NON-DOMESTIC RATES

HC Deb 04 March 1987 vol 111 cc947-68

Amendment made: No. 19, in page 3, line 39, leave out 'in whose entry in the valuation roll there appears no domestic subjects note' and insert 'in respect of which there is an entry in the valuation roll'.—[Mr. Ancram.]

The Parliamentary Under-Secretary of State for Scotland (Mr. Ian Lang)

I beg to move amendment No. 20, in page 4, leave out line 4 and insert—'(B-S) × I'.

Mr. Deputy Speaker

With this it will be convenient to take Government amendments Nos. 22 to 25 and No. 28.

Mr. Lang

Amendments numbers 20, 22, 23 and 24 are drafting amendments intended to remove a possible ambiguity in the definition of "I" in subsections (3) and (4) of clause 4. At present I is defined in terms of a percentage increase in the RPI over a 12-month period. This might be taken to require that the other factors in the formulae be multiplied by a number on a percentage scale from 1 to 100. Clearly this is not what is intended.

The amended definition of I dispenses with percentages, and expresses I in terms of a ratio of the RPI at the two relevant points in time.

To define I in this way requires adjustment of the formulae themselves. The process of adjustment enables the formulae to be expressed more simply.

I hope that I have made the position clear.

Mr. Home Robertson

I confess that algebra was never my strong point, so I am not sure whether I am grateful to the Minister for removing a (B—S) or an (M) from the two formulae in subsections (3) and (4). As I understand it, these amendments will mean that the Secretary of State — with the consent of the Treasury, which is not a proviso that fills us with confidence—will determine the maximum non-domestic rate poundage for each local authority, which will generally be based on the increase in the retail prices index over the previous year.

It is important to reiterate at this stage our opposition to the principle of Whitehall dictating the details of local affairs in Scotland, and that affects the determination of non-domestic rates as well as everything else. This part of the Bill is a serious infringement of the principle of local democracy. It undermines the accountability of local authorities to local business. Ministers keep telling us that one of the main objectives underlying the Bill is increasing the accountability of local authorities.

It is probably worth mentioning that there will still be statutory consultations with non-domestic ratepayers under the new legislation, but that will be pointless, because the person who will be determining the non-domestic rate will not be present at the statutory consultations because he will be the Secretary of State for Scotland.

One can visualise certain circumstances in which business men and chambers of commerce might come along to their local authority at the statutory consultation and say that they would like additional local authority services. They might want a new road built or some improvement in community facilities which might be very useful to them. However, many local authorities, under the new regime, will have no choice but to say to the non-domestic ratepayers, "We are sorry. We would love to provide additional services in your area that will be useful for your businesses, but you must recognise that you are paying a reducing and limited contribution towards our budget, so you cannot expect us to be using poll tax payers' money to assist businesses." That will rather inhibit discussion in that forum.

The formula in clause 4 is based on a largely irrelevant multiplier, for these purposes—the retail prices index. Fundamentally, I am speaking to amendment No. 25, which would replace the reference to the retail prices index with a reference to a local government price index. Such an index exists. I understand that the Scottish Office, in its dealings with COSLA and local authorities in Scotland, works on a calculated volume measurement of local authority costs. Such a measurement can and should be made. We suggest that that is the most appropriate way of basing the calculation of the non-domestic rate under the operation of this new legislation.

8.30 pm

Businesses have been hard hit by rate increases, which have been engineered by this Government, in recent years. Indeed, I know that businesses have made strong representations on the subject. I must ask the question, how would a business man like it if his budget were to be subject to controls based on utterly irrelevant criteria which are dictated by the Scottish Office? That is what would happen to local authorities under this new formula. The consequences of that artificial calculation could be drastic, not only for the local authorities, their employees and those who use local authority services, but also—it is important to emphasise this—for the poll tax payer, or community charge payer, if the Minister insists on giving this rather cosy name that the Government have selected.

The Secretary of State took great pleasure earlier in quoting from the recent representations from the Rating and Valuation Association. I shall quote another part of what the Rating and Valuation Association has been saying to hon. Members during the last week, specifically on clause 4: It is considered that the Retail Prices Index is quite inappropriate to Local Government's costs. An alternative (preferably specially constructed) index should be sought. Since the increase in non-domestic rates will be limited to the retail prices index increase in September of the previous year, Community Charges will not only have to be determined by including estimated pay and price increases on that part of an authority's expenditure to be met from community charges but also to include the difference between September retail price index and estimated actual pay and price increases arising during the year on that part of the authority's expenditure to be met from non-domestic rates. In other words, the Community Charge payer will forever more be subsidising the non-domestic ratepayer. The association said that, and the Secretary of State has seen fit to give credence to the Rating and Valuation Association in earlier debates. The Minister owes it to us to take some account of what it says on this subject.

The cost of providing local services is influenced by matters that are not covered in the retail prices index. The largest element in local authority costs is staff costs—teachers' salaries, manual workers' wages and such like. Some 60 per cent. of local authority costs are related to staff costs, wages and salaries. The next largest element in local authority costs is loan charges, which amounts to 15 per cent. of the total. In addition, there are a range of other costs — materials, machinery associated with property maintenance, road vehicles and all the rest. None of that is adequately reflected in the retail prices index.

I have a copy of the most recent summary of the retail prices index, and it is worth referring to the prices that are taken into account in the retail prices index. The first item is food, which comes to 18.5 per cent. of the total. Alcoholic drinks account for 8.2 per cent., tobacco for 4 per cent., housing for 15.3 per cent., fuel and light for 3.2 per cent., durable household goods for 6.3 per cent., clothing and footwear for 7.5 per cent., transport and vehicles for 15.7 per cent., miscellaneous goods for 8.1 per cent., services for 5.8 per cent., and meals bought and consumed outside the home for 4.4 per cent. Precious little in that is relevant to the calculation of local authority costs. That is a point which the Minister should explain and take into account in responding to the debate. There is nothing about wages, precious little about loan charges and nothing about building materials or other items which are relevant to the affairs of local government.

The retail prices index has nothing whatever to do with local government costs, so a multiplier based on that consideration alone is bound to distort the situation. Indeed, it is the refusal of the Government to take account of the real increases in the cost of local government services in uprating rate support grant in recent years which has done more than anything else to force up rates during the years that they have been in power.

The constituency that I represent is currently contemplating a rate increase of 30 per cent. That will cover only a 6 per cent. increase or growth in services. The rest of that 30 per cent. increase in rates — in other words, 24 per cent. of the total—is accounted for by the failure of the Government to take account of the increases of costs and to increase the rate support grant accordingly.

At present, everybody — domestic and commercial entities — is contributing towards the cost of local authority services. Under this new system, the increase will be concentrated on the domestic sector, because of the way that the formula will apply. This artificial new restriction on the contribution of businesses to local authorities seems likely to drive up domestic poll tax rates at an alarming rate. As I understand it, if the business rate is frozen to this formula, which is associated to the retail prices index, but a local authority finds its costs have increased by, for example, 6 per cent. more than the retail prices index, the bulk of that extra burden will fall on the poll tax payer. A 6 per cent. increase in the cost of local authorities would be translated into an 18 per cent. increase in the poll tax.

In that scenario, the personal poll tax would be forced up from the often quoted £250 a head to £295 a head in one year. I have asked for some information from COSLA, and it confirmed that in a normal year local authority costs will increase by 2 per cent. more than the retail prices index. Some 2 per cent. of local authority costs in Scotland amounts to approximately £20 million, which would mean an increase of £6 a head to the poll tax payer. That only takes account of the suppression of the business rates under this formula.

Another imponderable is the sheer inefficiency of the poll tax system. It is quite inevitable that difficulties will arise in collecting this tax, because a significant number of people will not pay it. To compensate for that, those who pay it will have to pay more than they should. This poll tax—of which everyone is cheerfully saying, "It is only going to be about £250 a head" — will be jacked up rapidly as a consequence of this formula, other aspects of the Government's legislation and the manner in which they intend to administer it. People who think that they will be better off under the poll tax system should be warned of the high-speed ratchet effect that the Government are building into the system. People on low incomes, who are being dragged into this new tax net, have every reason to be alarmed at that prospect.

The solution to the crisis of local government finance will have to be the restoration of realistic levels of central Government support to local authorities. That is what the Labour party is pledged to work towards. This formula is a deliberately obscure mechanism to cut the contribution of businesses to local budgets and progressively transfer the burden of the cost to the poll tax payer. We think that the whole system of poll tax is wrong. The non-domestic contribution is calculated on an unrealistic basis. We are proposing a calculation of the non-domestic contribution on a genuinely realistic basis, which would at least protect the personal taxpayer from the vicious spiral that I have been seeking to describe.

That is why I feel strongly that the House should accept amendment No. 25. However, there is a procedural problem. I intend to press the principle of amendment No. 25, but that will be rendered difficult by the effect of Government amendment No 24, which will be dealt with first, which means that amendment No. 25 cannot be voted on. Therefore, it is our intention to vote against Government amendment No. 24 to register our strong belief that variations in the non-domestic rate should be able to reflect factors which affect the costs of providing local services, which are essential to domestic householders, non-domestic ratepayers and businesses.

Mr. Allan Stewart

The hon. Member for East Lothian (Mr. Home Robertson) has made one technical and one general point. The technical argument was that the retail prices index is not relevant for these purposes. I hope that the RPI will become wholly irrelevant. The Government's counter-inflation policies may very well achieve that in the not-too-distant future, but the RPI would be extremely relevant to everybody if, by any mischance, the Opposition attained power.

I hope that my hon. Friend the Minister will resist in principle the proposition that a special index should be constructed. If such an index were constructed, there would inevitably be pressure to increase the costs in it. There would be no incentive to reduce its component costs. The area of most concern would be wage costs as there would be every reason for one side of the negotiating table to push for high wage increases and no incentive for employers to resist. If local authorities, like many others, have to take account of the RPI, they are much more likely to be realistic and to resist unnecessary cost increases.

My hon. Friend explained the amendments lucidly but I did not quite follow amendment No. 23. I am not entirely sure why it is necessary to replace the formula in line 21. If my hon. Friend does not want to add to what he said earlier, I shall read carefully tomorrow what he said.

The hon. Member for East Lothian made a general point to justify dividing the House. I accept that non-domestic rates must be retained, but they have a series of economic disadvantages. If they are paid by the company, they are an overhead which is unrelated to profitability and therefore a tax on investment and jobs. If rates are passed on to the customer—I suspect that they are at least in part—they are likely to be a regressive tax. Opposition Members have talked about equity, but that represents a tax even on the poor.

I disagree fundamentally with the proposition of the hon. Member for East Lothian because the consequences of increasing non-domestic rates are often borne wholly outside the local community. That is certainly true of industrial rates, although it is probably less true of commercial rates. There is therefore not the accountability to which the hon. Gentleman refers. The same is not true of national Government as the consequences of any taxation imposed by a national Government are felt overwhelmingly in the nation.

The non-domestic ratepayer has often been milked by local authorities. That has had a serious effect on jobs. We debated this matter in Committee when the hon. Member for Glasgow, Cathcart (Mr. Maxton) seemed to take the view that increases in non-domestic rates have no economic effects on jobs, although the hon. Member for Glasgow, Springburn (Mr. Martin) did not share that view. Non-domestic ratepayers require the type of protection that my right hon. and hon. Friends are suggesting.

Mr. Maxton

Would the hon. Gentleman care to say what benefits are granted to non-domestic ratepayers by payment of rates? There is much business directly as a result of local authorities. There are firms which rely entirely on local authority orders. Many other companies survive because local authority employees, who are often a large proportion of the population, buy goods and services provided locally. Without that local government financial input, many companies have gone to the wall. How many building companies, for example, have gone to the wall as a result of the Government's capital expenditure cuts?

8.45 pm

Mr. Stewart

If I endeavoured to answer that general proposition, I am sure that I would fairly quickly be ruled out of order. Capital expenditure under Scottish Office programmes has increased substantially in real terms.

Of course, there is a complex relationship between non-domestic ratepayers and local authorities. I am not suggesting that non-domestic ratepayers do not receive benefits from the services provided by local government. My argument, however, is that the consequences of increased expenditure and therefore of increased rates on non-domestic ratepayers can have serious and adverse economic consequences. It is in a sense taxation without representation.

I hope that my hon. Friend the Minister will confirm that the Government's policy remains unchanged and that he will resist in principle as well as in practice the concept of replacing the RPI with a special index.

Mr. Dick Douglas (Dunfermline, West)

The hon. Member for Eastwood (Mr. Stewart) said that there was some opposition to non-domestic ratepayers having local taxation imposed on them. His arguments were general and apply to any tax. They could apply to corporation tax. We can argue that that tax is profit based, but companies will go out of business if they cannot pay the rates.

I declare an interest in the Fife Regional Co-operative Society. The hon. Member for Fife, North-East (Mr. Henderson) displayed no sympathy for that society when he spoke earlier. I hope that we shall soon have an announcement that what has appeared in the press in Fife and elsewhere about the Fife Regional Co-operative Society is quite wrong and that the backlog of rates, which is regrettable, has been redressed. There was, however, no sympathy from the hon. Member for Fife, North-East for a commonly-owned concern.

Mr. Allan Stewart

Will the hon. Gentleman give way?

Mr. Douglas

No.

On clause 4 the Government's amendments are of an arithmetically calculated variety. They do not strike in any way at the root incidence of this particular clause. The clause shows quite clearly that the imposition on the non-domestic ratepayer will be frozen and will be inflation related to the retail price index, as if that was the only inflation that was of interest to local authorities.

My hon. Friend the Member for East Lothian (Mr. Home Robertson) suggests in his amendment that if there is to be fairness at all it should be related to what might be construed as a local authority inflator. That strikes me as perfectly fair, if we are to have this tax at all. It should relate to the expenditure and the changes in costs to the local authority.

The Government say that this is a radical and reforming measure, but they show little faith in its radical nature because they place the local authority, and especially the domestic ratepayer, in a catch-22 position.

You would no doubt call me to order, Mr. Deputy Speaker, if I went too far along that particular road, but in clause 24 and in schedule 3 the Government show that they are putting such great faith in the poll tax that they say that it is an increased measure of accountability and that it is such a great measure of accountability that it will call those bad spendthrift local authorities to book. However, they have such faith in it that they have to take powers to retrench and, if necessary, impose a levy on those so-called recalcitrant local authorities. So much for local democracy.

In this measure the Government have it both ways. They put great faith in this reforming measure. On the one hand they are saying that they want local authorities to be called to account, but if for reasons outwith their control costs increase beyond the RPI, that portion will be placed on the poll tax payer. Moreover, if those local authorities try to impose that burden on the poll tax payer, and if the Government consider that burden to be excessive, the Government will claw it back. So much for accountability.

The Bill — especially this clause—is a fraud perpetrated by a Government of frauds who have tried to construe this measure as a reform. When in heaven's name was there a poll tax before? It was way back in the 15th and 16th centuries. So the Tories are marching forward into the 15th and 16th centuries.

Mr. George Robertson (Hamilton)

I congratulate my hon. Friend the Member for Dunfermline, West (Mr. Douglas) on his spirited speech which has brought some life back to the debate after the deadening effect of the contribution by the hon. Member for Eastwood (Mr. Stewart), who has spoken in all of these debates. He speaks sometimes with great perception and wisdom and that is presumably why he is not on the Front Bench.

What puzzles us most is that he is one of the few people who served in the Government, was sacked and has not yet had his knighthood. The only explanation, given his innumerable speeches on the Bill and the lack of a knighthood, is that some sort of piecework system has been adopted by the Conservative party. The hon. Gentleman must earn his knighthood by tedious but ultra-loyal speeches. Tonight he displayed that absolutely because he told the hon. Member for Galloway and Upper Nithsdale (Mr. Lang) that he did not understand what the Minister had said. He could not understand the explanation, but he was still going to vote for it. That is ultra loyalty, and I am sure that the Patronage Secretary will be in at the time of the vote and will pay due recognition to that fact. When the day comes for turning up brief, loyal and boring speeches the knighthood will be there in the next honours list.

Nothing less than a knighthood would be appropriate as a reward for loyally sticking by every dot and comma of the Bill. As this debate amply illustrates, we see the inconsistencies of the Bill in their full, stark glory. It comes forward as a minor technical amendment moved by the hon. Member for Galloway and Upper Nithsdale almost in his sleep as though it was something of no great consequence. We know, however, that it underlines the truly bogus nature of the whole scheme that will now be foisted on the Scottish people. It is a test bed for what will become a grandiose experiment on the English and the Welsh in the unfortunate event of the Conservatives winning another period of office.

It is predicated on a lie. It is predicated on a misconception. It is predicated on a prejudice that local authorities are all profligate with their expenditure, that all local authorities' expenditure should be condemned, that practically everything that local authorities do is to be caricatured by the minority of local authorities and has little or nothing to do with the real world which we all have to inhabit.

I am glad to say that yesterday the Hamilton district council in my constituency announced that this year it was going to cut the rate bill by 5p. Here is a Labour local authority—the composition of the council is 17 Labour members, 2 Liberal and 1 Conservative, the last being an accident in the great unanimity of my constituents which has reduced the rates this year by 5p by good and efficient husbandry of the resources, and yet it is to be caricatured with all the others that enter into the great hall of horror that the Conservatives use to justify this Bill.

One of the most bogus points of the whole argument is to pretend that, in some way, business will be relieved of some of the burdens from which it complains that it suffers. The great selling point that was just mentioned was to be the uniform business rate—that this will in some way be the great liberation of the single old ladies in tenement flats and of those widows who live in huge houses. It is also to lift the financial burden from industry. However, the majority of industries in Scotland will know that the services will still have to be paid for, and will not be conned by that.

I do not accept the bland assurances given here this evening that this is a means of relieving them of the responsibilities that they know they will have to accept. The index linking with retail prices hears out the suspicion that I am sure most of them already have. We know, and my hon. Friend the Member for East Lothian (Mr. Home Robertson) has amply illustrated it and proved it this evening, that, inevitably, whether they are Conservative or Labour, local authorities' costs run ahead of the retail prices index. Because of the much narrower tax base which will be used under the poll tax, there will be a much greater impact on the local population. Precious few industrialists are not individual ratepayers, so they will hardly think it a great liberation if, on the one hand, business is cushioned from the increases caused by inflation and, on the other, they have to bear in their domestic rates a disproportionate part of the cost of the formula. This poll tax Bill will be no better news for industry than for the vast majority of our constituents, who will suffer from this grossly unfair and unreasonably regressive measure which has been projected solely as an election gimmick. The scheme will be costly and a bureaucratic nightmare. The consequences will fall just as much on large and small businesses as on the poorest people.

The inviolable iron link to the retail prices index which will protect business ratepayers for ever is only as good as the Minister's promises. I doubt that an industrialist or small business owner in Scotland would believe these promises—having seen the Government's record north of the border during the past six years—any more than earlier promises. This discredited, discreditable empty gimmick has been produced simply to get the Government off the hook. It will bear hardest on the weakest and poorest in the community and will finally marginalise any relevance that the Scottish Conservative party has to the affairs of the country which we represent.

9 pm

Mr. Lang

The deep opposition to the clause expressed by the hon. Member for Hamilton (Mr. Robertson) and other Opposition Members comes rather odd in this debate on a couple of drafting amendments, especially when they had the opportunity to debate their amendment, which would have left out the whole clause. We have the rather curious formula of the Opposition planning to vote against a Government drafting amendment in order to express their support for their rather different amendment. By comparison, the formula which I explained to the House earlier falls into a simpler category. I should like to explain to my hon. Friend the Member for Eastwood (Mr. Stewart) that the change being made under subsection (4) applies the same information which I gave to the House in the context of the formula under subsection (3).

As for the amendment of the hon. Member for East Lothian (Mr. Home Robertson), we went over this ground thoroughly in Committee. The local authority cost index, to give the index its normal title, would not be an acceptable alternative to the general index of retail prices for the purposes of clause 4. The local authority cost index is no more than an informal joint undertaking of the Scottish Office and COSLA. It could not possibly be used as a basis for determining increases in non-domestic rates without first placing the whole operation on a much more formal basis and opening it up to sufficient public scrutiny to ensure that the index would be generally acceptable as a satisfactory basis on which to proceed. The whole process of drawing up the RPI is decided by a committee, the retail prices index advisory committee, which has members representing a wide range of interests, including the CBI, the TUC and Government Departments. This helps to ensure its reliability and general acceptability.

This brings me to another reason for opposing the amendment. The RPI is a broadly based index which is widely acknowledged as a sound measure for assessing the general rate of inflation, and that could not be said of the local authority cost index. It would be far too easy for local authorities to push their costs up in the knowledge that, through the mechanism of the index, non-domestic ratepayers would be bound to meet their share of the costs. My hon. Friend the Member for Eastwood made that point extremely well in warning the House to beware that type of index. This is not to argue that local authorities would take the opportunity to do so, but the point is simply that non-domestic ratepayers would not then have the same statutory protection which we have undertaken to give them.

The hon. Member for East Lothian used the word "irrelevant" to describe the RPI and his hon. Friend the Member for Dunfermline, West (Mr. Douglas) took a similar line. I notice that, in their comments on the proposal, all their concern was with the local authority. When do we ever hear any concern from the Opposition with the business man who has to pay the rates? That is where our starting point is. When we hear of Lothian proposing to increase its rates by 29 per cent. and inflation is under 4 per cent. we can see the need for protection for the business community which exists as a cross between a milch cow and a sitting duck. The only thought that some local authorities give them is when deciding whether to milk or to shoot them, and they end up doing both.

It is necessary to impose a discipline on local authorities. The clause tackles head-on the main weakness in the non-domestic rating system in Scotland. For far too long, businesses have had to put up with the sudden, sharp and often unexpected increases which take place from year to year in their rates demands. Profligate and spendthrift local authorities have been able to make unreasonable impositions on their business communities with complete impunity because business does not have a vote in local elections. [Interruption.] I am replying to the debate. If Labour Members had any concern for the well-being of Scottish industry and commerce, they would give the clause their whole-hearted support. Instead, they have greeted it with a series of ill-informed and irrelevant criticisms which show only too clearly how little genuine concern the Labour party has for Scottish business.

The other day, we saw a report that an American electronics company was contemplating locating in Scotland, but it warned us that the one thing that would put it off would be the return of a Labour Government.

The past system lacked accountability. We have seen wide variations in rates between different authorities that have created business inefficiency and disruption of production costs. The system has been arbitrary and erratic in its impact and has undermined efficiency and competitiveness. It has concealed true costs and undermined the link between the cost of services and the cost to domestic ratepayers. We are determined to introduce a system that will have predictability and perceptibility and will give protection to the business community. In that spirit, I urge the House to support the Government's amendment.

Amendment agreed to.

Amendments made: No. 21, in page 4, leave out from 'rate' to end of line 6.

No. 22, in page 4, leave out lines 16 and 17 and insert— '(c) I is the ratio of the retail prices index for September 1988 to the retail prices index for September 1987.'.

No. 23, in page 4, leave out line 21 and insert—

'M × I × R'.—[Mr. Ancram.]

Amendment proposed: No. 24, in page 4, leave out lines 25 and 26 and insert— '(b) I is the ratio of the retail prices index for September of the immediately preceding year to the retail prices index for September 12 months earlier; and.'.—[Mr. Lang.]

Question put, That the amendment be made :—

The House divided: Ayes 216, Noes 164.

Division No. 108]	[9.05 pm
AYES
Ancram, Michael	Hayhoe, Rt Hon Sir Barney
Ashby, David	Hayward, Robert
Atkins, Robert (South Ribble)	Heathcoat-Amory, David
Baker, Nicholas (Dorset N)	Heddle, John
Baldry, Tony	Henderson, Barry
Best, Keith	Hickmet, Richard
Bevan, David Gilroy	Higgins, Rt Hon Terence L.
Blaker, Rt Hon Sir Peter	Hill, James
Boscawen, Hon Robert	Hind, Kenneth
Bottomley, Mrs Virginia	Hirst, Michael
Brittan, Rt Hon Leon	Hogg, Hon Douglas (Gr'th'm)
Browne, John	Holt, Richard
Buchanan-Smith, Rt Hon A.	Howard, Michael
Budgen, Nick	Howell, Rt Hon D. (G'ldford)
Bulmer, Esmond	Howell, Ralph (Norfolk, N)
Carlisle, John (Luton N)	Hubbard-Miles, Peter
Carttiss, Michael	Irving, Charles
Churchill, W. S.	Jackson, Robert
Clark, Sir W. (Croydon S)	Jenkin, Rt Hon Patrick
Clarke, Rt Hon K. (Rushcliffe)	Jessel, Toby
Colvin, Michael	Jones, Gwilym (Cardiff N)
Conway, Derek	Jones, Robert (Herts W)
Cope, John	Joseph, Rt Hon Sir Keith
Critchley, Julian	Key, Robert
Crouch, David	King, Roger (B'ham N'field)
Dicks, Terry	Knight, Greg (Derby N)
Dorrell, Stephen	Knowles, Michael
Douglas-Hamilton, Lord J.	Knox, David
Durant, Tony	Lamont, Rt Hon Norman
Evennett, David	Lang, Ian
Farr, Sir John	Lawler, Geoffrey
Favell, Anthony	Lawrence, Ivan
Fletcher, Sir Alexander	Lee, John (Pendle)
Fookes, Miss Janet	Leigh, Edward (Gainsbor'gh)
Forman, Nigel	Lennox-Boyd, Hon Mark
Forsyth, Michael (Stirling)	Lewis, Sir Kenneth (Stamf'd)
Forth, Eric	Lilley, Peter
Franks, Cecil	Lloyd, Sir Ian (Havant)
Fraser, Peter (Angus East)	Lloyd, Peter (Fareham)
Freeman, Roger	Lord, Michael
Fry, Peter	Lyell, Nicholas
Gale, Roger	McCrindle, Robert
Galley, Roy	McCurley, Mrs Anna
Gardiner, George (Reigate)	MacGregor, Rt Hon John
Gardner, Sir Edward (Fylde)	MacKay, Andrew (Berkshire)
Glyn, Dr Alan	MacKay, John (Argyll & Bute)
Goodlad, Alastair	Maclean, David John
Gow, Ian	McLoughlin, Patrick
Gower, Sir Raymond	McNair-Wilson, M. (N'bury)
Grant, Sir Anthony	McNair-Wilson, P. (New F'st)
Greenway, Harry	Madel, David
Gregory, Conal	Major, John
Griffiths, Peter (Portsm'th N)	Malins, Humfrey
Ground, Patrick	Malone, Gerald
Grylls, Michael	Marland, Paul
Gummer, Rt Hon John S	Marlow, Antony
Hamilton, Hon A. (Epsom)	Marshall, Michael (Arundel)
Hanley, Jeremy	Mates, Michael
Hannam,John	Mather, Sir Carol
Hargreaves, Kenneth	Maude, Hon Francis
Harvey, Robert	Merchant, Piers
Hawkins, C. (High Peak)	Meyer, Sir Anthony
Hawkins, Sir Paul (N'folk SW)	Mills, Iain (Meriden)

Mills, Sir Peter (West Devon)	Spencer, Derek
Moate, Roger	Spicer, Michael (S Worcs)
Monro, Sir Hector	Stanbrook, Ivor
Morris, M. (N'hampton S)	Stevens, Lewis (Nuneaton)
Moynihan, Hon C.	Stewart, Allan (Eastwood)
Murphy, Christopher	Stewart, Andrew (Sherwood)
Neale, Gerrard	Stewart, Ian (Hertf'dshire N)
Needham, Richard	Sumberg, David
Nelson, Anthony	Tapsell, Sir Peter
Neubert, Michael	Taylor, Teddy (S'end E)
Nicholls, Patrick	Temple-Morris, Peter
Norris, Steven	Terlezki, Stefan
Oppenheim, Rt Hon Mrs S.	Thomas, Rt Hon Peter
Osborn, Sir John	Thompson, Patrick (N'ich N)
Ottaway, Richard	Thorne, Neil (Ilford S)
Page, Sir John (Harrow W)	Thornton, Malcolm
Page, Richard (Herts SW)	Thurnham, Peter
Parkinson, Rt Hon Cecil	Townend, John (Bridlington)
Pawsey, James	Trippier, David
Peacock, Mrs Elizabeth	Trotter, Neville
Percival, Rt Hon Sir Ian	Twinn, Dr Ian
Pollock, Alexander	van Straubenzee, Sir W.
Powley, John	Vaughan, Sir Gerard
Price, Sir David	Waddington, Rt Hon David
Proctor, K. Harvey	Waldegrave, Hon William
Raison, Rt Hon Timothy	Walden, George
Rhodes James, Robert	Walker, Bill (T'side N)
Rhys Williams, Sir Brandon	Waller, Gary
Ridley, Rt Hon Nicholas	Ward, John
Ridsdale, Sir Julian	Wardle, C. (Bexhill)
Rifkind, Rt Hon Malcolm	Watson, John
Roberts, Wyn (Conwy)	Watts, John
Robinson, Mark (N'port W)	Wells, Bowen (Hertford)
Roe, Mrs Marion	Wells, Sir John (Maidstone)
Rost, Peter	Whitfield, John
Rowe, Andrew	Whitney, Raymond
Rumbold, Mrs Angela	Wiggin, Jerry
Sackville, Hon Thomas	Wilkinson, John
Sainsbury, Hon Timothy	Winterton, Mrs Ann
Shaw, Sir Michael (Scarb')	Winterton, Nicholas
Shelton, William (Streatham)	Wolfson, Mark
Shepherd, Colin (Hereford)	Wood, Timothy
Shepherd, Richard (Aldridge)	Yeo, Tim
Shersby, Michael
Skeet, Sir Trevor	Tellers for the Ayes:
Smith, Tim (Beaconsfield)	Mr. David Lightbown and
Speed, Keith	Mr. Michael Portillo.

NOES
Abse, Leo	Clwyd, Mrs Ann
Archer, Rt Hon Peter	Coleman, Donald
Ashdown, Paddy	Conlan, Bernard
Ashley, Rt Hon Jack	Cook, Frank (Stockton North)
Ashton, Joe	Cook, Robin F. (Livingston)
Atkinson, N. (Tottenham)	Corbett, Robin
Bagier, Gordon A. T.	Cox, Thomas (Tooting)
Banks, Tony (Newham NW)	Cunliffe, Lawrence
Barron, Kevin	Davies, Rt Hon Denzil (L'lli)
Beckett, Mrs Margaret	Davis, Terry (B'ham, H'ge H'l)
Bell, Stuart	Deakins, Eric
Benn, Rt Hon Tony	Dewar, Donald
Bennett, A. (Dent'n & Red'sh)	Dixon, Donald
Bermingham, Gerald	Dormand, Jack
Bidwell, Sydney	Douglas, Dick
Blair, Anthony	Duffy, A. E. P.
Boothroyd, Miss Betty	Eadie, Alex
Boyes, Roland	Eastham, Ken
Bray, Dr Jeremy	Evans, John (St. Helens N)
Brown, Gordon (D'f'mline E)	Fatchett, Derek
Brown, Hugh D. (Provan)	Faulds, Andrew
Brown, N. (N'c'tle-u-Tyne E)	Field, Frank (Birkenhead)
Brown, R. (N'c'tle-u-Tyne N)	Fields, T. (L'pool Broad Gn)
Brown, Ron (E'burgh, Leith)	Fisher, Mark
Bruce, Malcolm	Flannery, Martin
Buchan, Norman	Forrester, John
Callaghan, Jim (Heyw'd & M)	Foster, Derek
Campbell-Savours, Dale	Foulkes, George
Canavan, Dennis	Fraser, J. (Norwood)
Clay, Robert	Freeson, Rt Hon Reginald
Clelland, David Gordon	Freud, Clement

George, Bruce	O'Neill, Martin
Gilbert, Rt Hon Dr John	Orme, Rt Hon Stanley
Godman, Dr Norman	Park, George
Golding, Mrs Llin	Parry, Robert
Gourlay, Harry	Patchett, Terry
Hamilton, James (M'well N)	Pike, Peter
Hamilton, W. W. (Fife Central)	Powell, Raymond (Ogmore)
Hancock, Michael	Randall, Stuart
Hardy, Peter	Raynsford, Nick
Harrison, Rt Hon Walter	Redmond, Martin
Hart, Rt Hon Dame Judith	Rees, Rt Hon M. (Leeds S)
Healey, Rt Hon Denis	Richardson, Ms Jo
Heffer, Eric S.	Roberts, Ernest (Hackney N)
Hogg, N. (C'nauld & Kilsyth)	Robertson, George
Holland, Stuart (Vauxhall)	Robinson, G. (Coventry NW)
Home Robertson, John	Rooker, J. W.
Howarth, George (Knowsley, N)	Ross, Ernest (Dundee W)
Howells, Geraint	Ross, Stephen (Isle of Wight)
Hughes, Roy (Newport East)	Rowlands, Ted
Janner, Hon Greville	Sheerman, Barry
Johnston, Sir Russell	Sheldon, Rt Hon R.
Jones, Barry (Alyn & Deeside)	Shields, Mrs Elizabeth
Kaufman, Rt Hon Gerald	Shore, Rt Hon Peter
Kennedy, Charles	Short, Ms Clare (Ladywood)
Kirkwood, Archy	Silkin, Rt Hon J.
Lambie, David	Skinner, Dennis
Lamond, James	Soley, Clive
Leadbitter, Ted	Spearing, Nigel
Leighton, Ronald	Stott, Roger
Lewis, Ron (Carlisle)	Strang, Gavin
Lewis, Terence (Worsley)	Straw, Jack
Litherland, Robert	Thomas, Dafydd (Merioneth)
Livsey, Richard	Thomas, Dr R. (Carmarthen)
Lloyd, Tony (Stretford)	Thompson, J. (Wansbeck)
Lofthouse, Geoffrey	Thorne, Stan (Preston)
Loyden, Edward	Tinn, James
McKay, Allen (Penistone)	Torney, Tom
Maclennan, Robert	Wallace, James
McNamara, Kevin	Wardell, Gareth (Gower)
Madden, Max	Wareing, Robert
Martin, Michael	Weetch, Ken
Mason, Rt Hon Roy	Welsh, Michael
Maxton, John	White, James
Maynard, Miss Joan	Williams, Rt Hon A.
Mikardo, Ian	Wilson, Gordon
Millan, Rt Hon Bruce	Winnick, David
Miller, Dr M. S. (E Kilbride)	Woodall, Alec
Mitchell, Austin (G't Grimsby)	Young, David (Bolton SE)
Morris, Rt Hon A. (W'shawe)
Morris, Rt Hon J. (Aberavon)	Tellers for the Noes:
Nellist, David	Mr. John McWilliam and
Oakes, Rt Hon Gordon	Mr. Frank Haynes.
O'Brien, William

Question accordingly agreed to.

Amendments made: No. 27, in page 4, line 38, after '(a)', insert ' "the base rate" means—

1. (i) the rate determined by that local authority in respect of the year 1988–89 less, in the case of a regional or islands council, such portion of that rate as they have determined to be their public water rate for that year under section 39 of the 1980 Act (which relates to the levying of rates in respect of expenditure on water supply), or
2. (ii) where, before 1st April 1989, the Secretary of State prescribes a base rate in respect of that authority for the purposes of this section, the amount so prescribed;

(b)'.

No. 29, in page 4, line 44, after 'of a', insert 'tenth of a'

No. 30, in page 4 line 45, leave out from 'shall' to the end of line 2 on page 5 and insert 'increase or, as the case may be, reduce the sum to the nearest tenth of a penny.'.—[Mr. Ancram]

Mr. Maxton

I beg to move amendment No. 31, in page 5, line 2, at end insert— '(6A) The non-domestic rate levied by each local authority in respect of lands and heritages specified in subsection (8) below:—

1. (a) shall not exceed one half of the rate which would be leviable apart from the provisions of this subsection; and
2. (b) may be such lesser amount as the local authority may determine.

(6B) The lands and heritages to which subsection (7) applies shall be those occupied by a club, society or other organisation wholly or mainly for the purposes of sport or physical recreation, as the said purposes may from time to time be defined by the Secretary of State for Scotland (acting on the advice of the Scottish Sports Council and the Association of Local Sports Council) where any surplus of funds is applied exclusively to the improvement of its facilities or is otherwise applied for the furtherance of the aforesaid purpose except that any area of the club, society or other organisation that is used as a licensed bar or restaurant shall pay rates on that area, although in deciding the rate the local authority may take account of the net profit made by such bar or restaurant in any one financial year.'.

Mr. Speaker

With this it will be convenient to take amendment No. 178, in page 5, line 2, at end insert— '(6A) Before determining a non-domestic rate under this section, a local authority shall, in accordance with such procedure as the Secretary of State may direct, make provision for relief from rating for any lands or heritage occupied by a club, society or other organisation, not established or conducted for profit, and which are wholly or mainly used for the purposes of sport or physical recreation. (6B) The Secretary of State may by statutory instrument define any term necessary for the purposes of subsection (6A) above.'.

Mr. Maxton

As this is a debate on sport, I am sure that all hon. Members, particularly Scottish Members, will be delighted to know that Dundee United is beating Barcelona 1–0—[Interruption.] It is typical that even when one tries to make a reasonable cross-party comment the Secretary of State seems to find it funny.

This is a debate that has aroused some interest and therefore I intend to be brief to allow other hon. Members to participate. What this new clause would do is essentially what Strathclyde regional council, of its own volition, has decided to do, which is to give 50 per cent. rate relief to clubs with licensed bars and premises for those parts of the ground and premises which are not licensed and do not have a restaurant. However, the local authority will take into account the turnover and profit made in the bars when deciding the rates that will be paid.

This is a sensible and moderate attempt to solve problems faced by sports clubs. It is not necessary to reiterate the problems that sports clubs have faced. However, there are many sports clubs in Scotland, especially those with licensed bars, which are finding it incredibly difficult to pay their rates bills. As a result, some are in very serious trouble.

We attempted to do something about that in Committee. I believe that the amendment tabled by the hon. Member for Strathkelvin and Bearsden (Mr. Hirst) and his hon. Friends is far removed from the hon. Gentleman's very brave words prior to the debate in Committee. He suggested then that sports clubs should be taken out of rating altogether. However, he now suggests the status quo. The amendment represents the status quo with the exception only of the word "shall". Under the existing position : A rating authority can grant relief of rates to organisations whose property is occupied for the purposes of a club, society, or other organisation not conducted for profit, which are wholly or mainly used for purposes of recreation.

Mr. Michael Forsyth

Will the hon. Gentleman give way?

Mr. Maxton

No, I will not give way as this is a very short debate and I want to get on.

After all his huffing and puffing and the publicity he received, the hon. Member for Strathkelvin and Bearsden has tabled an amendment which reflects the existing practice in every local authority. It does not take us—

Mr. Forsyth

Will the hon. Gentleman give way now?

Mr. Maxton

The amendment does not take us one step forward. However, amendment No. 31, if accepted by the House, will give genuine relief to sports clubs that require such relief.

It is very important for sports clubs that the Minister, if he cannot accept the amendment, at least makes it clear that he will move some form of amendment in another place. The hon. Member for Strathkelvin and Bearsden tried to withdraw his amendment in Committee on the basis of a supposed promise from the Minister who said that he would consider the matter carefully. There are no Government amendments on the Amendment Paper today covering that matter and that must come as a bit of a shock and a surprise to the hon. Gentleman.

Mr. Forsyth

Give way.

Mr. Maxton

I will not give way. I hope that the Minister will seriously consider the amendment and support it.

Sir Hector Monro

I hope that tonight we shall get somewhere on this issue of mandatory derating of sports grounds. I have to remind myself that on 19 November 1966 I moved an amendment for 50 per cent. mandatory derating in the then Finance Bill which was unfortunately opposed by the Labour Government of the time. Tonight I hope that we shall make progress, bearing in mind that we went into this matter in great detail during proceedings on the Rating and Valuation (Amendment) (Scotland) Act in March 1984 during which two amendments to do roughly what we are trying to do today were defeated by the casting vote of the Chairman in Committee.

We need to make it clear that tonight we are dealing with derating of sports clubs as opposed to the important issue that we dealt with earlier in the Rating and Valuation (Amendment) (Scotland) Act 1984 which dealt with the very unfair valuation affecting Scottish sports clubs generally, —clubs such as Rangers and Celtic, or the Hawick and Gala rugby clubs — as opposed to the problems in England and Wales.

Mr. Bill Walker

My hon. Friend mentioned different football clubs. Will he also mention Dundee United, which is doing so well tonight?

Sir Hector Monro

Yes, of course. We have already cheered the good news, and we hope that it will hold its position until the end of the match.

This issue is distinct from the high valuations in Scotland compared with those in England and Wales, which we hope will be resolved sooner or later, especially if there is a revaluation in England. But if we accept, as the Government must, the principle of mandatory derating of sports clubs—it has happened in Northern Ireland, with the distinction that licensed premises were considered to be separate from sports facilities — for the limited amount that it would cost nationally, we should go ahead with it in Scotland. I welcome what has been done in Strathclyde and Fife. Those two large authorities have taken the important step. Let us encourage the other regions to do the same. The easiest way to do that would be for the Government to introduce an amendment in another place to provide for mandatory derating.

We have heard the arguments of the Sports Council and the Central Council for Physical Recreation. The Government must give a lead to show the many volunteers in sports organisations in Scotland that we shall take this important step forward to resolve the problem of rates on Scottish sport clubs, especially the unlicensed parts of those sports clubs. Sports officials will look to the result of this debate with great anxiety, so I hope that the Government will announce their acceptance of the principle.

Mr. David Lambie (Cunninghame, South)

I have been looking forward to this debate since the debate on the Rate Support Grant (Scotland) Order a fortnight ago, when I told the hon. Member for Strathkelvin and Bearsden (Mr. Hirst) that he had been conned by the Government into not pushing his amendment in Committee. I have been proved correct. I was disappointed to hear the hon. Member for Dumfries (Sir H. Monro) say that the Government should give a lead in another place. This is the time for them to give the lead that they did not give in Committee. Conservative Members assured us that the Government would give a lead on Report, but now the hon. Member for Dumfries is saying that they will give a lead in another place, where Members of Parliament have no say. Unless they give a lead tonight, the Opposition should support amendment No. 31.

I am one of those who believe that, at a time when the Government are cutting support to local authorities so that they cannot provide the sports facilities that they used to provide and we must now depend upon amateur sports clubs, the latter must be given concessions so that they can provide sporting facilities. I believe that no amateur sports club should be on the valuation roll, but I cannot even convince my side of that tonight, so I shall support amendment No. 31, which provides for mandatory 50 per cent. relief from rates.

I do not understand amendment No. 178, and I hope that the Secretary of State will tell us what it means. But I trust that he will not try to con the Opposition as he conned his hon. Friends into withdrawing their amendments in Committee. The hon. Members for Strathkelvin and Bearsden, for Dumfries, for Eastwood (Mr. Stewart) and for Stirling (Mr. Forsyth), who has had an Adjournment debate on the subject, should stand up and be counted tonight. This is an opportunity for them to stand up and, for the first time, to vote against the Government. If they do not do that, the people and amateur sports clubs in Scotland will recognise that they have been conned, just as other hon. Members have been conned by the Government Front Bench. Therefore, I ask them to stand up and be counted and vote for the sports clubs of Scotland. If they do so, we shall get support and the 50 per cent. mandatory rate. If they do not want to do that, they will go down in history as the people who killed the amateur sports clubs in Scotland and they will never be forgiven by the Scottish people.

9.30 pm

Mr. Rifkind

It might assist the House if I were to intervene at this stage to state the Government's position on this important matter.

My hon. Friend the Under-Secretary of State dealt with this matter in Committee and, having heard lengthy discussions, offered, without commitment, to take the problem away for consideration. The Government have been giving serious consideration to whether, and if so in what way, it would be appropriate to help to solve the real problems that sports clubs face in Scotland because of factors to which hon. Members on both sides of the House have drawn attention. We have considered various possibilities and have concluded that mandatory relief for sports clubs would not be the best solution.

Mr. Lambie

Why not?

Mr. Rifkind

I am about to explain.

The amendment which the hon. Member for Glasgow, Cathcart (Mr. Maxton) has proposed would break up the framework in the 1962 Act, a framework which clearly distinguishes between charities which are to have 50 per cent. mandatory relief and a wide range of non-profit-making bodies with worthy purposes, including recreation, in respect of which local authorities are to have complete discretion as to what percentage of relief — from zero to 100 per cent.—they should give. Charities apart, the idea of local discretion here is right and we should not seek to substitute some central view. However carefully we framed any legislation, we should be left with problems in defining centrally what category of bodies should get the relief. Those who framed the 1962 Act were right to respect the place of local discretion in making the dificult judgments that are needed. We should not depart from their basic thinking now.

However, I am determined to help sports clubs, and I propose to do so in the following way. I propose to ensure that local authorities are not deterred from due exercise of their discretion by any thought that if they grant relief to a particular club they lose income, which they then have to recover from their other ratepayers, or, after 1989, from community charge payers. If they decide to grant relief, they should be compensated by an addition to their grant. The new grant system for which clause 25 provides will enable me to give local authorities an important new reassurance in this connection. Grant distribution under the new system will take into account differences in expenditure need and in the amounts of non-domestic rate income.

I intend to measure non-domestic rate income net of reliefs given by local authorities under the 1962 Act. If that is done, giving more relief will directly increase the amount of grant that an authority gets.

As a result, after 1989 all concerned with the welfare of sports clubs, and, indeed, the local authorities, can he satisfied that if a local authority uses its discretion it will not lose a penny of its income.

But I go further. I am keen that the practical effect of the approach I have outlined should be available sooner. I have concluded that my approach will, subject to one point, make it possible to achieve improvement in the treatment of relief by 1988—a date earlier than anything that has been canvassed by Opposition Members either in Committee or this evening. In respect of 1988–89, the benefit is rather more complicated to achieve because of the provisions governing the present rate support grant system. At present some authorities, those which in any year qualify for the resources element of the grant, have in practice no financial disincentive to grant relief. But this depends on a rather technical point. What I want to do is to ensure that we can provide for a system in 1988–89 that is as fair, predictable and universal as the system I have described for 1989–90. Therefore I will arrange for an amendment to be made in another place to this Bill so as to bring the existing grant provisions broadly into line with the post-1989 arrangements.

It may help the House if I describe some details of how the arrangements for relief will work. Responsibility for the granting of relief will remain with the local authorities. They are best placed to ensure that it is only given to bona fide sports clubs. Each autumn, the rating authorities will be asked for details of commitments made for the following year to give relief to sports clubs. Since such relief can be terminated only from the end of a financial year after 12 months' notice there will be no risk of any authority taking the grant without giving relief. Relief given to sports clubs will be subject to scrutiny by an authority's auditors in the normal way. These proposals and the legislative amendment that we shall introduce in another place will remove the last disincentive.

Mr. Dewar

The Secretary of State will understand that we shall want to read what he has said because it is complicated to take in on first hearing. As I understand it, I welcome what he has said and I recognise that it is an important step forward. I accept this point about the voluntary principle and the judgment exercised by local government.

The Secretary of State said that there will be an amendment in another place for what may be described as a bridging provision. Is there any need for legislation? Should there not be some statutory mark of the general scheme that he announced in the first place? Does that not require some legislation? Will he confirm that the practical effect is that if the discretion is properly exercised with all the safeguards of auditors' scrutiny and so on, the rate income forgone will be made up completely by the Scottish Office? Will he confirm that there will not be some ill-defined addition to grant and that the total shortfall will be made up specifically?

Mr. Rifkind

I thank the hon. Gentleman for his welcome and I appreciate that he will wish to study the details before giving a detailed response. I genuinely welcome his response. There is a need to make a relatively minor amendment in another place to enable these new provisions to be available next year. However, after 1989, when revenue support grant replaces rate support grant, it is possible under the existing terms of clause 25 for me to operate by dealing with the matter in the way that I have explained without further legislative amendment.

I can confirm that the effect of these proposals will be that any individual local authority which may lose revenue which it would otherwise have received from a sports club but for the relief that it will provide will receive additional rate support grant commensurate with the revenue forgone.

Mr. Kirkwood

On first hearing I echo the welcome that the hon. Member for Glasgow, Garscadden (Mr. Dewar) has given the proposal. Will there be any difficulty for a club, such as the Hawick rugby club, which has a substantial licensed element to its income and premises? Will the local authority still be able to exercise discretion and take an objective judgment over the whole position of the recreational aspects vis-a-vis the licensing aspects of the club when considering granting discretionary relief?

Mr. Rifkind

Discretion will remain with local authorities, as it does at present. The only change will be that if a good proportion of authorities were to exercise that relief, they would lose revenue from clubs, which would not result in any improvement in their grant from central Government. That is the only situation that would change. Most hon. Members would not see it as particularly desirable to give relief for the licensed premises of a sports club. However, I emphasise that that is a matter for the local authority to decide and to exercise its discretion if it thinks that relief is appropriate.

Mr. Maclennan

Is the Secretary of State saying that if revenue is forgone by the local authority as a result of giving relief, it is his present intention that that should be made good by an adjustment in the rate support grant? If that is the case, can he tell us what assurance there is that his successor will continue such a concession? If the concession is purely discretionary and not written into statute, what assurance can sports clubs have that the concession which the Secretary of State alleges he has made will be a lasting one and not merely put forward by him at a convenient time from the point of view of an election?

Mr. Rifkind

As my hon. Friends have said, the best assurance would be to continue to vote for the Government who introduced the measure. I appreciate that that might not be the answer that the hon. Gentleman wished me to give. Obviously, if any future Government wished to change the policy, they could do so by introducing legislation or by asking Parliament to change the legislation as easily as by changing it in any other way. The Government are introducing this new change and we firmly intend to implement it as long as we have the power to do so.

Mr. Foulkes

The Secretary of State says that the money a local authority loses will be added to the rate support grant settlement. How will the local authority know that the money has been added to the RSG settlement if it did not know what the original RSG settlement was to be?

Mr. Rifkind

I explained earlier the way in which the system will operate, that each autumn the rating authorities will be asked for details of commitments made for the following year to give relief to sports clubs. Since such relief can be terminated only from the end of a financial year and after 12 months' notice, there will be no risk of any authority taking grant and not giving relief. [Interruption.] Obviously the House is in a curious mood because hon. Members have just heard announcements about new proposals.

Mr. Foulkes

Will the Secretary of State give way? We are suspicious of the right hon. and learned Gentleman.

Mr. Rifkind

I am anxious to give way, but I know that if I remain at the Dispatch Box for much longer there will be no opportunity for other hon. Members to take part in the debate.

Mr. Dewar

My hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) has raised an important point which I should like to rephrase in order to get at the point by a different route. In the rate support grant settlements, there are clearly specific grants. If they go up, it is in effect a redistribution, while the total remains the same. One is merely reducing expenditure in other areas in order to make a concession. Is this new money and how can the local authorities know that it is new money and not simply money taken from another pocket?

Mr. Rifkind

The position is simple. When each year Government decide on the aggregate of rate support grant, they will take into account all the circumstances and they will have to include—[Interruption.] This is not some new principle. It is exactly the way in which rate support grant is determined by every Government, and that is the proper way to do it. I have told the House that no local authority will lose a single penny by a decision to grant relief of the kind that we have outlined. These proposals and the legislative amendment that we will introduce in another place—

Mr. Millan

The Secretary of State has not answered the point made by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar). At the moment, specific grants are deducted from the aggregate RSG and the net amount is then distributed as RSG. Will that happen in this case?

Mr. Rifkind

It will not be done by means of a specific grant. It will be done through the needs element next year. With regard to the new system, it will be done under clause 25. [Interruption.] That is what I said in my earlier speech.

The proposals and the legislative amendment that we will introduce in another place will remove the last disincentive any local authority may have had to withhold relief from sports clubs. I am happy to commend them to the House.

9.45 pm

Mr. Michael J. Martin (Glasgow, Springburn)

At the end of the day I do not believe there will be more money for local authorities to support sports clubs; the global sum will be the same. However, I am happy that the discretion will be with the local authorities.

In my constituency there are some sports clubs which do excellent work, but there are others that are, frankly, only an excuse to open licensed premises. They are an extension of a pub. In my constituency there is a club, the Ranza angling club, and I do not know anyone in that club who owns a fishing rod. It exists for people to have a drink. I have no objection to people going to licensed premises, but I object to public money going into such a club. I am glad that the local authority rather than the Secretary of State will have the discretion about funding such clubs.

Mr. Ernie Ross

rose—

Mr. Martin

No, I will not give way.

Mr. Home Robertson

rose—

Mr. Martin

No, I will not give way. If the Front Bench had not used so much time, perhaps I would be able to give way.

There is an excellent junior sports club in my constituency, St. Roch's Junior Football Club. That club handed over the running of its licensed premises to a committee. The licensed premises were supposed to make some money towards the upkeep of the grounds. However, the grounds and the club itself are still as poor as church mice. Thousands of pounds in takings disappeared from the face of the earth, and there was no benefit to the sports club.

I cannot envisage a situation wherein a sports club, run in such a fashion, should receive any support from the local authority. It is all very well for the new clause to state that it excludes licensed premises. However, anyone who knows anything about local bowling clubs will be aware that, at the annual general meetings, there is one faction which wants better facilities for the sports club and wishes to raise the price of drinks on the licensed premises, and another faction interested in the licensed premises and wishes to keep the price of drinks down. I hope that when support is given to sports clubs care is taken to ensure that they are bona fide sports clubs.

Sir Russell Johnston

rose—

Mr. Martin

No, I am sorry, I will not give way.

I hope that those members of sports clubs who may read the reports of this debate will take steps to try to allow young unemployed people to enjoy the use of their facilities at off-peak times. There are too many bowling clubs, golf clubs or squash clubs — of which hon. Members are supportive— that are closed shops. Each year they put up their annual fees to ensure that only an elite may join. If we are to give subsidies, we should ensure that the clubs have a policy that allows those who are less fortunate than ourselves the use of such facilities.

Mr. Michael Hirst (Strathkelvin and Bearsden)

It is probably rather a good thing that you have chosen to call me at this stage, Mr. Speaker, after, rather than before, my right hon. and learned Friend the Secretary of State has made his announcement. I am happy to be able to say that I unreservedly welcome his statement. I am certain that it is fully supported by my colleagues. The disarray and silence on the Opposition Benches is significant. The hon. Member for Glasgow, Cathcart (Mr. Maxton) must be regretting some of his comments. It is a pity that he did not wait to hear what my right hon. and learned Friend had to say.

Mr. Ernie Ross

I do not want to delay the House for more than a couple of seconds, but it is appropriate that we are talking about sports grounds when Dundee United has just successfully beaten Barcelona 1–0. There will be an early-day motion and I invite right hon. and hon. Members to sign it.

Mr. Hirst

Probably the only voice of accord this evening will be welcoming that result. I have no doubt that the hon. Member for Dundee, West (Mr. Ross) will be able to have that recorded in his local newspaper.

I am glad that my right hon. and learned Friend made this announcement tonight. It is the result of sustained pressure from Government Back Benchers. In Committee, we had some hard words from those such as the hon. Member for Cathcart. As I do not think that he will have a chance to participate, I pay warm tribute to my hon. Friend the Member for Stirling (Mr. Forsyth) who, in an Adjournment debate and since, has, with his colleagues on this side of the House, championed the cause of amateur sports clubs in Scotland. He has at last achieved the justice that we have always sought.

The announcement underlines the importance that the Government attach to supporting the efforts of amateur sporting clubs in Scotland. Sadly, in recent years, because of high rates bills, these clubs have had to spend more time fund-raising than coaching youngsters in the essentials of their sport. The hon. Member for Kilmarnock and Loudoun (Mr. McKelvey) is not with us. I recognise the representations that he made on behalf of the amateur boxing clubs in his part of the world, clubs whose future was threatened by the size of their rates bill.

The hon. Member for Cathcart will remember that throughout the comments that I made in Committee I argued for the principle of discretionary relief. He was the first to tell me that rates relief should not be handed out to the Royal and Ancient at St. Andrews, to Muirfield or to some other prosperous golf club.

Mr. Maxton

No.

Mr. Hirst

Yes. The hon. Gentleman was the first to say that the result of my amendments in Committee would be to hand out money to those who did not properly deserve it. Therefore, I am grateful to my right hon. and learned Friend the Secretary of State for arranging a scheme that will ensure that the local authority will be able to grant relief, on a discretionary basis, to clubs that properly deserve it.

Sir Russell Johnston

I am grateful to the hon. Gentleman for giving way. I know that he has been most anxious, as have many hon. Members, to secure an effective scheme. However, we are worried about whether the relief scheme that the Secretary of State has offered, because it is not specific, and is variable within the rate support grant formula, will give local authorities the assurance and confidence that we seek.

Mr. Hirst

I do not know whether the hon. Gentleman listened to my right hon. and learned Friend's speech as I did. As I understand it, the local authority would not qualify for relief if it did not make money available to amateur sports clubs. If I am wrong I will give way to my right hon. and learned Friend so that he can correct me. In other words, if the relief is not granted to sports grounds local authorities will not qualify for the compensatory amount.

We must pay tribute to the sustained campaign by the amateur sports clubs in Scotland, which were the first to identify the problem, and which continuously drew the attention of hon. Members to the need to relieve the rating burden because in many instances it threatened the future of their clubs.

This is a thoroughly welcome statement. I am particularly grateful to my hon. Friend the Under-Secretary of State for Scotland who, when in Committee I moved amendments, undertook to take them away, consider them and, if possible, bring back some sort of scheme on Report. When he did not do so he was vilified. He has been the subject of abuse from Opposition Members, but tonight we have seen that Conservative Members care for amateur sports clubs in Scotland.

Mr. Wilson

Like many Opposition Members, I welcome the relief that has been given to the hard-pressed amateur sports clubs, many of which were verging on bankruptcy and some of which are now having to sell land to keep going, land which could have been used for sporting purposes. Like many Opposition Members—although we do not like looking a gift horse in the mouth —we begin to wonder where the cash is coming from. The sports clubs have won, but I am not sure that the local authorities have, because it may be that in making up his budget the Secretary of State will take some cash off various things before making adjustments. If the new money is coming from the Treasury, I shall be delighted to see it.

Can I point out to the Secretary of State that this is just one battle in the war? One of the main causes of contention in the commercial sector is the huge imbalance in valuations between England and Scotland. This subject was hinted at earlier. The Secretary of State, taking the relief route, has not addressed himself to the problems which arise from valuation.

It was my intention, had more time been available, to refer the Secretary of State to Armour on Valuation, a major tome on the subject, which suggests a route for dealing with the problems of those who run the football grounds. We have heard the excellent news from the hon. Member for Dundee, West (Mr. Ross) of Dundee United winning, but the rates bill on Tannardice park, Dens park, Ibrox or Parkhead is heavy compared with other facilities in England. Therefore, the Government cannot rest on their laurels. They must consider valuation. Having said that, I thank the Secretary of State for whatever relief has been given on this occasion.

Mr. Maxton

Any relief for the sports clubs is welcome. My initial response to the statement of the Secretary of State — which was cleverly worded — was one of welcome. But having listened to the questions that he answered from some of my hon. Friends I now have several grave reservations as to whether the local authorities will ever see the money that he is prepared to give them.

Did he consult the local authorities and do they approve of the scheme? The Secretary of State was careful to say that he is removing the disincentives to giving relief, but he did not say that he was giving the local authorities any incentives to grant relief.

What the Secretary of State has done will be welcomed by the sports clubs, but I am not convinced that it will be welcomed by the local authorities.

We wish to look carefully at the scheme. We shall not make a judgment on it now. We shall return to it in another place. We do not believe that the Secretary of State, having looked at the document, will give the local authorities the money. We want to look at it, and we shall return to it in another place.

Mr. Rifkind

Will the hon. Gentleman give way?

Mr. Maxton

If the Secretary of State will allow me, I should like to finish what I am saying. While we retain reservations about what the Secretary of State is doing, we do not believe that it would be appropriate to push my amendment to a vote. Therefore, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.