasing rates for the businesses in their areas. For all businesses rates are a substantial outgoing and for some they are very significant. For some businesses there may be a clear equation between level of rates and number of jobs. It is essential that local authorities are aware of this especially as, once out of business, a firm is not there to pay rates. I shall be consulting the Convention of Scottish Local Authorities and representatives of industry and commerce on the details of how this will take place with a view to drawing up a code of practice.

I note that the Scottish CBI and the Association of Scottish Chambers of Commerce have combined to set up the Scottish business rates committee. At its request, my hon. Friend the Minister responsible for home affairs and the environment in the Scottish Office met the committee last week, and I welcome the initiative taken towards working out arrangements for effective consultation. I shall want there to be full consultation, in particular with the convention, before the code of practice for consultation is drawn up.

Clause 5 improves the position of the disabled. Under the Rating (Disabled Persons) Act 1978, institutions for the disabled have all of their rates rebated if used entirely to provide accommodation, facilities and services for disabled persons and purposes ancillary thereto. Rebate cannot be given if any part, even a small part, of the premises is used for other purposes. It is all or nothing. An institution may not qualify, even though it may be substantially similar to another which receives full rebate. Therefore, we consider that it would be more satisfactory if the qualification were widened. The measures proposed in clause 5 will replace the "all or nothing" system by a threshold of 50 per cent. use by the disabled and a rebate pro rata to that use. I hope that that will not only be welcomed by everyone concerned with the disabled but also by both sides of the House, as I am sure that it will be.

I turn now to clause 6. Housing expenditure has always been treated separately from other items of local authority expenditure. A significant proportion of a district council's rates — about one third — is accounted for by the contributions that ratepayers make to the housing account. Clause 6 would give me, therefore, the power to impose a limit by order on the contributions that local authorities estimate to make from their rate fund to their housing revenue account. This would replace the present administrative system of housing expenditure limits, under which an authority's capital expenditure allocation is reduced if it chooses to budget for a rate fund contribution above the level set by the Government. Under this system, however, the contribution from the rates to current housing expenditure has continued to grow; the result has been that capital expenditure has been reduced unnecessarily. This clearly cannot continue, and the new power will permit greater accuracy in planning the component parts of housing expenditure in Scotland, while enabling a greater share of the resources available to be directed towards capital investment, something that I hope all hon. Members will welcome.

Part II deals with valuation. On this, as on the rating clauses, I have to record my thanks for the views that we have had on the White Paper and the discussions held with COSLA and other bodies in recent weeks. The main valuation provisions have two principal objectives. First, we are aiming to improve the structure of the valuation appeal system so that, following future revaluations, appeals may be settled much sooner than was possible after the last revaluation. That should be greatly to the benefit of both ratepayers and local authorities. Secondly, we are providing the means whereby several valuation anomalies can be removed from the Scottish system, and ratepayers with genuine grievances can have greater access to the appeal system to ensure that future problems are more likely to be resolved at their inception than has been the case to date.

Clause 7 would make it possible, after the next revaluation, for a new proprietor, tenant or occupier of any lands and heritages, for his first six months as such, to have a right of appeal similar to that which his predecessor had at revaluation. This may not benefit large numbers but it will certainly remove serious problems for some ratepayers and a general feeling of inequity where ratepayers face burdens arising from rateable values that they consider unfair and against which they would have appealed had they been in occupation at the time of revaluation.

As regards improvements in the structure of the appeal system, in clause 8 I have accepeted the advice of the Scottish Valuation Advisory Council that the Lands Tribunal for Scotland should be used as an alternative to local valuation appeal committees to hear particularly important or complex appeals, in the first instance. Appeals would still be lodged with the local committee which would be able to refer cases to the Lands Tribunal if these raised particularly difficult issues, or were likely to form test cases that would have implications for many others to follow. This should allow these important cases to be heard authoritatively much earlier in the appeals cycle than has been the case in the past, and so settle the rating liability for the ratepayers involved and allow many consequential cases to be settled. Apart from being speedier justice, this should bring greater certainty to the cash flow position of businesses and local authorities alike.

In clause 9, the Bill also introduces a provision designed to streamline appeals to the lands valuation appeal court by allowing it to consist of only one judge in cases where that judge believes it to be appropriate. A three-judge bench would still be available where necessary, and this should bring some improvement in the timing and handling of appeals.

As hon. Members know, there have been many assertions that particular classes of property in Scotland suffer in valuation terms by comparison with properties elsewhere. While the valuation methods used in Scotland may lead to higher valuation than in England and Wales in particular cases, we have identified only two problem areas where the difficulties arise from specific statutory provisions relating to a particular class of lands and heritages.

Clauses 10, 11 and 12 contain provisions relating to caravan sites and reed beds. In future both will be treated broadly as in England and Wales. Individual caravanners would have the right—which many have sought—to have their static leisure caravan valued separately from the remainder of the caravan site in which it is situated. The power is being sought to enable the caravans remaining in the composite entry to receive an element of derating along the lines applied administratively in England and Wales. The level of any derating to be prescribed is a matter on which I shall be consulting the representatives of the caravan industry and the Convention of Scottish Local Authorities. When I have decided what derating might be appropriate, the necessary order to implement that decision will be brought before the House for approval by affirmative resolution. Reed beds will be exluded from valuation in future as they are now in England and Wales.

Mr. Dewar

I recognise that the right hon. Gentleman may not have made up his mind on this, but I would be interested to know what range he is thinking of. It has commonly been said, for example, that a 40 per cent. discount is extended in England. Is that the figure of which the right hon. Gentleman is thinking and putting out for consultation?

Mr. Younger

I appreciate the hon. Gentleman's point. It is not my intention to prejudge the consultation by making a firm decision at this point. The general objective in deciding what level of derating would be appropriate would be to produce a rough parity of treatment between caravan sites in Scotland and those south of the border. That would be the general objective but, naturally, I shall want to receive views from those whom I consult before making firm decisions.

Mr. Nicholas Fairbairn (Perth and Kinross)

I am glad that clause 12 excludes reed beds from valuation. Only one company in Scotland has been the subject of the suggestion that rates should be paid on reed beds. Those rates were imposed as a result of the reversal by the Appeal Court of the decision of the local valuation appeal tribunal that such rates were appropriate. They have never been paid because this has been a matter of dispute and now is a matter of legislation. I do not ask for an assurance at the moment, but will my right hon. Friend seriously consider whether it would be equitable to make this claim retrospective—[HON. MEMBERS: "Oh".]—as it is a theoretical anomaly and as it is recognised that it would be wrong, if it were ever applied in Scotland, that there should be a historic payment of rates?

Mr. Younger

I well appreciate my hon. and learned Friend's interest in this matter, which he has raised with me continuously. I know that he will be glad that we are at last taking action. I shall consider what he has just said but I find it somewhat surprising that my hon. and learned Friend of all people should be advocating retrospective legislation. Without prejudice to that, I shall consider the points that he has made.

Clause 13 is relevant to subjects that are at a disadvantage by comparison with competitors elsewhere. It would open up the appeal system to enable valuation methods to be adopted that could lead to more equitable results. That is not to say that it will be necessary to fight appeals in every case to get an equitable valuation. It will certainly be necessary to lodge appeals in some cases; but I hope that, once it is reasonably clear in practice what might be achieved on appeal, assessors will operate so as to produce values with which appeal committees would find no fault and ratepayers would not contest. In practical terms the success of these provisions depends on the assessors' readiness to work in accordance with the spirit of what will be approved by Parliament. My hon. Friend the Under-Secretary of State has recently met the assessors to discuss the provisions of the Bill with them.

Perhaps the most significant change in clause 13 is that what we propose should benefit all types of specialised premises ranging from heavy industry to sports stadia. This is the proposed right of comparison with hereditaments in England and Wales. Where rental evidence is not available in Scotland—that is generally where there are particularly specialised premises — it will be possible to cite English values as comparable rents. Due account will have to be taken of the lapse of time since the English revaluation to which these values relate; and it will be for the appeal committee or the Lands Tribunal, as the case may be, to consider the evidence led by the parties to any case in deciding what allowance should be made for movement in rents. Some will also benefit from the removal, by clause 14, of the restriction whereby in Scotland downward movement in rents is not accepted as a material change of circumstances. Certain depressed sectors of the business community at present see their competitors in England and Wales being able to have their rateable values reduced because of a general downturn in rents. In Scotland this has not been possible. Clause 14 would make it possible to take into account movements of rents as a reason for changing valuations between general revaluations. Since we are talking in terms of a downturn in rents since the time of the last revaluation, I should mislead the House if I said I expected that this would benefit large numbers; but it will benefit those who are in the most difficult situations where business has declined.

Mr. Dewar

These are detailed matters that will be considered carefully in Committee. But on the subject of comparators with rental values in England, I am not being sarcastic when I say that I know the Secretary of State will be familiar with the case in 1964 of the Portland Cement Manufacturers Association v. Assessor for East Lothian, in which Lord Kilbrandon made it perfectly clear that if there was a shortage of Scottish comparators rental comparators from England could be taken in. In what way does clause 13 depart from or enlarge on Lord Kilbrandon's judgment, which is certainly the law of Scotland at the moment?

Mr. Younger

The hon. Gentleman is on to a good point and I shall try to make it as clear as I can. The hon. Gentleman is correct to say that the law at present allows other rental values to be taken into account. If other rental values are available in Scotland, that is fine. But the change that is proposed in the Bill will make it possible to cite English values or non-Scottish values as if they were rentals. Therefore, they could be used as comparisons in the case of Scottish subjects. That is the answer and I should like to proceed unless the hon. Gentleman has another point.

Mr. Dewar

The right hon. Gentleman is saying that valuations in England can be brought in as comparators. Is it not unhealthy and peculiar if a valuation, which has been evolved under a different legal framework, is suddenly imported into the Scottish legal framework where it is an alien implant? If we want to achieve this, would it not be better to change the basis of Scottish valuation law?

Mr. Younger

The answer is that the position is already difficult to deal with because the subjects concerned are competing with other subjects outwith Scotland in the same type of market. If the hon. Gentleman reads this part of the Bill, he will find that these provisions are precisely designed to bring equity where, alas, there is no equity at present. This is a material change. We have introduced it for that purpose because at present the position is highly unsatisfactory.

Clause 14 also proposes to allow court decisions altering the value of comparable subjects to be taken into account in subsequent appeals. This will avoid the serious inconsistencies that have arisen recently, where appeals concerning one group of properties have been successful but other, similar, neighbouring properties have not been able to be brought into line.

Taken together, the valuation measures in the Bill are not so much an instant panacea for all problems as a means whereby the appeal committees and the courts, strengthened by the introduction to the appeal system of the Lands Tribunal, will be freed to allow changes in particular aspects of the valuation system which have been giving the most trouble. The final decisions as to what is right and fair will rest with the courts while the main responsibility for ensuring that the spirit of the legislation is brought into practice as efficiently as possible must rest with assessors and with individual ratepayers prepared to appeal.

Clauses 15, 16 and 17 are the usual clauses dealing with amendments and repeals, financial provisions and citation, commencement and extent. We shall be moving an amendment in Committee to widen the scope of clause 16 for technical reasons. I would also draw attention to the fact that clause 17 makes provision for two of the provisions to come into immediate operation after the Bill receives Royal Assent. Those are the provisions in clauses 1 and 2. This will enable the grant reduction of an individual authority resulting from any general abatement in 1984–85 to be directly related to its overspending. This means that the unfairness arising from the present arrangements will be removed at the earliest opportunity. It will also enable combined selective action reports to be laid in respect of any selective action taken in 1984–85, thus streamlining the procedure for that year.

In debates involving the statutory provisions for selective action, there has often been criticism of the extent to which the original provisions have been amended and the consequent difficulty of understanding what they are. The hon. Member for Garscadden in particular has made this point effectively.

The amendment of the 1966 Act by the Acts of 1981 and 1982 has made the 1966 Act difficult to follow. I am glad, therefore, to say that we have been able to bring these parts of the 1966 Act, as amended, together in one place in schedule 1. The minor provisions in schedule 2 are in part consequential on the main provisions and in part some technical tidying of the schedules. Only paragraph 8 will have noticeable substantial effect on the electricity boards as ratepayers and a very few local authorities. It provides that for purposes of rate payments certain special applications relating to public undertakings will be treated as valuation appeals. The boards would have to pay rates earlier than hitherto, but no earlier than other businesses.

In commending the Bill, I am asking the House to reaffirm that rates should remain local authorities' main source of revenue; that industry and commerce should, as major ratepayers, have the right to representative consultation by local authorities before rate levels are struck; that the valuation system and opportunities for appeal by ratepayers should be improved; that penalties that may have to he exacted for high spending should be proportionate to each authority's level of expenditure measured against guidelines; and I am asking for power to exercise a general control over rate levels only as a last resort and to relieve the burden on ratepayers.

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

In relation to rate-capping, my right hon. Friend says that rates are to remain the main source of revenue. Members of Parliament are elected to do one job and local councillors are elected to do another. How can it be right to treat councillors as though they were not elected to do that job? Surely rate-capping is an anti-democratic procedure. I appreciate that my right hon. Friend wants to introduce it for Scotland, but considering that many of us will not have it introduced for England, what he proposes cannot be right.

Mr. Younger

I appreciate my hon. Friend's feelings on the subject, but he is omitting two important points to which I am sure he will want to give due consideration before other legislation comes before us. The first is that while he and hon. Members generally feel strongly that local authorities should be given the maximum autonomy to make their own decisions in their own spending matters, it has never been the view of any Government that local authorities should run completely free of any statutory consideration by Parliament. Local authorities, whether or not we like to admit it, operate very much under statute laid down by Parliament, and that is the basis of everything they do.

Secondly, I am sure that my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) will bear in mind the problem that arises—it is only in such circumstances that these powers are intended to be used —when local authorities as a whole go right against the essential national economic policy of the Government of the day, whatever the complexion of that Government. There is a great problem if the burdens that are put on the ratepayers, as a result of that, become insupportable, and my hon. Friend will want to consider that carefully before reaching a final view about what this legislation will do.

I end—and I must end because my speech has taken a long time because of the number of interventions—by considering the main political arguments that exist between us on the Bill as a whole. It will not do for the Opposition just to oppose the Bill lock, stock and barrel and say nothing about what they would put in its place. The hon. Member for Garscadden can simply pick up the briefs that he has received from the various interested groups concerned and read them word for word, and he would be good at doing that, but—

Mr. Dewar

What is the right hon. Gentleman doing?

Mr. Younger

—if that is all he does and leaves his contribution at that, he cannot be credible for two reasons. First, it was the Labour party while in government—and his right hon. Friend the Member for Glasgow, Govan (Mr. Milian) in particular—who first had to tackle the overspending of local authorities. That was where it all started. Admittedly it took the International Monetary Fund to force the right hon Gentleman to do it, but nevertheless he did it. He started it off.

In 1976–77 the right hon. Member for Govan imposed a cut of £5 million on the aggregate Exchequer grant, and for the following year he reduced the rate of grant by no less than four percentage points. That still stands as the largest reduction ever made in the rate of percentage grant. It also resulted in a reduction in manpower of no fewer than 10,000 in one year, which still remains by a long way the largest manpower reduction ever forced on local authorities—and forced on them it was by the right hon. Gentleman.

The hon. Member for Garscadden was, I assume, supporting his right hon. Friend the Member for Govan at that time. Therefore, he cannot disclaim responsibility for what happened then.

Mr. Dewar

Really!

Mr. Younger

If the hon. Member for Garscadden is saying that he was not supporting his right hon. Friend at that time, I shall be glad to hear that. Then we shall really know that he is on the side of the angels. However, I suspect that he was supporting his right hon. Friend and that, therefore, he cannot get away with it now.

Secondly, in view of that history, it cannot be believable if the hon. Member for Garscadden tries to maintain that in the light of the overspending that we have seen in recent years he would have let it rip and taken no action to curb it. Even if he tried to do nothing, no Treasury of any Government could have been able to face such figures. And if it did, the IMF would have stepped in before long.

The Opposition cannot oppose everything in this matter —reduction of grant, selective abatement and general abatement — without losing their right to be taken seriously. We have had to face up to the need to bring local spending reasonably into line with what the nation can afford at a time when a world recession has reduced the nation's resources, as it has those of everyone else.

Although we have not yet succeeded in achieving a real reduction in local spending over what was being spent in 1978–79, we have greatly helped ratepayers in areas where unreasonable spending plans were drawn up, as the figures that I mentioned earlier show, and there are clear signs that many more local authorities are working closer to guidelines. As I said, last year in the outturn no less than 25 authorities—over one-third of the total—were within guidelines.

This debate will be an interesting test of whether the official Opposition can be taken seriously or whether they will take refuge in mere opposition for opposition's sake —not only negative but in flat contradiction of what they did when they had responsibility and had to face up to the realities of the matter. Those are the reasons why we must allow for a general abatement that is fairer to local authorities, why we must have power to limit rate increases generally as a fall-back power, and why we must reform the rating system to remove some some of the anomalies that have caused such concern in recent years. That is what the Bill does and that is why I commend it to the House.

4.58 pm

Mr. Donald Dewar (Glasgow, Garscadden)

The Secretary of State has an unhealthy obsession with the past. I suspect that it is based on an understandable unwillingness to talk about the present and the Government's current policies and performance. I wish at the outset to make it clear that I do not oppose every clause in the Bill. However, taking the measure as a whole, I find it a miserable business which reflects little credit on the right hon. Gentleman, and even less credit on those on the Benches behind him who are mindlessly supporting him in this endeavour.

What we are examining is the climax—or, perhaps more accurately, the nadir — of a dishonourable campaign that has been waged for a number of years to ensure a total shift in the balance between central and local government in Britain. The slogan that lies behind this piece of legislation is that the Secretary of State rules. In a simplistic sense that is true, but we should not create a situation in which local government is captive in the Secretary of State's train and local councillors are condemned year after year to carry out policies which they cannot influence, in a situation in which their room for manoeuvre, their right to exercise discretion, is "cabin'd and confin'd" in a totally unreasonable fashion.

There are a few things in the Bill to which I do not object. It is short and almost all bad, but, for example, clause 5 makes a minor concession on the rating of premises used by the disabled, and nobody could object to that. A few of the valuation provisions—I say "a few" because I do not mean all of them—we shall look on with a reasonably charitable eye. I also welcome schedule 1, which is a useful act of codification; at least it allows any ordinary human being to understand where we are in terms of local government legislation. It allows us to see the state that we have reached, and a harsh and brutal scene it is as a result of the Secretary of State's efforts in the last three or four years.

The House must make an overall judgment of the Bill on its Second Reading tonight. Taking the Bill as a whole, it is wrong in principle and could be oppressive in practice. One of the key points is that it is unnecessary even if one accepts the doubtful assumptions on which the Secretary of State argued his case.

Mr. Barry Henderson (Fife, North-East)

The hon. Gentleman says that the Bill is unnecessary. Surely the only justification for that view is that those who say that they believe that the facilities of selective action and abatement that my right hon. Friend already has have been successful. Is that not the essence of the matter?

Mr. Dewar

I shall come to that. It is interesting that the Secretary of State spent the first 20 minutes of his speech defending the Local Government (Miscellaneous Provisions) Act 1982 and hardly mentioned the additional powers that he is taking in the Bill. He hurried over them with indecent haste when he went over the contents clause by clause. I shall deal with that later.

I shall not try to deal with every clause in the Bill, because that would try the patience, already sorely tried, of hon. Members. However, I shall examine one or two of the more objectionable clauses. Exhibit No. 1 is clause 6. It deals with rate fund contributions to the housing revenue account. It is a grey, anonymous and highly technical clause. However, in all seriousness I believe that it is full of menace for those in my constituency as well as others in every constituency in Scotland. We are handing a blank cheque to the Secretary of State, who is taking power to limit the rate fund contribution to the housing revenue account. The right hon. Gentleman is doing so in the most sweeping terms, because the Bill says, in whatever way the Secretary of State thinks fit. The right hon. Gentleman is taking powers to limit the rate fund contribution, and in so doing council house rents will be put up at his whim and will. There is to be no messing about. The clause goes straight in with the bovver boots.

Let me make clear what will happen. There are three sources of income on the housing revenue account. The first is the housing support grant, the second is the rate fund contribution and the third is rents. No one complains about this. The Secretary of State has complete control over the housing support grant contribution. He is now taking powers to limit, if he wishes, the rate fund contribution. If he controls two of the three, inevitably he controls the third and will be able to lay down exactly what rent levels should be. There is no escape from that unless one assumes that massive savings can be made, probably on the repairs and maintenance side of the housing revenue exchequer. However, with housing stock deteriorating, and faced with the problem of delivering a decent service, no wide-scale savings can be made in that department.

Therefore, we are faced with a fearful prospect. The constant theme of Ministers over the past few years has been that rents in Scotland are too low as a matter of social judgment. Ministers are not saying, "Unfortunately, because of what the Treasury is dictating, we shall have to put a hike on rents on a temporary basis." When the hon. Members for Edinburgh, Pentlands (Mr. Rifkind), and for Eastwood (Mr. Stewart), and all the others who have passed unmemorably before our eyes, stood at the Dispatch Box, they said on all occasions that they wanted to force up rents.

The figures are there for anyone to see. I did an amateurish thing, but it shows the general situation fairly accurately. I took the 1979–80 rating review and the same set of figures for 1983–84. On the 1978–80 housing revenue account, 48 per cent. of it was a contribution from rent revenue — rent that tenants paid to local district councils in Scotland. Some 35 per cent. came from the housing support grant and 16 per cent. from the rate fund contribution. In 1983–84 the contribution from rents rose from 48 to 67 per cent. The rate fund contribution was largely the same at 19 per cent. and housing support grant had collapsed from 35 to 11 per cent. Therefore, rents had to take a larger share of the burden when the average council house rent in Scotland went up by 115 per cent. in the four years of the previous Conservative Administration.

We are on course for a grotesque distortion. The only alibi used by the Secretary of State, which was that in the end it did not matter how high rents went up because there would always be the rebate system or, more recently, the housing benefit system, has been undermined in the months when we have been considering the legislation by the actions of the Chancellor of the Exchequer in his autumn statement.

I have never seen such crocodile tears as those shed in the White Paper over, for example, the loss of capital for the housing account of district councils in Scotland. The Secretary of State has the confounded brass cheek to say, "We need this piece of oppressive legislation because we have seen housing authorities lose their capital grant as they have not raised their rents enough." Who linked rent levels to capital grant allocations? It was the right hon. Gentleman who did that. Having erected a piece of machinery which he knows is inequitable, indefensible and unjust, he says that it is disgraceful that we have ended up like this, so we must do something worse. That is the basis of the right hon. Gentleman's argument. It is a disgrace that we should he insulted by such a level of argument.

On the rate-capping clause, clause 3, the right hon. Gentleman hurried through his argument. The Secretary of State is apologetic about the rate-capping argument. He says that it is a fallback position and that he probably would not use it without a year's notice. That is what he said to COSLA on 7 November. If we know almost every informed body of opinion that deals with local authorities is opposed to that provision, we are entitled to ask why we need it.

This is where we come to the argument of the hon. Member for Fife, North-East (Mr. Henderson). Even if we assumed that there the situation was out of hand in terms of local government expenditure—I shall challenge that in a minute—and there was a problem to be overcome, we have in any event passed out of that phase. Rightly or wrongly, we have the Local Government and Planning (Scotland) Act 1982 and the Local Government (Miscellaneous Provisions) Act 1982. Even if one assumes that that state of affairs has to be dealt with, we have to look at the situation in this financial year and what is happening now in local government. We must ask whether we need the rate-capping provision and the rate fund contribution limitation which I have already discussed.

Mr. Ernie Ross (Dundee, West)

No.

Mr. Dewar

My hon. Friend has got the point. The answer is no. My hon. Friend is very sharp.

In 1983–84 rates went up by only 2 per cent. If one argues on a slightly different basis, taking into account the water rate, the sums raised by selective action and so on, one can reasonably hold that the rates went down by 0.5 per cent. in 1983–84. I think that it will be common ground between the Secretary of State and me that in 1984–85 rate increases are likely to be around or under 5 per cent. Let us remember that this situation will be said to justify the most fundamental attack on local democracy for many years. In the 1983–84 budget there was an excess over guidelines of £121 million. That sounds extremely impressive, but £19 million was taken out by selective action and £45 million by general abatement, so that the excess, using current machinery, was £57 million on a budget of £2,665 million, or probably over 2 per cent. In those circumstances, there is no strong case for adding such oppressive measures to the statute book.

Even if we assume that there had been spendthrift and profligate local authorities, we believe when examining the present position that such machinery should not have been used because it was based on a false premise. Even allowing for that premise, there can be no case for further oppressive machinery.

Mr. Younger

The last thing that I wish to do is to interrupt the hon. Gentleman's peon of praise for the Government's successes in reducing local authority spending. Everything that the hon. Gentleman has said shows that I am correct in saying that I hope I shall not have to use these powers. How would the hon. Gentleman deal with the position that we faced a few years ago, when many people, including the Leader of the Opposition. were forecasting rate increases of 25 per cent.? If the hon. Gentleman is not prepared to support the proposed powers, what will he tell the ratepayers?

Mr. Dewar

I would not deceive the ratepayers by pretending that the local authorities are at fault. The ratepayers for whom the Secretary of State weeps copious tears have been faced with rate increases of more than 140 per cent. in the average rate bill because of the cuts in grant and support which have been brought about by the Government's policies.

I shall refer the Secretary of State to some unpalatable facts facing Glasgow ratepayers. I agree that I am using an outlandish and unlikely example in talking to Conservative Members, because Glasgow is not represented by any Conservative Members of Parliament. If we assume that the 1983–84 grant being paid by the Government to Glasgow was at the 1978–79 level, the result would be equivalent to 18p on the rate poundage. If we take the same calculation for Dundee, the figure would be a rate poundage equivalent of 25p. These enormous and regrettable rate increases have been funded by local government because of the persistent undermining of Government support. There can be no argument about that.

The Government also base their argument on the fact that local government expenditure has been out of control. Scottish Office expenditure between 1981 and 1984—I am indebted to the Library for the figures—increased by 4.6 per cent., while local government expenditure increased by 0.4 per cent. If we examine the record of those bodies and apply a GDP deflater at market prices which gives the figures in real terms, we see that in that three-year period the Scottish Office has managed minus 0.4 per cent., while local government has managed minus 4.4 per cent. The Secretary of State appears to be disagreeing, but there is no evidence of runaway spending by local government in real terms, which is the only moral basis of the attack mounted by the Secretary of State.

Mr. Younger

That argument is so riddled with holes that I do not know where to begin. The hon. Gentleman is well aware that a large part of the Scottish Office budget is for the Health Service. I am sure that the hon. Gentleman is not advocating bigger cuts in the Health Service. The hon. Gentleman must also be aware the Scottish Office has reduced its manpower by about 15 per cent. whereas local authorities have managed only 2 or 3 per cent. during the period to which he referred. The hon. Gentleman knows that his argument is rubbish.

Mr. Dewar

I have every sympathy with the right hon. Gentleman. He is saying, "I could not make cuts because so many of my services are essential." That is exactly the argument advanced by local authorities with equal validity. There is no case for an increase in the punitive powers already on the statute book and available to the right hon. Gentleman. I do not believe that such powers should be on the statute book at all, never mind being increased.

I accept the argument, although I may put it a little crudely, that the Secretary of State is well known to be a gentleman, that he is meek, mild, awfully well educated, that he would never do anything beastly and that he is a reasonable man. However, even if we believe that claptrap, I suggest that there is great danger in putting weapons on the statute book and saying at the same time, "Of course, I do not intend using them". At same future time, someone may wish to use them. We cannot even guarantee—although I hope that it will not happen for a long time — that there will never be another Conservative Government.

If I peer into the shadowy, murky and muddy pool of talent on the Conservative Back Benches—

Mr. Fairbairn

rose—

Mr. Dewar

The hon. Gentleman once said in an article in The Scotsman that his mind was like a dirty pool frozen over.

Mr. Fairbairn

It must have been in an edition of The Scotsman to which the hon. Gentleman contributed.

If the hon. Gentleman thinks that it is so dangerous for the Secretary of State to have such a power, if ever a Secretary of State for Scotland was nasty enough to use it, does he assure the House that if the Scottish people were ever unfortunate enough to have a Labour Government and he was chosen as the Secretary of State for Scotland he would immediately repeal such a power, lest he were ever tempted to use it?

Mr. Dewar

I recognise that the Secretary of State believes in undergoing sin to ensure that he can with stand temptation. I assure the hon. and learned Member for Perth and Kinross (Mr. Fairbairn) that he has that pledge. We do not like this legislation.

The Secretary of State may say that he does not wish to use the proposed power, but he cannot speak for the future. With all respect to the right hon. Gentleman, his record does not inspire confidence. If I refer to one or two examples of what might be and what might have been if the powers had been available earlier, perhaps hon. Members will follow my argument.

A provision in the Bill proposes to limit the rate fund contribution. Two or three years ago Scottish local authorities experienced the limitations which the Secretary of State attempted to impose on the rate fund contrbution with the existing machinery. In 1981–82 Glasgow was asked to impose a rent rise of 70 per cent. Because Glasgow increased rents by only 31 per cent.—I use the word "only" sarcastically—the city incurred a penalty of £11 million. In 1982–83 the demand was for a 32 per cent. rise, and the final penalty that fell upon Glasgow's capital account was £17 million. In 1981–82 and 1982–83 the Government asked for a limitation on the rate fund contribution which would have meant increases in council house rents of 70 per cent. and 30 per cent. respectively. Although in those days there was a little room for manoeuvre and discretion, expensive and painful though it was, we were able to cushion the impact. If the powers that we are now discussing had been on the statute book at that time — who can deny the possibility of the Secretary of State returning with similar demands—the prison door would have been slammed shut and the councillors of Glasgow and of many other districts would have had no option but to comply with the most unfortunate social consequences for the people they represent.

If we examine the Secretary of State's record on housing support grant, we can see what he has done to local government and local government services. In the Government's first year of office the housing support grant was £213 million per annum. It has now fallen to £72 million, and I guess that it will fall—I can do no more than guess — next year to £52 million. The housing support grant during the first year of the Secretary of State's tenure at Bute House was £4.30 a week for every house in the public sector. The figure this year will have fallen to £1. Given such butchery, I have no confidence in assurances that the Secretary of State would be reluctant to use the powers that he is asking for and that he will not continue on his, at times, almost tyrannical course to curtail local government democracy.

Clause 2 represents an extraordinary proposition. I think that the Secretary of State chose the euphemism of streamlining. Surely there must be some Conservative Back Bencher who has a slight prick of conscience about this proposition. That streamlining is a direct blow and a mean kick at parliamentary scrutiny. The powers are serious and severe. The Secretary of State said that he hoped he would never have to use them, but he has used them fairly frequently recently. When a local authority's rate support grant is cut in the middle of a financial year, the victim is not even to be given the courtesy of a separate order and debate. Anyone who believes, even only vestigially, in the importance of Parliament and of proper scrutiny as a check on the Executive must see the clause as a depressing little example of the contempt with which Governments tend to treat the House.

Mr. Michael Forsyth (Stirling)

Were not the Lothian, Stirling and Dundee orders treated as a whole in 1981 rather than separately as we did in the summer, and did that not have the full support of Opposition Members?

Mr. Dewar

The hon. Gentleman will not remember the incident, because he was not there at the time. However, there was much argument then and the Government were rapped sharply over the knuckles by the Select Committee on Statutory Instruments for the way in which they presented those measures. I am not making a party political point. The House should have the option, and if hon. Members think that the case for Kirkcaldy, Lothian, Glasgow or anywhere else should be examined in detail, they should be able to do that.

I do not believe that streamlining is the only issue. After all, the debate on each of the orders can last for only one and a half hours if that is the Government's wish. I believe that the measure may represent an attempt to protect Ministers. All too often they know that they are on weak ground, and if all the orders are lumped into one debate they can avoid many of the important and difficult points by discussing subjects that allow for better diversionary tactics.

Mr. Michael Hirst (Strathkelvin and Bearsden)

If the hon. Gentleman is so concerned about Parliament having an opportunity to discuss separate orders, why were there practically no Opposition Members present when the Kirkcaldy order was debated in the summer, and why did not the Labour party force a Division?

Mr. Dewar

I cannot remember whether the hon. Gentleman was around then. However, his intervention has made the point well. I believe that there were four orders that night which were all debated separately and there were separate votes on three of them. The point is that that option will no longer exist. I do not know whether the hon. Gentleman intends to speak in the debate, but I wonder whether he supports the proposition and whether he can honestly say that it is a great reform to use the time of the House to take away the right of hon. Members to scrutinise important orders that deal with individual local authorities.

It has not been made clear, but I take it that we shall at least be given the courtesy of being able to vote separately on each of the local authorities, even if they appear on one order. When the Under-Secretary of State, the hon. Member for Edinburgh, South (Mr. Ancram), replies to the debate, I want that to be cleared up. It would be somewhat contemptuous of Parliament and, indeed, plain insulting if four or five authorities had very different cases and we could not differentiate between them because there was only one vote. [Interruption.] Perhaps the Secretary of State would like to clear that up.

Mr. Younger

My hon. Friend the Under-Secretary will reply to that question at the end of the debate. However, I have noted what the hon. Gentleman has said, and he is quite entitled to make that point.

Mr. Dewar

I am glad that I am entitled to make that point. I am sorry that the Secretary of State could not immediately give an assurance that there would be a power to have separate votes. Indeed, it would be disgraceful if that were not so, and the right hon. Gentleman knows it. The sheepish looks of his colleagues show that they know it too.

Ministers have got us into a fine fankle over the valuation law. Of course I want help to be given to those groups that feel they have a grievance. I should not be ungrateful if it was possible to help caravan owners or those who run hard-pressed football grounds or race tracks, but I am concerned about the way in which it is done. The whole thing is ill thought out. It is a bit of cosmetic window dressing and I doubt very much whether it will achieve the expected result.

We are told that we can now bring in English comparators under clause 13 when sufficient evidence is not available in Scotland. Earlier, I referred to the case of Associated Portland Cement v. Assessor for East Lothian. From Lord Kilbrandon's judgment, it is certainly possible to take in comparators if there is insufficient evidence in Scotland of rent levels. The only difference that clause 13 would make is that it might—I stress "might"—give a right to extend that to valuations in England as well.

We shall all have to consider the matter carefully, but my advice from those who work in the valuation courts is that clause 13 will not materially change the law of Scotland. Those who are now throwing their caps in the air thinking that the valuation of their football grounds will fall by about two thirds or that their race tracks will be saved may find that they are in a very false position. We need much more detail about that.

We must also ask why football grounds should be helped but not tennis courts, indoor bowls or cricket pitches. Those who own such facilities have all made representations to us in great detail and have provided impressive statistical evidence to suggest that there is a great differential between England and Scotland. I am not sure that it will help the public's opinion of the rating system if we introduce a new anomaly by holding that there is sufficient evidence of rent values in Scotland, because there are a few more cricket pitches than race tracks, and that consequently the latter should be given help and others the former refused it.

The Secretary of State will know that the Scottish Tourist Board is preparing reports to show that there is a great differential between England and Scotland when rate burdens are taken as a charge on each room in a hotel. Indeed, department stores have also been mentioned. Thus, it is not clear that clause 13 will help, unless a deal has been fixed with the assessors behind the scenes. That would be an unfortunate way of proceeding. If the provision is to help, it is possible that we will open the door much wider than the two or three specific anomalies mentioned in the White Paper.

The Secretary of State may think that I am wrong, but I got my next point from a brief. I refer to a scathing memorandum from the Scottish Assessors' Association, which deals with the White Paper that has been embodied in the Bill. I agree with what it says. Paragraph 9.4 states: It seems to the Association to be scarcely credible that valuation principles that have been approved by our own courts should be set aside in favour of methods about which little is known, merely because the Scottish valuation result is different from the English. The association's point is to ask why there is a difference and who is right. We should not say that there is a difference, and therefore an anomaly, which must be dealt with immediately in a piecemeal way. That point must be considered very carefully. I was amazed when the hon. and learned Member for Perth and Kinross said that there should be retrospective payments to the proprietors of the reed bed in his constituency. He said that it was quite wrong that they had been rated. It was not wrong. That was what the courts of the land decided was the proper valuation approach in Scotland. Nor was it wrong merely because people did not like it. If we conclude that it is unjust and inequitable, we change the basis of the valuation system. We do not change it in this breathless and populist way which will have uncertain results.

Much of that part of the Bill that deals with valuation is an attempt to get something popular on to the statute book and to cover the disorderly retreat of the right hon. Gentleman and his right hon. and hon. Friends from the prospect of rating reform in a wider sense. It is extraordinary to argue, as the right hon. Gentleman did, that there is no public demand for radical change in the rating system. If the right hon. Gentleman had said, "We wanted to do it but we could not find a way in which to do it—all your scepticism about methodology proved right," I should have had some respect for his view, but to blame the poor public and say that they do not want change simply beggars the imagination. The right hon. Gentleman has consistently done that. Because he has failed he is now reaching for a few piecemeal reforms which are on extremely shaky legal foundations to stick into his Bill.

As to the right hon. Gentleman's consultations with non-domestic ratepayers, the logic of his stance is a return to a business vote. He got near to that in his discussions with COSLA on 7 November. The right hon. Gentleman does not advocate a business vote, but he is introducing a half-baked attempt to placate people without giving them any real influence. The danger is that the so-called consultative process will lead to irritation and frustration among all the parties concerned.

The Opposition do not object to consultation. Indeed, we do far more consultation in Scotland than the Scottish Conservative party. That is why we are considerably more in touch with Scottish public opinion. I find it extraordinary that the Secretary of State should preach the virtues of consultation to us. There has been a storm of criticism of his White Paper and yet there is almost no evidence of concessions on that White Paper in the Bill.

There has been no response to the wide range of criticism that has come from across the political spectrum. There has been almost united opposition to the Bill from COSLA. On Thursday, a delegation from COSLA visited the House. One of the most effective and persuasive advocates of the futility of what the Government are doing was the Conservative leader of Edinburgh district council, Councillor Brereton. The Government Whips might be interested to consider the independent members of COSLA. One of them, Councillor Jameson, the convenor at Dumfries and Galloway, is one of the most able opponents of this nonsense. The only place where there appears to be no doubts, not a stir of conscience, nor a spark of independence, is on the Conservative Back Benches. It is significant that only the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) ably put the point of view of many Conservative councillors in Scotland.

I recently talked to somebody who described Conservative Back Benchers as lickspittle toom tabards. Perhaps that person went too far. They are merely sadly anonymous time servers. I fear that they will prove that again today. They now have a chance to redeem themselves. I hope they will listen to what Scotland is saying about the Bill and make it clear that there must be changes.

I have talked much about the practicalities of the case. I have even tried to argue it on the assumption that the Government want the House to make. There is, however, another consideration—the Bill is wrong in principle. It is fundamentally wrong to put such provisions on the statute book. It represents a drive for centralisation in Scotland which will do a great deal of harm to local democracy.

I accept that local democracy is not always popular because it is equated with local government and local government is not popular because it is at the sharp end. It witnesses its services being cut and its rates rising because of the depredations on the support it receives from the Government.

I heard the Secretary of State mention to his satrap on his left that I had not mentioned the ratepayer. I should like to make it quite clear that I have a great consideration for the ratepayer. That is why I object to the figures that were quoted for housing support grant and rate support grant. They constitute a constant erosion of the basic support that is provided for vital services. That is the secret behind the higher rates that Scotland has faced.

We might quarrel, as a matter of politics, about what the Government do with their support but nobody denies that they have a right to cut or increase—I hope that the latter will happen soon—the amount of local support that they provide. However, we do not believe that the House should be used as a means of imprisoning local government in a statutory framework which crushes out all room for local discussion and initiative. It should be clear that the claim of the Conservative party in Scotland that it is interested in local democracy cannot be maintained in the face of the Bill. The Government are making guidelines mandatory. The Bill gives the Government complete control over rents and rates.

It is nonsense for the Secretary of State to tell COSLA, as he did on 7 November, that he believes in the importance of local government and has no wish to interfere. Such a suggestion has a hollow ring when we consider the Bill. It is a case of Younger's law of local democracy. The Government are telling the local authorities, "You have total freedom to do exactly what you are told to do and you have no freedom except to follow the dictates of the Treasury." We want none of it. We do not like the Bill at all. We shall protest about it in the Division Lobby tonight and, if we lose the argument here, we shall take it to the country. I assure Conservative Members who seem to be doubtful of the point that at the first opportunity we shall throw the Bill out as unnecessary nonsense.

5.36 pm

Mr. Barry Henderson (Fife, North-East)

I hope that when the hon. Member for Glasgow, Garscadden (Mr. Dewar) takes his argument to the country, as he certainly must after tonight, he will secure more agreement between himself and his colleagues than he did between different parts of his speech.

The hon. Gentleman suggested that my right hon. Friend had successfully persuaded local authorities to reduce their expenditure. [Interruption.] Have you noticed, Mr. Deputy Speaker, how after an Opposition Member sits down a continuous rumble starts to emerge from other Opposition Back Benchers? If they were peaceful and quiet and had a sense of courtesy, Conservative Members would make their usual brief, concise and useful speeches, whereas if they continue to rumble Conservative Members might find that they have more to say than they originally thought.

The hon. Gentleman said that my right hon. Friend had successfully changed local government's attitude to expenditure. That is to be welcomed. He also said, wrongly, that my right hon. Friend was responsible for local authorities putting up rates. As I understand it, the amount of money that my right hon. Friend has provided in support of local authorities is greater in real terms than that provided at any stage by a Labour Government. It is not the Government's fault that continuing aspirations of higher expenditure by Labour-controlled local authorities have, in some extreme cases, put an extra burden on ratepayers.

Mr. Ewing

I can give the hon. Gentleman an example of the Secretary of State being directly responsible for a 5p in the pound increase in rates. Falkirk district council had budgeted for a nil increase, only to be faced with the derating of external plant and machinery. When I led a deputation from that local authority to the Under-Secretary of State for Scotland we were told that, because rates in Central region and Falkirk district were lower per capita than in other parts of Scotland—there is no point in the Secretary of State trying to tell his hon. Friend the answer because I am providing both the question and the answer. We were told that the rates per capita in the Central region —including the Falkirk district—were lower than in the rest of Scotland. The Secretary of State refused to make good the shortfall arising from the derating concession that he had handed to British Petroleum. As a result, Falkirk district council had to amend its budget and increase rates for the rest of the ratepayers by 5p in the pound.

Mr. Henderson

I hope that anyone considering the length of my speech will bear in mind the length of the hon. Gentleman's intervention. I recollect that the Labour party supported us on that measure. It is clear that Scottish businesses were greatly disadvantaged before that change and that that had to be put right. It was put right, and we have noticed that the hon. Gentleman has girned about it ever since. That is very unfortunate. The hon. Gentleman took three minutes to make his intervention, which was an abuse of the House and of my efforts to make a short speech.

I welcome the continuing efforts of my right hon. Friend the Secretary of State to contain the burden of rates and taxes. The hon. Member for Glasgow, Garscadden (Mr. Dewar) remembered at the end of his speech to say a few words about ratepayers. He knew that if he did not, the Minister would, when he replied, remind him that, once again, the Labour party had not considered the ratepayer.

My right hon. Friend the Secretary of State made one error in his speech. I thought that I heard him say that rates would continue to account for the main source of local authority income. Surely the rate support grant is the main source of local authority income. It must be borne in mind that rates account for less than half the total income of local authorities. The majority of their income comes from the taxpayer. However, when the taxpayer sees some grandiose local authority scheme, he does not always think about that. Between a tenth and a sixth of local authority income comes from the domestic ratepayer, and herein lies one of the considerable problems about rating and local government finance.

I confess that I am disappointed that it has not been possible to find agreement on a better way of financing local government than the rating system.

Mr. Ernie Ross (Dundee, West)

Will the hon. Gentleman vote with us?

Mr. Henderson

If the hon. Gentleman mere to put forward an attractive scheme for financing local authorities in a responsible way, I should certainly support him. I have looked around desperately for such a scheme. I recognise that there has been no broad agreement on a major alternative source of revenue to rates because those who have wanted to be rid of rates are about equal in number—regardless of whether they are in favour of the income tax route or other routes—with those who want to retain rates. There has not been a clear, broad agreement about an alternative way of raising large sums of money to finance local government.

Perhaps the hon. Member for Dundee, West (Mr. Ross) will support me in my proposal. If we retain rates—we are doing so — as the main source of locally-raised taxation for local government purposes, in addition to the funds that come through the rate support grant formula, I should think that there will be merit in basing the rates levy on guidelines or a nationally agreed measure. Local authorities wishing to raise more money from their locality should do so with a poll tax so that local authority expenditure above the national guidelines is directly paid for by those who have the votes to decide that local authority's future.

Similarly, if the local authorities do not spend the full amount of the guidelines, they should be able to impose a lesser levy on their constituents. This combined with a broad-based property tax to raise a substantial amount of money would be an attractive concept. The Labour party has tried to infer that whether local government expenditure goes up or down a little at the margin there are no high spenders in local government. Any extra expenditure by local authorities at the margin should be paid by those who have direct control over who is elected to the local authority.

I have always believed the introduction of selective action by my right hon. Friend the Secretary of State to be a valuable measure. More than any other single act, it has created the satisfactory state of affairs to which the hon. Member for Garscadden referred. We now have a greater sense of responsibility for finance by local government. I am glad that my right hon. Friend is bringing forward a fairer basis of abatement where that occurs. It is a source of aggravation in areas such as mine where the district council has been especially careful in levying rates that the council has been hit for abatement of its rate support grant simply because other local authorities have grossly overspent their guidelines. I am glad that the legislation will put that right, and that where there is an abatement it will at least be in relation to the extent of overspending by local authorities.

There have been a number of severe anomalies as between Scotland and England. My attention has been especially drawn to the rating of caravan sites. I am glad that, at last, something positive is being done. This matter is of considerable importance to the tourist industry in my constituency which contains some of the finest caravan sites in Great Britain. Caravan site operators in Scotland compete with their counterparts in England, including, sometimes, those in the west country. The holidaymaker, when deciding where to go for the holidays, is influenced by the price. The Scottish caravan site operator is being unfairly treated, and I am glad that we are doing something about that problem in the Bill.

I am a little worried about where anomalies may end. We ought to be clear about the type of anomalies that we are trying to correct. I believe that football clubs made a powerful and well-argued pitch for fairer treatment of football stadia in Scotland compared with England. I worked out that if Celtic's or Rangers's ground — I forget which—were based in Aberdeen, the club, on the figures presented to us, would pay £22,000 a year less in rates than it does in Glasgow and Strathclyde. That anomaly has not been created by the valuation system. There is an anomaly between a club governed by a local authority in which the substantial spender is Labour-controlled and one in which the substantial spender is Conservative-controlled. I do not know whether someone who chooses to go to a football match is influenced by the price of the ticket, which is marginally dependent on the rating of the stadium. I am a little sceptical of that and a little anxious about where that thinking might lead unless we have a clear concept of what sort of anomalies we want remedied.

Another anomaly was brought to my attention only this week regarding the effect of rates on shooting in Scotland.

Mr. John Home Robertson (East Lothian)

Oh, yes.

Mr. Henderson

I am glad to see the hon. Gentleman taking an interest at last. As none of my hon. Friends owns any shooting rights, I shall be glad to have the hon. Gentleman's help.

My constituent wrote: In England, rates are not charged unless the shooting rights are let. In Scotland we suffer the inequality"—

Mr. Home Robertson

"Suffer"? What a load of rubbish.

Mr. Henderson

I am quoting my constituent. He continued: of having our shooting rated whether it is let or whether we use the alleged asset or not. That is similar to some of the anomalies dealt with by the Bill, and perhaps we should consider including it. The most important aspect of remedying anomalies is whether they distort the position in business between the north and the south of the border.

I welcome the proposed improvements in the appeals procedure. I hope that when the Bill is considered in Committee we will look in depth at the methods being suggested. But I hope also that the changes in the appeals procedure will not allow the continuance of what has become the unfortunate and growing tendency of people appealing for no other purpose than to save themselves the interest on the money that they would have paid in rates if they had coughed up at the due time. A number of people who pay substantial rates to authorities such as Dundee, which makes extremely harsh demands on its ratepayers, try to put off the awful day. Something must be done to discourage them from doing that. We must ensure that the appeal system is not used for improper purposes.

My right hon. Friend's attempt to make the system fairer will be warmly welcomed by the great majority of those who bear the burden of rates.

5.53 pm

Mr. Donald Stewart (Western Isles)

The hon. Member for Fife, North-East (Mr. Henderson) tried to make the best of a bad job because the measure is worthless. The Secretary of State said that it was intended to help the ratepayers of Scotland, but far from doing that it is a vote of no confidence in the whole set-up of Scottish local government. If it was a worthwhile measure the Secretary of State would not have been so keen to foist paternity on to the right hon. Member for Glasgow, Govan (Mr. Milian) by saying that he "started it off". If the measure was intended to be of great benefit to the ratepayers of Scotland, he would not have been so ready to share the credit.

There is a great deal of disappointment with the failure of the Tories to match up to their commitment to abolish rates in their October 1974 manifesto. I concede immediately that that commitment was not repeated in 1979 or 1983. They now find it impossible to make such a commitment. How, therefore, could they make that commitment in 1974? We can only conclude that it was a baseless and empty promise to fool the electorate.

The National Federation of Self-Employed and Small Businesses, which the Government claim as a friend, wrote to the Scottish Office on 7 October, saying about the Bill: Some of our Scottish regional chairmen did not wish us to make a submission in order to signify our disgust at your failure to reform rates. I do not intend to take up the time of the House by dealing with the Bill clause by clause. I share the disquiet already expressed by hon. Members about clause 6. The Shelter organisation has pointed out that the housing revenue expenditure is made up almost wholly from the loan charges, which is outwith the control of most local authorities. The net result will be that only rent will be available to meet the costs, and the tenants will have to pay. Of course, housing benefit is also being reduced.

The Conservative manifesto for Scotland in 1983 stated: In Scotland we are already effectively using powers to reduce the rates of councils which plan excessive and unreasonable expenditure. England and Wales now intend to introduce measures with a similar aim. On rating, as with so many other matters, the Tory Government are using Scotland as a guinea pig. If their poisonous experiments get by in Scotland, the remainder of the United Kingdom will receive the same medicine.

I noted with interest that the Secretary of State's colleagues on the Back Benches appear to have been fitted with silencers. It took an English Conservative Member, the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark), to say that similar legislation would not be accepted in England. That should give the Government a lead in knowing what should be their duty to Scottish ratepayers.

Mr. Henderson

Surely the right hon. Gentleman has no objection to Scotland pioneering this legislation, as it has pioneered so many other things?

Mr. Stewart

There are some aspects of pioneering that Scotland can do without. I do not want to be a guinea pig for unpleasant medicine. I am content to leave that to those south of the border. I would rather that it was not tried at all. I am not volunteering to try out any of the unpleasant measures that the Government bring before the House.

The alleged failure of COSLA to stick to guidelines is less pronounced in Scotland than that of local authorities south of the border. The expenditure and rate levels of local government is no business of central Government and the Secretary of State for Scotland. Local ratepayers are the judges, and they can pass the necessary verdict on profligate councils—if any exist. Indeed, the Secretary of State said that what had occurred in Lothian had been corrected by the electorate. That is the way it should be done. It was done that way in the past and must be done that way in future if local government is to have any reality in Scotland.

What happened to the Government's slogans "Less government", "Stand on your own two feet", "Local initiative", "Power to the grass roots" and so on? The Secretary of State for Scotland—the gauleiter of British Government in Scotland — is introducing further legislation to remove power from local authorities to fix their priorities, rates and level of services. As the Aberdeen Press and Journal stated: Many people will come to the conclusion that local government will not only be a dangerous myth but also that there will be little point in councillors pretending to be local representatives when in reality they are Whitehall commissars. Scottish local authorities have been subject to tight control. For three years the Secretary of State has had the right to take action against councils, and that power is only now available in England. It is no wonder that the English Association of Metropolitan Authorities warns that: The erosion in local autonomy that has already occurred in Scotland is soon to occur in England. At least in England the Government can claim a mandate. No such mandate exists in Scotland. The Government's dirty work is being done by the representative of a party that was decisively rejected by the Scottish electorate. [Interruption.] I am not attempting to pass legislation against the Scottish people, unlike the Minister and his friends. They are a colonialist Administration with no moral basis for their policies. They are the hyprocrites who preach that law and order must be obeyed. Yes, it must be obeyed, provided that those who make the laws do so with the consent of the governed.

Scottish local authorities have been subjected to tighter control. The Secretary of State has had this power for a long time, and the fact that it was introduced from another source is not enough. I served for 20 years on local authorities —town and country councils, and on other authorities as well. The Secretary of State said that he did not want to hear that this Bill is the end of local government as we know it. I shall say it: the Bill is the end of local government as we know it. The power will pass from the people who elect local authorities to central Government.

Another offence against local government is that many of the functions that local authorities will have to cut were wished on them by central Government — whether Conservative or Labour. However, they were amply funded, so the work was done. Now the cash is being withdrawn. The public will expect the services to continue, but it will be beyond the power of local authorities to continue to provide them.

This legislation is a betrayal of the Scottish tradition of local government in accord with local wishes. Those people who now serve in Scottish local authorities must ask themselves whether they can perform any independent functions, or whether they will simply be the tools of central Government. II' the Bill is passed, local government in Scotland will be a shadow. The substance will have been filched by a Government who are devoid of democratic principle.

6.1 pm

Mr. Michael Forsyth (Stirling)

I am glad to have this opportunity of supporting the Bill. It implements the pledges that I and my hon. Friends gave to the electorate during the general election campaign—pledges which, I am almost certain, contributed significantly to my election to this place to represent Stirling, where the authority has been wreaking havoc.

There has been much bogus indignation on the part of those who oppose the Bill, both in the House and elsewhere. The fact that the Government's efforts to protect ratepayers are greeted in such an irresponsible way comes as something of a surprise to me. The need for control, as my right hon. Friend the Secretary of State pointed out, is not new. Indeed, the power to withhold the rate support grant to authorities whose expenditure has been excessive and unreasonable is as old as the system itself. As my right hon. Friend said, it first came into effect in 1929. The fact that these powers have had to be used only recently says more about Labour-controlled councils than about anything else — much more than about the Government's desire to impose restrictions on local government.

Mr. Ewing

Is it accurate to say that, following the hon. Gentleman's election as the Member for Stirling, he is on record as heaping the highest possible praise on the Labour-controlled Central regional council for its management of the local economy?

Mr. Forsyth

I am grateful to the hon. Member for Falkirk, East (Mr. Ewing) for giving me the opportunity to confirm what I said at the time. I said that, compared with the district council, the Central regional council was a very responsible authority. Indeed, at the risk of damning it in the eyes of some Labour Members, I am happy to stand by that position. I shall say something later about the Central regional council.

The extravagance of some of the more extreme Labour-controlled councils in Scotland has reduced parts of Scotland to wastelands. A city such as Glasgow has been blighted by the local authority and its policy on rates. Despite all the arguments about whether central Government are to blame, or whether the rateable values of department stores are to blame, the fact remains that Marks and Spencer in Glasgow pays twice as much per square foot in rates as does Marks and Spencer in Oxford street, the biggest and busiest shopping centre in the world. That is at the heart of Glasgow's problem and at the heart of Scotland's problem.

The efforts of local authorities such as Stirling district have imposed an unfair burden of local economies. It is quite impossible for my constituents to pursue the vital service industry of tourism when they have to pay two and a half times as much in rates as their competitors pay across the border in Conservative Perth and Kinross. The same Labour-controlled authorities and their leaders, who cry crocodile tears for the unemployed, are destroying jobs and businesses through their rating policies. There is much evidence of the link between unemployment and rating. The recent survey on the effects of the GLC's policies in London showed that for every £10,000 raised in rates one job was destroyed. I am sure that the figure in Scotland is considerably worse.

Mr. Home Robertson

The hon. Gentleman compared the rate burden of his constituents in the Central region with those in neighbouring Tayside. Will he concentrate for a moment on the services that those rates pay for? Is he not thankful that the service of home helps for elderly people in the Labour-controlled Central region is twice as good as it is in the Conservative-controlled area across the boundary?

Mr. Forsyth

The intervention of the hon. Member for East Lothian (Mr. Home Robertson) is typical of the Opposition's mentality. The Opposition assume that because something is twice as expensive it is twice as good. Expenditure on those services is not a measure of the effectiveness of the authority. There are many other ways of providing the help in the home that all Conservative Members would like to see extended, particularly through the use of volunteers, which does not cost ratepayers a penny.

Despite the rhetoric and the accusations of cuts, local government spending is up in real terms by 12 per cent. since 1978, although we are supposed to have a hard-nosed Conservative Government pursuing a war against local authorities. Spending has grown in real terms, and so have the numbers employed. In fact, local government in Britain as a whole employs 3.2 million people compared with 1.1 million in France, and 898,000 in Germany. I do not hear people in France or Germany complaining that they do not have enough people in local government or that their services are deficient compared with those that we enjoy—or otherwise—in Scotland.

Employment in local government in Scotland has continued to rise at a time when businesses have had to shed people to pay their rates. There are now 25 per cent. more people employed per head of population in local government in Scotland than in the rest of the United Kingdom. The only cuts that have taken place in local government are in services, not expenditure. We have witnessed the spectre of the hard-pressed ratepayer having to pay more and more for less and less. Services are the first thing to be cut by those who seek to frustrate the efforts of Conservatives who want value for money and economies in administration. We see waste and inefficiency, instead of the provision of sensitive services on which many people in our community depend.

The rating system, as such, is proving burdensome in the extreme for those who have to pay the bills, and it takes no account of either ability to pay or profitability. I regret that we were unable to find an alternative to the rating system. However, that is not what is at issue in today's debate. Even if we had a poll tax, local income tax or some other form of funding, the basic problem of over-expenditure and extravagance would remain. The revenue would have to be raised by another method.

When we discuss alternatives to the rating system it is sometimes like shifting deck chairs on the Titanic. We are discussing a hole in the side of a ship. I do not wish to repeat well-rehearsed arguments. Instead I shall make suggestions for improving the Bill.

The Opposition will go through the ritual of attacking clause 1. They must recognise, as many Labour-controlled councils do, that if clawback of rate support grant is necessary, it should come from the councils whose expenditure is excessive and not, as at present, from all, whether or not they are irresponsible. A feeling of injustice exists among low-spending authorities who are penalised for other councils' overspending.

Clause 2 has been attacked because it is claimed that it reduces the opportunity to debate the individual circumstances of councils. I sympathise with the argument in favour of individual orders and debates, but, as my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Hirst) said, we must remember what happened in the House when such proceedings occurred for all to witness. Not only did we have to put up with an excessive number of Front Bench speeches, but we had to endure the spectacle of the Chamber being emptied as Opposition Members made their exits to catch the night sleeper. I was rather sorry for the large delegations from Stirling and Kirkcaldy who came at the ratepayers' expense to watch our proceedings. They witnessed a debate when the House was at its emptiest and least likeable.

I was amused to see the puzzled look on the faces of some representatives from Kirkcaldy who could not understand why no Division was called on their order. It was to the credit of the hon. Member for Falkirk, West (Mr. Canavan), who had a heated discussion with his Whip, that a Division was called on the Stirling order. Although I have reservations, I can see the merit in a longer, better-attended debate, on the principles rather than the details.

The details of the Opposition's case expressed in that debate proved to be a nonsense. We were told that when the councils came to implement the rate rebates the most appalling problems would result. We were told that it would mean that Stirling and Kirkcaldy would have to cut vital services.

Mr. Dewar

The hon. Gentleman's interesting argument is based on a fallacy. All the orders can be taken together in one and a half hours if the Government wish.

Mr. Forsyth

I have no doubt that that can be brought up later. My case is for a longer debate so that we can examine the principles involved.

Mr. Henderson

Has my hon. Friend not come to the conclusion that if the Opposition made more sharply focused and relevant speeches in Committee we might reach agreement on sensible proposals but that that is difficult when faced with filibustering speeches?

Mr. Forsyth

I wish that I had had the wit to think of that.

Stirling and Kirkcaldy did not have to shed a single project when faced with the cuts, despite the protestations and anguish from Opposition Members. Indeed, Stirling now has too much money because it raised excessive rates and is embarrassed by it. It seems that it has been able to find £75,000 for Christmas lights, resources for BMX cycle tracks and many other projects.

Such authorities prove that the Secretary of State—as he admitted today—was far too kind and fixed rate repayment levels were too low. I warned him of that in the case of Stirling. He should have decided on 3p instead of 2p.

Clause 3 is contentious. The arguments have been forcibly put by both sides. It has been the subject of substantial press debate and we have been lobbied about it. I represent the ratepayers of one of Scotland's most expensive district councils and I welcome the proposal in clause 3. People complain that imposing a general limit on rate increases ignores fluctuations in council accounts; that it is not only current expenditure that affects rate levels, but changes in RSG and interest rates. I accept that, but I reject it as an argument against the Bill's proposals. I have news for those who espouse that argument —commercial organisations face exactly the same difficulties.

Manufacturers face fluctuations in raw material prices, labour costs and demand for their products and services—something which councils tend to ignore. Manufacturers do not expect their customers to cope with dramatic price variations and they do not expect prices to rise ahead of inflation year after year. That would be suicidal and they would go out of business. But local authorities do not go out of business.

It cannot be beyond the wit of local authorities to arrange their affairs—particularly since many of them hold large balances to ensure rate cuts near election year—so that their rates rise, if they must, in a steady and orderly manner to enable businesses to organise their cash projections. The audit commission's annual report shows clearly that most authorities could smooth out changes in rates. In many cases I suspect that they do not do that for political and electoral purposes.

I have a serious objection to the proposed new section 108B, which seems to give the Secretary of State power to limit reductions in rates. It is difficult to conceive of any circumstances when that could be beneficial to ratepayers, or appropriate for a Conservative Secretary of State. In the unlikely event of the Labour party taking office I can see how such a power might be used in pursuit of ever higher public expenditure. Serious consideration should be given to whether such a power should be allowed to remain in the Bill. All Conservative Members will welcome clause 4 and its intention to ensure that those who pay the majority of rates are at least consulted before the level of rate burden is fixed. I must draw the attention of the House and the Minister to the type of attitude — the hon. Member for Falkirk, East was good enough to mention the Central region—that commercial ratepayers have to face from local authorities. The Secretary of State will have received from the Central regional council, normally a moderate local authority—as I was happy to confirm—a submission on the Bill. I should like to read two extracts. Paragraph 1 states: if the experience of this authority is typical, the most distinguishing characteristic of the consultations which have already taken place with the local business community has been the ignorance of, and indifference to, the problems and service needs of the local authority and the requirement of a secure financial base to meet these service needs. Paragraph 29 states: It is hard to believe that anyone who is engaged in consultation of this kind"— that is, with local business men— could be expected to take it seriously, and the present Government would appear to attach much greater value to the opinions of local businessmen than anything which has been experienced in this community would justify. I fear that that attitude to clause 4 is typical. It shows a lamentable disregard by local authorities for those on whom local prosperity depends. The Central regional council may not agree with the opinions of local business men, but I should have thought that it would show some respect for them, because if local business men did not make the money and provide the employment there would be precious little for the authority to do and spend. I hope that in drafting the directive the Minister will seek the comments of business organisations so that the arrogant attitude revealed in the Central regional council letter is not allowed to render the exercise a meaningless charade.

Mr Ewing

The hon. Gentleman is being downright unfair to Central regional council. That is not untypical of the hon. Gentleman, because he does not understand the background to the discussions and the attitude that the authority has, through the years, had to tolerate from the central Scotland chamber of commerce, which does not represent any business in his constituency. The central Scotland chamber of commerce was partly responsible for the rate fiasco that occurred, in Falkirk district in particular and the Central region in general, as a result of the derating of outside plant and machinery.

Mr Forsyth

I am grateful for the hon. Gentleman's intervention. In one debate, it is astonishing to be asked to confirm that I believe that the Central regional council is a good authority and later to be criticised for being unfair to it.

I am familiar with the problems that Central regional council has faced. I have taken on board some of the points it has made to me about rating. In this submission and in its attitude towards the business community, I believe that it is typical of far too many people in local government and too many Scottish authorities.

I am sure that there will be no dissent on the Conservative Benches about clause 6. The proposal, which clamps down on the blatant misuse of rates to buy votes by subsidising council rents, is long overdue. As long ago as 1981 the Under-Secretary of State for Scotland, my hon. Friend the Member for Eastwood (Mr. Stewart), who was not then constrained by the cares of office, established that substantial numbers of Scottish council tenants received back from the council in rent subsidy more than they paid in rates. In a number of cases tenants paid less in combined regional, district and water rates than they received in subsidies. I accept that some progress has been made on that matter, and that the growth in rate-borne subsidies, which was spectacular under the previous Labour Government, has now been halted, but it is still far too high.

This year, all but six of Scotland's councils are budgeting to subsidise rent by a total of £125.7 million. It is a burden without justification that domestic and commercial ratepayers have to meet. It is paid for by fewer jobs, lower wages and higher prices. It does not help the less well-off. They receive rent rebates and cannot benefit. It is nothing less than a transfer of income from the rest of society to the better-off council tenants; from the elderly owner-occupier living alone on a fixed income to the council tenant, whose home may receive three or four incomes.

Mr Dewar

rose—

Mr. Forsyth

I shall not give way. I understand the hon. Gentleman's point of view on this matter. He spelt it out earlier.

The £125.7 million is 30 per cent. of net rateable expenditure. In some districts it rises to 50 per cent. or more. Despite the Secretary of State's efforts, the subsidies are still unacceptably high and steps must be taken to reduce the burden of that blatant bribery. My worry is whether clause 6 is the best way to achieve that end. No doubt the Secretary of State will use the proposed power to protect the ratepayers, but I cannot be certain what the position would be if Labour Members were in power. It may well be that they would remove the restraints and unleash the Labour councils' wild men on the poor ratepayers again. Will the Secretary of State consider substituting a statutory limitation for rate fund contributions, with a fixed timetable by which it should be met? The contributions lack moral, social or practical justification. They add, on average, 11p in the pound to the rates of the Scottish ratepayer and they are a burden that our people should no longer be expected to bear.

Three of the clauses in part II that relate to valuation appeals will no doubt improve the position of individual ratepayers in challenging valuations and speeding appeals. They do not deal with the unfair position of householders and tenants when appeals are heard. I have spoken to people who have experienced the ordeal, and I ask the Minister to consider revising the advisory booklet so that tenants are warned that hearings will be conducted along the lines of the courts, because the present impression is all to often given that the appeal will be an informal affair. The ordinary householder or tenant finds himself at a psychological disadvantage as compared to the assessor and his trained staff.

I wish to deal with the rating of licensed premises. I am not an expert on valuations, but I understand that licensed premises are unique in being valued on turnover rather than square footage. When such ratepayers appeal, they can be put in a position whereby their turnover is publicly revealed. I see no justification for that. It does not seem a useful application of the rating system that we should have rules that seek to penalise success and discourage the most effective use of premises. Will the Minister study the position with a view to placing such premises on the same basis as other businesses?

The Bill protects Scottish ratepayers. It removes some of the manifest unfairnesses of the rating system, but, as with all Bills at the start of their parliamentary career, the details can no doubt be improved. It will be widely welcomed by the vast majority of those who have had to pay the price of spendthrift councils such as Stirling, or suffer the unfairness of the present rating system. I hope that the Bill will not be mindlessly obstructed by those who seek nothing more than to further political advantage.

6.29 pm

Mr. Hugh Brown (Glasgow, Provan)

I assure the House that I shall be briefer than the hon. Member for Stirling (Mr. Forsyth), and more tolerant and understanding of the problems facing local government. He said that one reason why he won his seat was the Tory election manifesto, but the more electors get to know him and his sour cynical attitude, the fewer votes he will keep. He is a curious mixture. His opponents and supporters will note that he wanted rents increased substantially, and he seemed to suggest that there were too many old people getting home helps, who could be looked after instead by family and friends. It is a sour, sad note that he injects into local government.

Mr Michael Forsyth

I was not for a minute suggesting that the elderly should get fewer home helps. I argued that the home help service should be expanded by involving more volunteers.

Mr Brown

The hon. Gentleman can explain it in his own way, but I understood him to say that there were far too many paid home helps. Whether he wishes to qualify that now is another matter. If he continues with his sour, intolerant attitude as a Scottish constituency Member, he will end up representing a constituency in Northern Ireland — I apologise to those Members for Northern Ireland who are excellent.

I was surprised that the Secretary of State cast aspersions on the working methods of my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) when he spoke about the possibility of my hon. Friend quoting extensively from briefs. No one has supplied me with a brief and my hon. Friend, who made an excellent speech, is as capable as any one of digesting the masses of material sent to us, not only from party sources — which the Secretary of State may consider to be biased—but from other authorities. It would be a pity, and unfair of the Secretary of State, to say that Labour Members were merely quoting briefs without understanding them, or opposing the Bill for the sake of it. I wish to quote from three or four sources, the first of which is from the Conservative party.

The idea that we are witnessing a great reform of the rating system is a myth. I shall not consider all of the Bill, as we shall examine it in detail in Committee. In 1974 the Conservative party election manifesto said that the Conservatives would abolish domestic rating in the lifetime of a Parliament. There were no "ifs" or qualifications. One myth that is often put round, even in some Labour and trade union circles, is that the Prime Minister can at least be commended for always carrying out her promises. I have often questioned that. In October 1974, speaking as the official Conservative spokesman on the environment and before she made her bid for power, she said: We have decided to take the historic step to abolish the present rating system over a five-year Parliament…With the full backing of a Conservative Government pledged to abolish the present rating system, that Committee will have an added incentive to present alternatives to Ministers. The Prime Minister also said: As a sign of good faith we shall start by taking education from the rates to the Exchequer. That pledge also sank without trace.

Mr Henderson

I am sure that the hon. Gentleman wishes to be fair. He will recollect that I lost my seat at that election, and that the Conservative party was not elected to Government. Therefore, perhaps it is not unreasonable that the party did not carry through those pledges.

Mr. Brown

The hon. Gentleman will have to do better than that. He had better not defend such matters, because I am not drawing conclusions from them at present. I am simply putting it on the record that the Prime Minister made such statements in 1974.

In case the first speech from which I quoted was an exuberant and slightly exaggerated speech, the right hon. Lady made a similar statement the following week. She said that she would give immediate help to all ratepayers by transferring the cost of teachers' salaries and more of the cost of police and fire services from the rates to the Exchequer. She reaffirmed that she would abolish the unfair system of household rates. Curiously, the 1979 Conservative manifesto stated: Labour's extravagance and incompetence have once again imposed a heavy burden on ratepayers this year. But cutting income tax must take priority for the time being over abolition of the domestic rating system. That is nothing but a continuation of the commitment made in 1974. My right hon. Friend the Member for Halton (Mr. Oakes), who dealt with such matters in the Labour Government of that time, understands the point that I am making. Too many people in the Labour party have perpetrated the myth that the Prime Minister carries out her pledges. There was no change of policy in 1979, but an endorsement of the previous commitment, with the only qualification being that income tax cuts would take precedence.

It is true, as the hon. Member for Stirling said, that the 1983 Conservative manifesto did not mention the abolition of domestic or other rates. The only commitment was a vague statement about reforming the rating system, with a few details set out in the Scottish manifesto. What happened between 1974 and 1979?

Mr. John Corrie (Cunninghame, North)

Five years of Labour Government.

Mr Brown

Perhaps a Minister might have had the grace to admit that the Conservative party was wrong. If not, it was trying to con the electors. Ministers have the choice, but they cannot say to the House that this is a great Bill that will come near to fulfilling their original intentions, or that it will make a great contribution to the vexed problem of how to finance local government.

The change was obvious in the Green Paper of 1981, which stated that: The Government is committed to the reform of the domestic rating system. After the 1983 election, the White Paper stated only The Government have therefore decided to make reforms to the rating system which is basically sound. The latter words show a change of attitude.

I do not impute dishonest motives to any individual, but there has been collective dishonesty on the part of the Conservative party. I am sorry that the Under-Secretary of State has left the Chamber, since he was guilty of dishonesty in connection with Lothian. At present, there seems to be discrimination against of my good friends in Glasgow district council, only because there is no one in the Chamber to knock hell out of them. Stirling district council will get all the publicity in this Parliament from what I can see. It will have the new hard men of the Left in the Labour party, through the persistent misrepresentation of the hon. Member for Stirling. I do not know whether the Under-Secretary got his job through his attacks on Lothian regional council, but he made a name for himself by doing that.

Conservative Members give the impression that the Conservative party is the party of low rates. It is, in fact, the anti-local government party. All of us with any knowledge or experience of local government know this. Local government is not popular, and therefore anybody who knocks it will get kudos out of doing so. The Government have been doing that since 1979.

Of all the comments that I have received, not one commends the Bill, although the Minister may want to trot out some examples of support for it. People might say that one would expect opposition from COSLA, as a local government body, because the Bill is an attack on the powers of local government, and seeks a diminution of them insofar as the powers go to central Government at the expense of local government. Therefore, COSLA, representing local authorities, should rightly be opposed to the Bill. However, what about the chamber of commerce in Glasgow? If I were canvassing Labour voters, I should not go to that body first. It says: The Government has gone back on the Conservative party's manifesto pledge to abolish rates and after an exploratory Green Paper debate, the Scottish Office has issued a White Paper entitled 'Valuation and Rating in Scotland: Proposals for Reform' based on the premise that there is little point in replacing rates with an untried and possibly equally unfair system. The chamber of commerce did not support Labour. but it also does not think much of the Conservative party reneging on its general commitment and the impression that it had given that it would, some time, abolish domestic rates.

I am sorry if I am signing on for the Committee, but I do not know whether too many other hon. Members will be doing so. I hope that this does not sound pompous or patronising, but in all the years that I have been here I have never seen as weighty a document from a professional body as the one that we have seen from the Scottish Assessors Association. My hon. Friend the Member for Garscadden dealt with some of the points in it, and I shall not go into its details. However, it is a bad sign for the Government when a responsible body such as this criticises them. It is a professional body with a difference, as I am sure hon. Members know. Its members are assessors appointed by local government but riot answerable to it. They have an independent role beyond anything like that of social workers or the police. Here we have a body challenging the generality of the Government's approach, as well as some of the details that we shall be looking into in Committee. I have never known that to happen.

I am talking about what might be a minor part of the Bill, the so-called anomalies. I do not consider that the differences that have arisen because of the different systems in Scotland and in England and Wales for valuation and rating burdens are anomalies. All of us would want to sit down to assess and probe to see whether any injustices have crept in for one reason or another. That would be a fair-minded and basic approach for which all hon. Members would work. Even the Government might have wanted to do so, although they have not got it right. We all agree that there should be some kind of equality between rate burdens, despite the fact that there is a different system.

I have never known a body as influential in its subject as the Scottish Assessors Association to come out so bitterly in its comments and criticisms without seeing whether it could reach a compromise with the Government behind the scenes. I do not say, cynically, that this is a manoeuvre — it is part of the legitimate discussions between Government and professional bodies that have a professional knowledge and interest, away from politics. I have some sympathy with the Minister. He is having a comparitively easy ride on the Tenants' Rights, Etc. (Scotland) Amendment Bill, for what that is worth. However, he will have a few heavy sessions in Committee if he takes it on single-handed. I can understand the Labour opposition to the additional powers that the Secretary of State is being granted. I hope that the Minister will clear this point up. That also applies to the arrogance of the Conservative youth from Stirling.

I have been here long enough to know so much about procedure that I shall never give an opinion and say dogmatically that I am right. The procedures are so complicated that anybody who thinks that the answers are easy should think himself out of that position. I have never known five or six votes on one order. I may be wrong. Perhaps the Government have found out about this, and have consulted the Chair and the Clerks, and perhaps there is a procedure in the Standing Orders, about which I might not know as there are so many Standing Orders. If the Government know something that I do not, I should be delighted to hear about it, because nobody wants to waste time. I do not want to argue about whether there should be one vote or five votes, or whether we should finish in time to get to sleep early. That was another cynical remark from the hon. Member for Stirling. He has never been sitting in here, anxiously wondering whether he could finish in time to get a plane. He has not been here long enough to warm his seat, never mind do anything else.

We shall be opposing the Bill tonight, and opposing, in the Committee, the parts of the Bill that require to be opposed. There are one or two parts with which we agree, but it is bad in parts and mostly it is thoroughly bad. I hope that hon. Members will reject it.

6.48 pm

Lord James Douglas-Hamilton (Edinburgh, West)

I listened with interest to what the hon. Member for Glasgow, Provan (Mr. Brown) had to say about the commitment given in 1974 by the Prime Minister. That commitment has not been implemented, because, although many plans were put forward, there was no consensus as to which should be agreed upon and there was no clear public support for one system and it was thought imprudent to embark on any one.

The hon. Member for Linlithgow (Mr. Dalyell) spoke about Edinburgh zoo, which is in my constituency, and I thank him for coming to my constituency two Fridays ago and investigating the problems of the zoo. In the election, a commitment was given to abolish all anomalies, especially those between the English and Welsh and the Scottish valuations, where there was a grave difference. The Royal Zoological Society of Scotland is being treated most unfairly, by any view, under the present system. I am a life member of the society.

Edinburgh zoo suffers a gross unfairness because it has a rateable value that is higher than that of any other zoo in Britain. It consists of about 32 hectares and it has a rateable value of £49,358. Whipsnade zoo, which has an area seven times larger, has the infinitely lower rateable value of £17,500.

London zoo receives £2.8 million from the Treasury, while Edinburgh in stark contrast receives a mere £12,000 from the Scottish education department for its specialist education work. In comparison, Edinburgh zoo receives virtually nothing. The argument for London zoo receiving £2.8 million is that it has a national collection of national significance. However, Edinburgh zoo also has a national collection of national significance and should be better treated than it is at present.

Virtually all the significant zoos in western Europe are heavily subsidised by their respective Governments. The West Berlin zoo is an exceptional example because many of its facilities were built by the British Army after the second world war.

Edinburgh zoo's rateable value is especially unfair and produces a rates bill of more than £31,000 a year. London zoo receives £2.8 million from the Treasury and pays far lower rates. Chester zoo, which is infinitely larger than Edinburgh zoo, pays no rates. Similarly, Twycross and Marwell zoos pay no rates. On any view, Edinburgh zoo is treated unfairly.

I do not know whether Glasgow zoo is within the constituency of the hon. Member for Glasgow, Maryhill (Mr. Craigen), who is sitting on the Opposition Front Bench, but Edinburgh zoo is treated most unfairly even in comparison with Glasgow zoo. Glasgow zoo's rateable value is £8,347 and the zoo is about a third of the size of Edinburgh zoo. Edinburgh zoo's rates would have to be reduced by over a half to bring them into line with Glasgow's rates. I appreciate that my right hon. Friend the Secretary of State does not have a zoo in his constituency although he has a race course, but I believe that Edinburgh zoo is every bit as significant as his race course.

This is an issue of national significance because Edinburgh zoo has the most outstanding collection of animals in Scotland. It has 304 different species while Glasgow, the next largest zoo, has 99. Some of the species at Edinburgh zoo are well known the world over, not least the penguins, which were well advertised in "Pick up a Penguin". It is undoubtedly the best collection of penguins to be found in any zoo in the world.

The zoo has an important pioneering education function. No fewer than 50,000 children have been taught educationally at the zoo and for many of them it was their first experience of handling animals. The classes have operated with the greatest possible success, and in formulating them the zoo has had consultations with the Royal botanic gardens, the Royal Scottish museum, teachers' associations and many other organisations of a very high standard. In addition, it plays a decisive role in zoo keeper's training. The programme caters for more than 250 student keepers. As well as the 50,000 children who are taken around the zoo on educational school visits, the zoo has shown round 60,000 pupils.

The zoo has an important research role and has pioneered a great many research projects. Over the past 10 years it has worked on about 58. It helps expeditions which go abroad, especially those with a Scottish content.

It is co-operating with other zoos and it is pre-eminent because it has a significant conservation role. Conservation will become more important in the final quarter of the century. It is co-operating with many other zoos in the breeding of various species and in maintaining viable groups for breeding. It is involved in conservation inside Scotland and outside Scotland with other zoos.

I hope that the Minister will give the most serious consideration to ensuring that clause 13 adequately covers the special position of Edinburgh zoo. It faced a great tragedy when it had to close its aquarium. The reason for the closure was a combination of mounting inflation and mounting fuel costs. The deficit increased each year. In 1980 it was £47,000, in 1981 it was £63,000 and in 1982 it was £81,000. At the same time it has been charged crippling rates, rates that are far higher than those charged to any other zoo.

The zoo has done everything requested of it by the Government. It has employed hundreds of young persons under the Manpower Services Commission's scheme. When the hon. Member for Edinburgh, East (Mr. Strang) was a Labour Minister, he kindly took the trouble to visit the zoo to see the scheme operating in practice. I stress that it operated very well. It has also employed 100 volunteers and paid them nothing. It has relied on self-help in exactly the way the Government would wish.

The danger is that clause 13 does not properly cover the zoo's needs. The zoo has the foremost collection of animals in Scotland and it seems that there is the danger that its collection may be depleted year by year and whittled away as a result of a series of makeshift economies.

On leaving the zoo the other day with the hon. Member for Linlithgow, we decided to pay a courtesy call to Maria. Maria is an orang-outang which the hon. Gentleman presented to the zoo. When we visited Maria it appeared that she had a spark of recognition for the hon. Gentleman. I hope that in the years to come a system can be devised to ensure that Maria and all those like her will continue to flourish.

6.57 pm

Mr. Gordon Oakes (Halton)

Like you, Mr. Deputy Speaker, I have been a Member of this House for nearly 20 years. However, this is the first time that I have ever sought to intervene in a debate on Scottish affairs. That is despite the advantage that my Christian name might give me in catching your eye in such debates.

As this is such a momentous occasion in my life, I hope that the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton) will forgive me if I do not take up his remarks on zoos, no matter how interesting that subject may be. I shall restrict my comments to clause 3.

I have three reasons for thinking that my Scottish colleagues should listen to me, an English Member. First, I promise faithfully to be very short. Secondly, I assure them that this is for me a one-off intervention in Scottish affairs. Thirdly, the only balanced, sensible and reasonable speech that I have heard from the Government Benches throughout the debate came from another Englishman. The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) intervened in the speech of the Secretary of State and made it clear that he would not accept the content of clause 3.

The Bill is a constitutional outrage. The outrage is being committed in one part of the United Kingdom, but if one attacks our constitution all right hon. and hon. Members are affected, whether they come from England, Wales, Scotland or Northern Ireland. That is why I have sought to intervene in the debate.

On previous occasions the Government have introduced legislation for Scotland and subsequently translated that legislation to England and Wales. When they have introduced legislation for Scotland they have said to us poor Sassenachs, "You do not understand that Scottish local government is entirely different from local government in England and Wales; it is far more centralised. You do not understand the system." When we have swallowed that, they have produced legislation for England and explained, "All that we are doing is bringing England and Wales into line with Scotland." That has happened twice since 1979 and I am certain, as the right hon. Member for Western Isles (Mr. Stewart) said. that they are using Scotland as a guinea pig for a virus which they will use to infect the whole of the United Kingdom during this Session.

It has been said that this is a pioneering measure, but this is precisely the type of pioneering in local government of which the Government have been guilty on two occasions during the present Parliament.

The Bill is a constitutional monstrosity. We have in the entire United Kingdom an unwritten constitution. II is a dual franchise system. We are elected to the House as hon. Members of various parties and councillors are elected by almost precisely the same electors to district councils or regional councils in Scotland and to county councils in England. They have a mandate to carry out, just as we have a mandate to carry out. In those circumstances, it is entirely wrong and unbalanced constitutionally for one group of elected representatives to seek, in the way that clause 3 does, to limit the powers of another group of elected representatives, who are themselves responsible to the electorate.

I was a Minister in a previous Labour Government and I appreciate that central Government have responsibilities over the total amount of money that they spend within the nation as a whole and also with regard to the grant that they give to local government. Conservative Members referred to my right hon. Friend the Member for Glasgow. Govan (Mr. Milian) who, in 1976—I must share some of the guilt — was faced with the difficulty of trying to persuade local authorities to spend less money. We did not introduce anything as unconstitutional and draconian as clause 3 to say that the Secretary of State, whether of England, Wales or Scotland, could intervene in local authorities and tell them what their rate should be and how much they should spend. That is what clause 3 seeks to do and that is in no way a continuation of any policy of my right hon. Friend the Member for Govan or of any Labour Minister in that Government.

Local authorities are elected bodies and are responsible to an electorate. I am reminded of the old American constitutional cry at the time of the War of Independence, "No taxation without representation." The reverse is equally true. One cannot have adequate representation without a power of taxation. That is precisely w hat the Government are seeking to bring about in Scotland by this Bill, and, by design, subsequently in England and Wales.

In local authority circles in England we call it not rate capping, but knee capping. Clause 3 is doing institutionally precisely what knee capping does to an individual. It is a vindictive and violent punishment. That is what the Government intend for local authorities. They are vindictive towards local authorities and they intend to punish them because they do not obey the dictates of central Government. Just as knee capping cripples a human being, so rate capping cripples a local authority and renders it unable to stand on its own feet. It has precisely the same effect; no wonder we refer facetiously to the likely legislation for England and Wales as "knee capping".

I assure the House that the proposal is implacably opposed by English and Welsh local government associations as, I believe, it is opposed by the relevant associations in Scotland. I am a vice-president of the Association of County Councils in England and Wales and of the Association of District Councils, both of which are Conservative-controlled. The Association of County Councils is heavily Conservative-controlled. I assure Conservative Members, with the full authority of those associations, that we will fight in every way the proposals for rate capping as outlined in clause 3. Sometimes, different local authority associations in England and Wales have varied in the ferocity of their attacks on what the Conservative Government were doing. That is particularly so of the Association of County Councils. But that is not the case with rate capping. They are absolutely opposed to this unconstitutional proposal.

I promised that I would not speak for a long time. It is a pity that more English and Welsh Members have not been present for the debate. It is outrageous that some Conservative Scottish Members have taken the line that they have during the debate and I wonder how those Members will explain to their councillors at regional and district level why they supported the Bill or why they were not here to listen to one of the most important debates affecting local government in Scotland. When the bell rings at 10 o'clock — I use John Donne's famous words— And therefore never send to know for whom the bell tolls; It tolls for thee I say to my English and Welsh colleagues: it tolls for us as well, as for Scotland, unless the Bill is opposed and rejected.

7.5 pm

Mr. John Corrie (Cunninghame, North)

I wish to go down the path of the right hon. Member for Halton (Mr. Oakes). I came here with a specific remit from the Conservative councillors of my district council to support the Bill because they strongly believe in the Bill as it stands. Perhaps, as has already been said, there are Conservatives who oppose it, but I can assure the right hon. Gentleman that the Conservatives on Cunninghame district council have given me not only their permission to say that they support the Bill, but demand that I say it. I welcome most of the Bill, but I do not support parts of it and I shall return to those later.

I say to my hon. Friends on the Front Bench that, if we are willing to bring forward controversial legislation such as this, we must face it head on. We cannot duck behind the hope that we will never have to use it. If we put proposals into a Bill we must face up to the fact that at some point we may have to use them.

I was one of those to whom my right hon. Friend the Secretary of State referred who are disappointed that we have not scrapped the whole rating system. I think that it is an extremely iniquitous and unfair system which bears mostly on those who can least afford to pay. Many of my constituents along the coast of Ayrshire are old and live in their own houses. There are many widows and widowers living in those houses who are suffering now in their old age because they can no longer afford to keep those houses up. The main burden of owning those large houses is the rates bill, which causes enormous problems.

Part of the problem arises from the valuation of those properties. I can never understand the way the properties are valued. The valuer in some cases appears to pluck a figure from the air and then double it or treble it. A house that is slightly inland may have a completely different valuation and rent structure and therefore a completely different rate burden. If we are to continue with rates, we must consider how these valuations are carried out. I hope that this problem can be looked at under clause 13.

Clause 7 says that if one buys a house, moves into it and then finds that there is a high rate level, one can then question the rating on that house. How does anyone moving into a house know that he can question the rate level? Will a circular be sent out so that people who change houses can know that if they want to question a rate bill they can do so?

My area is committed to tourism. One of the major problems in the area is caravan parks. The situation there is extremely serious and therefore I welcome clauses 11 and 12. In many cases it is almost too late because a large number of caravanners have pulled out of Scotland. That particularly applies to the south of Scotland because, being reasonably close to the border and the north of England, caravanners can move to sites where their expenses are much lower than they are in Scotland, and I will give a few figures to illustrate the difference.

The average 30 ft by 10 ft static caravan in my constituency is rated at about £120. In the Lake District the same caravan is rated at about £40. For an empty pitch —one with no caravan and therefore no income—the average rateable value in that coastal area which depends so much on tourism is £28 per pitch. The same pitch in England costs between £12 and £16.

If we consider sites as a whole, the comparisons are quite frightening. A good park in the constituency of my hon. Friend the Member for Galloway and Upper Nithsdale (Mr. Lang)—I am thinking of one with 240 caravans—is paying about £27,000 in rates. In the north of England a caravan site containing 300 pitches is paying £9,000. The incentive is for people to pull their caravans off the pitches in Scotland and move south. If we are to even up the situation as between England and Scotland, I am led to believe that the difference is about 40 per cent. I hope that such an evening up will take place, and I was glad to hear the Secretary of State say that he will look at the comparable figures for the two countries.

Another major problem with the leisure industry is that site owners are being undermined by exploitive tourism. Throughout Scotland there are springing up caravan sites that do not need a licence. These sites can have five caravans without providing any facilities. In a private Member's Bill that was due to be presented two weeks ago it was suggested that that number should be increased to eight caravans. In addition, when there are caravan rallies, the participating caravans can sit on pitches for five days without it being a legalised park. Indeed, there was a suggestion in that Bill that instead of five days it should be 28 days.

It is unfair that people should spend vast sums of money providing all the facilities that are required for caravan sites to encourage tourists to them only to see in a field up the road a large number of caravans coming in without any facilities having been provided for them. The latter sites do not provide toilet, washing and other facilities, and they do not pay rates. There is also the problem of the illegal parking of caravans. I refer to caravanners who simply pull into laybys. I hope that local authorities will clamp down on that because the more people who park at the side of the road, the less revenue is going into legitimate caravan sites.

Considering the problems of the hotels in the area about which I am speaking, I cannot see how the Bill will even up the discrepancies between England and Scotland. However, I may have misread the measure, in which case the Minister will correct me when he replies.

Sadly, this week we have seen the marina and curling hall in Largs go, with the local hotel's furniture and furnishings being sold prior to it being pulled down so that a block of flats can be built on the site. It was one of the largest, perhaps best, hotels in that coastal area. That happened because that hotel was paying £26,000 a year in rates. A comparable hotel in the south of England with a comparable rate poundage pays about £4,600 a year. The add-on per room cost makes for a very large difference indeed.

As Opposition Members have pointed out, the crunch point in the Bill comes with the power that it gives to the Secretary of State to control local authority expenditure by rate capping, and the right hon. Member for Halton (Mr. Oakes) spoke ferociously against that. The Secretary of State said that it would be used only in the last resort, as the ultimate deterrent. I have previously said that, if we are to have such legislation, it should, if necessary, be used. If we put such a sanction in measure, we should have the courage to support its use.

The complaint of Labour Members is that measures such as this are killing off local democracy, and they say that Scotland is different from England because there is no Tory mandate there.

Mr Maxton

That is correct.

Mr Corrie

The hon. Gentleman cannot have it both ways. He cannot have a section of this House as a party in Scotland and at the same time adopt the independent line that many Labour Members would like to take. If they wish to continue to be a part of this House, they cannot have an independence outwith it.

Mr Maxton

The logic of what the hon. Gentleman is saying is the abolition of the Scottish Office and no separate Scottish entity in this House. I can follow the logic of that. I cannot follow the logic of Conservative Members saying that they want to stay part of the United Kingdom but are not prepared to give democratic control to the 99.6 per cent. of Scottish civil servants who work in Scotland and not in England.

Mr Corrie

There is no halfway house, so we are faced with a straight choice that Opposition Members must accept. Either we are part of the United Kingdom within the Westminster system, or there is a totally separate Scotland with an independent Government in Scotland. There is nothing in between. Opposition Members cannot have it both ways. The Labour and Conservatives parties have looked in the past at ways of trying to find a better system, but no alternative system has got through this House.

Mr Canavan

The hon. Gentleman says that there cannot be anything between absolute uniformity in the United Kingdom and complete separation or independence. Why, then, are we debating the Second Reading of a Bill that applies only to the people and local authorities of Scotland?

Mr. Corrie

Because we are part of the Westminster system and we discuss Scottish legislation within that system. That is why we are discussing it here and not in an independent parliament in Edinburgh.

A Glasgow councillor is reported in one of today's newspapers as saying that, if the Bill became law, local authorities will become only an arm of this House. Local authorities are now only an arm of this House; they are there because this House, by statute, has put them there. Democracy in local government applies primarily to spending the money that local authorities have to spend once it has been decided what those overall sums shall be. Therefore, the argument adduced by Opposition Members. on that subject is week.

But I disagree with the Secretary of State on the question of rate support grant being used to control local authority expenditure by cutting central Government support. No Minister will admit that the local authority will simply slap the addition straight on to the rates. A story in my local newspaper from the local Labour group states that, because the rate support grant has been cut, a number of pennies would automatically be added to the rates before anything else was considered. I hope that some of the powers in this measure will be used in such a way as to stop that automatic shift of expenditure from central Government on to the backs of the ratepayers in all areas of Scotland.

I am not sure of the value of clause 4, which is about consultation with non-domestic ratepayers. I have spoken to all the businesses in my area, and all that they say is that the rates are too high, so they must be cut. I admit that there is no other answer to the question of whether the rates are too high. That is fair. There is no doubt that because of high rates in some areas small businesses have suffered, collapsed, or moved away. However, the converse is also true. If one agrees that, because a business needs a little relief, one will cut its rate bill, the money will have to be found somewhere else. The domestic ratepayer will have to pay a little more, so he will suffer again.

I warmly welcome the help that will be given under clause 5 to the disabled. I hope that something positive and practical will come out of that clause. Clause 14 means that changes in valuations can take place. In most cases valuations should go down, so rates should go down, not up. I hope that that will be considered also.

Mr Dewar

That was the purpose.

Mr Corrie

One hears mostly about rents going up, but rents go down as well as up.

Mr Dewar

I am interested in the hon. Gentleman's point. The changes in rental value are interesting. Obviously, the measure is geared to a situation in which there has been a fall. Therefore, the valuation should be adjusted downwards on appeal, taking advantage of the new provision. The important point is whether there will be an allowance for inflation as it is extremely unlikely that the rents will fall in cash terms. They may fall in real terms. If it is left on a cash basis, the provision will be almost worthless.

Mr. Corrie

Time will tell. I am glad that I am an ignorant farmer and not an urban dweller like the hon. Gentleman. He knows much more about the matter than I do. I bow to his superior knowledge.

When the Bill becomes law, all that we shall have done is to tinker with the existing system. I should have preferred a complete change. I still believe that the only real answer is to scrap the rating system, cutting the throat of the sacred Conservative cow, and increase taxation in such a way that we can pay finances to the local authorities from the Exchequer rather than put the present burden on those who pay rates. We cannot tinker enough to make the present system fairer for those who suffer from it. As long as we retain it, people in my constituency who live in large owner occupier houses will carry an unjust and unfair burden.

The only thing on which I disagree with my Front Bench is clause 2, on procedure. It is a nice thought that we would know that there was only one hour and a half of debate and a vote, and the debate would be all over at 11.30 pm. However, if the Government are taking fairly draconian measures, it is only right that those who are affected have a chance to say how they feel. Many councils might be taken to task by the Government, and they would expect hon. Members representing their districts to make a speech within the one and a half hours of debate. I genuinely hope that my right hon. Friend and other Ministers will consider that matter in Committee.

I support most of the Bill. No doubt I shall be on the Committee. In Committee I shall consider certain matters, but on the whole I warmly welcome the Bill.

7.25 pm

Mr. Malcolm Bruce (Gordon)

The Secretary of State's opening speech showed a lack of conviction and confidence in what he was doing. He seemed, if I understood him right, to say how much he disliked the measure that he was introducing, but that the ends, painful as they were, justified the means. That is not an acceptable reason for proposing such a fundamental measure.

The clause that causes most concern is clause 3. Despite the Secretary of State's assurances, I believe that it involves a major shift in the emphasis of decision making in Scotland. As hon. Members have already said, it paves the way for the Government's wish to make a similar shift in England and Wales. I challenge the Secretary of State to say on what basis he believes the Scottish Office is a more democratically represented body of the Scottish people than the democratically elected local authorities, which at least have been elected in Scotland by their local communities to do a job. The Secretary of State's Scottish Office commands the support of only 28 per cent. of the voters in Scotland, yet he presumes to suggest that it knows better than the local authorities elected by local communities. That is a dangerous step.

The Scottish Office is not very accountable to the House. It is certainly not accountable to the Scottish people. It has developed a habit of issuing its promulgations by press release and written answer rather than by arguing its case in the House. The Bill is part of the evidence of the Secretary of State seeking powers to do more of that. Clause 2, which enables him to bring forward a global order that will take in a number of local authorities, is a retrograde step. As the hon. Member for Glasgow, Garscadden (Mr. Dewar) said, the Government do not treat the House with much respect. To seek such an order demonstrates greater contempt towards the House than has been demonstrated in individual orders.

My main concern about the Bill is that, fundamentally, it is centralist. It is interesting and appropriate that it will become an Act in 1984, a significant year. The Bill smacks of the "Big Brother" approach. The Secretary of State will need time to get used to being called "Big George". He has not been used to that in the past.

The Bill is cowardly. It has failed to grasp the real issue, which is the need to reform the rating system. The battery of evidence from Layfield has been thrust aside as irrelevant. The work and consultation that went into that report have been swept aside. All sorts of bodies have stated clearly for many years that they want a reform of the rating system. Some people say that they want it to be abolished. The Government have done neither of those things. If they were concerned about the problems of commercial ratepayers, which I understand and share, they could have taken the approach of allowing a 10 per cent. reduction in commercial rates across the board. That would have been direct, positive and identifiable help for commercial businesses, which they would have appreciated. They could have said that that was something that the Government had done for them. To do what the Government are doing will not directly help commercial ratepayers.

The Government say that consultation of commercial interests will be required. It is not clear what that means. First, it is not clear what the consultation process will be. Who will be consulted? Who is the representative of business? Is it the Confederation of British Industry, chambers of commerce or the Institute of Small Business? What about the many businesses that are not members of those organisations? How will they be consulted? Will they be consulted individually if there is no one to represent them? As the hon. Member for Cunninghame, North (Mr. Corrie) said, all that they say is that they want the rates to be cut. In the circumstances in which local authorities operate, we have not learnt anything during that wasteful procedure that we did not know before, which is that commercial businesses feel the burden of rates and want a reduction.

I believe that they would have been more appreciative if the Government had taken direct action to give them the benefit of the reduction. I suggest with some temerity that Labour Members are not completely guiltless in this matter. I do not wish to make a sweeping condemnation, but several Labour-controlled councils have to some extent given the Government the excuse that they need. I refer not to those councils who have legitimately stated that they have interests and wish to defend the views of their electorate, but to councils such as Lothian who have blatantly gone out of their way to defy the Government and follow a contrary policy. Such unacceptable behaviour, regrettably, gave the Government an excuse effectively to take a sledge hammer to crack a nut.

The sad fact about Lothian is that the voters acted properly. They took a democratic decision to throw the council out. When the new council proposed a revised budget, it was still unacceptable to the Secretary of State. As a result, the moderate council members became disillusioned as to whether the consultation process between central and local government was a two-way street. All the traffic is coming from the Government and the Bill is indicative of a one-way street. When the Government suggest that local authorities are less representative than the Scottish Office they understandably ignore the fact that there is always the option of making local authorities more representative by changing the voting system. Such a suggestion would not appeal to the Government who have swept aside any willingness to examine such reform. They are not interested in securing representative government. Attacking Left or Right-wing opponents is more fun, but it produces dog fights that degrade politics because constructive debate and dialogue do not take place. The Scottish Office is not famous for that type of reform any more than it is for having grasped the nettle of the need to reform rates.

I believe that the general attitude that flavours the behaviour of the Scottish Office towards local authorities was borne out by the decision of a recent planning appeal in Aberdeen. A planning application to build 1,400 houses was objected to by the community council, which is a nonpolitical body, by the Labour-controlled city council and by the the Conservative-controlled regional council but, nevertheless, the plan was approved. That decision demonstrates absolute contempt towards local consultation and the wishes of local people. The attitude of the Scottish Office is that big brother, as always, knows best. I regret the fact that the Government consider themselves justified in introducing such draconian measures.

I welcome the interjections by the right hon. Member for Halton (Mr. Oakes) and the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) who expressed the genuine resentment and concern on Conservative Back Benches and among Conservative councillors against the significance of the proposed legislation. Regrettably the Government seem to think that they can enforce the legislation on Scotland. The signs are that if enough ripples are caused south of the border the English measures may not be brought forward. However, Scotland, unfortunately, would have been stuck with the measures by then.

The Secretary of State should address himself to the broader constituency problems of Scotland and not just deal with the difficult councils who have obsessed him in the measures that he has introduced to the House in the short time that I have been a Member of Parliament. I represent Gordon district council which considers that it has been treated extremely unfairly by the Scottish Office in recent yars. Gordon district council has no political bias. It was initially singled out for not selling council houses fast enough. The council considers that the selling of council houses has been popular, but no real account was taken of the fact that the council was selling proportionately more than many other authorities without increasing staff. However, the authority had extreme difficulty in processing the sales at the speed required by the Scottish Office. The local authority challenges the figures on which the Scottish Office bases its calculations. For a council to be rapped over the knuckles when it considers that it was doing everything reasonable creates resentment.

The Gordon council accepted enthusiastically, as did all Scottish councils, the Government's policy on home improvement grants. Many people were encouraged to apply for the grants, and it is greatly embarrassed by the fact that the Government have cut support for them. That has created much extra work which the authority must cope with without the necessary resources and manpower.

It considers that the proposed calculation of rates—the client-group method — is likely to leave it at a considerable disadvantage. That problem could be of direct relevance to the consequences of the Bill.

As the local authority understands those consequences — the Secretary of State may well argue that it does not—it has some reason to be apprehensive as to the changes introduced by the Scottish Office. It is worried that the new method of assessment could have a significant impact on its need to finance its own resources, and the cut in rate support grant which in practical terms would follow. It estimates that a 58 per cent. increase in rates could be necessary just to stand still.

The consequences of such rate increases would be catastrophic for many businesses. If the Government sought to penalise such a council the consequences would be even more catastrophic. By having changed the rate support grant, the Government would have forced it into a position of either suddenly or gradually making up the deficit from its own resources. For the Government then to impose rate capping on the local authority would have a catastrophic effect in terms of the rate increase that might be imposed and the effect of the loss of services on businesses within my constituency.

I seek an assurance from the Government that local authorities such as the Gordon district council, which are non-political and have always sought to co-operate with the Government, should be exempted from the measure. The Gordon district council already considers that it has been hard hit by Government measures directed elsewhere, but which have taken many innocent bystanders within their path.

The Liberal party considers that decisions should be taken bearing in mind the wishes of the local community. The Government are drawing power up from the grass roots when they should be passing it down. I assure the Government that disaffection with this measure has spread wider, despite the protestations that have been made, than just to Liberal and Labour-controlled councils. It affects individuals who work for the local authorities and who are dedicated and hard working, and councillors of all political persuasions who consider that they are being got at. They feel that the Secretary of State is forcing them to make cuts that he is not prepared to make himself.

Mr Albert McQuarrie (Banff and Buchan)

The hon. Member for Gordon (Mr. Bruce) referred to the catastrophic effect that the loss of the improvement grants will have on Gordon district council. Surely the hon. Gentleman accepts that the 90 per cent. grant will be payable to those applicants who have made application to their local authority and have had them approved until 31 March 1984.

Does the hon. Gentleman accept that the money allocated by the Government to his local authority for next year, provided it observes the guidelines, should enable it to meet its commitments because it is in exactly the same position as my local authority?

Mr. Bruce

It is clear that those who have legally contracted to have home improvements carried out and have a legal agreement with the council will in due course get their 90 per cent. although it is not clear when they will do so. The Government actively encouraged the whole process and consequently many of my constituents have been given estimates and are more or less committed to making improvements for which they will not necessarily receive the 90 per cent. grant, because they will not have had approval in time. As a result, some of them may not receive the full benefit. However, I accept that the legal commitment will be honoured. Nevertheless, that does not get the hon. Gentleman off the hook, because many people may have begun the process of going for a home improvement grant and the council has had to impose a moratorium on accepting more applicants. That gives rise to resentment among those who have not benefited.

The hon. Gentleman referred to the allocation of rate support grant and improvement grants to the district during the coming year. However, that is not the point of issue that the council has raised with me. It is concerned about proposals for a new method of calculating rate support grant, which it feels will be disadvantageous, partly because it will involve a reduction in or removal of the oil-related grant — and given the district's high rate of population growth, that gives cause for concern—and partly because it believes that full account has not been taken, under the new system, of the rural nature of the area. We shall have to see how things work out. However, the concern is real, and the effect of Government cuts and policy during the past two or three years has not increased my council's confidence in its relationship with the Scottish Office.

Mr McQuarrie

The hon. Gentleman does not seem to have grasped my point. When the decision was made to cut the 90 per cent., it was made perfectly clear that every applicant who had applied to the local authority for the 90 per cent. grant and had received its approval to carry out the improvements would get that 90 per cent. until 31 March 1984. That is clear. In addition, it must be borne in mind that the 50 per cent. still remains, although many of us disagree with the act. I want to drive home that point about the 90 per cent., because I do not think that the hon. Gentleman has understood it.

Mr Bruce

I thought that I had made myself clear. I understand what the hon. Gentleman said, but a moratorium has been imposed on my constituency. In addition, the timing for receiving the money is not clear. I am frequently contacted by constituents who have experienced delays, at the very least, in being able to carry out the work, and instead of moving in in the autumn, it may mean that they cannot move in until next spring. That causes genuine concern. The Government should have anticipated such disruption instead of encouraging councils to set the ball rolling and then cutting the grant from under their feet. However, I am not disputing the proposition that the 90 per cent. will ultimately be paid to those who applied in time.

Whatever protestations the Secretary of State may make, it is my conviction that such legislation will fundamentally alter the character of local government. It undermines the morale and confidence of both councillors and officials, many of whom do a great deal of good work and are close to their local communities and committed to them. I have never disputed the Government's right to dictate or alter the level of rate support grant, but it is quite another thing to take direct control over the rate settings.

The various formulations and changes of policy that continually emanate from the Scottish Office do not always achieve the savings that the Government want. Indeed, they often cost money, cause frustration and waste time and effort. Two councillors, one of whom is a member of the governing party, are concerned about the implications of the changes that I have referred to. They say that the district council has sought to keep rates as low as possible and to stimulate local employment by encouraging commerce and industry to move to the district. What are members of the council now to say to such industrialists if they are faced, as a result of the change in the formulation of the rate support grant, and through no fault of their own, with large increases?

The Government should recognise that councils are elected by their local community and are in touch with them. They are genuinely concerned about the commercial operators who pay too much in rates and about the injustices of the rating system. To meet that concern, the Government should first impose across-the-board rate relief for commercial ratepayers. Secondly, they should reform the whole rating system. Thirdly, they should reform local government in a way that makes it truly democratic and accountable, and, indeed, much more democratic and accountable than the Scottish Office is or can be, given its remoteness and the Government's lack of mandate to govern the people of Scotland.

7.45 pm

Mr. Tom Clarke (Monklands, West)

I trust that the hon. Member for Gordon (Mr. Bruce) will forgive me for saying that the debate is memorable. Although I have been a Member of Parliament for 18 months and in local government for 18 years, this is my first opportunity to address the House on local government. In that 18 months I think that I have heard every speech in every local government debate bar one. I was even in the Chamber when we held the debate on the Kirkcaldy order, and would have been willing to vote if my Whips had been anxious for me to do so.

It may well be less than prudent to say so, but it seems that the more involved one is in local government, the less likely one is to be heard by the Government Front Bench. Even the two Ministers on the Front Bench tonight do not appear to be listening to a word that I am saying. When they have read in tomorrow's edition of Hansard what I have said today, I hope that they will reflect on the words of Harold Wilson when Michael Noble was appointed Secretary of State for Scotland. Harold Wilson said that he had been appointed because he was the only Scottish Member that Harold Macmillan had not heard make a speech. I am in the unfortunate position of having heard all the speeches and I have not learnt anything new.

I do not think that there are many Ministers who have local government experience, but there seems to be a prejudice — perhaps it is subconscious — against local government. Indeed, it has been reflected in most of the speeches made by Conservative Members, with the exception of that made by the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark). As the hon. Member for Gordon has said, many people in district after district, region after region and in the island authorities have devoted much time, effort and energy to the success of their local authorities. It is incredible and, indeed, unacceptable that I have not heard one ministerial speech so far that has paid tribute to them and has accepted that they exist to serve the community to the best of their ability and in very difficult circumstances. I am sure that the House would want to acknowledge the contribution made by Scottish councils—regional, island and district.

The major question before us was posed by my right hon. Friend the Member for Halton (Mr. Oakes). It concerns the simple issue of the role of local government in our democracy. Since the Government came to power local government powers have been steadily eroded. Moreover, local authorities have had to deal with problems that were not of their own making while being attacked because of their manpower levels and the types of services that they wanted to maintain. If the House gives the Bill a Second Reading it will be a grave—and yet another—blow to Scottish local government. No one can disguise that fact.

Neither the Secretary of State nor his right hon. and hon. Friends have said much about services. They are extremely important. The Secretary of State and the hon. Member for Edinburgh. West (Lord James Douglas-Hamilton) were right when they said that local authorities exist to exercise statutory powers that the House has given them. It is bordering almost on the immoral for the House to give local authorities statutory powers and then to deny them the resources necessary to ensure that those powers are effectively and efficiently exercised.

If the Bill is enacted, the Secretary of State, who has not been elected to deal with housing in Monklands, education on Tayside or housing repairs in Hamilton, will be able to take it upon himself to decide, in spite of the wishes of the local electorate in those areas, that their rates are excessive and unreasonable. Without having a majority in Scotland and without having a majority in any of the local authorities he can decide to intervene.

Mr McQuarrie

I am aware of the hon. Gentleman's considerable experience in local government. Does he accept that the bulk of the money that is paid to local authorities comes from Government, regardless of its policital colour? Surely the Government have a right to know what the local authority is doing. If local authorities are exceeding their powers, as many have in the past few years, it is right for the Secretary of State for Scotland to intervene. It would be the same if the Opposition were in power and discovered that local authorities were not carrying out their obligations.

Mr Clarke

The Government have exercised their rights, in terms of representing the taxpayer, by introducing the very statutory duties that we have been discussing. The matter calls for much judgment and common sense. When the Government go beyond their rights they invite the type of difficulties that they have encountered in several local authorities and which I predict will intensify if the Bill is enacted.

Local authorities want to do an effective job for their communities. Ever since the Wheatley report, local authorities have watched the Government interfering in the statutory rights that were given to them by the electors and in the exercise of the powers that Parliament wishes them to have. The Bill represents yet another intervention. What the Government intended to do after 1979 was not quite so blatant as what they are doing now. They are now saying, "We have had all of these problems trying to persuade local authorities to agree with our financial approach. We have tried to persuade them but that has not worked. We have tried bullying but perhaps that has not worked, so we shall introduce this new Act." By doing that the Government erode the standing and role of local government. They do so at their peril.

Right hon. and hon. Members who have referred to anxieties about the rating system have more than a point. We ought to be honest with our constituents. Time and again we have discussed rating reform. We have set up all sorts of committees and commissions. I gave evidence to the Layfield commission. Although we are all critical of the rating system, nobody has yet devised an acceptable substitute for the present system. We should admit that. That being so, the situation is fragile and we must be careful about the way in which we handle the relationship between the Government and local government.

Local government has an extremely good record. Authorities have three objectives. First, they must respond, within the law, to the views of their electorates. Secondly, they must take account of the social factors of their communities. Thirdly, they are communities within a national structure so that when national problems such as unemployment and the state of our economy reflect on local communities local authorities have a responsibility, which is recognised by statute, to protect communities that they represent as much as they can and, if necessary, introduce new initiatives in the interests of local people.

The Bill represents an impediment to those three objectives. Because of that and because the Government have been examining all sorts of means to reduce their contribution to local government, many problems are arising. I am sorry that the hon. Member for Stirling (Mr. Forsyth) is no longer present. I should like to tell him and his supporters—I did not detect that there were many of them— that he has gone far too far. Perhaps that is understandable. I gather that he is a councillor for Pimlico. Today he made a pre-election speech which might have been suitable for Pimlico but was irrelevant in terms of Scottish local government.

The hon. Gentleman went much too far because he tried to persuade Scottish people, including some of us who feel that we have done a fair bit to assist Scottish local government, that we should set aside everything that we have discovered over the years, including our social patterns, and put in its place a Milton Friedman philosophy which no doubt appeals to him and some of the students at St. Andrews university whom we saw on television the other night. That is not good enough. The people of Scotland are proud of their local government. They were given to believe in 1973–74, after the Wheatley report, that things would change for the better. They recall that the first sentence of the Wheatley report said: Something is seriously wrong with local government in Scotland. The trouble with the Government's activities since they came to power is that, instead of allowing local authorities to carry on with their work, to identify the problems and to try to find solutions, they have imposed even greater problems on them, not least by their niggardly attitude to local government finance. We have heard Conservative Members lay the blame for closure of shops, commerce and the rest at the doors of local authorities. That is absolute nonsense. Although rates are important, they represent less than 1 per cent. of the costs which face industry and commerce.

Shops and places of commerce are closing because of the recession, and the Government's policies have added to the problems that people are facing. If the Conservative party, and especially the hon. Member for Stirling, are worried about this issue, I refer them to the record of the last Labour Government, which has been maligned during this debate, but which shows that during the Labour party's last three years in office rate contributions by industry and commerce declined. Had that decline continued to 1983, the rate burden on industry, shops and commerce would have been considerably less.

Those in local government who are paying great attention to our deliberations—and who will, perhaps, be disappointed when they hear the result of the vote—should not lose heart. Local government has been with us for a long time and will be here for still longer. We cannot say the same about this Government. Their approach is pragmatic. As my hon. Friend the Member for Glasgow, Provan (Mr. Brown) said, their approach changes from time to time. The Prime Minister gave certain pledges about the abolition of rates, about putting education into the national structure, and so on. That did not happen. Local government has been damaged by the Government, and the Bill is yet another contribution to that damage. Local government can and will recover, if only because of the concern for individual communities that exists in Scottish local government. That will triumph in the end.

8.1 pm

Mr. Michael Hirst (Strathkelvin and Bearsden)

I compliment the hon. Member for Monklands, West (Mr. Clarke)—my neighbouring Member of Parliament—on his candid admission that no satisfactory alternative to rates has yet been devised. That is why we are debating a Bill that makes alterations, albeit minor ones, to the rating system, rather than one which, lock, stock and barrel, abolishes domestic rates.

I should very much have welcomed the opportunity to discuss a Bill to abolish domestic rates. However, like the hon. Member for Monklands, West, I recognise that we can alter an existing system only when we can introduce a system that will work effectively and cheaply in practice. To have abolished domestic rates and substituted some type of major bureaucratic alternative would have been a retrograde step. I compliment my colleagues on the Government Front Bench on not doing that.

Earlier today we had the strange spectacle of the right hon. Member for Halton (Mr. Oakes) breezing into the Chamber to tell us that this was the first time in 20 years that he had chosen to make a contribution to a Scottish debate. He told us in vigorous terms how much the Labour party opposed this measure, and he used a great many strong adverbs. I draw the attention of the House to the fact that today there has seldom been more than 10 per cent. of Labour Members representing Scottish constituents sitting in the Chamber. There was one token appearance from the alliance, and even he has disappeared. I cannot believe that this measure was fought with the—

Mr. Ernie Ross

Where was the hon. Gentleman during the Secretary of State's speech? He was late.

Mr Hirst

I happily acknowledge the fact that I was late. The hon. Gentleman will be aware that the fog at London airport disrupted all the airline schedules. I was 12 minutes late to hear my right hon. Friend's speech because I chose to support a free enterprise airline which was affected by fog at London airport. I have no doubt that had it not been for that I should have heard my right hon. Friend.

A suggestion was made by hon. Members, including the hon. Member for Monklands, West, that the Conservative party was prejudiced against local government. That is not the case. There is a prejudice only against those local authorities which, by following reckless spending policies, put the future of business and commerce in doubt. I have a great number of colleagues who serve in local government, and for whom I have the highest regard. I would go so far as to say that the elected representatives of local government in the district which I represent have, by and large, shown much responsibility and good sense in their prudent management of the affairs of the district council. To show that I am approaching this measure in an even-handed way, I add that one of those authorities is Conservative-controlled and the other is Labour-controlled.

Last week, during a debate on the Scottish economy, Labour Members evinced their customary concern about unemployment. Is that concern properly placed when, at the same time, they are not prepared to be critical of local authorities that drive up rates and so destroy commerce and, in its wake, jobs? There is a direct correlation between the progressive financial debilitation of business caused by higher rates and business closures.

My right hon. Friend the Secretary of State for Scotland referred to the increase in rates in Scotland during the past four years. He said that this rate increase was one and a half times the prevailing inflation rate, and a rise of no less than 136 per cent. in five years. I represent a constituency that is close to Glasgow, and until recently I was a ratepayer in Glasgow. I know what I am talking about when I refer to the rates that the business community, especially large department stores, in Glasgow must endure.

There are a number of very reputable and fine shopping streets in Glasgow, but, as Conservative Members who have shopped in or who live in Glasgow know, the shopping areas have been progressively destroyed. Each store that has gone has attributed high rates to be the straw that broke the camel's back. I know that those stores have had to trade in difficult times, but the closure process has been going on for many years, including the times when there was low inflation and when there was a consumer boom. The Glasgow department stores have been crippled by high rates.

I am sorry if Labour Members dispute that fact, and I can suggest only that they return home to their constituencies during the Christmas recess and start talking to local business communities. I am certain they will find that, after interest rates, the overhead which most adversely affects business is local authority rates. People recognise that the Government have taken action to stabilise interest rates and I believe that, broadly speaking, they are glad that the Government are prepared to tackle their other source of concern—domestic rates.

My hon. Friend the Member for Stirling (Mr. Forsyth) referred to rates paid by Marks and Spencer in Glasgow. I make no apology for appearing to be parochial, because an important economic lesson must be derived from the history of rates in Glasgow. I cite the case, to which I referred several months ago in the House, of Lewis' store in Glasgow, which pays more rates than the entire rates bill of Harrods in Knightsbridge. It is therefore impossible for department stores and similar businesses in Glasgow to compete effectively. When department stores close their doors, unfortunately that means the end of jobs.

Mr Dewar

I am not clear about what the hon. Gentleman is saying. He could mean the rate poundage, the rate valuation, or a combination of both. The hon. Gentleman will agree that, in view of what the Secretary of State said this afternoon, it is clear that, at least on the valuation point, there is no hope under the Bill for the department stores.

Mr Hirst

The greatest concern is caused not just by the valuation, but more importantly by the rate poundage. Local government rates have increased by 136 per cent. in five years, and this is one and a half times the inflation rate. It is little wonder that when businesses have to cope with that level of overhead they eventually close their doors and go out of business.

My hon. Friend the Member for Stirling also mentioned the number of people employed by local authorities, which now stands at 6,200 more than in 1978. We are all aware that additional responsibilities have been placed on regional councils by statute during the past five years. Nevertheless, there is a deep and widespread concern that local authorities are not sufficiently efficient.

I must make one point in favour of the smaller authorities. When manpower restrictions are imposed, they are least able to make the necessary economies. Larger authorities such as Glasgow have considerable room to increase their operational efficiency. Why have local authorities in Scotland 20 per cent. more staff than their counterparts in England? The difference in the statutory provisions that govern their activities is not great enough to justify that differential.

Unlike domestic ratepayers, non-domestic ratepayers have had no right of representation to date. Therefore, I welcome the provision that they should be consulted by local authorities. We must bear in mind that non-domestic ratepayers bear 60 per cent. of the rate burden.

I welcome clause 6, which enables the Secretary of State to impose a limit on the contribution from the rate fund to the housing revenue account. The House has already been told that the rate fund contribution totals almost £126 million this year. Conservative Members generally recognise that that is a wasteful subsidy to all ratepayers. It is not necessary, because it takes no account of need. There is a perfectly adequate rent and rate rebate scheme in operation, and those who require assistance receive it. That £126 million is used to subsidise all tenants, whether or not they need it. It takes no account of the cascading effect on ratepayers who are not tenants and do not participate in that windfall.

That typically wasteful subsidy last year squeezed the capital allocation of no fewer than 27 district councils. The business community will welcome the fact that the Government are prepared to take action, thereby ensuring that the capital allocations of the council are not squeezed, and the money is, therefore, in the kitty for the district councils to proceed with capital projects that provide employment and business for the business community.

Mr Dewar

I understand—although I do not agree with him — that the hon. Gentleman objects to any subsidy to the council house tenant. Has he a similar objection to the mortgage relief arrangements for taxpayers? Is he not horrified that the richer someone is the more valuable his mortgage is to him?

Mr. Hirst

The hon. Gentleman will be aware that that is a specious argument. There are clear restrictions on the amount of mortgage relief that the better-off taxpayer can enjoy. A substantial subsidy is being paid to the tenant. The Government's line of argument is that £126 million is being spent in a generally wasteful way because the subsidy is paid to people irrespective of need.

Clause 4 will be especially welcomed by the business community ratepayers. During recent years they have been increasingly frustrated by rising rate bills. They have been powerless to make representations against that. I understand that the Secretary of State will make regulations to ensure that the consultation process allows discussions to take place between local authorities and business community representatives. It is important that those regulations are drawn in a careful way to ensure that the process of consultation is not a charade. The councillors in my local authority are, by and large, doing a good job. I think that they will take the trouble to ensure that the consultation process is effective. However, a number of local authorities—

Mr. Fairbairn

The Bill provides not for a voluntary duty to consult, but for an obligatory duty to consult.

Mr Hirst

I am grateful to my hon. and learned Friend for drawing my attention to that fact—although I was already aware of it. There is a statutory duty to consult, but such consultation must be meaningful. We must riot allow a local authority to say that it has consulted the business community, which has made various points, and then ignore all the representations. The consultations must be framed so that the business community has an opportunity for wide discussions with the local authority at the stage when it has some idea of the authority's spending power for the following year, and at a stage when the regional council has not finalised its spending priorities and budget alternatives. There should be at least two meetings — one after a local authority's policy and resources committee has discussed its budget alternatives, and another after the rate support grant has been announced by the Government, and therefore" the budget alternatives of a local authority have narrowed.

Proper and unhurried discussions are essential if the business community is to have an opportunity to influence — [Interruption]. The hon. Member for Glasgow., Garscadden (Mr. Dewar) may disagree, but one reason why the business community has been folding, closing its doors and losing jobs is simply that local authorities that are governed by a bunch of loonies have not been prepared to listen to the business community. I welcome the powers in the Bill that ensure that a local authority gives the business community an opportunity to make meaningful representations on its budget alternatives.

I want to make one further suggestion to my right hon. Friend the Secretary of State on the process of consultation, which must be meaningful and effective. Will he consider building into the regulations a duty on a local authority auditor to report that consultations have been carried out in accordance with the regulations? A local authority is already required to submit to audit by either public or private enterprise. The auditors have a wide remit, which includes carrying out examinations on a value-for-money basis—and more is the pity that they do not do that. A duty to report on the consultations should be part of their remit. In that way the business community would have confidence that it was being properly and adequately consulted by local authorities.

Mr Ernie Ross

rose—

Mr. Hirst

I give way to the hon. Gentleman.

Mr. Dewar

rose—

Mr. Hirst

No, I am not giving way to the hon. Gentleman. I have heard of unusual interventions, but never of an intervention by proxy.

I want to say a word about valuation. There are a number of useful concessions in the Bill. In particular, I welcome the opportunity for an incoming tenant or proprietor to appeal against the valuation. There have been cases in which the previous tenant or proprietor, by failing to appeal, has left a future purchaser with a more excessive liability than is fair. I think that we all welcome that change.

Then there is the use of comparators in specialised cases. I hope that my hon. Friend the Minister will explain to the business community how that will work. I am afraid that many businesses which now pay high rates because of the tendency of local authorities to strike high-rate poundages, may feel, when they see a comparable business south of the border paying less in rates, that they are justified in seeking a reduction in their rateable value. I am afraid that their hopes may be ill-founded.

However, I welcome the provision for the sake of specialised businesses. I have one in my constituency, and it has been bombarding me with letters. Indeed, the Minister may be aware of it. It thinks that it has been unfairly treated, and looks forward to this legislation as a way of correcting the anomaly. However, I have to point out that caravan sites and reed beds are not of great significance to me in Strathkelvin and Bearsden. I appreciate the concern of my hon. and learned Friend the Member for Perth and Kinross (Mr. Fairbairn), but I am afraid that commercial reed beds apply only in his constituency.

Although commercial reed beds may not be relevant in Strathkelvin and Bearsden, shopping malls are. My hon. Friend the Minister may know that small town centre redevelopments can benefit from the mall concept of shopping. It is a comparatively recent introduction in Scotland, but it holds out the prospect of considerable local economic benefit. In this respect, I wish to mention the worry that exists about a recent land valuation appeal court decision, which allowed the valuation roll entries for a shopping mall. I believe that that is contrary to English practice. I hope that the Minister will confirm that. If the rating of these malls take place, their development could be adversely affected. If the anomaly is not rectified, is there any reason why rating could not also be extended to common parts of offices, or even to residential flats in multiple occupation? I hope that my hon. Friend the Minister will be able to reassure me on that matter.

8.22 pm

Mr. Gavin Strang (Edinburgh, East)

The hon. Member for Strathkelvin and Bearsden (Mr. Hirst) made great play of the effects of rates on employment and businesses in Glasgow and elsewhere. We have heard that story time and again. Certainly it is true that rates are a cost, and that if rates rise sharply they damage business. We accept that. However, to pretend that rates are a major cost or to pretend that they are a major cause of unemployment is patent nonsense. Furthermore, we should remember that the main reason for the increase in rates has been the slashing of the rate support grant by this Government.

Mr Hirst

If the hon. Member for Edinburgh, East (Mr. Strang) doubts what I and my hon. Friends have said, what does he say about the statement made by the assistant secretary of the Glasgow chamber of commerce that year in, year out, the increase in rates is the straw that has broken the back of commercial businesses in Glasgow and led to their closure?

Mr. Strang

That is a very convenient example to give. It is a way of getting at the local council. The chamber of commerce in Edinburgh has been saying the same thing. Nevertheless, the main reason for shop closures is the lack of demand in the economy. There may be a correlation between rate increases and unemployment and closures, but I do not accept what the hon. Gentleman says. We do not say that rates are not a factor; we say that they are nothing like as important as Conservative Members say.

The Government have done nothing to tackle the real problems that face the Scottish people. They have done nothing here to tackle the scandal, the cancer, of mass unemployment, especially among young people. There is nothing here to reverse the decline in our important industries. There is nothing to reverse the serious cutbacks in the services that are provided to our people. In fact, the Bill will make the position even worse. Certainly there is nothing in the Bill to improve housing. On the contrary, the Bill will reduce even further public expenditure on public sector housing.

The Bill seeks to reduce the effect of rates on certain groups. In so far as it helps the disabled, we welcome it. Moreover, most hon. Members see the change for fixed caravans as long overdue. However, the means whereby the Government intend to help football clubs will prove inadequate. What matters to the Hibernian football club is the extent to which this legislation will reduce its rate liability. The Bill goes about it in a most unfortunate way, as has been said by a number of hon. Members in the debate. We must tackle the problem in the Scottish context. In Scotland, we have a valuation system and a rating system. If the Government want to provide a rate consession for football clubs, as I think they should—I believe that they should extend it to other sports, and not just race tracks—they should provide rate relief on a changed basis of valuation. To do it in the way that the Government propose is not only wrong but it unlikely to achieve the real benefits that we believe are long overdue for Scottish football clubs. I hope that the Minister will tell us the impact that he expects the Bill to have on the rates that the Hibernian football club will have to pay.

The Secretary of State made great play of the situation in Lothian. I want to say a word about what the cuts are doing to Lothian. During the past three years, the Government have enforced a reduction of £65 million in the Lothian region's budget. There has been a serious effect on services and employment. As I said in an earlier intervention, 4,000 jobs have already been destroyed as a result of those cuts. In teaching 13,000 jobs have been lost, and among home helps and residential workers over 1,000 jobs have gone.

Let me give other examples of the cuts. On 28 August, bus fares will rise for the third time in two years. That is an increase of 50 per cent. Free travel for pensioners has been ended. Now there is full fare at peak times, and a lop fare at off-peak times. Moreover, 1,500 housebound old folk have lost their entitlement to home help services since the cuts started. I hope that hon. Members are worried about that. I hope that they do not defend it.

Many old people in Edinburgh are deprived of a home help as a result of cuts. About 3,000 housebound and disabled people will lose their entitlement to free television licences. About 5,500 of the poorest children in Lothian will lose their free school meals. I could give further examples of what the Government's policies are doing in Lothian. They are seriously reducing the level of service. They are hitting hardest the people in greatest need and, above all, they are contributing to unemployment. Young people's prospects have been made much worse by the Government's policies.

There is no hope of reversing the decline in the economy unless we reverse the Government's policies; reverse cuts in public expenditure and prime the economy by increasing spending by local authorities, nationalised industries and other public sector agencies.

The Lothian region has been required to reduce expenditure massively. Edinburgh district council is Conservative-controlled and is happy to implement the Government's policies. A number of hon. Members, including my hon. Friend the Member for Monklands, West (Mr. Clarke), went with a Scottish Committee to examine housing in Edinburgh. We visited parts of my constituency. Most of my colleagues represent west of Scotland constituencies and they were all appalled at Edinburgh's housing. They were appalled at the state to which the local authority had allowed houses to sink. The Bill proposes nothing to remedy that. It will reduce further the scope for local authorities, which may want to use money from the general rate fund to improve public sector housing.

I have corresponded with Ministers about the Bingham estate in my constituency. Surely the Government can produce something constructive and positive for housing in Edinburgh. They must encourage the Edinburgh district council to invest and improve houses to create a decent environment for my constituents.

We were encouraged by the Government and by Edinburgh district council, to its credit, to boost repairs and improvements to tenements in Edinburgh. The district council was processing about £1 million worth of improvement and repair grants a week. What happened? The Government cut back. The Government are entitled to cut the rate of grant from 90 per cent. to 50 per cent. from 1 April next year. That would be acceptable if the money were provided for the transition period, so that people could receive the higher grant this year and only the lower grant next year.

However, many people who have already incurred expenditure on work done by architects and surveyors have been told that their applications are frozen. They will have to pay bills, but have nothing done to improve their properties. As I said at Question Time last week, the Government should provide additional money to cover the intermediate period to enable improvements in Edinburgh, Glasgow and elsewhere to go ahead. It is scandalous that people should be treated in that way. The Government are guilty of a breach of faith and I hope that they will think again.

The crunch issue is the attack on local democracy. One of the great social and economic advances in this century has been the tremendous growth in the provision of valuable and important local government services. The growth of council housing and services for the disabled, home helps and the tremendous improvement in education is of immense importance.

We are talking about huge sums, authorities with immense responsibility and councillors elected to take decisions. The Government are undermining democracy, one of the great strengths of our society. The Bill is one more step down the road. The Government are turning councillors into their puppets. They are turning local authorities into the agents of central Government rather than independent democratic bodies responsible for their own decisions. That is why the opposition to the measure is so widespread.

The Labour party does not oppose the Bill because it is opposed in principle to the Government's economic and social policies. The measure is opposed by all shades of opinion in Scotland because people recognise that there is something fundamental and precious about local democracy and the principle that if one does not like what an elected person does someone else can be elected at the next election. It is outrageous for the Government to continue to take us down this road in the face of so much opposition.

8.34 pm

Mr. Nicholas Fairbairn (Perth and Kinross)

I am happy to follow the hon. Member for Edinburgh. East (Mr. Strang). If he regards the opposition as so widespread, it is remarkable that the Opposition are so widespread in their absence. Hardly any of them have been here throughout the debate. One of the characteristics of hon. Members like the hon. Member for Edinburgh East is that they are reluctant that anyone should have to pay rates. We are told that the Hibernian football club should not pay rates. In the next breath we are told that the local authority to which the Hibernian football club pay rates should spend infinitely more.

It is completely irresponsible for hon. Members to say, "I disapprove of tax on my constituents or organisations in my constituency. I regard it as irresponsible of the Government not to allow local authorities to spend more money which I wish to forbid them to collect." That duplicity is implicit in all the Opposition speeches. They are all in favour of extravagance provided that it does not come out of the pocket of any interest to which they are committed.

Rates are a bad tax because they form so small a part of local authority expenditure. It is no good the hon. Member for Edinburgh, East talking about local democracy when that local democracy is voted for by one third of those entitled to do so.

The people who provide one quarter of locally raised expenditure have no vote. The Government provide the majority of tax that local authorities spend from the pockets of people who have nothing to do with the constituency. The basis of local rates and democracy is essentially unfair in regard to the raising of finance, for a number of reasons. It is a tax on heritable property only, regardless of the capacity of those who dwell in or use it to pay. It is also a tax which is raised regardless of the use of the available services.

In the city, people have street lighting and rubbish collections in every street. That is different from the predicament of those who live in the country who do not have main drainage, rubbish collections and street lights. It involves the concept of Robin Hood: we should all contribute regardless of whether we benefit; those who need the benefit most will receive it. It does not operate that way. It is a thoroughly unfair tax which places its burden on families at all times regardless of the stage of their development or their ability to pay. Assuming that people form a family home, their ability to pay from the moment when they are married to the moment when their children grow up and the moment that they are widowed is utterly different. Rating is an unfair tax.

This timid and welcome measure is brought forward only because no one has suggested an alternative tax which would not have equal, though different, unfairnesses. It is the duty of all hon. Members at all times to find and suggest ways, regardless of party political advantage, of making the raising of this comparatively small proportion of local expenditure fairer. The huge anomaly between the amount of money raised in one authority and in another, and their manning and expenditure, gives rise to general anxiety and the concept of unfairness. When the public believe that a tax or a law is an imposition or is generally unfair, we must do our best to remove that anxiety. This measure, which I hope will be improved, is an attempt to do that.

Mr Maxton

In Committee.

Mr Fairbairn

The hon. Gentleman has voted himself on to the Committee, which will be infinitely better if he is on it than if I am. I am glad to hear many hon. Members say "Amen".

It is important that the manifest feeling of injustice felt by ratepayers, whether they pay rates on a council house, private dwelling, flat, shop or business, is removed. They believe that it is an imposition out of all proportion in many authorities to the service which is rendered. It is easy for the local authority or for the hon. Member for Edinburgh, East, who has disappeared like a phantom in the night and like the home helps he spoke of—

Mr. Dewar

I sympathise with what the hon. and learned Gentleman said about the public attitude to rates. In the Scottish Office news release, the Secretary of State for Scotland stated that an alternative system to domestic rates has been abandoned because of the lack of public support for radical change. Is it not surprising that the Government gave that reason, given what the hon. and learned Member said about widespread public anxiety and disquiet about the rating system?

Mr. Fairbairn

I agree with the hon. Gentleman, but he misinterprets the phrase. Each suggestion in the Green Paper received almost equal complaint.

I am in favour of the poll system, in which each person in a house pays an equal tax, but it would have revolutionary difficulties. In a cottage, for example, in which six farm workers lived, they would suddenly have to pay six rate taxes, whereas at present they pay none because it is paid by the employer. That could cause great difficulties. The difficulty about reforming the tax is finding an alternative and preferable tax. It is all very well to say that football grounds should pay less or that they should pay the same as English football grounds, but some other sod who may or may not go to football matches must make up the difference. We should understand clearly that when we remove the burden of rating on one man we add it on to the shoulders of another.

I am suspicious of the continual leapfrogging of comparisons between England and Scotland—we hear that in England one does not pay rates on caravans, or on football grounds, or that it is less of a burden. If Scotland is to have a separate system of law and of rating, we should be brave enough to stand up to it and to correct our system, and not have the absurd position of leapfrogging over the methods employed in England. The right hon. Member for Western Isles (Mr. Stewart) said that Scotland was like a diseased animal being put to the test in a laboratory, and that if the test worked England might adopt the pill. I prefer the concept that the Scots are improving their own laws, and if, 400 years from now— it is usually 400 years after Scotland introduces a decent law that England follows it—the English wish to introduce it, good luck to them. We are not guinea pigs. I prefer to believe that we are entrepreneurs, even though the pace of advance is so timid that we are more "preneurs" than entrepreneurs.

I welcome any and every attempt to make the rating system equitable, because at present it is not equitable. This measure contains some slight improvements that will make it more equitable. If there is a suggestion tonight for an improvement in the Scottish rating system, let us hear it from whatever source it comes; but we have not had the privilege of hearing it so far today. Perhaps it is being kept for the wind-up speeches, although I doubt it. I must tell the hon. Member for Garscadden, with great respect, that if he speaks as fast in his wind-up speech as he did in his opening speech, few of us will be able to take it down.

Everyone can contribute by suggestion to the reform of rating, and I hope that my right hon. Friend's ear will always be open to methods of improving it. However, nothing is more inequitable than that those who are elected to local authorities by one third of the electorate then proceed to spend the money, one quarter of which is provided by people with no vote, and ensure that their expenditure is out of proportion to the service that they provide. How can it be that Perth and Kinross district council, which represents vast areas of countryside with vast distances for all the services provided—

Mr. Donald Stewart

How many people live there?

Mr. Fairbairn

The number of people is the same, and although the right hon. Gentleman may take the view—it is hardly right for a Socialist to take the view that human beings should be demeaned, or in his case to be raised, to the position of sheep—

Mr. Maxton

Will the hon. and learned Gentleman give way?

Mr. Fairbairn

When I have finished with the right hon. Member for Western Isles I shall give way. How can it be that a local authority with such huge responsibilities in tourism and the arts, and with such disparate villages and roads, can provide services at a quarter of the rate of an equivalent Socialist authority? That is the charge, and that is why the powers being taken by my right hon. Friend are right. If ever—may God preserve us from it—there is another Socialist Government in Britain, they would not remove the power, because they would always wish to use it.

The case rests simply—I shall give way to the hon. Member for Glasgow, Cathcart (Mr. Maxton).

Mr Maxton

It is all right.

Mr Fairbairn

The hon. Gentleman is determined to get on to the Committee. I shall give way to him if he wants.

Mr Maxton

No thanks.

Mr Fairbairn

I shall give way to the hon. Gentleman in Committee.

The Secretary of State is right to take, on behalf of the people who contribute to this huge tax, which they cannot avoid and which they all dread and fear, any opportunity and power that enables him to tell the local authorities that they cannot and must not, for the enlargement of their army of employees, charge small shops and businesses so much. Big shops are affected as well. How would any hon. Member like to have a shop in Princes street which, on 1 January, he knew had to make £250,000 to pay the rates before selling a single Christmas cracker?

Mr. Ernie Ross

Christmas crackers in January?

Mr. Fairbairn

On 1 January. If one is to pay the rents, one has to start selling Christmas crackers early.

This is a modest Bill, but it takes powers that will at least allay the fears of those who live in houses that are rented, either privately or from the local authority, or houses that they own, or who run a business or attempt to do so. [AN HON. MEMBER: "What about castles?") Castles are derated. They are so frightful that the hon. Member would not allow his constituents to live in such appalling conditions.

It is important that we should always attempt to reduce the burden of this tax, which is so often enlarged by the personal aggrandisement of those who work in local authorities, and who are not careful of the democracy of which some Labour hon. Members speak.

8.53 pm

Mr. John Home Robertson (East Lothian)

It was a bit much for the hon. and learned Member for Perth and Kinross (Mr. Fairbairn) to girn on in the way that he just has about the way in which local authorities might or might not have a sufficiently strong electoral authority to do what they are doing as they have the support of perhaps 30 per cent. of their electorate. He supports a Government who have the support of only 28 per cent. of the electorate in Scotland, but are still content to foist unwelcome legislation on the people of Scotland, even with that pitiful power base.

Mr Fairbairn

I happen to represent a county called Perthshire that has 100 per cent. Tory support, so if the hon. Gentleman wants to go dividing it out, he should put his argument differently.

Mr Home Robertson

I was not aware that there was still such a thing as the county of Perth.

Mr Fairbairn

Perthshire.

Mr Home Robertson

We have always known that the hon. and learned Gentleman is an anachronism, and he has just confirmed that.

I am trying to think of a parliamntary term to use for the hon. and learned Gentleman, but it is difficult. He accused us of duplicity, and went on to suggest that he wanted to improve the quality of the rating system, but he has been sitting on the Government Benches for the past four years consistently supporting measures that have cut the rate support grant and thereby transferred more and more of the burden of funding local services on to the ratepayers about whom he was moaning. That will not do. It is dishonest. I am sorry if that is unparliamentary. I shall use it generally rather than specifically. Nevertheless, it is dishonest for Conservative Members to use such an argument.

One thing that should be said over and over again when debating such legislation as this is that the House should not be debating it. In 1979, people in Scotland voted for the establishment in Scotland of an assembly where specifically Scottish legislation could be dealt with by a body voted for by Scottish voters. For an example of what happens to Scottish business in the House, let us cast our minds back less than a week. Last Tuesday, the House debated the Scottish economy, and the vote announced at the end of the debate showed that 328 Members voted for the Government and 186 voted against, apparently a majority of 142.

I have recently had the misfortune to be appointed an Opposition Whip—

Mr. Fairbairn

Then shut up.

Mr Home-Robertson

I was one of the Tellers for Tuesday's Division. There passed through the door 100 Members before I saw one Scottish face.

Mr Fairbairn

Will the hon. Gentleman tell us to whom it belonged?

Mr. Home-Robertson

No. I am becoming bored with the hon. and learned Gentleman, I really am.

Mr Corrie

We are equally bored with the hon. Gentleman.

Mr Home-Robertson

Forty-two Scottish Members voted against the Government and 16 voted for them. That amounted to an Opposition majority of 26. That shows that democracy in Scotland without an elected assembly is not worth very much at present. That is a sad commentary, but it is a fact.

Mr Gerald Malone (Aberdeen, South)

Did the hon. Gentleman take steps to check that there were no English faces going through his own Lobby?

Mr. Home-Robertson

That is not the argument that I am advancing. I am saying that four times as many Scots voted against the Government as for them. We are stuck with a United Kingdom Parliament and I do not want to be in it for the rest of my career. I want to get into a Scottish assembly. I am sorry that the hon. Gentleman misunderstood me. Perhaps he wanted to do so.

Mr Fairbairn

My hon. Friend the Member for Aberdeen, South (Mr. Malone) has shown that he understands the hon. Gentleman's argument.

Mr Home-Robertson

One of the few areas of Scotland in which democracy has been able to work until recently has been local government. People are free to elect or reject their local councillors. The Secretary of State mentioned that fact when he introduced the Bill. He referred to the rather unfortunate election result following the Lothian regional council elections in 1982. He accepted that the electorate had the right to elect or reject its councillors. I am not saying that the result was wrong, but more people voted Labour than Conservative in that 1982 election. The people had the right to change their councillors, and they did so. That is fair enough; it is the due process of the democratic system.

People should be able to vote for the standard of services that they want in the recognition that they will have to pay for it. Life is made pretty difficult for local authorities when they come to exercise their functions. The Secretary of State continues to cut his contribution to the financing of local authority functions and services. I understand from COSLA that rate support grant cuts have been equivalent to an increase in rates of about £1.70 a week per household. The Secretary of State goes on and on about the burden on the ratepayers, but in his term of office he has increased the rate burden on each household in Scotland by the equivalent of £1.70.

With these cuts in RSG, local authorities were compelled either to increase rates, to cut services or to introduce a combination of both options. That is an unpleasant predicament for local authority councillors. Let us spare a thought for the men and women who offer their services and stand for election as prospective local authority councillors. When elected, it is their intention to do a useful job of work for those whom they represent. I was a local authority councillor and I remember working flat out to try to get a playground for a small village which did not have a playground. I was able to provide the playground, but those who are in the same position now cannot introduce improvements because, instead of producing slightly more services, they are having to cover up for the Secretary of State's cuts. More often than not they are having to carry the can for him. Surely this is utterly wrong.

Local authorities have been doing their best according to their convictions. Some have been cutting services while others have been increasing their rates. Even that is not enough for the Secretary of State. He is not even prepared to inflict misery second hand. He continues to throw tantrums rather like a spoilt child. He does not want to play and he is determined that everyone else in Scotland should be miserable, too. That being so, the Bill has come before us. It is perhaps the final stage in a process which is doing away with the discretion of elected local authorities to exercise their autonomy.

I say it is the final stage because once the Secretary of State has taken powers to fix both rents and rates, we will have seen an unprecedented and amazing degree of centralisation, something we never expected to see from the Conservatives or any other Government. Nevertheless, that has been happening over the past four years, and this evening we are seeing the culmination. It is a tragedy. Precious little will be left to the discretion of elected local authority councillors in the coming years. That is of massive constitutional significance, as my right hon. Friend the Member for Halton (Mr. Oakes) pointed out. I was delighted that an English Member took part in our deliberations because the Bill has significance for the whole of the United Kingdom. It is of major constitutional importance. It is a tragedy that Members from England, Wales and Northern Ireland and, indeed, Scottish Conservative Members have not recognised what may be starting here this evening. The final residue of local rights and autonomy is being taken from elected representatives in Scotland to be put into the hands of the Secretary of State for Scotland and his civil servants in Whitehall.

The Secretary of State parades around pretending to be concerned about the burdens that have been imposed on ratepayers. But they know that he has failed to fulfil the promise that was given by his party on a number of occasions to replace the rating system. I think that the right hon. Member for Western Isles (Mr. Stewart) has already mentioned the letter that all hon. Members received from Mr. Anderson of the National Federation of Self-Employed and Small Businesses Limited, which he addressed to the Scottish Office. It said: I have been asked to make it clear to you, and the Secretary of State, that our giving submissions to you on these proposals is in no way a measure of our approval of this substitute for rate reform. Some of our Scottish Region Chairmen did not wish us to make a submission in order to signify our disgust at your failure to reform rates. That is not the Labour party speaking, but people who are naturally supporters of the Conservative party. They make it abundantly clear that what is being offered is an inadequately radical reform of the rating system, which is fundamentally flawed and unfair and should be changed.

The Bill does not reform the rates. I suppose that part II of the Bill tinkers with tiny groups of anomalies in the valuation system. May I say, in order not to sound unduly churlish, that I welcome the changes that are proposed in respect of race courses. One of the few race courses in Scotland, Musselburgh, is in my constituency and the changes will help it, but why single out race courses and reed beds? When I saw "reed beds" in the Bill, I thought it was an April fool joke which the Scottish Office had taken seriously. Caravans and one or two other areas are covered in the Bill and, as far as they go, those provisions should be welcomed. But this is not the replacement of the rating system for which many of us hoped. Indeed, I have had from my constituents representations that I have passed on to the Minister who is to reply. They wonder why anomalies affecting them have not been dealt with. One concerns research laboratories and has been referred to in the past by the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton). Inveresk Research International, which has a research laboratory in my constituency, had hoped that this exercise would lead to rating relief equivalent to that which is enjoyed by its competitors south of the border, but that has been turned down by the Government.

There are two sides to the local government finance equation. On one side there are rates and other income, such as the rate support grant, and on the other there is expenditure. The hon. Member for Fife, North-East (Mr. Henderson) referred to "grandiose schemes" by local authorities. We have seen the cuts that have been suffered in local government services in Scotland. I would not describe them as cuts in grandiose schemes. When I see bigger classes in primary schools and more composite classes in schools in my constituency, when I see pensioners who used to receive free public transport having to pay for their bus tickets, I think not of grandiose schemes, but of mean-minded people such as the hon. Member for Stirling (Mr. Forsyth), who seem to be prepared to inflict such misery on people. When I intervened during the hon. Gentleman's remarks he tried to wriggle out of the point about the provision of home helps for the elderly in different authorities. He suggested that, just because more money was being spent in one area, that did not necessarily mean that the service in that area was any better. I have with me the relevant figures on home helps. I tabled a question to the Secretary of State for Scotland and received a reply on 22 November with a table giving the number of home help whole-time equivalents employed in each region in Scotland in 1979 and 1982 respectively, with the figures of the number of people over the age of 65 per whole-time equivalent home help in each regional council area.

The two authorities that are relevant to the argument advanced by the hon. Member for Stirling are Central and Tayside. In Tayside, which does not believe in spending money, there are 121.6—whatever 0.6 of a person is—people over the age of 65 for every home help employed in that area. In Central, a Labour-controlled authority—part of which the hon. Gentleman is lucky enough to represent — the comparable figure is 80.6. That is a large divergence. I will not quote other figures.

Mr Maxton

Quote the figures for Strathclyde.

Mr Home Robertson

I would rather not prolong the story. The figures are dramatic and I recommend that hon. Members study them. They are published by the Scottish Office and it is clear that those authorities which have been willingly and cheerfully cutting expenditure are heaping misery on to people who can least cope with it—the old who need help in their houses—while giving rate cuts to those who can afford it. It is nice to get some money back, but hon. Members should consider who is suffering by what is happening.

I could cite many more examples, but we know that the present Secretary of State is not interested in the quality of local authority services and protecting the interests of the people of Scotland. Indeed, I would not describe this as a Scottish Office Bill. Certainly it has nothing to do with the interests of the people of Scotland. Consider, for example, who is sponsoring the Bill. It is Presented by Mr. Secretary Younger supported by Mr. Michael Ancram, Mr. Solicitor General for Scotland and"—wait for it—the Financial Secretary to the Treasury, and I suspect that that is what the Bill is all about—cuts and more economies.

We shall get no joy for the suffering people of Scotland from the present Government. That will come about only when we get a change of Government, and it will be that much easier when we have a directly-elected Scottish assembly to enact proper legislation for Scottish local authorities on specifically Scottish affairs.

9.9 pm

Mr. Jim Craigen (Glasgow, Maryhill)

My hon. Friend the Member for East Lothian (Mr. Home Robertson) spoke of the sponsors of the Bill and, in doing so, touched on a point that my hon. Friend the Member for Monklands, West (Mr. Clarke) spelt out in his speech. As an experienced provost of Coatbridge and a distinguished president of COSLA, he was right to warn about what lies ahead for local government in Scotland if the Bill becomes law. My hon. Friend the Member for Edinburgh, East (Mr. Strang) gave a similar warning when he referred to the treatment that is being meted out to ratepayers in respect of improvement grants and local services.

The Bill is no substitute for a rating reform designed to benefit Scotland's ratepayers. In fact, it is no more than an appeasement for the guilty consciences of Ministers seeking to bury the speeches that they made during the past decade, in which they promised either implicitly or explicitly to abandon the present rating system. As my hon. Friend the Member for Glasgow, Provan (Mr. Brown) observed, specific promises were made in October 1974 and in 1979, concerning a major overhaul of the rating sytem and most people expected that after 1983 the Government would come up with something much more fundamental than has been produced in the Bill.

Mr Fairbairn

Does the hon. Gentleman have a reform to suggest?

Mr. Craigen

I listened to the hon. and learned Gentleman with great care, as I always do. He suggested a poll tax.

The trouble is that the House has never properly debated the reactions to the Government's White Paper published in August, entitled Valuation and Rating in Scotland: Proposals for Reform". There has been undignified haste in the way in which the Government, having called for observations by 14 October, then produced the Bill, and hurriedly threw it into Second Reading. There should have been a proper discussion of alternatives, as the hon. and learned Member for Perth and Kinross (Mr. Fairbairn) suggested, although I do not accept his proposal of a poll tax on the six people living in a cottage. He lives in a castle, so presumably he does not pay the same amount in rates.

The Secretary of State talks of reforming a system that he says is basically sound. This afternoon he said that he was not asking for the impossible. That may be so, but he is seeking simply to create the impossible in Scottish local government. Rates have never been a popular method of obtaining local revenue for authorities. The trouble is that the Government have made an already unpopular system more unpopular by their constant cutting back on the amount of rate support grant that is given by central Government to the authorities to enable them to provide the services that Parliament, in its wisdom, decides that they should properly provide. Had the Government been fairer with the Scottish local authorities, they would have been £400 million better off. There has been the equivalent of a 2 per cent. cut per annum in the rate support grant for Scottish local authorities since the Government came to office. Even in the past year the Government have thrown more responsiblities on to the shoulders of local authorities in the shape of the housing benefits legislation, which gave rise to much confusion.

Having abandoned any pretence that there is to be a reform, the Secretary of State now wants to acquire more controls over local authorities. He is no longer satisfied with the power to determine approved expenditure, as he does each year, or to set the percentage for the rate support grant. We await with trepidation the announcement on Friday of what the percentage will be. The situation 'could be improved if he were to increase the rate support grant by 1 per cent. There would be a rate reduction of 2.5p, which would be welcome to ratepayers, including business people, in the Scottish community. I hope that the Secretary of State will bear that very much in mind when he makes his decision about the rate support grant percentage to be announced on Friday.

However, the question is not what the Secretary of State will do. The problem is that we are waiting to hear how he will use the powers in the Bill. Scottish local authorities are being asked to consult the business community. The CBI and the Scottish chamber of commerce will be consulted. The noses of the self-employed and the Institute of Directors have been put out of joint by their exclusion. It remains to be seen how many bodies in the business community consider that they should also be consulted about the levying of rates.

The Secretary of State consults COSLA each year, but the reaction of most local authorities is that such consultation makes little difference to the policy of the Secretary of State. Perhaps the Under-Secretary will tell us that that is not the position and that the Government do alter some of their intended measures as a result of their consultations with COSLA.

The Secretary of State is taking considerable powers unto himself. I shall be interested to know how the right hon. Gentleman will interpret "any guidance" that he may give to Scottish local authorities. We are moving towards government by circular. Local authorities will be required to conform to "any guidance", whatever that means. If a Labour Government had sought to introduce such legislation, howls of outrage and anger would have come from the Tories. They would not have been prepared to allow any Government to exercise such arbitrary powers.

The warnings in the strong speech of my right hon. Friend the Member for Halton (Mr. Oakes) were well received. The great pity is that more English Members of Parliament were not in the Chamber to listen to it. I understand that about 180, 140 and 154 circulars were issued by the Scottish Office in the years ending April 1981, 1982 and 1983 respectively. When the Secretary of State gives guidance, are we to examine the circulars to establish whether we have fallen foul of guidance notes issued to 65 local authorities? The Secretary of State has considerable powers. Which civil servants will be empowered to deal with this matter?

I listened to the speech of the hon. Member for Strathkelvin and Bearsden (Mr. Hirst). I sometimes think that I am attending a meeting of the old Glasgow city council. The Conservatives were called "progressives" then and won seats, but when they started calling themselves "Conservative" they failed to do so. They used to give us the impression that if they, the business people, were in office, they could run the city. When the Conservatives eventually formed the administration, the officials trampled all over them and told them what to do. I foresee such a danger in the intended legislation.

The hon. Member for Strathkelvin and Bearsden probably has not had many anodyne replies from his hon. Friend the Under-Secretary. The hon. Gentleman can take it from me that if he writes a letter to his hon. Friend the Under-Secretary about a local government problem in his constituency, he will pass the letter to the civil servants to answer. They will not understand the subtle distinctions between Bishipbriggs and Bearsden and they may not even have visited Auchinairn. When the Minister receives the reply from the civil servants, he may even read it before signing it. The hon. Member for Edinburgh, Pentlands (Mr. Rifkind) the former Under-Secretary used to read the letters, but they sent him to the Foreign Office because the Prime Minister needed somebody who could read the diplomatic tapes. The trouble was that the Prime Minister did not send the hon. Gentleman there quickly enough. When the hon. Member for Strathkelvin and Beardsden wishes to take up a matter with one or other of his local authorities, he will be told by one or other of the heads of department or by a chairman of one of the committees, "Sorry, we do not have authority or ability to take this decision." He will be told to go to the Scottish Office if he wants an answer to his query. The Scottish Office will tell him that it leaves it to the local authorities and that it never involves itself in the nitty gritty of local government. The hon. Gentleman will find that his constituents—ratepayers — are becoming more and more impatient because of the inability to get a decision about any of the problems that they have mentioned to him.

Parliament does not have sufficient time to debate the national and international issues, let alone the day-to-day management problems of Strathkelvin and Bearsden. The selective orders should not be wrapped up into one debate and vote. It is important to be able to differentiate between the regional problems of Grampian, Lothian and Strathclyde, or between the district problems of Glasgow and Bearsden. Indeed, there may be considerable pressure from Conservative Back Benchers because Argyll and Bearsden, along with Glasgow, are in the top 10 to be picked out for action by the Secretary of State. The problems loom ahead and I think that the hon. Member for Strathkelvin and Bearsden would be well advised not to try to introduce local government problems continually into the Chamber. He will find that he gets short shrift—in a nice way—from the Under-Secretary of State, the hon. Member for Edinburgh, South (Mr. Ancram). The Government could assist local authorities, if they so chose, by increasing their contribution to local authorities, through the operation of the rate support grant.

Mr Henderson

I am sure that the hon. Gentleman appreciates that that might still come out of the same pockets—the pockets of taxpayers.

Mr Craigen

The hon. Gentleman had better not get me started on all the former wee burghs in east Fife. He went on about all the local business people who did not have votes. However, I am not aware that there is a 651st constituency Member who represents the CBI, or a 652nd who represents the Institute of Directors in this House. I cannot see why he should plough that furrow. Indeed, I never know what furrow he is ploughing.

The guidelines that the Secretary of State keeps talking about are not explicitly mentioned in the Bill. They are a great secret. How are the guidelines made up? We received many papers about the legislation from outside bodies referring to how the guidelines were made up. I understand that the central research unit of the Scottish Office has had a big hand in it. Contained in a Scottish Office circular that I received from COSLA was the memorable phrase: they have consulted the service specialists within the Scottish Office and local authorities". We assume that the word has been said, and that no other negotiations are available to local authorities about the makeup of the client-group method. I refer to the sophisticated method by which the Government, in effect, allocate a predetermined level of expenditure to the local authorities. This year we have an unallocated £84 million. Last year we had £120 million. I believe that that is known affectionately as the "acht tae hell" adjustment factor, because no one is quite sure how that unallocated money is distributed.

Perhaps I might be allowed to reminisce about a joke in the days when I worked for an educational organisation that was involved in the marking of examination papers. In that respect the "acht tae hell" distribution might simply consist of the examiner throwing the papers down some steps and seeing where they landed, the unfortunate student getting a mark which related to only where the papers landed.

Government by circular has its dangers. The more Government Back Benchers realise that the better. We are also to witness the introduction of derogations into the workings of local government. Perhaps the Minister will tell us how those derogations will operate. Will it be a great horse trading exercise in local government whereby local authorities say, "We shall do this if you give us more money for that"?

My hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) referred to the considerable impact that the limitation on the rate fund contribution will have on housing revenue accounts. At the moment, 28 of the 56 housing authorities in Scotland do not receive housing support grant. I fear that next Monday, when we shall hear a statement on housing support grant, Scottish local authorities will be infinitely worse off. Shelter (Scotland) is worried that as much as 60 per cent. of Scotland's housing stock will fall out of the housing support grant system in 1984–85. That is serious. That event is coincidental with the Government's intended regulations for the right-to-repair scheme. I suspect that an increasing proportion of the responsibility for repair and maintenance of Scotland's housing stock will be thrust on the shoulders of tenants.

The Government are taking yet another power to themselves—the power to determine nationally the rent levels that will he operated in every district council. The Government have all of the powers and yet we have no idea of how the Secretary of State will use them. He is allowed to issue any guidance in respect of rate support grant and housing support grant will depend on what the Secretary of State thinks fit.

I shall not weary the House with the nitty gritty of the valuation proposals. The Secretary of State must have taken some comfort from the fact that the Scottish Assessors Association was one of the few bodies to express pleasure at his intention to retain the present rating system. The fact that the present system keeps it in a job must help. Nevertheless, the association must have given him some encouragement until he read its comments about the way in which the Bill will operate. It is becoming increasingly worried about some of the anomalies that have been referred to. It is beginning to worry that the Under-Secretary will be like the Dutch boy with his finger in the dyke and that he will be inundated by organisations saying, "You have done this for some groups of people, why do you not do it for us?"

I never cease to be amazed by the subtlety of the hon. Member for Edinburgh, West. He realised in an instant that if Edinburgh zoo had been in the Ayr constituency of his right hon. Friend the Secretary of State it would have been included in the Bill with the race courses, the football stadiums and the caravan parks. The same is true of Glasgow zoo. I also never cease to be amazed by the impact of that Dreadnought my hon. Friend the Member for Linlithgow (Mr. Dalyell) who managed to talk about Edinburgh zoo during a discussion on clause 13.

I hope that the Secretary of State will realise that he is seeking, in effect, to resolve the anomalies of Scottish valuation by introducing English comparators. They will not fit easily into the Scottish system unless the present system of Scottish law is changed. If that occurs, there will be many court cases and there will be much need for legal aid. Some of these factors have not been as properly thought out as the Government suggest. The right hon. Member for Western, Isles (Mr. Stewart), with his experience as provost of Stornoway, aptly said that it took an English Tory —the the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark)—to put the real point of this Bill to the Secretary of State for Scotland. People south of the border are worried that if the Secretary of State gets away with this measure tonight it will be inflicted on all the English and Welsh local authorities tomorrow. They might not be far wrong.

It is a tragedy that not one Scottish Tory Back Beecher had a good word to say about Scottish local government. I have my criticisms and I write some strong letters to heads of departments and local authorities, but I do not want Parliament to end up as a glorified town council looking after the affairs of local government throughout Scotland. The danger of the Bill is that it will enmesh us in many of the detailed problems of local government My right hon. Friend the Member for Halton and the hon. Member for Selly Oak served us well in pointing out that this measure is designed to undermine the confidence and sap the strength of Scottish local government, and they fear that it will prepare the way to introduce similar measures for England and Wales. I hope that more Government Back Benchers will join us in the Division Lobby or abstain—this would be a favour—so that we can heave out the Bill. It is important that we should seek to preserve local accountability and to save Parliament from entrusting the day-to-day management of local government in Scotland to the MacHumphries of the Civil Service.

9.32 pm

The Under-Secretary of State for Scotland (Mr. Michael Ancram)

The hon. Member for Glasgow, Garscadden (Mr. Dewar) began by saying that he would not be speaking from a number of briefs. As far as I could see, both he and the hon. Member for Glasgow, Maryhill (Mr. Craigen) were speaking from one brief, which might be called the Sewell file. Only during the last five minutes of the speech of the hon. Member for Maryhill did I realise that he had picked up the right file. For two thirds of the time that he spoke the hon. Gentleman referred more to the Committee upon which we are both engaged than to the legislation before the House. I am sure that he was merely rehearsing for tomorrow morning, so we can forgive him.

The hon. Member for Garscadden would have us believe that the whole of Scotland was up in arms against the Conservative Government for undertaking this legislation and that the Conservatives were some form of embattled minority with their backs to the wall.

Mr Dewar

Self-knowledge does a lot of good.

Mr. Ancram

It was, therefore, with surprise that on Friday morning I opened The Scotsman to find that in the constituency of the hon. Member for Falkirk, West (Mr. Canavan) the Conservatives had gained a seat on the Labour-controlled Falkirk district council and had captured Park ward in Grangemouth. That did not suggest to me that this was the vote of an electorate that was determined at all costs to prevent this legislation and to oppose its proposals for local government.

We have had a wide-ranging and useful debate this evening. It illustrates the fact that the subject is important and that the measures we propose are significant. Indeed, in the criticisms that have been made I gain no little confidence from the fact that they are divided between those who say that we are going too far and those who say that we are not going far enough. Some people have been disappointed that we are not doing something more radical. Our reasons for not destroying the rating system and putting in its place something entirely new and untried were set out by my right hon. Friend the Secretary of State in his opening speech.

Opposition Members criticise us for being too radical, but we are convinced that what we propose in this Bill is necessary if the present system of local taxation is to continue to work fairly. Without reform there is the danger that the burden of rates will become too much for the individual and for the economy. It is the duty of central Government to be ready to act in such a situation. We cannot stand by and say that it is all a matter for local government. The responsibility for the fair working of a national system of taxation rests firmly with central Government and, therefore, we have felt bound to act. We believe that what we propose will help ratepayers who for too long have felt that they are being unfairly treated and that they cannot cope with the burden of rates.

I shall now deal with some of the points raised in the debate. I may not cover all of them, but I shall write to hon. Members about any points that I miss.

There has been a general criticism that the Bill is a fatal attack on local government. A number of Opposition Members said that, in some form or another, during the debate. I deny that charge absolutely. The Government believe that local authorities have a vital and unique role to play, and that they are best placed to judge their expenditure priorities and to distribute available resources accordingly. We have left them that freedom in the legislation. What we have done in the national interest — guided by the same principle that encouraged our Labour predecessors to introduce guidelines—is to seek to constrain the total amount of public expenditure consumed by local authority spending.

Mr Maxton

The Government are not allowing local authorities to decide how to use their available resources. That is the most important point of all. Until they are given that right, the Government are taking all power away from them.

Mr Ancram

That is an extraordinary comment. The Labour party did not allow local authorities to decide their available resources when it was in power. When it had the responsibility of government, it realised that local authority spending was an essential part of overall public spending and could not be looked at in isolation.

The Bill seeks only to strengthen the means of constraint and to make it fairer. None of the measures needs to be used if local authority spending is held within reasonable bounds by authorities themselves. In the light of increasing local government spending — the hon. Member for Garscadden cannot deny that it has risen in real terms since 1979—it would be surprising if, as a responsible Government, we did not seek powers to control that vital and huge part of Scottish public expenditure, the failure to restrain which could undermine our drive to economic recovery.

I listened carefully to the right hon. Member for Western Isles (Mr. Stewart). I was surprised that he referred to giving freedom back to the people. He appeared to make the mistake that a number of Opposition Members have made, that of thinking that people and local government are synonymous. One reason why we have had to act to restrain local government is that so often, by its high levels of expenditure, it was actually restraining the freedoms of the individual.

The hon. Member for Garscadden said that the cuts in rate support grant had put up the rates. I challenge him to say that if rate support grant had been maintained at its level when we took office rates would have come down. The most likely result would have been that expenditure would have risen. Had the hon. Gentleman been in government at that time, he too would have had to constrain expenditure.

Mr Dewar

I did not maintain that rates would have gone down. I said that we would not have been faced with the massive increases that resulted from the cuts in rate support grant. I gave some figures—which I concede immediately I calculated with the help of some advisers —which suggested that if the RSG had been maintained at the same level in Glasgow the ratepayer would have had a saving of 17p in the rate poundage. Does the Minister dispute that figure?

Mr. Ancram

I do. I think that the hon. Gentleman, in his heart of hearts, knows that those theories do not work in practice. Had he maintained the rate support grant, he knows as well as I do that the effect would have been for expenditure to go up, with all the consequences that would have flowed from that.

Clause 1 deals with the general abatement. When we have reduced the rate support grant in financial years up to now, we have had no choice but to reduce the grant to individual authorities according to the amount of rate support grant that they received in the first place. My hon. Friend the Member for Fife, North-East (Mr. Henderson) was right to point out the unfairnesses of that system, even though we managed to provide some limited protective arrangements. Those unfairnesses have persisted ever since. When Labour reduced grants during a year by that unfair system, they made no effort to change the system. Indeed, tonight, if we are to accept the silence of the hon. Members for Garscadden and for Maryhill on this subject, we must take it that they seek to oppose the principle of the legislation which will allow us to rectify that unfairness. Labour Members who represent authorities that have suffered from the rough justice of the present system should remember that when they vote tonight, because I am sure that those authorities will watch carefully how they vote.

For our part, we have responded to criticisms which we feel are justifiable, and we are now setting out to make the system fair. Grant losses will now be directly related to the individual authority's excess over guidelines. That, I know, will be welcomed by the moderate-spending authorities which are attempting to bring their expenditure down to guidelines. Of course, it will not be so welcome to the high-spending authorities. However, it will exert a stronger pressure on those high-spending authorities to bring down their spending. That must be welcome.

The hon. Member for Garscadden discussed clause 2. He was joined by the hon. Members for Glasgow, Provan (Mr. Brown) and for Maryhill. Indeed, my hon. Friend the Member for Cunninghame, North (Mr. Come) said that he had some reservations on the matter. The hon. Member for Provan, in his normal direct way, asked me to explain the situation. The provision in the Bill makes it possible for there to be a composite report, where that seems appropriate. That report would be the subject of a single debate and a single vote. However, we are ready to consider the suggestion that there should be separate votes on each authority which is mentioned in a composite report. We may need to discuss the matter further in Committee. [Interruption.] We are prepared to consider the matter, and I should have thought that the hon. Member for Garscadden would be gracious enough to accept that.

A great deal of our discussion this evening has been about the justification for the powers in clause 3, which enable the Secretary of State to set a general limit on the rates of all local authorities. The first point I want to make strongly is that this is a power of last resort. It is not an attempt to take over local government and fix its rates as a matter of policy. We will use this power only if it becomes clear that it is impossible by the other means at our disposal—selective action and general reductions in grant—to keep within reasonable bounds overall local authority expenditure and rates. We do not want to have to impose a general limit on the rates of local authorities, and if authorities are reasonable the power will never be used. However, if expenditure and rates of local authorities as a whole are at an unacceptable level we would have to use a general power of limitation. In such a situation, selective action would not be adequate.

Mr Dewar

I understand, but do not agree with, the Minister's argument. The clause also allows for derogations so that local authorities can escape the general limitation on rate increases. Why is that different in principle from the existing powers?

Mr. Ancram

The hon. Gentleman has lived through three years of selective action and must realise that selective action is selective. It aims at authorities whose particular and specific expenditure plans are excessive and unreasonable. The Secretary of State will have discretion to allow derogations when they are deserved. Selective action has succeeded in controlling individual authorities planning excessive and unreasonable expenditure. It will remain available for that purpose.

If a substantial number of authorities in any one year decided to rate for unacceptable levels of expenditure to the detriment of their ratepayers, and with all the damaging consequences that flow from excessive rate increases, the power would enable the Government to react—I use that word advisedly —by rectifying the situation in the subsequent year. I trust that the power will not be needed and I hope that its existence will be a salutary' deterrent factor in the minds of authorities when each year they strike their rates.

The right hon. Member for Halton (Mr. Oakes) suggested that Scotland was being treated as a guinea pig and leading the way to similar legislation for England. All that I can say to him is that my right hon. Friend the Secretary of State runs his own show in Scotland and that we shall continue to introduce legislation which we believe to be suitable to Scotland's circumstances. I cannot help laughing, because Opposition Members are always telling us that we copy and follow the English. Tonight they complain that we are doing something possibly before the English.

I must correct my hon. Friend the Member for Stirling (Mr. Forsyth) on one point. He is worried that the power to reduce rates in clause 3 is limited. That is not so, because the new section 108B enables the Secretary of State to set a minimum reduction in rates. It does not limit the reduction that the local authority may make, so long at it makes the minimum reduction required in the rate limitation order.

A number of hon. Members, including my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Hirst), asked about consultation with non-domestic ratepayers under clause 4. A major criticism of the present rate system is that the larger part of the rates is paid by those who have no say in the level of rate. Non-domestic ratepayers — mainly business and industry—pay over half of the rates levied by local authorities.

We have no intention of going back to the business vote, because that would undermine the principle of one man one vote, which is the basis of local democracy. However, it is essential to do something about the unfairness, not least because it can have serious economic consequences for individual businesses, as my right hon. Friend the Secretary of State said. For that reason we have included in the Bill a provision requiring local authorities to consult non-domestic ratepayers before they fix their rate.

Last week I met the Scottish Business Rates committee, a newly formed group in which the CBI and the Association of Scottish Chambers of Commerce have combined to work out effective arrangements for the consultation provided for in the Bill. I welcome the initiative by the CBI and the chambers of commerce and I have had a useful discussion with the committee on the practicalities of consultation. I shall, of course, want to consult COSLA and all other interests fully before issuing a code of practice on how consultation might be carried out in the various circumstances of authorities throughout Scotland.

Mr Dewar

We do not want a business man's closed shop so that only they are consulted. How does the Minister judge the effectiveness of consultation? I presume that it is not enough to say that the test is whether consultations result in changes. After all, we had consultations with COSLA on the White Paper and none of its suggestions appears in the Bill. I assume that the Minister would object if I said that that consultation was a meaningless charade.

Mr Ancram

We must use the word "consultation" rather carefully, because there is a consultative process by which we are trying to find out the best way in which to achieve our object. There are two areas of consultation. I have already fallen into that trap. The ultimate consultation must be the subject of the views put forward by those who will have to operate the system. The committee that I met has got itself together. admittedly from the business side, because it wishes to put forward its views on how the consultation might be structured, what sanctions there might be and what information it would wish to see within it. When I said "sanctions", I meant the structure within which the system would work and the code which might ultimately be put forward. I hope that we can achieve a workable and acceptable system which will benefit non-domestic ratepayers in the way that we have suggested.

The other clause which was mentioned was clause 6. Labour Members are to be congratulated on recognising that there is a connection between rents and the contribution that ratepayers make to housing costs. They must also recognise that there is a connection between the contribution from the rates towards housing costs and the amount that is left for capital expenditure, in a climate where public expenditure is not unlimited.

It may be helpful if I remind the House of the figures. The contribution from the rates per council house has risen from an average figure of £62 per house in 1978–79 to over £142 per house in 1983–84. In the same period, average rents have risen from £4.42 per week to the present figure of £9.87 per week, but Scottish rents are still considerably below the average figure for England and Wales which stands at £14 per week.

The Opposition must recognise that the result of authorities' decisions to pay unreasonably large amounts from the rates towards housing costs is that the amount left available for capital expenditure has been unnecessarily restricted; and we now have a situation where the resources being taken by rate expenditure are around 50 per cent. of all the resources left for capital spending on the housing block. I should like to know how Labour Members justify the present situation, for I certainly cannot.

Nor is there any simple connection between rate contributions and rents. Rents are, of course, an important item which councils must look at in balancing their books, but they will also have to look at whether there is scope for savings through greater efficiency on other items of expenditure, such as management and maintenance. I am concerned that at present very large contributions from the ratepayers could be subsidising inefficient practices in management and maintenance. I believe, therefore, that our proposals will contribute to improved efficiency in local authority housing departments as well as ending the present unnecessary diversion of resources from capital programmes.

Valuation clauses have also been the subject of some comment. My hon. and learned Friend the Member for Perth and Kinross (Mr. Fairbairn) spoke about his unhappiness at the fact that we have not replaced the rating system. Many other hon. Members have also spoken about the unfairness of the system. My right hon. Friend made a point which I believe is indisputable. There is little point in replacing it with an untried system that will receive little support from the outset, because replacing imperfection with potentially equal imperfection will achieve nothing. By this legislation, we seek to make the present system less anomalous and more acceptable.

It should be remembered that the prospective reductions in the rating base which the Bill could bring about will be more than offset by the natural growth in the base as more and more new properties come into valuation. The Bill is aimed at ending valuation anomalies, at improving the opportunities each ratepayer has for appeal and at streamlining the appeal system itself.

It is plain that much of the Opposition criticism has come from briefs from the Scottish assessors. I met representatives of the assessors last week, and I believe that their initial fears about what might have been in the Bill have been substantially dispelled by its publication. I hope that their remaining worries about the next revaluation will prove groundless and that their preparations for that revaluation will be informed by the Bill's intentions.

A number of further points were raised. I shall write to those hon. Members whose specific problems I have not dealt with.

My hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) talked about Edinburgh zoo. I hope that he will appreciate, despite the figures that he gave us, that under the 1962 Act Edinburgh zoo already receives a 60 per cent. charitable rate relief. It is at Lothian regional authority's discretion to relieve as much of the remainder of the rates burden as it wishes. My right hon. Friend cannot and should not interfere with that discretion. The extra relief afforded to other zoos about which my hon. Friend spoke is similarly at the discretion of their rating authorities. If he has further worries about A, I hope that he will write to me.

We heard tonight from the Opposition Front Bench one of the most synthetic and hollow attacks that the House has witnessed for a long time. We should not be surprised. It is hard for a party which in government tried to ram its ideologies down the throats of local councils, the party which in Scotland — we cannot remind Opposition Members enough of this — presided over the biggest reduction in the rate of grant in 1977–78, and in the preceding year abated the rate support grant by £5 million, to do other than bluster in the face of the Bill. I do not, however, accuse its members of hypocrisy. The hon. Members for Garscadden and Maryhill have had to make do with the meagre ammunition at their disposal. They must feel like the infantry in the first world war. Isolated and excluded from the councils of war of the shadow Cabinet, they had no option but to obey their orders to charge and not to reason why.

It is hardly surprising that Labour Members seized so gratefully upon the stick provided to them by the Labour members of COSLA. They would have been wiser to examine it more closely before launching their attack with this weapon, for it is no straight stick, and like the boomerang that it is, it will come back and hit them.

The Bill, as my right hon. Friend said, is about ratepayers—the vast mass of people in Scotland who are sick and fed up to the teeth of being the punchbag of local authority overspending. They know, even if Opposition Members prefer not to know it, that comparatively high valuations and profligate councils are the recipe for unacceptable rate burdens and lost jobs. They know, even if Opposition Members pretend not to, which party is on their side. It is not the Labour party—the party which argues even now that councils should be allowed to raise their rates to the sky if they wish to.

The greatest irony in this debate is the central theme of the Opposition attack today, which is that they are the defenders of local democracy. The truth, if only they would realise it, is that within their thesis they carry the seeds of its destruction. Local government and local democracy can work only as an integral part of the wider whole. By seeking to distort local expenditure at the expense of the national economic strategy, and by proclaiming the isolation of local decision-making from national economic realities, they condemn local government to being an irrelevance to anything other than its own political whims, and that will undermine local government.

The facts are simple and cannot be overstated. Far from us seeking to destroy, we seek in the Bill merely to set the parameters within which responsible local government in Scotland should operate. We ask only for the powers to restrain local government within those parameters. Those are limits which no prudent authority need fear, because such prudent councils operate within them anyway. If the imprudent fear them, the ratepayers and taxpayers of Scotland will welcome it.

The Bill, for all its apparent complexity, has one overriding purpose — to recreate a system of local government finance and expenditure which is fair to all.By restoring some equity in valuation, and by enabling the Government to restrain excessive exploitation of that finance base, we will achieve that purpose. It is a purpose which is overwhelmingly welcomed by ratepayers and taxpayers alike, and I ask my hon. Friends to support the Bill tonight.

Mr Maxton

I want to make the point to the House that this debate is an absolute negation of democracy in three specific ways—

Mr. Ian Lang (Lords Commissioner to the Treasury)

rose in his place and claimed to move, That the Question be now put:—

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the Bill be now read a Second time:—

The House divided: Ayes 277, Noes 198.

Division No. 85]	[10 pm
AYES
Adley, Robert	Braine, Sir Bernard
Aitken, Jonathan	Brandon-Bravo, Martin
Alexander, Richard	Bright, Graham
Amery, Rt Hon Julian	Brinton, Tim
Amess, David	Brooke, Hon Peter
Ancram, Michael	Brown, M. (Brigg & Cl'thpes)
Arnold, Tom	Bryan, Sir Paul
Ashby, David	Buchanan-Smith, Rt Hon A.
Aspinwall, Jack	Buck, Sir Antony
Atkins, Rt Hon Sir H.	Budgen, Nick
Atkins, Robert (South Ribble)	Bulmer, Esmond
Atkinson, David (B'm'th E)	Burt, Alistair
Baker, Nicholas (N Dorset)	Butcher, John
Baldry, Anthony	Butterfill, John
Banks, Robert (Harrogate)	Carlisle, Kenneth (Lincoln)
Batiste, Spencer	Carttiss, Michael
Bendall, Vivian	Chalker, Mrs Lynda
Bennett, Sir Frederic (T'bay)	Channon, Rt Hon Paul
Berry, Sir Anthony	Chope, Christopher
Best, Keith	Clark, Hon A. (Plym'th S'n)
Biffen, Rt Hon John	Clark, Dr Michael (Rochford)
Biggs-Davison, Sir John	Clark, Sir W. (Croydon S)
Blaker, Rt Hon Sir Peter	Clarke Kenneth (Rushcliffe)
Bonsor, Sir Nicholas	Clegg, Sir Walter
Boscawen, Hon Robert	Cockeram, Eric
Bottomley, Peter	Colvin, Michael
Bowden, Gerald (Dulwich)	Conway, Derek
Boyson, Dr Rhodes	Coombs, Simon

Cope, John	Howell, Ralph (N Norfolk)
Cormack, Patrick	Hubbard-Miles, Peter
Corrie, John	Hunt, David (Wirral)
Couchman, James	Hunt, John (Ravensbourne)
Critchley, Julian	Hunter, Andrew
Crouch, David	Hurd, Rt Hon Douglas
Currie, Mrs Edwina	Jackson, Robert
Dicks, T.	Jessel, Toby
Douglas-Hamilton, Lord J.	Jones, Gwilym (Cardiff N)
Dover, Denshore	Jones, Robert (W Herts)
du Cann, Rt Hon Edward	Kellett-Bowman, Mrs Elaine
Dunn, Robert	Kershaw, Sir Anthony
Durant, Tony	King, Roger (B'ham N'field)
Dykes, Hugh	King, Rt Hon Tom
Edwards, Rt Hon N. (P'broke)	Knight, Gregory (Derby N)
Eggar, Tim	Knight, Mrs Jill (Edgbaston)
Evennett, David	Knowles, Michael
Eyre, Reginald	Knox, David
Fairbairn, Nicholas	Lamont, Norman
Fallon, Michael	Latham, Michael
Farr, John	Lawler, Geoffrey
Favell, Anthony	Lawson, Rt Hon Nigel
Fenner, Mrs Peggy	Leigh, Edward (Gainsbor'gh)
Finsberg, Geoffrey	Lennox-Boyd, Hon Mark
Fletcher, Alexander	Lester, Jim
Fookes, Miss Janet	McCrindle, Robert
Forsyth, Michael (Stirling)	McCurley, Mrs Anna
Forth, Eric	MacKay, John (Argyll & Bute)
Fox, Marcus	McQuarrie, Albert
Fraser, Peter (Angus East)	Madel, David
Freeman, Roger	Malone, Gerald
Gale, Roger	Mather, Carol
Galley, Roy	Maxwell-Hyslop, Robin
Gardiner, George (Reigate)	Mellor, David
Gardner, Sir Edward (Fylde)	Meyer, Sir Anthony
Garel-Jones, Tristan	Miller, Hal (B'grove)
Gilmour, Rt Hon Sir Ian	Mills, Sir Peter (West Devon)
Glyn, Dr Alan	Miscampbell, Norman
Goodlad, Alastair	Monro, Sir Hector
Gow, Ian	Murphy, Christopher
Gower, Sir Raymond	Neubert, Michael
Green way, Harry	Newton, Tony
Gregory, Conal	Nicholls, Patrick
Griffiths, E. (B'y St Edm'ds)	Normanton, Tom
Griffiths, Peter (Portsm'th N)	Onslow, Cranley
Grist, Ian	Oppenheim, Philip
Ground, Patrick	Oppenheim, Rt Hon Mrs S.
Grylls, Michael	Page, Richard (Herts SW)
Gummer, John Selwyn	Parris, Matthew
Hamilton, Neil (Tatton)	Pawsey, James
Hampson, Dr Keith	Peacock, Mrs Elizabeth
Hanley, Jeremy	Pink, R. Bonner
Hannam, John	Pollock, Alexander
Hargreaves, Kenneth	Porter, Barry
Harris, David	Powley, John
Harvey, Robert	Prentice, Rt Hon Reg
Haselhurst, Alan	Raffan, Keith
Hawkins, C. (High Peak)	Raison, Rt Hon Timothy
Hawkins, Sir Paul (SW N'folk)	Rees, Rt Hon Peter (Dover)
Hawksley, Warren	Renton, Tim
Hayes, J.	Rhys Williams, Sir Brandon
Hayhoe, Barney	Ridley, Rt Hon Nicholas
Hayward, Robert	Rifkind, Malcolm
Heathcoat-Amory, David	Roe, Mrs Marion
Heddle, John	Rost, Peter
Henderson, Barry	Rowe, Andrew
Hickmet, Richard	Ryder, Richard
Higgins, Rt Hon Terence L.	Sackville, Hon Thomas
Hill, James	Sainsbury, Hon Timothy
Hind, Kenneth	Sayeed, Jonathan
Hirst, Michael	Scott, Nicholas
Hogg, Hon Douglas (Gr'th'm)	Shaw, Giles (Pudsey)
Holland, Sir Philip (Gedling)	Shaw, Sir Michael (Scarb')
Holt, Richard	Shelton, William (Streatham)
Hooson, Tom	Shepherd, Colin (Hereford)
Hordern, Peter	Shepherd, Richard (Aldridge)
Howard, Michael	Shersby, Michael
Howarth, Alan (Stratf'd-on-A)	Silvester, Fred
Howarth, Gerald (Cannock)	Sims, Roger
Howell, Rt Hon D. (G'ldford)	Skeet, T. H. H.

Smith, Sir Dudley (Warwick)	Vaughan, Dr Gerard
Smith, Tim (Beaconsfield)	Viggers, Peter
Soames, Hon Nicholas	Waddington, David
Speed, Keith	Wakeham, Rt Hon John
Speller, Tony	Waldegrave, Hon William
Spence, John	Walden, George
Spencer, D.	Walker, Bill (T'side N)
Spicer, Michael (S Worcs)	Walker, Rt Hon P. (W'cester)
Squire, Robin	Waller, Gary
Stanbrook, Ivor	Walters, Dennis
Stanley, John	Ward, John
Stern, Michael	Wardle, C. (Bexhill)
Stevens, Lewis (Nuneaton)	Warren, Kenneth
Stewart, Allan (Eastwood)	Watson, John
Stewart, Andrew (Sherwood)	Watts, John
Stewart, Ian (N Hertf'dshire)	Wells, Bowen (Hertford)
Stokes, John	Wells, John (Maidstone)
Stradling Thomas, J.	Wheeler, John
Sumberg, David	Whitney, Raymond
Tapsell, Peter	Wilkinson, John
Taylor, John (Solihull)	Winterton, Mrs Ann
Taylor, Teddy (S'end E)	Winterton, Nicholas
Thomas, Rt Hon Peter	Wolfson, Mark
Thompson, Donald (Calder V)	Wood, Timothy
Thorne, Neil (Ilford S)	Woodcock, Michael
Thornton, Malcolm	Yeo, Tim
Thurnham, Peter	Young, Sir George (Acton)
Townend, John (Bridlington)	Younger, Rt Hon George
Tracey, Richard
Trippier, David	Tellers for the Ayes:
Trotter, Neville	Mr. Ian Lang and Mr. Archie Hamilton.
Twinn, Dr Ian
van Straubenzee. SirW.

NOES
Alton, David	Cowans, Harry
Anderson, Donald	Craigen, J. M.
Archer, Rt Hon Peter	Crowther, Stan
Ashley, Rt Hon Jack	Cunliffe, Lawrence
Ashton, Joe	Cunningham, Dr John
Atkinson, N. (Tottenham)	Davies, Rt Hon Denzil (L'lli)
Bagier, Gordon A. T.	Davies, Ronald (Caerphilly)
Banks, Tony (Newham NW)	Davis, Terry (B'ham, H'ge H'l)
Barnett, Guy	Deakins, Eric
Barron, Kevin	Dewar, Donald
Beckett, Mrs Margaret	Dixon, Donald
Beith, A. J.	Dobson, Frank
Bennett, A. (Dent'n & Red'sh)	Dormand, Jack
Bidwell, Sydney	Douglas, Dick
Blair, Anthony	Dubs, Alfred
Boothroyd, Miss Betty	Duffy, A. E. P.
Boyes, Roland	Dunwoody, Hon Mrs G.
Bray, Dr Jeremy	Eadie, Alex
Brown, Gordon (D'f'mline E)	Eastham, Ken
Brown, Hugh D. (Provan)	Edwards, R. (W'hampt'n SE)
Brown, N. (N'c'tle-u-Tyne E)	Ellis, Raymond
Brown, R. (N'c'tle-u-Tyne N)	Evans, loan (Cynon Valley)
Brown, Ron (E'burgh, Leith)	Evans, John (St. Helens N)
Bruce, Malcolm	Ewing, Harry
Caborn, Richard	Fatchett, Derek
Callaghan, Rt Hon J.	Faulds, Andrew
Callaghan, Jim (Heyw'd & M)	Field, Frank (Birkenhead)
Campbell, Ian	Fields, T. (L'pool Broad Gn)
Campbell-Savours, Dale	Fisher, Mark
Canavan, Dennis	Flannery, Martin
Carter-Jones, Lewis	Foot, Rt Hon Michael
Cartwright, John	Foster, Derek
Clark, Dr David (S Shields)	Foulkes, George
Clarke, Thomas	Fraser, J. (Norwood)
Clay, Robert	Garrett, W. E.
Cocks, Rt Hon M. (Bristol S.)	Gilbert, Rt Hon Dr John
Cohen, Harry	Godman, Dr Norman
Coleman, Donald	Golding, John
Concannon, Rt Hon J. D.	Gould, Bryan
Conlan, Bernard	Gourlay, Harry
Cook, Frank (Stockton North)	Hamilton, W. W. (Central Fife)
Cook, Robin F. (Livingston)	Hardy, Peter
Corbett, Robin	Harman, Ms Harriet
Corbyn, Jeremy	Harrison, Rt Hon Walter

Hart, Rt Hon Dame Judith	Park, George
Haynes, Frank	Parry, Robert
Healey, Rt Hon Denis	Patchett, Terry
Heffer, Eric S.	Pendry, Tom
Hogg, N. (C'nauld & Kilsyth)	Penhaligon, David
Holland, Stuart (Vauxhall)	Pike, Peter
Howell, Rt Hon D. (S'heath)	Powell, Rt Hon J. E. (S Down)
Howells, Geraint	Powell, Raymond (Ogmore)
Hoyle, Douglas	Prescott, John
Hughes, Robert (Aberdeen N)	Randall, Stuart
Janner, Hon Greville	Redmond, M.
Jenkins, Rt Hon Roy (Hillh'd)	Rees, Rt Hon M. (Leeds S)
John, Brynmor	Richardson, Ms Jo
Jones, Barry (Alyn & Deeside)	Roberts, Allan (Bootle)
Kaufman, Rt Hon Gerald	Roberts, Ernest (Hackney N)
Kennedy, Charles	Robertson, George
Kilroy-Silk, Robert	Robinson, G. (Coventry NW)
Kinnock, Rt Hon Neil	Rogers, Allan
Kirkwood, Archibald	Rooker, J. W.
Lambie, David	Ross, Ernest (Dundee W)
Lamond, James	Ross, Stephen (Isle of Wight)
Lead bitter, Ted	Rowlands, Ted
Leighton, Ronald	Ryman, John
Lewis, Terence (Worsley)	Sedgemore, Brian
Litherland, Robert	Sheerman, Barry
Lloyd, Tony (Stretford)	Sheldon, Rt Hon R.
Lofthouse, Geoffrey	Shore, Rt Hon Peter
McCartney, Hugh	Short, Ms Clare (Ladywood)
McDonald, Dr Oonagh	Short, Mrs H.(W'hampt'n NE)
McGuire, Michael	Silkin, Rt Hon J.
McKay, Allen (Penistone)	Skinner, Dennis
McKelvey, William	Smith, C.(Isl'ton S & F'bury)
Mackenzie, Rt Hon Gregor	Snape, Peter
Maclennan, Robert	Soley, Clive
McTaggart, Robert	Spearing, Nigel
McWilliam, John	Steel, Rt Hon David
Madden, Max	Stewart, Rt Hon D. (W Isles)
Marek, Dr John	Stott, Roger
Marshall, David (Shettleston)	Strang, Gavin
Martin, Michael	Thomas, Dr R. (Carmarthen)
Mason, Rt Hon Roy	Thorne, Stan (Preston)
Maxton, John	Tinn, James
Maynard, Miss Joan	Torney, Tom
Meacher, Michael	Wainwright, R.
Michie, William	Wallace, James
Mikardo, Ian	Wardell, Gareth (Gower)
Millan, Rt Hon Bruce	Wareing, Robert
Miller, Dr M. S. (E Kilbride)	White, James
Mitchell, Austin (G't Grimsby)	Wigley, Dafydd
Molyneaux, Rt Hon James	Williams, Rt Hon A.
Morris, Rt Hon A. (W'shawe)	Wilson, Gordon
Morris, Rt Hon J. (Aberavon)	Winnick, David
Nellist, David	Woodall, Alec
Oakes, Rt Hon Gordon
O'Neill, Martin	Tellers for the Noes:
Orme, Rt Hon Stanley	Mr. James Hamilton and Mr. John Home Robertson.
Owen, Rt Hon Dr David

Question accordingly agreed to.

Bill read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 42 (Committal of Bills).