HC Deb 24 February 1988 vol 128 cc283-5
3. Mr. Worthington

To ask the Secretary of State for Scotland what estimates he has of the effect on the percentage increase in domestic rates in Scotland in 1988–89 of restricting the non-domestic rates increase to the annual inflation rate.

The Minister of State, Scottish Office (Mr. Ian Lang)

Non-domestic rates will not be indexed until domestic rates are abolished in 1989–90. Therefore, no such estimates have been made.

Mr. Worthington

The Minister's answer does not surprise me. Roughly translated, it means that he cannot be bothered to work it out. Is the Minister aware that his attitude of studied indifference to the consequence of his policy resembles that of Marie Antoinette, because, in effect, he is saying, "Let them eat cake"—[Interruption.]

Mr. Speaker

Order. Will the hon. Gentleman ask his question?

Mr. Worthington

Does the Minister agree that in 1987–88 the average rate increase for Scotland was 13 per cent., and that if a poll tax had been in force and a business rate had been indexed at 4 per cent., the average poll tax increase across Scotland would have been 25 per cent.?

Mr. Lang

I am anxious to help the hon. Gentleman, although it is a hypothetical and artificial calculation. If the new system were in place and if Strathclyde were to peg expenditure and increase the non-domestic rate by the rate of inflation, it would be able to reduce the community charge by about 5 per cent.

Sir Hector Monro

Does my hon. Friend agree that the Opposition and the Convention of Scottish Local Authorities have created a scurrilous campaign on the community charge and its effects on the non-domestic rate? Will he point out to the Opposition that the non-domestic rate, tied to a rate of increased inflation, will be of immense advantage to businesses in Scotland, because they can plan ahead knowing the maximum rate increase? That will be a tremendous advantage to the industrial future of Scotland.

Mr. Lang

My hon. Friend is absolutely right. In the current year non-domestic rates rose by 15 per cent. when inflation was at about 4 per cent. That illustrates the extra burden that the non-domestic sector has had to bear. It is important to keep down non-domestic rates, in order to preserve jobs.

Mr. Andrew Welsh

Will the Government impose the uniform business rate system throughout the United Kingdom in 1990, or will it be applied only to Scotland as most people suppose? Is the Minister aware that the present unfair disadvantage to Scottish businesses through the rating system in commercial and financial terms compared with England will be mild compared with the problems posed for Scottish businesses if the UBR is implemented only in Scotland and not throughout the United Kingdom?

Mr. Lang

The hon. Gentleman has got it the wrong way round. The uniform business rate is coming in south of the border in 1990. Until we are able to harmonise the practice and the law on valuation between England and Wales and Scotland, it will be impossible to contemplate any move towards a national United Kingdom rate. In the meantime, index-linking gives excellent protection to the non-domestic sector.

Mr. Allan Stewart

Does my hon. Friend agree that in a year when the Government are increasing aggregate Exchequer grant by more than 8 per cent. there is no justification for any local authority increasing the rate above the rate of inflation? My hon. Friend said that there were considerable advantages to business men from index-linking. Will he comment on the rumour that the discussions between the Scottish Assessors' Association and the Inland Revenue valuers—[Interruption.]

Mr. Speaker

Order. I cannot hear what the hon. Member is saying.

Mr. Stewart

Will my hon. Friend comment on the rumour that the talks between the Scottish Assessors' Association and the Inland Revenue valuers are not progressing without difficulties? Does he agree that it is essential that those talks should be completed before revaluation north and south of the border in 1990?

Mr. Lang

My hon. Friend is alsolutely right about the 1988–89 RSG settlement. There was an increase of 8.2 per cent., which was well above the rate of inflation. It was based on local authorities' own budgets for 1987–88, inflation and allowances for other factors. The talks between the Scottish Assessors' Association and the Inland Revenue are making progress, but the issues on which they are engaged are complex and it would be a mistake to rush the talks.

Mr. Maxton

Following the question of the hon. Member for Angus, East (Mr. Welsh), what assessment have the Government made of the damage that will be done to Scottish industry by a uniform business rate operating in England and Wales for several years before it operates in Scotland? When they finally introduce a scheme for Scotland, will it be linked into the United Kingdom scheme, so that there is one United Kingdom scheme and one uniform business rate across the whole United Kingdom, or will it be a separate Scottish UBR?

Mr. Lang

A separate Scottish UBR is not part of our programme. It is impossible to make firm estimates of the effect of what goes on south of the border until after the 1990 revaluation. It is important that local authorities should control their expenditure because high and growing local authority expenditure has greatly damaged the business sector in the past.