Local Government and Housing Bill (Hansard, 14 June 1989)

Mr. Bruce
I would like the Minister to explain clearly how the uniform business rate will apply. If it is likely to lead to losers in areas such as rural Grampian, the Borders and the Highlands and Islands, I hope that he will produce other measures to compensate for that. Those are important points. I am sure that the Minister is well aware that businesses in those areas are extremely concerned about the proposals and that the Government have so far failed to meet those concerns.

§ Mr. Archy Kirkwood (Roxburgh and Berwickshire)
This is an important debate. I can see some quizzical looks coming from the Treasury Bench. I do not intend to speak for more than a few moments, but I want to continue with the point my hon. Friend the Member for Gordon (Mr. Bruce) raised. It is important that those of us who represent areas similar to the Minister's own are given a clear statement by him.
I detected a note of dissent from the Minister when my hon. Friend the Member for Gordon said that currently low-rated rural areas, such as his and my areas, will suffer from the introduction of the new system. I noticed the Minister strike a note of dissent by vigorously shaking his head. If he is of that view, I should be grateful if, when he brings this short debate to a conclusion, he would spell out why he thinks that we are wrong in taking that view.
I have talked widely to people in my own area of the Borders. They cannot see how they can be financially advantaged by the new system, which I appreciate and, for reasons I stated earlier, am prepared to support this evening. It is important that the Minister gives time to these technical matters. We are looking some distance into the future, so it is important that the Government take every opportunity to spell out the proposals.
I have some additional questions. If, in the course of the revaluations in 1990 and 1995, there are big shifts of the non-domestic rate burden between the categories, whether industrial, commercial, offices and shops or factories, that mean there are much heavier burdens on some sectors within those categories, will the Government consider bringing in some relief mechanism? They undertook to do so and I was in favour of the idea. Indeed, I suggested it in 1985, when the last revaluation took place. Will the Government at least keep that option open, as it appears that there are sectors that will be severely prejudiced when the time comes.
I may have missed this point earlier. I am not trying to be clever, but I thought that the Minister said casually that he thought that the two systems of rating and valuation had almost been reconciled. He seemed to be quite satisfied that that would produce no problems. I should be surprised if that were the case, and I should like to hear what evidence the Minister has. Is he prepared to publish the extent to which that reconciliation has been achieved?
1009 There are significant differences between the English and Scottish systems. One is administered and implemented by the Inland Revenue and the other by rating and valuation offices. There is a wide gap there. Some of us fear that, if that reconciliation is not achieved harmoniously and properly and in a considered way, problems will result. Therefore, I hope that the Minister of State will take a moment or two to make sure that some of those real questions and worries are assuaged. I agree with the hon. Member for Clydebank and Milngavie (Mr. Worthington) that this is an important issue and I hope that some of the worries expressed in this short debate can be settled.

§ Mr. Lang
This has been a valuable debate and it is certainly a very important debate for Scotland. It is worthy of comment that the Scottish National party has not thought fit to be present on this important occasion.
I welcome the grudging support and acceptance for our proposals that has been given by the Labour party—although the hon. Member for Glasgow, Cathcart (Mr. Maxton) complained that we showed a lack of respect in bringing forward this measure at the tail end of this Bill. I suspect that he would like us to put it back for another year. The pretence that the Labour party supports this measure and that it has worked for such harmonisation over a period is absolute nonsense.
I took the opportunity to look up the Hansard of the Committee stage of the Abolition of Domestic Rates Etc. (Scotland) Act 1987. The hon. Member for Cathcart then stated: There has been a swing of opinion among Scottish businesses. They increasingly appreciate that local government expenditure is one of their major sources of income. Cuts in rates and Government expenditure make as many businesses less viable and drive as many of them to the wall as increasing their rates does."—[Official Report, First Scottish Standing Committee: 20 January 1987, c. 438.] That is the kind of out-of-touch, self-deceiving approach that the hon. Member for Cathcart demonstrated in that Committee. He said that reform was not needed and that it would not happen. We believe that it was needed, and we have made it happen.
The hon. Member for Cathcart has asked me about the amount of assistance from central Government. I made it clear earlier that the assistance will come substantially from the Government, but that we shall expect a modest contribution from the local authorities. Obviously, the details cannot be announced until the autumn. If I point out that in broad terms we are talking about £250 million as the estimated figure to achieve harmony over a period of five or six years and if I say that local authorities spend over £4.5 billion per year, the matter can easily be seen in perspective.

§ Mr. Maxton
That does not answer the question. Will the Minister say how much of that £250 million will come from the Exchequer, and how much will have to come from the local authorities?

§ Mr. Lang
I have already told the hon. Gentleman, both in my opening speech and just now, that the details of the apportionment will be announced in the autumn in the normal way. It would be quite wrong to announce that in advance—

§ Mr. Worthington
rose—

§ Mr. Lang
No, I shall not give way.
1010 I have said that the contribution requested from local authorities will be modest.
The hon. Member for Cathcart also asked me about the position of local authorities that have to make a substantial adjustment while others may be unaffected, because he expected that they would be below the common business rate that we are seeking to achieve. The hon. Member for Gordon also raised that point and asked about winners and losers. I expect that all local authorities will find that their rates are reduced as a result of this measure, with the exception of Orkney and Shetland which I would expect to be the only ones below the common rate.
In answer to the specific points about Orkney and Shetland, we have always recognised that a safety net and grant will have to continue to these islands for a long time. We recognise also their policy to repay debt by 1992. Their grant settlement for this year allowed for and recognised that. We intend to continue to take a sensitive approach to the special circumstances of Orkney and Shetland.
It is natural that, in the apportionment of the criteria that are applied to local authorities when adjusting—a point raised by the hon. Member for Gordon—the higher spenders will be expected to achieve the highest reductions. They are the ones with the most scope for saving, but they are also the ones that are likely to receive larger sums in assistance. Nobody can be in any doubt about the capacity for making modest savings who reflects that the Accounts Commission recently identified a possible saving of £20 million from the school janitor services alone.
I take exception to the claim by the hon. Member for Gordon that Grampian region has been clobbered for the benefit of Strathclyde in the revenue distribution grant for this year. Strathclyde's revenue grant increased by 7. per cent., while Grampian's increased by 14.6 per cent.— exactly double.
This is an important measure, which will he of considerable assistance to the business community in Scotland, which will certainly not have been taken in by Labour's protestations. The Labour party did nothing for the business community when it was in office, except through its local authority control, to pile up rate burdens upon it. We have found the solution to its problem. We have announced our plans for implementing it. We shall be bringing it in on the same time scale as the adjustment to the uniform business rate in England. I believe that it will he of considerable advantage to business in Scotland.