§ Committee stage resumed.
§ Clause 18 agreed to.
§ Clause 19 [Part III—Supplementary]:
Baroness Denington moved Amendment No, 54:
Page 19, line 9, at end insert ("provided that no such order shall specify a date prior to 1st April 1982")
§ The noble Baroness said: This is an amendment which is supported by all the local authority organisations. As we understand it, the Secretary of State is saying that this part of the Bill when it becomes an Act should come into operation on 1st April next year, and seeing that the Bill will not become an Act—
§ Lord ELWYN-JONES
It is not easy to hear the noble Baroness. I hear that the machine is now on, so I have not intervened to the detriment of my noble friend.
§ Baroness DENINGTON
I must say that is very strange because I am usually one of those people who whisper to my neighbour in a gentle voice and everybody outside in the corridor hears me. I am rather comforted. I understand all is well now. I was going on to say that, since there will barely be 4½ months when this Bill becomes an Act before the Secretary of State is wanting it to come into operation, 275 it really is the contention of the local authority associations—and I am sure they must be right—that there is so much detailed work arising out of the Bill, and the Secretary of State still has to issue a number of directions and regulations, that they just cannot with the best will in the world be in a position to bring it into operation by 1st April next year. What we are asking for is an extension to 1982, on the assumption that one should let it run for a full financial year; otherwise one might perhaps have suggested October 1982.
In regard to the changes proposed in tendering a number of authorities say they will have to recruit extra staff. The change in the way the local authorities account for their maintenance work is going to involve changes, and the revamping of their costing systems with consequential changes, and this is going to cause changes in computer systems. One typical authority, I am told, alleges that it will take 18 months, when all the details are known, to get them on to the computer. This seems to me a very long time indeed. But it surely becomes perfectly plain that it could not possibly be achieved within the barely 4½ months available. I am also informed that the Chartered Institute of Public Finance and Accountancy are producing a code of guidance for use by authorities, setting out the appropriate accountancy practices that authorities should follow to implement the legislation. Obviously that will be very valuable and very necessary. This will also be used by the district auditor services in examination of the local authorities' accounts, again showing how important it is to have this code of guidance and to be able to work from it.
I understand that on the Committee stage in another place the Minister stated:We shall continue to listen to any further arguments the local authorities want to put to us on timing".As far as I understand—I am open to correction—the local authorities were told they would be consulted, but the consultations on timing have not taken place. I would ask the Minister to ask his Secretary of State to be reasonable and to give the local authorities a chance to take this Bill in, to absorb it and to do all the enormous amount of work which 276 is going to be required to get their house in order and then be able to give him, in proper form, all the information that he is going to be asking for. I beg to move.
§ Lord SANDFORD
I do not often find myself agreeing with the Opposition, but I am afraid I have to tell my noble friend that I think it would be quite improper for Parliament to accept this Part of the Bill and this clause in particular, unless it were first amended as the noble Baroness has just proposed, because all the reasons she has just given are indeed so. My noble friends will have to decide for themselves what to make of it all. All I can do is to reiterate what the facts are as far as the association is concerned. There has not been the consultation on this particular issue; there have been lots of consultations but not as to the date for introducing this part of the Bill. It is, of course, a fact that after the Bill is enacted regulations and directions pertaining to this part will then have to be issued, and only then will it be possible to get on with the detailed arrangements for accounting and tendering as prescribed in the Bill, and prescribed in some detail.
Then there is the further point that the noble Baroness has mentioned, that the detailed codes of guidance which there has been a lot of discussion about are not yet available. It would be quite improper for Parliament to give its authority to the introduction of this part of the Bill until it not only knew that their codes of guidance were available but had an opportunity to study them and hear professional opinion upon them. So with great regret I have to say that I for one—and I reflect here the views of the entire Association of District Councils—will have to support this amendment. My noble friends will have to make up their own minds.
I feel I must oppose this amendment quite strongly, because this clause does nothing really other than allow the Government flexibility. This is what the Government must have in order to plan the implementation of the Bill itself. I am also concerned about the consultation side. It is really a question of who is consulting whom. I am quite certain that Her Majesty's Government would in no way put a bar upon interested 277 parties arranging for meetings, should they deem that necessary. If, on the other hand, they are being deliberately prohibitive, I, for one, would like to hear evidence as to that fact. But I do not believe that that is so; I believe that the key to this is that the Government must have flexibility.
§ Viscount RIDLEY
I too would like to support the amendment on behalf of the County Councils Association. I feel that in so doing it is not in any way aiming at this part of the Bill about which your Lordships may have noticed I have kept remarkably silent during the past several hours, which I think indicates the general support for the objectives behind this part of the Bill. The county councils, although they do employ direct labour in the highways departments and so forth, are not affected and are not, as I have said, opposing the spirit of this part of the Bill. All the same, they will be very deeply involved in the accounting side of it and it will put a great strain on the financial administration of all authorities, particularly coming at a time when we are dealing with a rate support grant; possibly the transitional arrangements which we have not yet discussed; and possibly the block grant which we have not even reached—and will not reach until Christmas, at this rate anyway—and so on. So, I think that it would be very sad if the Government put this fearful strain and public expense on authorities just to try to get the thing into operation. I believe that it would be to the advantage of the system and the whole idea of direct labour which we have been discussing at such length, if it could be postponed until 1st April, 1982. Should there be a Division I would be bound to vote with the Opposition on this amendment, but I hope that the Government will accept it.
§ Lord BELLWIN
I must say that I remain unconvinced that authorities really need another two years to get ready to implement proposals based on principles expounded and accepted as long ago as 1975. They had fair warning of our intention last August, when we said in our consultation document that we were aiming to bring the new system into operation for the financial year 1981–82. The broad outlines have thus been clear for a long time.
278 The details, too, have been under consistent close scrutiny for a year now. Authorities know already what will be contained in the regulations to control tendering which will be made under Clauses 5 and 7. They have had before them since July a draft code of practice prepared by the Chartered Institute of Public Finance and Accountancy which will enable them to consider now what changes they will need to make to their accounting systems. CIPFA is also developing with my department's active encouragement a standard computer system to enable authorities to meet and, indeed, go beyond the requirements of the Bill. As soon as possible drafts of the necessary subordinate legislation will be issued so that the remaining small gaps in the picture can be filled. It will take an effort, but authorities can certainly do it if the will is there. They can be ready for the next financial year. This legislation has been overdue for long enough already.
The noble Baroness, Lady Denington, spoke of the extra staff, as did my noble friend Lord Ridley. I always hear those stories whenever anything new comes out. Yes, I am sure that in the case of some authorities it will involve extra staff, but in the case of other authorities it will not do so. It is a question of how these things are done. As for it taking 18 months to get all the details on to the computer, I must say that I would not know quite what was involved in that and nor, indeed, did the noble Baroness, Lady Denington, say. I should want some convincing.
I think that the most important point made by my noble friends and the noble Baroness, Lady Denington, was the one about consultation. As I stand here I am not aware of the amount of consultation that has taken place, but it would surprise me immensely, knowing all the consultation that has taken place on so many aspects of the Bill for so long now, if there had not been consultation. It need hardly be said that if more time was needed to discuss the nuts and bolts, the nitty-gritty, the department—as I seem to be saying so often today—is open and everyone involved is welcome to come along. But I do not think that that should be a reason for our not proceeding.
I am grateful to my noble friend Lord Morris who talked about flexibility. Of course we want it. As to there being any 279 bar or prohibition on consultation, I hope that what I have just said assures him about that—I hope it hardly needed saying. I should really be regretful if my noble friends, when "the chips are down" as they say, still felt that they had to vote against the Government. We consider that this is long overdue. There is no point in further vacillation. We know where we are going. We can tidy things up as we go, if we have to do so, but to delay another year would be unthinkable. I wonder whether the noble Baroness feels that she could withdraw
§ the amendment, but, if not, then, of course, we must vote on it.
§ Baroness DENINGTON
The noble Baroness does not think that she can withdraw the amendment because if she does she will let the local authorities down, and she is not prepared to do that.
§ 8.15 p.m.
§ On Question, Whether the said amendment (No. 54) shall be agreed to?
§ Their Lordships divided: Contents, 61; Not-Contents, 119.281
|Auckland, L.||Hampton, L.||Ridley, V.|
|Avebury, L.||Hatch of Lusby, L.||Rochester, L.|
|Bacon, B.||Houghton of Sowerby, L.||Ross of Marnock, L.|
|Balogh, L.||Irving of Dartford, L.||Sandford, L.|
|Beswick, L.||Jacques, L.||Segal, L.|
|Bowden, L.||Jeger, B.||Simon, V.|
|Bruce of Donington, L.||Kaldor, L.||Stedman, B.|
|Byers, L.||Llewelyn-Davies of Hastoe, B.||Stewart of Alvechurch, B.|
|Chitnis, L.||Lloyd of Kilgerran, L.||Stewart of Fulham, L.|
|Cledwyn of Penrhos, L.||Lovell-Davis, L.||Stone, L.|
|Collison, L.||Maelor, L.||Strabolgi, L.|
|Crowther-Hunt, L.||Melchett, L.||Taylor of Mansfield, L.|
|David, B. [Teller.]||Minto, E.||Thomson of Monifieth, L.|
|Davies of Leek, L.||Mishcon, L.||Thurso, V.|
|Davies of Penrhys, L.||Oram, L.||Underhill, L.|
|Denington, B.||Parry, L.||Wallace of Coslany, L.|
|Elwyn-Jones, L.||Peart, L.||Wells-Pestell, L.|
|Evans of Claughton, L.||Perth, E.||Whaddon, L.|
|Gainsborough, E.||Ponsonby of Shulbrede, L. [Teller.]||Wilson of Radcliffe, L.|
|Gregson, L.||Winstanley, L.|
|Hale, L.||Rhodes, L.|
|Airey of Abingdon, B.||Denman, L.||Henley, L.|
|Alexander of Tunis, E.||Dormer, L.||Hereford, V.|
|Alport, L.||Drumalbyn, L.||Hill of Luton, L.|
|Audley, L.||Dundee, E.||Holderness, L.|
|Avon, E.||Elibank, L.||Home of the Hirsel, L.|
|Balerno, L.||Ellenborough, L.||Hunt of Fawley, L.|
|Bellwin, L.||Elliot of Harwood, B.||Kemsley, V.|
|Belstead, L.||Elton, L.||Keyes, L.|
|Berkeley, B.||Evans of Hungershall, L.||Kimberley, E.|
|Boardman, L.||Faithfull, B.||Kintore, E.|
|Boyd of Merton, V.||Ferrers, E.||Knutsford, V.|
|Boyd-Carpenter, L.||Ferrier, L.||Lindsey and Abingdon, E.|
|Bridgeman, V.||Forester, L.||Liverpool, E.|
|Brougham and Vaux, L.||Fortescue, E.||London, Bp.|
|Caithness, E.||Gainford, L.||Long, V.|
|Carr of Hadley, L.||Geddes, L.||Lyell, L.|
|Cathcart, E.||Gisborough, L.||McFadzean, L.|
|Chelwood, L.||Gowrie, E.||Mackay of Clashfern, L.|
|Cockfield, L.||Gray, L.||Macleod of Borve, B.|
|Colville of Culross, V.||Gridley, L.||Mancroft, L.|
|Cork and Orrery, E.||Grimthorpe, L.||Mansfield, E.|
|Craigavon, V.||Haig, E.||Margadale, L.|
|Crathorne, L.||Hailsham of Saint Marylebone, L. (L. Chancellor.)||Marley, L.|
|Croft, L.||Massereene and Ferrard, V.|
|Cromartie, E.||Hanworth, V.||Melville, V.|
|Cullen of Ashbourne, L.||Harvington, L.||Monk Bretton, L.|
|de Clifford, L.||Hastings, L.||Morris, L.|
|Denham, L. [Teller.]||Hatherton, L.||Mottistone, L.|
|Murton of Lindisfarne, L.||Romney, E.||Trefgarne, L.|
|Netherthorpe, L.||Sandys, L. [Teller.]||Trenchard, V.|
|Newall, L.||Savile, L.||Trumpington, B.|
|Nugent of Guildford, L.||Selkirk, E.||Tweedsmuir, L.|
|O'Hagan, L.||Soames, L. (L. President.)||Vaizey, L.|
|Orkney, E.||Stamp, L.||Vaux of Harrowden, L.|
|Radnor, E.||Stanley of Alderley, L.||Vickers, B.|
|Rawlinson of Ewell, L.||Strathcona and Mount Royal, L.||Vivian, L.|
|Redesdale, L.||Swansea, L.||Waldegrave, E.|
|Renton, L.||Swinfen, L.||Watkinson, V.|
|Rochdale, V.||Teviot, L.||Windlesham, L.|
|Rollo, L.||Tranmire, L.||Yarborough, E.|
On Question, amendment agreed to.
§ 8.24 p.m.
§ Clause 19 agreed to.
§ Clause 20 [Right of councillor to opt for financial loss allowance]:
Lord RENTON moved Amendment No. 55:
Page 19. line 28, at end insert ("notice").
§ The noble Lord said: The word "notice" was, no doubt, omitted through inadvertence. If it is not put in, the sentence does not read very sensibly or grammatically. I beg to move.
§ Lord BELLWIN
I am most grateful to my noble friend for spotting this typographical error and for bringing forward an amendment to correct it. The Government, of course, accept it, and I repeat that I am most grateful to my noble friend.
§ On Question, Whether Clause 20, as amended, shall stand part of the Bill?
§ Lord ROSS of MARNOCK
I draw attention to page 20, subsection (7):This section does not extend to Scotland".I do not know how it could because it is an amendment of an English Act. There is nothing in Section 173 of the Local Government Act 1972—and this gives us Section 173A—that applies to Scotland. So if any words here are otiose they are the words:This section does not extend to Scotland".But I gather that the provision is probably there just in case any local councillor in Scotland thought that he would get the same option as that which was available in England and Wales and, no doubt, for 282 the avoidance of doubt the noble and learned Lord the Lord Advocate agreed that the insertion of these words would be all right. Strictly speaking they are quite unnecessary.
However, if that is their purpose, perhaps someone from the Scottish Office will explain to me why local councillors in Scotland are not being given this option. I know that the Minister will say, "Oh well, there was a communication" and that they suggested that they would prefer not to have this. But that was before the actual amendment was tabled, which I think was during the Report stage or the Committee stage of another place. I wonder whether they communicated with or gave the opportunity to the Scottish local authorities to opt for this one in view of the fact that it was actually going into the Bill. So far as I can gather there was no further meeting of the Convention of Scottish Local Authorities to consider this. I think that it is as well to give an opportunity to the Scottish Office to explain why this option is not available in this clause to Scottish councillors.
§ The Earl of MANSFIELD
As I understand it, the noble Lord really has two complaints. First, he says that subsection (7) has no business in the Bill, or this part of it. Secondly, I think that the noble Lord asks why, in effect, the choice between attendance allowance and financial loss allowance does not extend to Scotland. On his first point—I am almost reluctant to say this—at first blush the point would appear to have some merit and it will be looked at.
§ The Earl of MANSFIELD
But it needs very careful consideration. Nevertheless, I pass on to the part of his remarks which I think deserves a considered 283 answer. The answer to why the choice was not made available to councillors in Scotland is that, speaking historically, the particular clause under discussion was inserted in the Bill in response to an amendment tabled in Standing Committee with the support of the English and Welsh Local Authority Associations. The Confederation of Scottish Local Authorities was naturally consulted about the provision, but it decided that it did not wish the option to extend to councillors in Scotland. Without revealing secrets I can say that the Government were mildly surprised, but there was no question of foisting the new arrangement on Scottish local authorities who had given a clear indication that they did not want it. In the circumstances, therefore, the section does not extend to Scotland, and I hope that the noble Lord will be satisfied with this explanation.
§ 8.31 p.m.
§ Lord RENTON
The matter is not quite as simple as has appeared even from the last two speeches. If we turn to Clause 164 we find there set out the parts which apply to Scotland and those which do not.
§ Lord RENTON
On the other hand, if we turn to paragraph 20 of the Explanatory Memorandum we find that certain parts are said to apply in their entirety to Scotland. One of the parts there mentioned is Part IV in which Clause 20, which we are now discussing, falls, and yet in fact because of subsection (7) of Clause 20 Part IV does not in its entirety apply to Scotland. Of course, one must not hold it against the Government that in the course of changes in the Bill the Explanatory Memorandum may not hold good for the rest of time, but at the same time, having tried myself to find out the territorial extent of the Bill to Scotland, I must confess to a slight puzzlement over Part IV. Also, although I hope it is not out of order to mention it in passing, Part VII gives rise to some difficulty as well. I think that the matter could well be clarified in due course by an amplification of Clause 164.
§ Lord ROSS of MARNOCK
The noble Lord has been anticipating a lengthy speech that I am going to make when we come to Clause 164. I can assure him that it is wrong in more than that considerable part. He will appreciate my difficulties in trying to relate the various references in various parts of the Bill to what clauses apply to Scotland. In many cases they are quite wrong too. I think that the Lord Advocate's department must bear some responsibility for this in not keeping the changes that were made elsewhere up to date in respect of this particular Bill. Of course we have made further changes that will necessitate further amendment of, for instance, Clause 2 with reference to Clause 164.
I was aware of the attitude of the Scottish local authorities to which the Minister of State referred, but the point I was making was that they were consulted before an amendment was eventually set down. They replied with reference to allowances that they would prefer a salary, and secondly that they thought it would be invidious for people probably attending the same meeting to be in receipt of very different sums of money, one in respect of allowances and others in respect of loss of earnings, because the sums are different.
They also drew attention to the fact that account should be taken at the present time of the losses or the disadvantages to certain councillors in respect of occupational pension schemes as a result of being paid only allowances, and what they were really losing in the long term. It is a serious matter from the point of view of getting the right councillors and getting young councillors. It is not something just to be glossed over. I hope that the Government are giving some attention to it.
They also referred to the fact that they considered that the allowances presently payable are quite inadequate, and that they should be upped. It was not a simple reply, but the point is this: Did the Government inform the Scottish local authorities that, despite their original attitude, they were going ahead and going to place an amendment on the Marshalled List? It may well be that if they had known that, they would have opted in. It would have been wise for the Secretary of State for Scotland to take powers to 285 introduce it probably at a later stage—rather than seek new legislation—by order if and when Scottish local authorities felt it would be to their advantage to have this particular optional payment.
§ Baroness DAVID
If there is no response to that, I have one or two comments to make on the clause. In fact, I have a tiny bit of praise for the Government. We are glad that they have paid attention to the representations made by the Opposition during the Committee stage in another place and that this clause has been included in the Bill. I think it will make a difference to a certain number of people. It may encourage some people, who would not embark on standing for local authorities, to do so. Even so it still would probably be at a certain financial cost to themselves, but it is an improvement on the Bill as it originally stood. I hope that people will be encouraged to go into local government because I am an enthusiast for local government having served in it for 15 years or so. Of course this slightly depends on what happens later on in this Bill, because if the independence and powers of local authorities are going to be eaten away, as they may be if certain changes are not made, people may be less willing to come forward. Anyway, I can give a welcome to this clause.
§ Lord EVANS of CLAUGHTON
I also should like to give a general welcome to this clause. Whatever it does to encourage people to become councillors by financial inducement, if you like, will of course never—but I suppose legislation can never—make up for the difficulty that many people find in standing for local authorities. However much lip service may be paid by employers in whatever sector to the fact that it makes no difference to the promotion opportunities of their employees, it is a fact that many people are put off not by the lack of financial inducement—and in the 24 years I have been a councillor 17 were unpaid, and really the payment did not make much difference to me, and to a lot of other people—the difference is made by the knowledge that if you are a councillor and the boss wants you in his office and they say, "I am sorry, he is at the allotments and smallholdings committee" a mental note is made by the employer, "That chap should not be promoted".
286 I cannot see how even the Government of Mr. Heseltine—who has had his usual standing ovation today—and the Secretary of State could legislate for that. We all, in whatever party, owe a duty to people who might be considering going into local government and to the employers to state as often as we can that if we put an impediment, and unstated impediment, in the way of a potential councillor, that will damage his promotion prospects. I think that might be doing more of a service to ensuring the high quality of local government than increasing allowances or introducing the financial loss allowance. Having said that, one can only welcome this, but I do not think it is going to cure any problems it is only going to make the suffering a little less painful.
§ The Earl of PERTH
I hope that the Government will consider seriously the point made by the noble Lord, Lord Ross of Marnock. It seems to me that we do not want to be at a disadvantage in Scotland. It may well be that the local authorities who to date have said that they do not want it may change their minds. If the power was within the powers of the Secretary of State for Scotland, I should have thought that that would be a good thing. While it is not something which we should divide upon today, it is something which I hope the Government will think of for Report stage.
§ Clause 20, as amended, agreed to.
§ Clause 21 [Amendments relating to allowances to members of local authorities and other bodies]:
§ 8.39 p.m.
Lord SANDFORD moved Amendment No. 55A:
Page 21, line 16, at end insert—
(" (6) In section 174(1) of the Local Government Act 1972 (which provides for the payment to members of bodies travelling allowance and subsistence allowance) there shall be inserted after the word "duty" where it first appears, the words "whether or not approved also for the payment of such allowances in the nature of those payable under section 173 above".").
§ The noble Lord said: I should like to congratulate my noble friend on having weathered the storms of Part III and direct labour organisations and sailed into the 287 calmer waters of Part IV and allowances. This amendment is a simple one, and its purpose is this: It is to give local authorities the flexibility of being able to pay travelling and subsistence allowances on their own to members in performance of approved duty without at the same time becoming liable automatically to pay attendance allowances or financial loss allowances, if claimed, in addition.
§ An example of the circumstances where this would be useful would be where it is desirable but not essential for a member to attend a meeting, conference or seminar where his presence would be useful but not vital for the working of his council. In present circumstances, it is not possible to pay the one allowance without paying the others, and I believe this flexibility would be useful. I beg to move.
§ Viscount RIDLEY
I rise briefly to support what my noble friend said because I have had many instances of the sort of example he gave where it would be useful to ask members to go to a meeting but it would be expensive if they were to charge the various allowances, although they might not want to do so, but help with travelling expenses would be valuable, and I therefore hope the Government will accept the spirit of the amendment.
§ Lord EVANS of CLAUGHTON
I too support the amendment. I am sure the noble Lord, Lord Sandford, would assure us that he is not thinking of the kind of occasion, which occurs in local government from time to time, where people claim an attendance allowance and a subsistence allowance, and any other allowances that may be going, for attending the mayor's ball. So long as it is in respect of a serious event I am sure the amendment would be a useful acquisition.
§ Lord BELLWIN
I am glad the noble Lord, Lord Evans, made that last point, because although it was meant in jest, nevertheless there has been much concern about what some authorities classify as approved duties, and I am sure there are many of which probably no one in this Committee would approve. Obviously I have sympathy for the aims of the amendment and my noble friend Lord Sandford put the point fairly and well for extending the discretion of local authorities to 288 decide what allowances to pay in respect of approved council duties. But other issues than this need to be taken into consideration and the Government believe that these other issues weigh heavily against accepting the amendment. I might add that the wording of the amendment appears to be defective; I am advised it would not achieve the precise effect desired, but that is not our main concern.
At present, once a council duty is approved for allowance purposes, it carries with it entitlement to the full range of councillors' allowances; that is, attendance allowance (or financial loss allowance) plus travelling and subsistence allowances. It is an all or nothing situation; either the full range of allowances is payable, or none at all. To make the change proposed in the amendment would involve distinguishing between different types of council duty. In effect, two classes of approved duty would be created; the one attracting all the allowances, the other only travelling and subsistence allowances. Some duties would cease to qualify for attendance allowance and would inevitably cone to be regarded as second-class jobs. Councils would have to consider each of the duties they approved for allowance purposes and would be faced with invidious decisions as to which duties were more important than others; and particular decisions could well provoke resentments among councillors. Nor do I accept the argument that this change would necessarily reduce expenditure on allowances, but as the argument was not pressed on that point I will not pursue it; but it has been said elsewhere that that would be the effect.
The great advantage of the attendance allowance system is that in this respect it is straightforward. It provides a simple means of acknowledging council service. If a particular activity is accepted as an approved duty on the part of members, they may receive appropriate allowances not only for travel and subsistence but in respect of the time they have given up to performing that duty. The amendment would introduce a substantial complication into the system. It would cause confusion in the minds of the public and might arouse more suspicion than already exists among ratepayers of the allowances system as a whole. I have no wish to encourage authorities to incur 289 unnecessary expenditure, but for the reasons I have explained I find that argument inconclusive. Your Lordships will wish to know that it is already open to an individual councillor to decide not to claim all or part of any allowance to which he may be entitled. Something like one-fifth of councillors prefer not to claim their allowances. There need be no concern that we would encourage imprudence and irresponsibility by failing to accept the amendment.
I was very involved with this issue in my previous capacity, both within my own authority and when I was vice-chairman of the AMA, and I discussed the subject with all my colleagues in local government. It is a difficult issue because, as has been said, it is not just the money but the whole effect on a career and all that goes with it. Yet, when the discretion was as wide as it was before, one had situations which were very unfair as between one authority and another, often adjacent authorities, where one classified a whole range of duties as approved and another refused to do so. The more we can do away with that the better it is for the image of local government because there are always those who are only too pleased to say, "There is another example of it", should there be the slightest suggestion of stepping outside the bounds of propriety. With what joy, I fear, certain people point to such matters as a reflection on all councillors, when we know very well that that is not the case. I suggest, therefore, it is best to keep the provision fairly tight and not leave too much room for individual discretion. I think most authorities would prefer it that way. For those reasons we cannot accept the amendment, but I hope noble Lords appreciate that it is with great sympathy that we have considered this whole area.
§ Baroness STEDMAN
Forgive me if I am wrong, but is the amendment necessary? Like the noble Lord, Lord Evans of Claughton, I spent many years in local government, most of them before we had any allowances. Indeed, I remember in my earlier days, in the mid-1940s, the officers, having a good trade union, negotiated first-class train fares and daily attendance allowances and if the chairman of their committee went with them, the chairman went second class and had to claim his or her expenses. I am glad 290 we have moved on from that to some sort of parity.
When my county was first formed after reorganisation—I cannot speak for it at the moment although my ex-chief executive is below the Bar listenin to the debate—we had an arrangement by which, when there were council representatives on an outside body, and most of them were attending that organisation voluntarily—like the Eastern Arts Council or the council representative on the Institute for the Blind—the councillors, being representatives, were able to claim travel allowances but did not receive attendance allowances. Presumably it is open to any council to make those sort of decisions when appointing representatives to such bodies. If so, that would make the amendment completely unnecessary, would it not?
§ Lord SANDFORD
So that there should be no doubt that that kind of flexibility is possible I moved my amendment. I was not entirely convinced by the Minister's reply. If there are authorities which are daunted by the prospect of having to make invidious distinctions between one situation and another and one class of member and another, they can stick to the rigidities of the system as it is at present. The flexibilities of my amendment were designed for those authorities which recognise the facts of the situation—namely, that some approved duties are essential to the working of the council or to attract the full range of allowances, others are useful but not essential—and it should be possible to pay out-of-pocket expenses but not incur the liability to pay the full allowances. I think I have the better of the argument, but I am glad to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ On Question, Whether Clause 21 shall stand part of the Bill?
§ 8.49 p.m.
§ Baroness DAVID
We are pleased to welcome in this clause the abolition of the three-mile limit for the payment of subsistence to councillors. I speak with particular passion about this because I lived within one and a half miles of the Shire Hall in Cambridge when I was a member of Cambridgeshire County Council 291 and it was rather irritating to have to pay for my lunch in the middle of a meeting when most of the other people could claim for it. I was surprised to note that the cost of this will be £820,000 in a full year and I am wondering whether the Secretary of State will make allowance for this expenditure when he is considering the general expenditure of councils.
§ Lord BELLWIN
All I can say to the noble Baroness is that I hear what she says. I can make no comment on it at this point.
§ Clause 21 agreed to.
§ Clause 22 [Introduction of special responsibility allowances for members of local authorities]:
§ On Question, Whether Clause 22 shall stand part of the Bill?
§ 8.50 p.m.
§ Lord EVANS of CLAUGHTON
I generally welcome the introduction of special responsibility allowances for members, although I have some reservations. I am aware that it was recommended by the Robinson Committee but not immediately approved by the local authority associations generally. It does have the problem, which I do not think we can afford to neglect, of having two levels of councillor. I should be very much concerned if any encouragement were given to the development, which I find dreary and reprehensible, of the party in control taking all the places on the policy and resources committee and having just their chairmen, with no opposition members being able to take part in the discussions of the policy and resources committee. I find that very dreary and undemocratic, and generally the kind of dispensation that makes local authorities unpopular with the public at large. I should be very unhappy indeed if it were to encourage the development of two levels of councillor—the salaried, special responsibility councillor and the ordinary poor old Back-Bencher. So I have certain reservations about that.
In a sense I suppose I must declare an interest and ask the Minister whether, in defining special responsibilities, he seeks 292 to limit it only to chairmen. I can see a very strong case for the chairman of an education committee or a large-spending committee, who has enormous responsibilities and is very often, on a big authority, virtually a full-time councillor, having a special responsibility allowance. I have been a councillor for 24 years and in that time I have been a leader for 24 years of a group extending from one to 19. The Minister says he talks to himself aloud. I used to have problems, when I was a group of one, only when I was in two minds. My group rose from one to 19. I say with great sincerity—I am sure that many others who have been in opposition, perhaps not as long as I have, will agree—that opposition leaders do have special responsibilities. They are expected to give almost as much time as, and very often more time than, some chairmen—almost as much time as the leader of the council. I would hope to have an assurance from the Minister that special responsibilities as defined in subsection (2) does not rule out members of opposition parties.
§ Baroness DAVID
I should very much like to support what the noble Lord, Lord Evans, has said. I was going to give general support to the clause but was going to ask about the position of opposition leaders and spokesmen. I am not quite clear, and I do not think the clause is quite clear, whether they are going to be able to get the special responsibility allowance. We support the giving of this, as the Robinson Committee suggested, but we think that the slight changes from what Robinson suggested are on the right lines. We are anxious to hear about the position of the opposition spokesmen.
§ Viscount RIDLEY
Before the Minister replies can I raise another point on this question? I understand that discussions on the details involved are likely to follow when the Bill becomes an Act. One thing that will be considered is that the population of an authority is going to be taken into account. That means that the chairman of the education committee of a large borough in a county with an enormous population might be paid more than the chairman of an education committee concerned with a small population. I hope there is not too much weighting. I come from the most sparsely 293 populated county in Britain. There is just as much work for the chairman of the education committee in Cumbria or Northumberland as there is in Kent or Sussex, and I hope the population will not be too overriding a consideration when these details are discussed.
§ Lord BELLWIN
The recommendation of Robinson was on that very point—that the amounts of money should vary in accordance with the population. It was the main criterion the committee set down—as to exactly how much. I take the point. One can have as much work to do in a sparsely populated and yet very widespread authority as in the opposite, and so I am sure that ought to be thought about. On the point about the opposition leaders, that is entirely up to the discretion of the local authority itself. I would entirely agree with the noble Lord, Lord Evans, that it is awful in those authorities which insist on one-policy committees; and there are plenty of them round the country. Personally I think it is dreadful. In any authority I was ever involved with we never had anything of that kind. To me the simplest thing was to involve the opposition. Then one had drawn the teeth in any case, all the time. I always thought it was a matter of good tactics, apart from good sense, that it be seen that there was not an attempt to keep out opposition.
It would be up to each authority as to what it does regarding its allowances, and it will have to decide who it is going to designate to receive them; it is a matter for the authorities' discretion. One can only hope that they will use it responsibly and fairly. But I can readily see where we will get some injustice in it. Nevertheless, this is the next step forward. I do not think we have the whole answer in this Bill as to how one recompenses people who go into local government. But still it is a step forward, and I think everyone recognises it as such.
I should like to ask my noble friend the Minister whether Her Majesty's Government are thinking of extending that principle to hardworking Opposition Whips in your Lordships' House?
§ Lord BELLWIN
I would hope that they would extend it to hard-working Ministers in your Lordships' House!
§ Lord MISHCON
The Committee will have listened with rapt attention to what the noble Lord, Lord Evans, said. If I may say so, he represents with great efficiency and great experience a minority party. Many of us who have served in local government—some of us have been fortunate enough to serve all our lives as members of a majority party—have always, when we have considered the question of contribution to local government affairs, welcomed the fact that there were many members of an opposition who had such a useful contribution to make, especially on committees.
I recognise, since I have been trying, with my noble friend, so often in debates on this Bill to talk in terms of the independence of local authorities, what the Minister says when he makes the point that this must be at the discretion of local authorities. However, there is one thing which would not be mandatory and which would not be in a Bill but which I hope he could say to the Committee. It is this. When guidance is issued by his department to local authorities in regard to this specific clause that we are dealing with—that is, the clause dealing with the special allowances that could be made for responsibility—the Minister as a matter of guidance should say to those local authorities that it is meet and fit, as the department sees it, that special consideration should be given, when meting out these special allowances, to those who belong to a minority on the local councils. I think that with that guidance some local authorities may be shamed into compliance with it; and certainly it could be quoted in debates in council chambers. Therefore I think it might be very useful.
§ The EARL of CROMARTIE
Before the Minister answers this point may I say that I feel that I have some right to speak. Since 1935, leaving out the war years, when I was doing something else, I have been in local government; in fact I was convener of my county. We have all been talking about opposition and parties. Now we in the Highlands do not let party politics enter our local government at all, and we are very much the better for it.
§ Lord PITT of HAMPSTEAD
The noble Earl is probably right. On the other hand, in most parts of the country there are majority and minority parties. What my 295 noble friend Lord Mishcon said is most pertinent, because in effect this would be the way for central Government to help, just by the guidelines; the guidelines would be useful. Not only would they influence the majority party in the decisions that it makes, but they would be weapons that the minority party could use.
§ Lord BELLWIN
I am very sympathetic to the point that the noble Lord, Lord Mishcon, makes. In my experience I have found that authorities—not of course all, but most—take notice of guidance of that kind. I acknowledge, for example, that usually the leader of the opposition has an absolutely enormous task. I have served in that capacity, I have served in most of them, and I know what is involved. So I thank the noble Lord for his suggestion. We shall give it some thought and see whether we are able to do something of that kind. We shall take that one away.
§ Clause 22 agreed to.
§ 9.2 p.m.
The EARL of MINTO moved Amendment No. 56:
After Clause 22, insert the following new clause:
§ ("Allowances for vice-chairmen of councils (Scotland)
§ 3A. A council may appoint a member of the council to be vice-chairman of the council and may pay to him, for the purpose of enabling him to meet the expenses of his office, such allowance as the council think reasonable." ").
§ The noble Earl said: I beg to move Amendment No. 56. The objective of this amendment is to give to the Scottish councils the same facilities as exist at present in the English and Welsh councils. It might help if I were to remind the Committee of the statutory background as it stands at the present moment. Section 3 of the Local Government Act 1972, which applies to England and Wales, contains an enabling provision for the appointment of a chairman and to pay him an allowance for the purpose of enabling him to meet the expenses of his office. In Section 5 of the same Act there is a similar provision for councils in England and Wales to appoint a vicechairman 296 and pay him an expenses allowance.
Under Section 3 of the Local Government (Scotland) Act, 1973, we are enabled in the councils in Scotland to appoint a chairman, and subsection (7) allows us to act in the following way:
A council may pay the chairman, for the purpose of enabling him to meet the expenses of his office, such allowance as the council thinks reasonable".
However, the 1973 Act does not make provision for councils in Scotland to appoint a vice-chairman, and accordingly there is no power to pay an expenses allowance to anyone who may be acting ex officio in that role.
This matter was considered by the Robinson Committee, and perhaps this amendment, which has the support of the Convention of Scottish Local Authorities, is best supported by a short paragraph from the Robinson Committee's Report. Under the heading "Existing statutory allowances" on page 51 the Robinson Committee reported at paragraph 215:
We have also had regard to the position of the mayor, chairman and others who currently enjoy by statute an allowance to cover the expenses of their office. We have learned that these allowances, voted by individual councils, are in general no more than necessary to defray the costs of office and that they are often applied to the benefit of the council as a whole rather than just to one individual".
Then in firm, black letters the committee added:
We recommend that this arrangement should continue, with the addition, as previously recommended by the Oakes Committee, of vice-chairmen in Scotland".
So this amendment to all intents and purposes has the blessing of a recommendation from two previous reports, from separate committees, and the backing, too, of the Convention of Scottish Local Authorities.
§ I should like to say that during the past six years I have had the privilege of watching from the inside the council chairmen in Scotland attempting to carry their very heavy workloads, and I should have thought that in a Bill which now involves Scotland it was reasonable that we should endeavour to place all the councils of Great Britain in the same terms of reference within this sphere. I beg to move.297
§ Lord DIGBY
I should like to support my noble kinsman in this amendment. As vice-chairman of an English county council I am horrified to learn that my equivalents North of the Border apparently are illegitimate. I believe that they exist, even though they do not seem to be allowed. Vice-chairman is an important office from the point of view of the working of the council and in regard to other aspects of succession. I should like to ask whether this allowance is of the type that we have just discussed in relation to Clause 22, or whether it is the equivalent of what we call the chairman's fund, which is an allowance to enable official hospitality expenses to be incurred. In other words, is it for the actual expenses of the individual, or is it for expenses of his office when entertaining other people?
§ The Earl of MINTO
In answer to that point I should make clear that the reason why this amendment did not appear in relation to Clause 22 is that in that clause we were referring essentially to special responsibility allowances. This is what we in Scotland would call in the terms of a pure expenses allowance for his duties as vice-convenor, as we would say, vice-chairman, as I have said, in Scotland.
§ Lord ROSS of MARNOCK
I should like to support the amendment moved by the noble Earl, Lord Minto. The issue is separate from the special responsibility payment and all it would do would be to bring the position of Scotland up to that of England and Wales. You can imagine a local authority like Strathclyde, which embraces half the population of Scotland. Of course, the work has to be shared out, there has got to be a vice-convenor, and in that case I do not think there is any justification for Scotland's not being in the same position as the local authorities South of the Border.
§ Viscount THURSO
We on these Benches, and I in particular, would like to support the noble Earl, Lord Minto, on this amendment. I served for many years on the Caithness County Council and on Thurso Town Council and I am currently Lord Lieutenant in Caithness. I therefore know how much social responsibility is now falling on the convenor of the county, who in our particular instance has lost two town councils, 298 complete each with a provost and bailes, to share the workload of meeting the social obligations to the community of the local authorities. This workload is now falling on the lieutenancy, I may say, in no small measure. It is not that I am trying to get rid of the workload, but I do realise, in the position in which I find myself, exactly how much work is now falling upon a diminished number of office-bearers within the local authorities and I realise exactly how much expense falls upon them and how much effort they have to put into keeping community life going in a multitude of different ways. I think it is vitally important that we help vice-convenors in this instance to support those convenors and to support the work of the councils and the life of the community.
§ Baroness ELLIOT of HARWOOD
I am glad to support this amendment. I speak as one who has been, like the noble Earl, Lord Cromartie—29 years, even longer still—on the county council. It was the noble Earl, Lord Minto, who succeeded me when I retired. I can vouch for the fact that the work on the regional councils now, as opposed to the counties which existed when I was on the county council, is tremendously increased. The area has increased; the amount of work has increased. The number of people who do it is smaller, and it is most important that we should recognise this and help these county councillors or regional councillors; and I am sure it is only right and fair that in Scotland we should have the same treatment as they have in England and Wales. I hope very much that the Government will recognise this and see that this amendment is included in the Bill.
§ The Earl of MANSFIELD
The historical position was accurately set out by the noble Earl, Lord Minto. I think I should just say that the statutory creation of a vice-chairman or vice-convenor, call him what you will, and the payment of an allowance to him were not included in the Local Government (Scotland) Act of 1973 simply and solely because the Scottish local authorities had not previously expressed any need or desire for the post of vice-chairman. The whole aim, or at least a major part of the aim, of the 1973 Act was to leave the new 299 local authorities the maximum freedom to organise themselves as they wished and it was therefore considered inappropriate to have such a statutory provision. But since the Act came into force, of course, the local authorities have organised themselves in the way that seems best according to each individual circumstance.
There is no doubt that in Scotland there has been a growing concern, of which the Government are aware, about the position of senior councillors in general, and of course there are a number of vice-chairmen. Concern has also been expressed as to the need to provide additional remuneration in recognition of the very onerous burdens which fall upon those particular councillors. Clause 22 and the powers contained in it are designed to alleviate the position and burden of these councillors with extra responsibilities, and I have no doubt that they will include vice-chairmen. Therefore, vice-chairmen who are members of Scottish local authorities will be able to qualify under the special responsibilities scheme. The question therefore arises, bearing in mind Clause 22: Is it either necessary or desirable that vice-chairmen should have what I might call the extra-special statutory enshrinement which would be the result of this amendment?
When I first considered the matter I came to the conclusion that there was no special need and that they could be (as it were) remunerated, if that is the correct word, quite adequately under Clause 22. But in view of the expressions of support for the amendment which have come from all parts of the Committee I think it is only right that I should say that I will take this away and have a look at it. I cannot give any commitment at this stage, but it may be that something will come of it. In the meantime, perhaps the noble Earl would at this stage be good enough to withdraw his amendment.
§ The Earl of MINTO
I should like to thank the noble Earl the Minister of State for his comments, and also other noble Lords for their support of my amendment. There is one point that I might make at this moment, and that is the fact that, of course, the heart of the object of the amendment is the actual appointment and the power of appointment of a vice-chairman, which does not come within the 1973 Act. I 300 think that that is very important, because Clause 22 applies throughout. This is a specific within the additional clause that I am suggesting. But having made those comments I would again thank the noble Earl and, bearing in mind his remarks with regard to having a second thought, I have pleasure in asking the Committee for leave to withdraw this amendment.
§ Amendment, by leave, withdrawn.
§ 9.17 p.m.
Baroness FAITHFULL moved Amendment No. 57:
After Clause 22, insert the following new clause:
§ ("Disclosure of information
§ .—(1) In subsection (3) of section 32 of the 1974 Act (which empowers a Minister of the Crown or an authority subject to investigation to give notice to a Local Commissioner that in the opinion of the Minister or authority disclosure of certain documents or information would be contrary to the public interest and which prevents any person from communicating any such document or information to any other person, or for any purpose) for the words "any person" there shall be substituted the words "the Local Commissioner or any member of the staff of a Commission who is allocated to assist him".
§ (2) In subsection (3) of section 30 of the 1975 Act (which makes similar provision for Scotland) for the words "any person" there shall be substituted the words "the Commissioner or any member of his staff".").
§ The noble Baroness said: The introduction of this clause is straightforward, simple, non-political and non-controversial. The intention of the clause is to amend Section 32(3) of the Local Government Act 1974 to allow the Commission for Local Administration—that is, the ombudsman in connection with the work of local authorities—the unrestricted right of access to documents and information kept by and in the possession of a local authority, such information being relevant to a complaint of maladministration in respect of a local authority. This new clause would bring the procedure and practice of the Commission for Local Administration into line with that of the Parliamentary Commission—that is, the Civil Service Ombudsman—who, under the Parliamentary Commissioner Act 1967, has access to documents and information concerning a complaint.
§ In order to make a fair and just assessment concerning a complaint, in respect of both the local authority and the 301 complainant, the local authority commissioners need to have access to all facts relevant to a case. This clause is supported by the Association of County Councils, the Association of Metropolitan Authorities and the water authorities, and I personally have consulted with the Association of Directors of Social Services, the Association of British Fostering and Adoption Agencies and the Adoption Resource Exchange, and all agree with the clause.
§ As the law now stands, under Section 32(3) of the Local Government Act 1974 a notice may be served by the local authority on the Local Authority Commission withholding documents concerning a complaint of maladministration. This has been tested in the courts in a case relating to foster parents and children. The local authority's case was upheld in law. Only the Secretary of State can discharge the notice but it is deemed wiser to change the law than in every case for the Commission to have to apply to the Secretary of State.
§ In May 1977 the then Secretary of State in another place stated that it was his Government's intention to amend Section 32(3), as this clause is seeking to do today. Parliamentary time was not found to make the change. Following the 1979 general election, the present Government introduced in another place the Local Government Planning Land Bill (No. 1). In this Bill the previous Government's change of law in respect of Section 32(3) was included. The Government, however, did not proceed with the No. 1 Bill and regretted that parliamentary considerations made it necessary to defer the changes, but emphasised to the Commission that they did not imply any change of heart.
§ Accepting the problems of successive Governments over their legislative plans, the Commission especially regret the failure to amend Section 32(3). More than three years has passed since it was agreed that a change would be necessary allowing the local commission right of access to information and documents relevant to their investigations. I beg to move.
§ Lord BELLWIN
I thank my noble friend for, as always, the lucid and helpful way in which she has explained this 302 amendment to the Committee. The Government recognise the need for the change in the effect of the 1974 Act that this amendment would make, and I am happy to accept the amendment.
§ On Question, Whether Clause 23 shall stand part of the Bill?
§ Lord IRVING of DARTFORD
This clause provides for the substitution of the requirement for quinquennial revaluations of the discretionary power to the Secretary of State to decide when new valuations shall take place and when they shall come into effect. Rateable values provide the tax base for local government. Even with the statutory requirement for five-yearly revaluations, only three revaluations have taken place since the war. With the existing law, however, Parliament has to agree every year if a revaluation is to be postponed. If Clause 23 were enacted, Parliament would only hear of rating revaluations as and when the Secretary of State saw fit to order a revaluation.
If revaluations are not carried out regularly, the tax base is held at an artificially low level and anomalies in valuation arise as between different classes of property within local authorities and the level of valuations between local authorities. As a result, the tax base becomes unfair as well as out-of-date, and this also distorts the distribution of Government grants to local authorities.
Regular revaluations are essential if the rate base is to be kept up-to-date, and if it is not to involve substantial injustices arising between individual ratepayers as to the relative rate burdens which they bear. Without regular revaluations, the whole rating system is liable to be undermined.
A necessary feature of a source of local taxation is that its basis should be objective and independent, but it will be impossible to preserve both the independence and the objectivity if the Government deals with the local tax base in an arbitrary way. The clause is somewhat ambiguous. It will be interpreted as meaning an end of revaluations in their present form. The Government may intend this as paving the way for the abolition of rating at least of domestic properties. I am certainly not in favour of an end of the rating system, 303 nor are the local authority associations, nor was the Layfield Committee, nor indeed were the Conservative Government of 1970 to 1974. It is, in my view, essential to the independence of local government. However, if the Government feel themselves committed to the abolition of the rating system they ought not to dismantle the present system without proposing a viable alternative in its place and recognising that such abolition would mean a 5 pence increase on income tax or a 5 per cent. increase in VAT.
The clause would permit the Secretary of State to specify new revaluation procedures. The local authority associations want to stress that any change in the method of assessment should be the subject of consultation with the local authorities and with interested organisations before such orders are passed. I hope that we can have this assurance from the Minister. I would also hope that he will be able to accept a proposal for a fair and sound tax base resting on regular five-yearly revaluations of property.
§ 9.26 p.m.
§ Lord EVANS of CLAUGHTON
I support all that the noble Lord has said and, if I may say so, he said it extremely well and succinctly and has left little to say. All of us have reservations about the rating system which is regressive and which discourages improvement to housing and so on; but because of amendments made in various pieces of legislation, it is much less regressive and unfair now than it was some years ago. But the great point about the rating system, however imperfect it is, is that it is a means of raising locally money which the local authorities can use as they wish and which is not dependent on central Government. We know that the Conservative Party have given an undertaking to abolish the rating system. I say that because I am a keen Conservative Party Conference watcher; although they are not of the same fascination as Labour Conferences. But there are 82 motions. I understand, submitted for this year's Conservative Party Conference at Brighton calling for the abolition of rates as was promised in the 1974 Conservative Party Manifesto. I understand that one motion to be debated at this Conference calls upon the Government to introduce 304 measures as soon as practicable to abolish the present inequitable rating system.
I think it is an imperfect and inequitable system but it is less so than it used to be. The whole problem is this. It is all very well to say, "Let us find another means of raising money locally "—but every alternative system put forward has considerable imperfections. A great attraction must be local income tax, but there are problems there. There is the very old Liberal chestnut which I am bound to bring up: the taxation of site values—which I have never myself succeeded in fathoming but I understand it has much to commend it according to the valuation officers. I am sure that this will not cure the problem of money raised locally by rates. We shall probably cure the problem of financing local government locally only when and if we introduce a system of regional government. In spite of the best efforts of my party, I suspect that will not happen in the near future.
I think that the Conservative Government are caught in the kind of "Catch 22" situation in which the previous Labour Government were caught. Noble Lords on the Opposition side want to preserve the rating system and the quinquennial review, but there was not a single quinquennial review during the last Labour Government. We all recognise that there is a serious problem. We do not want to lose local independence of money raising and I suspect that most of us are unable to devise a system—or the civil servants have not been able to do so—which will be an acceptable alternative. What I worry about is that I suspect that this clause, as the noble Lord has said, is leading to the abolition of rates and towards the total abolition of any system of money collected locally and towards total dependence on the block grant system. This would emasculate local government to a point where it will cease to be local government and will become a local agency. Although I regard the rates system as imperfect, until we have devised something else we would be much mistaken if we were to agree to any system to abolish the quinquennial review which would then exacerbate the inequalities of the existing system and lead towards the abolition of any system of money raised locally. I very much support the proposal to leave out Clause 23.
§ 9.30 p.m.
§ Lord DAVIES of LEEK
I have listened with care—and I will speak for only about two minutes if the Committee is worried. Looking at this Bill, we are afraid that the authority of local government will be disappearing. Many of us consider that basic good local government is the fundamental heart of democracy. In the raising of money, and in the rating system, local authorities want freedom. Although this may not be relevant, the point of raising local money ought now, when looking at systems in local authorities in great football areas and others, to be to devise a system by means of which younger people could come into the local rating system or whatever one could think of. When they tear out telephone boxes, when street windows are broken at football grounds and there are groups of 16 to 18 years of age, it is not good saying that responsibility could not be put upon those young shoulders to realise what this vandalism does throughout the cities of England, Wales and Scotland. At some time in the future I hope that this age group will be looked at. If I followed that much further, if there were rules of order in this House and a Mr. Speaker, I would be ruled out of order. But I think in passing that should be noted.
§ Baroness STEDMAN
I rise to support my noble friend in his opposition to this clause. The major objection to it—and indeed to the whole of Part V of this Bill—is that Clause 23 absolves the Government either from having a regular five year revaluation or from presenting reasons to Parliament why there should not be such a regular revaluation. If this were so then the Government could seek to justify their contention, and if they could carry the resolution in Parliament.
Surely members of the Committee opposite realised the advantages to the local authorities if their rateable values are regularly updated. The rates, as has been said by previous speakers, are the local authorities' tax basis. Their revenue estimates are based on their rates. The rates are what local authorities have to live on and on which they have to survive. If the valuation is outdated then the local authorities are labouring under a major burden because they are not receiving the revenue which is theirs 306 by right, and they are not receiving the money they need to finance the services that they have to provide. This is even more serious when this Bill seeks to introduce a system obliging local authorities to hold their rates down to certain levels. It makes it even more intolerable—after requirements, coercions, inducements and even possible penalties—that local authorities still cannot have a proper rate base from which they can collect the revenue that rightly and properly should be available to them.
I am sure that the noble Lord is going to tell me when he replies that there have only been three five-year revaluations since the war. I accept that my party, when in Government, were no better than the party opposite. The present valuation list is seven years old because my Government, when in office, deferred the quinquennial revaluation until after the Layfield Report. They at least had to go to Parliament to get the approval for that deferment. We are against giving the Secretary of State the discretionary power so that he can have a valuation either in whole or in part whenever he wants it or does not want it without any parliamentary check and without any consultation with the local authorities or their associations.
One could ask: Why is this clause in the Bill? As the noble Lord, Lord Evans, said, the Prime Minister has already stated that her party is dedicated to abolishing rates. Is this clause in the Bill because the Government intend to abolish the rating system? If so, when is that likely to happen, what consultations will there be with local authorities before such a decision is taken, how soon shall we know of that decision and what is to replace the rates?
Local authorities regard this clause as another attack on their autonomy. The local authority associations tend to see it as the thin end of the wedge, which is intended to reduce the effectiveness and the vitality of local democracy. We have a right to know, before we proceed on to the other parts of this Bill, what is in the Government's mind, because in due course when we come to Part VI we shall be talking about a reformed type of grant that depends very much on rateable value. The proposed block grant cannot properly be determined unless we have an updated valuation.
307 As other noble Lords have said, the local authority associations are opposed to any moves at this stage which tend to lead towards the abolition of the domestic rate, and the County Councils Association have said that they see it as an essential feature of local autonomy and local accountability to the local electorates, in the absence of any better independent source of local taxation. If that independent source of taxation will not readily be available, then this clause should not stand part of the Bill.
§ Viscount RIDLEY
I should like to express my unease in regard to this matter. I was a member of the Layfield Committee, which has been mentioned twice, and one of the things we felt strongly about was that the quinquennial valuation should continue. Otherwise, the rate base gets so out of date that it becomes a nonsense. So, undoubtedly, there is disquiet in the ACC. I think that the Minister who is to reply knows a lot more about Scotland than I do. He may tell us why the Scottish local authorities have the power to do their own revaluations. They are very much more realistic, and move upwards and downwards with the value of the property that they are concerned with.
The objective of doing away with the rates appears to have been denied by the Secretary of State at Brighton, who I saw on the television not long ago. I did not see more than a bit of the programme, but it is a pledge which the Conservative Party will live to regret. Unless they can find an alternative which is acceptable to local authorities, I hope that they will move very cautiously in this field.
§ Lord DIGBY
I have some experience of this problem being a ratepayer in the Republic of Ireland, where a revaluation has not been done since the 19th century and I am paying something like £11 in the pound. Luckily my ancestors were clever, but some inflated their rateable values at that time, because that enabled them to get bigger mortgages and they have been paying ever since. However, having seen all those, and realising the disadvantages, I must support this clause because I am a supporter of the rating system. But I believe that it needs to be reformed, and this gives the Govern- 308 ment a chance of seeing how they can reform the rating system, while not having the very considerable expense of revaluations in the short term.
§ Lord ROSS of MARNOCK
That would be quite feasible, quite relevant and a good argument, but, unfortunately, as far as I can see, this will apply only to England and Wales and I presume that any reform to get rid of the rating system would apply to the whole country. I am surprised that the noble and learned Lord the Lord Advocate is to reply to this debate. Of course, he will be able to tell us that it will not apply to Scotland, and that Scotland has had the quinquennial revaluations. Mind you, they are not very popular. The last one cost me very considerably, indeed, when they upped my valuation by a multiple of, I think, 4½. But the argument was that it was time to sort out the variations between one area and another.
There is no doubt that there are very few people who can wholeheartedly support the present rating system. The trouble is that nobody can agree as to what we are going to put in its place. The point is that with the narrow base of the present rating system under which you pay rates according to the house you live in, irrespective of your income, property, or anything else, the more you load on to that the worse it becomes from the point of view of equity. It means that you have got to keep your rating system realistically up to date by valuations.
This is a monstrous clause. I do not know why it is being included in the Bill. Somebody asked why it is that we in Scotland do our valuations ourselves. The reason is simple. In the 1956 valuation Act changes were made in respect of the qualifications of the valuation officers—the assessors as we called them at that time. Scottish local authorities were given the option to go over to the English system and get the thing done for nothing by the Inland Revenue. They all opted to do it themselves except for, I think, one small area of the Borders. We felt that if we did it ourselves we could do it far, far better, and this has proved to be the case. So we have carried out our quinquennial valuations. Despite the moans, we have retained a sense of fairness.
309 The longer you go on putting off the revaluation the more difficult it becomes and the worse it becomes. When eventually it comes, people are faced with the realistic results of what has happened in seven, eight, nine or 10 years. But to leave it to the Secretary of State to do it by order specified from time to time, and not to justify it is, I think, quite wrong. It is a retrograde step that England and Wales are taking and I am very glad that Scotland is not included. Do not let anybody propose an amendment at Report stage to include Scotland!
§ Lord MISHCON
I promise the Committee to be brief and, I hope, not to repeat any point that has been made. May I just extend one point; namely, that I could well understand a clause such as this being in a Local Government Bill if the Government had thought their way through the alternative to rating and had wanted to present it to the Committee in order that the Committee might know that it was a waste of time and money to have a quinquennial. The views of noble friends on my side of the Committee would obviously be very critical of any such alternative. Nevertheless, it would be intelligible that one had this clause in the Bill if the Government had made up their mind to tell the Committee that within so many years or months a new system would be put before Parliament and therefore it was a waste of time and money, as I have said, to have a quinquennial valuation now. So I join with those who ask the Government to be frank with the Committee and to say whether or not any such alternative plans have reached an advanced stage. If it were possible, it would be very nice to know their nature; but if that is not possible at least we are entitled to know, if this clause is to stand, when it will be that the House will have an opportunity to consider such an alternative.
My second question is this. If the answer to the first question is that it is impossible to give any such information to the Committee, bearing in mind the obvious obsolescence that there will be about the present valuation list, could the Minister please say when it is proposed by the Government to make the order for which it is envisaged this clause will provide? Again the Committee will not want to agree to this clause in vacuo 310 without knowing when such an order is likely to be made.
The third and last question I address to the Committee, almost with a break in my voice, is this. Since this is an administrative matter for the Minister to decide, why, all of a sudden, in view of the arguments which we have heard, is this to be confirmed by an Affirmative Motion of the House and not by the Negative Resolution procedure?
§ 9.45 p.m.
§ The LORD ADVOCATE (Lord Mackay of Clashfern)
The present statutory position is that a new valuation list for England and Wales—and let me say that now and not have to repeat it, at least for some little time—is required on 1st April 1981. This is determined by Section 68 of the General Rate Act as subsequently amended and by the Valuation Lists (Postponement) Order 1978. I understand that it was the intention of the previous Government to effect a further postponement at least until 1982. Clause 23 of this Bill would give effect to the present Government's proposal to cancel the revaluation which was announced by the Secretary of State on 22nd June 1979.
The amendment which has been proposed to leave out this clause would restore the statutory requirement for regular revaluations and unless a further postponement order was made a revaluation would then be required in April 1981. We have heard a lot of argument about how difficult it would be to bring the Direct Labour Organisation clauses of this Bill into operation quickly. I think it is reasonably obvious that a general revaluation in April 1981 would hardly be a feasible proposition at this stage.
The noble Baroness, Lady Stedman, anticipated me to some extent when she said that Governments of her party were about as bad as those of this Administration in this respect, but I think that she has hardly been fair in this matter. So far as I understand it in England and Wales there have been three general revaluations since the war—in 1956, 1963 and 1973—and I am sure noble Lords opposite will recognise all of those dates as being years in which there was a Conservative 311 Administration, whereas during all the time that the party opposite formed the Administration there was no revaluation at all in England and Wales.
In this situation the proposal to defer revaluation is, we would suggest, widely understood and accepted, and the background to that decision is that this Government came into office committed to looking for fundamental reforms of rating. I think they were not committed to dismantling the rating system or anything of that sort, and in my submission this clause certainly does not do anything of that kind. But the Government are committed to looking for fundamental reforms and this we are doing; but as noble Lords have said this is a very difficult matter. It is easy enough to criticise the present system, but constructive criticism suggesting an effective new system is not so easy, although of course we are open to ideas on that subject.
In view of the difficulty of the question, it is natural that we should not force the pace, but we are conducting the review in a careful and deliberate way. It was made clear in the manifesto which preceded the last general election that, with economic preoccupations, rating reform would have to take a second priority. While the future of the rating system against that background is so uncertain, it seems to me that my right honourable friend the Secretary of State, against the background of the history of general revaluations in England and Wales, could not justify continuing with a general revaluation. The public would see that as inexplicable and wasteful. On the other hand, cancellation has brought expenditure savings already of around £5 million and made manpower economies in the valuation office of the Inland Revenue; and, more important still, it gives time for a serious review of the rating system.
With regard to the method used in the Bill, it seems to us to be right to use that method, because at this stage we cannot tell exactly when these considerations will be completed. It would obviously, in our view, be silly to have a general revaluation until these proposals are brought forward. Accordingly, we see the system of having a revaluation on a date fixed by the Secretary of State as a sensible way to proceed against that 312 background. And, of course, this is a matter on which wide consultation would take place, as indeed it has taken place on the reform of the rating system itself, and I perhaps should repeat my invitation to anyone who has constructive ideas to participate fully in that consultation. In the meantime, I would invite the Committee to agree to the inclusion of this clause in the Bill.
§ Lord MISHCON
Before the noble and learned Lord the Lord Advocate sits down would he be good enough to deal with the questions I ventured to pose to him? He has said that it is not now possible to say when an alternative scheme will be put before the House as an alternative to the rating system. This I understand; and I almost anticipated, if I may say so, with respect, that that would be his reply. If this clause is seriously put before the Committee for endorsement, can he tell the Committee when is the latest date he would expect before the Secretary of State decided that he would have to make an order in regard to valuation? Thirdly, and lastly, I did ask him—and I said it was with a break in my voice, and the lamentation becomes even more considerable when I get no reply—why is it that we have been told repeatedly today and yesterday that whenever there is a pure administrative order to make (I am looking at this moment at the noble Minister who has made that declaration to the Committee on so many occasions) the appropriate procedure is to do it by the Negative Resolution procedure and the prayer to negate as it were; whereas now when we come to a clause where it looks as though the Secretary of State is not very keen on making an order of an administrative nature he suddenly asks for an Affirmative Resolution of the House? I do ask, if I may, for a frank answer to both those questions.
§ Lord MACKAY of CLASHFERN
I must say I thought, perhaps by implication, I had tried to answer those questions in my previous remarks. So far as a particular date is concerned by which an order for revaluation would be required, I think that is very difficult to anticipate. It depends on how successful the progress is towards fundamental reform, and also of course depends on the extent to which the passage of time affects the validity of the existing list. I accept that any passage 313 of time affects it to some extent, but it is really a matter for judgment, looking back to see just exactly what effect it has had.
So far as the form of this clause is concerned, I said that I thought this was the appropriate form for the purpose that the Secretary of State had here in mind. It seems to us that to bring in a new revaluation is a very significant general step, and therefore one which Parliament should have the opportunity of affirming; that is, that it should be a procedure where the affirmation of Parliament is required because of the significance of what is involved. I hope on this occasion at least I have answered the noble Lord's questions, so as to avoid any further break in his voice.
§ Lord IRVING of DARTFORD
I am sorry the noble Lord is unable to accept the amendment. He mentioned that the three valuations since the war had been under Conservative Governments and I
§ think he and his Government deserve that credit. But it hardly seems logical, in view of that virtue, now to proceed to cancel the obligation altogether. To have an effective local democracy, people having to face things like rates should be assured that they are fair, objective and independently assessed, so that they can have confidence in the system. The longer revaluations are postponed, the greater the distortion between authorities and people. I do not believe that we ought to put up with a decaying system because we are not going to have regular revaluations. I hope that your Lordships will join in the Lobby in support of this amendment.
§ 9.55 p.m.
§ On Question, Whether Clause 23 shall stand part of the Bill?
§ Their Lordships divided: Contents, 130; Not-Contents, 42.315
|Airey of Abingdon, B.||Elliot of Harwood, B.||Morris, L.|
|Aldington, L.||Elton, L.||Mottistone, L.|
|Alexander of Tunis, E.||Exeter, M.||Murton of Lindisfarne, L.|
|Alport, L.||Faithfull, B.||Netherthorpe, L.|
|Ampthill, L.||Ferrers, E.||Northchurch, B.|
|Audley, L.||Ferrier, L.||O'Hagan, L.|
|Avon, E.||Forester, L.||Orkney, E.|
|Balerno, L.||Fortescue, E.||Orr-Ewing, L.|
|Bellwin, L.||Gainford, L.||Pender, L.|
|Belstead, L.||Geddes, L.||Perth, E.|
|Berkeley, B.||Gisborough, L.||Radnor, E.|
|Bessborough, E.||Gowrie, E.||Rawlinson of Ewell, L.|
|Boardman, L.||Gray, L.||Redesdale, L.|
|Boyd of Merton, V.||Greenway, L.||Renton, L.|
|Boyd-Carpenter, L.||Grimthorpe, L.||Rochdale, V.|
|Brabazon of Tara, L.||Haig, E.||Rollo, L.|
|Bridgeman, V.||Hanworth, V.||Romney, E.|
|Brougham and Vaux, L.||Harvey of Tasburgh, L.||St. Aldwyn, E.|
|Brownlow, L.||Harvington, L.||Saint Oswald, L.|
|Cairns, E.||Hastings, L.||Salisbury, M.|
|Caithness, E.||Hatherton, L.||Sandford, L.|
|Carr of Hadley, L.||Hereford, V.||Sandys, L. [Teller.]|
|Cathcart, E.||Hill of Luton, L.||Savile, L.|
|Chelwood, L.||Holderness, L.||Selkirk, E.|
|Cockfield, L.||Home of the Hirsel, L.||Sharples, B.|
|Colville of Culross, V.||Hunt of Fawley, L.||Soames, L. (L. President.)|
|Colwyn, L.||Keith of Castleacre, L.||Spens, L.|
|Congleton, L.||Kemsley, V.||Stanley of Alderley, L.|
|Cork and Orrery, E.||Keyes, L.||Strathcona and Mount Royal, L.|
|Craigavon, V.||Kimberley, E.||Swansea, L.|
|Crathorne, L.||Kintore, E.||Teviot, L.|
|Croft, L.||Lindsey and Abingdon, E.||Tranmire, L.|
|Cromartie, E.||Liverpool, E.||Trefgarne, L.|
|Cullen of Ashbourne, L.||Long, V.||Trenchard, V.|
|de Clifford, L.||Lyell, L.||Trumpington, B.|
|Denham, L. [Teller.]||McFadzean, L.||Tweedsmuir, L.|
|Denman, L.||Mackay of Clashfern, L.||Vaizey, L.|
|Digby, L.||Mansfield, E.||Vaux of Harrowden, L.|
|Dormer, L.||Margadale, L.||Vickers, B.|
|Drumalbyn, L.||Marley, L.||Vivian, L.|
|Dundee, E.||Middleton, L.||Waldegrave, E.|
|Elibank, L.||Minto, E.||Watkinson, V.|
|Ellenborough, L.||Monk Bretton, L.||Windlesham, L.|
|Avebury, L.||Kaldor, L.||Ross of Marnock, L.|
|Balogh, L.||Kilmarnock, L.||Segal, L.|
|Birk, B.||Kirkhill, L.||Simon, V.|
|Chitnis, L.||Llewelyn-Davies of Hastoe, B. [Teller,]||Stedman, B.|
|Cledwyn of Penrhos, L.||Stewart of Alvechurch, B.|
|Collison, L.||Lovell-Davis, L.||Stewart of Fulham, L.|
|David, B.||Mishcon, L.||Stone, L.|
|Davies of Leek, L.||Mountevans, L.||Strabolgi, L.|
|Elwyn-Jones, L.||Parry, L.||Thurso, V.|
|Evans of Claughton, L.||Peart, L.||Underhill, L.|
|Hale, L.||Pitt of Hampstead, L.||Wells-Pestell, L.|
|Harris of Greenwich, L.||Ponsonby of Shulbrede, L. [Teller.]||Whaddon, L.|
|Houghton of Sowerby, L.||White, B.|
|Irving of Dartford, L.||Ridley, V.||Winstanley, L.|
|Jeger, B.||Rochester, L.|
Moved accordingly, and, on Question, motion agreed to.
§ Resolved in the affirmative, and Clause 23 agreed to accordingly.317
§ 10.4 p.m.
Baroness DAVID moved Amendment No. 58:
After Clause 23, insert the following new clause:
§ "Repeal of s. 21 of Local Government Act 1974
§ The noble Baroness said: Now that revaluation is to be postponed until we do not know when, until the Secretary of State decides that the moment has come, this, in a way, minor amendment perhaps becomes rather more important. The change in treatment for rating purposes of minor structural alterations to properties and central heating installations, which was introduced by Section 21 of the Local Government Act 1974, has resulted in anomalies and discrepancies in rate bills of otherwise comparable properties. Not unnaturally, this has caused a good deal of ill-feeling and irritation.
§ As the law now stands no rates are payable on the increased rateable value attributable to minor structural changes or central heating installations until a new valuation list is introduced. This means that a ratepayer who made such changes to his property before the introduction of the 1973 valuation list pays rates on the value of the improvements, while a ratepayer who made the changes in, say, 1974, possibly just a year later, pays no rates on the improvements. This anomaly leads to confusion and to friction between ratepayers, perhaps people living in next-door houses. We consider that Section 21 of the 1974 Act should be repealed. I beg to move.
§ Lord MACKAY of CLASHFERN
I recognise that Section 21 of the Local Government Act 1974 gives rise to some anomalies and unfairnesses between one ratepayer and another. The object of the provision was to simplify the rating valuation system by removing the necessity for making changes to the rateable values of properties every time small improvements are made. It helps to keep down the costs of maintaining the valuation lists and reduces the inconvenience to householders of forms and inspections. 318 An important consideration also was that householders would not be discouraged from making minor improvements by the prospect of having to pay higher rates and water charges immediately.
I recognise the effect on that of any postponement of a general revaluation, but in our view the arguments in favour of the provision still hold good, and while the future of domestic rating is under review and the system considered for radical reform, the balance of argument in our view seems to be with permitting this concession to continue. While I understand the arguments that are put against it, I would respectfully suggest to the Committee that the section should be allowed to remain.
§ Baroness DAVID
It may keep down the cost of making some sort of new valuation but, on the other hand, the council is not getting the benefit of the rates which would come from the increased value. It seems to me that it is, in a way, a two-edged argument. I feel that if there is not going to be a revaluation for some time this should be looked at again. If the Minister would be willing to consider this, then I would withdraw the amendment for the moment and think about bringing it forward again on Report.
§ Lord MACKAY of CLASHFERN
All I can say is that I think this has been fairly fully considered and I do not think it would be very open of me to suggest that I could reconsider it.
§ On Question, amendment negatived.
§ Clause 24 [Ascertainment of rateable value of non-industrial buildings]:
§ On Question, Whether Clause 24 shall stand part of the Bill?
§ 10.10 p.m.
§ Viscount RIDLEY
I wish briefly to express a little unease about the clause. There is involved in it a power to order the revaluation of only certain classes of hereditaments, and this seems quite a power to enable Governments to use a political influence between, say, domestic and non-domestic ratepayers. There is 319 already a considerable discrepancy, which has widened over quite a long period with domestic rate relief, and I am not happy that this should be perpetuated. I hope the Government will take on board my point about the dangers of the clause.
§ Lord MISHCON
May I ask the Lord Advocate, when dealing with the matter raised by his noble friend, to say that this might be considered so that some of us who do not wish to table needless amendments on Report may have our time saved here and now and know that the Government are being generous in this respect?
§ Lord MACKAY of CLASHFERN
So far as Clause 24 is concerned, the position is to make an improvement in the definition. The point my noble friend was referring to perhaps arises more aptly under Clause 25.
§ Viscount RIDLEY
I apologise to my noble and learned friend; he is quite right and I should raise the matter under Clause 25. The hour is late, so perhaps I may be forgiven.
§ Lord AVEBURY
Perhaps the noble and learned Lord will explain one feature of the clause. I hesitate to burden the Committee with technical questions at this late hour but I notice that in subsection (4) there is a provision for transitional relief about which the Secretary of State may make regulations in respect of hereditaments the net annual values of which are to be ascertained in accordance with Section 19 (3) of the 1967 Act instead of in accordance with Section 19 (2). The implication, as I understand it, is that certain rateable values will be increased by the new method of ascertainment.
We should not let the clause go without an explanation as to what hereditaments are likely to have their values raised and whether the amounts will be of considerable size, as one would expect they might be if there have to be transitional provisions. The ratepayers who may be affected by this change in the method of ascertaining their rateable values should be aware of what is likely to hit them and of what their rights may be to seek the 320 transitional relief provided for under subsection (4). An explanation from the Minister would be of value therefore not only to the Committee but to ratepayers who might be affected and who find their rates going up as a result of the clause.
§ Lord MACKAY of CLASHFERN
As noble Lords will appreciate, the basis of the valuation of certain of the properties to which the clause relates will be on the basis of net rents and there may be changes in rateable values accordingly. It is difficult to say by how much until one knows what the net rents in question are. It is to provide for that possibility that the transitional provisions are in the clause.
§ Lord AVEBURY
The Minister has not said what kind of properties are likely to find their rateable values increased as a result of the clause. Can he not give some indication of the types of premises the rateable values of which are likely to be increased, even if he cannot say by how much?
§ Lord MACKAY of CLASHFERN
The clause as a whole is dealing with the situation of premises which are valued to gross at the moment and will be valued to net when the clause comes into effect. These are premises which are non-industrial but are not domestic dwelling-houses, speaking very generally. It is premises of that sort which would be affected in this way and be valued by reference to net rents, which might give a higher figure than the present one.
§ Clause 24 agreed to.
§ Clause 25 [Valuation and adjusted valuation]:
§ [Amendment No. 59 not moved.]
§ Lord MISHCON
I wonder if I might have your Lordships' indulgence, as we have reached Clause 25, to make a point purely and simply for the convenience of Members of the House and certainly Members of the Committee.
§ Several noble Lords: Order, order!
§ 10.16 p.m.
Baroness STEDMAN moved Amendment No. 60:
Page 26, line 27, at end insert—
("(4) Before exercising his powers under this section the Secretary of State shall consult with such associations of local authorities as appear to him to be concerned and with any local authority with whom consultation appears to him to be desirable.").
§ The noble Baroness said: I want to make it plain to noble Lords opposite that in this amendment we are not seeking to oppose Clause 25, but we do wish to see it further amended so that adequate consultation will take place between central Government and local government. As I see it, Clause 25 has two purposes, and I share the unease of the noble Viscount, Lord Ridley, who jumped the gun a few moments ago. The first of the purposes is the technical one which will provide a proper basis for rating revaluations and enable the Secretary of State to prescribe a time by reference to which the valuation shall be made.
§ The second purpose is, I think, the more important of the two. It is to enable the Secretary of State by order to arrange for partial revaluation. Although the local authority associations have all said that they would prefer to see a complete rating revaluation, if that is not possible then I think they would accept a partial revaluation, covering perhaps non-domestic property, provided that that was linked to some sensible and fair method of adjusting, say, the domestic rateable values.
§ Clause 25 does make this possible; but as I see it, and as the local authority associations feel, there is a defect in this clause in that it makes no mention at all of consultation between central Government and local government on an issue which is absolutely fundamental to local government tax base. All the local authority associations have said that they believe this clause could be amended in the way that I am suggesting tonight. and that it would be an improvement.
§ Again, we get back to the need for consultation with the local authorities. I understand that at Committee stage in another place the noble Lord's honourable friend, Mr. Fox, agreed to look again at the possibility of making statutory provision for consultation. There was no statutory duty on the Government to consult last summer and they went ahead without any proper consultation with the 322 local authorities in withdrawing the revaluation. We want to see consultation with local authorities, and we hope that the noble Lord can advise us how his honourable friend now proposes to do that in the light of his comments at Committee stage in another place.
§ All we are asking, in effect, is that before he exercises his powers under this very important clause and Section 22 of the 1967 Act the Secretary of State shall consult with the local authority associations and such local authorities as he considers it desirable to consult. When this Government first took office they made a decision about revaluation without really adequate consultation with the local authorities. The local authorities did not expect such an announcement, and they should at least be brought into discussions before that sort of decision is taken. The councils, the councillors and the ratepayers have all got to be taken along with the Government when these matters are considered.
§ Revaluation, in whole or in part, affects the level of the rates and what they ought to be spent on. Therefore it is a subject of considerable interest to all those who are involved in local government; and local authority associations feel that, while they do not want to be a party to the actual decision that is finally made by Government, they want it written into the Bill that they shall be consulted before such vital decisions are made. I beg to move.
§ Lord MACKAY of CLASHFERN
This amendment would require the Secretary of State to consult local government interests before exercising any of the powers conferred on him by Clause 25. This is the clause that provides for the possibility of a partial revaluation, and the clause provides that in such an event the Secretary of State shall prescribe an arithmetic multiplier that will be applied either to the revalued or to the non-revalued sector so as to preserve the overall balance of rateable value between the sectors. The clause as drafted already places a duty on the Secretary of State to consult local government and others about that adjustment. It seems to us quite right that there should be consultation in this important professional matter, and that is provided for.
323 The amendment before us goes further, however. First, it would require consultation about the prescription of a time, earlier than the general revaluation is to have effect, by reference to which any valuations for the new list are to be assessed. Now it seems to me that the local authority associations have no special interest in this reference time. It is a technical point on which professional advice would be received from the valuation office of Inland Revenue. It is really on the practicalities that that would be important. If any consultation is needed, it would be with professional associations in the valuation world, and this kind of consultation is very likely. Indeed, once the date of a revaluation has been announced, the professional bodies are certain to come forward voluntarily with their advice on a reference date for the valuers to use.
The second requirement of this amendment is more significant. It would require consultation about the question of whether there should be a full revaluation or a partial one, and, if partial, for what classes of property. Here I recognise that the local authority associations will feel themselves to be specially interested. The Government know their preference for a full revaluation, if a revaluation is to take place. However, even in this event a statutory duty to consult seems undesirable and unnecessary. Partly this is because the amendment would provide for consultation with local government interests but says nothing about other interested parties. It is difficult to have consultation with ratepayers, but there are some bodies in the field that attempt to represent ratepayers as a group. Partly also a duty to consult local government seems unnecessary, because the local authority associations have formal access to the Secretary of State through their participation with him in the Consultative Council on Local Government Finance.
I should have thought that that is a fairly telling point. The Consultative Council meets several times a year and has a joint secretariat. The local government side can therefore keep a regular review of the Secretary of State's intention towards a revaluation, and this subject has already been discussed this last year in that particular forum. While local authorities share with the Secretary of 324 State in the Consultative Council, then I think one can say that they already have established a forum for consultation on any financial issue in which they are interested. The logical outcome of the amendment before us would be that a duty to consult should be inserted by statute in every provision that mentions any aspect of local government finance. I suggest that that would be unnecessarily to burden the statute book without a corresponding advantage. I think that the general arrangements for consultation that I have described are adequate and should be thought satisfactory.
With regard to the point made about the decision not to hold the revaluation, that was a decision which in the peculiar circumstances required to be taken rather quickly; work was going on. I should think it is true that my right honourable friend the Secretary of State has done his best to consult as far as possible, but I accept that in that particular case there may have been special reasons for urgency which did not enable him to consult as fully as otherwise he might have done. I hope that in the light of that explanation the noble Baroness will feel able to withdraw the amendment.
§ 10.24 p.m.
§ Lord MISHCON
I apologise for having intervened earlier, but I just did not know how to get over the difficulty regarding our procedural rules. The point that I was trying to make, which I now make in order, relates to the way in which Clause 25 had been printed in the Bill now before the Committee. That was a plea only for clarity, and especially for clarity for those who, outside this Chamber, are not quite so accustomed to Bills and to reading them, and who, because of their interests, possibly, which are peculiar and do not arise generally in regard to legislation, have to read this Bill and come to some sort of conclusion as to whether or not they should make representations upon the Bill to any appropriate association.
Your Lordships will see, if your Lordships would be good enough to look at page 24 of the Bill, and at Clause 25, that this is one of those fairly rare occasions when parts of another Act are incorporated and there are changes in regard to the sections which are quoted 325 from that Act. Your Lordships will also see if you look at Clause 25 that you deal with exactly the same print in regard to the subsections of the clause itself as you do with the parts of the other Act which are going to be altered. Looking down the columns on pages 24 and 25, the following mystery appears. Your Lordships will see "(1)" and then "19A.—(1)" in precisely the same type, followed by "(2)" and "(3)". Then, if you go over the page to page 25, you see "(4)", "(5)", "(6)" and "(7)". Then, all in the same clause, "19B.—(1)" in exactly the same type as before, and "(2)", "(3)", "(4)" and "(5)". Then, if you turn over to page 26 you will see, all of a sudden, "(2)" coming after "(5)" in precisely the same type and with precisely the same indentation, in fact, as occurs in the case of the other clauses. My plea was going to be that in future, in a clause where, as I have said, sections of another Act are quoted and amended, it would be very helpful if printing arrangements could be made either to have a variation in the numbers and the way they are printed or at least a variation in the indentation in the Bill itself.
Having made that general point—and your Lordships have been most indulgent in allowing me to make it now, and I repeat my apology; I did not know when to raise it, quite frankly, since it did not have anything to do with an amendment—may I ask the noble and learned Lord the Lord Advocate this question? I appreciated the logic, if I did not agree with the reasoning, of his reply to my noble friend Lady Stedman when he said that local authority associations were brought into consultation in regard to financial matters in any event, and therefore there was no need to incorporate that in a Bill. As I said, I understood the logic of that, and I understood the reasoning. Why should that consultation not have taken place within that very ambit when one is dealing with a method in regard to adjusting the rateable values, as is set out in this Bill? Indeed, I thought that was going to be the reasoning behind the amendment moved by the noble Lord, Lord Renton, that it was all unnecessary because there were financial matters which were considered in the appropriate way all through the year, and therefore it was quite unnecessary to put this in 326 the Bill. But to my consternation the noble Lord withdrew his amendment, or said it was not going to be moved.
We are now left with a situation which I do not quite follow, and it is this. Either these matters are discussed with local authority associations and therefore there is no need to have any provision in this clause, or in any clause indeed, relating to financial matters, because it happens automatically; or that is not so, in which case there is the necessity. If the answer to the question be, no, these financial matters are definitely discussed on all appropriate occasions within the local authority associations, why has the method of dealing with this specially to be provided for by way of consultation? If indeed the noble and learned Lord the Lord Advocate has given an explanation of this and I did not hear him because of my concern in making the other point and concentrating all my thoughts on that weighty matter, I ask his forgiveness, but I did not, frankly, hear his explanation, and I ask for it now.
§ Lord MACKAY of CLASHFERN
May I take the second point first. The explanation which I gave was that the method required in the clause for adjusting as between the revalued and non-revalued sections is a rather special matter and it is a matter on which it was thought right that there should be special enactment of consultation, because it is a matter that may affect not just the generality of local authorities, but the particular formula may be required to take account of local circumstances. On the other hand, where the amendment goes much wider than that into general consultation in regard to the exercise of any power under this clause, I was suggesting that the situation is a little different and that the general consultative machinery which is already in existence, and which seems to work reasonably satisfactorily, should be relied upon, otherwise all the statutes referring to local government finance would be liberally sown with a somewhat similar provision to that in the amendment.
I can see that one might question the need for even the special provision, but in our view it is a question of trying to strike the right balance, and where there is a rather special matter of this kind to prescribe a particular method which might 327 have particular local difficulties about it as a special duty of consultation is properly laid upon the Secretary of State.
So far as the printing is concerned, my understanding of the layout is that where subsection (1) of Clause 25 seeks to enact new provisions to go into another Act the new provisions are set in with a larger margin, and that continues down page 24. I agree, certainly, if my sight is not being affected by the lateness of the hour, that the margin does not seem quite so wide on page 25; but that is the intention. Then when you come to page 26 you see that subsection (2), which is back to the main numbering of the clause, is set out nearer the side of the page, and then you get the greater indentation again in subsection (3), when you come to put new provisions into the 1967 Act in subsection (3). I agree that page 25 looks as though it does not conform as closely to the pattern as I would have liked, and no doubt on the next reprint that particular difficulty may be overcome.
§ 10.33 p.m.
§ Lord AVEBURY
If I might endorse the sense of the remarks of the noble Lord, Lord Mishcon, I thought these pages were not at all clear. The answer is probably that when you have words or sections inserted in another statute, the right method of highlighting it, so that one cannot, in glancing at the page, be confused between what is properly in this Bill and what is being inserted in some other statute, would be to use another type face, preferably a bold type face, so that the words hit your eyes as you look at the page. I believe this is done on occasion in our Bills, although not for the purpose that the noble Lord, Lord Mishcon, has in mind.
May I, while I am on my feet, suggest to the noble Lord the Minister, who I know is trying to be very helpful in explaining why we have this element of consultation dealt with on page 25 which he thinks is necessary, while not wishing to go as far as the amendment currently under discussion, would it not be logical to say that if the Secretary of State does have an obligation to consult local authorities on all these financial matters when he meets them several times every year in the Consultative Council on Local Govern- 328 ment Finance, then the only requirement you ever need in consultation is with particular local authorities?
Rather than leaving out that subsection (3) altogether, what the noble Lord the Minister might like to consider is leaving in simply paragraph (b). The particular local authorities which, as he said, might be affected by these proposals, or the other bodies of persons with whom consultation may appear to be desirable, would not necessarily be represented at the Consultative Council on Local Government Finance, but the associations of local authorities are, as I understand it, invariably represented and would automatically be consulted about any of these matters. To be logical, the noble Lord the Minister should at Report stage come forward with an amendment which would delete paragraph (a) of that clause, while leaving in paragraph (b).
Viscount COLVILLE of CULROSS
As the fourth noble Lord to talk about the format of this clause, other than on clause stand part, I cannot be out of order! May I suggest to the noble Lord, Lord Mishcon, that the first priority is to make sure that nothing is done in this Bill that will prevent rapid consolidation. That is the primary thing that we must hope for. There have already been substantial changes to the General Rate Act 1967, which was itself a consolidation Act. After this Bill goes through, I think we cannot wait for another version of that. The second thing I would suggest to him is that, whereas it is comparatively common to write in new sections or subsections into existing statutes, the use of different type faces has been reserved so far for what I consider to be the most valuable of all purposes; that is, the construction of a Keeling schedule, whereby the new text with the amendments, highlighted in the usually heavy print, is set out in a schedule to the Bill, so that one can see the complete new text as it has been amended in the legislation there and then. That is not a device very often used by draftsmen—not as often as I would like to see. If we introduce too many different forms of type face, however, the value of that particular exercise—which is great when it is done—may well fall away. I would hope therefore that he would be satisfied with the expectation of early consolidation.
§ Lord RENTON
I am grateful to my noble friend Lord Colville of Culross for his reference to the need for consolidation and to his reference to the desirability of Keeling schedules on some occasions. I do not think, however, that he would suggest that this particular clause would be suitable for a Keeling schedule, because it merely adds to the existing law rather than making amendments to it. I was quite satisfied with the very candid explanation given by my noble and learned friend the Lord Advocate about the rather strange arrangement of the subsections and the new clauses here, and his free confession that it is on page 5 that the mistake is made of there not having been sufficient in-setting into the margin.
§ Lord MISHCON
I also very much appreciated the comments of the noble and learned Lord the Lord Advocate on what was a minor point, but it could occur again. I hope the Committee will forgive me for having raised it in the course of a very busy evening. May I thank the noble Viscount, Lord Colville of Culross, for the lesson he has given me? I assure him that I have learnt much from it. His own contribution, had it taken place before mine, would have been much more worthy of the Committee and of much more use to the Committee.
§ Baroness STEDMAN
We have strayed somewhat wide of the original amendment. I had not anticipated that we would be discussing Keeling schedules and so on on what had seemed to be a simple and reasonable amendment. But it has been an interesting five or 10 minutes. I am grateful to the noble and learned Lord the Lord Advocate for his reply. I should like to look at it tomorrow in Hansard for it seemed to me that there was a glimmer of hope that if we come back at the next stage with something that did not ask for quite such a wide field of consultations, we might get better treatment. On that basis, I will look at it again and come back to it, if necessary, at the next stage. I am happy to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 25 agreed to.
§ Clause 26 [Domestic rate relief]:330
Viscount COLVILLE of CULROSS moved Amendment No. 60A:
Page 26, line 34, leave out ("dwelling-house") and insert ("domestic").
§ The noble Viscount said: I had to make the speech that I made just now because I now propose that we should amend the 1967 Act by putting in some new subsections. I hope that the Committee will agree with me that it will be expedient to discuss these four amendments together because they are all a single point. Whether it is the rate poundage or the rateable value, when the rate bill arrives through the letter box it is very often rather large; and anybody who is entitled to a form of relief is, as a rule, thankful for that relief. The domestic relief which is at present available is, of course, fairly wide, but, despite the further extensions given in this Bill, there is still one anomaly. If any noble Lord lives in a house with an integral garage and a loft in which can be put unwanted furniture for storage, the whole building is treated as being domestic and attracts the full domestic relief. However, not everybody has an integral garage, but they still have a car. Not everybody lives in a house; some people live in flats where they have neither an integral garage nor an integral place to put their unwanted goods and chattels; so they have a separate garage or a separate shed or building which, in itself, forms a rateable hereditament. That separate building attracts no domestic rating relief, even if it would have done so had it been part of an integral building. This is an anomaly which may not represent a huge sum of money for the individual—but every little counts. I hope that it would not be a very large sum in aggregate for those who have to pay out this relief, which is central Government.
§ I do not think Her Majesty's Government had wholly overlooked this matter. It was raised by my honourable friends the Members for Hornchurch and for Melton on 6th March in Standing Committee in another place. My honourable friend the other Parliamentary Under-Secretary of State said that he would consider it again. I am sure he did so; but there have not so far appeared on the Marshalled List any amendments to give effect to it. I believe that these amendments would do so. They have the advantage that, although Amendment No. 60C looks extremely 331 complicated, the new definition of a domestic hereditament in the newly-to-be-inserted Section 48 (3) (b) will cut down the number of garages to those which really essentially must be the ones to be used for domestic purposes as opposed to any trade purposes. I would not wish to extend it further than to purely the equivalent of the integral domestic garage. Then of course paragraph (c) provides for private storage.
§ This is a small extension of a much-used, much-welcomed relief for householders who find the rates hard to pay. I hope that the Government, upon the further reflection that they have had time to give since March—which is quite a long time—may be able to provide some encouraging noises and reaction to what I suggest now. I beg to move.
§ 10.45 p.m.
§ Lord MACKAY of CLASHFERN
This matter has indeed been further considered by the Government since March. I am very happy to be able to advise the Committee to accept this and the other amendments that my noble friend Lord Colville will move, as he has indicated. This is an anomaly which over the years has generated a slow but steady stream of letters to the Department of the Environment and it is certainly a position which is very hard to defend. Nearly 2 million people stand to benefit from this extension of domestic rate relief, and it gives me particular pleasure therefore to be able to commend it to the Committee.
§ Viscount SIMON
May I ask the noble Viscount, Lord Colville of Culross, this: Amendment No. 60C, in head (ii), reads:is provided by the keeper of a hotel inn guesthouse or boarding-house and used wholly or mainly for the motor vehicles or his guests, or".Surely, it means "of his guests"?
Viscount COLVILLE of CULROSS
The noble Viscount is perfectly right. It is probably the result of my hand writing. If I may consider the matter rapidly on my feet, may I suggest a manuscript amendment to insert the word "of" instead of "or" when I come to that?
Viscount COLVILLE of CULROSS moved Amendment No. 60B:
Page 26, line 37, leave out ("dwelling-house") and insert ("domestic hereditament").
§ Viscount COLVILLE of CULROSS moved Amendment No. 60C:
Page 27, line 21, at end insert—
("( ) After subsection (4) there shall be inserted:—
(4A) In subsection (3) for the word "dwelling-house" there shall be substituted the words "domestic hereditament".
(4B) In this section "domestic hereditament" means a hereditament which is—
§ The noble Viscount said: I beg to move, with the substitution on page seven of the Marshalled List in head (ii), line 3, of the word "of" for the second word "or".
§ Viscount COLVILLE of CULROSS moved Amendment No. 60D:
Page 27, line 22, after ("(5)") insert—
("(a) For the word "dwelling-house" there shall be substituted the words "domestic hereditament"; and
§ Clause 26, as amended, agreed to.
§ 10.48 p.m.
"Limitation on business rates
(". There shall be added after section 2 of the 1967 Act the following new section—
2A.—(1) In determining a rate payable in respect of hereditaments to which this section applies, the amount per pound on the rateable value shall not exceed the standard rate poundage defined in Part VI of the Local Government, Planning and Land Act 1980 and for the purposes of this Act the standard rate poundage shall be calculated as if the actual expenditure of the authority levying the rate did not exceed the standard expenditure as defined in Part VI of the Local Government, Planning and Land Act 1980.
(2) This section applies to hereditaments used exclusively for business purposes.".").
§ The noble Lord said: The purpose of this amendment is to put a limit on business rates. It may be remembered that on Second Reading I had occasion to remind the House that businesses pay very nearly half the £9 billion of the total rate, and that this is equivalent to 85 per cent. of the anticipated yield of corporation tax. Businesses in fact pay a vast tax in rates and they are not represented as indeed are domestic ratepayers; and so in a sense this is taxation without direct representation. With that background, it must also be remembered that at a time of recession high taxes, including high rates, are a very important determining factor in investment, development of business and in employment. Against that background, I should like the Committee and my noble friends on the Government Front Bench to consider this amendment.
§ The new system of rate support grant, with the possibility of restricting the amount of grant that is given to excessively high-spending local authorities, could lead to a greater rate take-up on the part of all ratepayers. One also needs to remember that local authorities that are high spenders tend to be the kind of local authorities that see businesses as impersonal monsters, rather than as employers of the people who live in the ratepaying area.
§ So it is quite important that there should be consideration given to limiting the amount of rate which is paid by businesses to what could be a reasonable figure. It is suggested, within the terms of the amendment, that the burden of rate on business ratepayers should be 334 limited to that required to finance local authority services up to the so-called common standard, plus threshold. Anything in excess of that would fall upon the domestic ratepayers who, unlike the business ratepayers, as described, have democratic representation. This, it is suggested, will further the commendable objective of the Government of making local councils more accountable to their electorates. I beg to move.
§ Lord MISHCON
I rise to oppose the amendment and am somewhat surprised that the noble Lord should word this amendment in a way which, he says, makes local authorities more answerable to the electorate. Has this Bill not gone far enough not only in clipping the wings of local authorities, but in absolutely slaughtering them in regard to their dignity and their powers?
We listened on Second Reading—and we shall be coming to these points again very soon—to ways in which local authorities are to be limited by central Government in regard to their borrowing powers and capital spending, to how they are to be forced to give reports, to how they are to be told, without any reason, that their direct labour organisations can be closed down at the arbitrary wish of the Minister. I readily concede that that is a matter that will be looked at again by the Minister, but that is how the Bill stands. They are to be directed, they are to be pushed and they are to be told that, in some way or other—I think we shall be commenting on this later—their powers are being extended under this Bill. If some of us, as human beings, had our powers extended in this way, we would regard ourselves as prisoners who were allowed to walk a little further in the area prescribed for walking in the prison yard.
I hope that I am not exaggerating, but the noble Lord, Lord Mottistone, now comes to the Committee and wishes to have an amendment which, in any event, I believe to be unworkable—and I am so advised by those who are skilled in matters of local authority finance—and which tells local authorities that they cannot levy a rate poundage in respect of non-domestic hereditaments beyond what is laid down in the Bill by central Government.
335 Is there to be any further invasion of local authority rights? If there is to be, I suggest—and I hope not unreasonably—that the word "authority" should be left out of these assemblies, and they had better be called local agencies of central Government, with nominated deputies of central Government. If these matters are to be rectified, they must be rectified by parties who go before the electorate and point to something unjust about the way in which the rate poundage is levied, assessed and so on, and that must be done in a proper democratic way.
Let us cease this pantomime of saying such wonderful things about local authorities and how much they form part of the great democratic life that we in this country have, when we sit here at Second Reading, at Committee stage, at Report stage and hereafter taking every conceivable power away from them and, as I have said, rendering them completely impotent as a result. It is in that spirit that we on this side oppose the amendment.
§ Lord MONSON
I should like briefly to support this amendment for which the noble Lord, Lord Mottistone, has made an extremely good case. I wonder whether the noble Lord, Lord Mishcon, has read the most interesting article by Sir Horace Cutler in yesterday's Financial Times, in which Sir Horace points out that 65 per cent. of the rates in London are contributed by business. Business, of course, has absolutely no representation on the Greater London Council. If further burdens are heaped upon industry, this will lead to greater recession and more unemployment. Surely nobody on either side of the Committee could possibly wish to see this.
§ 10.56 p.m.
§ Lord BELLWIN
As the noble Lord, Lord Mishcon, will, I am sure, expect, I do not propose to anticipate what will be said in the debate, presumably not today, on the financial proposals in the Bill. The noble Lord, though, included some of what I presume he will say then and which I shall oppose very vigorously indeed. I disagree with him entirely as to the effect which the proposals will have on local government, but I do not think that this is the moment to embark upon that argument. I would prefer to stick 336 to the amendment itself and to comment upon its merits.
As has been said, this new clause would impose a ceiling on business rates. The ceiling would be derived from the calculations of an annual settlement for block grant, and it incorporates an essentially simple idea. In distributing block grant, an assessment has to be made as objectively as possible of the expenditure needs of each local authority. This assessment will be known as "grant related expenditure", a term which was adopted instead of the term "standard expenditure" in another place. Local authorities will remain free to determine expenditure below the level of their grant related expenditure or in excess of it, but grant entitlement would be reduced at high levels of expenditure. If business rates were required to be fixed on the assumption that expenditure did not exceed that of the grant related expenditure, then the appropriate grant related poundage would be derived from the grant settlement and could be read off from a schedule of poundages. I apologise immediately for the technicality of the terminology. I give due warning that it is something which we will have to become used to when we debate block grant. This is part of the complexity that it has for lay people.
The case for imposing a ceiling of this kind on business rates has been put to us by my noble friend Lord Mottistone. In recent months it has been put to the Government by the CBI. However, in practice the proposition would not work as simply as might be supposed. First, such a ceiling would place very great reliance upon getting grant related expenditure assessments exactly right. With the new block grant, this Government are making strenuous efforts to improve on assessment methods and to do them more objectively. But it must be recognised that such assessments can never be more than an approximate statement of the need to spend. It is for that reason that in operating block grant we will incorporate a threshold above the grant related expenditure, and the tapering of grant will not begin unless that threshold is exceeded. No such safeguard is built into this amendment.
Secondly, a ceiling on business rates alone raises questions of equity. Why 337 not also on domestic rates? It has been agreed that the business ratepayer is disfranchised. A ceiling on business rates would have the effect of throwing any marginal increases in expenditure wholly on to the domestic ratepayer. Taken on its own, that proposition can be defended, but such a scheme would be in addition to block grant. In other words, the extra burden on domestic rates would be in addition to the marginal increase in the proportion of expenditure that the ratepayer must find as a consequence of a lower rate of grant support on higher levels of expenditure which is a feature of block grant.
Finally, this additional burden on the domestic ratepayer would in some areas be slight; in other areas massive. This is because block grant achieves an equalisation of resources between authorities by ironing out discrepancies in their total rateable value. Within this total rateable value there can be a wide range of ratios of domestic to non-domestic rateable value. It would be wholly unfair and unacceptable to provide a ceiling that could have widely different effects between areas. There could be, for example, a higher domestic rate in district A than in district B, yet expenditure could be at a higher level in district A. This would make nonsense not only of the provisions in block grant for equalising the resources of different areas but also of our new efforts to improve the information given to the ratepayer about the rate bill and how it is spent.
One has to conclude therefore that a ceiling of the kind proposed would protect business ratepayers but would result in very uneven effects between areas, a consequent undermining of local accountability and considerable complication of the grant system. This, however, is to criticise the amendment on rather narrow grounds. It may be that a ceiling on business rates only could be devised. There would have to be a substantial re-designing of block grant but, given time, it might be possible to work something out. My advice to your Lordships would be not to accept this amendment and to decide against re-designing block grant at this stage. Let us first see how the new grant provisions, coupled with our provisions under Clause 2 of the Bill, work out in practice. It is my belief 338 that local authorities will come to terms with the greater discipline of accountability that these various measures will impose and that there will be less cause in future for concern about the level of rates on businesses.
As I sit down may I just say that I am conscious of the fact that some of the extremely high increases that we have seen recently in rates generally do have the impact upon businesses which is causing much concern everywhere and I shall return to that when we debate block grant. Therefore I can well understand the reason why my noble friend brings forth the amendment, but I hope I have illustrated adequately that there are many technical problems involved in doing what is suggested at this time; but there are in fact good reasons why we should not embark upon it at this time but that, like all the proposals about rating generally, it must be part of the pool of debate. With that explanation I hope perhaps my noble friend may feel able to withdraw this amendment.
§ Lord MOTTISTONE
I fully understand the technical difficulties that my noble friend the Minister has pointed out and I am reassured by the fact that he does not altogether discount the principle of my amendment for reconsideration in the future. It seems to me that the prosperity of the country is indirectly affected by the present situation, but with that semi-assurance on the part of my noble friend, for which I am most grateful, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ 11.4 p.m.
Lord MOTTISTONE moved Amendment No. 62:
After Clause 26, insert the following new clause:
§ "Rating relief for hereditaments which are partly used
(.There shall he added after section 25 of the 1967 Act the following new section—
25A.—(1) This section applies where—
(2) In this section, references to a hereditament comprising a commercial building are references to a hereditament (not being a dwelling-house or a hereditament having a floor space not exceeding 240 square feet and used as a lock-up garage) whose net annual value falls to be ascertained under section 19 (2) of this Act.
(3) If it appears to the rating authority that either paragraph (a) or (b) of subsection (1) applies and that the unused part is likely to remain unused for a period of 18 months or more, the authority shall request the valuation officer to apportion the rateable value of the hereditament between the unused part and remaining part of the hereditament; and if the apportionment made by the valuation officer is agreed by the authority and the occupier, then as from—
(4) The event referred to in subsection (3) above is whichever is the first to occur of the following:
§ The noble Lord said: This amendment relates to what we call "mothballing relief ". It is believed that it would be helpful to introduce a new provision which would exclude for valuation purposes those parts of properties which have been taken out of use but are being maintained in order that they may eventually come back into use at some later date when, for example, the present recession is over and the economy is growing again. This provision would be of particular value and help to manufacturing companies facing fierce competition from overseas.340
§ In the major recession between the wars industrial de-rating was introduced. There is a strong case for that being re-introduced now and it is under consideration within the CBI. Meanwhile, the provision of "mothballing relief"—that is, the process that is incorporated in the amendment—is a positive step that the Government can take to help preserve the industrial base. The administrative problems associated with mothballing relief could easily be overcome if there was a will to see some such measure successfully introduced. I beg to move.
§ Lord MACKAY of CLASHFERN
My noble friend Lord Mottistone has made a powerful case for rate relief for what is sometimes described as premises or plant in mothballs. Listening to the arguments, I think two strands can be distinguished. First, there is the case that if firms close down or cease to use certain production facilities in a factory, clearly definable parts of a factory or pieces of plant and machinery are left unused. The continuing rate liability in respect of those parts is then seen as a burden. The possibility of rate relief is seen as a valuable source of respite for firms with diminished profits, but with hope of restoration in time.
Second, there is an argument about equity. It is said that it is unfair that rates should be levied when a property is not being fully used. And a particular unfairness is seen between the case in which there are two separate small factories, one of which is closed (and, therefore, liable for empty property rating which would often be at a reduced poundage) and the case in which one half of a large plant is closed (where no rating relief at all is presently available).
At first sight those seem very persuasive arguments. There are, however, arguments against. The first is one of rating principle. Mothballing relief would breach the fundamental principle that the use of part of a hereditament constitutes occupation of the whole. This may not sound serious, but I believe that with any tax there has to be a desire to preserve the basic principles or the tax becomes inconsistent in its application with concessions made arbitrarily to some groups and withheld from others. Mothballing relief, for example, would pave the way for 341 arguments about what constitutes occupation for other classes of ratepayers, notably the domestic. Should we withhold such relief for unused rooms in domestic property? If my son goes off to university should I get a rates reduction?
A more difficult question perhaps is whether this sort of relief is workable in practice. There are two points. The first is the problem of definition and interpretation, to define a separate part sufficiently for this purpose. The other is the problem of enforcement. Once relief had been granted the rating authority would want to be satisfied that the area of property or the item of plant remained genuinely out of use. This is a matter of guarding against tax evasion, and in practice might be very difficult to enforce. Imagine trying to keep a check on some kinds of factory or plant, or office space, or facilities in shops and warehouses that might be made use of one day but not the next. it might also be costly to maintain adequate inspection. Thirdly, there are the effects on industry or commerce. Such a concession may, for many kinds of firm, introduce a new tax factor in calculations about whether to cut back production, whether to resume higher production, whether to use all parts of the plant efficiently. Rate relief for mothballing could thus have an unhappy distorting effect on decision taking, as any breach of taxation principle might do.
Finally, there is the important question: Who would pay for the relief? If relief were given for under-use of premises or plant there would be a loss of rate revenue for authorities. We cannot estimate how much because no one can guess how much under-use would be claimed to exist. Perhaps it would be a great deal. The cost would have to be borne either by other ratepayers or by the Exchequer, which means higher taxation centrally.
To sum up, it may be that a strong case for mothballing relief can be argued for particular firms. However, the relief proposed would cover all industry and all commerce. We cannot tell what the cost would be or where it would be borne. We must have some doubts about whether there would be a distorting effect on firms' decisions. More importantly, it would conflict with fundamental principles of rating and make for inconsistency and muddle. But above all, the practical 342 difficulties of knowing what constitutes "out of use" and of inspection and enforcement seem to be most formidable. I must reluctantly advise your Lordships to reject the amendment.
In doing so I should like to stress that the Government are far from unsympathetic to the problems of rates on firms that no longer require their premises fully. In this Bill, in Clauses 34 and 35, to which we shall come, we seek to take powers to suspend the surcharge on unused office property and to ameliorate the mainstream provisions of empty property rating. This follows a review of empty rating that has been conducted since the Government came into office. These clauses are, of course, the subject of other amendments on the Marshalled List so I shall not say more about them now, except just to indicate that the Government consider this to be an important matter, but I regret to say that we cannot see our way to supporting this amendment.
§ 11.10 p.m.
§ Lord HARMAR-NICHOLLS
That argument was the argument of the bureaucrat without any sort of reserve. The principle can be altered if circumstances which justify the alteration of the principle justify it. I should have thought that the fact that so many people who have factories and property have it left empty through no fault of their own is a justification for the alteration of a principle.
The only part that could hold water, if one did not examine it with a little care, is that it would be difficult to administer, but I do not accept that. We have found that the administration of this sort of thing is already in existence. For example, if one walks through customs, there are now two alleys: one where you go if you have nothing to declare, and the other where you go if you have something to declare. But, if you go through the one used for when you have nothing to declare, that does not prevent the customs and excise people examining what you have with you, if they feel that it is worth doing.
I should have thought that if you get an affidavit from any company that is claiming this relief, supported by their accountant, at the end of the day for 343 the most part the Inland Revenue accept the accounts submitted by the accountants of a company, and levy their taxes upon that. It is only if they have any doubt that the accountant himself has been misled and the accounts ought to be questioned, that they set about an inquiry and look into the matter. But the number of occasions on which that happens is rare, because if there is a statement of an accountant—someone whose profession is dependent upon their integrity—then I would have thought that that would be sufficient.
So it is within the power of Parliament always to alter the principle if it thinks that the circumstances justify it, and I feel that the circumstances do justify this mothballing suggestion, included in this new clause. As regards the administration part of it, yes, that can be overcome, on the undertaking in an affidavit from the people who are claiming the relief, supported by their accountants or by their lawyer, on both of which spot checks could be done.
The whole of our industrial administration depends upon spot checks. One could always use the bureaucratic argument that safety in the works means that every works must be inspected every day, because somebody may be infringing it. All of these things could not work if one did not have that amount of trust and in discovering by spot checks those who are taking advantage of the trust that is put into it. I believe that this ought to be looked at again. Despite the answer which my noble and learned friend has just given, I think that the circumstances certainly warrant another look at it so that we can see whether or not there are words that could bring about what is fair, despite the slight difficulty that bureaucracy might find arising from it. Perhaps we could do that on Report.
I feel that I must support my noble friend Lord Mottistone and my noble friend Lord HarmarNicholls. I must confess that I was astonished to hear Her Majesty's Government suggest that it would be difficult and expensive to monitor a mothballing arrangement. Just to give one very simple example: any part of a factory or plant that had to be shut down for a short 344 period would have need of no lighting, heating or power. It would be the simplest thing in the world for the industrial ratepayer to give evidence when he applied for the electricity in the plant to be turned off and for whom, say, the electricity was to be turned on again. There we have very good evidence indeed which I think even the civil servants might be able to understand and accept as evidence of the fact that the factory is not in use.
§ Lord MOTTISTONE
I do not know whether my noble and learned friend the Lord Advocate would care to respond to the suggestion of my noble friends Lord Harmar-Nicholls and Lord Morris, and say whether he would be prepared to consider the matter again. He spoke about two threads in my argument; he produced two splendid threads in his argument. In fact, at the beginning of his speech he supported the principle, as indeed he did in his closing remarks. Then he put in this nasty paragraph about bureaucracy which we all know can be argued the other way round if people have the will. Indeed, in my speech I anticipated that there would be a difficulty and said that if there is a will there is a way. Before I go any further, I just wonder whether my noble and learned friend has anything further to say.
§ Lord MACKAY of CLASHFERN
I was seeking to assert that we indeed have the will, but unfortunately have not been able to find the way. I think that it is fair to remind your Lordships that a similar amendment was proposed during the Committee stage on this Bill in another place, and my right honourable friend the Minister for Local Government and Environmental Services advised against the amendment. That was some time ago and I think that the matter has been fairly fully considered. Therefore, I do not think that I could encourage my noble friend to feel that there is much likely to come out of any further consideration of the matter.
§ Lord MOTTISTONE
Notwithstanding my noble and learned friend's remarks now, I did detect a chink in his armour in his earlier statement, and I think that further study of the Official Report will help me towards an amendment at a later stage. With that thought, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 27 [Payment by instalments]:
§ 11.18 p.m.
Lord MOTTISTONE moved Amendment No. 63:
Page 27, leave out lines 37 to 40 and insert—(" (5) This section shall extend to all hereditament).").
§ The noble Lord said: I apologise for having all my amendments on the run; it is pure chance. The purpose of this amendment is to extend the right of domestic ratepayers to pay rates by instalments—indeed, we understand the Government propose to extend it to very small firms—to all businesses. We understand that the Government's intention is to limit the right to business properties with a rateable value of £2,000 or less. This will only help very small firms and shops. Indeed, it is not very different from helping domestic ratepayers.
§ It has been argued that if this principle, within the terms of the amendment, is adopted abruptly, it would disrupt in a very large way the cash flow situation of the local authorities. Having observed from an earlier amendment what a large proportion of their income is paid for by unrepresented business interests, I believe that is probably the case. However—and here I suspect that I may be up against the bureaucracy again—it is surely possible to introduce such a principle by stages and for the local authorities to adjust control of their cash flow to meet the new situation as and when it is introduced. I should have thought that any competent administrators—perhaps the Government do not consider that their immediate servants in local or central Government are competent administrators—should be able to surmount this particular problem. I beg to move.
§ Lord MACKAY of CLASHFERN
As my noble friend has said, we propose to extend this to business ratepayers subject to a minimum and maximum sum to be specified by order. The next amendment, which I shall move, seeks to give power to prescribe different sums for Greater London than for other places, for reasons which will perhaps be obvious. The intention is that a suitable general maximum sum would be £2,000 of rateable value, as my noble friend has said. That 346 would be for a hereditainent outside London. The proposal in relation to London, if the amendment which I shall next speak to is acceptable to your Lordships, would be £5,000. So far as minima are concerned, a minimum of £100 appears appropriate both for London and for the generality of the country.
If one takes these figures of £2,000 elsewhere and £5,000 in London, I understand that our proposals would cover about 85 per cent. of non-domestic properties and thus give widespread benefit. At the same time they would cover only about 30 per cent. of non-domestic rateable value and thus be restrained in their impact on local authority income. We estimate that the cost to local authorities would be around £15 million in additional interest costs whereas, for instance, a limit of, say, £5,000 outside London would substantially increase interest costs arising from cash flow difficulties by introducing a further 15 per cent. of total rateable value at a gain of only 9 per cent. more property. So that as you go up you get a smaller return by way of proportion of properties but a much higher cost.
We believe that having minima and maxima of the kind that I have suggested gets a reasonable balance and extends this relief fairly generally in business. In our view it is necessary to balance much needed help to the business sector against the very real risk of damage to local authorities' cash flow. I perhaps ought to say that we consider that there is available both to central and to local government very competent administration, and that these figures are based upon what a competent administration would do in the way of handling this matter. Nevertheless, I believe that the limits which we have in mind which enable some 85 per cent. of non-domestic properties to qualify are sufficiently high to be of genuine assistance to the large majority of small businesses. Accordingly, in the light of these explanations, I hope that my noble friend will feel that the Government have gone as far as it is reasonably practicable to go in this direction, and that he will feel able to withdraw his amendment.
§ Lord MOTTISTONE
It is, again, am afraid, a rather disappointing answer. It would seem to me, as my noble and 347 learned friend said, that the small businesses are well looked after, and for that of course we must be grateful in every possible way. But the cash flow problems that might accrue to local authorities who, on the whole, are there to provide a service for the rest of us, should be subordinated to the wealth-creating companies, which are the large companies, who also have cash flow problems of their own. The fact that the local authorities' interests are taken first seems to me to be the opposite way round to what it should be, and that the concentration should be on doing everything possible to help the wealth-creating interests or industries and to subordinate all the administration, including ourselves, to that main purpose. I find this disappointing. I do not think that I have the support of the Committee. With that in mind, I shall have to study carefully what has been said to see whether we can find another way of tackling the problem. In the meantime, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ 11.25 p.m.
Lord MACKAY of CLASHFERN moved Amendment No. 64:
Page 28, line 4, at end insert—
(" (7) The power to prescribe sums conferred by this section includes power to prescribe larger sums in relation to hereditaments in Greater London than in relation to hereditaments elsewhere.").
§ The noble and learned Lord said: As I explained earlier, the purpose of Clause 27 is to extend to the occupiers of certain non-domestic property the right to elect to pay rates by instalments, which is currently enjoyed only by the occupiers of dwelling-houses. This right would be limited to property with a rateable value between minimum and maximum limits specified by order. The amendment seeks to make the necessary provision for any order to be able to prescribe higher limits for property in Greater London than elsewhere. This is desirable because evidence shows that the average non-domestic rateable value in Greater London in 1979 is more than double that outside. Accordingly, in order to get reasonable parity as between Greater London and elsewhere, this provision is necessary. I beg to move.348
§ Clause 27, as amended, agreed to.
§ Clauses 28 to 33 agreed to.
Baroness STEDMAN moved Amendment No. 65:
After Clause 33, insert the following new clause:
§ "Abolition of rating surcharge on unused office etc. property
§ (.—(1) Subject to subsection (2) below, sections 17A and 17B of the 1967 Act (rating surcharge on unused office etc. property) shall cease to have effect on 1st April 1981, and accordingly no person shall be liable to pay any surcharge under the said section 17A in respect of any period after 31st March 1981.
(2) Subsection (1) above shall not affect—
§ The noble Baroness said: I will not detain the Committee for long, and this is a probing amendment at this stage. We are concerned that the rating surcharge provisions of the Local Government Act 1974 are not operating as envisaged when the legislation was introduced, and despite subsequent modification, we still do not think they work as well as they might do. The main argument is that the local authorities have to carry out considerable work in identifying the properties where surcharge may be due, but in most cases the occupier can then show that the surcharge should not be levied either on the grounds of hardship because he is trying to sell or let the property or that he is adapting the property to make it suitable for some other use than that for which it was originally intended. The result is that the administrative costs of collecting the surcharge are proving to be very high. The Association of Metropolitan Associations carried out a survey recently which showed that the administrative costs were nearly the same as the amount they eventually collected.
§ The provisions to levy rates on the empty properties under Section 17 of the General Rate Act 1967 are capable of being used in a way that takes better account of the needs and problems of the local authority area. I recognise that in Clause 34 of the Bill as drafted the Government have introduced a power for the Secretary of State to suspend the 349 rating surcharge provisions by order. That is certainly better than nothing and we welcome it, but I hope the Minister will consider the points I have raised and perhaps take this back, and if any useful purpose will be served in tabling it at the next stage, I shall be happy to oblige him. I beg to move.
The MINISTER of STATE, MINISTRY of AGRICULTURE, FISHERIES and FOOD (Earl Ferrers)
I am grateful to the noble Baroness for having explained the purpose of the amendment. She was correct in saying that the Government have taken powers in Clause 34 to do virtually what she wishes, and of course the purpose of Clause 34 is to enable the Secretary of State to suspend the progressive surcharge provisions by order. The Government intend using this power straight away and it is proposed that it will take effect from 1st April 1981. Provision for the liability to surcharge to be reintroduced by a further order is included in the clause simply because there may be justification for it to be reintroduced by changed property market conditions in the future, and of course that would not be the case if the amendment were accepted. It seems to the Government that there could be times when conditions in the commercial property market might encourage a degree of undesirable speculation, especially in office building. For that reason it is preferable to keep the surcharge powers on the statute book, so they could be reintroduced by order if necessary. I accept the conditions attached to the proposed abolition in the amendment which seek to ensure continued liability in respect of any surcharge levied before the suspension order comes into force. I can tell the noble Baroness that the Government intend to include in the order the necessary provisions to achieve this effect. I hope that will satisfy the noble Baroness.
§ Baroness STEDMAN
I am most grateful to the noble Earl, and in the circumstances I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 34 [Suspension of provision for liability to progressive surcharge in respect of unused office etc. property]:350
§ [Amendments Nos. 66 and 67 not nioved.]
§ Clause 34 agreed to.
§ Clause 35 [Rating of unoccupied property]:
§ Lord IRVING of DARTFORD
There are two related amendments, Nos. 68 and 69. I think you have had submitted to you a manuscript amendment on the same clause. If you would be kind enough to call it I should be happy to discuss the three together.
§ Lord IRVING of DARTFORD
Would it be appropriate and convenient if I discussed the three Amendments together? Thank you very much. I beg to move Amendment No. 67A:Page 32, line 35, leave out subsections (2) and (3).This is a new clause introduced by the Government. If enacted it would increase the Secretary of State's power to prescribe how empty property rate provisions of the General Rate Act 1967 may be used. The 1967 Act provides that a local authority may not levy empty property rate until a property has been empty for three months. After that period has elapsed the authority may levy an empty property rate as it considers appropriate. Subsections (2) and (3) would enable the Secretary of State to vary the time for which a property may remain empty before a local authority may levy property rate and would enable the Secretary of State to set different time limits for different classes of property. Subsections (4), (2F) and (2H), would further increase the Secretary of State's power to prescribe what proportion of a general rate might he levied as an empty property rate and to vary the proportions which might be levied on different classes of authority.
Some of the local authority associations have argued that individual local authorities are in a better position than central Government to determine the needs and problems of their areas. This is as true 351 of the use or non-use of empty property rate as it is in respect of the services they undertake. The Secretary of State has indicated in his press hand-out of 15th May that he intends to use these powers. We consider this to be yet another unwarranted erosion of local government autonomy which ought to be resisted. I beg to move.
This amendment seeks to achieve the purpose of the noble Baroness's earlier proposed new clause, which is to abolish completely the surcharge on unoccupied commercial property. As I said during the discussion on that amendment, we believe that it is better to leave the Secretary of State with a power to revive the surcharge if, in the light of changing economic circumstances, this seems desirable. For example, if there were a recurrence of the property boom, with a lot of speculation in empty office property, the surcharge might have a part to play. With regard to the other amendments to which the noble Lord spoke at the same time, I am bound to tell him that it is the Government's intention to use the order-making power in the sub-paragraph which his amendment seeks to delete to reduce at the earliest opportunity the maximum level of empty property rate which may be levied to 50 per cent. of ordinary rates on business premises.
The power to vary this level is also essential if the Government are to maintain the necessary flexibility in their approach to changing circumstances ill both the domestic and the non-domestic sectors. It is not the Government's intention to use the order-making power to reduce the maximum level of empty property rate in the domestic sector at the present time. But clearly the use of this power to reduce the maximum level at which rating authorities may levy empty property rates has got implications for local government finance.
I should like to make it clear to your Lordships—and I think that it will satisfy the noble Lord—that the Government intend to compensate local authorities for the loss of income which will result from a reduction of the maximum level of empty property rate to 50 per cent. of ordinary rates. This will be achieved by an adjustment to the rateable value base used in calculating rate support grant 352 entitlements. It will involve compensating all local authorities that receive block grant—and only a handful will not—whether or not they currently levy empty property rate by prescribing that the rateable value of empty non-domestic hereditaments shall be treated for grant purposes as having 50 per cent. of its value in the local valuation lists. This will take effect from 1st April 1981. I hope that for those reasons the noble Lord will not seek to press his particular amendments.
§ Lord IRVING of DARTFORD
I am grateful to the noble Earl for his answer. I think he will appreciate that these points are very complicated matters and we should like time to consider them between now and Report stage. In the meantime, I am happy to beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 68 and 69 not moved.]
§ 11.37 p.m.
§ Earl FERRERS moved Amendment No. 70:
Page 34, line 37, leave out paragraph (1)) and insert—
(" (b) such notice as is mentioned in subparagraph (2) below is given by the charity or, as the case may be, the trustees ").
§ The noble Earl said: I should like to speak to Amendments Nos. 70, 7l, 72 and 73 together. These are four technical amendments that are necessary to correct flaws in the present drafting of Clause 35. Clause 35 is concerned with the rating of empty property, and, in general, it provides powers for the Secretary of State to vary certain provisions of empty property rating. My right honourable friend the Minister for Local Government and Environmental Services explained, when he introduced the clause in another place, that the Secretary of State proposed to use the new powers to reduce the maximum rate poundage that local authorities could levy on empty commercial and industrial property to 50 per cent. of the general rate poundage.
§ Properties that are occupied by charities or by trustees for charities and that are used for charitable purposes are given rate relief of at least 50 per cent of the rates due. An unoccupied property that is newly acquired by a charity does not, however, 353 attract rate relief. Conversely, a property that is acquired by a commercial firm will continue to attract charitable relief on empty property rates until it becomes occupied. The clause seeks to remove these anomalies.
§ The flaw in the drafting is that the clause makes references sometimes to charities, sometimes to trustees, and sometimes to both. This discrepancy makes the clause inoperable in some parts and anomalous in others. These four amendments seek to correct that omission. I beg to move Amendment No. 70.
§ Earl FERRERS moved Amendment No. 71:
§ Page 34, line 41, leave out (" charitable purposes (whether of the charity which owns it or of that and ") and insert (" the purposes of the charity or for the purposes of the charity and of ").
§ Earl FERRERS moved Amendment No. 72:
§ Page 35, line 4, leave out (" trustees became the owners of the hereditament") and insert ("hereditament was acquired by the charity or by trustees for it").
Earl FERRERS moved Amendment No. 73:
Page 35, line 10, leave out from (" paragraph ") to end of line 12 and insert—
- ("(a) if the hereditament ceases to be owned by the charity or by trustees for it; or
- (b) if it continues to be owned by the charity or by trustees for it, but it ceases to be the intention of the charity or, as the case may be, the trustees, that it shall be used as mentioned in sub-paragraph (2) above.").
§ On Question, Whether Clause 35, as amended, shall stand part of the Bill?
§ Lord MONSON
Before we leave Clause 35, may I ask the noble Earl, Lord Ferrers, precisely why the Government do not intend to use the powers conferred upon them by Clause 35 to vary by order the maximum level of the empty property rate and the length of the initial free period of three months in so far as domestic property is concerned. It seems extremely unfair on householders 354 that they should not be getting this relief, or that the Government do not propose to give them this relief, whereas they intend to do so as far as business properties are concerned. Three months is an awfully short period. If a landlord intends to improve his property, it is normally quite impossible to prepare plans, specifications and estimates, and to obtain approval for the grant, within a period of three months, let alone get the work done and have the property occupied again. Could the noble Earl possibly give some explanation of the Government's motives in not intending to extend this relief to domestic property owners?
I absolutely understand the reasons which concern the noble Lord, Lord Monson, and I think that anyone would have a great deal of sympathy with what he has said. But he will appreciate that the Government recently published a report on the vacant property survey which provides certain information on the amount and the condition of vacant property in England. This report found that a considerable number of properties were empty because private owners had been deterred, at least in part, from reletting by the effects of the Rent Acts; and in our Housing Act, this Session, we have introduced a number of initiatives, most notably the provision for shorthold tenancies, in order to encourage such people to bring their vacant accommodation back into use. The survey also found that 62 per cent. of empty properties were built before 1919, and our proposals for promoting home-ownership at low cost, such as the support lending scheme and statutory backing for schemes such as the GLC homesteading one, will, we think, make it easier for owners of older property to find purchasers. Prospective buyers of properties in poor condition will also be helped by our proposals in the Housing Act to make the house renovation grant scheme more attractive and flexible.
So, with all these new measures to give positive help to owners to bring problem categories of empty housing into use—in other words, what one might describe as the carrot—it would be inconsistent and, I would suggest, contrary to remove the stimulus of empty property rating, which really might be described as the stick. Under this clause in the Bill we retain 355 the right to alter the domestic rating and to lower it if that is required, but for the reasons which I have given we feel that at the moment it would be inappropriate.
§ Lord MONSON
I am grateful to the noble Earl for that explanation. I am not entirely happy with it, but I should like to think about it again between now and the next stage.
§ Clause 35, as amended, agreed to.
§ 11.43 p.m.
Lord MOTTISTONE moved Amendment No. 74:
After Clause 35, insert the following new clause:
§ "Abolition of the ratiny, of empty business properties.
§ (".—(1) In subsection (1) of section 17 of the 1967 Act there shall be inserted at the beginning the words "Subject to subsection (1A) below".
(2) In section 17 of the 1967 Act there shall be inserted the following subsection after subsection (1)—
(1A) This section shall not apply in respect of either
§ The noble Lord said: At the present time of recession and very depressed profitability, as I referred to earlier in relation to other amendments, the practice of many local authorities charging rates on empty industrial and commercial properties is causing particularly severe problems. In extreme cases buildings have been deliberately vandalised to reduce the rate burden, which is pretty disgraceful. The present provisions relating to the empty property rate are complex and take up a great deal of administrative time for both ratepayers and rating authorities. In this respect, the smaller firms are at a particular disadvantage. Whether or not a local authority levies an empty property rate is one of the factors taken into account by potential developers. A number of cases have been publicised, and are known to the Government, 356 where companies have been forced to pay rates on empty properties which they have tried but have been unable to sell. An example of this is the British Leyland comnlex at Speke, in Liverpool.
§ My right honourable friend the Minister for Local Government and Environmental Services has announced that the Government will restrict the empty rate on business properties that rating authorities can charge to a maximum of 50 per cent. of the full rate. This is helpful, but it really does not go far enough because the sums of money involved can be quite considerable. If you imagine the British Leyland complex at Speke, even 50 per cent. of its rateable value is an extremely high sum indeed. It is because of these considerations that we should like to see the right of rating authorities to levy empty property rate on industrial and commercial buildings abolished altogether. I beg to move.
§ Lord IRVING of DARTFORD
The new clause seeks to remove the right of individual local authorities to levy empty property rate on business premises. Section 17 of the 1967 Act is capable of being used very sensitively—and I know that this is not the view which the noble Lord takes; but it is true—having, regard to the economic and other conditions in their areas. For example, it means that empty property rate may be levied on properties within one or more geographical areas of a rating authority and applied only to properties of a type or size specified by the authority. The Act as it stands is better able to cope with varying conditions than this blanket amendment to remove all rights to levy empty property rates on business property. In a buoyant economy, the amendment would enable property owners to leave property empty while awaiting an increase in the rental value without any liability to pay rates. In a depressed economy, local authorities are as aware of the problems as anyone else.
I can understand my noble friend's desire to see empty property totally derated. It is almost the same argument as the noble Lord, Lord Monson, had earlier about derating domestic property. There are three strong arguments against this. First, to remove the requirement for owners of 357 empty property to make a contribution would cause a loss of income to local authorities of around £55 million a year. This is some £35 million more than the loss from our own proposals to reduce empty property rates to a maximum of 50 per cent. on business properties. This would be a substantial inroad into local authorities' funds. Secondly, total abolition of rates on empty property would mean that owners would pay nothing towards local authority services, from which they benefit along with those who have premises which are occupied. I am thinking here of police and fire services, for example. There are few owners of empty property who would sleep happily if they felt that they could not call on these services in an emergency. Thirdly, empty property rating is a lever, although perhaps not a very agreeable one, to discourage owners from holding property empty and unsold in the hope of future speculative gain, which is the point Lord Irving made. The significance of this lever obviously varies from year to year with changes in the market. It would not be consistent with the need to have flexible powers in this area, therefore, to abandon completely the provision for the rating of empty property.
I suggest that our approach in the Bill seems far preferable. Clause 35 provides for flexibility in the light of changing circumstances and orders can be made from time to time to vary the provisions as appropriate. We have promised, for example, that the problems of empty property rating in both the domestic and the non-domestic sector will be kept under review. I hope my noble friend will not feel moved to press his amendment.
§ Lord MOTTISTONE
I find my noble friend's arguments rather more persuasive than those of his colleagues earlier in the evening. The point about my amendment is that it would be effective for all time. Clearly, the country will prosper one day as long as this Government remain in power. We can look forward to an occasion when the last remarks of my noble friend will be relevant to the situation. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.358
§ 11.48 p.m.
Lord MONSON moved Amendment No. 75:
After Clause 35, insert the following new clause:
§ "Rates not to be increased above 1979 levels in real terms, except with Parliamentary approval
(. After section 3 of the 1967 Act insert the following new section:—
3A.—(1) Save as hereinafter provided, no rating authority shall, after 31st December 1980, have power to make or levy a rate higher than that sufficient to ensure that the total rates receivable by that authority in that year exceed the total rates received by the same authority in the year 1979 by a percentage identical to the percentage rise in the Retail Price index during the intervening period.
(2) The Secretary of State may by order permit a greater increase in the rate which can be made and levied than that provided for under subsection (1) above.
(3) An order under this section shall he laid before the Commons House of Parliament and shall not have effect until approved by a resolution of that House." ").
§ The noble Lord said: I beg to move Amendment No. 75. The purpose of this amendment is to prevent rating authorities raising rates above 1979 levels in real terms (as opposed to raising them in monetary terms) without the consent of Parliament or, to be more specific, the consent of the House of Commons. Since, effectively, potential increases in taxation might be involved if this amendment were to be accepted, it seems proper that the Commons alone should decide the matter rather than both Houses of Parliament. To forestall the criticism which I expect will be forthcoming, I should say that this amendment was drafted entirely by me, apart from subsection (3). I do not doubt that there are many technical defects in the amendment as drafted but, provided the general principle is accepted, these defects can be remedied between now and the next stage of the Bill.
§ At Second Reading I tried to extol the merits of a possible amendment along these lines. The noble Lord, Lord Bellwin, replying for the Government, implied that such a suggestion was not only extremely radical but almost unthinkable. In the absence of support from any other quarter of the House, I wondered whether it was worth proceeding any further. However, it then became evident that the tide of 359 public indignation against rate increases so large as to greatly outstrip people's net earnings (or the earnings of those who were actually liable to pay rates in full) was running extremely strongly. This popular indignation was manifested in leading articles in the press. For instance, that in the Daily Express of 19th September which asserted that there is a strong case for Government taking direct power to limit rate increases: What is the point of us losing as ratepayers what we stand to gain as taxpayers? On the same day the Evening News called upon Mr. Heseltine to ask Parliament speedily for the final weapon to impose economic sense on the determined spendthrifts.
This theme was taken up by several other newspapers. The Daily Telegraph went so far as to suggest that if profligate local authorities did not mend their ways, their function should be taken over entirely by central Government. The Economist of 4th October wrote:
The other big defect of Mr. Heseltine's new Bill is while it limits Exchequer grants, it does not limit local taxation or expenditure".
So it became evident that some sort of new clause on these lines would be, after all, generally welcomed by the country at large.
§ Now to explain the amendment rather more fully: at Second Reading I suggested that rate rises might be allowed to exceed inflation by 20 per cent. or thereabouts. For example, a rise in the cost of living index of 17½per cent. in a previous year would permit a maximum rate increase of 21 per cent. On reflection, this seemed over-permissive: indeed, a senior Conservative with whom I consulted certainly thought so. The amendment in the Marshalled List tonight permits an increase in line with the rise in the cost of living index, but no higher, in the normal course of events. To counter-balance this, a degree of flexibility has been introduced by subsections (2) and (3) which would permit the Secretary of State to override this limitation if the circumstances seemed appropriate, subject to the approval of the House of Commons.
§ I can anticipate three main objections to this amendment. At Second Reading, the noble Lord, Lord Bellwin, suggested that any such proposal would impose unprecedented shackles upon local government. I suggest this is not the case. 360 Local authorities would enjoy almost exactly the same freedom in decision-making as they do now, the only restriction being a limitation on the ability of local authorities to extract a greater sum in real terms from the ratepayers in order to implement their policies than they do at present. This is hardly very onerous.
§ The second objection—which will come mainly from Conservatives—is that the block grant proposals will do the trick and that my amendment is superfluous. In the words of the press: the Government will punish over-spending councils. I certainly concede that the block grant system is an improvement on the present system, but not much of an improvement. The people the Government will be punishing will not be the over-spending councils but their unfortunate ratepayers unless the constituency is a very marginal one. In cases where only a small minority actually pay rates in full and where the party that holds power has an unassailable majority, Mr. Heseltine's punishment will fall entirely upon the backs of the ratepayers.
§ The same answer can be given to those who object on the third ground, who will be mainly opposition supporters who oppose the block grant and who claim that the existing system is quite adequate to prevent local authority extravagance. Mr. Roy Hattersley said the other day that if local government electors felt really strongly about their councils high level of spending, they could always kick these councillors out at the next election.
I tried to point out on Second Reading the fallacy of this argument, and why local government elections could not be compared to general elections in this way. I was glad to have my views reinforced only yesterday by two gentlemen who speak with great authority. I quote:
More and more people, especially in the more extravagent authorities, are shielded from the full horror of rates. Industry and commerce pay through the nose whenever they can be trapped, as do houseowners who are above the rebate standard".
So wrote the right honourable Member for Orkney and Shetland, Mr. Jo Grimond in the Spectator. Sir Horace Cutler, leader of the Greater London Council, wrote in the Financial Times yesterday of the growing feeling of resentment on the part of that proportion of the population which pays domestic rates against that
proportion which does not. He went on to point out that in the Greater London area electors who do not pay rates exceed those who do, and that is why so many wildcat schemes, such as the idea of free travel on London Transport, can gain acceptance. Most of the electors have nothing to lose and that is why such proposals are suggested.
§ I should not want it to be thought that I am concerned only with the direct burdens being imposed on ratepayers, whether business or domestic, important and proper though it is to mitigate these burdens. The indirect consequences of failing to act would be almost as worrying. Whatever our individual political sentiments, we are surely united in wanting this Government to succeed in bringing down both inflation and unemployment. Yet if the few extravagant local authorities are simply allowed to push the entire burden on to the ratepayers, both inflation and recession will be stimulated—inflation because those who pay rates will press for higher wages and salaries to meet their rate bills; recession because shops, offices, warehouses and factories, all part of productive industry in the areas concerned, will close down and be obliged to dismiss their workers if rates become too burdensome.
§ I am sure that the overall purpose of this amendment will meet with broad public approval. I hope that the Committee will give it serious consideration and I should welcome any suggestions for improving it. I beg to move.
§ 11.57 p.m.
§ Lord ELLENBOROUGH
He and I agree on so many things that I think "noble friend" is hardly out of order. But I support the noble Lord, Lord Monson, because this clause has very considerable merit. It is in no way an answer to the rating problem, but it is, at least, an interim measure, an additional safeguard, for hard-pressed ratepayers on whose behalf I feel strongly, because I happen to be president of the National Union of Ratepayers' Associations which 362 has some 200 associations up and down the country.
I feel that this clause is simple and fair. It is easily understood. It is not a substitute for the complicated block grant proposals, which may be fine in principle but which, I fear, may be unfair in practice, and about which I know many ratepayers' associations will remain very worried, unless and until the Minister can give satisfactory reassurances and can clarify the position, which of course it is hoped in due course he can do.
One reason in favour of this clause is that the worst aspect of the proposed arrangements regarding the block grant is that, in the final analysis, there still will be no protection for the ratepayers. This is because, whatever financial penalties are imposed on the most monstrous, reckless and extravagant councils, they will still be able to raise additional monies by supplementary rate demands. In such cases, local ratepayers, particularly domestic ratepayers, will suffer an even greater and inequitable burden. Of course, the really spendthrift councils who abuse the system will receive a lot of bad publicity, but I doubt whether irresponsible people like Mr. Ted Knight, the Labour leader of Lambeth Council, is really going to give a damn that rates fall unequally on the population and that income earners who are not householders pay no rates. Such is the way of local elections, with turn-outs of 30 per cent., and sometimes much less than that, a large proportion of those voting not even being ratepayers—and it is always national and not local issues which determine the result when the time comes—that I very much suspect that the Mr. Ted Knights of this world will still be running Lambeth Council.
Even without any additional burdens, many ratepayers are having this year to carry impossibly heavy burdens because, under the existing rate system, the amounts that they pay bear no relation to their incomes. It is increasingly detrimental to those who are wholly dependent on hard-earned life savings, the purchasing power of which has been eroded by escalating inflation in recent years. Despite promises by successive Governments, so far no practical steps have been taken to ease the unfair burden of rates on retired people living largely on fixed 363 incomes who are just outside the limits of the rate rebate scheme.
Finally, I find it depressing that the Bill makes no mention of rating reform. It does not recognise the fundamantal flaw in the present rating system, in that too little revenue is drawn from too few electors, and that sooner rather than later means must be found to spread some or all of the rates burden from householders and commercial and industrial property holders to everybody who is able to pay. For those reasons, I feel that the noble Lord's clause has considerable merit and I should like to support it.
§ Lord BELLWIN
I readily acknowledge the strong and growing concern that there is against punitive rates which some councils are imposing, but I must advise your Lordships not to accept this new clause. Although at first sight it may appear to have some attraction, a closer inspection shows the clause to be undesirable and possibly likely to have the opposite effect from that intended. It would certainly have significant implications for local democratic responsibility for determining levels of expenditure and the tax burden that must be imposed to finance it.
There are some possibly fatal flaws in this proposition. To begin with, would not a ceiling become a national norm? We have all seen what happens with pay norms in incomes policies when they tend to become pay minima. A ceiling on rates of the kind proposed would be interpreted by some local authorities as a recommendation, and we could actually see authorities rating up to the 1979 level where otherwise they might have rated lower.
This effect is likely to be strengthened by the knowledge that in the following year the discipline would be repeated. Treasurers would advise their councils to stoke up balances to guard against any shortfall in income in the next year or the year after. Worse still, a ceiling would be discriminatory and would penalise all those authorities that in 1979 had low rate poundages, while favouring any that rated highly in that year. And this discrimination would continue indefinitely, for year after year. This is not to say 364 that we are not deeply concerned about the overall level of local government expenditure. No one following the press this year could accuse us of that. But we believe authorities should retain discretion and remain accountable locally for spending and rating decisions.
Block grant, plus full information to ratepayers, should together bring a new dimension to the local taxation issue because it will highlight and focus on what local councils are doing. Let me advise your Lordships to have confidence in that and to give it a chance without resorting to the severe step of central Government taking over the rate-making of local government, because that would be the effect of this amendment. I could speak at some length on this and, in other circumstances, would dearly love to do so, but I hardly think that this is the appropriate moment and I hope it will be felt that the points I have made may encourage the noble Lord to withdraw his amendment.
§ Lord MONSON
I readily acknowledge that the amendment as drafted has flaws, but I do not accept that they are fatal flaws. I take some of the points made by the noble Lord, but I think he has overlooked subsections (2) and (3) which introduce that degree of flexibility which would enable some of the difficulties to be overcome in practice. The fatal flaw in the Government's argument is the noble Lord's mention of democratic control, because where there is a situation where most of the electors in a given local authority area do not pay any rates, or pay rates which are so heavily subsidised as to be negligible, in practice you do not get that control in a fair way. Of course, I would not think of pressing the amendment tonight, but I want to take it back and look at it again before the next stage. At the moment, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 36 [Clerks of local valuation panels]:
§ On Question, Whether Clause 36 shall stand part of the Bill?
§ 12.6 a.m.
§ Lord PONSONBY of SHULBREDE
At this hour I intend to be very brief. 365 This clause enables the Secretary of State to impose on any two or more local valuation panels a clerk of his choice who is not their choice. The present provision is that every local valuation panel appoints its own clerk, and these provisions have been operating satisfactorily since 1949 and joint staffing arrangements have been agreed for a number of valuation panels by arrangement. The effect of this clause could be to undermine the independence of local valuation panels and that could be against the interests of justice. It is essential that a local valuation panel or court must have complete confidence in their clerk, and that could be lacking if the appointment of the clerk were to be made by the Secretary of State.
It is impracticable to provide that a joint clerk be appointed without the cooperation of the panelsconcerned and in my view this provision should not be made. Valuation panels have shown that they can work by agreement and there seems to be no reason for amending the present law.
I will deal with this as quickly as I can. All I will say to the noble Lord, Lord Ponsonby, is that there is a severe problem for the organisation of rating panels because the nature of the work is cyclical owing to the revaluation of rates which takes place every so often. Then there is a great bulge after a general revaluation, falling off to a much lower level in between. Because of the cancellation of the 1982 revaluation the workload of the service is currently at a low level and there is no prospect of it picking up significantly in the next two years. The panels and the Department of the Environment are looking for staff saving and economies and in some cases that can be achieved within an individual panel; but with a small service—and in this service there are only 227 staff in the whole country—that is not always possible and in some cases mergers of offices and staff between neighbouring panels can provide a better answer.
The proposal in this Bill is that these mergers should come about if necessary and I can only give the assurance to the noble Lord, Lord Ponsonby, that the clause would only be used as a last resort and only after full discussion and persuasion had been attempted first. I hope that will satisfy the noble Lord as to the reasons for the inclusion of this part in 366 the Bill, although the expression on the noble Lord's face does not lead me to believe that he is satisfied. If he wishes me to go into greater detail I shall be quite happy to do so.
Lord MOTTISTONE moved Amendment No. 76:
After Clause 36, insert the following new clause:
§ "Removal of local authorities' rights to be a party to valuation appeals for their own properties.
§ (".—(1) In section 69 of the 1967 Act (proposals for alteration of current valuation list)—
- (a) in subsection (1) for the words "including a rating authority" there shall be substituted the words "not being a rating authority unless it is the occupier or tenant of the hereditament in question";
- (b) subsection (3) shall be deleted.
§ (2) In section 70 of the 1967 Act (provision for objections to proposals)—
- (a) in subsection (1) paragraph (b) shall be deleted;
- (b) in subsection (2) the words "or the rating authority for the area in which the hereditament is situated" and the words "or, in the case of the rating authority (where they are not the occupier) on the rating authority" shall be deleted.
§ (3) (a) In section 72 of the 1967 Act (agreed alterations after proposals) paragraph (e) shall cease to have effect.
§ (b) This subsection has effect in relation to proposals made after the passing of this Act.
§ (4) In section 76 of the 1967 Act (appeals to local valuation courts against objections to proposals) paragraph (d) of subsection (4) shall be deleted.").
§ The noble Lord said: With the permission of the Committee, I would speak also to Amendment No. 316. It gives me great pleasure to take your Lordships practically right to the end of the Marshalled List. Where a proposal is made to alter the valuation list a procedure is laid down under Sections 70 to 78 of the 1967 General Rate Act for determining whether the proposal should be accepted. As an initial step in that procedure the valuation officer gives notice of the proposal to various interested parties. Those parties then have the right to object to the proposal. Where there has been an objection, or if there is no objection but the valuation officer does not consider the proposal to be well-founded, the matter can be resolved by agreement before it goes to the local valuation court. Section 72 of the General Rate Act 1967 provides for this agreement. Subsection (2) 367 of Section 72 lists the persons whose agreement must be obtained before the matter can be resolved in this way. Under subsection (2) the rating authority's agreement must always be obtained, whether or not it made the original proposal and whether or not it lodged an objection to the proposal, and that point is the nub of the amendment.
§ The rating authority's overriding right to be included in any agreement under Section 72 is a relic of the days before 1948 when the authority actually prepared the valuation list itself. The authority now has no powers to inspect the property or to determine its value. We therefore believe it should not have the power to block an agreement between the valuation officer and the other parties concerned, both of whom will have inspected the property and valued it professionally.
§ The amendment would not affect the rating authority's rights if it has made the proposal or has made a formal objection to the proposal, or it is the owner of the property concerned. The whole matter has been highlighted recently by appeals concerning oil refineries at Ellesmere Port which have been to the Court of Appeal on a preliminary point of law and are now referred back to the Lands Tribunal to be heard in detail. The eventual cost of these proceedings will be very substantial for all parties, regardless of the eventual outcome. The valuation officer is now the duly appointed person who is under a statutory duty to prepare and defend the valuation list. As a result of the present rights given to local authorities there is needless duplication of effort which in extreme cases, as instanced above, results in inordinate expenditure of public and private money in contesting appeals before the courts. I beg to move.
My noble friend wants to remove the rights of a rating authority to be involved with proposals to alter various rates on properties. I suppose that rating authorities can add to the delays and costs of valuation proceedings, but I am sure it does not happen a great deal. I know a few cases where rating authority intervention has been greatly resented by ratepayers, and sometimes justly. On the other hand, there is an 368 argument which is not often heard but which is, I suggest, quite legitimate, that the rating authority is representing other ratepayers when it intervenes to question or contest a proposed reduction; because reductions in rateable value can in theory add to other ratepayers' rate bills. I say "in theory" because in most areas, after a short delay of about a year, losses in rateable value are usually compensated for by increases in the rate support grant allocation which compensate for differences in rateable value.
The Government have not yet reached a firm view on the balance of arguments here. Your Lordships may like to know that Sir Derek Rayner has been conducting a review of procedures governing valuation lists and the statutory position of rating authorities is being covered in that review. I would not want to reach a premature conclusion about this subject and the Government will want to consult widely on this point and examine the evidence. I am quite sure on reflection my noble friend would not want to reach a premature conclusion either, and in that respect I hope he would not be prompted to take this amendment any further.
§ Lord MOTTISTONE
It is very tempting, my Lords! Yes, I get a certain amount of reassurance from my noble friend's remarks. Could my noble friend possibly say whether the Government would be able to reach a conclusion before the Bill completes its passage through Parliament, so that we could bring the matter up at a later stage?
My noble friend can certainly bring the matter up at a later stage if he wishes, and then he will be able to discover whether the Government have reached a conclusion by then; but I cannot anticipate that they will have done so.
§ Lord MOTTISTONE
With that very unsatisfactory closing remark, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clauses 37 to 39 agreed to.
§ 12.16 a.m.
§ Agricultural premises
§ (".—(1) In section 26 of the 1967 Act (agricultural premises) in subsection (3) after the word "farming" there shall be inserted the words ",land used for the purposes of fish farming,".
§ (2) In subsection (4) of that section after the words "market garden" there shall be inserted the words "or fish farm".")
§ The noble Viscount said: I beg to move Amendment No. 77. At this late hour I shall be as brief as possible and it will probably be for the convenience of the Committee if I speak to Amendments Nos. 77, 78 and 82 together. I am sure that those who support me in moving these amendments will also be as brief as they possibly can. I should also declare an interest in that I am responsible for the management of a salmon hatchery in Scotland, which I hope your Lordships will find entitles me to be knowledgeable on the subject without being unduly interested.
§ What we are trying to do with these amendments is to put right an anomaly which has become more apparent over the past nine years since the Rating Act 1971 came into force, when the noble Lord, Lord Sandford, speaking in the Second Reading debate pointed out that fish farming was not included in the de-rating proposals which were then being applied to all other forms of intensive farming.
§ During the past nine years fish farming has developed enormously. It has taken big strides forward in quantity, quality, know-how and so forth. We are now producing in this country some 6,000 tonnes of farmed trout every year as well as salmon, turbot, eels, crayfish, sole, carp and various other forms of fish which are being farmed. We have considerable know-how in this country and yet we are competing with foreign imports—which are increasing the whole time—from competitors on the Continent who are being very well helped and subsidised by the Governments in their own countries. In fact, the imports of trout alone into this country rose by some 40 per cent. in the last year for which we have figures, and clearly the demand is not yet being totally met by the fish farming industry in this country. It is a very high risk business and it is one where we need to do what we can to encourage people 370 both to set up and to expand their existing operations.
§ In moving these amendments, we feel that by bringing fish farming on to the same level as all other forms of farming of livestock, we would be not only putting right an anomaly, but encouraging a very important source of protein food and we would be not only putting right an injustice within the agricultural industry, but we would be doing something which would be of benefit to the public and to the community at large. I beg to move.
§ The Earl of RADNOR
I should like to support the noble Viscount, Lord Thurso, and at the same time to declare an interest as I am a fish farmer of some size. I shall not cover any of the points which the noble Viscount has covered so eloquently and so well. I am a farmer as well as a fish farmer, and to one who is a farmer it is quite obvious that fish farming is an extension of husbandry; there is no difference at all. It seems quite illogical that just because fish farming has come into being since 1971 it should not be treated in the same way as other facets of the farming industry.
I should like to mention very briefly a few points which, if in the future fish farmers have to pay back rates, might be spoilt, because I believe that fish farming is on this plateau at the moment of about 6,000 tonnes a year. It is a period when they might go forward and make a real contribution to the country's wealth, and if they are rated and things go against them, perhaps they will stay on that plateau or even slip back a little.
The brief points that I should like to make, admitting that it is a small industry, are, first, that the industry employs some people where people have not been employed before, and once more—it may sound a little unfair to say it—it is an industry particularly suitable to the modern educated school leaver and the lively person. Secondly, it has prevented a certain amount of imported fish, although this matter seems to be going wrong at the moment.
Thirdly—and this is a point which I think is worth bearing in mind—it uses up land which, on the whole, is not very profitably used for other purposes. There is one final point that I should like to 371 make to your Lordships, because I do not know a great deal about industry outside the country. However, so far as I can see, this is an industry that has immensely increased the mass of its product in the last few years without spoiling the quality in any way whatever—improving it if anything—and the unit price to the farm has gone down and not gone up. I hope that the Government will be able to accept this amendment because I believe that the fish farming industry has something to add to the gross national product, or whatever you like to call it, of this country.
§ 12.23 a.m.
§ Lord CLEDWYN of PENRHOS
I warmly support the new clause that has been ably moved by the noble Viscount, Lord Thurso. This is not an hour of the day on which to dilate on any subject, even one as important as this, so I propose to be very brief and to make two points. First, we have as a country suffered a severe blow in the curtailment of our traditional fishing grounds, and fish farming needs to be encouraged both by the Government and by Parliament. Of course, we know that there are imponderables in relation to fish farming and one wishes that one had more time to talk about these. But the industry is now well based, with production at about 5,000 tonnes per annum. I think that one should pay a tribute to the Government, and to successive Governments, for the contribution that they have made, and will make, towards research in fish farming. I do not think that this small industry, in fact, is asking for grants and subsidies.
The decision referred to by the noble Lord in Creswell v. BOC is, I think, very serious for the fish farming industry because fish is excluded from the definition of "livestock", and many fish farmers now face substantial rate demands which they were not anticipating. It is important to realise that these are rate demands which go back to 1974. Therefore, the sums involved are really very substantial.
This seems to me to be manifestly unfair and the new clause has the effect of putting this right. The Government's acceptance would indicate that they are determined to support fish farming. As 372 the Committee is aware, other countries do so on a much wider scale than we do. If we are not careful, we shall once more see imports kill a British industry. This is something that we must avoid at all costs. The money involved in all this is negligible overall for the Government, but it is crucial to the fish farming industry.
There is a good deal of expertise and a high standard of technology in the United Kingdom in fish farming. Many other countries envy this. These other countries may gain commercial benefits from our own developments in fish farming. I most earnestly appeal to the Government for their acceptance of this new clause.
I should like to support this amendment. I should like to begin with a quotation from Dryden, which says:Damned neuters in their middle way of steering,Are neither fish nor fowl nor good red herring".I think this really describes what we are trying to get at tonight. I am also interested to notice that the House of Commons Expenditure Committee has said that there is a definite need for a change in the law.
Fish farming is an extremely important industry because our seas are really overfished. It is not very well supported at the moment by the consumer because only 0.5 per cent. goes into our normal diet. Therefore, we should encourage more fish eating. It would also be very important in time of war, should we be unfortunate enough to have another war. I understand that at present there are about 150 farms for fish and that the average price fell by 12 per cent. in 1977–78, so there is not much profit. It has been remarked that consumption in Denmark, France and Italy is higher than it is here, but also we have the Japanese importing trout which have been gutted and tinned. There is the feeling that when they are washed some of the effluents might be injurious to people. The fish themselves, I gather, are quite safe to eat.
The average time to produce the first harvest is 15 years starting from scratch, and the cost to set up one of these farms can be as much, at the present time, as 373 £200,000. Of course the United Kingdom is rather behind in starting this industry. I should like to say too that there are experimental farms for turbot, Dover sole, and Atlantic salmon. When I had the opportunity of going to China I saw fish farming which was providing fish for 22,000 people in the rural commune, and they were also able to sell some at a profit.
The buildings are rated, and I should like to give one example. There is an old mill which has a roof which is two acres, and that now has rates of £13,000 a year because it is all under one roof. I think this is very detrimental to the hopes of people who are setting up these things and they have to put up new buildings. I should like to support this amendment. My noble friend Lady Emmet, who regrettably cannot be here tonight, has done so much to arouse interest in this work, and I am sure that if she had been been here she would have supported this amendment tonight.
§ Lord MOTTISTONE
I should like briefly to support this amendment. This is an area where not only have we got a new source of food but it is an exciting one for development, for all the reasons that noble Lords have so eloquently told us about.
§ Lord FERRIER
I also should like to support this amendment entirely on the grounds of the nation's food supply. It is a matter which I raised in this House nearly 20 years ago. As the noble Lord, Lord Sandford, will recall, we had a debate, to which the noble Viscount referred, on 3rd May 1971, when I moved an amendment to this effect. I hope that the Government will accept it. I agree with what the noble Baroness has said. If only the noble Baroness Lady Emmet were here, she would remind your Lordships of the case which she has so persistently put.
§ Viscount HANWORTH
I should also like to support this amendment. What I was going to say has been said more ably by the last speaker. It seems to me extraordinary, when we have to import so much food and at a tine when there are difficulties financially in doing so, that we should not do everything we possibly can to increase our own production.
374 I shall be very interested to see whether the Government have any possible reasons against agreeing to this amendment.
Lord de CLIFFORD
May I also support this amendment. This is a young industry, and is one which should be encouraged. This is a Government who, I hope, will encourage young industries and all forms of exploration into the provision of jobs; and if we can do anything to encourage a young industry like this, we should do so. It would benefit the whole country.
The noble Lord, Lord Cledwyn of Penrhos, said he did not wish to dilate at this hour of night on an important subject like this, and I would not wish to do so either. Equally, however, I would not wish to be so intolerably brief as not to do justice to an important matter, and I agree it is a pity that the noble Baroness, Lady Emmet of Amberley, is not here because in your Lordships' House she has been one of the greatest protagonists for fish farming. I have certainly noted the enthusiasm with which everyone has spoken in favour of the amendment.
The exemption of certain agricultural land and buildings in England and Wales is achieved by Section 26 of the General Rate Act 1967, which was extended by the Rating Act 1971. Fish farms are a relatively recent development and at the time of the 1971 Act it was thought that fish farms were generally concerned more with producing stock for fishing for sport than with food production, and the Government's intention in drafting the 1971 Act was that fish farms should be rated.
Since then the food production side of the business has grown rapidly in importance, which was not anticipated at the time. No fish farms have yet been rated effectively in England, though they have been in Scotland. The attempts of the Inland Revenue's valuers to assess the installations and make entries in the valuation lists for rating have led to litigation, to which the noble Viscount, Lord Thurso, particularly referred. The test case was that between Creswell and BOC, a case which took some three years to go through the courts. The Lands Tribunal interpreted the Rating Act 1971 and held that fish farms were exempt from 375 rating. However, a recent judgment in the Court of Appeal held that fish farms were in law liable to be rated. As I say, in Scotland fish farms always have been.
That is the background to the picture and I now come to the amendment, which as drafted is not entirely acceptable because it has certain loopholes, though I understand completely the intentions behind it. I would tell the noble Viscount that it can be said that fish farming, being principally for food production, should be treated in rating, as your Lordships have said, like agriculture generally and therefore exempted. The recent development of fish farming, after all, is very similar to, and analogous with, technological developments in food production such as in broiler keeping, which was derated under the 1971 Act, and it can be said that in most other respects fish farming for food should be treated equivalently with agriculture. On the other hand, it can be said that some fish farming for stock raising, for instance, does not merit agricultural treatment.
The Government are at present considering very carefully all the implications, as a result of the decision of the Court of Appeal, of the new situation which this judgment has brought about and are considering, for instance, the need to make the law clear beyond peradventure; the desire to encourage and not to penalise a young industry engaged in food production and the logic in seeking to bring one form of food production in line with others. I can assure the Committee that this matter is under active consideration at the present time. I personally have a great deal of sympathy with the amendment, but I am not in a position to recommend its acceptance here and now. If the noble Viscount would be good enough to withdraw the amendment at this stage, I will undertake either to put down an amendment on Report or, if that is not possible, the noble Viscount could put down an amendment himself and then I would be able to give him a clear understanding of the Government's position. I can assure the noble Viscount that that is not a "fob-off", if I may use such a vulgarly unparliamentary expression, but it is a definite desire to see that the noble Viscount's case is met if it is possible.
§ Viscount THURSO
I am most grateful to the noble Earl for his assurance. I would state at once that I know I will be supported in this by noble Lords who have subscribed to my amendments. In these circumstances I would be delighted to discuss this further with the noble Earl. I think it is essential that we deal with the matter at this juncture. When I say "at this juncture" I mean while this Bill is going through your Lordships' House, because the opportunity may not arise conveniently again. But on the assurance that I have been given I am very happy to accept the noble Earl's advice and to withdraw my amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 78 not moved.]
§ Clause 40 [Commencement and extent]:
§ Earl FERRERS moved Amendments Nos. 79 to 81:
§ Page 37, line 28, leave out ("words in")
Page 37, leave out line 39 and insert—
("(b) paragraphs 4(2) and 6 of Schedule 29 to this Act;
Page 37, line 45, at end insert—
("(3A) The provisions of Schedule 29 to this Act which give the Secretary of State power by order to prescribe multipliers and which are specified in subsection (3B)(a)(b) and (c) below shall not have effect until he exercises the power conferred by them.
(3B) The provisions of Schedule 29 mentioned in subsection (3A) above are—
§ The noble Earl said: There are three amendments in the name of my noble friend—Nos. 79, 80 and 81. They are not consequential amendments. They are mostly technical, but not wholly. If it met with the approval of the Committee I should be quite happy to move these formally, in view of the time, but if any noble Lord wishes for an explanation I 377 would be willing to give it. I beg to move Amendment No. 79.
§ The DEPUTY CHAIRMAN of COMMITTEES (Lord Alport)
With your Lordships' permission, I will put Amendments Nos. 79, 80 and 81 together.
§ [Amendment No. 82 not moved.]
§ Clause 40, as amended, agreed to.378
§ Lord DENHAM
I think this might possibly be the moment when we should resume the House. I beg to move that the House do now resume.
§ House resumed.
§ House adjourned at twenty-two minutes before one o'clock.