Lords Sitting of 12 April 1984

Preamble
The House met at eleven of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Southwell): The LORD CHANCELLOR on the Woolsack.

Oil Production: Employment Figures
Lord Gainford: My Lords, by arrangement I beg leave to ask the Question standing on the Order Paper in the name of my noble friend Lord Sandys.
The Question was as follows:
To ask Her Majesty's Government what is the approximate number of jobs which have been created in the United Kingdom as a result of the development of the nation's offshore oil reserves during the past decade.
The Parliamentary Under-Secretary of State, Department of Energy (The Earl of Avon): My Lords, the Department of Employment estimated in December 1983 that some 32,200 people were directly employed offshore and onshore in the extraction of mineral oil and natural gas in the United Kingdom. Indirect employment arising from North Sea orders and expenditure is considerably greater, but figures are not available for the United Kingdom as a whole. However the Industry Department for Scotland has estimated that a total of around 100,000 jobs in Scotland both offshore and onshore have arisen from North Sea oil activity; the figure for the country as a whole will obviously be considerably in excess of that.
Lord Gainford: My Lords, I thank my noble friend the Minister for those encouraging figures. Has he any information arising out of them as to the possible prosperity brought to the areas concerned, particularly the north east of Scotland?
The Earl of Avon: Yes, my Lords; as my original reply bears out, this is the case. I am pleased to be able to say that I believe that offshore employment is likely to continue rising up to the mid-1990s as new fields come on stream.
Lord Dean of Beswick: My Lords, I am grateful to the noble Earl the Minister for his Answer to the noble Lord's Question and the information he has given. Is the noble Earl aware of the broadcast this morning on Radio 4 in which a senior employee on the staff of Shell stated that there are further considerable reserves of oil that can be developed in the North Sea and in the Shell zone of the North Sea, but that of course the costs of exploration and of getting the oil will be a dearer and more expensive exercise than in the past? May I ask the Minister whether he will impress on the Government to bear this in mind and to give this industry further assistance, if it is needed, in order to keep the employment levels at what they are and, if possible, increase them through the downstream effects on engineering and other related industries?
The Earl of Avon: My Lords, I did not hear the broadcast to which the noble Lord refers but I could well understand its taking place. As the noble Lord is aware, we recently made a fiscal adjustment to encourage such exploration, and we are also encouraging the development of United Kingdom controlled technology to ensure the optimum development of our own market resources in this area.
Lord Grimond: My Lords, is the noble Earl aware that some of the extra employment that has arisen as a result of oil is in places such as Shetland and Orkney which have very little else to offer in the way of employment, and that as oil production runs down it will be important to support the local authorities in finding alternative work and in training some of the people who will lose their current employment, and indeed in encouraging investment in other labour-producing industries and services in the islands?
The Earl of Avon: My Lords, I fully understand the points made by the noble Lord and I hope that he will be encouraged by my earlier remarks when I said that I hoped that it would be increasing until at least the mid-1990s. We are also of course encouraging the industry to expand abroad and to try to get overseas markets at the same time.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that most people would expect the extraction of oil to be brought about on merit, to be efficient, necessary, and at the right price, and not merely to provide employment? Employment should not be the main factor. It is a very good factor which flows from successful exploration, but that should not be the one that causes the amount of money to be spent which would be needed to exploit these new areas.
The Earl of Avon: My Lords, I think the House is taking pleasure in the fact that this does produce more employment. I quite take the point that my noble friend makes and I am sure that the oil companies concerned will not be employing more people than they have to.
Viscount St. Davids: My Lords, does the noble Earl not agree that even when the oil runs out, as it must at a fairly early date, the sums which it has enabled us to invest abroad will continue to bring an income to this country which will give us a great deal of power to employ people, and thus, when the oil runs out, providing that we have continued this process, we shall continue to be a very well off country?
The Earl of Avon: My Lords, I like the noble Viscount's synopsis of the future economy of this country and I think I broadly agree with him. The present benefit from North Sea oil taxation runs at some £9 billion and that is obviously of great benefit to the country as a whole.
Lord Taylor of Gryfe: My Lords, is the Minister aware that the figure of 100,000 new jobs created in direct and indirect employment from North Sea oil is a welcome figure in Scotland and particularly in areas of high unemployment? Could he tell us now what is

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the percentage of the requirements of North Sea oil companies which is acquired from United Kingdom sources? What percentage of their purchases is from United Kingdom sources?
The Earl of Avon: My Lords, I am given to understand that at the moment it is on average 71 per cent.
Lord Stoddart of Swindon: My Lords, we are indeed grateful for those figures. However, the noble Earl will be aware that there has been some concern lately about contracts which have been placed not in this country but abroad. Could he comment on the placing of a contract by Sun Oil for an oil rig in Sweden rather than in this country and what effect that will have on jobs? Could he also comment on the cancellation of the oil pipeline by Shell which in fact will cost 400 jobs in Hartlepool and bring about considerable distress in that particular area? Will he finally say whether the 70 per cent. British content is being upheld in every case, and in the 9th Round will the Government be much firmer in enforcing the 70 per cent. British content, because, if not. I rather fear that more work will go abroad?
The Earl of Avon: My Lords, so far as the first part of the noble Lord's question is concerned, about Sun Oil, I think I can best refer him to the Written Answer that my right honourable friend the Minister of State gave in the other place on 26th March. He said that he was,
"not satisfied that the company has given British yards a full and fair opportunity… My Department will monitor very carefully Sun Oil's performance in carrying out its plans".
I cannot at the moment comment on the second part of the noble Lord's question. So far as the 71 per cent. is concerned, this is a figure on which my department is keeping a close eye and will make sure that it will, as we hope, increase rather than in any way decrease.

Nuclear Weapons: Safeguards
11.8 a.m.
Lord Kennet: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, in the event of a US cruise missile being launched by mistake from British soil, the Soviet Union will be informed by the United States hot-line or the British one.
The Parliamentary Under-Secretary of State for the Armed Forces: (Lord Trefgarne): My Lords, the safeguards surrounding the use and custody of nuclear weapons effectively preclude the possibility of a cruise missile being launched by mistake, and the noble Lord's proposition is therefore hypothetical. The use of hot-lines is not restricted to questions involving nuclear weapons nor to particular hypothetical scenarios.
Lord Kennet: My Lords, is it not nevertheless a hypothesis, however remote, which ought to be considered? Can the noble Lord assure the House that it has been considered and that at least the Prime Minister and the Secretary of State for Defence know the answer to this remote eventuality and are satisfied with it?
Lord Trefgarne: My Lords, I can assure the noble Lord that we keep all the realistic scenarios, however hypothetical, in mind; and so the answer to his question must be yes.
Lord Orr-Ewing: My Lords, would my noble friend consider whether the description of US cruise missile is an accurate one? Would it not be more accurate to say on the Order Paper, "cruise missiles deployed on United Kingdom bases as a result of NATO's request to the USA"?
Lord Trefgarne: My Lords, my noble friend may well be right, but then the wording of Questions on the Order Paper is not a matter for me.
Lord Bishopston: My Lords, unless the Minister can give an absolute assurance that there will never be a mistake in the firing of these or any nuclear weapons, surely the Government must have an emergency procedure Is the Minister still aware that the Korean airliner disaster, or incident, was one where we still do not know really what happened? As there could be a mistake either by human or mechanical means, have the Government no fallback position? If a weapon was fired by mistake, how is one to know before escalation takes place whether that is so? In the case of a mistake or otherwise, would the Prime Minister or the President be consulted? What happens if the Prime Minister is at the hairdressers having her hair done for Easter and the President is at a baseball match? How will they be briefed and consulted in a matter of four minutes to avoid disaster?
Lord Trefgarne: My Lords, I am lost in admiration for the noble Lord's fertile imagination As for the question of launching nuclear weapons from this country, that is subject to the procedures with which your Lordships are by now well familiar and which I have described to your Lordships on a number of occasions.
Lord Beswick: My Lords, have the Government taken into account the fact that the CIA appears to have an independent capability of waging war? What action would we take in the case of the CIA exercising that capability here?
Lord Trefgarne: My Lords, again the noble Lord's imagination seems to have run away with him Of course the CIA has no role in this country.
Lord Beswick: My Lords, this is not a matter of imagination, it is a question of reading the newspapers.
Viscount St. Davids: My Lords, is not the important point in this Question that the hot line should be kept perpetually warmed up so that if any missile, particularly a Russian one, should accidentally be launched, everybody would scream their heads off?
Lord Trefgarne: My Lords, that is precisely the purpose for which the hot lines have been established.
Lord Molloy: My Lords, does the noble Lord the Minister not agree that even those who support the fact that cruise missiles ought to be on this island of ours are nevertheless quite genuinely apprehensive that accidents could happen? They are equally apprehensive about what might happen if a cruise missile were deliberately launched. There would no doubt be retaliation, and what would happen then?
Lord Trefgarne: My Lords, the purpose of nuclear weapons, so far as the Western alliance is concerned, is to deter the prospect of anyone launching an attack on us. They have succeeded in that way for the past 40 years.
Lord Molloy: My Lords, is it not a fact that they will in no way agree that they will not be the first to use a nuclear missile? So what the Minister has just said is directly contrary to what has been said by the Prime Minister and the Secretary of State for Defence in another place.
Lord Trefgarne: My Lords, what we have said is that we would never be the first to use any weapon, nuclear or otherwise.
Lord Bishopston: My Lords, will the hot line be via British Telecom privatised or under public control? If a mistake takes place and escalation follows, will the Minister promise to come to the House the next day to report on the situation?
Lord Trefgarne: My Lords, I am not sure whether that is meant to be a serious supplementary question; but I can assure the noble Lord that the arrangements are now well established and have worked well for a great many years.
Lord Gladwyn: My Lords, did I hear the noble Lord aright when he said that we would never, in any circumstances, be the first to use nuclear weapons, or indeed any other kind of weapon, but in any case a nuclear weapon? Is that what he said?
Lord Trefgarne: My Lords, I said that our undertaking goes further than just not being the first to use nuclear weapons, it is not to be the first to use a weapon of any kind.
Lord Gladwyn: Therefore, including a nuclear weapon, my Lords?

Telephone Directories: Post Codes
11.15 a.m.
Lord Nugent of Guildford: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
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To ask Her Majesty's Government whether they will make representations to British Telecom to include post codes in the addresses of subscribers to the new telephone directory.
Lord Lyell: My Lords, it is for British Telecom to assess the case for this in the light, among other things, of views expressed to them by the Post Office and by telephone and postal users.
Lord Nugent of Guildford: My Lords, I thank my noble friend for that Answer, which does not give me much information. Does it mean that the new postal directories will contain the post codes for every address?
Lord Lyell: My Lords, did I hear my noble friend aright? He said "postal directories". I am able to inform my noble friend that among the new British Telecom directories there is a new book that is called The Phone Book, which I understand was launched last month in central Manchester for the area. I understand that British Telecom and the Post Office are discussing the possibility of including post codes for four areas in the new telephone books. The areas will be Northern Ireland, Shrewsbury and Mid-Wales, Exeter and Edinburgh. But I am sure that, as my noble friend and your Lordships will be aware, the matter of post codes is a matter for the Post Office.
Lord Nugent of Guildford: My Lords, that may be so, but is my noble friend aware that the cost of the postal services is a matter of concern to everybody? What would be the saving to the postal services if there was universal use of post codes, made compulsory throughout the country? How much would that save us in sending our letters?
Lord Lyell: My Lords, I am not able to inform my noble friend about what would be the saving by the use of post codes. My noble friend asked whether the use of post codes might be made compulsory, but perhaps he can suggest how the use of post codes could be made compulsory. I will convey his feelings on this matter both to the Post Office and to British Telecom.
Lady Saltoun: My Lords, can the noble Lord tell us how many computerised sorting offices there are in this country, and, if so, where they are?
Lord Lyell: My Lords, no, not without notice; but I shall inquire and will write to the noble Lady.
The Earl of Halsbury: My Lords, can the noble Lord give me a good reason why, if they are compulsory in Canada, post codes cannot be made compulsory in this country?
Lord Lyell: As I said, my Lords, I shall inquire. I shall inquire from the Post Office and will write to the noble Earl. But we receive ceaseless advice and have ceaseless requests from the Post Office to use post codes. I am sure your Lordships will agree that this is a matter for the consumer and a matter for the Post Office.
Lord Mowbray and Stourton: My Lords, would not one way to encourage the use of post codes be for the Post office to relegate mail without post codes to second-class status?
Lord Lyell: My Lords, that is a very interesting suggestion which I am sure the Post Office will note; but I am sure my noble friend will be aware that the Post Office grants concessionary facilities to bulk users of the post if these users put post codes on all outgoing mail which is the subject of this concessionary rate.
Lord Bottomley: My Lords, what about the carriage of second-class mail?
Lord Lyell: I understand that this is for all mail, my Lords. For concessionary bulk postage I believe it is a separate class of mail, on its own.
Lord Spens: My Lords, is it not a fact that the Post Office grants concessions to bulk users of mail irrespective of whether or not they use post codes?
Lord Lyell: I am sorry, my Lords; perhaps I should have clarified the position. It is that the Post Office grants additional concessions to those sending bulk mail who use post codes on outgoing mail.
Lord Nugent of Guildford: My Lords, while I appreciate that my noble friend is not directly responsible for this, may I ask him whether he will pass on to the Post Office the general wish that it should accelerate its programme of introducing post codes generally in the light of the many years of preparation? Will he ask that the Post Office should fix an early date when they will be universal, and proclaim when that will be?
Lord Lyell: I shall certainly pass that message on, my Lords.
Lady Saltoun: In that case, my Lords, will the noble Lord ask the Post Office if it will take some steps to enable users easily to find out the post codes of people they wish to write to?
Lord Lyell: My Lords, I understand that information on post codes is available in Post Offices, in the post code directories. I understand that these may be consulted in all Crown offices. I inquired about this, and I understand that "Crown offices" means all general post offices in all towns. In addition, the post code directories are available in most sub-post offices and in most public libraries. If the noble Lady has any difficulties, perhaps she would let me know.
Lord Wallace of Coslany: My Lords, the Question put down by the noble Lord, Lord Nugent of Guildford, refers to British Telecom. Practically all the questions asked by and replies given to noble Lords have referred to the Post Office. Is this House not aware that the Government have sold off British Telecom and that it now has nothing whatever to do with the Post Office?
Lord Lyell: My Lords, the noble Lord is quite correct, but that does not prevent the Government
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from passing on to the Post Office and to British Telecom the wishes of your Lordships' House.

Prisoners' Visitors: Disclosure of Information
Lord Donaldson of Kingsbridge: My Lords, in the absence of my noble friend Lord Avebury, I beg leave to ask the Question standing in his name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what under-takings as to non-disclosure of any information received in the prison is required of visitors to inmates in prisons in England and Wales.
Lord Denham: My Lords, I wonder if the noble Lord will make it clear whether he has been specifically asked to do so by the noble Lord, Lord Avebury. If that is not the case, he is out of order.
Lord Donaldson of Kingsbridge: My Lords, I make it quite clear that I have not been asked by my noble friend Lord Avebury. Therefore, I withdraw the Question.

British Railways Bill
Read a third time, and passed, and returned to the Commons with amendments.
Road Traffic (Driving Instruction) Bill
Read a third time, and passed.

Rating and Valuation (Amendment) (Scotland) Bill
11.23 a.m.
The Minister of State, Scottish Office (Lord Gray of Contin): My Lords, I beg to move that the Rating and Valuation (Amendment) (Scotland) Bill be now read a second time The main purpose of the Bill is simple It is to help ratepayers in Scotland who, in 1984–85, will be paying about £1· 5 billion in rates to Scottish local authorities While for some householders the rate bill may be relatively small, it is a considerable burden for many domestic ratepayers. It is also a heavy burden on business and commerce, who pay over half of the rates in Scotland.
We recognise that of course there must be adequate local government services but local authorities are not entitled to raise whatever taxes they like to finance them. With such vast sums at stake, careful attention must be given to how much is asked for and its effect on the local and national economy.
It may be asked why we have not abolished rates altogether This Bill reflects the White Paper, Valuation and Rating in Scotland: Proposal for Reform published last year. In that, the Government reported their conclusion that discussion on the Green Paper, Alternatives to Domestic Rates, had not

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produced any consensus on an alternative to rates. The Government decided that there was little point in replacing rates with an untried and unfamiliar system having little support from the outset. We therefore decided to make reforms to the rating system both to remove anomalies and to extend the Secretary of State's powers to control rates for use in the last resort.
Lord Ross of Marnock: My Lords, the noble Lord should not mislead the House. The conclusion that the Government came to is clear in the second paragraph:
"The rating system is basically sound".
That is the conclusion they came to.
Lord Gray of Contin: My Lords, the noble Lord is perfectly entitled to his interpretation. I have given my view in my opening remarks.
The Bill as it now stands before your Lordships' House is substantially the same Bill as that to which another place gave a Second Reading in December. The most significant change is the addition of two new clauses to the Bill, Clauses 7 and 8, which are intended to give the public greater information about the expenditure of local authorities. While there has been support from both sides for some of the measures in the Bill—the fairer method of distributing the general abatement, extending rating relief for the disabled, extending the jurisdiction of the Lands Tribunal for Scotland to rating valuation cases—other provisions are more controversial and have been the subject of prolonged debate in the other place. I would like to remind the House briefly of the provisions of the Bill.
Clause 1 would remove what is widely seen as an unfairness in the present arrangements for grant abatement. When it is necessary to reduce rate support grant during the year as a result of the level of overspending planned by local authorities generally, the grant reduction falls on individual authorities according to their original share of grant and is quite unrelated to their level of overspending as measured against guidelines. This clause will make it possible to relate grant loss directly to overspending measured against current expenditure guidelines. It will bring greater pressure to bear on high spenders and recognise the efforts of more moderate authorities. Clause 2 would make it possible to streamline the selective action procedure. At present, an individual report must be laid before Parliament for each authority which is the subject of selective action. Clause 2 would make it possible to lay a combined report covering several authorities and thus speed up the procedure.
Clause 3 gives the Secretary of State power to control the rate levels of all authorities. This is a last resort power to be used only if authorities fail to respond to other action and to the exhortations we have been addressing to them since 1979. The possibility of rate limitation should therefore be an incentive to all the authorities to moderate their spending and their rate levels. Even if it was used, the claim of its critics that it would mean the end of local democracy does not stand up. Authorities would still have full freedom within the limit to set their rate and their own expenditure priorities. I totally reject the idea that this clause would imperil local government in Scotland as we know it.
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It has been suggested that these powers are unnecessary. For the past two years rate increases have been low. However, it is not long since the picture was very different. For two years running—in 1980–81 and 1981–82—rate rises were over 30 per cent. Despite our requests to local authorities to reduce their spending in real terms, they are still budgeting to spend more than in 1979–elective action and the new form of general abatement of grant fail to bring expenditure and rates into line with the Government's plans, it is essential to have this last resort power available for use if necessary.
It has been suggested in another place that rates have gone up because the Government have reduced rate support grant. However, reduction in the level of rate support grant has been used by all Administrations as a means of putting pressure on local authorities to reduce their expenditure. Experience suggests that reductions in the level of grant constrains local authority expenditure and reduction in the level of expenditure is the key to reductions in rates. In any case, recent experience does not suggest that high rate increases are the result of reductions in rate support grant. For two years, between 1979–80 and 1980–81, and again between 1980–81 and 1981–82, rates went up by over 30 per cent. However, between the first of these two years the level of rate support grant fell by less than 1 per cent. and in the following year it was unchanged. If one looks at the following two years one sees that there were reductions in the level of rate support grant of 2.5 per cent. each year, yet rates increased, after selective action in those two years, by 12 per cent. and less than 1 per cent. respectively.
Obviously there are a number of factors governing the level of rates and a major one in reducing the increases has been the Govenment's success in tackling inflation. Another major cause of rate increases is increase in expenditure, and, as the Secretary of State made clear during the rate support grant debate in January of this year, if authorities had brought their expenditure down to the Government's plans, there could have been reductions in rates instead of increases, even although the level of rate support grant had been reduced.
Clause 4 introduces a statutory requirement for local authorities before fixing their rate to consult their non-domestic ratepayers, who are responsible for paying 60 per cent. of the rates. This clause aims to ensure that local authorities are aware of the clear equation for some businesses between level of rates and number of jobs.
Clause 5 improves the position of the disabled. Under the Rating (Disabled Persons) Act 1978, institutions for the disabled have all their rates rebated if used entirely to provide accommodation, facilities and services for disabled persons and purposes ancillary thereto. Rebate cannot be given if any part, even a small part, of the premises is used for other purposes. The measures proposed in Clause 5 will replace this "all or nothing" by a threshold of 50 per cent. use by the disabled and rebate pro rata to that use.
I turn now to Clause 6. A significant proportion of a district council's rates—about one third—is accounted for by the contributions which ratepayers

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make to the housing account. Clause 6 would give the Secretary of State the power to impose a limit by order on the contributions which local authorities estimate to make from their rate fund to their housing revenue account. The new power will permit greater accuracy in planning the component parts of housing expenditure in Scotland, while enabling a greater share of the resources available to be directed towards capital investment.
I have already mentioned Clauses 7 and 8, which were added in Committee. Clause 7 requires local authorities to keep a separate account of payments under Section 83 of the Local Government (Scotland) Act 1973. This is the power which allows local authorities to incur expenditure up to the maximum of a 2p rate on anything which they consider to be in the interests of their area or its inhabitants. While largely used to support industry, it has been used for more controversial purposes and the Government think it right that, as in England and Wales, this expenditure should be separately accounted for. Clause 8 gives the public in Scotland the same rights of access to the accounting documents of local authorities as are available to the public south of the Border. As with the other new clause that I have mentioned, this has been received widely as a useful extension of open government.
Part II of the Bill deals with valuation. The main valuation provisions which come in Part II of the Bill have two principal objectives. First, we are aiming to improve the structure of the valuation appeal system so that, following future revaluations, appeals may be settled much sooner than was possible after the last revaluation. Secondly, we are providing the means whereby several valuation anomalies can be removed from the Scottish system, and ratepayers with genuine grievances can have greater access to the appeal system.
Clause 9 would make it possible, after the next revaluation, for a new proprietor, tenant or occupier within the first six months to have a right of appeal similar to that which his predecessor had at revaluation. The Lands Tribunal for Scotland will be used as an alternative to local valuation appeal committees to hear particularly important or complex appeals, in the first instance, under the provisions of Clause 10. This should allow important cases to be heard authoritatively much earlier in the appeal cycle than has been the case in the past. Quite apart from being speedier justice, this should bring greater certainty to the cash flow position of businesses and local authorities alike.
The Bill also introduces, in Clause 11, a provision designed to streamline appeals to the Lands Valuation Appeal Court by allowing it to consist of only one judge in cases where that judge believes that is appropriate. A three-judge bench will still be available where necessary. This should bring some improvement in the timing of handling appeals. Clauses 12,13 and 14 contain provisions relating to caravan sites and reed beds. In future both would be treated broadly as in England and Wales. Individual caravanners would have the right—which many have sought—to have their static leisure caravan valued separately from the remainder of the caravan site in which it is situated.
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Reed beds will be excluded from valuation as they are in England and Wales.
Clause 15, which has received much consideration elsewhere, is relevant to subjects which are at a disadvantage by comparison with competitors else-where because of the method by which they are valued. In certain cases, on appeal, comparison will be possible with valuations in England and Wales and this should lead to more equitable results. Although the provisions are stated to refer appeals to valuation appeal committees or the Lands Tribunal this is in accordance with the framework of the existing legislation. Since ultimately the test of the assessor's valuation will be its acceptability to the commitee or tribunal the assessors will no doubt give effect to the provisions in making their valuations. The clause gives a right of comparison with hereditaments in England and Wales. Where rental evidence is not available in Scotland—and that is generally where there are particular specialised premises—it will be possible to cite English values as equivalent to comparable rents.
Clause 16 will make it possible to take into account movements of rents as a reason for changing valuations between general revaluations. It will also allow appeal decisions altering the value of comparable subjects to be taken into account in subsequent cases. This will avoid the serious inconsistencies which have arisen recently where appeals concerning one group of properties have been successful but other similar neighbouring properties have not been able to be brought into line.
The valuation measures in this Bill are a means whereby the appeal committees and the court, strengthened by the introduction to the appeal system of the Lands Tribunal, will be freed to take account of aspects affecting the valuation system which have been giving particular trouble. Final decisions as to what is right and fair will rest with the courts.
The purpose of the Bill is to help ratepayers by protecting them against high expenditure and high rates and by enabling individual valuation anomalies to be put right. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Lord Gray of Contin.)
11.40 a.m.
Lord Carmichael of Kelvingrove: My Lords, the Bill has been debated at great length in another place. It has also been debated very widely in Scotland by the individual local authorities, by COSLA, by professional bodies, particularly the assessors, the chambers of commerce and the Scottish CBI. In many respects the principles behind the Bill were very fully debated on Monday when your Lordships' House dealt with the English Rates Bill. I think it should be pointed out to Welsh and English Members that this Bill takes even more power than was taken in the Bill which raised the historic vote in this House on Monday.
Everyone is aware that the debate is not just about the money powers of local authorities and how much the Exchequer will be financing local spending. The fundamental issue is about the authority, the power and the very place of local government in our system of government. Until this Government started on their

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simplistic monetarist policy there was a general appreciation of the importance of local government in delivering services to its electors. A number of clauses in the Bill are technical—we have heard the Minister going through them—but as regards some of the detailed submissions that we have had from various bodies in Scotland on these technicalities, I am not sure whether they will be received, when they are ultimately implemented, with quite the enthusiasm the Government have put forward today in this House and earlier in another place. I think there will be a number of disappointments.
There are the concessions to the disabled, the derating of reed beds and low key improvements which the Government cannot really pretend will do anything fundamental about the Scottish rating system. It would seem also that some help with rates is being offered to race track owners and football parks, as well as to certain people with mobile caravans in caravan parks. I hope these improvements will be helpful to the individuals and the bodies concerned. However, as I said earlier, I think that perhaps they have been over-blown and that there will be considerable disappointment in Scotland when the people actually see the results of the working of the Bill. What seems to be most worrying is that some of the new principles are being introduced in a very piecemeal fashion, and I am pleased that the noble and learned Lord, Lord Mackay of Clashfern, who has great experience in the valuation courts, will be handling this part of the Bill, because we shall be very interested in his comments and his experience. When a Bill is introduced which tinkers with something at the edges, I have a feeling—I think the House has long experience of this—that new anomalies will ultimately be raised because of the changes. Therefore we will have other Bills and amending legislation within a relatively short time to put some things right.
This leads me, quite legitimately, to be able to ask the Government what really happened to the promises to abolish the rating system. In 1974 the Conservative manifesto said that the Conservatives would abolish domestic rating in the lifetime of a Parliament. As the then official spokesman for her party in October 1974, the present Prime Minister said:
"We have decided to take the historic step to abolish the present rating system over a five-year Parliament. With the full backing of a Conservative Government pledged to abolish the present rating system, that Committee will have an added incentive to present alternatives to Ministers."
The Prime Minister also said:
"As a sign of good faith, we shall start by taking education from the rates to the Exchequer."
A week later she said that she would give immediate help to all ratepayers by transferring the cost of teachers' salaries and more of the cost of the police and fire services from the rates to the Exchequer. She reaffirmed that she would abolish the unfair system of household rates.
Curiously, however, five years later the Conservative manifesto stated:
"Labour's extravagance and incompetence have once again imposed a heavy burden on ratepayers this year. But cutting income tax must take priority for the time being over the abolition of the domestic rating system."
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It was "for the time being"—not that it was being dropped altogether. However, the Green Paper in 1981 said:
"The Government is committed to the reform of the domestic rating system."
After the 1983 election the White Paper stated only:
"The Government have therefore decided to make reforms to the rating system, which is basically sound."
The impression, nevertheless, has been created—and it is a thing that has bedevilled local government for so long—that somehow or other the rating system is the cause of all the evils of local government and that local government itself uses the rating system quite irresponsibly and therefore the more central government control the better it will be for the ratepayers. This is an impression which I believe will take a great deal of time to be dissipated.
It is a myth that has been created that local government is profligate and irresponsible and that local government believes that the rate revenue is a bottomless purse which it can go into as often as it wishes The Government, in these simplistic statements coming from people with great responsibility within the Government, have done a great deal of harm to people's faith in local government. Time and energy will need to be spent explaining the difficulties involved in the rating system and I am sure that every time the question of local government finance comes up, whether it be in the saloon bar or anywhere else, people will say, "It's time we got rid of the rating system."
We all know there are many anomalies in it and perhaps a great many changes should be made; but, after the number of reports and studies that have been made, surely we know that it is not simple and therefore it was irresponsible of someone of the stature of the present Prime Minister and many others in the Conservative Party to promulgate the idea that it could be done easily. If there is room for changes or improvements in the rating system I think we would all be pleased. It needs something like another Layfield; or perhaps, as was suggested last Monday, the Layfield Report could be taken out and looked at again to see whether there is anything in it that we can use. There is no easy alternative to the local rates system unless we do away with the whole system of local government, and surely that is something we do not really want to do.
May I make just one more reference to emphasise the importance of local government by quoting an ex-Prime Minister, the noble Earl, Lord Stockton, speaking to a Conservative local government conference. He said:
"In [local government] this country possesses the strongest rampart against any arbitrary and despotic central powers."
That was a statement of considerable vision when we think of what went on in another place last night.
This Bill is the third in three years from this Government controlling the powers of Scottish local authorities, and the Government are making a very good attempt at undermining these very ramparts. In Clause 6, which the Minister dealt with at some length, the Secretary of State is taking overall powers to improve the rate fund contribution to the housing

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revenue account and the words that are used in the Bill itself are that he can do this—
"in whatever way the Secetary of State thinks fit."
There is no definition; there are no parameters; it is,
"in whatever way the Secretary of State thinks fit."
So the Secretary of State is really taking powers to decide specific rents of council houses. Irrespective of what knowledge he may have of areas in particular parts of Scotland, he, instead of the people who know the area and are responsible for it, is going to make decisions as to rents. They have no possibility of taking account of the social and economic forces in the area. The Secretary of State is the one who is going to make decisions which impose his will in whatever way he thinks fit.
It was said many times in another place during the passage of this Bill, but it does no harm to emphasise it here, that already the Secretary of State decides the amount of housing support grant. He is taking power in this clause to determine the rate fund contribution. Therefore, he will have complete control over the level of council house rents. So far as rents are concerned, the only room for manoeuvre that any local authority has is. somehow or other, to save on administration and maintenance.
When I think of my own local authority of Glasgow, or of Strathclyde, there is very little fat left in the administration of local authorities, and any draconian measures that were brought in to reduce adminis-tration costs would also reduce very considerably the service to the ordinary ratepayers in the city. In the past few years, this Government have added many other burdens to local authorities; in particular, to housing authorities. For example, the situation with the Act covering housing benefits is absolutely chaotic, because of the way it was introduced, and the Tenants' Rights Etc. (Scotland) Amendment Act, which we passed recently, will add other responsibilities to local authorities and housing authorities. Therefore, there is very little fat left from which any substantial savings could be made.
As regards maintenance, savings can be made only if maintenance is postponed to the detriment of the housing stock. There is a legacy in many of our big cities, as well as in our country areas, of architectural enthusiasm and planning combined with very doubtful engineering. That has Left us with problems of tower blocks, system-built flats and dampness, which strain local authorities' resources just to keep some houses fit for habitation. I am not blaming any government for some of the faults in housing. These places were built in good faith under pressure from enthusiastic architects and planners.
However, the fact is that we are now left with very great problems in terms of housing maintenance, and we should be spending a great deal more even to keep some of the stock that we now have, because of the rate at which it is deteriorating. Thousands of houses throughout Scotland have had to be abandoned or pulled down, so maintenance of those with any life left in them must not be neglected. We know, and the Secretary of State knows, that there will be a deterioration unless more resources are released to the housing authorities.
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I am sure that during the course of this Bill we shall be discussing overspending by local authorities as against central government. In the various stages in another place many figures went backwards and forwards without any final conclusion. But it was said by the Secretary of State that if any increase by his department were greater in percentage terms than local authorities' figures, it would be because he had greater responsibility than local authorities. In other words, he was unwilling to cut some of his services, but was happy to pass the opprobrium of the electorate onto local authorities by forcing them to cut down on their services. This is something which we shall go into at considerable length in Committee, and I look forward to hearing the replies which we are anxious to get from the Minister and which were not given in another place.
May I leave this section of the Bill and come to one or two other points, such as details of caravan parks, racecourses and football parks which have already been mentioned. Perhaps at a later stage the noble and learned Lord who is to reply can give us an outline of how he sees this operating, and say whether it will be detrimental to the body of rating law that we have in Scotland at present, and whether it will be a disturbance which has a ripple effect in many areas. In practice, the effect on rating law of some of the changes will be so bad that there will need to be an alteration.
There is another point which the Minister did not mention and to which we require an answer. I think it was the Secretary of State who used the word "streamlining" in connection with Clause 2. That applies when several orders are to be made covering a number of local authorities. We never had an answer in the other place as to whether all these orders will be taken at the one time and voted on en bloc or whether there will be an opportunity to vote on each order separately. So I hope that we can get an answer here. It seems as though a vote will be taken en bloc, so that perhaps Elgin. Glasgow and Peebles could be voted on together and one vote would encompass them all. There may have been a strong feeling that one of the orders should be negatived; but because the orders have to go through together they will be streamrollered through. I hope that the Minister will be able to answer some of these questions. Will there be separate debates and separate votes?
I have spoken rather longer than I intended; but I am sure the Minister appreciates that, although this Bill may not take quite so long as the Roads (Scotland) Bill, it is a Bill which we shall want to go through in considerable detail in this House. We think that it is a thoroughly bad Bill and it is fundamentally an anti-local authority Bill. We shall be helpful about those things which are of assistance to the ratepayers and people of Scotland, but otherwise we shall oppose the Bill in every way possible.
11.57 a.m.
Lord Taylor of Gryfe: My Lords, the House is indebted to the noble Lord, Lord Carmichael, for his criticism of the Bill, with his intimate and relatively recent experience as a Glasgow city councillor. We look forward also to the contribution of the former Provost of Aberdeen, who is in his place today, with his experience and knowledge in this field.

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The subject of the Bill has been one of abiding interest to me since I entered Glasgow City Council in my early twenties. The first thing I did in that city council was to put down a notice of motion: "That this council petition the Government to abolish the system of local rating and introduce a system of local income tax". I was reasonably innocent at that time, but I have read many reports and many contributions in this field since. My knowledge of the subject has increased, although I am a little like the Government: I am not entirely convinced about one system or another, although the logic appears to be on the side of some form of local income tax.
Assessment of rate contribution on the basis of the number of rooms occupied and the type of house occupied is not a rational proposition. It means that some people who are well able to pay, such as bachelors, and who live alone, pay very little, although they enjoy the same services as larger families who have to occupy bigger houses and, consequently, have to make a greater contribution to local government. Having lived with the subject for a number of years, I am a little disappointed at the Bill which is now before us. I do not think it does much to help the situation, but it embodies a principle very dangerous to democracy.
This has been local government week in this House, and we have debated the transfer of power from local authorities to central government at some length. Indeed, I was tempted to put down the same amendment to the Second Reading of this Bill today as that which was defeated on Monday. We might have had a much larger attendance on the Benches opposite if I had not resisted that temptation. I, too, enjoy my holidays!
There is no doubt that the Bill represents a shift in power. It changes the relationship between central and local government. It has never been a completely easy relationship. The Secretary of State for Scotland—and we have with us today two former distinguished Secretaries of State for Scotland—had to live with the local authorities and offer advice and guidance, but he rarely had mandatory powers over rate-fixing. The relationship has worked. I am a little worried by the departure of this Government from the traditional practice of living with local authorities with reasonable consensus, agreement and persuasion. According to the strident voice of the Prime Minister this week in her BBC interview, we live by conviction and not by consensus. That point is evident in a great deal of the legislation which is now before us. An element of confrontation which is unhealthy is being introduced into our society. This applies not only to local government but to other areas of our national politics.
I regret the shift of power away from local authorities to central government. Local authorities consist of people who have been elected. They are close to their constituents, whom they meet every day. They hold their surgeries once a week in the local communities, and they know, in a very intimate way, the needs of those communities. But the Bill says that the Scottish Office, the centralised administration, knows better. In a democracy there is always the sanction, if people behave irresponsibly, of the election. Local councillors, like Members of Parliament, are conscious of that sanction, and if they
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wish to be re-elected they have to behave in a way which commends itself to the electors. Therefore, this great transfer of power to the central authority, which is said to know best, is dangerous for democracy.
I hope that Members of your Lordships' House will have read the speeches which were made last night in another place on precisely this subject. The Scottish Office, which as a result of the Bill will inherit these great responsibilities and powers, has not been too clever about controlling its own expenditure. According to a statement which was made in the other place, between 1981 and 1984 Scottish Office expenditure went up by 4·6 per cent. while local authority expenditure in Scotland during the same period went up by only 0·4 per cent. Therefore, I am not sure that the credentials of the Scottish Office are entirely justified.
In local government we need people who feel that the job that they are doing is worthwhile. We need people to come forward at local elections and present themselves as councillors. In so far as their powers are diminished, as implied by the Bill, the ability of local authorities to attract people who can best serve their community is also diminished. Therefore, knowing, as I do, a little about local government. I do not believe that the charge levelled against then is justified. Of course there will always be some difficult people in local government, but the total charge, which involves a change in the legislation, is not justified. The Strath-clyde region contains about one-half of the population of Scotland. Those who represent the Strathclyde region have great responsibilities laid upon them. I am impressed by the number of people who have tried to do a good job, not simply with regard to their party manifesto but also in keeping with the needs of the rates and of responsible local government. I believe that the Bill undermines that situation.
May I say to the Government, who get rather upset about high spending local authorities, that many of the demands which are made on local authority services—taking care of our ageing population, increasing the number of home helps and taking care of the people who suffer from the side effects of unemployment, of which there is a great deal in western Scotland as a result of the Government's economic policies are consequently greater. There is greater poverty and there is greater deprivation. Therefore, it is not fair to blame entirely the local authorities for high spending when the demands which are made on these services are increasing. Central government has some responsibility for this situation.
Another area which was highlighted by the noble Lord, Lord Carmichael of Kelvingrove. was the provision of the housing support grant. Perhaps the Minister will confirm that in the first year of this Government the housing support grant in Scotland was £213 million. It is now down to £72 million. This results in the kind of situation which was pointed out by the noble Lord, Lord Carmichael of Kelvingrove: that there will be a steadily diminishing housing support grant which must, in time, result in higher rents for people who are unable to pay.
I agree with some of the Government's criticisms. I agree that some local authorities have not discharged adequately enough or rapidly enough their duty to sell

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council houses. This reduces the housing support grant. There has been a certain amount of frustration of that policy. Nevertheless, it does not call for the kind measures which are indicated here. The consequences for the housing account will be quite dramatic. At the Committee stage, therefore, I hope that we shall have the opportunity to think again about some of these matters.
Turning to the question of consulting local business interests, I support consultation. Local business interests contribute greatly to the rating system. However, it is important that the local business interests should select who is to speak on their behalf. It should not be left to the local authorities simply to invite people to speak on their behalf. The Bill does not make that point clear. I hope, therefore, that we shall be able to clarify it during the Committee stage.
For all these fundamental reasons I cannot support the Bill. We are opposed to it. We shall try to make our contribution at the Committee stage to improve its provisions.
12.8 p.m.
Lady Saltoun: My Lords, unlike the noble Lord, Lord Carmichael of Kelvingrove, and the noble Lord, Lord Taylor of Gryfe, I believe that this is a pretty good Bill. I welcome it. I regard it as having become absolutely necessary. Much of it is overdue and I shall support it.
However, there is just one matter which disappoints me. The law regarding the rating of sporting rights in Scotland is very unfair on the proprietor, particularly on the small proprietor, like small farmers who do not let their shootings and who may themselves never shoot at all. In England, sportings are assessed to rates only if they are severed from the land by a tenancy. An amendment to the Bill to remove this anomaly was moved in Committee in another place. The Minister rejected the amendment, on the grounds that in Scotland shooting and fishing rights are heritable subjects in their own right, whether or not they are severed from the land over which they are exercised, and that in this respect the law in Scotland was different from the law in England.
This is not correct. From the point of view of ownership, in Scotland shooting rights are inseparable and inalienable from the land. So are trout fishings. It is most unfortunate that the opportunity to redress this unfair anomaly in another place was lost. I shall be moving an amendment at Committee stage to try to rectify this situation. Otherwise, I wish the Bill extremely well.
12.10 p.m.
Lord Kirkhill: My Lords, the Explanatory and Financial Memorandum for this Bill states that it,
"gives effect to proposals for the reform of the rating and valuation system in Scotland contained in [the White Paper] 'Valuation and Rating in Scotland: Proposals for Reform' (Cmnd. 9018)".
But we should remember that the White Paper claimed to be the Government's response to a previous publication, the objective of which was to seek an alternative to domestic rates.
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It is surely a sad reflection on a Government which for many years has been so critical of the rating system that the legislation which we are now asked to consider does absolutely nothing to reform the rating system in any fundamental way. At the same time, however, the Bill seeks to impose upon local authorities strictures limiting the extent to which they can levy the one tax that it is open to them to raise.
It is apparent by the proposed action of the Government that the days when it seemed to be self-evident that local authorities needed a truly independent source of revenue have long since gone. It is clear that local authorities acknowledge that the Government have a right to determine the amount of grant which they are prepared to make available in support of local services. The local authorities, for their part, would claim that they should be free, without central interference, to determine the rate that is necessary to supplement Government grant so that services may be provided at a level which the local electorate is demanding. As a consequence in my view this Bill is wrong in principle and misconceived in detail.
Opposition to this Bill crosses both the political and geographical boundaries as we know them. It is noteworthy that the three English local authority associations are equally opposed to the principles underlying the Rates Bill which received a Second Reading in your Lordships' House earlier this week. Is it not ironic that this House—which is not democrat-lcalh elected—should exercise its legislative powers in the direction of curbing the basic freedom of democratically-elected local authorities?
It would not be quite so bad if power over local government were to be exercised by Parliament itself—but we know that in practice the power will be exercised by civil servants acting under pressure from the Treasury, with little knowledge of the local circumstances which have caused the particular authority concerned to pitch its expenditure at a certain level.
The Government claim that this Bill is necessary for good management of the national economy Since, however, local authorities meet current expenditure out of current income, local government expenditure does not in my view affect the public sector borrowing requirement. The Government also argue (and indeed the Minister emphasised just this very point in his remarks earlier) that local government expenditure is out of control There is no justification for that assertion Local government expenditure has risen, but at a lower rate than the expenditure of central government a point which the noble Lord, Lord Taylor of Gryfe, has just remarked upon. At the same time, we who legislate have placed additional duties upon local authorities, which inevitably have expenditure implications.
Side by side with the argument concerning the management of the economy, the Government claim that they are acting to protect the ratepayers In 1983–84 domestic rate bills increased on average by less than 1 per cent. In 1984–85 the increase will be less than 5 per cent. The major factor which has given rise to the increased burden which ratepayers have had to meet in recent times, despite the argument to the contrary advanced by the Minister, has been the

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decision of this Government, regrettably, to reduce the percentage of rate support grant thereby transferring more of the cost of local services from the taxpayer to the ratepayer.
Such a situation hardly confirms the Government's view that local government expenditure is out of control, or that this Government are anxious to protect ratepayers. It can in no way justify the very serious interference with the democratic process which the Government are seeking to introduce. Of course, the Bill is not entirely bad—as the noble Lord, Lord Carmichael of Kelvingrove, has just indicated. Clause 5, which enable institutions for the disabled to qualify for rate relief, is to be welcomed; and Clause 14, which exempts reed beds from rates, is obviously generally acceptable. Other clauses, however, are unnecessary in the light of the alternative powers which the Secretary of State already possesses.
Let me highlight a few of the more objectionable clauses in this Bill. Clause 2 enables the Secretary of State to include more than one authority in a report to another place which seeks to reduce the grant payable to local authorities whose expenditure he considers excessive and unreasonable. This curtailment—for that is what this is—of the statutory procedure can only have the effect of curbing public debate on a very important issue affecting the ratepayers of a particular authority. If several authorities are mentioned in one report, it is inevitable that the debate will be diffuse if not confusing. In view of the shortage of time available for such debates, certain Members of Parliament may be denied the opportunity of stating an adequate case against the order.
It is thoroughly bad practice to propose to the other place—which is supposed to protect the rights of the individual—such drastic measures by a procedure which curtails reasoned debate and argument. It is only right and fair that separate reports in respect of each authority against whom it is proposed that action should be taken might be presented to the other place for consideration.
Clause 3 of the Bill is undoubtedly the clause which has generated most discussion, being described, in phaseology that is more appropriate to the Rates Bill we debated earlier this week, as the "rate-capping clause". As I stated previously, on the basis of the past spending record of local authorities there is no justification for the Government seeking to take a general power to limit rate increases. The Government themselves do not seem too certain of their actions, because they claim that they are merely taking a reserve power which may never be used. I would claim that if that power were used, it could be detrimental to the general body of ratepayers.
If, for example, the Government had ordained that in 1983–84 no rate increase should exceed the rate level of the previous year, say 5 per cent. (which is below the rate of inflation) it is possible, indeed probable, that all local authorities would have sought to increase their rate poundages by roughly that amount. In actual fact, rate poundages increased by less than 1 per cent. Apart from that practical consideration, the clause is thoroughly bad in principle and totally objectionable to those who seek to protect democracy, whether at national of local level.
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It is significant that certain Conservative Members in another place voted against the equivalent clause in the Rates Bill. No Scottish Conservative Member of Parliament, for reasons best known to himself, was prepared to take such a step. In such a situation it becomes ever more important that noble Lords of all political persuasions should consider with the utmost care the very important step which the Government are asking us to take.
We now move to a very strange scene. Mr. Patrick Jenkin, to meet the mounting criticism of the Rates Bill by Members of his own party, has indicated that he would be prepared to make certain amendments to the equivalent clause in the Rates Bill. Scottish Ministers, on the other hand, have indicated that they are not prepared to make a similar concession to this Bill. Why that should be so is a question which must be put to the Minister. It is significant that those who voted against certain clauses in the Rates Bill when it was before the other place were Conservative Members of Parliament with previous local government experience. The only conclusion to be drawn is that Scottish Ministers have little concern for, or understanding of, the Scottish system of local government. Certainly the expenditure pattern of Scottish local authorities does not justify harsher treatment for Scottish local authorities than for authorities in England and Wales. Harshness apart, the procedural difference in the powers of selective action already available to the Secretary of State for Scotland makes a general rate-capping power even less necessary—even if one considered it to be necessary at all, which I do not—for Scotland than for England or Wales.
Clause 4 of this Bill imposes a duty on local authorities to consult with non-domestic ratepayers before determining their rates. It seems to me that in recent times local authorities have improved, and are continuing to improve, the processes by which they consult with their ratepayers. Surely it is difficult to justify special treatment being given to a particular class of ratepayer. I submit that this particular area is not one which can be properly governed by legislation. The objectives of the Government, in my view, would be more likely to be achieved by encouraging the improvement and extension of the voluntary processes of consultation which now take place, and take place in very substantial measure, thoughout Scotland. However, if the clause is to remain the Minister must explain why he has chosen to specify procedures for consultation which are different from those proposed for England and Wales.
Clause 6—as my noble friend Lord Carmichael of Kelvingrove has just indicated—enables the Secretary of State to impose a limit by order on the contributions of local authorities to the housing revenue account. In my view the Government until now have sought to influence rent levels by devious means, the most notable of which has been the housing expenditure limitation system. Local authorities have long attacked this system as being inefficient and irrelevant. It would now appear that even in the eyes of the Government the system has failed. Housing revenue accounts have three categories of income. The first, but by no means the most important, is housing

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support grant, which has been dramatically eroded in recent years to the extent that 30 authorities which own 58 per cent. of the total housing stock get no grant whatever.
The next category of income is the rent payable by local authority tenants. While the Government have taken steps to penalise authorities who have not increased their rent levels to the extent that the Government would like, rent levels have hitherto remained within the discretion of the local authorities concerned. The third category of income is the contribution from the rate fund to the housing revenue account. Again, this item has been within the discretion of the local authority, but that discretion will no longer be meaningful if the Bill is enacted in its present form.
In future, therefore, the Government will control the total amount of housing support grant and the amount of the rate fund contribution. It follows from that in effect that the Government are controlling the third element in the equation; namely, the level of rents. The practical consequence is that the Government will be, in essence, the national landlord of local authority housing in Scotland; but the responsibility which the Secretary of State accepts will stop short of assuming responsibility for the upkeep of the decaying housing stock which makes life intolerable in many of our city areas. It is absolutely pathetic. There is no prospect of improvement in the intolerable conditions under which many local authority tenants are living, if this Bill is enacted in its present form.
Part II of the Bill deals with the provisions relating to valuation. Already it has become clear that the owners of race courses, football clubs and similar categories of property feel that they have been badly let down by the Government. I will tell your Lordships why. The prospect was held out to them that they could, on appeal, introduce comparisons with similar categories of property in England and Wales. I have correspondence to that effect. It now appears that such comparisons can be introduced only in circumstances where it can be shown that there is in existence in Scotland an absence of comparable rental evidence. It is not the same thing at all. We are now talking about a different matter. In my view, Part II of the Bill is symptomatic of the muddle into which the Government have got themselves. By denigrating the rating system, and thereby encouraging a lack of confidence in such a system, they subsequently find that there is no better alternative and that their ideas for change are impracticable. For all that, the Government have decided to proceed with the legislation despite the fact that ratepayers will feel let down and that the relationship between central Government and local government will become increasingly embittered—even more embittered, if that is possible, than it is now.
I have spoken at some length on the financial provisions of the Bill. The valuation proposals are in many respects equally objectionable, but at this point I merely ask the Minister whether he has read the paper submitted by the Scottish Assessors Association and whether he can answer the very severe criticisms of the Government's proposals that have been advanced by the professional officers whose job it will be to comply with the legislation if it is enacted.
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This Bill raises one of the most important constitutional issues ever to come before this House. I ask noble Lords to consider most seriously the steps which they are being asked to take. Above all, I hope that noble Lords of all political persuasions will be prepared to look at particular clauses on their merits. In many of them I can find no merit whatever.
12.29 p.m.
Lord Campbell of Croy: My Lords, I should like to thank my noble friend for introducing the Bill so clearly at the beginning of this debate. Scotland had already started on the road to giving Ministers powers to curb excessive expenditure by local authorities before the rest of the country and before this Bill was introduced in another place. I remind your Lordships that four Scottish local authorities were last year the subject of reports to another place resulting from a system of guidelines and direct discussions between the local authorities and the Scottish Office. This Bill now goes further. For example, Clause 2 seeks to arrange that several local authorities can be included in one report to another place.
It also contains the provisions which have already been referred to by previous speakers to bring arrangements in Scotland to approximately the equivalent of the intended goals of the Rates Bill for England and Wales which we debated on Monday. I must make it clear that I regret the need for these provisions in the Bill. As a former Secretary of State for Scotland I feel that very strongly. During the four years when I was Secretary of State I aimed to be scrupulous—and I think my political opponents agreed with this at the time—in allowing local authorities to take decisions which were within their powers and discretion, having been conferred by Parliament. I may have disagreed with what they were doing or proposing to do, but I refrained from interfering except where I was bound by statute to approve standards or other factors.
However, I recognise the problem which has recently arisen over expenditure. A few local authorities (to use a colloquial expression) have gone right over the top. If there were to be no changes, a politically motivated local authority could nullify central Government's carefully thought out plans on public expenditure within general national policy. It could at the same time be imposing a massive burden on its ratepayers. It may be asked, will it then be brought to book at the subsequent local elections? The answer is not necessarily so because only a minority of local government electors pay rates. Of course, a large part of the total expenditure of local authorities is met by central government grants such as the rate support grant. From the electoral point of view such a local authority may calculate that the majority of its electors will feel that they are benefiting from the additional services being provided by the excessive expenditure at the expense of only a minority who pay rates.
I would draw attention to a substantial body of the ratepayers who have no vote or only a very insignificant number of votes. They are commerce and industry. It is essential, perhaps now as much as ever, that in Scotland we should be doing everything possible to encourage development and expansion of industry and commerce. We welcome some of the

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recent developments in the microchip industry and electronics in general, but we have to do everything that we can to encourage such developments. Having to pay such very heavy rates is no encouragement at all.
I welcome Clause 4 which provides, I think for the first time, for consultations to be carried out with non-domestic ratepayers—representatives of commerce and industry—but that can be only a limited advance. The local authority need take no notice of what they say. But I welcome the fact that it is recognised that those contributors to local government expenditure who do not have a vote should be consulted.
I come to the subject of the reform of the rates system. I believe that only a radical reform of the system or its replacement by something else will remove the situation which I have just described. I know the difficulties. I am fully aware of the searching investigations that have been carried out under successive Governments who have found that either an additional local income tax or various forms of indirect taxation run into insuperable difficulties. Now, as a result of the most recent one, I understand that the Government have reluctantly said that they cannot replace the rates system, at any rate in the foreseeable future.
I urge that the effort must be continued and a reformed system or a new system must be found. Otherwise, on expenditure, local authorities will not really be accountable to their ratepayers. Until there is a much closer identification of the body of their ratepayers with the body of their electors they need not, in certain circumstances, pay any attention to them on expenditure. I should hope that a new system would not necessarily be a local income tax but would be based on the same system as income tax; that is to say, that every resident adult in the local authority area who had an income over a certain threshold would be expected to pay the local government tax. At least that would bring closer together the ratepayers as a body and the electors.
Until that time I cannot wholly agree with the noble Lord, Lord Taylor of Gryfe, in saying that local authorities are subsequently accountable at election time to their ratepayers, for the reason I have given—that, only a minority of the electors pay rates. Accordingly, in present circumstances I support the proposals in the Bill in principle, while greatly regretting that it should be necessary to have this Bill for that purpose.
May I just refer to two or three other points in the Bill? Of course I welcome Clause 5 in extending the measures of relief for institutions concerned with disabled people. I do this as having been chairman in Scotland in 1981 of the International Year of Disabled People and also (as I think the noble Lord, Lord Kirkhill, will remember, because he was a Minister of State at the Scottish Office at the time) because before the 1978 Act which this Bill amends I was from the Opposition Front Bench advocating that reliefs of this kind should be brought in, and the first stages were carried out in that Act.
I also welcome Clauses 12 and 13 which start to make sense where rating on caravan sites is concerned.
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The Scottish tourist industry has for long pointed out the ridiculous anomalies there have been here. I remind your Lordships of what I have said on previous occasions. There could be a site for mobile homes and caravans one mile north of the Border, identical to a similar one south of the Border, and the rate bill for the Scottish one would be enormous compared with the one in England. I noted in the White Paper, Cmnd. 9018, that the Government had taken that point on board and were going to change the situation We shall look at these clauses to make sure that they carry out the Government's good intention. Those are all the comments which I propose to make on the Bill at this stage, but I am sure that it will promote a great deal of discussion in its later stages.
12. 38 p.m.
Lord Burton: My Lords, I had not intended to speak in this debate but I am afraid I have been stirred into action by what I have heard today. I welcome the Bill as far as it goes. When I was chairman of a district council we had a rate of one old penny. When there was a change of currency this was doubled to one new penny. As a result, in 1974 we had a surplus and we had a nil rate. That must be fairly unique, I think, over many years now in local government, but that is what happened Indeed, at the end of that year when we handed over to the new district council we handed over quite a considerable surplus, I think £1,000.
Admittedly, the new district councils have additional responsibilities, but our rates are now 22p in the pound on an increased valuation. I think your Lordships will agree that an increase from nil to 22p in 10 years on an increased valuation is staggering. What is more, apart from being a very heavy burden on a fragile rural area, Inverness district council is not, I believe by any means one of the worst offenders in Scotland. I am afraid I cannot say that I have not noted any wastage of money. Indeed, I am afraid that on numerous occasions I have seen money going down the drain. Therefore, I very much welcome the fact that it is possible to put some restriction on local government.
However, I also very much regret that the Government have opted out of trying to amend the rating system. My goodness! how I agreed with what my noble friend, Lord Campbell of Croy, said a few minutes ago: it is essential that we should have accountability. Indeed, my Lords, if the Government had tried to revise the rating system I wonder whether they would have had the hostility from the Benches opposite which clearly they have to this Bill. I wonder whether it would not be possible to try and work out something, even with the Opposition, because there is a very great need to try and get this put right. Further, I should like to support the noble Lady, Lady Saltoun, over the question of sporting rates. However, I should like just to correct one slight error because salmon fishings are a separate heritable property, though the other fishings, trout fishings, shootings and stalkings of course are not.
Lady Saltoun: My Lords, if the noble Lord would give way for one moment, I am aware of that and I particularly did not mention salmon fishings.
Lord Burton: My Lords, I am sorry. I knew the noble Lady had not mentioned them, but I did not

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notice that she had actually left them out. I thought it was worth drawing attention to that because I am rather surprised that the Scottish Office did not already know about this when the Minister gave the answer in the other place. I was given a similar reply to an amendment that I had put down for the Crofters Bill. I know this has caused difficulties in the Scottish Office and therefore I would have expected the Scottish Office to know that they are not a separate heritable property, and in particular trout fishings go with the land.
12 42 p.m.
Lord Ross of Marnock: My Lords, we have had an interesting debate, not the least of which was the last speech. When I hear a noble Lord getting up and comparing what the rate was when he was the chairman of a district council and comparing it with a present district council today, I do not think he is worth listening to. Of course any Englishmen and noble Lords who are in this place, who know nothing about local government in Scotland, might have been surprised at him.
The lowest form of local authority life before reorganisation was the district council. There were 196 of them. They were limited I think to a tuppenny rate eventually. But to compare that with the responsibilities that Inverness District Council has today is really shattering. It is shattering that anyone can speak and compare the two and try to say, "Because of that, we must have this Bill". My goodness! I hope that the noble Lord, Lord Burton, when he comes—as no doubt he will—to the Committee stage to talk about deer parks and their interests, will not be surprised if I do not pay too much attention to him.
The actual fact is that it must be rather distressing for the noble Lord, Lord Campbell of Croy. He was Secretary of State under the old dispensation when we had local authorities of small boroughs, large boroughs, district councils, county councils, councils of cities and the 196 district councils of which the noble Lord was a distinguished convenor—and I am sorry I have never heard of that one. He remembers, too, because he masterminded the Bill for the reorganisation of local government which created a complete new section. The idea was that we must have stronger, more viable local authorities and so we had the creation of nine regional councils, 53 district councils and three islands councils, to be independent, to be viable, to be able to stand up in their own corner for their own statutory rights against a central government. That was the hope. Not only that—and I think it is relevant to the point that was made by the noble Lord, Lord Taylor of Gryfe—they were going to be able because of the nature of the important work that they were going to do to attract a better quality of councillor.
Now, what is the position today? By the way that this Government have behaved since 1979 we have what the noble Lord, Lord Taylor of Gryfe, fears and does not want, and which nobody wants. There has always been a certain amount of come and go, as the noble Lord, Lord Campbell of Croy, knows, between the Secretary of State and the local authorities; but, generally speaking, we manage to soothe it out. But
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now we have confrontation. Confrontation has been invited, and it is very, very bad indeed for all those who have a high regard for local government.
I have been concerned in a family way with local government I think since the day I could walk. My father was a member of the old parish council which in Scotland administered the Poor Law. Parish councils were wiped out when the county councils were created. I remember the battles about that. I remember the battles that there were in respect of the introduction of a block grant in 1929 and all the changes in finance in relation to that: the Goschen formula, the eleven-eightieths to which Scotland was always entitled, and then the coming in of the exchequer equalisation grant. Then in 1966 they changed to the present situation of rate support grant with the three elements of needs, resources and domestic.
It is a complicated subject. There are three subjects here: the rating subject, the valuation subject and the housing subject—all with their own histories. But I am amazed at what has happened in the past four years; the extent to which the central authority have taken powers away from the local authority and dictated to the local authority. We are not within 10 years of the re-organisation yet. Please do not tell us the extent to which the rate support grant was cut by a Labour Government. If you are going to tell us that, then also tell us that the year before it was increased by a Labour Government to take account of the special expenses in relation to the translation from one form of authority to the other in re-organisation. Because of the extensive re-organisation, we gave the highest rate support grant percentage that ever was given and were told at the time that it would come down, as it did come down. So let us not have that from the Government.
Let them face up to the fact that now we have virtually an annual hammering of local authorities in Scotland. Until that Bill was passed the other night, we had already got in Scotland this business of picking out local authorities and fixing the rates on them. It was done for Scotland long before. I, too, thought of putting down a reasoned amendment but I did not do so for a different reason than the noble Lord: I did not want to see a repetition of the farce that we had in this place at midnight on Monday.
Democratically, this place, so far as Scotland is concerned, is a complete farce at the moment. But to add to it, to exaggerate it and underline it by the farce of people coming into this place for the first time for years—some of them for the first time certainly in this Parliament—and not even knowing where the Lobbies were and having to be being guided through! I did not think that did Parliament very much good. It enhanced very considerably my own feelings about this place, that the only way you can deal with it is to abolish it. People were coming in here in respect of the whole future of a great section of democracy, local government, which is probably a damned sight older than their titles. They prefer to take that step without having heard a single word of the argument. I did not want to repeat that farce in respect of Scotland.
The actual facts of course are these. Since 1979 local government expenditure in Scotland is practically static. I think there is an increase of 1.6 per cent. But

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the expenditure of central government, despite the fact that they have been saving on what they have been giving to local authorities, has gone up in real terms by 4.6 per cent. There are no excessive and unreasonable figures there on which to base the kind of legislation we already have and which we are now being given; there are no such figures whatever.
There is no argument about it; the figures are there. The rates in Scotland have gone up—yes, by 133 per cent. But how is the expenditure of a local authority met? It is met by subventions from Government, by rates, and of course by its own internal income from services. Each year the Scottish Office and the local authorities meet and determine what will be the aggregate expenditure of local authorities, having summed up all the various matters. It is the Secretary of State who agrees and says, "This shall be the total of your expenditure which I will reckon for grant".
The other element, apart from rates, is what the Government give. The Government then decide what percentage of that reckonable expenditure they will pay. That is called rate support grant. The fact is that this year it is being reduced by 1.6 per cent. It is also a fact that since the present Government came into office in 1979 it has been reduced by nearly 9 per cent.—year after year after year. What does that mean? If the expenditure remains the same, and the Government's share is deliberately cut, the rates must of course go up. When a Government take the hammer to the local authorities and take the power to tell them that their rates will not go up, that means that the services have got to be cut.
I have heard noble Baronesses and noble Lords here discussing Bills. I have heard the noble Lord, Lord Campbell of Croy, discussing them—I heard him today. He said he was grateful for what is being done for the disabled. But that does not reduce the expenditure one bit; it just spreads it to the rest of the ratepayers. I remember that when we passed a Bill on mental health there was a certain measure of triumph when we decided that there would be after-care for people when they left institutions. Who is to undertake the after-care?—the local authorities. Can they do that without staff, without spending money? Of course not. But if they do it and keep the expenditure at the same level, some other cut must be made. We have only to look around the streets of Scotland today and see whether they are as clean as they were 10 years ago. We have only to see the extent of the services, see what is being charged in respect of recreation facilities for youngsters playing football on a Saturday morning, and see the extent of the cuts in services which people consider to be valuable.
Who are the people who should decide whether a local authority is being excessively unreasonable with its expenditure? They are the ratepayers; and domestic ratepayers get a little help, though not so much as they used to get, under the rate support grant distribution formula. But the fact is that, thanks to the Government of the noble Lord, Lord Campbell of Croy, with the support of a number of people here, the ratepayers now have a chance to vote only once in four years. I have said before that I think that this is wrong. It was a much greater discipline upon local authorities
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when a third of the councils retired each year. When the noble Lord, Lord Taylor of Gryfe, was a member of Glasgow Town Council he submitted himself to the electorate once every three years, though he shared his ward with two other people; and so a third of the council retired each year. I think that it was salutary in respect of Lothian—who were the great offenders on one occasion when we had one of this kind of Bill—that the ratepayers exercised their right. It is the way to do it; it is the democratic way to do it. But I can assure noble Lords that it is wrong to use this invalid justification for action by a central Government.
We have now had three Bills, and here we are hammering the local authority a little more and introducing a monstrous clause which gives the Government power to fix the rates of any local authority, and every local authority, at the one time. The Government already have the power of abatement, to claw back some of the grant from the local authorities. They have taken back from Scottish local authorities about £ 170 million, and I say to noble Lords opposite, if you take away grant, do not be surprised if the rates go up. This is what the Government are going to do—fix the rates.
The other night we considered a housing Bill to do with tenant rights and I made the point that the Government are telling the local authorities that they must sell their houses. They are telling them the discount that must be given. Now they are telling them what exactly will be their rates. Yet the Government talk about strong, viable, independent local government that will attract quality people. What they want are puppets—and more and more they will get them, because the best people are leaving local government. The leader of the Edinburgh Tory-controlled council, Councillor Brereton, has attacked this Bill far more savagely than ever I have. He is someone who is in local government at the present time. I was grateful to hear of the experience of the noble Lord, Lord Kirkhill, who knows local government in Aberdeen inside out. He knows from both sides of the kind of battle that went on between local authorities and central government. It was a great Scottish game, more or less; we all enjoyed it. But in the end we came to some kind of conclusion.
Now, with the balance shifting and with central government taking complete control, we have a confrontation scene, and we shall not get in local government people of character, people of initiative. We used to be delighted with the progress in local government. Aberdeen always had a very good reputation for education, while Fife use to say, "Our education system is far better". I think of the work of individual authorities and individual characters within them—great convenors. Will that continue when initiative is stifled, when this place here tells local government what it will do on all occasions?
The other night I listened to the Prime Minister talking to Sir Robin Day about how she disliked consensus. Consensus was nothing. What she wanted was conviction—the politics of conviction. We are getting not the politics of conviction but the politics of dogma. The Government reek of it and it is going to be the destruction of local democracy as we know it. There is no justification for it.

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At present I think that in Scotland there are about 30 authorities which are below the guidelines. The gap in respect of education is 7·6 per cent. Thanks to the dictates of the Government, if they carry on with this Bill and do what they did last year, in Scotland 3,181 teachers will become unemployed; and that is allowing for 800 going in connection with the effects of the school-leaving age.
In the past in Scotland there were local authorities which gloried in the fact that they were innovative in education. There is none of that now, but rather determination by the central government. What has happened regarding transport grants? Let us take Strathclyde, in which live half the population of Scotland. One of the results of local government reorganisation in Scotland is that we have one local authority—Strathclyde—responsible for half the population of the whole of Scotland. It estimates that it requires £55 million in respect of bus and ferry services; and, remember, this area stretches from the islands right down to Ballantraye. For all the needs regarding transport it reckons that it will have to make grants of about £55 million. But the grant for the whole of Scotland that is being allowed by the Government under the rate support grant system is £56 million.
That is the kind of thing that noble Lords from the rural areas get up and speak about. They know the need for it. We had the debate on the Highlands and Islands Development Board. The Government have gone out of their way to give power to local authorities to make these grants, but are denying them the money and the wherewithal to do it. It is staggering that we find noble Lords from Scotland supporting, even with regret, the principle that is being applied here.
Then, of course there is the valuation element. My noble friend Lord Carmichael has dealt with that, as have other noble Lords who have spoken. I listened to what was said by the noble Lady, Lady Saltoun. When we come to the Committee stage, I know that she will be present because she usually is when following through a particular point. In respect of valuation, I can understand why the Minister of State missed out the words quoted to him:
"the rating system, which is basically sound".
There is a discovery for us! This is the great and glorious Government that would abolish domestic rates. Having said it, not once but in about two elections, I gather that what happened last time was that they did not find anything to say about rates. By this time they had discovered that what they had planned was not quite so easy. Someone therefore slipped in a sentence to say that there would be some rating reform.
One has to look at the rating reform in Scotland. The Bill proposes exemption from rates for reed beds, a thriving Scottish industry employing thousands and thousands of people. In fact, the Government were terrified by Nicholas Fairbairn in another place. They had to do something to placate the former Solicitor-General. It really is a joke, but rather a sad one, when the Prime Minister proclaims that she is against consensus and then the Government come along and say that they have a White Paper and that they hope from the responses to be able to narrow the choices
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and to make up their mind. They say, however, that there is no consensus. Having nailed their convictions to the manifesto, saying that they would abolish domestic rating, apart from what was said about the educational aspects, they now come along and say that the system is basically sound. Basically sound? I do not think that there is anyone in the House who could accept that.
The system of rates in Scotland is based upon putting a value on the house in which you live. It does not matter what your income is. There may have been a time in Scotland and elsewhere when a person's house reflected his affluence. It is not true now. The more that expenditure is piled on to that very weak base, the more likely it is to be crumbling, anomalous and unfair. That is the position. Everyone knows that it is unfair. Here am I, a poor pensioner. I have to pay the same rates as I paid when I was a not very well paid Secretary of State for Scotland. Is that sensible? Or should I get out of my house and look for another one? Why should I? This is true in respect of so many other factors.
I have always believed in a local income tax. It can be developed. The noble Lord, Lord Taylor of Gryfe, suggested it. There is a Swedish form of it. It has been done in other parts of the world. The present system is utterly wrong. If you put in gas central heating, your assessment goes up. If you put in electric central heating, which can be taken away when you leave, your rates are not affected. Time and time again, we get anomalies. One recalls that farmers used to be rated for their land at one-eighth rates or one-twelfth rates. Then a change was made. They paid 100 per cent. rates on their dwelling-house, the farm-house. Changes were made in respect of fish farms and in respect of certain machinery when certain local authorities thought they would do very well out of North Sea oil which was technically in their area although on the high seas. We made changes here and there, and now it is the turn of the reed beds.
I speak as honorary president of the Scottish Football Association, which I take far more seriously than I do this place. It has been given the possibility of comparing the assessment and rate payments. The concern is not just the assessment but what rates are paid in Glasgow, say. as compared with London. Celtic play at Celtic Park or Parkhead. The local name, for those who are uninitiated, is Paradise. The assessment is far greater than for Arsenal at Highbury. The same is true of all the English areas. Whether this Bill will solve it, I am not sure. I am practically sure that it will not.
The one important issue that no one has mentioned in the debate is that we have in Scotland our own independent local assessors, selected and elected by the local authority. They cannot very easily be sacked because it requires a two-thirds majority of those present. That was the decision of the Scots themselves through, I think, the 1956 Act. In England and Wales, it is done by the Inland Revenue; it does not cost the local authorities a penny. That is why our rates are a wee bit higher. There are other aspects to explain why rates are higher in Scotland compared with England and Wales, but this is an important one.
The people who determine the assessments in England and Wales are different people altogether.

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They do not work on the same basis. Even if they did, as was attempted in the case of caravans, they would come to a different conclusion. We have to even that out. It takes far more than eating away at the fringes in respect of caravans and reed beds.
We are going to watch the Bill carefully. Will it be the Lord Advocate who will be taking this Bill, or the Minister of State?
Lord Gray of Contin: My Lords, I think that both my noble and learned friend the Lord Advocate and myself will be taking part in the Committee Stage.
Lord Ross of Marnock: My Lords, confusion will be worse confounded! I hope that they will prepare for the onslaught that will come in respect of the Highlands and in respect of Ibrox, Hampden and Parkhead, and other places where there was glory last night when Dundee United defeated Roma. These are important matters from a Scottish point of view and from the ratepayers' point of view. However, it is not the right thing to do in respect of the whole rating system. It is an absolute nonsense.
I wish to say one word about housing. In 1970 the Conservative Government produced proposals for reform of housing finance. It was evident that what they did not like, although they are now rewarding it in giving discounts to tenants, were the subsidised rents paid by local authorities. There has been some cutting away. First, the subsidies went and housing support grants were introduced. Figures given today show that in 1979 it was as much as £215 million a year. Today, it is down to about £52 million a year, and is falling rapidly. There are, I think, 30 housing authorities that do not receive a penny in respect of houses for which subsidies were promised over a considerable period. By limiting it and telling the local authorities what they can pay in respect of rates contribution, having already cut their housing support grant, the Government are now going to fix the rents.
In the last 10 years there has been a very big change in respect of rents in Scotland. Indeed, they make the biggest contribution to the maintenance of Scottish housing. I am disappointed that this Government could not have left it at that. It is very dangerous indeed if. instead of using influence and persuasion, one resorts to statutory powers and powers which, if used, destroy the very basis of democracy, the independence of local authorities and the decision of local authorities as to how much they will pay. That is the danger of the Bill.
I am sorry that the Minister of State has been landed with it. I am sorry, indeed, that such a nice man as the noble and learned Lord the Lord Advocate has now got to defend these wicked principles. I do not think that he has experience of local government, but anyone who has local government at heart is opposed to the Bill. It does not matter what their politics may be. Indeed, that is already evident from the delegations that have come down here—Conservative delegations and independents, like Councillor Jameson from Dumfries and Galloway. The only person who supports the Bill thoroughly and wholeheartedly is the former chairman of a district council of the old dispensation. Shame on him!
1.11 p.m.
The Lord Advocate (Lord Mackay of Clashfern): My Lords, my noble friend in opening the debate today, and my right honourable friend the Secretary of State in another place, have made it very plain that the purpose of this Bill can be described very briefly. It is to help ratepayers, both business and commercial ratepayers, on the one hand, on whose financial stability our nation depends, and individual ratepayers on the other hand, who have seen significant increases in their rates over recent years.
We have had a fairly wide-ranging and very interesting debate—and, indeed, a debate on some aspects of the constitution that are not entirely relevant to this particular Bill. But I was interested to compare the contributions of the noble Lord, Lord Carmichael of Kelvingrove, and of the noble Lord, Lord Ross of Marnock. As I understood it, the noble Lord, Lord Ross of Marnock, was characterising the Government as being guilty of what he described as the "politics of dogma"—no question of change; it is always the same However, as I understood it, the noble Lord Lord Carmichael of Kelvingrove, was saving that when the Government looked very closely at the rating position and could not find an agreed solution emerging, they decided that they would not go ahead with proposals to scrap the rating system. Of course, it is even more remarkable because I think that the noble Lord, Lord Ross of Marnock, himself, having talked about the "politics of dogma", went on to make the same point.
However, it is important to remember a point which has not been stressed so much since my noble friend who opened the debate sat down; namely, that Clause 1 will enable grant reductions resulting from a general abatement to be directly related to the overspending of individual authorities, which will produce a much fairer arrangement than the present one and will put increased pressure on the high spenders to bring their spending down.
A point was raised as regards Clause 2, which is what my right honourable friend the Secretary of State described as the "streamlining provision". As I understand it, this provision essentially deals with the procedure in another place, and it provides that it will be possible for the report to deal with more than one authority. It does not necessarily mean that it would always be appropriate for that to happen. But as I understand the procedure in another place—and, of course, I am relating here what I understand to be the position rather than having had experience of it—one resolution will be required on a particular report Therefore, the answer to the question raised by the noble Lord, Lord Carmichael of Kelvingrove, is that there would be one vote per report, but there is no particular time limit on the debate; it could be long if necessary.
Clause 3 has attracted most attention. The Bill provides a power of last resort to set a general limit on the rates of all authorities. My right honourable friend has made it plain that this would be used only if general abatement and selective action fail to bring local authority expenditure and rates sufficiently under control. I do not believe that it spells the end of local democracy, as has been suggested. Local authorities

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will still be free over a large area to decide the rate levels within the limit, and also to allocate their own spending priorities. The provision will, however—and this is important—protect ratepayers against exorbitant rate levels, should it be necessary to do that—and I certainly hope that it never will be necessary to do that. But there can be no question that the level of rates has important economic consequences. An increase in business or commercial rates puts up the costs of firms, which will put up their prices; and it also affects competitiveness. An increase in domestic rates affects the individual very substantially, and, for example, has economic consequences upon savings.
A good deal has been said about the comparison between central and local government expenditure over some period. I think it is very difficult to reach a completely conclusive answer on this matter. But if one takes current expenditure, which is what counts for rates, and excludes capital, then central Government expenditure has increased by 78.8 per cent. in cash between 1978–79 and 1983–84, and the corresponding local government figure for current expenditure is. I understand, 96.1 per cent.
Much has been made of the constitutional argument as regards this particular provision. I believe that it is not correct to say that this marks a significant constitutional change. Local authorities are not free agents at liberty to decide exactly what they do regardless of Parliament. They are and always have been creatures of statute. They have been created by statute, and their powers have been set out by Parliament from time to time. Their actions have to take place within the statutory and economic framework set by a democratically-elected Parliament. As local authorities are responsible for a quarter of our public spending, no Government of any party could afford to ignore local authority spending in determining national economic policy, and I think it is true to say that no Government have done so.
I pass now to say a word about the housing provision and Clause 6 of the Bill. The situation so far as Clause 6 is concerned is that the Secretary of State takes power to limit the rate fund contributions to the housing revenue account. I believe that, contrary to what the noble Lord, Lord Kirkhill, has said, the result of that will be that in fact the level of rents will not be completely fixed, but certainly it will be possible to influence the level in such a way as to make available more resources for the maintenance of the housing stock than is possible under the present arrangements.
Lord Ross of Marnock: My Lords, why?
Lord Mackay of Clashfern: My Lords, for the reason that I have just explained: that if the level of rents is adequate there will be more money available to the local authority to use on the housing stock. It seems very obvious to me.
Lord Ross of Marnock: My Lords, the noble and learned Lord the Lord Advocate does not know the law. If the Secretary of State is dissatisfied in respect of the level of rents, he has the power—and he has used the power—to refuse to allow the local authority to spend as. regards capital equipment. If we take
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Glasgow as an example, last time it was penalised £17 million.
Lord Mackay of Clashfern: My Lords, your Lordships will be able to judge whether or not the assertion that the noble Lord has made about my knowledge of the law is correct. As regards the present system the result of dissatisfaction with the level of rents is, as the noble Lord has said, to reduce the capital allocation. As I understood it, that is what he said What I am saving is that that is not satisfactory because the result of that is—
Lord Ross of Marnock: Discontent.
Lord Mackay of Clashfern: My Lords, exactly. That is precisely why we want to change the system. The noble Lord is hard to satisfy. He is discontented with the present system and he wants to object to any way of improving it. It is fairly obvious that this is an improvement on the line that I am suggesting.
So far as consultation is concerned, a point was raised by the noble Lord, Lord Kirkhill, as to why the consultation arrangements were slightly different here from what they are in England and Wales. I think that he would be the first to acknowledge that the particular circumstances of Scotland are not the same in every respect as in England and Wales, and what the Secretary of State and the Government are proposing in this Bill seems to us appropriate for the Scottish situation.
Now I pass briefly to the valuation provisions. The noble Lord, Lord Carmichael of Kehingrove, invited me to say something about how these would operate. I should confirm of course that I have had the privilege of studying what the assessors said. The noble Lord, Lord Kirkhill, asked me whether I had read what the assessors say Considering that I spent a good part of my private practice acting for the assessors, what they say carries a good deal of weight with me.
Lord Kirkhill: My Lords, then the noble and learned Lord would at least concede that they are appalled.
Lord Mackay of Clashfern: Well, my Lords, that would be a matter of impression.
Lord Kirkhill: My Lords, that word was used not by me but by the professional officers concerned. The noble and learned Lord can certainly get that word in writing. There is no difficulty about that.
Lord Mackay of Clashfern: My Lords, I would have no difficulty in having that word in writing, but one has to take the way in which the assessors express themselves as sometimes requiring a little consideration. The points that the assessors have made I regard, as I said, as well worthy of consideration, but it often happens that when people who have been accustomed to one system are faced with a change. they have a little difficult) in accepting the change Some people say that about the legal profession. Whether it is so or not I do not need to pause to inquire but the situation is that the assessors are faced with quite important changes. They do not regard it quite as just dealing with the fringes. They regard these as quite

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important changes, and they have been faced with these, but I believe that we have been able to meet a good number of their concerns.
Perhaps the principal point in this area is the one that the noble Lord, Lord Kirkhill, raised in relation to the absence of rental evidence. I understood him to say that the Government had not come up to the undertaking that he had understood he had obtained from them; that, for example, a football park in Scotland would not be able to be compared with England and Wales. The situation, as I understand it, is that there are no rented football parks in Scotland, and accordingly there is no rental evidence on which comparison can be based. That is the reason why I think the two statements that he put together, saying they were different, are in fact the same.
The provision is not specifically related to any particular class of subject but is related to the question of whether or not there is sufficient rental evidence available in Scotland to proceed without reference to England, and I believe that to be a satisfactory arrange-ment. I believe that it meets the case put forward by the various interests to which the noble Lord, Lord Ross of Marnock, and others of your Lordships referred. They are saying that their rates are too high as compared with corresponding places in England and Wales.
There are two reasons for that. The first is that the rate poundage is too high, and that is what we are trying to deal with in the provisions in the first part of the Bill and the earlier provisions made by Parliament before. The other possible contributory factor is the valuation; that the valuation is higher than the corresponding valuation in England and Wales. That is what the new Clause 15 deals with. We are seeking to deal with both aspects of the problem on the basis of the case which has been put to us by the interests to which the noble Lord referred. Of course it is not restricted to particular interests. It is available to anyone who is in the situation described in the clause.
Lord Taylor of Gryfe: My Lords, in the debate in another place the case of Marks and Spencer in Glasgow, was quoted. They paid twice the rate per square foot for their premises in Glasgow compared to Oxford Street in London. Will the provisions of the Bill help to mitigate that kind of discrepancy?
Lord Mackay of Clashfern: My Lords, it would not be easy for me to speak about a particular case. May I say very generally, as I have just said, that there may be two reasons for a store like Marks and Spencer in Glasgow paying higher rates than their corresponding premises in London. The first woud be that the rate poundage in Glasgow is higher than in London. That is what the first part of the Bill is attempting to deal with; to cut down excessive expenditure.
The second reason is the possibility that the basic valuation for rating of the store in Glasgow is higher than that in London. So far as that is concerned, the reason for that may be an absence of rental comparisons in Glasgow, in which case this clause would apply; but in the case of a store I do not believe that that would be so. I think in the case of a store there will be rented stores in Glasgow on which the assessors
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can base their valuation. If there are rented stores in Glasgow on which the assessors base their valuations, and the actual rents paid in Glasgow are twice the rents paid in London, there must be some commercial reason for that. Those who set up premises in Glasgow must believe that it is appropriate to pay double the rent in Glasgow to what they would pay for corresponding premises in London.
I doubt very much whether that is the fact, but that might be the explanation. Anyway, these are the possibilities that occur to me on the example that the noble Lord referred to. I have certainly in my own experience come across cases in which the rents charged for properties in Scotland are higher than the corresponding rents in places in England and Wales, and these are matters of commercial judgment. It may surprise noble Lords to know that, but it in fact happens.
That leaves me to mention only the matter raised by the noble Lady. Lady Saltoun. I think I should like to agree with her statement so far as the law of Scotland is concerned. The point that she has made will no doubt be one that she will wish to raise at a later stage of the Bill when it can be considered. I think the noble Lady made it clear that she was talking about trout fishing and that the salmon fishings were not regarded as part of the heritage. Her statement of the law, as I understood it, was correct.
I have not perhaps responded to every point that has been made, but I think I have responded to the principal ones. I hope that your Lordships will accede to the Motion proposed by my noble friend.
On Question. Bill read a second time, and committed to a Committee of the Whole House.

Royal Assent
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:

Lotteries (Amendment) Act,

Town and Country Planning Act,

Education (Grants and Awards) Act,

Telecommunications Act,

Road Traffic (Driving Instruction) Act,

London Docklands Railway Act,

Standard Chartered Bank Act.

Disabled Persons Bill [H.L.]
1.29 p.m.
Read a third time.
An amendment (privilege) made.
Lord Campbell of Croy: My Lords, I beg to move that this Bill do now pass. I should like to say a few words at this point. First, may I thank all those who have participated during the various stages of the Bill in your Lordships' House. The suggestions which many of your Lordships made during those debates have led to changes, all of which I regard as

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improvements to the Bill. This Bill makes simple arrangements to investigate cases of alleged discrimination against disabled people and arrangements for a Commission to report to Parliament on these matters. It does not seek to operate through the law courts—there are many who see difficulties in that, including, as I understand it, the Government. There are practical difficulties and that is also my view. I foresee that if one tried to do this by introducing law and bringing people before the courts, it would probably be the wrong people who would find themselves in the dock, and if there were genuine culprits who ought to be brought to book they would find it fairly easy to escape, because of the difficulties of proof and also the ease with which other explanations could be put forward.
The Bill aims at the minimum of public expenditure. The Commission is small. It was even smaller in the original version of my Bill and I was persuaded to increase the numbers slightly. I would suggest that the main issue raised by my Bill is whether there should be any additions to the arrangements which already exist within Government departments for investigating allegations of discrimination. I think I can say that all who know me well will grant that I have for many years opposed the setting up of new official or semi-official bodies unless there really was a reason for them. In my view there must be very strong grounds for establishing new bodies of this kind. May I remind some of your Lordships whom I see here who were with me in another place that I was the chief opponent of a ministry—a Government department— when it was set up in 1964: the Ministry of Land and Natural Resources. My campaign was one of inquiry and questions. That ministry lasted for two years only. It disappeared, and except for people such as myself who were concerned with it at the time it has probably been forgotten. I have a record of trying to ensure that new bodies are not set up simply to give the impression that something is being done.
I therefore fully understand the criticism of the Bill that it would establish a new body, the Disablement Commission. I must make it clear that there is a good reason for some new independent body of this kind, however small and limited in resources. We understand from statements made by the Government, both in your Lordships' House and outside it, that it is the intention that complaints should be dealt with by Government departments. I believe that there is, or it is intended that there should be, a unit within the Department of Health and Social Security for this purpose. If that is so I am sure that that unit will do its best to try to be scrupulously fair in examining cases that are brought to it. There is, however, a serious drawback to that proposal which we should not ignore: many of the complaints of discrimination are against Government departments or offices.
This may be surprising. Those of us who have been involved nationally in matters connected with disability, such as the International year of Disabled People, or parliamentary campaigns, have received a vast amount of correspondence of matters of discrimination. I am surprised by the proportion of that correspondence which applies to Government departments and to Government offices. My own
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impression at looking into many of these, cases, I quickly add, is that they are not very well founded complaints. Nonetheless, the allegations of discrimination against officials in Government are there and no doubt they will continue. Those who make such allegations will not have complete confidence if it is the Government departments themselves who are to be the sole judges in their own case or if there is to be one unit in the DHSS. The Government would then be the judge in its own case.
I would add that as the Government may not be prepared to accept such a new body, if there is to be an alternative it might be this: rather than to have to set up a new body like the Disablement Commission, a modified form of the proposed Commission could be provided by an existing voluntary body. I know that there are among your Lordships some who have ideas of this kind, particularly my noble friend Lady Lane-Fox. There is not time now to pursue that. Nonetheless, I am sure it would command more public confidence, especially among the disabled themselves, than some invisible unit within the machinery of Government. I have no doubt that this Bill can be further improved, but it is there, available for another place, should the Government agree that it is necessary to have some modest system independent of Government departments. This Bill has benefited from the valuable contributions made in your Lordships' House. I beg to move.
Moved, That the Bill do now pass.—(Lord Campbell ofCroy.)
1.37 p.m.
Lord Ennals: My Lords, I want first to congratulate most sincerely the noble Lord, Lord Campbell of Croy, for piloting his Bill through the House. When it had its First Reading I spoke briefly from the Dispatch Box and said that I warmly supported it, though I saw it as very much a second tier or a less favourable Bill than that which had been proceeded with by my noble friend Lord Longford. I greatly regret the decision of the Government, for I can take it as no other, to use their influence to ensure the defeat of that Bill so that it was not referred to another place. Therefore in my mind this Bill introduced by the noble Lord, Lord Campbell, assumes much greater significance. I want warmly to welcome it.
The noble Lord asked a question in his few words about whether a new body was necessary and whether it could best be done by the Government. Of course the Government have an enormous part to play. I am certain that in many ways they are seeking to play it, not just in the DHSS but in other Government departments, whether it be employment, education or any other department. So many Government departments are involved in welfare, training, education and employment of people of one disability or another. Of course the Government have a role to play. But it is necessary to have another body such as that suggested in the Bill. I agree with the noble Lord that in view of the fact that the Government will inevitably be one of those against whom criticisms may be made, it is important that this body should be an independent body.
For a moment I should like to consider Clause 2 which defines the duty of the Commission. I am

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pleased that it has been set out in the way that it has, dealing not only with the disadvantaged but also with discrimination. I think that the commission could well look at both. The question of disadvantage is not necessarily the same as that of discrimination. One could say that there was not adequate access but that it was not in any sense an act of discrimination. One could say that there were inadequate facilities for training for disabled people but that this was not in any sense a deliberate act of discrimination. So one could say, with the services of local authorities for different types of disabled people, that they were not doing it in order to discriminate but because they had inadequate financial facilities or inadequate professional skills perhaps to deal particularly with small groups of disabled people. I think that it means that this commission—and I am glad that it has been broadened in terms of numbers from the original concept of the noble Lord, Lord Campbell of Croy—will be able to go into the question of the disadvantage.
Secondly, discrimination is linked but is extremely important. My own experience, before the Commission on Racial Equality was established and in the days when the Race Relations Board was looking at discrimination on grounds of race, was that in almost every case the force of the law was not necessary. I argued before that the force of law was advantageous but was not necessary and that in most cases conciliation could be achieved. It may be that conciliation would more often be achieved if the force of law were standing in the background. Nevertheless, I believe that most reasonable employers or most providers of service—be they local authorities or Government departments—once they had pointed out to them by an authoritative body such as this commission that there appeared to the commission to be acts of discrimination, would seek to put right what a responsible commission thought was wrong.
I think that, taking those two cases of disadvantage and discrimination, there is a very important field of work to be dealt with. It is no less important because, if there is that important field of work to be dealt with, it is right that the commission should report (as the Bill says) from time to time and that, as the commission think appropriate, they should report to the Secretary of State. I think, although it is not said, that it must be an annual report. It may be more frequent than an annual report, and I would hope that the commission would at least give consideration to the possibility that they might report on a particular aspect of disadvantage or on particular types of discrimination about which they felt that wider publicity and action by the Government could be helpful, whether in the field of work, of leisure opportunities, or of access or all the other things that make life more difficult for disabled people.
So it is in the mood of hoping that such a commission would interpret the definitions set out here in a very positive way and that they would feel free to bring to the attention of the public and the Secretary of State, since such reports will have to be published within a month, matters of particular concern, that I believe this Bill is a very important one. I hope that it will go further than your Lordships'
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House. Of course, the first point is to say that I hope your Lordships will pass it on its way to another place. That is my main plea. When it gets to another place, I hope that it will there be seen to be a Bill which deserves to be put on the statute book and that it will be seen eventually to be an important step forward in ensuring equal opportunities, fair opportunities and good services for the disabled people in our society.
Lord Banks: My Lords, I do not wish to detain the House but I should like to join in congratulating the noble Lord, Lord Campbell of Croy, for having piloted this Bill as far as to this stage. I hope that the Bill will now pass. We on these Benches were supporters of the Bill promoted by the noble Earl, Lord Longford, and we regretted that it did not secure the approval of this House. But we made clear on second reading that, if that Bill failed, we felt that the Bill introduced by the noble Lord, Lord Campbell of Croy, would provide a very useful function. That we still feel, and we hope that at some point in time the Government may be persuaded to find time for it elsewhere so that it can be passed into law.
Earl Attlee: My Lords, we on these Benches congratulate the noble Lord, Lord Campbell of Croy. I have one message to the noble Lord from the noble Baroness, Lady Masham, who apologises that she could not be here. She had to go abroad with her family. She has asked me to say she supports this Bill.
The Earl of Longford: My Lords, at an earlier stage, I found myself saying that I wished the noble Lord, Lord Campbell of Croy, well. I repeat those remarks today. I wish him very well and every good luck.
Lord Renton: My Lords, having opposed the Bill introduced by the noble Earl, Lord Longford, I would not wish it to be thought that any silence on my part with regard to this Bill meant that I was in disagreement with it. I think that this Bill can serve a very useful purpose. It would not cost much to implement it and it does not have what I find to be the disadvantages in the Bill introduced by the noble Earl.
Baroness Darcy (de Knayth): My Lords, I will not congratulate the noble Lord, Lord Campbell of Croy, on his handling of the Bill or wish it a safe passage because when I did that to the noble Earl, Lord Longford, last week the whole thing promptly sank like the "Titanic". I will just thank the noble Lord, Lord Campbell of Croy, for accepting so many amendments, and in many cases improving upon them. I think that it is a better and tidier Bill. I made no secret of the fact that I preferred the noble Earl's Bill because I do believe that making discrimination unlawful would speed the educative process and assist the commission to do its job. It is interesting that CORAD's last recommendation—in Chapter 5, paragraphs 61 to 65—was that, until anti-discrimination through legislation is introduced, an office should be set up to investigate individual cases of alleged discrimination.
I do not really know why the Government are against this Bill. I see the noble Baroness poised on the edge of her seat. Perhaps she is going to tell us that she

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has mellowed in her attitude towards this Bill, particu-larly in view of what other noble Lords have said, and especially the noble Lord, Lord Renton. Looking at what the Minister said on 6th March at the Committee stage (at column 223 of the Official Report for that day)—and I am paraphrasing to save time—he said that the main objections were that the commission would be expensive to establish and run; and, secondly, that it would duplicate the work already being done in both the statutory and the voluntary sectors, one of the most obvious examples being that of access.
As the noble Lord, Lord Campbell of Croy, has said, this small, modest commission could not be very expensive. There are fewer people in it than in relation to the noble Earl's Bill; and it is narrower in scope. Furthermore, it would not in fact duplicate the work done by the English Access Committee, for instance. The CORAD report mentions the work of the English Access Committee in relation to that of an office to investigate discrimination. I think it is important that we should remember that it was the CORAD report which suggested the setting up of the English Access Committee. They obviously must know what they are talking about as to the two roles being distinct.
In Chapter 5, paragraph 64, it says—and, again, I am paraphrasing—that the two would have quite different roles. The access committee would be a pressure group with architectural and planning expertise, and the office to investigate discrimination should be seen to be objective and should include legal experts. I feel that the commission would provide a much more satisfactory means of investigating discrimination than the Minister pursuing individual complaints brought to his notice.
The noble Lord, Lord Campbell of Croy, made the point (very forcibly, I thought) about complaints of alleged discrimination often being made against Government departments. Disabled people can complain to the Minister for the Disabled only through an MP or through a voluntary organisation. With the commission, they would complain directly. They would know it was an independent body, and, furthermore, that it was doing only this one job and was not trying to satisfy a whole lot of other needs at the same time. I think that that is a rather important argument against using the existing voluntary body to do this. They would know that disabled people themselves were on the commission and I think they would have confidence in the commission and would bring their problems to it. We could then begin to estimate the size and, accordingly, the problem. I therefore very much hope that the Government will not ignore this small and modest Bill.
Baroness Lane-Fox: My Lords, I give my good wishes to this Bill. My noble friend Lord Campbell of Croy has worked carefully and most knowledgably, and I think deserves our thanks for it. He has been working away towards it for quite a long time.
May I refer to the remarks of the noble Lord, Lord Ennals, that the defeat of the Bill of the noble Earl, Lord Longford, was a Government affair, because I must assure him with complete confidence that that was not the case? In conclusion, I really wish this Bill
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very well indeed and my congratulations go to my noble friend Lord Campbell of Croy.
Lord Swinfen: My Lords, may I also support the passing of this Bill and at the same time ask the Government to make certain that it has plenty of time to get through all its stages in another place?
Baroness Trumpington: My Lords, I should like to extend to the House the apologies of my noble friend Lord Glenarthur, who unfortunately cannot be here to attend this Third Reading. The change of represent-ation of the Government Front Bench does not indicate any mellowing. We recognise the admirable and positive intentions behind the Bill and have followed it with very great interest. We share the same aim of eliminating unjustified discrimination against disabled people, but my noble friend is well aware that at all stages we have made it clear that the Government will not provide sustenance for it in any way at any further stages, and I will not repeat any reasons for so doing except to reiterate that the new commission would cost money.
Whilst rejecting many of the remarks made today by the noble Lord, Lord Ennals, I should like to congratulate my noble friend Lord Campbell of Croy on providing the House with the opportunity to debate this subject. No doubt speeches made by your Lordships during the passage of this Bill will provide valuable information for the various existing channels, including the newly established access committee, which exists to deal with complaints and examine people's problems.
Bill passed, and sent to the Commons.

Statement and Adjournment
Lord Denham: My Lords, a Statement is to be made in another place this afternoon on guided weapons for the Royal Navy. With the leave of the House, I shall arrange for the text of this Statement to be printed in the Official Report.
Perhaps, with the leave of the House, I may also take this opportunity of wishing noble Lords in all parts of the House a peaceful rest during this coming Recess and a happy Easter. I think your Lordships would all wish to extend those remarks to the staff in all parts of the House.
Lord Ponsonby of Shulbrede: My Lords, I should like to join with the noble Lord, Lord Denham, in wishing your Lordships, and particularly the staff of the House, best wishes for the Easter Recess.
It has been an exceedingly long Session since Christmas, and, I think, as Easter has fallen very late this year, it was perhaps one of the longest on record. Therefore, the Recess is even more welcome than usual. I can assure your Lordships that we shall return with renewed vigour and renewed attempts to inflict further defeats on the Government after the Recess.
Lord Kilmarnock: My Lords, we on these Benches should also like to associate ourselves with the remarks of the Government's Chief Whip, particularly in

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relation to the sterling service of the staff during the long and, as the noble Lord, Lord Ponsonby, said, testing Session behind us. I fully agree with him that it is a very welcome break but we can flex our muscles for an even more testing Session to come.
Following is the statement referred to above:
GUIDED WEAPONS FOR THE ROYAL NAVY
With permission, Mr. Speaker, I wish to make a Statement about the procurement of the next generation of surface-to-surface and surface-to-air guided weapons for the Royal Navy.
For some months we have been conducting a competition for a second generation surface-to-surface guided weapon for the four Batch III Type 22 frigates and the first eight Type 23 frigates. The contenders were British Aerospace's ship-launched Sea Eagle, McDonnell Douglas' ship-launched Harpoon. Aerospatiale's Exocet MM40, and versions of Otomat from Oto Melara and Matra. The thoroughgoing evaluation of these contenders has taken into account performance, cost and timescale considerations as well as industrial and employment factors.
The competition has been keen and of considerable benefit in assuring value for money. Following the submission of 'best and final' offers from the competing contractors, the outcome is clear. Having taken all relevant factors into account, the Government have concluded that the best choice on both operational and cost grounds is the McDonnell Douglas Harpoon: a proven system, which has had 100 per cent. success rate in firings since 1978, and variants of which are already in service with the RN and RAF.
Subject to agreement with the company on contractual terms and conditions, we will place a fixed price contract worth of the order of £200 million for Harpoon missiles and associated ship systems for the Batch III Type 22 and Type 23 frigates.
I recognise that there will be disappointment that we have decided not to buy British for this item of Royal Navy equipment. However, the United Kingdom's position with regard to the high technology involved in advanced missiles has been preserved by our earlier decisions to purchase ALARM and air-launched Sea Eagle from British Aerospace. I take this opportunity of reaffirming the Ministry of Defence's commitment to air-launched Sea Eagle and also of reminding the House that 95 pence in the MOD's procurement £ is spent in this country.
The employment implications of the various options have been an important consideration in our decision. I am pleased to be able to tell the House that McDonnell Douglas have undertaken to provide offset work for British Industry to the value of 130 per cent. of the cost of the Harpoon order, of which half will be in areas of high technology and 30 per cent. on the Harpoon programme itself. McDonnell Douglas' track record on offset is excellent and their undertaking will be incorporated in the contract. Over the past seven years they have placed well over £300 million-worth of contracts in the United Kingdom at all levels of industry and, on sub-Harpoon, their offset eventually totalled one and a half times the purchase price. Another important consideration was the need to reduce as far as possible uncertainties caused by future exchange rate fluctuations. In this respect we have achieved an agreement with McDonnell Douglas that 30 per cent. of the value of the contract will be payable in sterling.
The Government are convinced that this decision is right for the Royal Navy and right for the taxpayer, and is also entirely satisfactory in employment terms for British industry.
In addition, I am also glad to be able to inform the House that today we have authorised the placing of a firm contract with British Aerospace for the full development and initial production of the vertically-launched version of the Sea wolf surface-to-air missile for the Royal Navy's Type 23 frigates. This important programme will ensure that Sea wolf keeps its substantial lead over all its international competitors, and will guarantee that the Type 23 frigates have the most modern versatile and devastating point defence missile system available. This is a programme of major importance for the Royal Navy and British industry. The initial order alone is worth some £250 million. Taken alongside the substantial order which we placed some weeks ago for the third main production order for conventionally-launched Sea wolf, this order will sustain the momentum of the programme
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and—not least—will sustain job opportunities at British Aerospace and their sub-contractors.
The Royal Navy has today acquired two highly effective modern systems which will greatly enhance operational effectiveness.

Swavesey Bye-Ways Bill [H.L.]
Reported from the Unopposed Bill Committee with amendments.
House adjourned for the Easter Recess at six minutes before two o'clock.