HC Deb 13 January 1994 vol 235 cc404-24
Mr. Henderson

I beg to move amendment No. 4, in page 2, line 19, at end insert— '(2) Before making any regulations under section 58 of the 1988 Act in relation to the financial year beginning in 1995 and to subsequent financial years, the Secretary of State shall consult persons or bodies appearing to him to be representative of persons subject to non-domestic rates about the effects of the compilation of new local non-domestic rating lists on hereditaments in each of the following categories—

  1. (a) factories;
  2. (b) offices;
  3. (c) shops;
  4. (d) warehouses; and
  5. (e) other hereditaments.'.

The Chairman

With this it will be convenient to take amendment No. 5, in page 2, line 19, at end insert— '(3) Before making any regulations under section 58 of the 1988 Act in relation to the financial year beginning in 1995 and subsequent financial years, the Secretary of State shall consult persons or bodies appearing to him to be representative of persons subject to non-domestic rates and those local authorities as appear to him to be concerned about the effects of the compilation of a new local non-domestic rating list on the local economy in each of the regions of England set out below and in Wales. For the purposes of this section the regions of England are the standard economic planning regions, namely

  1. (a) the Northern region;
  2. (b) the North West region;
  3. (c) the Yorkshire and Humberside region;
  4. (d) the West Midlands region;
  5. (e) the East Midlands region;
  6. (f) East Anglia;
  7. (g) London;
  8. (h) the South East region, excluding London; and
  9. (i) the South West region.'.

Mr. Henderson

I am always pleased, Mr. Morris, to serve under your chairmanship. You were the Chairman of the first Committee on which I served. The Bill that we were considering had seven or eight clauses. We managed to make progress, but it took us between 30 and 35 sittings.

Some hon. Members may erroneously have had the impression last night that some hon. Members were elongating their contributions. However, I can assure you, Mr. Morris, and the Committee, that that was not the Opposition's intention. We were making very real points in relation to procedure and the Bill. I hope to continue in the same spirit in Committee and to deal as expeditiously as possible with the amendments that have been selected.

Amendment No. 4 says that, before regulations are made under section 58, the guts of the 1988 Act, the Secretary of State should, with regard to the Bill's impact on different types of premises, consult bodies which appear to him to be representative of persons who may be subject to non-domestic rates.

Amendment No. 5 says: the Secretary of State shall consult persons or bodies appearing to him to be representative of persons subject to non-domestic rates and local authorities in different parts of the country.

The changing pattern of business rates clearly has many different impacts. There is the impact of revaluation which takes place every five years and the impact of the way in which any increases are subject to relief which the Government may or may not give to businesses. The impact differs according to the type of business and the region.

It is important that the Government should consult widely before decisions are made. The starting point differs in different parts of the country and the economic circumstances of businesses vary greatly.

Most hon. Members will agree that Dun and Bradstreet is a good source of information on the state of the economy in different parts of the country. In other circumstances, there may have been a temptation to have given the House more information from that organisation, but I shall simply say that it has recorded that the number of business failures in 1993 was nearly double those in 1990. However, the impact was different in different parts of the country. Dun and Bradstreet's most recent publication shows that London had more than 9,000 business failures last year, the south-east 13,000, the eastern region 2,000, the south-west 7,000, and so on. One can see the pattern. It is clear that there is a variation in the impact of the recession and in the circumstances in which different businesses find themselves. Those businesses would want to make representations to the Secretary of State regarding their circumstances before the Secretary of State sets limits on the general movement in the level of business rates or decides on the case for or against any transitional provision.

Opposition Members have complained about the procedure adopted in relation to the Bill and the inability of organisations to make their views known, but after I tentatively prepared some amendments which raised a number of issues that concern people, several organisations wrote to me setting out their views on the regional impact of business rates. Those views differ around the country.

Barnsley chamber of commerce, to which I referred earlier, believes that people in the south have received all the benefit of the Secretary of State's provisions in past years because they have had the largest part of the transitional arrangements. Some of its views have been echoed by, for example, the east midlands chambers of commerce and industry.

It is surprising that the Government had to admit earlier this evening that they have not received representations. I would not say that my desk has been flooded with representations, but I have had a reasonable spread from around the country.

The east midlands chambers of commerce say that they do not believe that the north and the midlands have benefited from the Secretary of State's provision in the past. They, too, believe that the south has done better.

On a previous occasion I mentioned the contribution that I received from Southampton chamber of commerce. It believes that the southern part of the country experienced the worst impact of the 1990 revaluation and that, although some transitional relief was made available, it did not compensate for the increases that businesses have had to face in that part of our nation. Therefore, it believes that the north has done best from the changes that have taken place since 1990.

My purpose in giving only a flavour of some of the evidence that I have on this matter is to show that different parts of the country have different perceptions of how they have been affected. The Secretary of State would be wise in future, if this legislation receives the approval of the House, before a decision is made on the question of relief, to consult widely regional organisations of one form or another, whether they are based on industrial and commercial associations or whether they are individual organisations. The representatives of these bodies should be consulted to give the Secretary of State a flavour of how businesses are performing and of what the impact of rates increases will be—and hence an assessment of the need for transitional relief. It would be both democratic and wise if the Secretary of State set off in that direction.

A whole spread of views has been put to me about amendment No. 5. Those views relate to the impact of the changes and to what sort of policies organisations want. They have mentioned, for instance, that they would prefer their local authorities, not the Secretary of State, to make decisions on these matters. They feel that local authorities would be more sensitive to the needs of local industry. They also believe that businesses would be more able to influence the decisions of local authorities and they feel remote from the Secretary of State and unable to have any great impact on his decisions. The onus is now on the Secretary of State to dispel those worries and to show himself open-minded when he takes his decisions.

8 pm

Most organisations identify industrial, commercial and retail premises and they often take a regional view of the possible impact on different types of premises. The Government should be aware of the strong feelings that prevail before they take decisions on these important matters. That is why amendment No. 4 was drafted. Many of these organisations may have wanted to make more concrete representations but they have been unable to do so because of the way in which the Bill has been rushed in, but the Association of Metropolitan Authorities tells me that it is aware of the views of various bodies representing sections of industry. If this debate were longer, I would be able to read out much more evidence in support of amendment No. 4.

I have had some interesting correspondence about the 1995 revaluation from an organisation known as Gerald Eve Research Forecasts, a company that acts as consultant to many local authority associations and major business organisations. In a word, it has many important clients and it has drawn together a number of different views on the projected impact of the 1995 revaluation. The AMA has been given an interesting paper on the subject by Robin Goodchild, who says that the rating changes will have different impacts in different parts of the country. He forecasts a reduction in the burden of rates on central London retailers of the order of 15 per cent., but an increase of about 20 per cent. in the east midlands, and of between 15 and 50 per cent. in the north-west and the north. He predicts that office developments in the east midlands will face a 50 per cent. increase in the burden of rates, while in the north-west and the north the increase will vary between 15 and 30 per cent. He also forecasts a reduction in the burden of rates for some southern parts.

The consultant predicts increases for all industrial premises following the revaluation, but smaller increases of between 5 and 10 per cent. in London and the south-east, and increases ranging up to 30 per cent. in the east midlands, the north and the north-west. I would expect the Secretary of State, when considering the transitional relief arrangements to apply from 1995, to want to be aware of these views of various consultants and I expect that the local authority associations may want to make their views known to him by way of representation.

My group of speculative papers written by Gerald Eve includes a number of other views, too. The office of Stephen Tutcher FRICS predicts that the burden of rates will not increase as much for offices in the southern part of the country after 1995, but that there will be an additional burden for offices in the north—a factor which I am sure the Secretary of State will take into account when deciding on transitional relief. I should add that the assessments of the impact of the revaluation vary among the consultants who have assisted local authority organisations.

My folder contains the views of other consultants on this issue, but I hope that I have established the general point, although if Conservative Members doubt what I say I am quite prepared to enlighten them further with more evidence. I hope, however, that they have taken the point already.

It is widely recognised that the state of the economy differs in various parts of the country. Likewise, the impact of rates on businesses differs. It is clear that the various consultants who have applied their minds to the detail believe that there will certainly be changes in the regional impact of the rates following the 1995 revaluation. For our part, we believe that the Secretary of State would be wise to undertake formal consultation with representative organisations before reaching decisions that will have a long-standing impact on the business community and, in turn, on the economy.

I look forward to hearing what my colleagues and the Minister have to say on this subject.

Mr. David Rendel (Newbury)

A fairly small and select class of right hon. and hon. Members who were here for the Second Reading debate are here again tonight. Those in that class will remember that yesterday I opposed an amendment moved on Second Reading by the Labour party. On this occasion, I want to show the even-handed way in which Liberal Democrats act in the House by supporting an amendment moved by the Labour party.

The fairness of my efforts will become even more apparent when I mention that my support is given in an attempt to persuade the Government that it is in their best interests that the amendment be agreed to. The Conservatives have often claimed to be a party which favours consultation with all sorts of people. Unfortunately, they do not often act in accordance with their words. The result has often been that legislation has been passed which has later had to be reversed—one has only to think of the poll tax legislation, and there are other examples.

I cannot help feeling that had the Government consulted properly on those occasions, the legislation that they later had to reverse would never have been introduced in the first place. That would have been much to their benefit, not least because of the waste of parliamentary time and of taxpayers' money caused by legislation that should never have been introduced.

I support the principle of consultation in general, and, in this instance, I think that the Government would be wise not only to consult but to listen to the results of their consultation. They could argue that there is no point in consulting, because—as everyone knows—even when they do consult they never pay any attention to what is said by the consultees; rather than being as cynical as they might be tempted to be, however, I suggest that they consult widely and take note of the responses. I think that they have been granted an opportunity that they should grasp with both hands.

Mr. Baldry

The amendment would simply oblige the Secretary of State to consult on a statutory basis. I consider it unnecessary. We fully recognise that consultation on matters relating to local government is extremely desirable, and we always engage in such consultation.

Mr. Vaz

I am astonished to hear what the Minister is saying. He was in the Chamber when the Minister of State replied to the debate on the allocation of time; he must have heard the Minister of State mock the Institute of Directors, the Confederation of British Industry and local authorities. He also mocked the Archbishop of Canterbury —although you were not in the Chair at the time, Mr. Morris. He said that he had had no representations from them. The Minister says that the Government wish to consult. To what extent did they consult before introducing the Bill?

Mr. Baldry

Any reasonable person who reads Hansard tomorrow will see that what the hon. Gentleman has said does not accord with the facts. We have just completed the most comprehensive review ever of the methodology for allocating grant to local authorities, which has involved Ministers and officials in numerous meetings with local authority representatives and organisations. Of course, we are always interested in the views of such bodies as the CBI, the Association of British Chambers of Commerce and the Institute of Directors.

We fully understand the need to consult widely on any proposals for the introduction of transitional arrangements following the 1995 revaluation, and subsequent revaluations. I therefore see no need to make the Bill longer by making that a formal duty. Yesterday, we made clear our intention to consult businesses on the effects of the 1995 revaluation by early summer. We also recognise that local authorities will need warning of our proposals, and we will certainly take their views into account.

I consider our record on consultation on business rates exemplary—as, indeed, is our record on consultation on all matters relating to local government finance. We consulted widely on our proposals for the current transitional arrangements before introducing them in 1990, and we have continued to listen carefuly to the views of individual businesses and their representatives ever since. My officials have regular discussions with members of the valuation profession about the effects of revaluations and the detailed operation of the non-domestic rating system; we also have regular meetings with local authority associations.

Mr. Rendel

Does the Minister consider it "exemplary" to consult people and then ignore the result of their consultations? That is what happened in the case of the poll tax legislation.

Mr. Baldry

Whenever Ministers consult widely on matters of public policy, they must ultimately make value judgments; that is their duty. I could consult every shire county in the country about the methodology involved in local government finance, but I could not possibly secure the agreement of all those counties on the relative weighting of the area cost adjustment. All the authorities that benefit from the adjustment want to keep it; those that do not will not want it to continue.

Consultation does not mean having to accept all that every organisation says: it means listening intelligently, being prepared to consider and being prepared, intelligently, to take on board the suggestions that are made. I believe that this Bill, like previous Bills, is a good example of the Government's willingness to respond to the views of businesses and other consultees about the operation of the business rate system.

8.15 pm
Mr. John Gunnell (Morley and Leeds, South)

Has the Minister consulted businesses on a regional basis? One of the advantages of the old system was the fact that such consultations took place at local level. If we accept that the Department's consultations with business cannot take place at local level, surely the Minister accepts that there will be great regional variations in the effect of the measures. Has he consulted the regional organisations of either the CBI or the chambers of commerce? He might receive different messages from different regions, and he might be able to take those differences into account.

Mr. Baldry

Of course. I am more than willing to take into account representations that might be made to us by the CBI at regional level—or, indeed, by local government at regional level. We are intent on ensuring that we secure the best possible system. I do not believe that any useful purpose would be served by the imposition of a statutory duty on the Government, given that our actions make it clear that we are more than willing to consult widely. I urge the Committee to reject the amendment.

Mr. Vaz

The Minister tells us to judge the Government by their actions. I am glad that the Minister of State has returned to the Chamber, because I intend to refer to comments that he made during the debate on the allocation of time motion. He made mocking remarks: I use the word "mocking" advisedly, because I was astonished at his demeanour when he challenged the Opposition on whether people were pressing at our doors and writing letters to make their views known on this important subject.

The Minister mocked the Confederation of British Industry, the Institute of Directors, the chambers of commerce and local authorities, and threw in an aside about the Archbishop of Canterbury; he said that he did not know whether the archbishop had decided to write a letter about the matter. The fact is that not even the Archbishop of Canterbury has had enough time to consider the Government's proposals. That is why my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) tabled the amendments. They would place a duty on the Government to consult a number of organisations and examine the various regions to observe the effects of their rating policy on local businesses.

The Under-Secretary says that this Government listen intelligently, and are intelligently prepared to take on board representations made by various organisations. When I challenged him about the number of organisations that the Government had consulted, however, he was unable to give me a single example. All that the Leader of the House and the Minister of State have told the House is that the Bill was published on 16 December.

The Minister implied that, if we had been diligent, we would have spent the Chirstmas period writing to organisations and asking for their comments. That is exactly what we have done. My hon. Friend the Member for Newcastle upon Tyne, North read out a number of comments made by chambers of commerce, selecting letters from Barnsley and Southampton from the pile that he had received; but I have not even had the chance to consult those organisations.

It is important that the Government accept the amendments. We feel strongly about them because the best way to proceed is to ensure full consultation not only with local authorities but with the regional branches of organisations such as the Institute of Directors and the CBI.

My hon. Friend the Member for Morley and Leeds, South (Mr. Gunnell), who is a former leader of Leeds city council, has vast experience in this sphere. From his membership of that fine council he knows about the level of consultation required by councils on various aspects of policy. We often hear Ministers from the Department of the Environment lecturing councils about the need to enter partnership agreements with local businesses. All urban regeneration policy is now based on the concept of a partnership between local authorities and the private sector, a partnership which has been spearheaded in places such as Leeds and Sheffield. The amendments have the same aim. They would ensure that the words used by the Government for a number of years were put into effect and that there was an attempt to rebuild the relationship between the local private sector, the local authority and the Government. We want to create a climate that will enable local businesses to form an equal partnership with local authorities.

I recently visited Luton to see the regeneration work being carried out by Luton borough council. Local councillors told me of their initiatives with the private sector. Every few months, members of Luton borough council hold meetings—they call them business breakfasts —with the business community and ensure that they are kept fully in touch with the needs of local business. That is precisely what we are asking the Government to do. We want to ensure that the people most affected by the Government's proposals are properly consulted.

The Under-Secretary says that it is not necessary to include every duty in the Bill. He says that he is a reasonable chap, is prepared to talk to anyone and attend meetings with anyone as long as he hears various points of view that can help to formulate policy. He mentioned the Government's review of local government finance, but we know where that led—it led to enormous cuts in resources for the rate support grant. The House will look forward to discussing that in the near future.

The Under-Secretary also said that we did not need to add more clauses to the Bill. The Bill has only four clauses and we are proposing small amendments. There is no reason why the Government cannot accept an amendment to a four-clause Bill, which would mean that the Government would formally consult a number of organisations which could assist them in the discharge of their duties.

I hope very much that, even at this late stage, the Minister will accept the amendments, as he has not really spoken against them. He accepts the principle behind them, but says that what the amendments suggest will be carried out in any event. It is not possible to predict who will be in the Department in a year's time, or even next week. For example, the then Minister for Local Government and Inner Cities, who introduced the Bill last year, gave some commitments, but things have changed. We would, therefore, much prefer to have commitments included in the Bill so that it is clear to local authorities and businesses what they need to do to bring their views to the Government's attention.

I hope that the Minister will accept the amendments and ensure that we make rapid progress.

Mr. Gunnell

I should like to correct my hon. Friend the Member for Leicester, East (Mr. Vaz) so that I do not offend another hon. Member. My hon. Friend did me the singular honour of describing me as a former leader of Leeds city council, but that was in fact my hon. Friend the Member for Leeds, East (Mr. Mudie). I am a former member of West Yorkshire metropolitan county council and was its leader until it was abolished by the Conservatives. Usually, when an authority is abolished, something similar is substituted for it. West Yorkshire county council consulted thoroughly with the local chamber of commerce and the regional branch of the CBI, but that consultation has not been replaced. I hope that the Minister will take the opportunity to change that tonight.

Mr. Henderson

I hoped that the Minister might respond to some of the additional points raised by my hon. Friend the Member for Leicester, East (Mr. Vaz), but it seems that he is intent on maintaining his sedentary position.

I have many times in Committee discussed amendments that have called on the Government, one way or another, to give a legislative commitment to consult various bodies. Many times I have heard Ministers say that they have a great deal of sympathy with the points being made and that they consult in any case, but that they are not prepared to include such a commitment in legislation. It is not good enough for the Government to adopt that attitude on a matter such as this.

It is important that formal consultation is carried out through the official channels representing interested bodies. It is not good enough for the Minister to say that he has a wink and a nod and various chats with friends around the country and that that gives him a clear impression of what is happening in industry and of the views of the industrial, retail and commercial sectors.

The amendments are necessary because of the, perhaps wrong, perception that people in the business community have about the impact of rates. The Government should try to meet any difficulties and set up a formal consultation process so that no one is in any doubt about the information according to which decisions are reached. However, as the Government are being so obstinate, I feel bound to press the amendment to a Division.

Question put, That the amendment be made:—

The Committee proceeded to a Division—

The Chairman

Serjeant, will you investigate the delay in the Aye Lobby and report back, please?

The Committee having divided: Ayes 94, Noes 295.

Division No.66] [8.27 pm
Abbott, Ms Diane Gunnell, John
Austin-Walker, John Hain, Peter
Barnes, Harry Hall, Mike
Bayley, Hugh Henderson, Doug
Beckett, Rt Hon Margaret Hill, Keith (Streatham)
Beith, Rt Hon A. J. Hinchliffe, David
Benn, Rt Hon Tony Hoey, Kate
Bermingham, Gerald Hogg, Norman (Cumbernauld)
Betts, Clive Home Robertson, John
Boateng, Paul Hood, Jimmy
Brown, N. (N'c'tle upon Tyne E) Howells, Dr. Kim (Pontypridd)
Campbell, Mrs Anne (C'bridge) Hoyle, Doug
Campbell, Ronnie (Blyth V) Hughes, Kevin (Doncaster N)
Chisholm, Malcolm Jones, Martyn (Clwyd, SW)
Clapham, Michael Jones, Nigel (Cheltenham)
Cohen, Harry Jowell, Tessa
Corbyn, Jeremy Khabra, Piara S.
Corston, Ms Jean Leighton, Ron
Cryer, Bob Lewis, Terry
Cummings, John Lynne, Ms Liz
Cunliffe, Lawrence Macdonald, Calum
Cunningham, Jim (Covy SE) Mackinlay, Andrew
Davies, Rt Hon Denzil (Llanelli) McLeish, Henry
Dewar, Donald McMaster, Gordon
Dowd, Jim Mahon, Alice
Eagle, Ms Angela Michael, Alun
Eastham, Ken Morgan, Rhodri
Foster, Rt Hon Derek Morris, Rt Hon A. (Wy'nshawe)
Foster, Don (Bath) Morris, Rt Hon J. (Aberavon)
Gapes, Mike Mowlam, Marjorie
Garrett, John Mullin, Chris
George, Bruce Oakes, Rt Hon Gordon
Gerrard, Neil O'Hara, Edward
Godman, Dr Norman A. Olner, William
Godsiff, Roger Pickthall, Colin
Pike, Peter L. Snape, Peter
Pope, Greg Spearing, Nigel
Powell, Ray (Ogmore) Stott, Roger
Prentice, Ms Bridget (Lew'm E) Strang, Dr. Gavin
Prentice, Gordon (Pendle) Vaz, Keith
Primarolo, Dawn Wareing, Robert N
Quin, Ms Joyce Watson, Mike
Randall, Stuart Wicks, Malcolm
Raynsford, Nick Wise, Audrey
Reid, Dr John Wright, Dr Tony
Rendel, David
Simpson, Alan Tellers for the Ayes:
Skinner, Dennis Mr. Jack Thompson and
Smith, Llew (Blaenau Gwent) Mr. John Spellar.
Ainsworth, Peter (East Surrey) Curry, David (Skipton & Ripon)
Aitken, Jonathan Davis, David (Boothferry)
Alexander, Richard Day, Stephen
Alison, Rt Hon Michael (Selby) Deva, Nirj Joseph
Amess, David Devlin, Tim
Ancram, Michael Dickens, Geoffrey
Arbuthnot, James Dicks, Terry
Arnold, Jacques (Gravesham) Dorrell, Stephen
Arnold, Sir Thomas (Hazel Grv) Douglas-Hamilton, Lord James
Aspinwall, Jack Dover, Den
Atkins, Robert Duncan, Alan
Atkinson, David (Bour'mouth E) Duncan-Smith, Iain
Atkinson, Peter (Hexham) Dunn, Bob
Baker, Rt Hon K. (Mole Valley) Durant, Sir Anthony
Baker, Nicholas (Dorset North) Elletson, Harold
Baldry, Tony Evans, Jonathan (Brecon)
Banks, Matthew (Southport) Evans, Nigel (Ribble Valley)
Banks, Robert (Harrogate) Evans, Roger (Monmouth)
Bates, Michael Evennett, David
Batiste, Spencer Faber, David
Beggs, Roy Fabricant, Michael
Bellingham, Henry Fenner, Dame Peggy
Bendall, Vivian Field, Barry (Isle of Wight)
Beresford, Sir Paul Fishburn, Dudley
Biffen, Rt Hon John Forman, Nigel
Blackburn, Dr John G. Forsyth, Michael (Stirling)
Body, Sir Richard Forth, Eric
Bonsor, Sir Nicholas Fowler, Rt Hon Sir Norman
Booth, Hartley Fox, Dr Liam (Woodspring)
Boswell, Tim Fox, Sir Marcus (Shipley)
Bottomley, Peter (Eltham) Freeman, Rt Hon Roger
Bottomley, Rt Hon Virginia French, Douglas
Bowden, Andrew Fry, Sir Peter
Bowis, John Gale, Roger
Boyson, Rt Hon Sir Rhodes Gallie, Phil
Brandreth, Gyles Gardiner, Sir George
Brazier, Julian Garnier, Edward
Bright, Graham Gill, Christopher
Brooke, Rt Hon Peter Gillan, Cheryl
Browning, Mrs. Angela Goodlad, Rt Hon Alastair
Bruce, Ian (S Dorset) Goodson-Wickes, Dr Charles
Budgen, Nicholas Gorman, Mrs Teresa
Burns, Simon Gorst, John
Burt, Alistair Grant, Sir A. (Cambs SW)
Butterfill, John Greenway, Harry (Ealing N)
Carlisle, John (Luton North) Greenway, John (Ryedale)
Carrington, Matthew Griffiths, Peter (Portsmouth, N)
Carttiss, Michael Grylls, Sir Michael
Cash, William Gummer, Rt Hon John Selwyn
Chapman, Sydney Hague, William
Churchill, Mr Hamilton, Rt Hon Sir Archie
Clappison, James Hamilton, Neil (Tatton)
Clark, Dr Michael (Rochford) Hampson, Dr Keith
Clifton-Brown, Geoffrey Hanley, Jeremy
Coe, Sebastian Hannam, Sir John
Colvin, Michael Hargreaves, Andrew
Congdon, David Harris, David
Coombs, Anthony (Wyre For'st) Haselhurst, Alan
Coombs, Simon (Swindon) Hawkins, Nick
Cope, Rt Hon Sir John Hawksley, Warren
Cormack, Patrick Hayes, Jerry
Couchman, James Heald, Oliver
Cran, James Heath, Rt Hon Sir Edward
Currie, Mrs Edwina (S D'by'ire) Hendry, Charles
Higgins, Rt Hon Sir Terence L. Patten, Rt Hon John
Hill, James (Southampton Test) Pattie, Rt Hon Sir Geoffrey
Hogg, Rt Hon Douglas (G'tham) Pawsey, James
Horam, John Peacock, Mrs Elizabeth
Hordern, Rt Hon Sir Peter Porter, Barry (Wirral S)
Howarth, Alan (Strat'rd-on-A) Porter, David (Waveney)
Howell, Rt Hon David (G'dford) Portillo, Rt Hon Michael
Howell, Sir Ralph (N Norfolk) Powell, William (Corby)
Hughes Robert G. (Harrow W) Rathbone, Tim
Hunt, Rt Hon David (Wirral W) Redwood, Rt Hon John
Hunt, Sir John (Ravensbourne) Renton, Rt Hon Tim
Hunter, Andrew Richards, Rod
Hurd, Rt Hon Douglas Riddick, Graham
Jack, Michael Rifkind, Rt Hon. Malcolm
Jenkin, Bernard Robathan, Andrew
Jessel, Toby Roberts, Rt Hon Sir Wyn
Jones, Gwilym (Cardiff N) Robertson, Raymond (Ab'd'n S)
Jones, Robert B. (W Hertfdshr) Robinson, Mark (Somerton)
Jopling, Rt Hon Michael Roe, Mrs Marion (Broxbourne)
Key, Robert Rowe, Andrew (Mid Kent)
Kilfedder, Sir James Rumbold, Rt Hon Dame Angela
Kirkhope, Timothy Ryder, Rt Hon Richard
Knapman, Roger Sainsbury, Rt Hon Tim
Knight, Mrs Angela (Erewash) Scott, Rt Hon Nicholas
Knight, Greg (Derby N) Shaw, David (Dover)
Knight, Dame Jill (Bir'm E'st'n) Shaw, Sir Giles (Pudsey)
Knox, Sir David Shephard, Rt Hon Gillian
Kynoch, George (Kincardine) Shepherd, Colin (Hereford)
Lait, Mrs Jacqui Shersby, Michael
Lang, Rt Hon Ian Sims, Roger
Lawrence, Sir Ivan Skeet, Sir Trevor
Legg, Barry Smith, Sir Dudley (Warwick)
Leigh, Edward Smith, Tim (Beaconsfield)
Lennox-Boyd, Mark Soames, Nicholas
Lester, Jim (Broxtowe) Speed, Sir Keith
Lidington, David Spencer, Sir Derek
Lightbown, David Spicer, Sir James (W Dorset)
Lilley, Rt Hon Peter Spink, Dr Robert
Lloyd, Rt Hon Peter (Fareham) Spring, Richard
Lord, Michael Sproat, Iain
Luff, Peter Squire, Robin (Hornchurch)
Lyell, Rt Hon Sir Nicholas Stanley, Rt Hon Sir John
MacGregor, Rt Hon John Steen, Anthony
MacKay, Andrew Stephen, Michael
Maclean, David Stern, Michael
McLoughlin, Patrick Stewart, Allan
McNair-Wilson, Sir Patrick Streeter, Gary
Madel, Sir David Sumberg, David
Maitland, Lady Olga Sweeney, Walter
Malone, Gerald Sykes, John
Mans, Keith Tapsell, Sir Peter
Marland, Paul Taylor, Ian (Esher)
Marlow, Tony Taylor, John M. (Solihull)
Marshall, John (Hendon S) Taylor, Sir Teddy (Southend, E)
Martin, David (Portsmouth S) Thomason, Roy
Mates, Michael Thompson, Sir Donald (C'er V)
Mawhinney, Rt Hon Dr Brian Thompson, Patrick (Norwich N)
Mayhew, Rt Hon Sir Patrick Thornton, Sir Malcolm
Merchant, Piers Townend, John (Bridlington)
Milligan, Stephen Townsend, Cyril D. (Bexl'yh'th)
Mills, Iain Tracey, Richard
Mitchell, Andrew (Gedling) Tredinnick, David
Mitchell, Sir David (Hants NW) Trend, Michael
Moate, Sir Roger Trotter, Neville
Monro, Sir Hector Twinn, Dr Ian
Montgomery, Sir Fergus Vaughan, Sir Gerard
Moss, Malcolm Viggers, Peter
Needham, Richard Waldegrave, Rt Hon William
Nelson, Anthony Waller, Gary
Neubert, Sir Michael Ward, John
Newton, Rt Hon Tony Wardle, Charles (Bexhill)
Nicholls, Patrick Waterson, Nigel
Nicholson, David (Taunton) Watts, John
Nicholson, Emma (Devon West) Wells, Bowen
Norris, Steve Wheeler, Rt Hon Sir John
Onslow, Rt Hon Sir Cranley Whitney, Ray
Ottaway, Richard Whittingdale, John
Page, Richard Widdecombe, Ann
Paice, James Wiggin, Sir Jerry
Patnick, Irvine Wilkinson, John
Willetts, David Young, Rt Hon Sir George
Wilshire, David
Winterton, Mrs Ann (Congleton) Tellers for the Noes:
Winterton, Nicholas (Macc'f'ld) Mr. Michael Brown and
Wolfson, Mark Mr. Derek Conway.
Wood, Timothy

Question accordingly negatived.

Mr. Henderson

I beg to move amendment No. 6, in page 2, leave out lines 23 and 24.

Perhaps it is fortuitous that this issue is being discussed in a Committee of the whole House. It is encouraging to see that Conservative Members have begun to take an interest in proceedings on the Bill. Those of them who had other things to do yesterday evening would have been welcome to join us then and to make their views known on the important issues that affect businesses in their constituencies. Their decision to join us today, and at least to listen to the debate—perhaps even to participate in it —is welcome. Some of the things that I shall say may encourage them to join in the debate. I see a smile on the face of the hon. Member for Langbaurgh (Mr. Bates), who is always keen to take part—indeed, he was the only Conservative Member who took part in the debate yesterday.

This is a key amendment. There is considerable regret among Opposition Members that the Bill is not being debated in a way that would allow representations to be made by interested parties. The clause, and our amendment to it, represent the nub of the Bill. The clause allows the Secretary of State to make a judgment on how the level of transitional relief should relate to the rating pool and to decide whether any funding from central Government should be paid into that pool to compensate for any gaps caused by the relief that businesses may have been given.

8.45 pm

The Parliamentary Under-Secretary of State and the Minister of State have both claimed that if the Government introduce transitional relief they intend to top up the pool and to make good any losses arising. I am not one who necessarily distrusts commitments given by the aforesaid Ministers, but, as has already been pointed out, we can never be sure that they will still be in post by the time the Bill takes effect. Indeed, the Bill will have a long-term effect on business rates way beyond 1995. It is not good enough practice for Ministers simply to give commitments —although I am sure that those commitments will go some way towards warming the hearts of the businesses affected. Parliament is supposed to legislate and if the Minister believes that there is a case for topping up the rating pool, he, on behalf of the Government, should be prepared to say that in the event of transitional relief being granted the Government will top up the pool and add to the amount of public money available for local authorities to meet important needs all over the country.

If we believe that there should be legislative backing to the Government's intention, it is important to press the amendment so that the commitment will be given and businesses around the country will be assured that the Government do not necessarily intend to reduce the funding available to meet the important needs of the community. If that is really the Government's position, there is a strong case for their accepting the amendment.

Mr. Baldry

We may have a rather frustrating debate because the amendment does not do what the hon. Member thinks that it should do or that he wants it to do.

Mr. Vaz


Mr. Baldry

Because the hon. Gentleman has sought to explain in his speech what he had hoped that the amendment would do. Anybody who reads Hansard tomorrow will see that that was what he had hoped that it would do.

The effect of the amendment would be to deny the Government the power to make transitional arrangements after 1995 which included a measure of Exchequer support for businesses facing rate increases as a result of the revaluation. Any arrangement would therefore have to be self-financing, with the cost of any protection for losers having to be borne by the gainers.

The Committee does not need to be reminded that the 1990 transitional arrangements were originally self-financing. Ratepayers who were potential beneficiaries of the 1990 revaluation had their rate reductions limited to meet the cost of cushioning the effects of increases. Not surprisingly, that was unpopular with businesses and added considerably to the administrative complexity of the arrangements. We listened to the concerns of businesses and that was why we introduced the Non-Domestic Rating Act 1992 to provide £1.25 billion of Government support for the arrangements. The Act froze rate increases beyond the rate of inflation for 1992–93, while allowing greater reductions for businesses whose bills were being phased downwards.

Mr. Vaz

Why will not the Minister accept that there is a fundamental difference between what was proposed in 1992 and what is being proposed in this Bill?

Mr. Baldry

I am concerned about what is proposed in the amendment.

Further relief worth £550 million was provided by the Non-Domestic Rating Act 1993 and, as we have made clear, this Bill provides further assistance. The Bill is entirely consistent with what we have sought to do in the past couple of years in providing support for the business community. The amendment would deny the Government the chance to make regulations giving further relief to businesses in 1995–96 and beyond should that appear to us to be necessary.

Mr. Vaz

I refer the Under-Secretary to what his hon. Friend said yesterday. I realise that he was not in the House, but at column 197 of Hansard, the Minister makes it quite clear that the scheme to be used has not yet been devised. Therefore, the amendment moved so ably by my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) does not mitigate against the scheme because the scheme itself has not been designed.

Mr. Baldry

That is why I began my comments on the amendment by saying that I thought that we were going to have a somewhat frustrating debate. The amendment does not propose anything that the hon. Member for Newcastle upon Tyne, North suggests, because it would remove the provision which would allow the Government to make the transitional arrangements that are not self-financing. I am sure that businesses would be interested to know if the Opposition were seeking to prevent us entirely from helping businesses with their rates by that means. We can always come back to Parliament with further Bills such as this Bill each year, but if the aim of the amendment is to ensure that decisions on any such funding are given parliamentary scrutiny, I can assure hon. Members that any transitional arrangements that we make after 1995 are already required by the Local Government Finance Act 1988 to be approved by both Houses of Parliament. There would be a full opportunity for hon. Members to consider any proposals carefully and there is no question that the arrangements could be used to increase the burden of rates on businesses, so we would not expect the regulations to prove contentious.

Mr. Vaz

How can the Minister expect Labour Members to accept any of his assurances when we bear in mind the fact that the Bill is being rushed through the House at record speed? How can we accept assurances that we will have the opportunity to scrutinise the complex regulations in the future when he has treated the House with such contempt over the past two days?

Mr. Baldry

The hon. Gentleman cannot quite keep a straight face when asking that question. As I have just explained, the statutory provisions of the Local Government Finance Act 1988 oblige us to bring the measures before the House. That is a much more practicable way in which to deal with the matters than the administrative complexity and timetabling problems with further full-blown Bills.

I remind hon. Members that businesses and local authorities will be looking for clear and early notice of any decisions that could affect rates bills. The simpler and faster the procedure, the more easily it is likely to be achieved. Flexibility is therefore essential. An amendment which would remove the provision that allows the Government to make transitional arrangements which are not self-financing would reassure businesses.

Mr. Betts

The Minister referred to the frustrating nature of the debate. Is not the greatest frustration that he keeps saying that there will be no occasion on which the shortfall in the business rate pool will not be made up by Government? If that is the case, why does not he cut across the Bill and give a commitment to legislate to that effect? What is the problem? There has never been any explanation of why the Bill cannot be drafted to achieve that. Why, if the Under-Secretary does not believe that our amendment achieves that commitment, does not he propose another amendment instead?

Mr. Baldry

To use a rather legalistic phrase, we have given those undertakings during the debate on occasions too numerous to particularise. My hon. Friend the Minister and I have sought to explain that it would not benefit the business community to seek to proscribe the scheme that we may introduce after 1995 until we have consulted. We have made it perfectly clear time after time that we would not expect council tax payers to bear the cost if the pool had to be topped up. Little short of putting it in bright lights, I am not sure what more we can do. Nor, with respect, do I think that the more times that we say it the more it will impact on hon. Members. It is clear that the whole debate about powers and duties was a spurious debate in an attempt to keep business going yesterday. There is no validity in it and the amendment does not seek to address that point.

I hope that the Committee recognises that the amendment does not do what it is even intended to do. It would remove the provisions which would allow the Government to make transitional arrangements that are not self-financing and would not be to the advantage of the business community.

Mr. Henderson

I had some doubts about whether we should proceed with the two final amendments because they deal with matters of fairly general concern which could have been covered partially on Second Reading with the remaining points being taken up on Third Reading. I am glad that I proceeded with amendment No. 6 because we have scratched a surface and exposed a flaw in the Bill.

If I understand the Minister correctly, he does not accept the sentiment of my argument in support of the amendment. He does not accept that there should be a provision which requires the Government to top up the rating pool in the event of transitional relief being given to certain businesses. He gave a commitment that he would do so next year, but he made it clear that he does not feel required to make such a provision.

9 pm

Mr. Baldry

As I said, this is going to be a frustrating debate. The amendment goes nowhere near achieving the hon. Gentleman's intentions. If he is asking me to undertake that if in future there is a need to top up the scheme the Government will do so, if that were the means we used, we have already given that undertaking. My hon. Friend the Minister and I made that clear and anyone who reads yesterday's Hansard will see that undertaking being given on a number of occasions. The amendment has nothing to do with that. As drafted, it simply removes the Government's ability to do exactly that. Indeed, it makes the task that the hon. Gentleman wants us to perform much more difficult. The amendment would oblige the gainers to pay for the losers. That is not a sensible way to proceed.

Mr. Henderson

I am pleased that the Minister intervened in my speech because he now appears to be clarifying his earlier remarks.

Mr. Nirj Joseph Deva (Brentford and Isleworth)

On a point of order, Mr. Lofthouse. On a matter which the Labour party has claimed to be so important, I find it outrageous that only one Labour Member is on the Back Benches.

The First Deputy Chairman of Ways and Means (Mr. Geoffrey Lofthouse)

Order. The hon. Gentleman is reasonably new to the House, but he has been here long enough to know that that is not a point of order for the Chair. [HON. MEMBERS: "But what he said is truel Order. It is not a point of order for the Chair, whether or not it is true.

Mr. Henderson

I have always found contributions from Tory Members more helpful before they have their dinner than after it. That has been confirmed again this evening.

If I understand the Minister correctly, he is saying that in any future year when transitional relief is given to businesses, any moneys that are lost to the rating pool because of that transitional relief will be made good by central Government finance and that will be in addition to the aggregate external financing limit. I am assuming that I have been given that commitment by the Minister unless he again intervenes to correct any misunderstanding. I should be happy to give way to him if he believes that I have misunderstood his position.

Mr. Baldry

I am not sure how often it will be necessary for us to put this on the record. I had hoped that if we had a sensible debate yesterday it could be accepted first time round. As we did not have a sensible debate and this was the only point that the hon. Gentleman could run yesterday, he is obviously having to make something of it again today.

Let me make the point again. Let us suppose that in due course we design, as we may well do, a scheme for some future year which is not fully self-financing. The hon. Gentleman should bear it in mind that the amendment would make that more difficult, but let us leave that to one side. Clearly, this would leave a shortfall in local authority revenue, which would need to be made up in one way or another. Clearly, it would be inappropriate for the council tax payer to bear that shortfall. In those circumstances, the Government would anticipate making up that sum. That is what we have said time and time again.

Of course, the most obvious way would indeed be to top up the rating pool by a compensating amount. That is what we have done for the past two years and what we propose to do for 1994–95, but it is not the only conceivable option. For example, we could decide instead to give local government as a whole a larger amount of revenue support grant than it would otherwise receive. [HON. MEMBERS: "Oh!"] Of course, that would compensate local government by another route, but it would not fall to the cost of either the council tax payer or local government. I am not sure how many more times it will be necessary to make that clear before Labour Members understand the point. I do not think that I can put it more clearly than that. I am sure that any reasonable person who reads Hansard from yesterday and today will see how clearly we have made the point. If the hon. Gentleman takes the matter further, it will demonstrate that this is not a serious debate but merely an attempt to take a bad point further, as was done yesterday.

Mr. Henderson

I assure the House that this is not an attempt to prolong the debate. Indeed, the debate is guillotined—there is no way that we can prolong it beyond 10 o'clock. The only reason why I am sticking to this point is that I want it to be absolutely clear. Yesterday, there was some confusion about the Government's intention. Even a Tory Back Bencher who came in to listen to a small part of the debate was confused.

If the Government are so firm in their response—I welcome their response, which has clarified their position —it would be better if they wrote that into the Bill. I assure the Minister that I will be watching to see what happens next year if transitional relief is granted. In subsequent years, if I am in the same post, I will be watching from this Front Bench. If I am on the Back Benches, I will still be watching.

Councils around the country will be watching to see that there is no camouflage by the Government in an attempt to reduce the amount of the revenue support grant before the announcement on transitional relief is made, only to restore it to what councils would have had to compensate for the relief given to the rating pool. If transitional relief is granted, I hope that the pool will be topped up by a genuine increase in resources which will be made available to councils by the Exchequer through the Department of the Environment.

My exchange with the Minister demonstrates the importance of having a gap between the Second Reading and the Committee stage so that there is more time for representative organisations to lobby Members of the House and for hon. Members to examine perhaps in more detail the implications of the wording of any amendments that they table. That demonstrates the point made by Labour Members in this debate. Based on the commitment given by the Minister, and based on some of the doubt about the wording of the amendment, I beg to ask leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Clause 2 ordered to stand part of the Bill.

Clauses 3 to 5 ordered to stand part of the Bill.

Order for Third Reading read.—

[Queen's Consent, on behalf of the Crown, signified]

9.8 pm

Mr. Curry

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

I was taken aback because I knew that Labour Members were anxious to give the Bill a profound scrutiny and I had not expected such rapid progress. Undoubtedly, debate on the technical clauses is proceeding apace on the trains heading out of London tonight.

This is an excellent Bill, which is in time. [HON. MEMBERS: "He has forgotten his notes."' I can manage without notes, thank you very much.

The Bill will enable local authorities to get bills out on time, which has not happened for various reasons in previous years. It is to the benefit of business, particularly small business, and it helps those in areas which are worst affected. The Bill continues the Government's pledge to moderate what was a difficult transition following the re-rating in 1990.

The Bill also looks to the future, and we know that there will be a new rating in 1995. That will be based upon facts which are being collected at the moment, and if that creates turbulence, clearly we will have to tackle it. The Bill gives us the means to do so. When we do that, we will put before the House the measures which we will take. Any shortfall in the financial pool will be made up from public funds. The Government have made that clear, and I have made that clear before.

In the past, the Opposition have been happy to welcome and support the Bill and, in practice, they do not have it in their heart today to oppose it. I think that Opposition Members know that it is right and necessary to create help for small business. It is important that the parties should be seen to be united on the matter, which is of great importance. The measure is opportune and the help is necessary. The small businesses which we are talking about in the centres of towns—particularly in London and the south east, which are the areas worst affected—will welcome the measure. Local authorities will welcome it, as will the business community and its representatives. It is important that the measure be right and in time. We have ensured this and I commend the measure to the House.

9.12 pm
Mr. Henderson

Proceedings have moved with such alacrity that hon. Members can forget where they are on the detail of the Bill.

The Opposition are concerned about the way in which the Bill has been dealt with in the House. We are happy that the question of business rates has been dealt with earlier in the parliamentary cycle and we are happy that Second Reading took place in January. We are not happy, and we are extremely worried, that the Government forced through the measure without due concern for the representations which might have been made by concerned parties on the impact of the Bill. All along, the Opposition have been intent on making sure that the democratic processes take place in the House—[Interruption.]

Mr. Vaz

On a point of order, Mr. Deputy Speaker. My hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) has been in the House for two days on the Bill. He is trying to make his Third Reading speech, and there is a lot of frivolity on the Government Front Bench. Perhaps they would like to listen to what my hon. Friend is saying.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)

Order. I have noticed the frivolity. If that is the case, I am sure that the Minister will listen to what the hon. Gentleman says.

Mr. Curry

It is very rare that we derive frivolity from the hon. Gentleman. On the few occasions we do, we are most grateful for it.

Mr. Henderson

It is so pleasing to see Government Members with smiling faces for a change. When T see frivolity among Ministers, I begin to wonder who it is that they are talking about who raises laughter and humour among them. It is pleasing to see that there is still lightness among Government Members.

We said yesterday on Second Reading that we wanted to conduct real arguments about the Bill, and that is what we did. It was not the wish of the Opposition that a guillotine motion be moved. The 10 o'clock motion was not moved last night because the Government neither had the confidence of its Back Benchers to proceed with the Bill, nor sufficient confidence in themselves to face the arguments in a session which may have lasted for a few hours.

The way in which the Bill has been dealt with in Committee demonstrates that the Opposition made the arguments expeditiously and moved through the Bill expressing our opposition. We have done so in a way with which the procedures of the House have coped easily. It has taken no more than about two hours to deal with the Committee stage and Third Reading since discussion of the guillotine motion finished.

The matter could have been dealt with yesterday if the Government were intent on dealing with all stages of the Bill in one day. Our position is that it negates many of the democratic processes in the House and in the country to deal with the Bill in one day. But if the Government wanted to deal with the Bill in one day, it would have been possible for that to happen. The reason why it did not happen was the Government's lack of confidence and because they wanted to scupper some of the debate that might have taken place today on the national health service. They were frightened to come to the House to deal with that matter.

I know that you will want me to dwell on the Bill rather than the Government's fear of the House of Commons, Mr. Deputy Speaker. The Opposition support the purpose of the Bill. We recognise that transitional relief needs to be granted to businesses because of the way in which the current structure of business rates has been introduced and the way in which transitional relief has been granted.

Business will judge whether the size of the relief is appropriate in the circumstances this year. Business will be extremely disappointed that it has not had full consultation with the Government on the economic circumstances that it faces and on what relief might have been helpful.

Many of us are suspicious of clause 3 of the Bill. Although the Government confirmed in Committee earlier this evening that if transitional relief were given, the rating pool would be topped up in a real sense, they are still opposed to putting that commitment in the Bill. That demonstrates to the House that the Government will not necessarily increase the aggregate external financial limit to take into account any need to top it up because relief has been given.

The Opposition will not oppose the Third Reading of the Bill because we want to see business in Britain receive the relief which it believes at least partly helps it in the present difficult economic circumstances. However, democracy in the country and in the House would have been better protected if, through the usual channels, the Government had dealt with the Bill in a sensible, workmanlike way—the way in which the matter has been dealt with in past years.

The Bill is much more complicated than the legislation of the past two years. It deals with structural, not merely financial, issues. That is why the matter needs much wider debate than in past years. It would have been better if the Government had been able to take account of representations that might have been made by organisations throughout the country and by Members of Parliament.

9.23 pm
Mr. Betts

The debate has been important because it has allowed us to raise in the House the real fears about the finance of local government and the part that the business rate plays within that. It has allowed hon. Members to draw attention to the fact that, because the business rate has been centralised and because central Government have taken over raising that rate and fixing the poundage, the amount of local finance that is directly under the control of local authorities has been substantially reduced. That has led to the problem of gearing.

The impact on the council tax of any increase in expenditure that a local authority wants to undertake, within the cap limits that the Government lay down, is multiplied several times because the council tax, which is the only part of their revenue in which local authorities have flexibility, is only a small part of the revenue available to local authorities. If the business rate were transferred to local authorities, that situation would be substantially amended and that would be to the benefit of the local authorities, democracy and accountability.

During the debate, we have been able to explore the reasons for the Government's decision to take over control of the business rate as part of their general approach—taking powers from local authorities and restricting their freedom of operation, including the freedom to provide local services that their communities vote for and want to be provided.

We have had a substantial discussion of the Government's intentions and of whether we can believe and trust ministerial assurances given now that if there are shortfalls in the pool of business rate money, because of transitional arrangements introduced by the Government, they will automatically compensate local authorities for that shortfall and will ensure that council tax payers and the recipients of local services will not be in any way disadvantaged because of the effects of those arrangements.

Throughout the debate, Opposition Members have tried to persuade Ministers to realise that an assurance given now may not be worth anything in two years' time if circumstances or Ministers change. We simply cannot take on trust that that assurance will always be honoured. We have, therefore, invited Ministers to change the legislation to include the word "shall" instead of "may". That seems a very small change.

If Ministers keep telling us that they have no intention other than to compensate local authorities for any loss in the pool because of transitional arrangements, why do they not write that into the legislation? That question has been asked many times, but I have not heard a clear and simple answer. Only a few moments ago, the Under-Secretary of State sought to explain that, as the transitional arrangements were not fixed and could vary from year to year, the legislation could not include a commitment to compensate in a particular way for any losses because of those arrangements. I simply do not accept that and he did not explain why it was the case—[HON. MEMBERS: "Yes, he did."] No, it was a non sequitur. A Bill could prescribe compensation for local authorities and contain a commitment to compensate while not prescribing the form of transitional arrangements. The two are not linked.

The Under-Secretary did not explain why the fact that the transitional arrangements were not prescribed in the legislation meant that no commitment to compensate could be written into it. However, he also let the cat out of the bag. Throughout the debate, Ministers have implied that compensation will be provided by the Government topping up the pool, as they intend to do in 1994–95 when £90 million will be paid in directly. The Government have given the impression that future compensation will always be provided in that way.

However, the Under-Secretary of State said something else. He said that compensation, to make up any loss in the business rate, might be given by increasing the revenue support grant to local authorities and that that would have no impact on council tax payers or the recipients of council services. He is absolutely wrong, because revenue support grant is paid out under a different system and by different allocations from those of the business rate. The latter is paid on a per capita basis, while the revenue support grant is paid out according to the standard spending assessment system; the two are not the same. If there were another £90 million shortfall in the pool and the Government made it up by compensating local authorities through a £90 million increase in revenue support grant rather than compensating the pool directly, the total impact on local government would be the same, but the impact on each authority would be different. That means of compensation would, therefore, have a consequence, which is what we have been arguing throughout. We want an assurance that that will not happen to be written into the legislation.

Furthermore, when the Government tell us that there is a £90 million shortfall in the pool because of their transitional arrangements but they will not top it up because they have already given that sum of money in the revenue support grant announced in the autumn, how do we know that that is the case? The Government could come along at any time and say that they do not need to top up the pool because they have already included £90 million, or whatever the sum is for that year, in the previously announced revenue support grant.

Frankly, that is not transparent. The Government will be able to claim that they have carried out their commitments as promised, but will merely be pretending that the compensation has been paid. It is difficult to accept ministerial assurances tonight when we know that they could devise a future system that made it unclear whether those assurances had been met.

It would have been much simpler if the Government had accepted, right at the start, the need to include in the Bill a promise always to compensate for any shortfall by topping up the pool. If that had happened, the debate could have been concluded many hours ago. The Government could have got their way, but, equally, local authorities and the recipients of their services could have been assured that future transitional arrangements would not adversely affect their council tax or the services that local people receive.

Question put and agreed to.

Bill accordingly read the Third time, and passed.

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